Last week was a tough week for the Justice Department’s criminal prosecutors. Before everyone gets out their Yates Memorandum trending claims, it is important to recognize that DOJ’s loss in several high profile cases does not reflect some earth-shattering trend or recent Yates phenomena. DOJ last a series of criminal cases that were indicted or investigated before the Yates Memorandum had hit the ground in September 2015.
I want to take a little time to review these cases and will do so in several separate posts. Today’s post focuses on DOJ’s recent loss against the former Warner Chillcott President Carl Reichel.
Last Friday, a Boston, Massachusetts’s jury acquitted Reichel of a single charge of conspiracy to engage in violation of the anti-kickback statute. The jury was not out long – which can be either a good sign or a bad sign for the government, depending on the length and complexity of the trial.
Warner Chillcott’s subsidiary plead guilty and paid a $22.94 million fine for paying kickbacks to physicians. In addition, the parent company agreed to a civil penalty of $102.6 million for illegal marketing of various drugs. Several executives and managers plead guilty during the investigation and agreed to cooperate with the government.
On paper, the case against the former President Reichel looked very strong. Reichel was alleged to have design and promote a scheme to increase drug sales by paying doctors to increase or maintain high prescription rates. Payments were made to physicians through exorbitant speakers fees and other benefits. In particular, Warner Chillcott paid for doctors’ expensive dinners, large speakers’ fees even though they did not actually give speeches.
The jury deliberated for less than a day before acquitting Reichel. During the trial, the government presented evidence from cooperating witnesses who tied Reichel to the scheme. However, the government did not have much documentary evidence tying Reichel to the plot, except for a few email messages.
The government also introduced a recording of a marketing meeting that Reichel attended during which the illegal program was promoted. Prosecutors claimed that Reichel was made aware of the program and that he knew it was illegal. Reichel did not testify at the trial.
Reichel’s defense cited “rogue employees” who violated the law and knew they were doing so. These executives and employees, the defense claimed, cut deals to save their own skins, and falsely implicated Reichel. The trial lasted for over a month.
DOJ’s loss was not expected, particularly such a quick verdict after a long trial. While it is easy to second guess a government prosecution, the case may have been complicated by reliance on cooperating witnesses, who can cause significant harm to a prosecution depending on their specific situations and presentation. Cooperating witnesses are even more risky when there is little corroborating evidence to implicate an individual, especially a former President.
Without watching the trial, it is hard to know exactly what the dynamics were that led to the government’s loss. Assuming that the government’s commitment to increase individual criminal prosecutions is sincere, it should be no surprise for the government to lose more criminal cases, especially against white collar criminals.
Every former prosecutor knows that some of the toughest cases are those where a cooperating witness provides critical
information that may not be corroborated. For whatever reason, juries tend to view cooperating witnesses with a great degree of skepticism.
Prosecutors have to devote skill and care to presenting a cooperating witness, understanding how juries are likely to react, and recognize the risks involved when relying on cooperating witnesses.
Even with the benefit of hindsight, based on the evidence collected during the investigation, it may be hard for the government to question whether it should have brought the case against Reichel or not. My guess is we will see more cases where defense counsel are able to secure acquittals or “victories” as the Justice Department implements the yates memorandum requirements.