Today's post is written by Dr. Alan Bean, of the non-profit organization, Friends of Justice. The acronym IRP, used throughout the article, stands for Investigative Resource Planning.
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Telling the IRP-6
Story
This is a story about how prosecutorial tunnel vision
created a tragic communication failure.
The criminal justice system exists to give everyone a chance to tell
their story. Juries decide who brings
the best story to the table. Bad things
happen when the system amplifies one story while silencing the other.
The IRP-6 case is characterized by an unusually deep divide
between the government’s story and the defendants’ story. Such a wide gap is rare, 95% of federal cases
are resolved short of trial because few defendants ultimately maintain their
innocence. If a federal case proceeds to
trial it is either because the government isn’t offering much of a plea deal or
because the defendants actually believe in their own innocence.
There are two ways of approaching the issue and everything
depends on where you start. It has been
said that where we place our focus determines what we miss.
Are the IRP-6 defendants innocent or guilty? If they are guilty, why do they claim to be
innocent and why are their friends, family and church so convinced that they
are? If they are innocent, why is the
government, represented by Assistant US Attorney Kirsch, convinced of their
guilt, and why did a jury agree?
This is primarily a story about motivation and
intention. Why did the IRP-6 choose to
engage with staffing companies, and why did these companies choose to engage
with IRP?
The government began with the second question and that made
it difficult to take the first question seriously. The defendants and their supporters,
naturally, begin with the first question and answer the second question
accordingly.
Let’s address the motivation and intention issue from the
perspective of the defendants. At every
stage of the process IRP executives were convinced that they were on the verge
of closing business with a major governmental agency and the company’s
negotiations with the NYPD and DHS appeared to be particularly promising.
On the other hand, IRP had no money and, because the company
was repeatedly asked to make significant tweaks to its software, it became
necessary to hire a wide range of personnel.
The alternative was to give up their dream, lay off all their employees,
declare bankruptcy and leave a steadily growing list of creditors unpaid. Since they were perennially convinced that a
government contract was just around the corner they persevered.
IRP engaged the services of staffing companies because, for
a small, black-owned IT company doing business shortly after the dot.com
meltdown, conventional sources of start-up income simply weren’t
available. IRP made a good faith attempt
to obtain funding from banks, angel investors and other sources of investment
capital, but repeatedly came up empty.
They used staffing companies to bridge the gap between the present and a
successful future because that was the only way of staving off catastrophic
consequences.
Now we address the issue of motivation and intent from the
perspective of the staffing companies.
Why did they choose to engage with IRP?
The government’s answer is the narrative the jury heard at trial. The staffing companies chose to do business
with IRP because they were told that IRP had a contract with the government, or
was on the verge of closing a contract.
They believed this story, and the story proved to be false. Because IRP was never close to closing a
contract with a government agency, the prosecution argued, they misrepresented
their business position to the staffing companies and this suggests that they
never had a viable product and they knew it.
Their only motivation for using staffing companies, therefore, was to
get free labor. No one ever asked why
IRP would want to get free labor to work on a bogus product but it was hinted
that the goal was to provide work for their friends.
The government turned a deaf ear to the defendants’ story
because they had already committed to the staffing company’s narrative. It is important to note, however, that the
staffing company’s narrative was largely shaped by the government itself. FBI agents approached these companies and
said, in effect, “Do you know that you are the victim of fraud?”
In theory, the decision to prosecute follows on the heels of
an investigation. In the Department of
Justice, the FBI investigates and the US Attorney’s Office prosecutes. But the IRP case began in the US Attorney’s
Office and wasn’t handed to the FBI until the Assistant US Attorney had already
developed a theory of the case and a prosecutorial strategy. The prosecution began when a former AUSA was
approached by a friend who happened to be the principal of a staffing company
that had engaged in business with IRP.
Asked to assist, and knowing that failure to satisfy his friend’s
request might impact his own career trajectory, the ex-prosecutor wrote a
letter to AUSA Kirsch explaining his theory of the case and suggesting how the
case could be prosecuted.
This relates to Harvey Silverglate’s famous assertion that
the vagueness of federal law makes it relatively easy for a federal prosecutor
to successfully prosecute any business person or public official, especially
those in financial embarrassment. The
fact that the first grand jury to hear the government’s case refused to indict
(a rare occurrence) suggests that the government’s initial theory of the case
and its prosecutorial strategy were seriously flawed. In other words, it is likely that both AUSA
Kirsch and the defendants genuinely believed their very different narratives.
Why did the staffing companies decide to engage with
IRP? Part of the reason was, as the
government suggests, that they realized that if IRP did sign a contract with an agency like the NYPD or the DHS, a
staffing relationship with IRP could prove very lucrative in the long
term.
But there is another side to this story—the side the jury
never heard. Trial testimony suggests
that a staffing company run a Dun and Bradstreet credit check on prospective
clients that is largely related to a company’s payment history. Since, in the beginning, IRP had no payment
history to speak of, and since, as the story developed, their payment history
became progressively worse, none of the staffing companies could justify a
decision to provide staffing to IRP. Or,
if services were provided, it was only in the belief that, although IRP was a
clear credit risk, the staffing company would win big if IRP’s cash flow
reversed in a dramatic way.
In other words, IRP executives shared their genuine belief
that they were poised to do major business with law enforcement agencies and
the staffing companies decided to roll the dice.
Unfortunately, the jury never heard this explanation because
the presiding judge barred the testimony of the only witnesses who could have
explained how staffing companies evaluate potential clients and make business
decisions. Andrew Albarelle, a veteran
of the staffing industry with a wide-ranging knowledge of the IT field, was
prepared to testify that IRP’s outreach to staffing companies was reasonable
and legal and that a quick review of the Dun and Bradstreet credit check would
have revealed that IRP might have trouble paying invoices in the short
term. If these companies decided to do
business with IRP anyway, Albarelle believes, it was because they were
motivated by the potential for windfall profits. In this view, the staffing companies entered
into business with eyes wide open.
Because this testimony was disallowed, the government’s
story was amplified, the defendants’ story was effectively silenced, and the
jury responded accordingly.
This story could be told by interviewing Mr. Albarelle, Mr.
Silverglate, the defendants (or their attorney), AUSA Kirsch (if he is
agreeable), former IRP employees, church members and friends of the defendants,
staffing company representatives and FBI special agents Moen and Smith. The story would be about the growing
potential for prosecutorial tunnel vision and wrongful conviction created by
the vagueness of federal fraud law.
