The BLT: The Blog of Legal Times

'Operation Holiday Hoax' Targeted Counterfeit Goods

A six-day enforcement sting combating the importation and distribution of counterfeit and pirated goods has netted seven arrests and the seizure of merchandise worth more than $26 million in the United States, federal officials announced today.

Lanny Breuer, assistant attorney general for the Justice Department’s Criminal Division, was on hand in Arlington, Va., today to announce the sting – dubbed “Operation Holiday Hoax.” The seized goods included Christmas ornaments, DVDs, CDs, clothing, shoes, handbags, perfume, stationery, phones and pharmaceuticals. In Mexico, the authorities seized an additional 272 tons of counterfeit goods.

“Consumers are entitled to rely on a marketplace that provides them with safe and legitimate products,” Breuer said in a prepared statement. “Consumers deserve to know that the goods and services they buy are what they say they are.”

The operation targeted the “most serious” intellectual property violators in the import and distribution network, Breuer said. Click here for a copy of the remarks.

In their own announcement supporting the law enforcement initiative, the Motion Picture Association of America and the Recording Industry Association of America said the sting had netted nearly 160,000 counterfeit DVDs and CDs.

“More than 2.4 million American jobs are supported by the movie and television industry alone,” MPAA chairman and CEO Dan Glickman said in a statement. “Each of the pirated DVDs shown here today represents a theft, not just from the motion picture studios, but from the hard earned wages of these men and women working in all 50 states of our union.”

Hogan & Hartson Senior Advisor Wins Asian Peace Prize

A Washington-based senior advisor to Hogan & Hartson is in the Philippines today being awarded an international peace prize alongside a U.S. congressman, a world-famous boxer and a Tony award-winning actress.

President Gloria Arroyo of the Philippines will present Christine Warnke with the Gusi Peace Prize in economics and humanitarianism at a banquet in Manila.

Warnke is one of this year’s 20 international recipients recognized for “working toward the attainment of peace and respect for human life and dignity,” according to the prize’s Web site. The awards cover such fields as science, sports, performing arts and politics.

Warnke, a government affairs advisor at Hogan & Hartson, is recognized for her involvement with humanitarian, business and health initiatives, particularly her work in Africa, said prize spokesman George Bistis. Bistis said he has been familiar with her work for years, and referenced Warnke’s efforts delivering wheelchairs to South Africa, building a hospital in Congo and fighting human trafficking in Romania among her accomplishments.

“There were so many countries,” Bistis said. “It was very impressive work that she has done, particularly for human rights, dignity and equality among sexes.”

Warnke, a native Washingtonian, works with several nonprofit organizations and said she was drawn to this work early on after spending part of her childhood in Sao Paolo, Brazil. “Growing up as a child and seeing it and watching kids on the street growing up in cardboard boxes really impacted me,” she said. “There are people living this way. Really destitute.”

Her next projects will be helping deliver wheelchairs to the Philippines (with help from Deepak Chopra) and encourage Angolans to register their children at birth so they can be citizens of the country, she said.

Meantime, she added, it’s rewarding to be honored among a class of noted humanitarians. “You feel like you’re among Mother Teresas here,” she said. “It’s very humbling.”

The only other American laureate this year is Rep. Bob Filner (D-Calif.), who is recognized in the category of legislation for introducing into Congress the Filipino World War II Veterans Act, which extended equal veteran status to Filipino veterans. The act passed in February as part of the American Recovery and Reinvestment Act.

Among this year’s other recipients are seven-time world champion boxer Manny Pacquiao; Tony award-winning Philippine singer and actress Lea Salonga; Russian painter Alexey Steele; Princess Fuziah Raza Uda of Malaysia; and Ali Nasuh Mahruki, the first Muslim and the first Turk to climb Mt. Everest.

The Gusi Peace Prize is named for Capt. Gemeniano Javier Gusi, a Filipino guerrilla who fought against Japan during World War II before becoming a politician and a human rights activist. It’s administered by the nonprofit Gusi Peace Prize Foundation.

Former laureates include actor Anthony Quinn, U.S. Rep. Gus Bilirakis (R-Fla.), and noted forensic scientist Henry Lee, of TV show Forensic Files fame. For a complete list of this year's and past winner, visit the prize’s Web site.

Former AG Mukasey: Terror Cases Don't Belong in Federal Court

Former Attorney General Michael Mukasey this afternoon criticized the Justice Department for its decision to prosecute five terror suspects in federal district court in Manhattan, calling the move "unwise" and saying it risks creating sweeping new law that will affect routine criminal cases.

Mukasey, speaking at the Federalist Society annual conference in Washington on Nov. 13, said the prosecution of terror suspects in civilian courts poses a significant challenge to the criminal justice system. Cases against Guantanamo Bay detainees, he said, were not investigated with the expectation that prosecution would happen in federal courts, with their stringent procedural and evidentiary rules.

The Justice Department announced this morning that five detainees, including Khalid Sheikh Mohammed, the alleged mastermind of the Sept. 11 terrorist attacks, will be prosecuted in the U.S. District Court for the Southern District of New York.

The security of judges, prosecutors, jurors and courthouses, Mukasey said, will be a chief concern. He warned that Manhattan could become a target for “mischief” among the followers of the defendants.

He said he is confident unbiased jurors can be found. “That part of the process I have great faith in. It’s the rest of it that worries me,” said Mukasey, a partner at Debevoise & Plimpton in New York.

“Here again, the plan seems to be to abandon the view that we are involved in a war” and return instead to a pre-Sept. 11 criminal justice model, said Mukasey, a former judge in the Southern District of New York himself. He spoke for about 15 minutes and took questions afterward. He is a member of the Federalist Society. (“If I had to be at any venue today after what was announced this morning, I’m glad it’s this one,” he said.)

The prosecution of terror suspects should occur at the Guantanamo Bay facility, he said. “That such a trial might actually be seen by the American public and the rest of the world as both fair and successful appears not to have occurred to anyone in authority,” Mukasey said.

The Obama administration has pledged to shut down the Guantanamo Bay prison camp. A Jan. 20 deadline, however, is unlikely to be met. Mukasey said the decision to prosecute defendants in federal court “appears to have resulted simply from a commitment” to close Guantanamo.

Earlier this morning, Attorney General Eric Holder Jr. said he is confident the government will succeed in prosecuting terror suspects in federal district courts. “I would not have authorized the bringing of these prosecutions unless I thought that the outcome, any outcome, would ultimately be successful,” Holder said.

Regarding security, Holder said: “New York has a long history of trying these kinds of cases. New York has a hardened system.”

Holder said he recognizes the challenges that the cases present and acknowledged evidentiary disputes between prosecutors and defense lawyers are likely. One issue is likely to be whether statements from detainees were coerced. Holder said the relevancy of those statements will determine whether prosecutors seek to use them. “I don’t know what the defense might do. It’s hard for me to speculate at this point. It’s hard to know exactly what our response will be,” Holder said.

DOJ: Computer Hackers Stole $9 million from ATMs in Just Hours

Updated Nov. 11

A group of international hackers is charged with invading the computers of Atlanta-based credit card processing company RBS WorldPay and stealing more than $9 million in just hours from ATMs across the globe, the Justice Department announced today.

A grand jury in the U.S. District Court for the Northern District of Georgia has indicted four individuals on charges that include wire fraud, computer fraud and aggravated identity theft. It was not immediately known whether any of the defendants, who are detained overseas, have retained counsel in the United States. Four other defendants, each from Estonia, are charged with access device fraud.

The indictment alleges that the group breached a security system that protected data on payroll debit cards, which allow employees to withdraw salaries from ATMs, according to the Justice Department. RBS WorldPay, represented by Hunton & Williams partners John Delionado and John Woods, is a part of the Royal Bank of Scotland.

Prosecutors said in a statement that the alleged hackers stole millions of dollars from more than 2,100 ATMs in at least 280 cities in the United States, Canada, Japan and other countries. Justice officials said international cooperation was a “significant factor” in bringing charges. Government lawyers and investigators have worked with counterparts in Estonia, Hong Kong and in the Netherlands.

“Last November, in just one day, an American credit card processor was hacked in perhaps the most sophisticated and organized computer fraud attack ever conducted. Today, almost exactly one year later, the leaders of this attack have been charged,” Acting U.S. Attorney Sally Quillian Yates of the Northern District of Georgia said in a statement.

Kimberly Kiefer Peretti of the Justice Department’s Computer Crime and Intellectual Property Section is assigned the prosecution with assistant U.S. attorneys Lawrence Sommerfeld and Gerald Sachs in Atlanta.

Chief Judge in D.C. Urged To Keep State Secrets Rulings in Place

A group of litigants who are suing the government are urging Chief Judge Royce Lamberth of the federal district court in Washington to keep in place a series of rulings in a high-profile state secrets case that recently settled for $3 million.

The litigants, including the Al-Haramain Islamic Foundation, said in court papers filed Friday in the U.S. District Court for the District of Columbia that Lamberth's rulings are important for application in other cases. Justice Department attorneys want Lamberth to vacate the rulings, saying that they have no precedential value.

Lamberth’s rulings deal with whether a federal district judge may decline, in a state secrets case, to give a high degree of deference to the government’s assertion of the privilege when the government is accused of making misrepresentations to the court; and whether a judge can determine that lawyers in a state secrets case have a “need to know” certain confidential information. (Justice Department lawyers say the judiciary cannot make that determination, only the executive branch.)

In the underlying case, former drug enforcement agent Richard Horn in 1994 sued a CIA officer and a State Department official in a complaint that alleged the defendants unlawfully intercepted Horn’s communication while he was serving in Burma. The case has dragged on amid a dispute about the state secrets privilege.

A settlement in the case, where the government has agreed to pay $3 million to Horn, was announced last week. Government lawyers said the settlement, which was reached while Justice appealed Lamberth’s rulings to the U.S. Court of Appeals for the D.C. Circuit, was not an admission of liability.

Alan Kabat of Washington’s Bernabei & Wachtel, joined by Jon Eisenberg of Oakland’s Eisenberg and Hancock, filed an amicus brief this month in the case that urges Lamberth not to vacate opinions in July and in August that went against the government.

Kabat and Eisenberg, on behalf of three interested parties, including the Al-Haramain Islamic Foundation, said the rulings deal with novel legal issues and should be left in place. “The opinions will be a valuable resource for litigants and courts as these issues arise in other cases,” the lawyers said in court papers.

DOJ Settles Former Drug Agent's Suit for $3 million

The federal government has agreed to settle for $3 million a long-running suit in federal district court in Washington that alleged a former CIA officer and a State Department official unlawfully eavesdropped on a drug enforcement agent in Burma.

The terms of the agreement were detailed in court papers filed Tuesday night in the U.S. District Court for the District of Columbia. The suit, filed by former DEA agent Richard Horn, was filed in federal court in 1994. The litigation had been under seal until this summer.

The suit has dragged on amid disputes about the state secrets privilege and whether and how much access the opposing lawyers should have to confidential information. In July and August, Chief Judge Royce Lamberth issued rulings against the Justice Department in which he ordered the government to provide security clearances for the private lawyers in the case. Justice attorneys were appealing the ruling when a tentative settlement was reached last month.

“This case has been pending for fifteen years, and the parties and the United States have now reached a comprehensive, global settlement of claims after extensive negotiations under the auspices of the Court of Appeals mediation program,” Justice attorney Alexander Haas of the Civil Division federal programs branch said in court papers. Click here for a copy of the settlement agreement.

Horn’s lawyer, Brian Leighton, a solo practitioner in Clovis, Calif., said Tuesday in an interview Tuesday night that the government “totally miscalculated our perseverance and resolve” in the litigation. Horn and Leighton have known each other for years, ever since Leighton’s days as a federal prosecutor in California. Leighton took the case on a contingency fee basis. He declined to comment on his portion of the settlement.

Former FBI Agent Pleads Guilty in D.C. to False Statements

A 40-year-old former FBI special agent pleaded guilty today in federal district court in Washington to fraudulently obtaining nearly $42,000 in lodging expenses, the U.S. Attorney's Office for the District of Columbia said.

Jeffrey Shim, who first took a position with the FBI in 2002 in the Honolulu division, fraudulently claimed $41,658 in housing vouchers to which he was not entitled over a 15-month period, U.S. Attorney's Office officials said. Shim resigned from the FBI last week. He has agreed to make restitution.

Authorities say Shim, who was reassigned to the Newark field office in January 2008, submitted false documents to FBI headquarters for reimbursement for claimed lodging expenses. In May 2008, Shim was on temporary duty assignment at FBI headquarters in Washington.

Shim, according to court records, falsely represented he was renting a room in Beltsville, Md., when he was living with his family in Olney, Md. Shim and his wife bought a house in Olney in August 2006.

Shim presented false documents to the FBI that included two fake "rental agreements" with forged signatures of a fictitious landlord, according to court records. The first rental agreement, submitted in June 2008, said Shim was paying $1,400 weekly in rent.

U.S. Attorney's Office officials said the FBI discovered "irregularities" that led to the investigation of Shim. The false statement charge was filed against Shim last month. Assistant U.S. attorneys Daniel Friedman and Matthew Solomon are prosecuting the case.

Shim is scheduled to be sentenced next February before U.S. District Judge Reggie Walton. Shim faces up to five years in prison and a fine of up to $250,000. Shim's lawyer, David Shapiro of Washington's Swick & Shapiro, could not immediately be reached for comment this afternoon.

Joe Biden's Adventures With Mark Gitenstein

As a member of the Soviet bloc until 1989, Romania is not known as the United States' closest ally. But its government now has pretty good access to Vice President Joe Biden.

A main reason: Biden's former chief counsel, Mark Gitenstein.

Gitenstein was confirmed in July as the U.S. ambassador to Romania. In an appearance Thursday in Bucharest, Biden spoke glowingly of their relationship and called Gitenstein “my best personal friend.” Gitenstein worked for Biden when Biden was chairman of the Senate Judiciary Committee, and until July he was a partner in Mayer Brown’s D.C. office.

“He has my ear,” Biden told Romanian President Traian Băsescu, according to a White House transcript. “I know you’ve already figured that out, because I know you’ve gone to him and you know he immediately picks up the phone and calls me.”

Biden added, “I hope you won’t take advantage of my friendship with the ambassador too badly.”

The relationship between Biden and Gitenstein dates back 30 years, Biden said. Their families have “raised each other’s children,” and Biden’s grandchildren consider the Gitensteins to be “almost relatives,” the vice president said. (Some of Gitenstein’s ancestors, by the way, emigrated from Romania, according to testimony from his confirmation hearing.)

Biden and Gitenstein likely got in some buddy time this week, according to reports from the traveling press pool. Arriving from Warsaw on Wednesday night, Biden stayed at Gitenstein’s residence. At a separate appearance Thursday, Gitenstein introduced Biden for a speech at Bucharest’s Central University Library.

Later Thursday, Biden used Gitenstein’s residence to host back-to-back discussions with two opposition party leaders who are vying for the presidency in elections scheduled for next month. Then, Biden was off to Prague.

Noted International Arbitration Attorney Joins Foley Hoag

Mark Clodfelter has moved offices one block up K Street, joining Foley Hoag's international litigation and arbitration practice as a partner. Previously, he was of counsel at Winston & Strawn in Washington.

Clodfelter has 25 years of experience in international arbitration, including work in the 1980s with the Iran-United States Claims Tribunal, created to mediate during the 1979 hostage crisis, and seven-year stint starting in 2000 at the U.S. State Department, where he managed the Office of International Claims and Investment Disputes, which represents the U.S. government in international arbitrations.

For the last decade, Clodfelter, 59, said he has focused his practice on the “rapidly expanding” field of investor-state arbitration, which involves a private investor suing a state or vice versa. “In the last 10 or 11 years, there’s been an incredible skyrocket in cases of private investors against states,” he said.

But he added that Foley Hoag, which he said represents a party in almost half of all cases at the International Court of Justice, will yield opportunities to expand his practice. “The attraction of the firm for me was its public international law practice is much broader,” he said. “I’m looking forward to an opportunity to do a greater variety of international law work.”

Among his first responsibilities will be continuing his representation of the Republic of Ecuador in claims brought by foreign oil companies over measures the country took amid rising oil prices. He represented Ecuador while at Winston & Strawn too.

Foley Hoag’s international litigation and arbitration practice also currently represents the government of Georgia in proceedings arising out of the Russian invasion in 2008 and Bangladesh in a maritime boundary dispute with neighboring India and Myanmar, among other clients.

Federal Judge: Ye Gon 'Most Definitely' a Flight Risk

A federal magistrate judge in Washington denied bail yesterday to Zhenli Ye Gon, who is awaiting extradition to face charges in Mexico related to a methamphetamine trafficking conspiracy after the U.S. case against him collapsed.

Magistrate Judge John Facciola said Ye Gon, jailed since his arrest in Maryland in July 2007, is a flight risk. Ye Gon is a native of China and a naturalized citizen of Mexico.

In denying bail, Facciola noted that authorities in Mexico, working with the U.S. Drug Enforcement Administration, found more than $200 million in Ye Gon’s house in Mexico City. Ye Gon said the money was not profit from alleged drug sales but rather cash from a political slush fund that he was asked to hold.

“An individual who had in excess of 200 million U.S. dollars in cash secreted in his home is someone who clearly possesses the means and motive to flee this jurisdiction and thus presents a clear risk of flight,” Facciola said. (At left, a photo of the cash provided courtesy of the DEA.)

The Justice Department and the DEA had heralded the arrest and prosecution of Ye Gon as a victory in the fight against international drug trafficking. But prosecutors this year abandoned the case, citing evidentiary concerns and Mexico’s interest in prosecuting Ye Gon. U.S. District Judge Emmet Sullivan dismissed the indictment with prejudice in August.

Ye Gon’s lawyers, Manuel Retureta and A. Eduardo Balarezo, are fighting extradition and recently asked that their client be released on bail pending the outcome of the extradition litigation. The lawyers argue that bail is justified due to special circumstances including the length of time that Ye Gon has been jailed. Ye Gon has been held in “extremely harsh solitary confinement” for more than two years, Balarezo and Retureta said.

Facciola said that nobody, including Sullivan, has said that the prosecution of Ye Gon was without merit or initiated by “some evil ulterior motive.”

Today, Ye Gon’s lawyers filed court papers urging Facciola to reconsider his decision denying bail. The lawyers said in court papers that Facciola ruled before the defense had filed its supplemental opposition to the government's request that Ye Gon be held pending extradition. The defense said it had until today to file that opposition.