United States Department of Justice ASSISTANT ATTORNEY GENERAL CRIMINAL DIVISION 5 NOV 1979 Honorable Robert F. Drinan Chairman, Subcommittee on Criminal Justice of the House Judiciary Committee House of Representatives Washington. D.C. 20515 Dear Congressman Drinan: I understand that in connection with the Subcommittee's consideration of the Department of Justice's proposals for additional statutory language to cover federal program theft, fraud, and bribery, your staff has suggested that it would be desirable for the Department to furnish a succinct written explanation of the need for these proposed provisions, and also to explain the derivation and effect of the phrase "person connected in any capacity with", which appears in both proposals. The need for the proposals stems from the fact that, while the federal government disburses many millions of dollars in federal funds to private organizations or units of State and local government pursuant to programs authorized or required by Acts of Congress, there is no general federal statute directed at safeguarding the integrity of these programs from theft, fraud, or bribery. With respect to theft and fraud, one of the most frequent obstacles to prosecution has been the strict legal concept of property. In numerous investigations, prosecutors have established that individuals or organizations have stolen from or defrauded a federally-supported program, but because the federal funds have been commingled with other funds or have been paid over to a public or private agency, there is no basis for prosecution since the United States no longer had title to or possession of the property. While in some instances, if the mails or an interstate facility is used to commit the offense, federal prosecution is still possible, other cases do not permit any federal cognizance of such offenses despite the fact that it is the federal government's program which is the direct victim of the theft or scheme. In many cases, state law enforcement officials have understandably declined to prosecute such offenses either because of a belief that the federal and not the state government is the injured party or as a result of local political factors. Дас Log programs. A related situation exists with respect to the lack of ability to prosecute bribery in connection with federally-supported The current federal bribery statute is written in such a way as to allow prosecution only in cases of bribery involving federal employees. We believe, however, that the United States has a strong interest in assuring the integrity of the programs to which it contributes substantial federal funds by retaining the ability to prosecute bribery involving the administrators of such programs, whether or not they are federal public servants, for acts designed to influence their administration of the federally funded projects. Although the magnitude of the problem defies quantification, we believe that the lack of any provisions in the federal criminal code addressed specifically to the program theft and bribery areas, coupled with the natural reluctance of state and local authorities to devote scarce law enforcement resources to these areas, is a substantial defect in our laws which deserves to be remedied in the course of the criminal code recodification and reform effort. With regard to the issue concerning the meaning of the phrase "person connected in any capacity with", this language is not novel and appears, for example, in two related present statutes, 18 U.S.C. 656 and 665. It has been interpreted to reach persons, such as controlling stockholders, who have a substantial influence over an organization or entity although they are themselves not officers or employees. See, e.g., Garret v. United States, 396 F. 2d 489 (5th Cir.), cert denied, 393 U.S. 952 (1968); United States v. Beran, 546 F. 2d 1316, 1320 (8th Cir. 1976), cert denied, 430 U.S. 916 (1977). In our view coverage of such persons for purposes of the proposed offenses of federal program theft, fraud, and bribery is appropriate just as Congress concluded it was in adopting the current coverage of such persons in the statutes referred to, which proscribe acts of theft from financial institutions and the C.E.T.A. Finally, I take this opportunity to note that certain necessary words were omitted from the proposal dealing with federal program theft and fraud previously sent to your staff. A correct draft, with the previously omitted matter underlined, is appended hereto. Your Subcommittee's consideration of these amendments is deeply appreciated. Appendix Insert as jurisdictional base "() the property has a value of $5000 or more and is property of an organization or a unit of state or local government receiving benefits in excess of $10,000 per calendar year pursuant to a program under the laws of the United States involving a grant, contract, insurance, guarantee, subsidy, loan or other form of federal assistance, and the offense involves property of, or utilized by, the program and is committed by an agent of or a person connected in any capacity with, such organization or unit of state or local government. United States Department of Justice ASSISTANT ATTORNEY GENERAL CRIMINAL DIVISION Honorable Robert F. Drinan Chairman, Subcommittee on Criminal Justice of the House Judiciary Committee House of Representatives Washington, D.C. 20515 Dear Congressman Drinan: 5 OCT 1979 Attached here to are three documents requested by the Subcommittee or one of its members. The first document responds to a request of Mr. Conyers concerning the amount of time it takes to initiate prosecutions for various offenses. The second and third documents respond to requests made to me during my testimony before the Subcommittee. The first of these responds to various questions posed concerning the effect of section 2121 of the draft (dealing with eavesdropping) on law enforcement. The second presents our position and alternative language on the "under color of official right" branch of the Hobbs Act. I hope that these responses aid the Subcommittee in its consideration of the draft bill. Sincerely, Enclosures Philip B. Heymann Assistant Attorney General Attached is a memorandum summarizing the results of a survey concerning the period for commencing prosecutions for fiscal year 1978. This survey was conducted by the Executive Office for United States Attorneys in response to your request for this information which emanated from Representative Conyers. At the time at which the request was made and the survey was conducted, the Subcommittee was exploring the possibility of reducing the generally applicable statute of limitations for both felonies and misdemeanors to two or three years. Since that time, the emphasis of the Subcommittee's consideration of the appropriate period of limitations has shifted to examination of the possibility of providing a shorter period for commencing the prosecution of misdemeanors while retaining the current fiveyear period for felonies. Thus, the survey was designed to address the issue of reducing the statute of limitations for felcnies and misdemeanors alike, and so the data obtained was not classified so as to distinguish the time elapsed prior to the prosecution of misdemeanors from that for the prosecution of felonies. Therefore the survey is not responsive to the narrower issue which is now before the Subcommittee. However, I would like to take this opportunity to again urge that the Subcommittee retain the present five-year statute of limitations for misdemeanors as well as felonies. Federal law has never provided for a shorter statute of limitations for misdemeanors than that provided for felonies, and I believe that adoption of a reduced period for commencing prosecution of miscemeanors would make difficult, if not impossible, the investigation and prosecution of many federal misdemeanors, particularly in the area of white collar crime. As I noted in my testimony before the Subcommittee, the most serious problems would arise in the prosecution of tax misdemeanors, regulatory offenses, and labor bribery (Taft-Hartley Act violations under 29 J.S.C. §186). Such offenses often require 1.10.110 Buy U.S. Savings Bonds Regularly on the Payroll Savings Plan |