Nominee for Manhattan U.S. Attorney: A nonpartisan star

Preetinder Bharara sees unfairness in case law that lets corporations be held responsible for acts of rogue employees.

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By Roger Parloff

NEW YORK (Fortune) -- When President Barack Obama nominated Preetinder S. Bharara last week to become the new U.S. Attorney for the Southern District of New York, which includes Manhattan, there was some cheap-shot snickering about a purported irony. Bharara, as Senator Charles Schumer's chief counsel, had spearheaded the Senate Judiciary Committee's investigation into former Attorney General Alberto Gonzales's politicization of the U.S. Department of Justice, and particularly the firing of nine U.S. attorneys. Now, some people said, he was receiving his own political reward, being picked to head the most illustrious federal prosecutor¹s office in the nation.

But those who know Bharara well - and they come from both sides of the aisle - salute him as a consummate professional, apolitical and fair-minded. For the business community he carries the added attraction of being someone who has thought deeply about how best to prevent prosecutorial overreaching in the context of business crime prosecutions without hobbling the legitimate needs of law enforcement, having published a 32,000-word law review on the topic in 2007.

"He¹s the most professional and honest person that I know," says Bill Burck, a former deputy White House counsel under President George W. Bush who is now a partner at Weil, Gotshal & Manges. "He came to D.C. as a nonpartisan person, and he's leaving as a nonpartisan person," says Burck in an interview.

Bharara, 40, was born in India's Punjab state, emigrated to the United States with his parents in 1970, grew up in New Jersey's Monmouth County, and became a naturalized U.S. citizen in 1980. He graduated from Harvard College in 1990, and from Columbia Law School in 1993.

"Preet and I met our first week of college," recounts Viet Dinh, who was U.S. Assistant Attorney General for Legal Policy from 2001 to 2003, under Attorney General John Ashcroft. "First day, we got into some argument about whether the framers [of the U.S. Constitution] thought man was fundamentally good or evil, and we ended up talking after class, over dinner, and through the night in front of the library. That was 1986, and we have been arguing ever since. He was best man at my wedding." Dinh is now a partner at Bancroft Associates, a law and policy firm in Washington, D.C., and a professor at Georgetown University Law Center. (Bharara did not return messages seeking an interview. Prior to confirmation hearings, nominees are routinely advised not to give interviews to the press.)

After law school, Bharara went into private practice, spending three years at the large corporate firm Gibson Dunn & Crutcher before moving to a boutique known as Shereff Friedman (later Swidler Berlin Shereff Friedman), where he did mainly civil litigation and white-collar criminal defense work.

"He was one of my all time favorite young associates," recalls Andrew Levander, who was then a partner at Shereff Friedman, and is now at Dechert. "He was savvy as a lawyer, had a great sense of humor, was thoughtful, smart, energetic, well-regarded." (Levander is currently representing money manager Ezra Merkin in civil matters stemming from Merkin¹s having invested his clients' money in Bernard Madoff's Ponzi scheme.)

In 2000 Bharara was hired as a federal prosecutor by then-U.S. Attorney Mary Jo White of the Southern District of New York, the district that includes Manhattan, the Bronx, and six New York counties north of the city. He started in the general crimes unit, like all young prosecutors, and then moved to narcotics before being rotated into one of the more senior assignments, the organized crime and terrorism unit. There he successfully prosecuted, among others, Chinese gang members and Anthony and Christopher Colombo, sons of the notorious Mafia don, Joe Colombo. Former U.S. Attorney White, now a partner at Debevoise & Plimpton, remembers Bharara as "definitely one of the stars in the office," and as "principled and apolitical."

In 2005 Bharara moved to Washington to become chief counsel to Senator Schumer and staff director of the Senate Judiciary Committee's Subcommittee on Administrative Oversight and the Courts. The reputation Bharara had earned for nonpartisan integrity at the Southern District is said to have helped him win cooperation from all sides in the contentious investigation of Attorney General Gonzales's firing of the U.S. Attorneys in 2005, an inquiry that eventually led to the resignations of a half dozen top Justice Department officials, including Gonzales himself.

"Senator Schumer is a partisan," says James Comey, the former Southern District U.S. attorney from 2002 to 2003, and the deputy U.S. attorney general from 2003 to 2005, "but Preet had credibility across the political spectrum, and was able to play a role where he was respected by both parties on that issue." Comey, now general counsel of Lockheed Martin, says that Bharara's "doggedness and his sense of the vital importance of the integrity of that institution" played a major role in driving that inquiry.

'First and foremost a prosecutor'

In 2006, a different set of issues came across the Senate Judicary Committee¹s radar screen that much more directly affected - and, to this day, continues to affect - the business community. During the course of a criminal prosecution of accountants at KPMG for allegedly developing and marketing illegal tax shelter investments, Manhattan federal judge Lewis Kaplan dismissed many of the cases and harshly criticized Southern District prosecutors for having violated the constitutional rights of the defendants. The source of the Kaplan's pique was that prosecutors, following guidelines laid out in a controversial 2003 Justice Department memorandum signed by then Deputy Attorney General Larry Thompson, had exerted enormous pressure on KPMG, as a corporate entity, to compromise the rights of its employees in order to curry favor with prosecutors and convince them not to indict KPMG itself - the corporate entity. Such an indictment would have almost certainly brought about the swift demise of the entire firm, much as indictments had destroyed Arthur Andersen, E.F. Hutton, and Drexel Burnham Lambert in the past. Specifically, prosecutors had pressured KPMG to stop paying the attorneys fees of the employees the prosecutors were targeting, to fire any KPMG employees who refused to speak to prosecutors (waiving their Fifth Amendment privileges against self-incrimination), and to waive KPMG¹s own attorney-client and work-product privileges - all on pain of, otherwise, finding itself indicted as a firm. Under the Thompson memorandum, prosecutors were effectively entitled to make such demands as a condition for not indicting the firm.

Though the controversy led to revisions in the Justice Department guidelines in December 2006 (in the so-called McNulty memorandum, which replaced the Thompson memorandum), the department did not swear off any of the forms of pressure Judge Kaplan found abusive, but rather instituted procedural hurdles before they could be invoked. Bills have been proposed that might tweak the language further.

But while much of the partisan tumult caused by Judge Kaplan's rulings focused on the Thompson memorandum - an artifact of the Ashcroft Justice Department and Bush Administration - as the root of the problem, Bharara published a scholarly article in the Winter 2007 issue of the American Criminal Law Review powerfully arguing that, while the abuses were real and necessary to address, the root problem lay much deeper. Specifically, he blames a lop-sided, century-long, ill-advised evolution of the case law that has created a fundamentally unjust situation in which corporations can, at least theoretically, be held liable for the criminal acts of rogue employees, even if the employee was a very low-level one acting mainly for his own benefit and in violation of corporate policy. Though corporations seldom actually are, in practice, prosecuted in such obviously inappropriate cases, the only restraint on prosecutors from doing so is the benevolent exercise of their prosecutorial discretion. Bharara's point is that to prevent prosecutorial overreaching in cases involving business corporations, judges will, in the end, have to correct the fundamental unfairness in the case law that currently makes corporations dependent on the kindness of prosecutors if they are to avoid indictment for the acts of rogue employees.

Speaking of any lesser efforts to address the problem - like, for instance, the McNulty revisions of 2006 - Bharara writes that "incremental, scattershot, and ephemeral tweaking cannot satisfy the long term goal of creating harmony between what is indictable and what seems morally culpable where corporations are concerned."

Friend and former deputy attorney general Minh sees the article as a good example of why Bharara is a "perfect" nominee for U.S. Attorney. "At a time when everyone was focused on either corporate fraud or prosecutorial overreach," he writes in an e-mail, "Preet went to the root of the matter and pinpointed" the deeper source of the problem in legal doctrine. "Preet is first and foremost a prosecutor," he continues. "But like all the best prosecutors, he tempers his zeal with an understanding of the larger societal policy impact. He is not about scoring points with a particular case but with doing the right thing for broader set of issues."

In today's devastated business environment, where angry taxpayers would like to see plenty of corporate CEOs' heads on pikes, Bharara seems like a fine choice to ensure that only the appropriate heads end up there. To top of page

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