The number of lawyers at the Fraud Section at the Department of Justice has been cut from 100 lawyers twenty years ago to about 50 lawyers today.
That’s according to Joshua Hochberg, a partner at McKenna Long & Aldridge in Washington, D.C.
Hochberg was chief of the Fraud Section from 1988 to 2005 when he joined McKenna Long.
“In part, some of the U.S. Attorneys’ offices have gotten more sophisticated in their own handling of white collar crime,” Hochberg said. “In the health care area, almost every office has a health care task force that trains people to prosecute and investigate health care fraud. In part, there was a political view that Main Justice was too large and that prosecutors should be out on the streets in the local offices.”
Hochberg said that while “politics never entered into any decision I was involved in,” politics “sometimes plays a role in the allocation of resources.”
“When resources are pulled from financial crimes and put into another area, that reflects a political decision that ultimately affects what we can do,” Hochberg said.
Hochberg is currently the examiner in the Refco bankruptcy case out of Manhattan.
He said that he has completed his report in that case and that it will be made public sometime later this summer.
Hochberg said he doesn’t think the current political turmoil at the Department is slowing the prosecution of corporate crime. But he does believe it is having a substantial morale impact.
“I was chief of the Fraud Section for seven years – which was by far the longest tenure of any chief of the Section,” Hochberg said. “During that time, we worked both sides of the fence. The political bosses changed. But there was always a healthy respect for the career professional, a willingness to listen to the advice of the career professional. That got out of whack. The career professionals feel in their gut that their role is significant. And whoever the political appointee is, it’s the career professionals who protect the institution. And so now, there is a morale problem.”
Hochberg coined the term FSTOP crimes – crimes of false statements, obstruction and perjury.
Should prosecutors charge high profile individuals with FSTOP crimes when they can’t prove the underlying crimes – the issue in the I. Lewis Libby and Martha Stewart cases?
“There is a lot to be said for vindicating the system and making it clear that nobody can get away with lying,” Hochberg said. “It sends a message. It even helps defense attorneys when they talk to their next client about the perils of lying or the need to take the Fifth Amendment even though you are a public official and you don’t want to take the Fifth Amendment. But on the other hand, a lot of these cases are discretionary. And it is a resource issue. How much time and effort do you want to spend given that there are other crimes out there that you want to investigate?”
Isn’t it inevitable that if a prosecutor spends enough time digging, high profile individuals will trip up and commit an FSTOP crime?
“A lot of people in the public limelight tend not to want to reveal embarrassments – even though those embarrassing situations have nothing to do with the underlying alleged wrongdoing,” Hochberg said. “So, to that degree, you could always dig deep enough to hit a sensitive nerve.”
[For a complete transcript of the Interview with Joshua Hochberg, see 21 Corporate Crime Reporter 25 (10), June 18, 2007, print edition only.]