The Library

Forewarned is Forearmed - Some Reflections on the Relationship Between Counsel and the Department of Justice

When Melvyn Weiss entered a plea of guilty to racketeering charges last week, many business lawyers considered it as justice long overdue. Viewed in the light of two recent filings in the United States District Court for the Southern District of Florida, however, Weiss' prosecution may be just the opening salvo in the Justice Department's campaign to hold lawyers accountable for the advice they give.

In United States v. Keuhne, the Department of Justice indicted well-respected criminal defense counsel, Ben Keuhne, for money laundering in connection with several opinions he had provided to the defense team for a member of the notorious Medellin cocaine cartel. Keuhne was asked by the defense team to opine on whether its legal fees were derived from illegal drug trafficking. The Government has alleged that Keuhne's opinions were not just wrong, but that they were designed to conceal the illegal origin of the funds. Keuhne's trial date is set for early next year.

As troubling as the Keuhne indictment is, the complaint filed by the Justice Department against in-house lawyer Christi Sulzbach is, no doubt, equally frightening to our clients and friends practicing in a corporate setting. In United States v. Sulzbach, the Department is seeking False Claims Act damages against the Assistant General Counsel and Corporate Integrity Program Director of Tenet Healthcare Corporation. As the successor corporation to National Medical Enterprises, Tenet inherited responsibility for administering a Corporate Integrity Agreement (“CIA”). Ms. Sulzbach was the corporate officer overseeing compliance with the CIA and certifying compliance with its terms. Ms. Sulzbach retained outside counsel to investigate allegations that various physician contracts ran afoul of the federal prohibition against certain financial relationships between providers. The investigation confirmed that the contracts violated the law. Thus, according to the Government, Ms. Sulzbach violated the False Claims Act when she signed certificates of compliance with federal law and submitted those certificates to the Department of Health and Human Services.

One lesson to take away from the Sulzbach case is that Corporate Integrity Agreements and Deferred Prosecution Agreements come at a high price; clients must be willing to endure increased Government scrutiny over future conduct in exchange for mercy for past transgressions. In many cases, the ghosts of that bargain will haunt the client long after the management that inked the deal has moved on. Invariably, it falls upon counsel to ensure that the client bears the burden of the bargain.

We have enclosed the Keuhne indictment and the Sulzbach complaint with this communiqué. We write not to frighten, but to inform. Moreover, we are confident that neither the press of business nor the demands of clients will override the common sense and sound legal judgment of our in-house colleagues.

For more information, please contact Robert J. Ridge at 412.394.2440 or rridge@thorpreed.com.

This Thorp Reed & Armstrong, LLP Communiqué is prepared in summary form and is not to be construed as legal advice or opinion on any specific fact or circumstance. We do not assume any responsibility to revise the Communiqué if there are subsequent changes in the law.

April 10, 2008