Department of Justice, Eric Holder, White-Collar Crime

Prison, Federalizing State Crime, And Drones -- All That And More In The Inspector General's Year-End Memo

A peek inside the Department of Justice.

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Christmas came early for folks who are skeptical about the Department of Justice and how it does business.

Michael Horowitz, the Inspector General at the Department of Justice, issued a memorandum to the Attorney General listing his office’s view of the “Top Management and Performance Challenges Facing the Department of Justice.”

Whether you’re someone with a political axe to grind against a Department of Justice run under a Democratic President, a libertarian who simply doesn’t like the government doing much of anything, or someone in the trenches of the criminal justice system who wants to see the guts of the Department of Justice on display, there’s something for everyone to like in the IG’s memo.

And, of course, the IG’s memo is, institutionally, a bit odd. One would think that Eric Holder, the Attorney General, would be the guy issuing memos about the top issues facing the Department of Justice. But, happily, we have the IG — pulling up the dark parts of the Department and bringing them to the public eye.

So here, just so you don’t have to read it, are the most interesting parts of the Inspector General’s memo for folks in the white-collar world.

We have a lot of people in prison and we will continue to have more

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White-collar criminal defense is, of course, criminal defense. If you’re a white-collar defense lawyer, you’re focused on keeping your client out of prison.

According to the IG, it looks like prisons in America are really expensive and will continue to be. Perhaps prison costs will swallow money for other DOJ prosecution efforts.

As the memo notes,

[I]n a recent speech to the American Bar Association, the Deputy Attorney General remarked that the “unsustainable” cost of the prison system represents “a crisis that . . . has the potential to swallow up so many important efforts in the fight against crime,” and that “[e]very dollar we spend at the Department of Justice on prisons and detention . . . is a dollar we are not spending on law enforcement efforts aimed at violent crime, drug cartels, public corruption cases, financial fraud cases, human trafficking cases, [and] child exploitation, just to name a few.”

A cutback in the resources to prosecute public corruption or financial fraud cases would, uncomfortably, for the white-collar world, have, uh, consequences.

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The IG is pessimistic on whether anything the Department is doing to stop the rise of prison rates will work. The Attorney General’s recent speech announcing changes in the drug sentencing is treated skeptically by Horowitz:

In August 2013, the Attorney General announced a program to limit the number of defendants that face lengthy prison sentences for drug offenses . . . .  Whether the policy change will have a material long-term impact on prison costs remains to be seen since many of these same defendants, if they had been subjected to a mandatory minimum charge, might have qualified for the mandatory minimum “safety valve” that Congress created in 1994.  This “safety valve” is already incorporated into the federal sentencing guidelines and can result in a sentence of less time in prison than the mandatory minimum sentence specifies.

I feel like someone said that already, but it’s a good point.

Also, there are a lot of old people in prison. Those are some expensive boomers. Madoff’s prison time ain’t going to come cheap to the taxpayer.

Maybe Federalizing State Crime Has Some Drawbacks

The IG is also critical (in its measured way) of how much of state law enforcement has been federalized, and how this has increased our federal prison population.

[O]ne of the factors contributing to the increasing number of prisoners in the federal prison system over the past 3 decades has been the trend to prosecute at the federal level many offenses that were previously handled largely or exclusively by state and local authorities.  By one estimate, the number of federal criminal offenses grew by 30 percent between 1980 and 2004; indeed, there are now well over 4,000 offenses carrying criminal penalties in the United States Code.  In addition, an estimated 10,000 to 100,000 federal regulations can be enforced criminally.  . . . The Department should simultaneously consider how the federalization of criminal law has affected its budget and operations, and whether rebalancing the mix of cases charged federally might help alleviate the budget crisis posed by the federal prison system without sacrificing public safety, particularly where state and local authorities have jurisdiction to prosecute the conduct.

In other words, maybe the Department of Justice doesn’t need to make a federal case out of it quite so often.

But overcriminalization is a serious problem, and one that a number of folks have been calling attention to. It affects the white-collar world more than others, because those regulatory crimes are generally not about regulation of, say, the narcotics trade or aggravated assault.

Maybe the FBI Isn’t So Good At Following The Law

The IG suggests that perhaps the Department of Justice’s components should follow the law, particularly in relation to national security investigations by the FBI.

[P]rior OIG reviews assessing the FBI’s use of national security letters (NSL), which allow the government to obtain information such as telephone and financial records from third parties without a court order.  These reviews found that the FBI had misused this authority by failing to comply with important legal requirements designed to protect civil liberties and privacy interests

NSA Information And Criminal Cases

An important question, raised by earlier press accounts about NSA information being given to law enforcement to use in criminal cases is echoed by the IG:

[Q]uestions arise about the impact on civil rights and liberties of conducting electronic searches of national security information and about whether and how information obtained in a national security context can be used for criminal law enforcement.  As the Department continues to acquire, store, and use national security information, these issues will arise more and more frequently, and the Department must ensure that civil rights and liberties are not transgressed.

It used to be you only saw wiretaps in drug or gang cases. Now you see them in white-collar cases. If the DEA is using NSA information, it’s only a matter of time before you see fraud prosecutors, or the SEC, try to get this information. It’s something to think about over the holidays.

The Rise of the Drones

The IG is also worried about drones. We should be too.

[In a] recent OIG review of the Department’s domestic use of [drones] . . . we found that the technological capabilities of drones – such as their ability to fly for extended periods of time and maneuver effectively yet covertly around residences – and the current, uncoordinated approach of Department components to using [drones] may merit the Department developing consistent [drone] policies to guide the proper use of [drones].

So, drone use is common enough the IG thinks a policy would be a good thing. Good to know.

I’m not sure I see how drones would be immediately helpful in white-collar cases. (Perhaps by using heat sensors to see how many people are actually in a conference room? Buzzing a golf course to see if competitors are playing a round together where they could be sharing price information?) But I’ll bet that if there’s a way, federal prosecutors and law enforcement will dream it up.

Matt Kaiser is a partner at The Kaiser Law Firm PLLC, a boutique litigation firm in Washington DC, which handles government investigations, white-collar criminal cases, federal criminal appeals, and complex civil litigation. You can reach him by email at mattkaiser@thekaiserlawfirm, and you can follow him on Twitter: @mattkaiser.

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