Snitching

Criminal Informant Law, Policy, and Research

White Collar

Life imitating art imitating life…

by

A vice president of a multimillion dollar company turns informant to avoid liability, surreptitiously taping his high-level colleagues who are eventually charged with corporate fraud. If this sounds like the plot of the movie “The Informant” (reviewed here), it is. But it is also the plot of this news story about the theft of $2 million worth of fuel from the Mexican oil company Petroleos Mexicanos: “Ex-Bush aide tied to stolen oil case.” Here’s an excerpt:

Josh Crescenzi of Houston, former vice president for Continental Fuels of San Antonio, has been cooperating with agents of U.S. Immigration and Customs Enforcement for several months, helping them secretly record conversations that have resulted in the conviction of a Houston oil industry executive, another one from San Antonio and the president of a small oil and gas company in Edinburg.

Stories like this (and this) suggest that the use of active informants in white collar investigations, i.e. using cooperating suspects to actively snare high-level corporate offenders in ongoing wrongdoing, is on the rise, although since the whole arena is shrouded in secrecy it’s hard to say if the practice is now more prevalent or we are just hearing more about it. In any event, because white collar informants and defendants are better resourced and represented than your typical street or drug snitch, we should expect such cases to improve the overall visibility and accountability of informant practices. As sociology professor Gary Marx wrote 20 years ago in his landmark book “Undercover: Police Surveillance in America”:

When lower-status drug dealers and users or prostitutes were the main targets of covert operations, the tactic tended to be ignored, but when congressmen and business executives who can afford the best legal counsel became targets, congressional inquiries and editorials urging caution appeared.

Of Insider-Trading, Informants,and Wiretaps

by

“Wall Street Meets the ‘Wire,’” is a post from earlier this week on White Collar Crime Prof Blog, discussing the criminal case against billionaire hedge-fund manager Raj Rajaratnam for insider-trading. Here’s a link to the news story on Bloomberg. The post focuses on the unusually aggressive use of wiretaps in the investigation, and asks whether the government was authorized under the federal wiretap statute to do so given the availability of cooperating informants. As the post explains:

Title 18 U.S.C. § 2518(3)(c) provides that a court issuing a wiretap authorization order must determine whether normal investigative procedures have been tried and have failed or reasonably appear to be unlikely to succeed if tried or to be too dangerous. This “necessity requirement” obligates the government to set forth a full and complete statement of specific circumstances explaining why traditional investigative techniques were insufficient or the application must be denied. In determining the sufficiency of an affidavit, a reviewing court must ensure that the issuing court properly performed [its] function and did not ‘serve merely as a rubber stamp for the police’. The government is not under an obligation to exhaust all alternative means of investigation in satisfying the necessity requirement but, neither should it be able to ignore avenues of investigation that appear both fruitful and cost-effective.

Given that the government had three co-conspirators, including one as early as January 2006, acting as informants and cooperating witnesses, and that these individuals had unfettered access to Rajaratnam and others involved in the alleged conspiracies, the question arises whether the government deliberately stalled this investigation and actively resisted utilizing normal investigative techniques, hoping to induce the court into believing that only a wiretap could succeed.

The post doesn’t mention it, but the government need not even get court permission for electronic surveillance if it has so-called “third party consent,” i.e. if the informant agrees to record the conversation. 18 U.S.C. § 2511(2)(c).

This story illustrates the intimate legal relationship between informants and other forms of surveillance. The law privileges informant use, forcing the government to justify its use of wiretaps if informants are available–note that the post refers to snitching as a “normal investigative technique.” Moreover, the law permits the government to circumvent the courts entirely and avoid asking for permission to record conversations if it can find an informant who will agree to the surveillance. The usual explanation for this hierarchy is that electronic surveillance is one of the most intrusive forms of investigation and therefore should be a means of last resort. Wiretapping is of course supremely invasive, but this fact obscures the fact that informant use can be similarly intrusive, i.e. when the government threatens friends and colleagues with criminal charges to get them to report on and record people they know. For those who are interested, Chapter Two of the book discusses informant law in detail.

The insider-trading story also hints at important differences between white collar and street/drug crime investigative tactics involving snitching. The culture of informant use is very different in these two realms: white collar informants tend to be (although not always) well controlled, represented by counsel, and provide information about past crimes, whereas drug informants tend to be poorly controlled, unrepresented, and permitted to engage in new criminal activity in order to generate evidence. At the same time, the two arenas share important features. Here’s an excerpt from Chapter Seven:

White collar informing shares important characteristics with its street counterpart. Both confer a vast amount of discretionary, unreviewable authority on law enforcement. Both exacerbate power inequalities among potential offenders, as well as between vulnerable offenders and the government. In both arenas, the decision to permit cooperation means that the government is tolerating and forgiving crime, and sometimes even creating an atmosphere in which crime may flourish. And both deprive courts, and thus the public, of significant amounts of power over and information about the operations of the executive.

As informant use becomes increasingly prevalent in white collar investigations, we should expect to see more of the problems of unreliability and continued criminality that have become familiar in the street crime arena. See previous post: Committing Crime While Working for the Government.

More fallout from the Jack Abramoff investigation

by

The Washington Post reports today on the sentencing of Bush White House official David Safavian, former chief of staff at the General Services Administration. Safavian was convicted of lying to federal investigators about thousands of dollars worth of perks and benefits he received from corrupt lobbyist Jack Abramoff. I think it is useful to follow the ripples left by the Abramoff affair because he is the paradigmatic example of what is both great and problematic about snitching. The great version: a bad guy cuts a deal with the government that exposes even worse guys, or “bigger fish,” and heightens public awareness of flaws in the system. This is the best argument for offering lenience to serious offenders–on balance it can create a greater public good, and indeed Abramoff’s conviction and cooperation has led to numerous other convictions and stronger ethics rules. The problematic version: Abramoff received a four-year sentence for his massive and ongoing corruption, not to mention a lesser sentence on a totally unrelated fraud charge in Florida. Had Abramoff sold a tablespoon of crack cocaine he would have gotten more prison time. Moreover, his cooperation has resulted in convictions of just a few “big fish”: Congressman Bob Ney, Deputy Interior Secretary Steven Griles, as well as today’s Safavian. While there have been other related convictions, they have mostly been of aides, other lobbyists, or players less powerful and culpable than Abramoff himself. Were these convictions worth letting the poster-child for corrupt lobbying off so lightly? This is the perennial dilemma with snitches: it is very hard to know whether we are actually getting more security and justice by letting them off the hook, or whether we too easily forgive serious wrongdoing in the name of cooperation.

Movie Review–The Informant

by

In 1992, Mark Whitacre was vice president of operations at agribusiness giant Archer Daniels Midland, handling hundreds of millions of dollars worth of contracts and overseeing the production of lysine, a key corn-based ingredient in animal feed. At the same time, for nearly three years Whitacre worked with the FBI to obtain evidence implicating ADM in a massive international price-fixing scheme. As do most informants, however, Whitacre had issues. He was factually unreliable, personally unstable, and–without giving away the story–engaged in a few shenanigans of his own. The New York Times calls the movie “a smart, cynical comedy” about greed and corporate malfeasance, and it certainly is. But the story of how the federal government came to believe, rely on, adore, distrust, despise, and ultimately discard Whitacre as an informant is also a whirlwind tour through many of the benefits and dangers of real-life informant use.

The Informant, starring Matt Damon, opened this weekend and it is based on Kurt Eichenwald’s best-selling non-fiction book of the same name published in 2000. The book, which weighs in at a whopping 550 pages, is an exhaustively detailed journalistic expose of the seemingly incredible facts of Whitacre’s cooperation with the FBI. While the movie is a comedy, with plenty of chuckles at the topsy-turvy quality of Whitacre’s personality and the resulting ups and downs of the ADM investigation, the book is more disturbing than funny. It offers an up-close view of how heavily the government depended on Whitacre, its inability to control or adjust to his deviations, how ADM’s money and political influence shaped the legal outcomes of the investigation, and how justice got deeply twisted along the way. As a factual matter, the film tracks the book relatively closely, and so while people may leave the movie theater shaking their heads over the craziness of it all, they would do well to take the underlying revelations of the film seriously. The Informant points to some very non-fictional truths about the productive yet dangerous marriage of convenience between the government and its informants. Here are a few take-aways:

Cracking Big Cases. If nothing else, The Informant makes abundantly clear why law enforcement goes through the trouble of cultivating informants: they are often the only way to crack big cases against politically powerful or otherwise hard-to-penetrate organizations such as corrupt corporations, drug rings, or terrorist groups. The FBI’s storied history with its mafia informants is a case in point. On the one hand, informants with names like “Sammy the Bull” Gravano enabled the investigation and prosecution of some of the most powerful mafia figures in history–including John Gotti–and over the years helped the government undermine the power of the mob. On the other hand, the FBI’s habit of letting its informants commit serious crimes like murder, racketeering, and money laundering has given snitching a bad name, and subjected the FBI to heightened scrutiny, congressional disapproval, and millions of dollars in civil liability.

Unreliable. At the end of the movie’s preview, Mark Whitacre casually informs his lawyers (and by implication the audience) that “I haven’t been telling you guys the whole truth.” This might be the biggest understatement of the movie, and it reflects the more general truth that informants are deeply unreliable sources of information. For example, the Center for Wrongful Convictions at Northwestern University Law School reports that 45.9 percent of documented wrongful capital convictions have been traced to false informant testimony, making “snitches the leading cause of wrongful convictions in U.S. capital cases.” Several states, including California, New York, Texas, and Illinois, have considered or implemented new laws to restrict the use of unreliable informant witnesses.

“Falling in Love with Your Rat.” This is how one federal prosecutor in New York describes the fact that law enforcement officials can become so dependent on their informant sources that they develop personal attachments to them and lose their objectivity. This attachment can impede the government’s evaluation the real usefulness or reliability of their long-term sources. Mark Whitacre’s FBI handlers, for example, grew so fond of him that they carried around photos of him and his family–a fondness that eventually blindsided them.

Vulnerable Informants. Like most informants, Mark Whitacre was also a vulnerable person. First and foremost, he was vulnerable to retribution from ADM–the company against which he cooperated. The threat of retribution and potential violence against cooperators is a widespread problem, particularly in gang-related cases. While the federal WITSEC program is well known and well funded, most states have few or no resources to protect or support witnesses who risk their security by cooperating.

Whitacre was also vulnerable in other ways which I won’t disclose, but that, as the book describes in detail, made his FBI handlers very uncomfortable with the eventual resolution of the investigation. While Whitacre was hardly a typical snitch, his predicament reflects the widespread reality that informants, like the criminal justice population more generally, are often vulnerable people: young, frightened, undereducated, suffering from substance abuse or mental health problems. Their weaknesses make them more easily pressured into cooperating, and less able to make self-protective decisions, and the criminal system has almost no mechanisms to protect them. In recognition of this fact, Florida recently passed first-of-its-kind legislation entitled “Rachel’s Law” (see previous post) which extends some much-needed protections to people who become informants.

In the end, The Informant is plain old good entertainment. But it also provides an accurate glimpse into the machinations of criminal justice, a drama that seems “unbelievable” even though it is all too real.

The Informant is rated R for occasional foul language.

No Special Treatment for Madoff Cooperator

by

The Wall Street Journal Law blog posts here that U.S. District Judge Richard Sullivan has refused to let cooperator Frank DiPascali out on bail, even though DiPascali has pled guilty and is helping the government unravel the Madoff scheme. The reason this is newsworthy is that everyone expects courts to treat cooperators well, even when they’ve committed major crimes (DiPascali’s crimes include helping Madoff, lying under oath to SEC investigators, and forging documents–he faces 125 years in prison). In other words, Judge Sullivan is the exception that illustrates the rule. It is more typical for prosecutors and courts to quietly accommodate cooperators–keeping them out on bail, dropping charges, and even helping them with criminal cases in other jurisdictions. In my view, and as I argue in my book, these commonplace accommodations and the culture of cooperation more generally have skewed the criminal system’s approach to culpability. Offenders are evaluated as much for their usefulness as their wrongdoing, and even the most heinous crimes have become opportunities for negotiation. For a haunting example, read this story in the Washington Times entitled Drug Dealer Avoids Jail in Daughter’s Killing, about a drug informant who avoided punishment for the death of his daughter who died of, among other things, a fractured skull and severe malnurishment.