The BLT: The Blog of Legal Times

New Prosecution Team Takes Over Blackwater Case

A new team of lawyers today took over the controversial manslaughter prosecution against a group of Blackwater security guards charged in the killing of Iraqi civilians.

The new prosecution team, which now includes assistant U.S. attorneys Anthony Asuncion, John Han and T. Patrick Martin, comes as U.S. District Judge Ricardo Urbina prepares to receive an update on the status of the case.

Delivering a blow to the Justice Department, Urbina in December 2009 dismissed charges against the guards, citing prosecution missteps. The guards were indicted in December 2008 in Washington federal district court.

Urbina dismissed the case after several weeks of a “Kastigar” hearing. At issue in the proceeding, which was held behind closed doors, was the extent to which the government built the manslaughter case on statements the guards made in the aftermath of the shooting in Baghdad in 2007. The defense lawyers for the guards argued the statements were protected.

The U.S. Court of Appeals for the D.C. Circuit in April reversed Urbina, sending the case back to the trial court for further proceedings. The full appeals court refused to rehear the case, despite pleas from the defense lawyers that the panel ruling was wrongly decided.

U.S. Attorney Ronald Machen Jr. said in a statement this afternoon that the new legal team was installed “out of an abundance of caution to place this prosecution on the strongest possible footing with respect to any future Kastigar litigation.”

Planned Parenthood Turns to Hogan Lovells for Congressional Probe

Planned Parenthood has retained lawyers from Hogan Lovells as it prepares to respond to a sweeping new inquiry into how the organization and its affiliates use federal money.

U.S. House Republicans launched the inquiry this month. Rep. Cliff Stearns (R-Fla.), the chairman of the House Subcommittee on Oversight and Investigations, wrote a letter to Planned Parenthood’s national organization asking for information about how the network of nonprofit health clinics complies with the law prohibiting the use of federal money on abortions.

Stearns’ subcommittee is one of the most active congressional panels for conducting investigations, and corporations and organizations that are in the subcommittee’s crosshairs often look to outside help. Solyndra Inc., a California solar-energy company that is facing an investigation related to a federal loan guarantee, has retained McDermott Will & Emery.

Working on the matter for Planned Parenthood are Hogan Lovells partner E. Desmond Hogan and of counsel Reid Stuntz. Both lawyers have experience in congressional investigations, and Stuntz is a former chief counsel on the oversight subcommittee under then-Chairman John Dingell (D-Mich.), according to his firm profile.

The situation is unique for Planned Parenthood. Although it has been drawn into other Capitol Hill inquiries in the past, it has never before been a target and Stearns’ letter makes clear that it is. “This is the first time someone has said, ‘I’m going to investigate the organization,’ ” said Roger Evans, the director of public policy litigation for the Planned Parenthood Federation of America, in a phone interview today.

Stearns initially asked Planned Parenthood to turn over documents by Sept. 29, but Evans said he and the subcommittee have agreed on a two-week extension. The subcommittee is asking for copies of audits from as early as 1991, related documents about funding and information about how Planned Parenthood detects possible criminal conduct such as sex trafficking.

In a statement, Planned Parenthood’s national president, Cecile Richards, called the investigation “politically motivated” and “a continuation of the efforts of earlier this year to undermine” the organization. The Associated Press reported in July that Americans United for Life, which opposes abortion rights, called for Stearns’ subcommittee to investigate Planned Parenthood, and Stearns said then he was considering holding a hearing.

“Our response will be to work with the committee to be sure they have whatever information they need to complete the request and to do so in as timely a fashion as we are able,” Evans said. Eventually, he said, “I think any objective observer will realize there is no genuine problem here.”

Stearns, in his letter (PDF), wrote that the committee “has questions about the policies in place and actions undertaken by PPFA and its affiliates relating to its use of federal funding and its compliance with federal restrictions on the funding of abortion.”

Two Democrats, Reps. Diana DeGette (Colo.) and Henry Waxman (Calif.), wrote a response (PDF) to Stearns on Tuesday calling his request “extraordinarily broad and burdensome” for Planned Parenthood. “Your fervent ideological opposition to Planned Parenthood does not justify launching this intrusive investigation,” they wrote.

DOJ Tries Second Shot At FCPA Sting Trial

Prosecutors today in Washington began their pitch to convince jurors that a group of arms and equipment dealers conspired to bribe an African defense minister in a two-year undercover investigation.

The sting, which ensnared 22 people in January 2010, marked the U.S. Justice Department’s first major use of undercover tactics in a Foreign Corrupt Practices Act investigation.

The prosecution is built on a series of recorded phone calls and videotaped meetings between a cooperating witness named Richard Bistrong and executives in the arms and equipment industry who believed they were participating in the sale of $15 million in equipment to the West African nation of Gabon. The deal was a ruse.

Laura Perkins, a DOJ trial attorney in the Criminal Division, today delivered the government’s opening statement. “This is a case about international bribery and the savvy business people who seek to profit from it,” Perkins told jurors.

Foreign bribery, Perkins said, blocks American businesses from competing on a level playing field. “We want American people and American businesses to export goods, not corruption,” she said in court.

Perkins dismissed defense arguments that the defendants are victims of an overzealous, poorly run law enforcement investigation that employed the services of a corrupt businessman as its lead actor. The prosecutor said only greed is to blame. Bistrong has pleaded guilty in a foreign bribery case in Washington and is awaiting sentencing.

Four of the 22 defendants have pleaded guilty and agreed to cooperate with the government. At least one of the cooperators, Jonathan Spiller, represented by O’Melveny & Myers partner Kenneth Wainstein, is expected to testify for the government at trial before U.S. District Judge Richard Leon.

Charles Leeper, an attorney for one of the defendants, complained in court papers in August that “outrageous government misconduct” taints the underlying investigation of the collective defendants.

Leeper, a white-collar defense partner at Drinker Biddle & Reath in Washington, asked Leon to defer ruling on the motion until after the government presents its case. The trial in the first case lasted several weeks.

Defense lawyers in the first trial attacked the integrity of the prosecution, saying the government "invented a crime."

The first trial of four defendants in the group ended in a hung jury this summer in Washington federal district court. Those defendants are rescheduled for a second trial early next year.

Prosecutors who participated in the first case—including Jonathan Haray, an assistant U.S. attorney, and Joey Lipton, a Fraud Section trial attorney—were spotted in the packed courtroom this morning.

The Fraud Section’s top prosecutor, Denis McInerney, also made an appearance, sitting with a throng of DOJ lawyers and staff.

FTC Orders Reebok to Pay $25 Million Over Toning Shoe Ads

The Federal Trade Commission has ordered Reebok International to pay $25 million in consumer refunds for claiming its "toning shoes" would give wearers stronger butts and better legs.

According to the FTC, the athletic shoemaker lacked scientific proof to back up claims it made about its EasyTone and RunTone shoes (which sell for about $80 to $100 a pair), such as walking in the shoes will lead to 28% more strength and tone in the buttock muscles than regular sneakers.

“Consumers expected to get a workout, not worked over,” said David Vladeck, director of the FTC’s Bureau of Consumer Protection, at a press conference today. “The evidence was wholly insufficient to support the objective claims [Reebok] was making.”

The FTC today filed both a lawsuit and proposed settlement in Ohio federal court, claiming that Reebok’s advertising was false and deceptive in violation of sections 5 and 12 of the FTC Act.

The settlement, which is subject to court approval, requires Reebok to deposit $25 million into an escrow account within 15 days. Consumers can apply for refunds, and any money that remains goes to the U.S. Treasury as disgorgement. Reebok must also cease making claims about the health benefits of its shoes unless they’re backed up by at least one well-controlled human clinical study.

Reebok in a statement said it settled “in order to avoid a protracted legal battle....Settling does not mean we agreed with the FTC’s allegations; we do not. We fully stand behind our EasyTone technology.”

The overall market for toning shoes - described as the newest trend in footwear - was close to $1 billion in 2010, according to the complaint. Vladeck declined to say if other manufacturers are under investigation for making false claims about their shoes.

Reebok was represented by its associate general counsels Sarah Stuart and Keith Wexelblatt and outside counsel Douglas Wood, John Hooper and Keri Bruce of Reed Smith.

FTC lawyers who worked on the case include Dana Barragate, Larissa Bungo and Michael Milgrom, who are based in the agency’s Cleveland office.

K&L Gates Lobbying for Dubai Company Over Unpaid Libyan Debts

A K&L Gates partner is advocating for a construction company from the United Arab Emirates on matters related to Libya, according to a lobbying registration form filed with Congress this week.

Michael O'Neil is lobbying for Dubai-based Apollo Enterprises Ltd. on the "recovery of funds and equipment from Libya," the filing says. The lobbying registration comes as the Libyan Transitional National Council works to establish a new government in the country. Libyan rebels took control of Tripoli and most of the country in August, sending longtime leader Moammar Gadhafi into hiding.

O’Neil, who specializes in international trade, federal policy, information technology, security and privacy at K&L Gates, didn’t immediately respond to requests for comment.

Apollo Enterprises is owned by New Delhi, India-based DSC Ltd., the filing shows. DSC Ltd. has worked on construction jobs in Libya since 1979, according to the company’s Web site. The Al Fateh Tower in Tripoli, the tallest building in the country, was one of its projects.

DSC says on its Web site that it is “ranked as one of the foremost and most trusted construction companies in that country.”

Former Investment Company Institute Counsel Joins O'Melveny

A former counsel for the Investment Company Institute has joined the Washington office of O’Melveny & Myers, the firm announced Tuesday.

Heather Traeger, formerly associate counsel at the institute, which serves as the national association of U.S. registered investment companies, joined the firm as a partner in the financial services practice group. She will advise clients on registration and compliance of management activities under the Advisers Act and the Investment Company Act.

Prior to joining the institute, Traeger served more than eight years at the U.S. Securities and Exchange Commission as the senior counsel to Commissioners Roel Campos and Isaac Hunt, as well as the senior counsel to the agency's division of market regulation, which has since been renamed the trading and markets division.

“Heather possesses a rare combination of experience in both broker-dealer and investment adviser regulation and we are thrilled to bring someone of her caliber on board,” Brian Boyle, chair of O’Melveny’s financial service practice, said in a written statement.

The Morning Wrap

Watch List: The Federal Bureau of Investigation is permitted to include people on the government's terrorist watch list even if they have been acquitted of terrorism-related offenses or the charges are dropped, The New York Times reports.

Competency Hearing: Jared Loughner, charged in the Arizona shooting rampage that killed six people and wounded congresswoman Gabrielle Giffords, faces a competency hearing Wednesday, CNN reports. Loughner is scheduled to be at the hearing in Arizona to decide whether he should remain committed in Missouri or if he is competent to stand trial.

Diplomatic Immunity?: Dominique Strauss-Kahn is taking another crack at invoking diplomatic immunity -- this time to fend off a civil suit filed by Nafissatou Diallo, the maid who accused him of sexually assaulting her in his suite at the Sofitel Hotel in Manhattan. But international law experts and criminal-defense lawyers said convincing a judge to buy the immunity argument will be a formidable task, according to Reuters.

Pot Precedent: Retired Justice John Paul Stevens said a 2005 U.S. Supreme Court ruling involving medical marijuana provides legal support for President Barack Obama’s health-care law, Bloomberg reports.

Passing: Orlando Brown, 40, a mammoth offensive tackle who sued the National Football League in 1999 after he was struck in the eye by an errant flag thrown by an official, was found dead Sept. 23 at his home in Baltimore, The Washington Post reports.

Google Wants Business Data Protected In AT&T Antitrust Case

Google Inc. said this evening in Washington the company is concerned confidential business information could be widely released without notice in the government's antitrust enforcement action against AT&T.

Lawyers for Google filed a motion to intervene in the U.S. Justice Department action pending in Washington federal district court, saying the company wants greater protection of its documents under a protective order already set up in the case.

The attorneys for Google said this evening that the company provided Justice confidential documents during its probe of AT&T's planned $39 billion acquisition of rival T-Mobile. The company wants the ability to object in advance to any public disclosure of confidential information.

Google’s attorneys, including Axinn, Veltrop & Harkrider partner Michael Keeley in Washington, said in a motion to intervene (.pdf) filed Tuesday evening that the company wants to protect information that includes product development and launch plans. (Name partner John Harkrider also represents Google in the action.)

The protective order entered in the antitrust case earlier this month fails, according to Google, to require the parties in the dispute always to provide advance notice to Google of potential disclosure of confidential information.

Google’s attorneys said they want advance notice from the lawyers in the case when certain documents may be put on the public record, mentioned in open court or given to experts.

Justice Department attorneys involved in the antitrust investigation issued a civil investigative demand to Google earlier this year. Google said it provided the government “a substantial volume of documents of a highly confidential and competitively sensitive nature” to Justice.

DOJ lawyers intend to produce Google’s documents to AT&T’s attorneys and the lawyers for T-Mobile, Keeley said in court papers.

The parties “in this action may want to use Google’s confidential documents to advance their arguments at a hearing or at trial and therefore could well have incentives to disclose rather than protect Google’s confidential information,” Google’s attorneys said.

Google’s attorneys said that without additional protection of confidential information, Google and other non-parties in the suit could find information—such as Google’s business plans related to Android—in the hands of competitors or in newspapers.

Google said it expects telecommunications industry officials will attend significant hearings in the AT&T case. “Disclosure of such plans to competitors could not only harm Google, but likely also competition in mobile markets,” Google’s attorneys said.

AT&T and the Justice Department have not responded to Google’s request to intervene in the dispute. U.S. District Judge Ellen Segal Huvelle has set a status conference in the case for next month.

Housing Agency IG Report Slams $1.35 Billion Settlement with BoA

Steve Linick is wrapping up his first year on the job as the first-ever inspector general of the Federal Housing Finance Agency with a bang.

Linick's office today released a report sharply criticizing FHFA managers for approving a $1.35 billion settlement in December 2010 with Bank of America for selling shoddy mortgages to Freddie Mac, saying the deal might have shortchanged taxpayers billions of dollars.

That report comes on the heels of two released last week, one that faulted oversight of Fannie Mae’s operational risk management program, the other finding shortfalls in the FHFA’s examination program.The FHFA became the conservator of Fannie and Freddie in 2008 when the two government-sponsored enterprises faced insolvency. The agency recently sued 18 of the world’s largest financial institutions for selling Fannie and Freddie faulty mortgage-backed securities, litigation which is unrelated to these claims.

Linick, a career Justice Department prosecutor who previously served as a deputy chief in the Fraud Section and as executive director of the National Procurement Fraud Task Force, was confirmed as IG of the new agency by the U.S. Senate last September.

He first made waves in April when he criticized Fannie and Freddie for paying their top six executives more than $35 million even as the U.S. Treasury has shelled out $162 billion to prop up the entities.

In the most recent report on the Bank of America settlement, the IG’s office said agency managers ignored warnings from a senior examiner about Freddie Mac’s loan review process. At issue were 787,000 mortgages sold to Freddie by Countrywide Financial, which was purchased by BoA in 2008.

The mortgages came with a guarantee. If Freddie later discovered a loan had a defect, such as the borrower did not have the income stated in the application, then Freddie could require that the seller repurchase the loan at full face value. The senior examiner complained that Freddie didn’t review more than 300,000 older loans that originated between 2004 and 2007 for possible repurchase claims – loans with an unpaid principal balance of more than $50 billion – before approving a $1.35 billion settlement that covered Freddie’s past, present and future claims for faulty mortgages from Countrywide.

By contrast, Fannie Mae – which also settled similar charges with BoA for $1.52 billion – did not include future claims in its deal, and was spared skewering in the report.

The report suggests that the FHFA let BoA off the hook cheaply because “a more aggressive approach to repurchase claims would adversely affect Freddie Mac’s business relationships with Bank of America.”

The FHFA management in comments pushed back. Jeffrey Spohn, senior associate director, conservatorship operations, defended Freddie Mac’s practice of not reviewing loans that default after two years because “most later defaults are likely to be unrelated to manufacturing defects (they more typically reflect life events of the borrower such as unemployment, divorce or health issues).”

He also wrote that FHFA “agrees in principle” with the IG’s recommendations about the loan review process but “not with each of the specific action steps,” and that it “believes action in support of this recommendation is already well underway.”

That apparently didn’t sit well with Linick’s office. In additional comments, the IG pointed out that “FHFA has not proposed a specific action plan of its own. Under the circumstances, FHFA-OIG will continue to monitor the issues discussed in this report and the actions that FHFA is taking.”

AstraZeneca GC Engelmann Jumps to McDermott Will

McDermott Will & Emery has added two lawyers to its life sciences practice in Washington, including the top in-house counsel for AstraZeneca Pharmaceuticals LP, the firm announced Monday.

Glenn Engelmann, the former vice president and general counsel of AstraZeneca, and Susan Lee, a former Covington & Burling associate, have joined the firm as senior counsel and associate, respectively.

At AstraZeneca, Engelmann advised company leadership on a variety of legal and regulatory matters as well as defending federal and state investigations and patent challenges. Lee will serve as a Food and Drug Administration associate and advise on business planning, product development, product testing and clinical trials and submissions to the FDA.

Engelmann and Lee bring “unique insights and experiences that will enable the firm to better service the needs of our global clients,” Stephen Bernstein, head of the firm’s health industry advisory practice group, said in a written statement.