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Pascrell Issues Statement of Principles on Deferred Prosecution Agreements


Location: Paterson, NJ


Three weeks after calling upon the House Judiciary Committee to hold hearings on the nature of deferred prosecution agreements entered into by the U.S. Attorney's Office, U.S. Rep. Bill Pascrell, Jr. (D-NJ-08) issued a white paper laying out a statement of principles designed to help shine light on an often used federal procedure that has never been fully disclosed to Congress or the American public. The white paper was transmitted to U.S. Attorney General Michael B. Mukasey and the House Judiciary Committee.

"The troubling lack of oversight and transparency in deferred prosecutions agreements has cultivated fertile grounds for impropriety," stated Pascrell. "Only months after the shameful departure of Attorney General Alberto Gonzales, the Department of Justice should take every action to bolster the integrity of America's justice system. That is why I have called for the Judiciary Committee to examine every aspect of deferred prosecution agreements including those brought into question by the actions of U.S. Attorney Christopher Christie. I urge the Committee to take into account the implementation of real guidelines, the restoration of judicial oversight and the full disclosure requirements that I have recommended."

Rep. Pascrell's white paper lays out the origin of deferred prosecution agreements and outlines how they have become common practice in negotiating the negative impact of corporate malfeasance on the public; namely on employees, consumers and shareholders.

In researching the history of such agreements, there lies a clear pattern of unchecked control granted to the federal monitors who are hired by U.S. Attorneys to oversee the defendant's efforts to abide by the agreement. The most recent example involves U.S. Attorney Christopher Christie's selection of his former boss, former Attorney General John Ashcroft, to serve as a federal monitor at the exorbitant expense of $52 million. In this example it appears as though the federal monitor, Mr. Ashcroft, used a political connection to win a contract and impose an incredible cost that may negatively influence the defendant's (Zimmer Holdings Inc.) employee compensation, shareholder earnings, and in turn, consumer costs.

"Make no mistake about it, Zimmer Holdings Inc. should be fully punished for defrauding Medicare of millions of dollars and causing immeasurable pain to seniors and families all across the America," stated Pascrell. "But Zimmer's punishment for plunging America deeper into a Medicare crisis should not translate into an opportunity for firms to be awarded an undisclosed, multi-million dollar contract. The Department of Justice and the U.S. Attorneys Office should be fighting fraud, cronyism, and abuse. The power they hold over undisclosed deferred prosecution agreements hints towards an unnecessary perception of impropriety."

In the case involving U.S. Attorney Christopher Christie, the fees charged by Mr. Ashcroft's firm were only released because the defendant found the fees to be so large and burdensome that they felt compelled to report them to shareholders through Security Exchange Commission (SEC) filings.

"In order to create transparency through this process there must be a requirement for full disclosure of the terms on each deferred prosecution agreement entered into by a U.S. Attorney and any contracts for the hiring of federal monitors."

Specifically, the outline or principles includes four main provisions;

1. Require guidelines on deferred prosecution agreements so that attorneys can best represent their client's interests. The lack of guidelines makes it impossible to hold federal prosecutors to account for their actions under these deferred prosecution agreements.

2. Restore judicial oversight on deferred prosecution agreements so that a judge agrees to terms of a deferred prosecution and the selection of a federal monitor. Under the current deferred prosecution system both corporate defendants and federal prosecutors evade any judicial scrutiny.

3. Remove the power to select federal monitors from the U.S. Attorney and create a set fee structure and national database of firms that have experience and skills to serve as federal monitors.

4. Require full disclosure of deferred prosecution agreements and any contracts for the hiring of federal monitors. Currently, deferred prosecution agreements are cloaked in secrecy and few, if any, details of such agreements are ever released outside of corporate defendants and federal prosecutors.

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