New York Attorney General Eliot Spitzer and federal officials are no longer cooperating and are now pursuing their own, separate investigations of the insurance industry, reported the Washington Post.
As recently as late May, the two prosecution teams had been conducting joint interviews, according to the newspaper. The Post added, however, that recently one scheduled joint interview was canceled after federal officials learned that Spitzer’s team had met separately with the witness’s lawyer and discussed a deal. Cutting separate deals could make the witnesses less useful to the other prosecution team, the paper noted.
“Everyone is all smiles when it comes to cooperation between the agencies,” said Jacob Frenkel, a former Securities and Exchange Commission enforcement lawyer and now a partner at Shulman, Rogers, Gandal, Pordy and Ecker PA, according to the Post. “But in truth, the competition for convictions and civil settlements is so intense that each regulator is putting its interest ahead of the public good.”
“If there’s a lack of coordination, both prosecutorial entities will see their cases suffer,” Robert A. Mintz, head of white-collar criminal defense at McCarter & English LLP, told the paper.
Tensions between federal and state prosecutors ran especially high
April, when Berkshire Hathaway chairman Warren Buffett was interviewed to shed some light on transactions of American International Group Inc. (Regulators have consistently maintained that Buffett is not a target of their investigation.)
Following a three-hour closed-door session at the New York offices of the SEC — which included prosecutors from the Department of Justice, the Eastern District of Virginia, the SEC, and Spitzer’s staff — a number of news organizations reported accounts of the discussion. Federal officials suspected that Spitzer staffers were responsible for the leaks, reported the Post.
Michele Hirshman, Spitzer’s top deputy, said this suggestion was “inaccurate and ridiculous,” according to the paper, which added that Hirshman described the insurance investigations as separate but complementary. Representatives of federal investigators declined to comment to the paper.
The Post noted that Spitzer, a candidate for the Democratic nomination for governor of New York, criticized the Bush Administration in a May 2 speech for failing to investigate illegal practices in the insurance industry. Spitzer’s office has been able to extract 10 guilty pleas from insurance executives as well as fines and other restitution exceeding $1 billion, the paper pointed out.