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U.S. attorney’s office in Richmond handling high-profile cases

High-impact cases have raised the profile of local U.S. attorney’s office

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Posted: Sunday, December 9, 2012 12:00 am

Not so long ago, federal prosecutors in the Eastern District of Virginia were focused on the streets of Richmond, Tidewater and Northern Virginia and their drug-fueled violence and murder.

But today, in addition to street crime, prosecutors routinely aim at interstate and international threats, including terrorism, intellectual theft, billon-dollar fraud, espionage, counterfeit luxury goods, and drug and human trafficking.

Their targets are as far afield as Hong Kong, New Zealand, Central and South America, the Horn of Africa and the Middle East.

Defendants include WikiLeaks and Megaupload, jihadists, CIA officers, a would-be suicide bomber, Somali pirates and a Colombian police general.

High-impact cases here in recent years have raised the district’s profile, and the Eastern District office is now said to rival that of the Southern District of New York, which covers Wall Street.

“What we’ve done in the face of what I call 21st-century crime, we have adopted a 21st-century playbook to combat it,” said Neil H. MacBride, who was appointed in 2009 as the U.S. attorney for the district.

“The world is flat,” he said. “There’s been a globalization not only of commerce but of crime and terrorism, and the Internet has changed the way that criminals and terrorists do business.

“It allows them to sit on the far side of the country or on the far side of the globe and victimize Virginians.”

The Eastern District of Virginia stretches from Northern Virginia through Richmond to Tidewater, covering one-third of the state’s geography and two-thirds of its population.

The district headquarters are in Alexandria and there are also offices in Richmond, Norfolk and Newport News.

“We are focused on protecting (these) Virginia communities from threats and crimes from not only here in the commonwealth, but from threats that come from beyond our state borders,” MacBride said.

Carl Tobias, a professor at the University of Richmond School of Law, said that because it is just across the Potomac River from the U.S. Department of Justice, the Eastern District has long been important.

“If you’re in Oklahoma or Wyoming, DOJ headquarters is something you don’t even know about,” Tobias said. “But if you can just get in your car and go over to main Justice or the other way around to the Alexandria courthouse, it’s just so much easier.”

“9/11 really changed a lot of what the Eastern District was about,” he added. “It sort of cemented the Eastern District as different and a valuable place, one of the venues of choice for big criminal cases and also big civil cases.”

There are several reasons, some of them unique, that allow federal prosecutors here to go after distant targets. And that, said Tobias, “makes it a really special district.”

Henry E. Hudson, now a federal judge, was the U.S. attorney here from 1986 to 1991. He said the district has always been a preferred venue for national security cases.

“We handled some spy cases during my five years as U.S. attorney, but it’s more now than ever. That’s not necessarily because of policy in the district, I think it’s because of the types of cases that the world situation is bringing into the district,” he said.

With the CIA in McLean, the Pentagon in Arlington, the world’s largest naval base in Norfolk, the Defense Supply Center Richmond and numerous other facilities, there is a huge national security presence in the district.

Then there’s the Federal Reserve Bank of Richmond; the FDIC in Arlington; the computer server handling financial reports to the U.S. Securities and Exchange Commission (known as EDGAR) in Alexandria; and Internet service providers along the Interstate 66 high-tech corridor.

The Troubled Asset Relief Program, or TARP, a government bailout program in which the money is disbursed through the FDIC, is in Arlington. An application for TARP funds can also give the Eastern District jurisdiction.

Those institutions and the access to potential digital evidence provided by information technology companies can offer federal prosecutors in the district jurisdiction across state and international boundaries to pursue criminals operating elsewhere.

McGuireWoods LLP Chairman Richard Cullen, who followed Hudson in the post in 1991, said the U.S. attorney’s job is to set priorities that reflect community needs.

“When I was doing it, there was an epidemic — in Alexandria, Richmond, Norfolk — of crack-related gang violence, including murders,” he said. “I was working with the leaders of the different cities ... and the police chiefs.”

Richmond was Virginia’s murder capital in the 1980s and into the 1990s. In 1994, with 161 murders, Richmond led the nation in per capita homicides.

Armed with stiff, no-parole federal sentences, prosecutors cracked down on drug and gun crimes. In 1993, they won three death sentences in federal court against members of Richmond’s deadly Newtowne Gang that killed 13 people in 45 days.

“That’s what they needed, and that’s what we did,” Cullen said of federal efforts to help out local communities and police.

“After 9/11, everything changed, and the community need became the same as the national need, and that was terrorism and fighting terrorism and cybercrime,” Cullen said. “And Neil MacBride has just done a fantastic job of meeting those needs.”

MacBride, 47, hasbeen mentioned as a possible successor to U.S. Attorney General Eric Holder and FBI Director Robert Mueller. Asked about his plans, he said: “I love the job, I look forward to serving as long as I can.”

A tall, trim man with graying hair who is married with three children, MacBride sometimes commutes by bicycle from his home in Arlington to his office in Alexandria, a round trip of 20 miles. On trips to Richmond, he brings his family back barbecue from Buz and Ned’s.

MacBride supervises a staff of 250, including 130 lawyers, with an annual budget of almost $23 million, the 14th-highest among the 94 U.S. attorney districts in the country.

In addition to criminal prosecutions, 27 of the district’s lawyers work on civil cases defending the U.S. government or bringing cases on behalf of the federal government.

There are also roughly 30 special assistant U.S. attorneys at any given time on loan from local and state government as well as the Department of Justice, the FBI, the IRS and other government agencies.

“I’m like the CEO, I guess. I kind of set the vision for the company,” he said. “It’s the organization that’s producing these results. They deserve all the credit.”

MacBride said the district’s mission is unique. Most U.S. attorneys’ offices focus on the crime that occurs in their district, he said.

“I would say that in the last three years, we have pivoted to a focus on local, national, transnational threats to the 6 million citizens of the commonwealth who live here in EDVA,” said MacBride.

Claire G. Cardwell, a Richmond-area criminal defense lawyer who represents clients in federal court here — including Jack Rosga, the convicted president of the Outlaws Motorcycle Club — said the federal agencies have more resources for in-depth investigations.

Local police are a better fit for street-level crime, so MacBride is probably making an appropriate change, said Cardwell.

Among other things, MacBride said, the district is “almost uniquely positioned to be another beachhead in the ... battle against financial fraud.”

For example, EDGAR and TARP gave the district jurisdiction in the $2.9 billion fraud that contributed to the failure of Taylor, Bean & Whitaker and Colonial Bank, MacBride said.

“The bad guy lived in Florida, the bank was in Alabama, but we prosecuted here in Virginia,” he said.

In the past couple of years, sentences imposed in white-collar cases prosecuted here have included prison terms of 105, 100, 60, 45 and 30 years.

“Those sentences reflect that we have gone after the worst of the worst and that this is very serious conduct, very egregious, cynical, heartbreaking ... financial fraud,” MacBride said.

MacBride took some lumps from the media for the prosecution of Charlie Engle, an ultra-marathon runner convicted of fraudulently obtaining mortgage loans by inflating his income while top executives at financial institutions escaped prosecution for their roles in the 2008 financial crisis.

MacBride said his office prosecutes both small financial fraud cases, like Engle’s, and large ones such as Colonial Bank and the case against executives at the Bank of the Commonwealth, who allegedly contributed to the largest bank collapse in Virginia since 2008.

Engle, said MacBride, chose to be tried by a jury, testified on his own behalf and was found guilty of 12 counts.

Email traffic through Virginia computer space leased here can also offer venue for prosecution here of criminals who leave digital footprints in the district.

That is what led to the January indictment of Megaupload’s Kim Dotcom, of New Zealand, in one of the largest criminal copyright cases ever brought by the U.S. government, he said.

Authorities allege Megaupload was engaged in the massive piracy of copyrighted works causing more than a half-billion dollars in losses to copyright holders.

Though it is a Hong Kong-based company and several defendants live in New Zealand, the eastern District was able to indict them because Megaupload leased server space from an Internet service provider based in Northern Virginia, said MacBride.

Then there’s what’s known as “first-brought” cases. For crimes that occur in other countries, a federal law gives jurisdiction to the place where defendants are first brought to the U.S.

When Somali pirates who attacked ships — including Virginia ships — off the Horn of Africa are flown into the Norfolk Naval base, the Eastern District of Virginia gains jurisdiction the moment the plane touches down.

“We are increasingly using what had been an obscure statute but using it as Congress intended it,” MacBride said.

“Those are the legal tools that vest us legally with venue to prosecute a wide swath of activity that is victimizing Virginians but where the bad guys live abroad,” he said.

Another attribute attracting cases to the Eastern District that might otherwise have been prosecuted elsewhere are the federal judges here who have procedural rules that keep cases moving in what has been dubbed the “rocket docket.”

“We don’t indict a case unless we are ready to go to trial in 70 days,” said MacBride. The relative speed of cases means many law enforcement agents prefer bringing cases here.

“The judges don’t always rule our way, but at least they rule,” he said.

Hudson, the former U.S. attorney for the district and now a judge, agrees. “Part of the reason why it is a preferred venue for a lot of these high-visibility, high-stakes cases is because our judges move our docket very quickly,” he said.

According to the most recent figures available to the U.S. Sentencing Commission, in the year that ended Sept. 30, 2011, there were 135 trials in the Eastern District, the most of any district in the country.

Hudson said that, from his perspective, the Eastern District U.S. attorney’s office has shifted away from smaller street crimes to pursue larger, more sophisticated investigations, including drug traffickers and Medicare or Medicaid fraud.

MacBride said his aim is to go after organizations rather than individuals whenever possible. He cited a half-dozen cases recently prosecuted in Richmond that started as local crimes but expanded into multistate and even international investigations.

Examples include the A&O and Provident Capital Indemnity Ltd. frauds handled by the Virginia Financial and Securities Fraud Task Force, a partnership between federal and state criminal investigators and civil regulators to investigate and prosecute complex financial fraud cases in Virginia and across the U.S.

MacBride said Virginia regulators got a tip from Texas authorities about a suspicious hedge fund in Houston selling securities to retirees in the Richmond area. “We jumped in,” he said.

A&O was selling life insurance settlements as securities. Such securities became popular after the financial meltdown of 2008 and 2009 made real estate-based securities toxic.

But in the hands of crooks, it became a big new fraud victimizing many elderly retirees, he said. Hundreds of people in 40 states — more than 30 in the Richmond area — were victimized in the $100 million A&O fraud.

“We arrested nine defendants and dismantled, utterly, the organization,” said MacBride. “I think that $100 million fraud could have got a whole lot higher had our task force not jumped in and taken these guys down.

The investigation also led to the discovery of a $485 million fraud by Provident Capital Indemnity Ltd., an insurance and reinsurance company in Dominica. In October, Minor Vargas Calvo, 61, of Costa Rica, the owner of the firm, was sentenced to 60 years in prison.

“A seemingly local crime — a salesman going door-to-door to retirees in Richmond — led us to a fraud across state lines and then across international lines,” said MacBride.


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