NY Adds New Civil Unit to Prosecute Complex Frauds


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This addition was given way after the US Attorney was given authority under the 2009 Fraud Enforcement and Recovery Act to move quickly in issuing civil investigations to obtain documents, responses to interrogatories and sworn depositions from companies and financial institutions.

These changes have allowed for quicker transition from investigation to cases; prior to this recent change every request had to be signed personally by the US attorney general or the assistant attorney general for the civil division at the US Department of Justice. This delegation of authority to local US attorney will “certainly speed up the bureaucratic mechanism for approval and it also gives U.S. attorney’s a significant amount of authority,” Laura L. Flippin, former deputy assistant general in the civil division at the Justice Department.

The formation of this new complementary unit in the civil division has several advantages to using civil litigation:

(1)  With its lower standard of proof, civil litigation might allow the government to prevail where criminal charges cannot be proved beyond a reasonable doubt.

(2)  In civil cases, the government has the ability to obtain broad injunctive relief.

(3)  Chasing down people who defraud the government through the False Claims Act the office can win treble damages and mandatory civil penalties.

(4)  The ability to freeze assets earlier depending on the circumstances which is an important part of attaching civil fraud

(5)  There can be a broader deterrent effect through aggressive use of civil litigation.

Defensive line assistants for the new unit are responsible for everything from defending Freedom Information Act requests regarding national security issues to representing the U.S. Treasury Department in the General Motors bankruptcy. As for the Affirmative line assistants, they are responsible for suing to enforce the Voting Rights Act to suing to improve accessibility for the disabled in theater district hotels.

Mr. Bharara said there are 20 to 225 assistants in the civil division that handle fraud causes which has allowed 6 prosecutors to pursue only health care fraud, mortgage fraud, bank fraud and abuses of the U.S. government’s Troubled Asset Relief Program. Since there is no way to reduce the defensive caseload they have ramped up the affirmative side without taking away from the defensive side of the practice.

“The complex [criminal] frauds unit is much busier than we thought it would be,” Mr. Bharara said. “In six months, we will be doing cases [on the civil side] we would not have contemplated.”




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