Corruption Matters - November 2016 - Issue 48

Wheel & spoke corruption

George Bokelberg is a criminal investigator with the FBI. He and his team were instrumental in uncovering the corruption of former New Orleans mayor Ray Nagin, who is currently serving out a 10-year jail sentence. Mr Bokelberg is a guest speaker at the Australian Public Sector Anti-Corruption Conference in Sydney next year, where he will talk about the investigation that garnered him and his team several awards in law enforcement excellence.

Change management picture

The Nagin investigation came about as a result of a tip-off from businessman Michael McGrath in an unrelated matter. Can you briefly describe how things unfolded?

Actually, we had been investigating Nagin’s chief technology officer and executive assistant, Greg Meffert, for many months before the McGrath information came to us. During the course of the Meffert investigation, we discovered some things that caused us to wonder whether we were going to have to turn our attention to Nagin as well. For example, we were uncovering evidence that suggested that businessman Mark St Pierre, who was providing kickbacks to Meffert, paid for Meffert’s and Nagin’s families to go on a Hawaii vacation. But we didn’t know if Nagin knew that this vendor doing business with his city had paid for the trip because Meffert had acted as a layer between the two, and may have taken credit to curry favor with his boss (Nagin).

We also had suspicions that St Pierre had paid for a Nagin family trip to Jamaica. And we had learned that Nagin had accepted another businessman’s offer of a private jet trip to Chicago to attend a New Orleans Saints playoff game, but there was confusion as to whether and when Nagin reimbursed the businessman. So, we had this little pot on a side burner that wasn’t our primary focus, but we were keeping it warm and receptive to whatever might need to go into it, knowing that it may become something quite serious later.

Then we got the call about Michael McGrath, who credibly described a $50,000 payment made to Nagin, camouflaged as an investment in Nagin’s struggling family granite business, directed by a businessman (Frank Fradella) whose company was tied in to the private plane Nagin took to Chicago. So, while we continued at that time to primarily focus on successfully charging and convicting the conspirators in the Meffert/St Pierre scheme, we began, in earnest, our spin-off investigation of Nagin.

You have said that Mr Nagin’s motivation was to keep the family granite business, Stone Age, afloat and that, at this level, the corruption was straightforward and unremarkable. He and his family received several hundred thousand in bribes from businesses (and some travel perks) in exchange for more than $5 million in city contracts. You said that it was the schemes unfolding around him that took on a level of sophistication. Can you explain what you mean by this?

So, that wording re the sophistication of schemes unfolding around him was more the reporter’s characterisation of events than my exact take on things. Like many others receiving bribes and kickbacks, Nagin’s were camouflaged, as investments, granite inventory, paid-for travel, cell phones with contracts, conduit campaign contributions, and exclusive business opportunity promises. Together, these were valued at more than $500,000.

We call Nagin’s type of conspiracy “wheel & spoke” because the various spokes may not be related or even know about each other’s involvement, with Nagin at the center. As such, conspirators on one spoke, if convinced to cooperate with us (the government), couldn’t necessarily provide intelligence or testimony regarding activities involving the other spokes.

There were several other features of the investigation which made it more difficult than many. One was that it was an entirely historical case, which meant we could not collect any real-time evidence, such as recordings of payoffs, or payoff arrangements. Another was that Nagin was extremely disciplined in his practice of deleting emails and text messages after he read them, and then deleting his responses after he sent them. He deliberately had his email box placed on the city’s smallest server, which meant after material was deleted, it was more likely to be written over (thus made irretrievable) more quickly.

He also insisted that everyone who had a Blackberry use Blackberry’s PIN (device to device) feature when texting him, rather than SMS texting, so that texts wouldn’t pass through (and leave a trace) on SMS servers. Finally, despite these digital challenges, we collected, through search warrants and other means, more than eight terabytes of digital material, comprised of more than 3.4 million digital documents, for us to analyse.

The investigation took part in the context of a city trying to rebuild itself after Hurricane Katrina; a hurricane that had flooded more than three-quarters of low-lying New Orleans in 2005 and left more than 1,800 dead across the region. The bungled recovery efforts following Katrina became highly politicised, and then, in 2009, came the FBI’s investigation into the city’s mayor. What was it like for you and your team to be part of this investigation at that time?  

The city was still really licking its wounds at that time, and you could see it in the press, and in discussions in the street, that every new announcement of a public corruption investigation, or municipal failing, was like a punch in the stomach for this traumatised city. In addition, citizens were becoming increasingly disappointed with the mayor whom they had elected to a second term right after Katrina, but who seemed increasingly disconnected and disengaged with regards to his custodianship of the city.

I need to be clear again, we never had an intention to target this mayor, with whom people were becoming more disenchanted. But we understood that we were obligated to follow where the evidence appeared to be taking us, and we felt a lot of pressure to make no mistakes in going forward and to not add to the traumatisation of the city via a failed investigation/prosecution of the mayor.

Clearly, the investigation took on a life of its own. Can you provide a description of the resources needed and the volume of material covered as time progressed?

The investigation was geographically wide in scope, requiring coordination with the FBI Newark and Dallas offices and corresponding US Attorney’s Office (prosecutors’ offices) to coordinate the cooperation of subjects in those locations, prosecuted for unrelated crimes, who became witnesses at trial. The investigation also gathered evidence in Tampa (Florida), Atlanta (Georgia) and Jamaica, and from the Securities and Exchange Commission.

Nearly 150 interviews were conducted, dozens of subpoenas were served and thousands of pages of financial records were analysed. Surveillance was conducted in a number of locations, and several search warrants were executed on the City of New Orleans. As mentioned earlier, we collected more than eight terabytes of digital material, comprised of more than 3.4 million digital documents, which we analysed.

Over the course of the investigation/prosecution, we generally had between two and five investigators working on the case, and between two and four prosecuting attorneys, and a devoted financial analyst, plus several intelligence analysts who assisted in the analysis of the digital material. I wish I could say that personnel assigned to the investigation had the luxury of being assigned full-time, but everyone had other things they were working on as well, and it wasn’t until it was time to prepare for trial that everyone could devote all of their energies to this matter.

Not all of Mr Nagin’s co-conspirators received a jail sentence. Conspirator’s culpability, cooperation and awareness of a crime are some of the factors that you have said go into deciding who gets charged in a conspiracy and who does not. Can you expand on this?

I can’t specifically account for why some were charged and some weren’t in the Nagin matter. Generally speaking and in addition to what I said earlier, in a world of limited resources, not everyone who appears guilty of breaking the law gets prosecuted, of course. Sometimes, those who demonstrate a pattern of illegal activity, as opposed to a one-time action or one act of bad judgment, get more attention from law enforcement.
There are times, with regard to corporations, that the responsibility for illegal acts is so diffusely distributed that prosecuting individuals can be problematic. Ultimately, there is no specific formula for us to follow when we’re sorting out who will be prosecuted or who will not, and it's the prosecutors who make the final call.

Let’s talk briefly about your own career progression. You worked as a clinical psychologist at a hospital for mental illness and addiction before becoming a case agent on public corruption investigations. How did that transition come about? 

After having worked for several years as a clinical psychologist in New Orleans, I was interested in expanding my practice into forensic psychology, as I had always had a side-interest in criminal justice. I approached the local FBI office to inquire about doing some consulting work and I was encouraged to apply to become a special agent instead.

After graduating from the FBI Academy, I was assigned to work as a criminal investigator at the Washington, DC, field office. While there, I was approached by FBI Headquarters to consult with the undercover program, as they had identified a need for a licensed clinical psychologist to consult with their program. Subsequently, I became the first chief psychologist for the FBI’s undercover program, where I validated their psychological screening and support program, and developed and validated a similar program for investigators of internet crimes against children.

I moved from there to working as a supervisor in the undercover program, which is where I was when Hurricane Katrina hit New Orleans. During my 10 years in Washington, I had been returning to New Orleans for visits several times a year, maintaining my friendships and connections there and always intending to move back. After Katrina, my now-wife and I agreed that we wanted to be a part of the rebuilding of the city, so I stepped down out of the management program and took a transfer to New Orleans to resume work as a criminal investigator. Because of the state of the city at that time, the majority of white collar crime was disaster-related fraud, so I investigated cases such as one in which art dealers took advantage of customers wishing to replace their Katrina-destroyed art collections by selling mass produced paintings from China, passing them off as the true works of up-and-coming local artists.  

I was also assisting with some undercover public corruption cases, and then transitioned into solely investigating public corruption. The transition from psychologist to investigator seems pretty straightforward to me intellectually, as both involve intensely working with people, uncovering what the truth is, gathering convincing evidence of that truth, and getting others (prosecutors, defense attorneys, subjects and juries) to get on that same page of truth, to work towards some better resolution.

What is it like to work for the FBI?

I am one of the senior agents amongst 16 or so criminal investigators working public corruption here in The Big Easy. I have found amongst my fellow agents some of the most earnest, best-intentioned, warmest and most committed people I’ve ever met; so working for the FBI means getting to work with those people while serving some greater purpose, which for me is protecting the vulnerable from those who would prey upon them.

Is this your first trip to Australia?

In July 2003, I was invited to contribute, as the chief psychologist of the FBI’s undercover program, at the Australian Institute of Police Management during their National Policing Priority Workshop, during which we discussed management of undercover operatives. It was a wonderful experience, so I’m quite pleased at this prospect of returning to Sydney for the Australian Public Sector Anti-Corruption Conference.

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