Not enough lawyers?

James Cohen in Newsday, February 15, 2009

Staff shortages hit local federal prosecutors' offices; vacancies affecting cases


Overworked and understaffed.

That sounds like many workplaces, and it includes the offices of local federal prosecutors.

At a time when Wall Street wrongdoing is a major national concern, recent Department of Justice statistics show local federal prosecutions of white-collar crime and securities fraud have dropped off from higher levels earlier in the decade.

One reason for the drop, although prosecutions have picked up in recent months, may be staffing shortages and unfilled lawyer jobs in the U.S. Attorney's offices based in Brooklyn and Manhattan, according to a recent Department of Justice Office of Inspector General report. Another reason may be a drop in recent years in referrals for white-collar crime prosecution from federal agencies.

Severe in Eastern District
The staffing impact has been most severe in the Eastern District, which covers Long Island, Queens, Brooklyn and Staten Island. But even the Southern District, which covers Manhattan, the Bronx and six nearby upstate counties, appears to have shifted staff from priorities like counterterrorism and firearms to health care fraud and drug cases, according to the study.

The audit, which was released late last year and covered all 94 federal districts, showed unfilled staff positions in local federal prosecutors' offices between fiscal years 2002 and 2007. The report also signaled that federal prosecutors nationwide have been lax or uneven in the way they comply with Justice Department record-keeping requirements.

A spokeswoman for the U.S. Attorney's office in Manhattan acknowledged that the office underreported attorney work hours before 2007, not reflecting the effort in various investigative areas. The office has been working to rectify it, she said. A spokesman for the Eastern District declined to comment about the office's record keeping and deployment.

Budget problems blamed
According to Justice Department officials, the reduction in filled attorney jobs is rooted in federal budget problems.

"This underutilization occurred primarily because (prosecutors) had limited budgets to address annual rising costs, such as cost-of-living adjustments and increases in rent," said the report. "As a result, (federal) officials said (prosecutors) did not have adequate funds remaining to fill vacant positions."

"At some point they just stopped hiring," said one former Eastern District prosecutor, who asked not to be identified.

Under interim U.S. Attorney Benton Campbell, appointed in October 2007, the Eastern District has since gone on a feverish hiring binge, employing 60 new prosecutors as 29 left, for a net gain of 31, said spokesman Robert Nardoza. The office has five vacancies out of 178 attorney spots, he added. A spokeswoman for the Southern District said the office had 219 attorneys.

But even with more prosecutors, overall indictments in the Eastern District fell 33 percent from fiscal year 2003 to 2008, according to government data compiled and released by the nonprofit Transactional Records Access Clearinghouse, affiliated with Syracuse University. The Southern District's drop was 17.8 percent.

Securities fraud cases up 200%
White-collar crime and securities fraud prosecutions in both districts also fell in that period, though they recovered substantially in 2008 in the Eastern District, with securities fraud cases jumping 200 percent in a year, TRAC data showed. Among those cases were the pending indictments against former Bear Stearns hedge fund managers Ralph Cioffi and Matthew Tannin. (The arrest of Nicholas Cosmo in the suspected Ponzi scheme at Agape World Inc. occurred in fiscal year 2009 and won't show up in federal data until later this year.)

But in Manhattan, the drop in Wall Street securities fraud cases has been marked, with a 71 percent decline from 2003 to 2008, although all white-collar cases are off only an average of 17 percent, according to TRAC.

One case, massive effort
"I am not surprised at all," prominent defense attorney Gerald Lefcourt said of the Manhattan trends. He said that prosecutors used massive resources in one tax fraud case surrounding accounting giant KPMG, which he was involved in. The case against many of the 19 defendants was dismissed before the October 2008 trial, in which three defendants were convicted and one acquitted. With so much effort on one case, combined with the need for federal agents to work on terrorism, Lefcourt said the drop is understandable.

Others agreed. "Most of them [securities cases] are very difficult cases," said Fordham University Law School professor James Cohen.

"Many of the white-collar prosecutions have come from internal investigations that private law firms do," said defense attorney and white-collar crime specialist Elkan Abramovitz. TRAC data showed that white-collar crime prosecution referrals from the FBI and other agencies to the Southern and Eastern Districts dropped by more than 50 percent from fiscal year 2002 to fiscal year 2008.

Federal prosecutors in the Eastern and Southern Districts declined to comment on the TRAC data.