Conflicts Alone Won't Expose Wolff & Samson Atty To ChargesJames Cohen in Law 360, March 14, 2014
Federal prosecutors may be tempted to explore allegations that Wolff & Samson PC co-founder David Samson used his Port Authority of New York and New Jersey chairmanship to help his firm's clients, but whether the powerful attorney crossed a line from ethically questionable conduct would likely hinge on a false statement, a cover-up or some other instance of fraud.
Under a microscope over his possible role in “Bridgegate,” Samson was hit with an ethics complaint from a union-affiliated group on March 3 claiming he violated the state Conflicts of Interest Law. The complaint alleged he involved himself in Port Authority decisions from which clients of his West Orange, N.J.-based firm stood to profit — an administrative action that Samson has pledged to fight. Later that week, Manhattan federal prosecutors reportedly subpoenaed the bi-state agency for records related to Samson's alleged conflicts. That subpoena was later withdrawn in a move that could allow U.S. Attorney Paul Fishman in New Jersey to handle the matter, according to news reports.
Federal prosecutors potentially eyeing the business dealings of Samson — a former New Jersey attorney general and a close ally of N.J. Gov. Chris Christie who has seen his firm's lobbying work explode since the governor took office — and their intersection with his clout-filled Port Authority position raises questions about when alleged conflicts can amount to criminal violations and how the U.S. attorney might apply the law.
“Don't count against an aggressive prosecutor, particularly if they find false statements or some sort of intentional act to conceal the applicable facts,” said Eli Richardson, a member of Bass Berry & Sims PLC. “But the federal prosecutor should and presumably would be aware that they are going to get a push-back on appeal from the defendant, and the court of appeals may agree with the defendant.”
Fishman's office is already investigating "Bridgegate," the politically tainted closure of George Washington Bridge access lanes in September, as well as Hoboken, N.J., Mayor Dawn Zimmer's allegations that Christie's administration threatened to withhold Superstorm Sandy funding if she didn't rubber stamp a development project by a Wolff & Samson client.
In a recent statement, Samson co-counsel Michael Chertoff of Covington & Burling LLP declined comment on “the progress of investigations.”
“Let me add, there continues to be a good deal of erroneous coverage of matters pertinent to my client. That will become evident in due course,” he said.
Samson's conduct as Port Authority chairman is ripe for investigation, and a failure by him to disclose clients of his firm in connection with Port Authority votes or what he personally stood to gain would mean big trouble, according to Fordham Law School professor James Cohen. There's is also a tipping point where the amount of business that Samson allegedly helped secure for clients raises the presumption of not just a conflict but of something much worse, he added.
“This is a cesspool, and it's a tribute to how unsmart and arrogant Samson is and how unsmart and arrogant Christie is,” Cohen said. “They run this state or at least they run a part of it, and they get to do whatever they want, and that makes prosecutors salivate. That's when people make mistakes; that's when they don't cross their T's and dot their I's.”
However, alleged unethical conduct on the part of a government official isn't necessarily criminal and may fall short of a charge such as honest services fraud, which the U.S. Supreme Court in its 2010 decision in Skilling v. U.S. restricted to schemes involving bribery or kickbacks, according to Day Pitney LLP managing partner Stan Twardy, a former U.S. attorney for the District of Connecticut.
“There's going to have to be some false statement, some violation of federal law,” Twardy said. “It really does have to rise to the level of there being something fraudulent in connection with federal funds or federal government involvement.”
U.S. Attorney Fishman "is somebody who is not going to trample folks just because it's the politically popular thing to do,” Twardy added.
There are criminal statutes that could apply depending on how prosecutors approach the case and what any investigation uncovers, according to attorneys.
If prosecutors do find offensive conduct, they could turn to federal criminal laws against interfering with commerce through the use of one's official office or possibly Title 18, Section 666 of the U.S. Code, which prohibits parties from fraudulently obtaining or misapplying federal funds, according to Barry Pollack, a member of Miller & Chevalier Chtd.
“Fraud does not require a bribe or a kickback. Nor does it require an affirmative false statement,” Pollack said. “The intentional omission of a material fact can suffice to constitute fraud. The government could argue that an undisclosed conflict of interest was a fraudulent material omission of fact.”
And while the Supreme Court may have narrowed the honest services provision for mail and wire fraud with its Skilling decision, federal appeals courts have been developing their own bodies of law on the kinds of bribes or kickbacks that can trigger the statute, according to Pollack.
New Jersey could be a more attractive forum for prosecutors than New York because of the Third Circuit's 2011 decision in U.S. v. Bryant, in which the court ruled that there doesn't have to be a quid pro quo for an honest services violation and that a stream of benefits for some official action is enough, Pollack said.
“A stream of monetary benefits received as a result of an undisclosed conflict of interest could be argued to be a kickback such that the honest services provision applies,” he said.
Prosecutors could also look to false statement statutes such as Title 18, Section 1001 of the U.S. Code, according to Richardson. That would cover a material false statement in a matter within the jurisdiction of a federal department or agency, Richardson said.
“The question is: How do you interpret that? It's not entirely clear, and prosecutors and courts may not agree with each other,” Richardson said, noting that the Port Authority isn't a federal agency but receives federal funding. “The government, even if they're successful at trial, if they're very aggressive in pushing a broad interpretation of the phrase, is definitely at risk for reversal before a court of appeals.”