This Article is From Feb 17, 2015

Preet Bharara's Task Force on Wall St. Has Shifting Legal Roster

Preet Bharara's Task Force on Wall St. Has Shifting Legal Roster

File photo: Preet Bharara addresses a press conference. (Associated Press)

New York:

They indicted the powerful hedge fund SAC Capital Advisors, cracked down on insider trading and sent Bernard Madoff's accomplices to prison.

Now the prosecutors - once members of an elite Wall Street task force at the U.S. attorney's office in Manhattan - have moved on.

Over the last year, eight prosecutors have departed the unit, most landing at big law firms. And the current chief of the unit is now fielding interest from multiple firms, people briefed on the matter said, suggesting that another vacancy will soon emerge.

All the job hopping has fed speculation about the future of a division that has become a crown jewel of the U.S. Justice Department and a central plank in the legacy of Preet Bharara, the U.S. attorney in Manhattan. Given the departures - as well as a recent appellate court ruling that reined in insider trading prosecutions - has the unit hit a wall?

The answer is no, nearly a dozen current and former prosecutors say. The departures, the prosecutors say, reflect the natural ebb and flow in the Justice Department's roster, a cycle that plays out at U.S. attorneys' offices around the country and periodically occurs at Bharara's Wall Street unit.

Changes at the unit are a microcosm of those unfolding across the legal world. Lawyers are leaving public service for private law firms as the economy gathers steam and as demand for white-collar specialists grows from Wall Street firms and other companies facing government investigations. Even some hedge funds are looking to hire former prosecutors.

A three-year Justice Department hiring freeze did not help. But the hiring restriction was lifted a year ago, so the office has begun to fill vacancies and tap a deep bench of younger prosecutors for the Wall Street unit. Prosecutors must cut their teeth on general crimes and narcotics cases before joining the Wall Street unit, which is among the office's most senior divisions.

"That's the beauty of the office," said Lorin Reisner, who was head of the office's criminal division, which includes the Wall Street task force, until last year when he, too, departed for a private firm - Paul, Weiss, Rifkind, Wharton & Garrison. "You lose stars, but you also bring in new energy."

A spokesman for Bharara, Jim Margolin, similarly noted: "The office regularly experiences departures of attorneys, and the securities and commodities fraud unit is one of those that is affected. But there is also a regular influx of talented replacements."

The turnover coincides with the reality that the pipeline of insider trading cases has slowed, and cases arising from the financial crisis are all but resolved. Few prominent securities trials are scheduled for early this year.

Some prosecutors have suggested that the Wall Street unit, known as the Securities and Commodities Fraud Task Force, is just as active, but in less visible ways.

The unit is quietly building investigations into money laundering on Wall Street, including one at Commerzbank, Germany's second-largest bank, behind Deutsche Bank. In insider trading, the office might take only a brief pause while it fully assesses the appeals court ruling, which threatens to overturn certain convictions. Bharara has asked the appellate court to reconsider its ruling, warning that it "threatens the effective enforcement of securities laws."

Bharara's Wall Street task force, .. prosecutors say, is no more prestigious than, say, his terrorism, cybercrime or public corruption units. He is fond of saying "I love all my children equally."

But it was his financial cases that landed him on the cover of Time magazine, with the headline "This Man Is Busting Wall Street." And after recording a number of prominent Wall Street victories - securing more than 80 insider-trading convictions, indicting SAC Capital on charges of insider trading, handling the Madoff cases, charging a pair of JPMorgan Chase traders involved in the "London Whale" trading blowup and extracting guilty pleas from the likes of BNP Paribas, to name a few highlights - Bharara has become the public face of white-collar prosecutions.

So when some prosecutors behind those cases looked ready to leave, the legal industry pounced.

John T. Zach, who helped indict SAC, became a partner at Boies, Schiller & Flexner last month. Matthew L. Schwartz, who handled the London Whale and Madoff cases, did the same.

Those departures followed three other prominent departures: Antonia Apps, Eugene Ingoglia and Marc Berger, the former chief of the Wall Street unit. (Arlo Devlin-Brown left the unit to become head of the office's public corruption group.)

This is not the first time the unit has lost big names in a short time. The most recent previous exodus was several years ago, just after the initial wave of arrests stemming from an investigation into the hedge fund magnate Raj Rajaratnam.

Two years after that, Andrew Michaelson, one of the prosecutors on Rajaratnam's case, took a job with Boies Schiller. Also soon to exit were Jonathan Streeter, now at Dechert, and Reed Brodsky, now at Gibson, Dunn & Crutcher.

Their departures, while significant, opened the door for other prosecutors to handle the SAC Capital and Madoff cases. And last year, the prosecutors who worked those cases traveled to Washington for a victory lap.

Inside the Justice Department's Great Hall, a two-story auditorium known for its nude statues and terra-cotta tile floor, U.S. Attorney General Eric Holder handed one of his highest honors last September to the SAC Capital prosecutors. They included Devlin-Brown, Zach and Apps.

A month later, in Washington's largest concert hall, some of the same prosecutors marched on stage to collect yet another award from Holder, this time for the Madoff cases. Of the five task force prosecutors honored that day, one remains in the unit.

© 2015, The New York Times News Service
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