justice department

Your Money Adviser: Same-Sex Couples Are Urged to Apply for Social Security Spousal Benefits

September 17, 2013 by NewsMaker

The agency says it is studying the applicable law with the Justice Department. But it is urging same-sex couples to apply for benefits anyway — even if they live in a state that doesn’t recognize their marriage.

What’s more, the agency also is inviting applications not just from those in same-sex marriages, but also those in other legal same-sex relationships, like civil unions or registered domestic partnerships.

Applying as soon as possible is important, because if you are ultimately found eligible, you can get benefits retroactive to your filing date.

“In the coming weeks and months, we will develop and implement additional policy and processing instructions,” the message says. “If you are in a same-sex marriage or other legal same-sex relationship, even if you live in a state that prohibits same-sex marriage, we encourage you to apply right away.”

“That’s huge,” said Mary Bonauto, civil rights project director with the Gay Lesbian Advocates Defenders (GLAD) in Boston.

Social Security offers a range of financial benefits for spouses and families. You can file for retirement benefits based on your spouse’s work record, for instance, which entitles you to more money if your spouse earned more than you, or to delay tapping your own benefits.

You can also receive “surviving spouse” benefits after your spouse dies. For example, you can receive a one-time payment of $255. And you can get your deceased spouse’s higher retirement payout instead of your own.

The Social Security Administration’s Web site says it is now processing some spousal retirement claims and paying them when due. If you and your spouse live in a state where same-sex marriage is sanctioned, and you meet other criteria (see below), the application should be straightforward. An unresolved question, however, is whether couples who were legally married in one state but moved to another state that doesn’t recognize gay marriage can get the same benefits. That’s because the Social Security Administration currently uses a “place of residence” standard in deciding spousal benefits.

Susan Sommer, senior counsel with the gay rights group Lambda Legal, said Social Security had instructed its staff to accept and hold such applications, pending further legal clarification. “We’re awaiting guidance, and we’re really hopeful,” she said.

The agency also is holding other types of applications for now, like those for survivor benefits when one spouse dies. However, Ms. Bonauto said she was encouraged by the case of 83-year-old Herb Burtis, a musician and voice teacher in Western Massachusetts. Mr. Burtis had applied for survivor benefits after his husband died in 2008. (They married in 2004, when Massachusetts legalized same-sex marriage). His late husband’s monthly retirement benefits were $700 higher because he had earned more than Mr. Burtis, and Mr. Burtis filed a claim for the extra payment. His application was initially denied. But he became a plaintiff in a lawsuit that successfully challenged the Defense of Marriage Act, or DOMA, which was struck down in June by the United States Supreme Court. He is now getting the extra money, and also received a lump-sum payment for the last five years.

Ms. Bonauto said there was “every reason to expect” that the agency would eventually process and pay survivor benefits to other eligible same-sex applicants.

Here are some questions to consider:

■ How do I know if I’m eligible for benefits?

You must meet certain criteria. For instance, to receive spousal retirement benefits, you generally must be at least 62 and have been married for at least 12 months; for the survivor’s benefit, you must be at least 60 and have been married for nine months. If you meet age and duration requirements, Ms. Bonauto said, you should apply for benefits, even in the face of other uncertainties.

■ How do I apply?

You can apply online at www.ssa.gov forspousal retirement benefits. But you must apply for survivor’s benefits by calling or visiting a local Social Security office; make an appointment before you go. GLAD advises you to bring a copy of your marriage license, or your civil union or domestic partnership certificate, and a copy of your spouse’s death certificate.

■ What if I have questions?

Contact the regional communications director for your state. A list is available on the Social Security Web site.

E-mail: yourmoneyadviser@nytimes.com

Article source: http://www.nytimes.com/2013/09/17/your-money/same-sex-couples-are-urged-to-apply-for-social-security-spousal-benefits.html?partner=rss&emc=rss

Filed Under: Your Money Tagged With: justice department, project director, same sex relationships

Your Money: How the Court’s Ruling Will Affect Same-Sex Spouses

June 26, 2013 by NewsMaker Leave a Comment

Now that the Supreme Court has struck down the Defense of Marriage Act, some of these issues will be wiped away. The ruling makes clear that married gay couples living in states that recognize their unions will immediately gain access to more than 1,000 federal benefits, like Social Security and family leave rights. Less certain is how couples living in the remaining 37 states will fare.

The murkiness exists because federal agencies generally defer to the states to determine a couple’s marital status. Some agencies look to the laws in the state in which a couple now live, for instance, while others look to those in the state in which the couple were married.

“Unless the administration changes its practices and rules — and in a couple of cases, unless the law changes — then couples residing in a nonmarriage-equality state may not be recognized for some federal programs,” said Brian Moulton, legal director at the Human Rights Campaign. “Now that we have an opinion out, we will be anxiously awaiting what the administration will say about this and urging them to ensure that all married couples, regardless of where they live, are fully recognized.”

White House officials said that they had already begun analyzing the hundreds of relevant laws and statutes at issue and were working with the Justice Department to make benefits available as swiftly as possible.

But even if the administration were to apply the ruling broadly, gay married couples would still not be on entirely even ground with their heterosexual peers. Until other states approve the unions, couples will still need to travel to one of 13 states or the District of Columbia to get married. And they will still need to deal with a patchwork of state laws that could make it difficult to get a divorce or establish legal ties to their children.

Of the estimated 650,000 same-sex couples living together nationally, about 114,100 are legally married, according to the Williams Institute. But those figures could increase, given the court’s other ruling on Wednesday that effectively removes legal obstacles to same-sex couples marrying in California.

Here’s how many of them will be affected:

Social Security

Gay married couples living in states where same-sex marriage is legal can apply for Social Security benefits on their spouses’ earnings records, as well as survivor benefits. The Social Security Administration typically looks to the states to determine whether a person is married, which could create problems for couples that move to a state where it is not.

But it is possible that benefits would extend to couples in certain civil unions and registered domestic partnerships. The agency’s rules also say that if a person is not married — but would inherit property from a spouse as a married person would without a will according to their state’s law — that person is also entitled to benefits.

“Though still untested while DOMA has been in place, we presume that under this provision partners in a civil union or comprehensive domestic partnership (or even in a less comprehensive domestic partnership but one in which you can inherit under state law, as in Wisconsin) could claim spousal benefits,” said Susan Sommer, director of constitutional litigation at Lambda Legal, a gay rights advocacy group

Federal Income Taxes

Married couples living in states where gay marriage is legal will be able to file joint federal returns. That should save some couples money, especially when one person earns much less or does not work at all. High-income couples with two working spouses will probably pay more.

That said, filing jointly can cause even lower-income couples to become ineligible for certain tax savings like the earned-income tax credit. Ultimately, the tax consequences will be based on where couples live, their income and their particular circumstances.

Couples who would have saved significant sums by filing jointly might want to consider amending their recent tax returns. Such amendments have been permitted for the last three tax years, according to Patricia Cain, a professor at Santa Clara University School of Law and an expert on sexuality and federal tax law. More specifically, that means many taxpayers can refile for tax years 2010, 2011 and 2012. The three-year clock started on April 15 for people who filed on or before that date; those who received a filing extension have three years from the date they filed, she added.

What remains unclear is whether same-sex couples married in states where gay unions are legal could file joint federal returns if they moved to a state where they are not. “There has been a lot of discussion about whether the I.R.S. could recognize someone married in Massachusetts but living in Georgia,” Professor Cain said. “I think they have the power to do that, but no one seems to think they will do that. I think they will wait for guidance from the White House.”

The other big question is whether couples in civil unions and registered domestic partnerships can file joint returns. The I.R.S. typically looks to the taxpayer’s state of residence to determine whether someone is married. But a letter from the office of the chief counsel of the I.R.S., written in 2011, states that an opposite-sex couple in a civil union in Illinois should be treated as married for federal tax purposes. “The I.R.S. would have the power to interpret the word spouse,” Professor Cain said, adding that the Internal Revenue Code does not define the word.

Employee Benefits

This article has been revised to reflect the following correction:

Correction: June 26, 2013

An earlier version of this article misstated the number of states where gay marriage is permitted following the Supreme Court rulings on Wednesday. Gay couples marry in 13 states, not 12 states, and the District of Columbia.

Article source: http://www.nytimes.com/2013/06/27/your-money/how-the-supreme-court-ruling-will-affect-same-sex-spouses.html?partner=rss&emc=rss

Filed Under: Your Money Tagged With: human rights campaign, justice department, murkiness

White House Pushes for Media Shield Law

May 15, 2013 by NewsMaker Leave a Comment

The official said that President Obama’s Senate liaison, Ed Pagano, called Senator Charles E. Schumer, Democrat of New York, who is a chief proponent of a so-called media shield law, on Wednesday morning and asked him to reintroduce a bill that he had pushed in 2009. Called the Free Flow of Information Act, the bill was approved by the Senate Judiciary Committee in a bipartisan 15-to-4 vote in December 2009. But while it was awaiting a floor vote, a furor over leaking arose after WikiLeaks began publishing archives of secret government documents, and the bill never received a vote.

The new push comes as the Obama administration has come under fire from both parties amid the disclosure this week that the Justice Department, as part of a leak investigation, secretly used a subpoena earlier this year to obtain a broad swath of calling records involving Associated Press reporters and editors.

Attorney General Eric H. Holder Jr. on Tuesday defended the subpoena but also disclosed that he had recused himself last year from overseeing the investigation, and that his deputy, James M. Cole, was the official who signed off on obtaining the toll records — logs of calls sent and received — for several A.P. bureaus and reporters.

In testimony before the House Oversight Committee on Wednesday, Mr. Holder reiterated that he had recused himself from the investigation. “I’m simply not a part of the case,” he said.

Brian Fallon, a spokesman for Mr. Schumer, said the senator would reintroduce the compromise version of the bill in the form that passed the Judiciary Committee.

In a statement, Mr. Schumer referred to the A.P. subpoena: “This kind of law would balance national security needs against the public’s right to the free flow of information. At minimum, our bill would have ensured a fairer, more deliberate process in this case.”

It is not clear whether such a law would have changed the outcome of the subpoena involving The A.P. But it might have reduced the chances that the Justice Department would have demanded the records in secret, without any advance notice to the news organization, and it may have allowed a judge to review whether the scope of the request was justified by the facts.

Under the 2009 bill, which was negotiated between the newspaper industry, the White House and the Judiciary Committee, the scope of protection for reporters seeking to shield the identities of their confidential sources or the calling records showing with whom they had communicated would vary according to whether it was a civil case, an ordinary criminal case or a national security case.

The most protection would be given to civil cases, in which litigants seeking to force reporters to testify or seeking their information would first have to exhaust other means of obtaining the information before making the request. The burden would be on the information seekers to show why their need for the information outweighed the public’s interest in unfettered news gathering.

Ordinary criminal cases would work in a similar fashion, except the burden would be on the reporter seeking to quash the subpoena to show by a “clear and convincing” standard that the public interest in the free flow of information should prevail over the needs of law enforcement.

Cases involving the disclosure of classified information — as in the investigation into The A.P.’s disclosure of a failed bomb plot in Yemen last spring — would be even more heavily tilted toward the government. Judges could not quash a subpoena through a balancing test if prosecutors could show that the information sought might help prevent a future terrorist attack or other acts likely to harm national security.

However, the prospect that a confidential source might leak something else in the future would not be enough to invoke that exception under the 2009 compromise legislation.

It remains unclear what kind of legal device the Justice Department used to obtain The A.P.’s calling records from phone companies. It is not clear how the standards established by the media shield legislation would apply to administrative subpoenas called “national security letters” that the F.B.I. may issue to obtain customer records from a business without a judge’s permission.

The 2009 legislation would have created a presumption that when the government is seeking calling records from a telephone carrier, the news organization would be notified ahead of time, allowing it to fight the subpoena in court. But the bill also would have allowed the government to seek a 45-to-90-day delay in notification if a court determined that such notice would threaten the integrity of the investigation.

In the summer of 2010, Mr. Schumer sought to distance the media shield bill from fallout from the WikiLeaks disclosures by raising the prospect of amending it to make clear that its protections would apply only to traditional news-gathering activities and not to Web sites that serve as a conduit for the mass dissemination of secret documents. But that issue was never resolved, and the bill Mr. Schumer is reintroducing is the one that cleared the Judiciary Committee in December 2009, Mr. Fallon said.

Article source: http://www.nytimes.com/2013/05/16/us/politics/under-fire-white-house-pushes-to-revive-media-shield-bill.html?partner=rss&emc=rss

Filed Under: Media Business Tagged With: fallon, justice department, wednesday morning

U.S. Secretly Obtains Two Months of A.P. Phone Records

May 13, 2013 by NewsMaker Leave a Comment

WASHINGTON (AP) — The Justice Department secretly obtained two months of telephone records of reporters and editors for The Associated Press in what the news cooperative’s top executive called a “massive and unprecedented intrusion” into how news organizations gather the news.

The records obtained by the Justice Department listed outgoing calls for the work and personal phone numbers of individual reporters, for general AP office numbers in New York, Washington and Hartford, Conn., and for the main number for the AP in the House of Representatives press gallery, according to attorneys for the AP. It was not clear if the records also included incoming calls or the duration of the calls.

In all, the government seized the records for more than 20 separate telephone lines assigned to AP and its journalists in April and May of 2012. The exact number of journalists who used the phone lines during that period is unknown, but more than 100 journalists work in the offices where phone records were targeted, on a wide array of stories about government and other matters.

In a letter of protest sent to Attorney General Eric Holder on Monday, AP President and Chief Executive Officer Gary Pruitt said the government sought and obtained information far beyond anything that could be justified by any specific investigation. He demanded the return of the phone records and destruction of all copies.

“There can be no possible justification for such an overbroad collection of the telephone communications of The Associated Press and its reporters. These records potentially reveal communications with confidential sources across all of the newsgathering activities undertaken by the AP during a two-month period, provide a road map to AP’s newsgathering operations and disclose information about AP’s activities and operations that the government has no conceivable right to know,” Pruitt said.

The government would not say why it sought the records. Officials have previously said in public testimony that the U.S. attorney in Washington is conducting a criminal investigation into who may have provided information contained in a May 7, 2012, AP story about a foiled terror plot. The story disclosed details of a CIA operation in Yemen that stopped an al-Qaida plot in the spring of 2012 to detonate a bomb on an airplane bound for the United States.

In testimony in February, CIA Director John Brennan noted that the FBI had questioned him about whether he was AP’s source, which he denied. He called the release of the information to the media about the terror plot an “unauthorized and dangerous disclosure of classified information.”

Prosecutors have sought phone records from reporters before, but the seizure of records from such a wide array of AP offices, including general AP switchboards numbers and an office-wide shared fax line, is unusual.

In the letter notifying the AP, which was received Friday, the Justice Department offered no explanation for the seizure, according to Pruitt’s letter and attorneys for the AP. The records were presumably obtained from phone companies earlier this year although the government letter did not explain that. None of the information provided by the government to the AP suggested the actual phone conversations were monitored.

Among those whose phone numbers were obtained were five reporters and an editor who were involved in the May 7, 2012, story.

The Obama administration has aggressively investigated disclosures of classified information to the media and has brought six cases against people suspected of providing classified information, more than under all previous presidents combined.

The White House on Monday said that other than press reports it had no knowledge of Justice Department attempts to seek AP phone records.

“We are not involved in decisions made in connection with criminal investigations, as those matters are handled independently by the Justice Department,” spokesman Jay Carney said.

Article source: http://www.nytimes.com/aponline/2013/05/13/us/politics/ap-us-ap-phone-records-subpoena.html?partner=rss&emc=rss

Filed Under: Media Business Tagged With: justice department, justification, office numbers

E-Book Price War Has Yet to Arrive

December 23, 2012 by NewsMaker Leave a Comment

Last spring, the Justice Department sued five major publishers and Apple on e-book price-fixing charges. The case was a major victory for Amazon, and afterward there were widespread expectations — fueled by Amazon — that the price of e-books would plunge.

The most extreme outcome went like this: Digital versions of big books selling for $9.99 or less would give Amazon complete domination over the e-book market. As sales zoomed upward, even greater numbers of consumers would abandon physical books. The major publishers and traditional bookstores were contemplating a future that would pass them by.

But doomsday has not arrived, at least not yet. As four of the publishers have entered into settlements with regulators and revised the way they sell e-books, prices have selectively fallen but not as broadly or drastically as anticipated.

The $10 floor that publishers fought so hard to maintain for popular new novels is largely intact. Amazon, for instance, is selling Michael Connelly’s new mystery, “The Black Box,” for $12.74. New best sellers by David Baldacci and James Patterson cost just over $11.

One big reason for the lack of fireworks is that the triumph of e-books over their physical brethren is not happening quite as fast as forecast.

“The e-book market isn’t growing at the caffeinated level it was,” said Michael Norris, a Simba Information analyst who follows the publishing industry. “Even retailers like Amazon have to be wondering, how far can we go — or should we go — to make our prices lower than the other guys if it’s not helping us with market share?”

Adult e-book sales through August were up 34 percent from 2011, an impressive rate of growth if you forget that sales have doubled every year for the last four years. And there have been more recent signs of a market pausing for breath.

Macmillan, the only publisher that has not settled with the Justice Department, said last week as part of a statement from John Sargent, its chief executive, that “our e-book business has been softer of late, particularly for the last few weeks, even as the number of reading devices continues to grow.” His laconic conclusion: “Interesting.”

Mr. Norris said Simba, which regularly surveys e-book buyers, has been noticing what it calls “commitment to content” issues.

“A lot of these e-book consumers aren’t behaving like lab rats at a feeder bar,” the analyst said. “We have found that at any given time about a third of e-book users haven’t bought a single title in the last 12 months. I have a feeling it is the digital equivalent of the ‘overloaded night stand’ effect; someone isn’t going to buy any more books until they make a dent in reading the ones they have already acquired.”

Another, more counterintuitive possibility is that the 2011 demise of Borders, the second-biggest chain, dealt a surprising blow to the e-book industry. Readers could no longer see what they wanted to go home and order. “The print industry has been aiding and assisting the e-book industry since the beginning,” Mr. Norris said.

It is possible that Amazon, which controls about 60 percent of the e-book market, is merely holding back with price cuts for the right moment. The next few weeks are when e-book sales traditionally take a big jump, as all those newly received devices are loaded up with content.

Amazon declined to comment beyond saying, “We have lowered prices for customers from the prices publishers set on a broad assortment of Kindle books.” Barnes Noble declined to comment on its pricing strategy.

The question of the proper price for e-books has shadowed the industry ever since Amazon introduced the Kindle in late 2007 and created the first truly popular portable reading device. Amazon had a natural impulse to build a market and was an aggressive retailer in any case, so it took best sellers that cost $25 in independent bookstores and sold them for $9.99 as e-books. Consumers liked that. E-book adoption soared.

Article source: http://www.nytimes.com/2012/12/24/technology/e-book-price-war-has-yet-to-arrive.html?partner=rss&emc=rss

Filed Under: Media Business Tagged With: e books, impressive rate, justice department

Economix Blog: A Look at Taxing Marijuana

December 9, 2012 by NewsMaker Leave a Comment

Anthony Bolante/Reuters

Here’s a thought for a tax increase that might at least break some of the tension in the room between President Obama and John Boehner: a marijuana tax.

It’s not as ludicrous an idea as it might seem. This week, Washington became the first state in the nation where marijuana is legal for recreational use. Colorado is set to follow its lead soon.

The fact that some states are starting to relax their marijuana laws got analysts at the Tax Policy Center thinking. What if the drug were legalized nationwide and taxed?

The center looked at two studies, one of which estimated that a marijuana tax could bring in $9 billion a year in state and federal tax revenues and save roughly the same amount on law enforcement. (The study made certain assumptions about price and demand, and applied taxes comparable to those on alcohol and tobacco, as well as income taxes on those making money in the legalized trade.) Another study, which used the approximate tax on cigarettes as a benchmark, estimated that a marijuana tax could bring in $1.4 billion to California alone.

Now, of course, $9 billion isn’t much. One percent of the country’s gross domestic product is about $150 billion. And this year’s deficit is about $1 trillion. The tax increases and spending cuts set to begin taking effect on Jan. 1 if Mr. Obama and Mr. Boehner aren’t able to agree on a plan to head them off add up to about $600 billion.

Is a marijuana tax a bit fanciful in the near-term? Probably. Federal prosecutors aren’t planning on making it any easier for these states to tax marijuana. In fact, the White House and the Justice Department have been considering whether to pursue legal action against Colorado and Washington to block their new marijuana laws.

Article source: http://economix.blogs.nytimes.com/2012/12/07/taxing-marijuana/?partner=rss&emc=rss

Filed Under: Economy News Tagged With: benchmark, justice department, tension

BP Will Plead Guilty and Pay Over $4 Billion

November 16, 2012 by NewsMaker Leave a Comment

In a rare instance of seeking to hold individuals accountable for company misdeeds, the Justice Department also filed criminal charges against three BP employees in connection with the accident.

“This is unprecedented, both with regard to the amounts of money, the fact that a company has been criminally charged and that individuals have been charged as well,” Attorney General Eric H. Holder Jr. said at a news conference in New Orleans to announce the settlement.

The government said that BP’s negligence in sealing an exploratory well caused it to explode, sinking the Deepwater Horizon drill rig and unleashing a gusher of oil that lasted for months and coated beaches all along the Gulf Coast. The company initially tried to cover up the severity of the spill, misleading both Congress and investors about how quickly oil was leaking from the runaway well, according to the settlement and related charges.

While the settlement dispels one dark cloud that has hovered over BP since the spill, it does not resolve what is potentially the largest penalty related to the incident: the company could owe as much as $21 billion in pollution fines under the Clean Water Act f it is found to have been grossly negligent. Both the government and BP vowed to vigorously contest that issue at a trial scheduled to begin in February.

Under its deal with the Justice Department, BP will pay about $4 billion in penalties over five years. That amount includes $1.256 billion in criminal fines, $2.394 billion to the National Fish and Wildlife Foundation for remediation efforts and $350 million to the National Academy of Sciences. The criminal fine is one of the largest levied by the United States against a corporation.

BP also agreed to pay $525 million to settle civil charges by the Securities and Exchange Commission that it misled investors about the flow rate of oil from the well.

In addition, the company will submit to four years of government monitoring of its safety practices and ethics.

“All of us at BP deeply regret the tragic loss of life caused by the Deepwater Horizon accident, as well as the impact of the spill on the Gulf Coast region,” Robert W. Dudley, BP’s chief executive, said in a statement. “We apologize for our role in the accident, and as today’s resolution with the U.S. government further reflects, we have accepted responsibility for our actions.”

A broader settlement that would have resolved the Clean Water Act claims failed to win agreement from some parties, in particular the state of Louisiana. BP and the government now intend to go to trial on those claims in February.

The government charged the top BP officers aboard the drilling rig, Robert Kaluza and Donald Vidrine, with manslaughter in connection with each man who died, contending that the officials were negligent in supervising tests to seal the well.

Prosecutors also charged David Rainey, BP’s former vice president for exploration in the Gulf of Mexico, with obstruction of Congress and making false statements for understating the rate at which oil was spilling from the well.

As part of its plea agreement, BP admitted that, through Mr. Rainey, it withheld documents and provided false and misleading information in response to the House of Representatives’ request for information on how quickly oil was flowing. While Mr. Rainey was publicly repeating BP’s stated estimate of 5,000 barrels of oil a day, the company’s engineering teams were using sophisticated methods that generated significantly higher estimates. The Flow Rate Technical Group, consisting of government and independent scientists, later concluded that more than 60,000 barrels a day were leaking into the gulf during that time.

Lawyers for all three men charged denied that their clients had committed any criminal wrongdoing.

“This is not justice,” Mr. Kaluza’s lawyers, Shaun Clarke and David Gerger, said in a statement. “After nearly three years and tens of millions of dollars in investigation, the government needs a scapegoat.”

Mr. Holder, the attorney general, said that the government’s investigation was continuing and that other criminal charges could be filed.

Clifford Krauss reported from Houston and John Schwartz from New York. Contributing reporting were Julia Werdigier and Stanley Reed in London, Charlie Savage and John M. Broder in Washington and Campbell Robertson in New Orleans.

Article source: http://www.nytimes.com/2012/11/16/business/global/16iht-bp16.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: justice department, remediation efforts, securities and exchange commission

Justice Dept. Issues Guidance on Foreign Bribes

November 14, 2012 by NewsMaker Leave a Comment

WASHINGTON — With billions of dollars in potential fines and foreign investment in the balance, the Justice Department and the Securities and Exchange Commission on Wednesday released long-awaited guidance on how prosecutors interpret and enforce a federal anticorruption law that bans American businesses from bribing officials overseas.

The 120-page “resource guide” to the Foreign Corrupt Practices Act lays out the government’s understanding of and standard practices for the 1977 law. The statute sat largely dormant for decades, but a recent explosion of enforcement has struck terror into corporate boardrooms, leading to large fees for compliance lawyers and enormous fines and settlements paid to the government.

The detailed guidance — including numerous case studies illustrating what would and would not be considered a violation of the law — is particularly important because cases of foreign corrupt practices rarely get adjudicated. Corporations are generally inclined to settle potential cases without a trial because being indicted can cripple a business.

As a result, judges rarely weigh in on whether prosecutors’ interpretation of the statute in ambiguous scenarios — such as when an employee of a state-owned enterprise, like a utility, should be considered a “foreign official” and therefore covered by the law — is accurate.

The guide — signed by Lanny A. Breuer, the assistant attorney general for the Justice Department’s criminal division, and Robert S. Khuzami, the director of enforcement for the S.E.C. — lays out a series of factors in considering who counts as a foreign official. Among the factors, for example, is whether a foreign government controls an entity, like a utility, or has only a minority stake in it.

It also discusses gift-giving at length, and addresses when gifts to an overseas charity — or travel and entertainment provided to foreign officials who may be considering issuing a contract to a business — amount to a bribe.

For example, the guidance says that it would not violate the statute if a company provided foreign officials, like employees of a state-owned electricity commission, promotional T-shirts at a trade show, picked up a bar tab or bought “a moderately priced crystal vase” as a wedding gift. There would also be no violation if the company paid for the foreign visitors’ travel to a city in the United States where the company has facilities, including taking them to a baseball game or the theater.

However, it says, it would violate the law to pay for foreign officials and their spouses to travel to a city like Las Vegas or Paris if the company has no significant facilities there. That would display a “corrupt intent” to curry favor with the officials because “the trip does not appear to be designed for any legitimate business purpose” and “is extravagant.”

“The fight against corruption is a law enforcement priority of the United States,” Mr. Breuer said in a statement. Enforcement of the statute “is critical to protecting the integrity of markets for American companies doing business abroad, and we will continue to make clear that bribing foreign officials is not an acceptable shortcut.”

Mr. Khuzami added: “Investors must have faith that the economic performance of public companies reflects lawful considerations of markets, price and product rather than a mirage resulting from bribery and corruption.”

Paul E. Pelletier, a former Justice Department prosecutor who worked on Foreign Corrupt Practices Act investigations, said the guidance was unlikely to be “groundbreaking” for lawyers who already specialize in the law in terms of “providing bright lines that don’t already exist,” but would be “important and useful” for in-house lawyers at companies.

“I think it’s important because people want it and it provides one-stop shopping,” he said. “It’s going to give us good boundaries as to what the government’s present view is as to certain issues, and that’s always good and helpful. And it’s going to raise the profile of the Foreign Corrupt Practices Act even more.”

Congress enacted the Foreign Corrupt Practices Act as part of a series of reforms after the Watergate scandal. For its first few decades, prosecutors rarely invoked the statute. But in recent years, enforcement has soared, from just two actions in 2004 to 48 in 2010.

The change dates to the collapse of Enron a decade ago. It led to tougher financial laws, like requiring top executives at publicly traded companies to certify that their firms’ books were accurate, which in turn forced them to pay closer attention to payments made overseas. The 2010 Dodd-Frank law further ratcheted up pressure by giving corporate whistle-blowers a financial incentive to report violations.

Against that backdrop, beginning with the Justice Department in the George W. Bush administration, prosecutors began developing more expansive theories about the type of graft that the statute covered. The department and the S.E.C. also began driving up fines by requiring companies to disgorge profits as a condition of settling cases without an indictment, driving up fines to record levels, including $800 million paid by Siemens in 2008.

Businesses have called for greater clarity, complaining that the law is being stretched beyond its intent and that it is not clear what conduct is now considered off limits; the guidance is expected to be closely analyzed by corporate lawyers who help firms comply with the law and respond when a violation is uncovered.

Article source: http://www.nytimes.com/2012/11/15/business/justice-dept-issues-guidance-on-foreign-bribes.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: anticorruption, foreign corrupt practices act, justice department

DealBook: Accusations Against Bank on Iran Deals Surprised U.S. Regulators, Too

August 8, 2012 by NewsMaker Leave a Comment

Jin Lee/Bloomberg NewsBenjamin Lawsky, superintendent of the New York State Department of Financial Services.

Top executives at Standard Chartered said they were surprised when New York’s banking regulator accused them on Monday of scheming with the Iranian government to launder billions of dollars to potentially support terrorist activities.

They were not the only ones caught off guard.

The regulatory order also stunned other authorities investigating the bank, namely officials at the Federal Reserve and the Justice Department, according to several people close to the case.

The agencies involved, including the Treasury Department, are debating just how expansive the suspected wrongdoing was at Standard Chartered. Benjamin M. Lawsky, a former prosecutor who now leads the state banking regulator, claimed the bank had processed $250 billion in tainted money while cloaking the identities of its Iranian clients by stripping their names from paperwork. Some federal authorities, though, believe that the amount is much smaller, perhaps in the millions. Standard Chartered, for its part, said that only $14 million did not comply with regulations.

The wide disparity stems from different interpretations of how many Standard Chartered transactions violated a federal rule that governs the way money from abroad moves through the American financial system.

Before 2008, the rule did not require foreign banks to disclose much detail to their American subsidiaries as long as the banks overseas thoroughly vetted the transactions to detect suspicious activity. Since 2008, though, all transactions with Iran and other sanctioned countries, are banned.

Standard Chartered maintains that “99.9 percent” of the transactions under scrutiny complied with that rule and involved legitimate Iranian banks and corporations. Further, the bank argued that it had examined the transactions and found that they had nothing to do with terrorist activities.

Some Treasury Department officials, while still reviewing the transactions, suspect that Mr. Lawsky has taken too broad a view, according to people briefed on the matter. The officials think that some of the transactions, though perhaps questionable, were not necessarily illegal.

However, Mr. Lawsky said that Standard Chartered’s deliberate effort to mask the identity of its clients points to wrongdoing and further suggests that the bank had not fully scrutinized the transactions. One Iranian client, for example, was told to use “NO NAME GIVEN” in paperwork to transfer money, according to an order Mr. Lawsky sent to the bank on Monday outlining the apparent violations of law. That way, the money transfer could escape scrutiny and “not appear to N.Y. to have come from an Iranian bank,” said a 2003 e-mail from a Standard Chartered official cited in the order.

The Fed, which has been investigating the bank since 2010, still is not sure how vast the scheme was. For that reason, it has not yet pursued an action, according to people briefed on the matter who spoke anonymously because the investigation was not public. Similarly, the Justice Department is still determining whether to bring a criminal case.

Before Monday, these authorities were not expecting Mr. Lawsky to act. In money laundering cases, authorities almost always move in concert. Mr. Lawsky’s order against Standard Chartered irked many of the other regulators, who questioned whether he had moved too quickly.

Some people close to the case note that Fed officials had been investigating Standard Chartered since 2010 — a year before Mr. Lawsky’s Department of Financial Services was created by merging the existing state banking and insurance departments.

Standard Chartered, in a statement rejecting Mr. Lawsky’s claims, said that it “voluntarily approached” agencies in 2010 including the Department of Financial Services, the Justice Department, the Federal Reserve Bank of New York and the New York district attorney, and that it is engaged in discussions with them.

“Resolution of such matters normally proceeds through a co-ordinated approach by such agencies,” the bank said, adding that it “was therefore surprised to receive the order from the DFS, given that discussions with the agencies were ongoing.”

“It seems like it’s grandstanding,” said Richard L. Scheff, a white-collar lawyer and the chairman of the law firm Montgomery, McCracken, Walker Rhoads. “There’s little benefit of approaching things in that way,” and “you’d want the enforcement community to be working cooperatively.”

Some, however, have praised Mr. Lawsky’s aggressiveness in this case and others as a refreshing change from the days when cozy regulators had a soft touch with Wall Street. He has drawn comparisons to other hard-charging New York prosecutors, notably Eliot Spitzer and Andrew M. Cuomo.

“Ben Lawsky wouldn’t take a job where it wasn’t expected of him to move quickly, make changes and be a force,” said Steven Cohen, a lawyer with Zuckerman Spaeder, who worked with Mr. Lawsky at the attorney general’s office under Mr. Cuomo, now the governor of New York. Neil M. Barofsky, the former inspector general for the Treasury’s bank bailout fund, lauded Mr. Lawsky’s speed in contrast to what he called the “passivity of federal regulators.”

Mr. Lawsky, who vowed to shake up the banking establishment when Mr. Cuomo appointed him in 2011, is unapologetic.

“The very serious and indisputable conduct described in the order speaks for itself,” David Neustadt, a spokesman for Mr. Lawsky said. “We have and will continue to work with our state, local and federal partners.”

As main deputy to Mr. Cuomo, Mr. Lawsky helped bring many headline-grabbing cases against big names like Bank of America and Ernst Young.

In 2011, shortly after taking the reins of the newly minted banking regulator, Mr. Lawsky set his sights on Standard Chartered.

The bank turned over a battery of e-mails and other internal bank documents that detailed the scheme, according to people briefed on the matter. The documents outlined projects with code names like “Project Gazelle,” money flowing to Iran’s central bank, United States executives warning of “criminal liability,” and a manual that told employees how to hide the wave of questionable transactions.

Senior executives at the bank, the order said, also quashed internal complaints. In 2006, according to the order, the bank’s chief executive for the Americas warned his superiors that the illicit activity with some Iranian companies had “the potential to cause very serious or even catastrophic reputational damage to the group.”

In response, another executive asked: “Who are you to tell us, the rest of the world, that we’re not going to deal with Iranians.”

After reviewing some of the documents, Mr. Lawsky’s office regularly checked in with the New York Fed as the regulator further examined the extent of potential wrongdoing at Standard Chartered.

In a meeting this April, some of Mr. Lawsky’s deputies told New York Fed officials that they were going to move forward, according to a person who attended the meeting. Another person familiar with the meeting, however, said that the scope and timing of his actions were not clearly communicated.

On Sunday, Mr. Lawsky informed Cyrus R. Vance Jr., the Manhattan district attorney who is also investigating the bank, that he was filing the order, according to a person with knowledge of the matter.

It was not until Monday morning that Mr. Lawsky’s office informed federal officials, some of whom were disappointed with the late notice, according to people briefed on the matter.

The order outlined nearly a decade of wrongdoing that, Mr. Lawsky said Monday, “left the U.S. financial system vulnerable to terrorists, weapons dealers, drug kingpins and corrupt regimes, and deprived law enforcement investigators of crucial information used to track all manner of criminal activity.“

This post has been revised to reflect the following correction:

Correction: August 8, 2012

An earlier version of this article incorrectly stated that Federal Reserve officials had turned over a battery of e-mails and other internal bank documents to New York’s banking regulator, Benjamin Lawsky. Those documents were provided by Standard Chartered.

Article source: http://dealbook.nytimes.com/2012/08/07/iran-accusations-against-bank-surprised-regulators-too/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: disparity, iranian government, justice department

DealBook: AT&T’s 11th-Hour Plan to Save Its Deal With T-Mobile

November 29, 2011 by NewsMaker Leave a Comment

Andrew Harrer/Bloomberg NewsRandall Stephenson, chairman of ATT, knew it would not be easy to persuade regulators to approve the T-Mobile deal.

About an hour after ATT announced its $39 billion acquisition of T-Mobile in March on a Sunday afternoon, I got a call at home. It was Randall L. Stephenson, ATT’s chairman and chief executive. Mr. Stephenson, an affable man with a wry sense of humor, knew he would face a battle persuading regulators the deal should be approved. And with me.

As I peppered him with questions about why the government would possibly allow the No. 2 and No. 4 telephone carriers to merge — a textbook example of creating a duopoly between ATT and Verizon if there ever was one — he deftly stood his ground. He was convinced the deal would happen.

“When you get to the facts, this is a deal that gets approved,” he insisted, rattling off a list of high-price bankers and lawyers who he said agreed with his assessment.

Your Money Adviser: Same-Sex Couples Are Urged to Apply for Social Security Spousal Benefits

Your Money: How the Court’s Ruling Will Affect Same-Sex Spouses

White House Pushes for Media Shield Law

U.S. Secretly Obtains Two Months of A.P. Phone Records

E-Book Price War Has Yet to Arrive

Economix Blog: A Look at Taxing Marijuana

BP Will Plead Guilty and Pay Over $4 Billion

Justice Dept. Issues Guidance on Foreign Bribes

DealBook: Accusations Against Bank on Iran Deals Surprised U.S. Regulators, Too

DealBook: AT&T’s 11th-Hour Plan to Save Its Deal With T-Mobile

DealBook Column

View all posts

Related Links

Recent News

Partners