The government's lead lawyer in the prosecution of Texas financier R. Allen Stanford is taking early retirement as the Justice Department's Fraud Section prepares to undergo big changes under new leadership in the Criminal Division, several sources with knowledge of the decision said. The decision comes as the Fraud Section chief prepares to leave for work in private practice.
Current and former Justice lawyers say there is tension in the Fraud Section as the Justice Department continues its search for a section chief, a premier post in the department. Assistant Attorney General Lanny Breuer, the head of the Criminal Division, has put a renewed focus on the section and its work prosecuting fraud on a number of fronts -- including in the health care, securities and mortgage arenas.
Breuer has said he wants a "rock star" leader for the section, a person who career prosecutors speculate will be pulled from the ranks of Big Law. (Breuer joined the department this year from the Washington office of Covington & Burling, where he co-chaired the white collar criminal defense and investigations practice.) Career prosecutors want a chief who has deep prosecution experience rather than a criminal defense lawyer who, perhaps, hasn't been in the trenches for years.
Career prosecutor Paul Pelletier, the Fraud Section's principal deputy chief for litigation, is planning to stick around on a contract basis at least until he finishes the Stanford case, according to current and former Justice attorneys. The trial could be more than a year away.
Pelletier's decision comes several months after Steven Tyrrell, the chief of the Fraud Section, announced he was taking early retirement and stepping down to look for work in the private sector. Pelletier and Tyrrell, a veteran prosecutor who took over the section in 2006, declined to comment about their decisions. Tyrrell and Pelletier both worked as federal prosecutors in Miami. Pelletier was acting chief of the Fraud Section for more than a year before Tyrrell took over.
The Justice Department offers early retirement to select employees who are over the age of 50 and who have served for at least 20 years. An attorney who opts for early retirement gets pension payments immediately and without penalty. Tyrrell remains the section chief. He has said he plans to stick around for several months longer to aid any transition to a new leader of the section. (Tyrrell hasn't announced where he is going. He has previously worked at Skadden, Arps, Slate, Meagher & Flom and Kelley, Drye & Warren.)
The sources also said a deputy chief in the section, Mark Mendelsohn, a prosecutor for 11 years who supervises Foreign Corrupt Practices Act prosecution, has begun to look for work in the private sector. Mendelsohn sent out a recusal letter internally last week that identified certain law firms, according to current and former Justice lawyers. Mendelsohn, a federal prosecutor for nearly 12 years, declined to comment.
Two other deputy chiefs in the section, Steve Linick and Kirk Ogrosky, declined to comment about the comings and goings in the section. Justice Department officials also declined to talk about moves in the Fraud Section, which has about 60 lawyers.
Ogrosky supervises health care prosecution, and Linick specializes in procurement fraud prosecution. Last year, President George W. Bush nominated Linick to be the inspector general of the Federal Housing Finance Agency. The nomination died in committee. Ogrosky left the Justice Department in 2004 to join the Washington office of Skadden Arps, where he was of counsel. He returned to the department in 2007. Pelletier and Ogrosky both are former prosecutors in Miami, a city where Justice lawyers have aggressively targeted health care fraud.
For deputy chiefs in the section, the time could be right to jump ship to private practice -- for financial reasons -- given the Obama administration's focus on the prosecution of fraud, several lawyers in the private white-collar bar said. The Fraud Section has high exposure right now. Mendelsohn, Linick and Ogrosky are often guest speakers. Last Sunday, Ogrosky and Attorney General Eric Holder Jr. appeared on the CBS news program "60 Minutes" to talk about combating Medicare fraud. (On the program, Ogrosky spoke before Holder.)
Breuer told The National Law Journal in July that the search for a Fraud Section chief includes tapping into Big Law and prosecution offices around the country. Justice officials say the department is "very far along" in the process for hiring a section chief and for a deputy chief for securities fraud prosecution. The section is planning to hire 10 to 15 attorneys -- with a particular focus on health care fraud.
"The Fraud Section continues to be a magnet for talent," a Justice spokeswoman, Laura Sweeney, said in a statement to The National Law Journal. "In recent months, we've had an extraordinary number of high-quality applications for positions within the Section, and its future looks incredibly bright."
This article first appeared on The BLT: The Blog of Legal Times.