It is nearly impossible to go a day without seeing talking heads on cable news, or government officials on social media, decrying the dangers that illegal government leaks pose to the very foundation of our society. While most of these attacks focus on why such unauthorized leaks are a continuing threat to national security and the ability of our government to function, too little attention has been given to how, in recent years, illegal leaks have been weaponized by some government agencies to intimidate, threaten, and ruin the lives of private individuals.
Indeed, nowhere is this practice more evident than in examining how the FBI, under former Director James Comey’s tenure, and former U.S. attorneys, engaged in seemingly regular illegal and highly prejudicial leaking to the media against private individuals accused of white collar crimes, including many of whom were ultimately never convicted of any crimes. Safeguarding the reputation and credibility of our most powerful law and order institutions while protecting the livelihoods of innocent Americans demands that we bring this unjust practice to an end; now.
But how did this come to be? Not by cherished tradition but by expediency and a desire for home runs within the federal law enforcement community and across our society. It is no secret that federal prosecutors, particularly in New York’s Southern and Eastern Districts increasingly relied as much on public relations as the law for driving their cases home.
We came to expect that the Southern District’s Preet Bharara would hold a splashy press conference to claim his latest scalp, and the media and the public ate it up, making Bharara a minor celebrity. But it was not simple vanity that, then and now, motivated prosecutors; it is his well-honed legacy of media strategy: dragging prominent and wealthy financial industry-types before the cameras has a funny way of pressing them to plea bargain.
Bharara and Robert Capers, his like-minded Eastern District counterpart, were summarily dismissed by Attorney General Sessions along with every other U.S. attorney a few weeks after President Trump was sworn in. With few convictions but nonetheless lots of damaged reputations, it was a welcome if unintended, house-cleaning.
But the FBI has joined in on the act. The bureau has been accused in several high-profile cases of leaking damaging grand jury evidence to the media and tipping the media off to raids. Without fail, the attendant publicity provides an unjust assist to the prosecutors, who use the leverage of public opinion to cow their targets into plea bargains providing the bureau and U.S. attorneys another a check in the win column.
A crucial metric for success is leaking to influence a grand jury, as in the case of New York financier Mark Nordlicht and his Platinum Partners hedge fund. As detailed in court documents, the FBI leaked to a number of reporters that Nordlicht was running a “Ponzi-like scheme," which is a dog-whistle for prejudice.
This allegation, made while Nordlicht’s fund remained in operation during the investigation, ironically (or perhaps, intentionally) had the effect of suppressing the value of those very investments. It should go without saying that in a case alleging overvaluation of investments, such deliberate government conduct not only hurts investors, but shapes the very evidence eventually put before the grand jury.
One can also look to the insider trading case brought against legendary Las Vegas gambler William Walters, in which FBI Coordinating Supervisory Special Agent David Chaves admitted to disclosing to media “sensitive and confidential details, including trades being examined, records being analyzed, the name of an individual approached by the FBI and the supposed targets of the investigation”.
The leaks were published nine months before an indictment was handed down by the grand jury, and the articles resulting from the leaks were—not coincidentally—pivotal to bringing the indictment. In January of this year, federal prosecutors warned that Chaves may be prosecuted for his leaks. Chaves’ conduct is now under investigation by the FBI’s Office of Professional Responsibility and the Justice Department’s Office of the Inspector General.
Worse still, according to Walters’ filings, Chaves and possibly other agents in the FBI’s white-collar unit seemed to have made a habit of leaking about investigations to goose witnesses and intimidate targets in other insider trading cases, including those targeting David Ganek of Level Global and SAC Capital’s Michael Steinberg.
The court was so alarmed by the FBI leaks that it took the unusual step of ordering the Department of Justice to update it with written reports over the internal investigation of Chaves and any others found to be engaged in leaking bearing on insider trading. Clearly, the court recognized that leaks lead to the intimidation — if not outright coercion — of both witnesses and defendants thereby stymying the prospects of a fair trial or even proceeding to trial at all.
The extent that FBI and other government personnel have come to rely on leaks signals a failure in the chain of command, an indication of the mistrust in agency protocol or, arguably worst of all, affirms an agent’s misguided notions of his supposed authority to determine a private citizen’s legal fate.
For better or worse, these leaks have become a debilitating fixture in the halls of power. The bedrock American principles of “innocent until proven guilty” and the right to a fair and just hearing are in peril when the government leaks against citizens accused of wrongdoing. The next The FBI Director and US Attorneys Office cannot in good conscience ignore the challenge of ridding us of this nefarious practice.
Taking the necessary strides for doing so will return our justice system to a place where, instead of media leaks and the subsequent intimidation they cause, the standard will inevitably rely on legal investigations that are thoroughly and carefully conducted, and trials that are untainted and fair to all.
John Banks-Brooks served as attorney-adviser at the Securities and Exchange Commission and counsel at the New York City Council.
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