Legal Times
January 14, 2008
Pedro Ruz Gutierrez and Marisa McQuilken
Word that New Jersey’s top federal prosecutor steered a multimillion-dollar contract to former Attorney General John Ashcroft’s private firm to oversee a company’s compliance program has upped anxiety levels at Main Justice and in Congress.
The contract — part of a Justice Department effort to get corporate America to shape up without indictments — with the Ashcroft Group will be paid by Indiana medical implant maker Zimmer Holdings and could be worth up to $52 million. The deal caught the attention of Attorney General Michael Mukasey and surfaced as the Criminal Division is reviewing the use of private monitors in out-of-court settlements. Ashcroft, while a big name, isn’t the only former Justice official to benefit from such contracts.
James Robinson, a partner at Cadwalader, Wickersham & Taft in D.C., and James Cole, a partner in Bryan Cave’s Washington office, have both served as outside monitors. Robinson, who was assistant attorney general in the Criminal Division until 2001, was hired to monitor AOL in a $210 million securities fraud settlement in 2004. Cole, previously deputy chief of the Public Integrity Section, was hired to oversee AIG in a $126 million securities fraud settlement reached in 2004.
"The line between an appearance issue and a conflict of interest can be narrow," says Joshua Hochberg, a partner at McKenna Long & Aldridge who helped approve such arrangements while fraud section chief of the Criminal Division until 2005. Hochberg estimates that at least 25 monitors have been appointed since 2003. In most instances, Hochberg says, companies suggest two to three persons to serve as monitors with Justice officials making the final decision.