U.S. Promotes Its Record on Corporate Crime
Wednesday, July 18, 2007
Government officials defended their hard-nosed approach to policing corporate crime yesterday at a reception to mark the fifth anniversary of a task force that targets misconduct in the nation's executive suites.
Attorney General Alberto R. Gonzales, Deputy Attorney General Paul J. McNulty, and officials from the Securities and Exchange Commission and the FBI gathered to trumpet what they said were more than 1,200 convictions since President Bush established the Corporate Fraud Task Force in July 2002.
The celebration came a day after a federal judge in New York threw out indictments against 13 former KPMG executives because he said government tactics were overzealous and out of bounds.
Debate over prosecutorial tactics has flared among lawmakers and corporate leaders. Under heavy pressure last year, McNulty relaxed guidelines that help determine whether companies will face criminal charges, changes that he said deserve a chance to work before Congress and federal judges intervene. Members of the House and Senate this year introduced legislation that would go even further to protect communications between executives and their lawyers.
The federal government's record since the collapse of Enron and WorldCom includes convictions of more than 200 chief executives and presidents, 53 finance chiefs and 23 corporate lawyers, officials said yesterday. By adopting a narrow focus and enlisting insiders to serve as guides to fraud and other abuses, government investigators were able to crack many sophisticated business schemes.
Among executives serving more than two decades of prison time are WorldCom founder Bernard J. Ebbers and former Enron chief executive Jeffrey K. Skilling. Phillip R. Bennett, the former leader of commodities brokerage Refco, and David A. Stockman, former chief executive of auto parts maker Collins & Aikman, are awaiting trial in New York.
"Combating white-collar crime and corporate fraud is as high a priority today as it was when we began this effort five years ago," Gonzales told an audience of current and former federal investigators, including the U.S. attorneys in New York, Chicago and Washington.
John S. Pistole, deputy FBI director, told the crowd that his organization had shifted resources after terrorist attacks but still managed to tally 490 pending corporate fraud investigations last year.
McNulty, who is chairman of the task force and who plans to leave government this summer, said the group continues to scrutinize unlawful activities by hedge funds, suspicious trading in advance of corporate merger announcements, mortgage fraud and tampering with stock option awards, among other subjects.