From New Hampshire To Birmingham: Bill Athanas And The Fight Against Fraud And Corruption

by Thomas Fox

Lawyer ImageEd. Note-I continue my series of profiling thought leaders in the area of anti-corruption. Today, I post an interview with Bill Athanas, partner in the firm of Waller Law.

1.         Where did you grow up and what were your interests as a youngster?

I grew up in a small town in central New Hampshire.  I spent most of my time playing sports, and was a diehard fan of Red Sox, Patriots and Celtics.  While the 1980s were great times for Celtics fans, the Patriots were pretty much irrelevant then and cheering on the Red Sox was pure torture.  I can still remember the pain I felt after Game 6, but recognize that I never would have appreciated 2004 and 2007 anywhere near as much if I hadn’t lived through the hard times.

2.         Where did you go to college and what experiences there led to your current profession?

I attended the University of New Hampshire.  While I always had an interest in becoming a lawyer, one incident in particular really pushed me in that direction.  I was taking a marketing class and the professor directed us to answer a particular question in our text.  I wrote down the wrong question number, and when I turned in my answer, the professor (whose name I still remember, almost 25 years later) gave me a zero (not just an F, but an actual zero).  I remember thinking that the result was incredibly unfair and disproportionate to the mistake I made, and I pleaded with her to reconsider.  She refused.

3.         Describe your early legal career in Boston.

During law school, I worked at a firm where I met Bruce Singal, a former AUSA in Boston, who had a  white collar practice.  I joined the firm after graduating and worked with Bruce for about five years, until I decided to leave to join the Justice Department’s Fraud Section in Washington.  I had  numerous opportunities that few young lawyers get.  Those included spending the better part of year representing indigent defendants in Boston Municipal Court and second chairing Bruce’s federal criminal cases.

4.         How did you come to join the DOJ? What areas did you focus on and what types of cases did you try?

Working on white collar cases quickly made me realize how much I wanted to be a federal prosecutor, and I decided to apply to the Fraud Section in 2001 after seeing a posting on the DOJ website.  Fraud Section interviews back then were conducted in a room with about 15 people firing questions, and I managed to make it through despite having only recently filed a Hyde Amendment claim against two Fraud Section lawyers (one of whom was in the room).

When I arrived, Peter Clark was assigned to be my supervisor.  While Peter was the FCPA Deputy Chief then, my initial focus was financial institution fraud.  I very much wanted to try cases, and in 2001, handling FCPA cases was not the path to trial experience.

I spent my first couple of years investigating and trying Ponzi scheme and bank fraud cases.  In 2004, I was assigned to the ongoing HealthSouth accounting fraud investigation in Birmingham and asked to take over a spin-off investigation of foreign bribery in Saudi Arabia.  We eventually charged four HealthSouth executives in that case, and after two pled the others went to trial.  Both were acquitted, and I got my first real tough lesson as a prosecutor:  sometimes when you try a case poorly, you still win – but not always.  That defeat still stings, but the experience has helped me every day since.    

5.         What took you to Birmingham, AL from DC?

Like pretty much everyone who works in the Fraud Section, my service involved a tremendous amount of travel (220+ days a year on the road).  In early 2002, while working a Ponzi scheme case in Springfield, Missouri, I was having dinner with Ed Slagle, an agent from Atlanta who then with FDIC-OIG who was also assigned to the case.  Ed and I were the primary individuals heading up the investigation, and spent virtually every week working in Springfield or Kansas City for almost a year.

We got to be great friends and one night over dinner Ed told me about a bank fraud case he was working in Birmingham which he believed was not getting the attention it needed.  I came down to Birmingham in the summer of 2002. I spent the better part of the next 2 ½ years handling that bank fraud case and the HealthSouth foreign bribery prosecution.  The people that I met during that time – including, most importantly, my future wife – led me to conclude that I should make my home in Birmingham permanently.  While I enjoyed my time at Fraud immensely, and relish the opportunity it provided me to work with some very smart people, after four years I decided that dedicating a quarter or more of my time to travel was not something I wished to do any longer.  Former U.S. Attorney Alice Martin (another mentor to whom I’ll always be indebted) offered me a job as an AUSA and I moved to Birmingham in January 2006.  I first handled terrorism cases  but quickly moved to economic crime cases with a focus on public corruption.  I left the office in 2009 with mixed emotions, and joined Waller soon thereafter.  While my journey from New Hampshire to Birmingham was hardly a conventional path, coming here is easily the best decision I ever made.

6.         What changes have you seen in FCPA enforcement over the years?

Obviously, the most notable is the dramatic increase in the number of enforcement actions.  When I got to the Fraud Section in late 2001, the FCPA team was pretty much Peter Clark and Philip Urofsky; now it seems there are more people doing FCPA work at Fraud than not.  The people who helped to bring about that result (particularly Mark Mendelsohn, the hardest working public servant I’ve ever seen) deserve tremendous credit, in my view.

But from my current perspective, the increase in the volume of enforcement actions is less significant than the manner in which the government has carried them out.  While some would suggest that the spike in volume is indicative of the government enforcing the statute in an indiscriminate fashion without regard for anything but driving up the numbers, I see a more purposeful approach on the government’s part: an attempt to leverage the relatively small number of cases it is able to prosecute to effect FCPA compliance on a far broader scale via the carrot and stick method.

The stick is obvious:  the substantial financial penalty the government typically seeks in the form of fines and disgorgement, as well as the sizeable legal and investigative fees that are often a byproduct fulfilling the government’s expectation that the company under scrutiny will conduct and provide the results of its own review.  For some, the carrot is less apparent:  the prospect of substantial reductions both in penalties and legal fees, particularly when the company is able to secure an early declination.  Much concern has been voiced about the impact of the stick – from the efforts of the Chamber of Commerce to commentators to law firm alerts – and a fair amount of it is justified, in my view.  But those who limit their focus to the magnitude of the direct and collateral consequences which result when companies face FCPA enforcement actions fall short in their analysis, sometimes deliberately so.

Whenever illegal activity is particularly difficult to detect and the government faces an acute shortage of investigative and prosecutorial resources, the government must maximize the deterrent value of those cases it is able to prosecute in order to have any hope of carrying out its enforcement initiatives.  Whenever deterrence plays a major role in enforcement strategy, it is common to have penalties which may appear disproportionate to the offense.  But simply calibrating the perceived imbalance between crime and punishment leads to faulty conclusions if no accounting is made for the opportunities that exist to avoid negative outcomes.

In my view, the most significant change in FCPA enforcement is the government’s attempt to make clear these opportunities.  In just the past eighteen months, we have seen this message communicated in several different forms, including the release of the Guidance, the Morgan Stanley declination and various statements by key enforcement personnel.  Regardless of the channel used, the core message is consistent:  the government does not expect perfection in FCPA compliance, and companies whose compliance efforts reflect a genuine commitment to FCPA compliance can avoid draconian sanctions even if violations occur.

The question then rightly becomes: “how does a company do that?”  Sometimes, the answer is easy.  For large companies operating in high-risk industries in high-risk locations, anything short of a gold standard compliance program suggests, at best, a failure to treat FCPA concerns with the requisite seriousness.  The government uses the “stick” to punish that failure.

At the same time, the government seeks to convey a different message to mid-market companies about what is expected of them.  Those companies who are not attuned to that message (frequently because they have been subject to repeated omens that the sky is falling) often incorrectly conclude that the only way to avoid those draconian punishments is to spend money at the level the behemoths spend.  This mistaken conclusion typically causes a mid-market company to react in one of two ways:  an earnest but horribly misguided expenditure of money in an attempt to replicate a gold standard compliance program or simply throwing up its collective hands because of the seemingly enormous cost of doing so.

Over the past couple of years – whether though the Guidance, the Morgan Stanley declination, or the expressed views of key personnel – in order to avoid the latter reaction, the government has tried to counter some of the misinformation suggesting that the former is required.  And the message that emerges from these efforts is clear, to those who are really listening: companies can demonstrate a genuine commitment to FCPA compliance without spending a fortune.  The government’s effort is designed to help companies – particularly those at the mid-market level – understand that simply by paying close attention to and working to effectuate these pronouncements in a sincere manner, they can mitigate the overwhelming percentage of the risk at a fraction of what the large companies spend.  This attempt to inform while enforcing is to me the most dramatic and significant change in FCPA enforcement.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Thomas Fox, Compliance Evangelist | Attorney Advertising

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Thomas Fox

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