Fordham Law


In alluding to secret investigation, former federal prosecutor Sal Perricone may have violated a cardinal rule

Bruce Green in The Times-Picayune, April 24, 2012

Media Source

In his anonymous online rants, federal prosecutor Sal Perricone took a lot of chances -- trashing federal judges, criticizing his boss and encouraging gun owners to go to former Mayor Ray Nagin's house, for instance. But his most ill-advised comment may have been one in which he suggested James Carter, a former City Council member and now a top adviser to Mayor Mitch Landrieu, had committed a crime.

In doing so, Perricone violated a cardinal rule of federal prosecutors: He made reference to a federal investigation, one that was unknown to the public. He also casually trashed the reputation of a public official after an investigation that apparently bore no fruit.

Here is what Perricone said: "Oh, when is somebody going to ask Carter what his involvement was in the failed Algiers Landing project ... now there's a little story. And Landrieu appoints him to be a criminal justice commissioner???? Ironic."

Legal observers say the comment could be especially troubling to investigators from the U.S. Justice Department, who are attempting to assess the damage caused by Perricone's online activity.

Perricone's reference was to a large-scale development along the Algiers riverfront near Mardi Gras World that was proposed by Blaine and Barry Kern and a team of developers in 2006. The ambitious project, actually called Algiers Crossing, envisioned as many as 1,500 apartments -- some in high-rise buildings -- plus a hotel and various commercial uses in a stretch between Brooklyn Avenue and the levee.

Because of the increased density and the commercial uses, a zoning change was needed, and that meant approval from the City Council. The project was in Carter's district, meaning the decision largely fell to him.

Carter eventually went along with the zoning change, but only after mediating extended negotiations between the developers and a handful of neighborhood groups and clergy who initially opposed the deal. Among other concessions, those talks resulted in the creation of a "community benefits agreement" that would create a roughly $2 million trust that would be funded by the developers and parceled out by the groups that negotiated the deal.

Community development organizations would have applied for money to build low- and moderate-income housing, and possibly some commercial development, according to Valerie Robinson of Old Algiers Main Street Corp., who was involved in the negotiations. The area is one of the city's most blighted pockets.

The leader of the groups that initially opposed Algiers Crossing was the Rev. Arthur Wardsworth, pastor of Second Good Hope Baptist Church, where Carter was a deacon. The federal investigation apparently centered on whether Carter had a conflict of interest in negotiating the community benefits agreement, a question that was also raised pointedly by a local blogger at the time, though his posts are no longer online.

In the end, the riverfront project never got off the ground because the financial markets tanked. It's not completely clear whether the federal investigation petered out because federal authorities decided nothing untoward had happened, or because of the project's shelving, or for some other reason. Wardsworth, meanwhile, died in 2009.

Two sources with knowledge of the probe confirmed that the FBI did indeed investigate, and that Perricone was involved in the investigation as well.

But a number of people involved in negotiating the community benefits agreement -- which was at the heart of the matter -- say they weren't ever aware of a federal probe, nor do they know what would have prompted one.

"I have no idea what he's talking about," Carter said of Perricone's comments. He added: "I was never contacted by any law enforcement or anything like that. It's just bizarre to me. I've been overly ethical."

Robinson, of Old Algiers Main Street, who helped confect the community benefits agreement, was also named to the board that would dispense the money. Though the deal fell through, the board was constituted and a small amount of money was pumped into the fund, she said -- in fact, the board still meets once in a while.

Robinson noted that the groups that negotiated the deal "were told it was the most anyone had gotten in a CBA (community benefits agreement) in the city."

But there was nothing nefarious about it, said Robinson, who characterized the horse-trading as a garden-variety negotiation.

"I didn't ever see anything that didn't look like a development deal," she said.

Beryl Ragas of the Algiers Riverview Association, who was also involved in making the deal, offered a similar take.

"We had to make sure the community was going to be represented," she said. "We came out with a decent agreement for the good of the community."

The developers, who are hoping to resuscitate the project, likewise say they saw nothing untoward.

"It's like any new project," said Barry Kern. "You bring 'em in and show it to people. It was a learning experience. ... I got a lot closer to a lot of the people in the neighborhood (during the negotiation). When you're talking about doing something of that scale ... it was long, that's for sure. But I didn't find it contentious."

Steven Lipkins of J.S. Karlton Co., a member of the development team, said he was likewise unaware of any shenanigans. He noted that the developers are trying to get the plan back on track.

"If there's something going on, fortunately, it wasn't with us," Lipkins said. "No one has ever called me and said the CBA is being looked at."

The feds' investigation of Algiers Crossing had been dormant for years when Perricone -- who, under his "Henry L. Mencken1951" alias was quick to accuse public figures of criminal behavior -- decided to mention it on NOLA.com in September.

U.S. Attorney Jim Letten has asked the Justice Department's Office of Professional Responsibility to investigate Perricone's online antics. Letten said he could not confirm or deny that his office oversaw a probe into Algiers Crossing.

Perricone, who retired last month after he was unmasked, believes he did nothing wrong. His lawyer, John Litchfield, said this: "Mr. Perricone's position is that no time did he violate any law, regulation or oath in connection with his work at the U.S. Attorney's Office. That would be true for this comment, as well as any other comment he made."

But legal observers have said the Office of Professional Responsibility might not see it that way. Bringing what had been a secret probe to light, in particular, could get Perricone in deeper trouble than he's already in.

"If he's repeating what's already in the public domain, no one's going to have much of a worry about it," said Stephen Saltzburg, a professor at George Washington University Law School and an expert on federal criminal procedure.

But leaking about an otherwise-secret probe "is going to be especially troubling to the DOJ," Saltzburg said. "One of their fundamental principles is that grand juries are secret, and that people shouldn't have their reputations attacked simply because at some point a prosecutor or a law enforcement agency looks at them. They look at a lot of people."

Bruce Green, a professor at Fordham Law School and a former federal prosecutor, said Perricone's comments could violate "a number of rules."

"To the extent he's revealing grand jury secrecy or investigative materials ... obviously, you can't do that," he said. "You can't disclose things for your own benefit or enjoyment."

A federal prosecutor who divulges grand jury material can be found guilty of contempt of court under the Federal Rules of Criminal Procedure.

Saltzburg noted that leaks about federal probes "put the Justice Department in a very awkward position. That kind of leak has a stigma associated with it that's very hard to erase. When you don't know who's doing it, it doesn't have the same clout. But when you know it's coming from inside, that's different.

"The department doesn't usually clear people. And one of the reasons they don't announce they're clearing someone is that when you do that, you're essentially revealing that someone was under investigation."