- U.S. awaits word on whether it can carry out punishment terms
- Judge had scuttled deal deferring prosecution over Iran sales
The deal was too lenient, a punishment unfit for the crime of trading with the enemy, according to a Washington federal court judge. Now his authority is being challenged.
Judge Richard Leon in February rejected the government’s $21 million deferred-prosecution agreement between federal prosecutors and a Dutch aerospace firm it accused of illegally selling aircraft navigation parts and components to Iran -- a move prosecutors called unprecedented. On Friday, Justice Department lawyers will ask a U.S. appeals court to reverse Leon’s decision, and revive the agreement with a unit of Fokker Technologies Holding BV.
The appellate arguments take place as the Justice Department comes under increasing pressure from lawmakers and other critics who say it has gone too soft on corporate crime. In recent years, federal judges have given more scrutiny to settlement deals, including those where corporate defendants don’t admit wrongdoing. This week, the Justice Department also announced a renewed effort to prosecute individuals for corporate crimes, a policy shift following criticism of the department’s reliance on deferred- and non-prosecution agreements that failed to punish people responsible for the fiscal crisis that erupted in 2008.
Leon is opposed by U.S. prosecutors and Fokker, an aerospace company whose parent is among the subcontractors for the Pentagon’s F-35 fighter-jet project. Appellate lawyers for the Justice Department and Fokker each argue in court papers that Leon overstepped his authority by rejecting the agreement. U.S. lawyers contend he invaded their prosecutorial discretion. Advocates for the aerospace company also touted their client’s confession of wrongdoing and cooperation with the Justice Department.
“Federal judges should leave the plea bargaining process to the executive branch that is closer to the parties, closer to the facts and closer to the various complex considerations that are part of a corporate criminal resolution,” Mark Robinson, a former deputy chief of the Justice Department’s Criminal Division who’s now in private practice, said in an e-mail.
In the proposed agreement with federal prosecutors, Fokker admitted that it shipped U.S. aircraft parts and technology to customers in Iran, Sudan and Burma without proper export licenses from 2005 to 2010. The unit had agreed with prosecutors last year to disgorge revenue it said it made -- $21 million -- from those illegal exports and remain subject to prosecution for an additional 18 months. The company avoided being subjected to oversight by an independent monitor, which is being demanded more frequently by authorities in similar cases.
“In my judgment, it would undermine the public’s confidence in the administration of justice and promote disrespect for the law to see a defendant prosecuted so anemically for engaging in such egregious conduct for such a sustained period and for the benefit of one of our country’s worst enemies,” Leon wrote in his February ruling.
While Leon invited prosecutors and the company to retool the settlement and resubmit it to him, they opted to appeal instead. Prosecutors, in their brief filed with the appellate panel, called the judge’s action “unprecedented.”
Their bid is unfolding just as President Barack Obama’s administration is pushing through a historic deal that would ease sanctions against Iran in exchange for nuclear power concessions. The White House has secured sufficient support to veto any Congressional vote to reject the accord. The Republican-led U.S. House of Representatives on Wednesday abandoned plans to vote on a bill disapproving the treaty, while Senate Republicans lost a battle to block a similar ballot with that chamber’s Democratic minority on Thursday.
With the Justice Department and Fokker aligned in asking the Washington appellate court to overturn Leon’s decision, the three-judge panel considering the case appointed an outside lawyer to defend the judge’s reasoning and his conclusion.
That attorney, David DeBruin of Jenner & Block LLP, in a friend-of-the-court brief said Leon’s ruling wasn’t an abuse of a power since the judge acknowledged his authority should only be used sparingly and was appropriate in this case.
Fokker’s conduct was “shockingly egregious,” DeBruin said in the brief. “It knowingly and willfully violated U.S. sanctions laws over 1,000 times, including sales to the Iran Air Force, Iran Navy and Iran Army,” for which the company was asked only to give up the revenues gained from those sales, with no additional fines.
Robinson, a partner in Boston-based Mintz Levin Cohn Ferris Glovsky & Popeo PC who isn’t involved in the case, said setting a low bar for judicial intervention in deferred-prosecution agreements would introduce a “wild card” into that process -- somebody who hasn’t been a party to the negotiations and may not have seen all the evidence.
The case is U.S. v. Fokker Services BV, 15-3016 and 15-3017, U.S. Court of Appeals, District of Columbia Circuit (Washington).