Politics & Policy

Mueller’s Investigation Flouts Justice Department Standards

Special Counsel Robert Mueller in June 2017 ((Reuters/Aaron P. Bernstein))
Gates was charged with $100 million in financial crimes — and pled guilty to two minor offenses, one of them highly questionable.

These columns have many times observed Deputy Attorney General Rod Rosenstein’s failure to set limits on Special Counsel Robert Mueller’s investigation. To trigger the appointment of a special counsel, federal regulations require the Justice Department to identify the crimes that warrant investigation and prosecution — crimes that the Justice Department is too conflicted to investigate in the normal course; crimes that become the parameters of the special counsel’s jurisdiction.

Rosenstein, instead, put the cart before the horse: Mueller was invited to conduct a fishing expedition, a boundless quest to hunt for undiscovered crimes, rather than an investigation and prosecution of known crimes.

That deviation, it turns out, is not the half of it. With Rosenstein’s passive approval, Mueller is shredding Justice Department charging policy by alleging earth-shattering crimes, then cutting a sweetheart deal that shields the defendant from liability for those crimes and from the penalties prescribed by Congress. The special counsel, moreover, has become a legislature unto himself, promulgating the new, grandiose crime of “conspiracy against the United States” by distorting the concept of “fraud.”

Why does the special counsel need to invent an offense to get a guilty plea? Why doesn’t he demand a plea to one of the several truly egregious statutory crimes he claims have been committed?

Good questions.


The Multi-Million-Dollar Fraud Indictments . . . and Penny-Ante Plea
On Thursday, February 22, with now-familiar fanfare, Mueller filed an indictment against Paul Manafort and Richard Gates, alleging extremely serious crimes. Let’s put aside for now that the charges have absolutely nothing to do with the stated rationale for Mueller’s appointment, namely, Russian interference in the 2016 election and possible Trump-campaign collusion therein.

According to the special counsel, Manafort and Gates conspired to commit more than $25 million in bank fraud. In all, the indictment charges nine bank-fraud counts, each carrying a potential penalty of up to 30 years’ imprisonment (i.e., 270 years combined). Furthermore, the two defendants are formally charged with $14 million in tax fraud (the indictment’s narrative of the offense actually alleges well over twice that amount). There are five tax-fraud counts, yielding a potential 15 years’ imprisonment (up to three years for each offense), against each defendant.

According to the special counsel, Manafort and Gates conspired to commit more than $25 million in bank fraud.

Mind you, this indictment, filed in the Eastern District of Virginia, is not a stand-alone. It piles atop an earlier indictment in the District of Columbia. That one, filed back in October, accuses Manafort and Gates of an eye-popping $75 million money-laundering conspiracy, a charge that carries a penalty of up to 20 years’ imprisonment.

The two indictments contain many other felony charges. But sticking with just these most serious ones, we can safely say that, on February 22, Manafort and Gates were portrayed as high-order federal felons who faced decades of prison time based on financial frauds in the nine-digit range. And while I have previously discussed potential proof problems for the money-laundering charge, proving bank fraud and tax fraud is comparatively straightforward. The indictment indicates that the evidence of these crimes is well documented and daunting.

Yet, the very next day, Friday, February 23, Mueller permitted Gates to plead guilty to two minor charges — a vaporous “conspiracy against the United States” and the process crime of misleading investigators, each carrying a sentence of zero to five years in jail. This flouted Justice Department policies designed to ensure that federal law is enforced evenhandedly across the nation.


‘The Most Serious Readily Provable Charge’
In plea negotiations, federal prosecutors are instructed to require that a defendant plead guilty to “the most serious readily provable charge consistent with the nature and extent of his/her conduct.” (See U.S. Attorney’s Manual, sec. 27.430.) In a properly functioning Justice Department, a defendant is not accused of over $100 million in financial fraud and then, within 24 hours, permitted to plead guilty in a wrist-slap deal that drops the major allegations and caps his potential sentence well beneath the penalties applicable by statute.

As outlined above, Mueller accused Gates of significant felonies totaling over 300 years of potential incarceration. Had the special counsel simply demanded a plea to a single bank-fraud count — the most serious statutory crime charged and, according to the indictment’s description, an offense that is readily provable — Gates would have faced up to 30 years’ imprisonment.

If, as all appearances suggest, Mueller’s goal is to get Gates to cooperate, such a plea, besides honoring Justice Department guidelines, would have provided plenty of incentive. Under federal law, the prosecutor does not need to sell out the case for a song to induce cooperation. The prosecutor can demand a guilty plea that reflects the gravity of the defendant’s actual offenses. Then, if the defendant cooperates fully and truthfully, the law permits the prosecutor to ask the judge to impose a sentence beneath the severe term that would otherwise be called for — a sentence of little or no jail time.

Under federal law, the prosecutor does not need to sell out the case for a song to induce cooperation. The prosecutor can demand a guilty plea that reflects the gravity of the defendant’s actual offenses.

The Justice Department’s manual further admonishes prosecutors to refrain from guilty pleas that could “adversely affect the investigation or prosecution of others.” That is exactly what Mueller has done to the ongoing prosecution of Manafort. By giving Gates a pass on the bank-fraud (and tax-fraud, and money-laundering) charges, Mueller signals that these allegations are inflated. A jury could well feel justified in giving Manafort a pass on them, too.

By contrast, let’s imagine that Mueller had followed Justice Department protocols by insisting to Gates that nothing less than a guilty plea to the most serious readily provable charge — a 30-year bank-fraud count — would suffice. In his plea allocution, Gates would inevitably have implicated Manafort as his bank-fraud co-conspirator. Manafort would know that, were Gates to testify at trial, he would tell the jury that Manafort conspired with him in the bank-fraud scheme. That would markedly increase the likelihood that Manafort would be convicted of the bank-fraud charges. It would ratchet up the pressure on Manafort to plead guilty. It would help the investigation and prosecution.

Despite the prevalence of tax charges in the Virginia indictment, note that Mueller did not demand that Gates plead guilty to any of them, either. The manual (in sec. 6-4.245) requires the Justice Department’s tax division to approve a prosecutor’s decision not to proceed on tax charges. Did Mueller, after months of painstaking work by revenue agents, announce a high-profile tax case against Gates only to get the tax division’s okay to drop it in less than 24 hours? (Mueller’s plea agreement with Gates drops the tax counts, among other charges — see agreement, p. 2, para. 3.)

But we’re just getting warmed up.


Using the ‘Catch-all’ Conspiracy Statute to Slash Sentencing Exposure
Mueller’s pleading shenanigans are an affront to the Constitution’s separation of powers. To begin with, he undermines Congress’s clear intent to punish grave conspiracy offenses with severe penalties. He does this by making promiscuous use of the comparatively minor conspiracy offense set forth in Section 371 of the penal code. We will come momentarily to the manner in which Mueller distorts the fraud provision of this statute. For now, let’s focus on the penalty provision.

In its most frequently invoked part, Section 371 prescribes imprisonment for a mere zero to five years for those who conspire “to commit any offense against the United States” (emphasis added). Federal prosecutors regard this as a “catch-all” provision because it covers all possible federal offenses, no matter how trivial. In particular, Section 371 embraces categories of minor crime that do not contain their own separate conspiracy provisions.

This is in stark contrast to categories of serious crimes — e.g., narcotics trafficking, terrorism, racketeering, and others we’ll come to — for which Congress has enacted separate conspiracy statutes with far more severe penalties. When crimes in these categories occur, prosecutors are schooled that they must charge the conspiracy statute that Congress has tailored to that kind of offense, not the catch-all provision in Section 371. A concrete example: If a defendant conspires to violate a person’s civil rights, the prosecutor must charge him under the “conspiracy against rights” statute (Section 241), in which Congress prescribes penalties of up to ten years’ imprisonment, life imprisonment, or death, depending on the severity of the violation. Regardless of how anxious he is to induce a guilty plea, the prosecutor is not supposed to charge the case under Section 371 — which would limit the sentence to five years and thus enable the defendant to escape the more severe penalties Congress has decreed for civil-rights crimes.

But this is precisely what has been done by Mueller’s team, led in the Manafort-Gates prosecution by Andrew Weissmann. In his sensational narrative of the two-count case to which Gates is pleading guilty, the special counsel “informs the Court” that Gates and Manafort “generated tens of millions of dollars in income” through allegedly illegitimate business in Ukraine and then “laundered the money through scores of United States corporations, partnerships, and bank accounts.” But after all this heavy breathing, we learn that Mueller does not charge Gates with money-laundering conspiracy — an offense for which, to repeat, Congress prescribes a penalty of up to 20 years’ incarceration. In fact, money laundering does not even rate a mention in the statutory offenses the special counsel claims (in Count One) that Gates conspired to violate.

When, after 23 pages of atmospherics about gazillions in fraud on the financial system and the Treasury, we finally get down to the statutory offenses Mueller says that Gates conspired to commit, there are just two minor ones: (a) failure to file reports of foreign bank accounts (the “FBAR” charges) and (b) failure to register as a foreign agent (the “FARA” charges, which include false statements to the Justice Department in that connection).

To be very specific, Mueller alleges that this was a conspiracy to commit “the violations of law charged in Counts Three through Six and Ten through Twelve” of the original indictment (i.e., the District of Columbia indictment that hypes the supposed money-laundering scheme that Mueller has abandoned in Gates’s plea). Notice something strange: Mueller omits Counts Seven through Nine, even though they, too, are FBAR counts. (See Indictment, pp. 25–26.)

What’s going on here? Some remarkable sleight-of-hand.

What’s going on here? Some remarkable sleight-of-hand.

First, the three FBAR counts Mueller included in the conspiracy (Three through Six) are the ones that involve Manafort, not Gates. Mueller has cut out of the conspiracy to which Gates was required to plead guilty the FBAR counts (Seven through Nine) that actually involve Gates himself. That is, having already spared Gates from the money-laundering, tax-fraud, and bank-fraud charges announced with such fanfare, Mueller is also shielding Gates from his own alleged FBAR violations.

Second, each of the FBAR charges against Gates in the original indictment had a ten-year maximum sentence under Section 5322(b) of Title 31, U.S. Code. Gates thus faced a combined 30 years’ imprisonment on them. But FBAR statutes do not have their own conspiracy provision. By charging Gates with a single Section 371 conspiracy, rather than requiring him to plead guilty to a straight Section 5322 violation, Mueller effectively halved the potential maximum sentence from ten to five years. Moreover, to repeat, the special counsel has stripped Gates’s own FBAR offenses out of the conspiracy. He is now depicted as a mere accomplice in Manafort’s separate FBAR crimes.

Now let’s move on to the FARA aspect of the conspiracy (Counts Ten through Twelve). It seems straightforward: Gates and Manafort are alleged to have acted as foreign agents of the political party that ruled Ukraine for a time; to have failed to register as such; and to have made false statements to the government about that work.

Yet, the Justice Department virtually never brings criminal charges against FARA violators; the failure to register is handled by encouraging foreign agents to comply with the law. Forcing Gates to plead guilty to this charge seems odd, then, to those of us who recall former FBI director James Comey’s recommendation against prosecution for a much more serious offense: Hillary Clinton’s mishandling of classified information. Even though Mrs. Clinton’s conduct may literally have violated a criminal statute, Comey dubiously rationalized that indicting her would be an improper selective prosecution for conduct the Justice Department virtually never treats as a felony. “No reasonable prosecutor,” we were told, would charge a case under such circumstances.


‘Conspiracy against the United States’
But perhaps Mueller reasons (ahem) that this is the rare FARA case that warrants prosecution. After all, Gates and Manafort not only failed to register; they lied to cover up their Ukrainian work. This, then, brings us to the special counsel’s other theory for prosecuting Gates over the FARA misconduct — the newfangled, ever-elastic “conspiracy against the United States.”

As I pointed out when Mueller first indicted Manafort and Gates, there is no such offense in federal law as “conspiracy against the United States.” What Section 371 criminalizes (besides the afore-described conspiracy “to commit any offense” under federal penal law) is conspiracy “to defraud the United States” (emphasis added).

Defraud is a loaded word that prosecutors have a notorious history of stretching beyond recognition. Because an important purpose of the criminal law is to put people of average intelligence on notice of what is forbidden, words in criminal statutes are construed in accordance with their commonsense meaning. The common understanding of “defraud” is illegally to obtain money or property from someone by deception. To defraud the United States, then, is to swindle or embezzle from its government. Nevertheless, relying on extravagant precedents from federal circuit courts of appeal, the Justice Department instructs that fraud can theoretically be expanded to include “any willful impairment of the legitimate functions of government.” (See U.S. Attorneys Manual, Criminal Resource Manual Section 923.)

Mueller has taken this expansive construction and run with it: Anything that two or more people do that in any way hampers the ability of Leviathan to perform its metastasizing functions could conceivably be an actionable “conspiracy against the United States,” even if Congress has not seen fit to criminalize it. Thus, two people who fail to register as foreign agents do not just conspire to violate FARA; they “conspire against the United States” by impairing the Justice Department’s maintenance of an accurate foreign-agent registry. Two people who fail to file foreign-bank forms “conspire against the United States” by impairing the Treasury Department’s monitoring of assets held by Americans overseas.

. . . And, just to extend this logic, let’s say a president and his subordinates were to fire the FBI director or consider firing a special counsel. Even if the Constitution permits this and no law directly forbids it, mightn’t they, too, be deemed to have “conspired against the United States” by impairing the government’s investigative functions?

The Supreme Court has never ruled on this theory that prosecutors are empowered to legislate previously unknown crimes on the rationale that government functions have somehow been undermined. The High Court has, however, invalidated a theory that is very close. In the 1980s, the Justice Department attempted to use the federal mail-fraud statute to prosecute corrupt public officials. Prosecutors did not just claim that the officials had stolen money or tangible property; they further theorized that “fraud” included the concept of depriving citizens and the government itself of their “intangible right” to have public affairs conducted honestly.

In its 1987 ruling in McNally v. United States, the Supreme Court rejected the notion that prosecutors could construct a “deprivation of honest services” crime out of a fraud statute, and it chastised the lower courts for indulging this errant interpretation. The justices reaffirmed the Court’s long-held conclusion that

the words “to defraud” commonly refer to wronging one in his property rights by dishonest methods or schemes, and usually signify the deprivation of something of value of by trick, deceit, chicane or overreaching.

(Emphasis added; citations and internal quotation marks omitted.)

In the fraud statute, the Court reasoned, Congress was focused on “frauds involving money or property.” If there were any ambiguity about this, Congress could clear it up by enacting a more expansive statute “in clear and definite language.” But, the justices admonished, “there are no constructive offenses” — prosecutors have to content themselves with misconduct that “is plainly within the statute”; only the legislature has the power to invent new crimes.

The lesson is clear: The concept of fraud, including fraud on the government, is to be given its traditional, commonsense meaning of a deprivation of money or tangible property.

Congress promptly took up the Court’s invitation and enacted a fraud statute that expressly targeted schemes to deprive people of “the intangible right of honest services.” (See Sec. 1346 of the penal code.) Even more than “defraud,” however, the elusive term “honest services” proved ripe for prosecutorial overreach. After defendants repeatedly challenged the statute on vagueness grounds, the Supreme Court finally limited it, in Skilling v. United States (2010), to cases involving bribes and kickbacks.

The lesson is clear: The concept of fraud, including fraud on the government, is to be given its traditional, commonsense meaning of a deprivation of money or tangible property. If there is to be criminalization of other kinds of schemes that deprive the government, not of its tangible assets, but of its capacity to carry out its functions effectively, it is for Congress to proscribe these schemes in clear criminal statutes. Prosecutors may not legislate new crimes by mushrooming the definition of “fraud.”

Yet this is exactly what Mueller is doing.

Think about how bizarre this is. For public consumption, the special counsel alleges breathtaking felony offenses — bank fraud, tax fraud, and money laundering, crimes involving over $100 million when aggregated. Yet, to obtain a guilty plea from one of the allegedly serious felons, Mueller finds it necessary to abandon the hair-raising felonies he purports to have found. If these felonies are readily provable, as Mueller has claimed in his indictments, they are supposed to form the basis of any plea under Justice Department policy. If Gates is the mega-criminal nine-digit fraudster the special counsel has portrayed, he is not supposed to get a slap on the wrist. Yet Mueller accepts a plea to minor charges, including a Section 371 conspiracy that is a prosecutorial invention — designed to shield the allegedly serious felon from penalties Congress has decreed for the misconduct involved.

These charges against Gates and Manafort have nothing to do with “collusion with Russia,” the investigation for which Rosenstein appointed Mueller. There is no reason this case could not have been prosecuted by regular Justice Department lawyers. There was no need for a special counsel for this. And regular Justice Department prosecutors, overseen by engaged Justice Department superiors ensuring adherence to well-established Justice Department policies, would not prosecute a case this way.

Editor’s Note: This column has been corrected from the original version, which erroneously stated that Congress had prescribed a separate conspiracy statute for FBAR offenses. The author has amplified the correction, here.

Most Popular

Elections

The Odds Are Slim to Nunes

When the history of the 2018 midterms is written, there will be a chapter on missed opportunities for Democrats. Some may wonder if they should have spent so much money supporting Beto O’Rourke in Texas, or whether Heidi Heitkamp was doomed from the start in North Dakota. One painful question for progressives ... Read More
Politics & Policy

The Beatification of Beto

The media’s treatment of Texas Democratic candidate Beto O’Rourke wasn’t the most egregiously unfair coverage of the past year -- that would be the treatment of Brett Kavanaugh -- but it ranks among 2018’s most annoying. The endless glowing profiles of O’Rourke in every publication from Vanity Fair to ... Read More