Prosecutors Coercing Defendants to Contribute to the Prosecutor’s Favorite Charities

Earlier this year I wrote about judges who sentence defendants by ordering them to contribute to the judge’s favorite charity. Maybe one reason many prosecutors do not put up a fuss is that they also like to settle cases by requiring the defendant to contribute to the prosecutor’s favorite charity. That is quite a power— the prosecutor can use the strong arm of the state to force a defendant to fund his pet project.

Let us first consider what federal prosecutors now do. The Department of Justice of the United States often settles cases by requiring defendants to pay money to its favorite charities and, as you may have guessed, they tend to be supporters of the president who appointed the U.S. Attorney. Hence, supporters of President Obama are the winners right now. We are not talking about prosecutors requiring defendants to pay restitution to the victims of their crimes. That makes sense. Instead, prosecutors insist that the defendants pay money not to the victims but to third parties.

For example, earlier this year we learned the Department of Justice arranged a settlement with Citibank and Bank of America that required these corporations to “donate” $150 million to “community development groups” similar to ACORN. The donations earn “double credit” against the banks’ obligations, so $150 million erases $300 million in fines.

Not only do federal prosecutors get to reward their friends, they avoid the middleman; that is, they do not need to ask Congress to appropriate money (which is the way the Constitution intended. Art. I, § 9, clause 7).

Another fly in the ointment for federal prosecutors is the “Custodians of Money” Act, 31 U.S.C. § 3302. It requires (with exceptions not relevant here) that any “official or agent of the United States Government” (that includes prosecutors) “receiving money for the Government from any source shall deposit the money in the Treasury as soon as practicable without deductions for any charge or claim.” Prosecutors, using their official powers, are receiving the money on behalf of the United States.

Nonetheless, Justice Department guidelines allow these forced donations, while conceding that they “can create actual or perceived conflicts of interest and/or other ethical issues.” Presumably, the Justice Department thinks that if the money goes directly to the third party, the federal official never has “received” the money. Like a fly in my soup, that argument is a bit hard to swallow. The only reason the defendant gives any money to charity is that the federal government is insisting on the “donation” as the cost of the plea bargain.

In early 2016, we learned that the Bank of America donated more than $60.1 million to various charitable funds and nonprofit groups, as part of a $16.6 billion settlement with the United States. Here’s the best part (for Bank of America)—for every one dollar the bank gives, the bank is credited with $2 toward its financial fraud settlement with the Justice Department. The federal government argues that these donations are “voluntary” and thus are not funds that the bank should deposit to the Treasury. However, if the bank does not make the “voluntary” donation, that would violate its plea agreement with the Department of Justice. The grateful recipients of Bank of America’s largesse are organizations that support the present Administration.

Bank of America is not alone. Citigroup signed a similar agreement, giving least $10 million in “community relief” to a government-approved list that (coincidently?) are Democratic-friendly nonprofits. It pays to have friends in high places.

We find ourselves in a situation where the federal government can claim to the public that it is settling a case for, let’s say, $1 billion, but the federal coffers never see this money. Instead, the settlement is wiped clean when the corporation gives half of it to political supporters of the party in power.

State prosecutors engage in similar practices although state ethics rules bar them as well. Consider a 1995 Opinion in North Carolina [NC Eth. Op. RPC 204 (N.C.St.Bar.), 1995 WL 853878]. It concluded that a prosecutor may not plea bargain with individuals in exchange for donations “to even the most worthy charity” because that “implies that justice can be purchased.” Still, we can find prosecutors who violate this restriction.

For example, the Iowa Supreme Court suspended a lawyer for a year with no possibility for reinstatement for a year, because the lawyer, while a county attorney, required some defendants, as part of their plea bargain, to donate to a fund in the sheriff’s office. These plea agreements “gave the appearance to the public that justice was for sale in Cass County.”

Morrissey v. Virginia State Bar is another, rather bizarre, example. As part of a plea agreement in a rape case, the defendant agreed to pay the victim $25,000 damages and to give a $25,000 gift to charities selected by the prosecutor. The prosecutor originally wanted the $25,000 to fund a “prosecutor’s corner” show on a local TV station. The prosecutor said that he “would be the focal point [of this television program] and he would have guests on, [to] explain prosecution oriented issues.” The defense lawyer thought that it would be an inappropriate use of the money, so the prosecutor abandoned that particular idea but still required a charitable donation.

That prosecutor did not disclose the charitable gift portion of the agreement to the victim or the court. The court found that, in soliciting this arrangement, the prosecutor misled the victim of the crime into accepting this resolution of the case and concealed the terms of the gift from the court, both actions violating provisions we now find in the ABA Model Rules, Rules 8.4(c) and (d). The court suspended the prosecutor from practice for six months.

The N.Y. State Bar Association’s Committee on Professional Ethics, in 2003, declined to prohibit all donations, but strictly cabined the discretion of the prosecution. This opinion specifically approved of Morrissey. The question involved a plea bargain with a defendant charged with driving while intoxicated or driving while ability impaired. If the defendant pleads guilty to a lesser charge, the prosecutor will agree that the negotiated sentence will include a donation by the defendant to the county’s STOP-DWI program. The opinion advised yes, under strict conditions:

If probable cause supports a charge, and if all terms of the sentence are legal, a district attorney may agree to a plea bargain in which the defendant is required to make a donation: (1) to the statutory program known as STOP-DWI, as long as the district attorney is not also “coordinator” of the county’s STOP-DWI program; or (2) to a not-for-profit organization, as long as the prosecutors handling or supervising the case do not have a “personal interest” in the organization that reasonably may affect their judgment; they do not know that any lawyer in the district attorney’s office has such an interest; and the donation to the organization does not create an appearance of impropriety.

At a minimum, the prosecutor must be very candid to the court, when proposing that the defendant donate money at settlement of a criminal charge. Still, the N.Y. test offers no comfort to the prosecutor. First, the prosecutor must have no interest in the charity and it must not create “an appearance of impropriety”—a test that is, shall we say, a bit vague.

The best way to avoid the appearance of impropriety is not to engage in the conduct at all. Fines in plea bargains should go to the state or federal treasury, not to friends of the prosecutor.