The World's District Attorney

James Freeman-The Wall Street Journal

Legendary prosecutor Robert Morgenthau on his famous cases, his brawl with Mike Bloomberg, and why he's sounding alarm about Iran.

In the criminal justice system, the people of Manhattan have been represented for 35 years by New York County District Attorney Robert Morgenthau. This is his story.

Mr. Morgenthau, who inspired the original D.A. character on the television program "Law and Order," will retire on Thursday at age 90. Much of the barely fictitious drama is set in his office in Manhattan's Criminal Courts Building. This week, amid half-filled boxes and scattered personal mementos, he sat down to discuss his life's work.

Even though he knows I'm wearing a wire—actually an audio recorder placed on the table between us—America's D.A. speaks candidly, including about his public blowups with New York Mayor Michael Bloomberg. Mr. Morgenthau says this is the first mayor he hasn't gotten along with, and that the relationship went south when his office started investigating the city's role in the death of two of New York's bravest in an August, 2007 fire. Among other mistakes, city inspectors had failed to note that the water had been turned off at the old Deutsche Bank building opposite Ground Zero. The blaze resulted in 33 "mayday" calls from firefighters, and the D.A. is amazed that only two lost their lives.

Mr. Morgenthau soon got a call from a city lawyer telling him that "the mayor wanted me to tell you that he's surprised that you're looking at the Deutsche Bank case." Mr. Morgenthau says he told the mayor's minion, "You tell the mayor that I'm surprised that he's surprised."

Why would the mayor encourage such a call? Because, says Mr. Morgenthau, Mr. Bloomberg "thinks all lawyers work for him" and "doesn't want anybody around who doesn't kiss his ring, or other parts of his body."

The mayor has also recently gone after Mr. Morgenthau's budget, with city officials demanding that he stop sending some of the money forfeited by criminals to the state government, and instead send all of it to the city. The D.A. reports that both governments benefit handsomely from the work of his office—$300 million so far this year, with another $230 million coming soon.

These big criminal forfeitures support his $80 million budget, but they are also the product of Mr. Morgenthau's unique legacy among district attorneys: his national and global reach. Such resources have allowed him to prosecute complex international business cases. Combined with his jurisdiction in the world's financial capital, he has become in a sense the world's district attorney.

Thomas Jefferson would have liked this bastion of local power as part of a federal system, but it is not always celebrated by federal officials. "I'm sure it [annoys] the hell out of them," Mr. Morgenthau observes.

The feeling is mutual. The D.A. says that while he's had to deal with the federal bureaucracy for decades, "it has just gotten worse" and "they ought to burn it down and start all over again. It's extremely worrisome."

For example, he says, "We had a lot of trouble with the Treasury Department" in his recent case against Credit Suisse, in which the bank coughed up $536 million and admitted to aiding Iran and other rogue nations in violating economic sanctions. The feds, as they did in a similar settlement with the British bank Lloyds, wanted only civil penalties.

Mr. Morgenthau would have none of it. He says Credit Suisse had been "stonewalling us" and only struck a deal after he threatened to bring criminal charges to a grand jury. "We would have gotten an indictment," he says.

In 2006, Mr. Morgenthau's office began an investigation into New York's Alavi Foundation, which turned out to be an Iranian government front. Money from the foundation "was being used to pay Iranian agents around the world," he says. Last month the U.S. government seized $500 million of the foundation's assets, including a Fifth Avenue office tower.

Mr. Morgenthau lacked the statute to bring legal action so he referred the Alavi inquiry to the FBI, while continuing to track a larger financial web. Individuals associated with Alavi had received money from Iran's government-controlled Bank Melli, which has been sanctioned by our government, the United Nations and the European Union for its support of the regime's nuclear and missile programs. The D.A.'s investigators found a money trail leading from Melli and other Iranian state-controlled banks, through legitimate banks in London and other European cities and into correspondent banks in the United States.

Credit Suisse, Lloyds and "eight other banks that we know about," according to Mr. Morgenthau, were involved in "stripping." This means disguising that Iran is the origin of transactions routed through American banks.

What are the Iranians buying with their ill-gotten American currency? Mr. Morgenthau obtained a shopping list that includes tantalum, a hard metal used in roadside bombs. But the Iranians are thinking bigger. He reports that he showed the shopping list to an executive at Raytheon, which manufactures missiles for the American military. Mr. Morgenthau says that after reviewing Tehran's wish list, the Raytheon official was stunned at the sophistication that would be required to create it, and replied, "My hands went cold."

The Iranian finance investigation led him to evidence showing the destination of a North Korean cargo plane that was seized in Bangkok by Thai police on Dec. 12. Despite Iranian denials, Mr. Morgenthau says the massive weapons shipment was bound for Tehran.

After years of prosecuting world-wide financial cases, including bringing down the criminal enterprise known as the Bank of Credit and Commerce International, Mr. Morgenthau has assembled a formidable intelligence network. "When people trust you, you get a lot of information from all around the world."

Mr. Morgenthau says "It takes a long time to build the kind of network we have" and adds that he expects his successor, Cyrus Vance Jr., will continue to focus on international financial crimes and Iranian finance in particular. That's because these cases are effective.

Regarding Iran, the lifelong Democrat scores both parties in Washington for ignoring the gathering threat. His own concern flows in part from his experience as a newly minted ensign aboard a destroyer the day Pearl Harbor was attacked. Mr. Morgenthau later saw action in both the Atlantic and Pacific theaters, and was fortunate to survive one sinking when a convoy ship violated standing orders and picked him and fellow crew members out of the water. He doesn't want his country to be caught unprepared again.

'Everyone has dropped the ball on [Iran sanctions]. The president is smoking pot or something if he thinks that being nice to these guys is going to get him anywhere," Mr. Morgenthau says. He says economic sanctions can "have significant impact" because most of Iran's enablers are not terrorists, just people "trying to make a buck. . . . They don't enjoy being the focus of an investigation." The D.A. argues that more aggressive federal enforcement of existing sanctions, plus a new effort to restrict Iran's gasoline imports, could make life very difficult for a regime that is under increasing pressure from its own citizens.

"The president has to say this is a priority. We have sanctions and we ought to make them work," he says. "The boss," as he's known to Manhattan prosecutors, is particularly concerned about Iran's progress in missile development and its budding relationship with Venezuelan dictator Hugo Chávez. While the two countries have opened banks in each other's countries, the D.A. reports that they nonetheless are transacting business in dollars through New York.

Mr. Morgenthau says his habit is to "never look back," but he obliges when pressed to revisit some of his most famous wins and losses. Boss of mob bosses John Gotti evaded the long arm of Mr. Morgenthau for years but was ultimately convicted of murder by the feds. "The [FBI] didn't turn over key evidence they had to us," he says.

Asked whether he should have indicted board members along with Tyco Corporation CEO Dennis Kozlowski and CFO Mark Swartz, Mr. Morgenthau responds, "probably."

Of his recent prosecution of Anthony Marshall, convicted of stealing from his mother Brooke Astor, Mr. Morgenthau makes clear that the case had a significance beyond exposing the lifestyles of the rich and famous. He notes a disturbing trend of children ripping off their parents and grandparents. The case, he says, "sent a message all over the country: You can't steal from your elders."

Mr. Morgenthau notes that his office was the first in the country to "indict the footprint," which means securing indictments before finding a defendant. This has the practical effect of removing the statute of limitations.

Mr. Morgenthau is proudest of his victories in cases widely considered unwinnable. He notes that his office was the first in the country to successfully prosecute a murder case with no body and no witness. In 2000 he won convictions against Sante and Kenneth Kimes. The mother and son killed Irene Silverman when they believed she had caught on to their plot to swindle her out of her Upper East Side mansion. The son later admitted to disposing of the body in a dumpster.

Mr. Morgenthau took on another lost cause but finally prevailed, 15 years after the disappearance of Gail Katz-Bierenbaum. Discovering flight records at New Jersey's Essex County Airport led his team to conclude and ultimately prove that her husband had pushed her body out of a Cessna over the Atlantic.

Overall, it's hard to argue with the results. While he is quick to credit the police and other city officials, Mr. Morgenthau notes that when he became district attorney in 1975, Manhattan was suffering almost 650 murders annually. Last year, there were 62. From more than 39% of the city's murders, Manhattan's share has fallen to just 12%.

Manhattan's renaissance has allowed many New Yorkers to consider not just survival, but success, and more specifically how to keep more of what they earn from the tax collector. Mr. Morgenthau has aggressively pursued those who seek to preserve their capital in other jurisdictions, but that doesn't mean he favors the current system.

"I think taxes in New York City and State are much too high," he says. "But you're never going to see them reduced unless everybody pays what they're required to pay under the law."

Mr. Morgenthau's effort to go after citizens who park their money in tax havens has led to more frustration with the Mayor. The D.A. says Mr. Bloomberg "has never been any help. I've talked to him three times about it and each time the conversation is almost identical. I tell him how much money is offshore and in the underground economy and he always says, 'I'm paying my taxes.' And I always say, 'Mike, no one is suggesting you don't, but there are a lot of other people who don't.' And then he says, 'I'm glad I'm not a lawyer.'"

Before exiting the public stage, Mr. Morgenthau also wants to set straight the record on one of the most controversial episodes in the history of the United States Supreme Court. Justice Abe Fortas was denied a Senate vote in 1968 when President Lyndon Johnson sought to elevate him to chief justice to replace the retiring Earl Warren.

The following year, Fortas resigned his seat as an associate justice after it was revealed that he received money from the foundation of Louis Wolfson, who had been convicted of crimes related to a securities case.

But Mr. Morgenthau already knew about the payments from Wolfson. As a U.S. attorney appointed by John F. Kennedy, he had been investigating Wolfson for years, against the wishes of Wolfson's friends in the Kennedy and Johnson administrations. (To be fair, politicians seeking contributions were not the only defenders of Wolfson. More recently, Henry Manne has written in these pages that Wolfson invented the modern hostile tender offer, enhancing the power of shareholders and making the U.S. economy more competitive.)

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In any case, Mr. Morgenthau believes that Attorney General Nicholas Katzenbach was fired by LBJ in 1966 because he refused to block Mr. Morgenthau's indictment and subsequent conviction of Wolfson. At the time, Mr. Katzenbach said disputes with FBI Director J. Edgar Hoover caused his resignation.

Knowing of the $20,000 per year "for life" that Wolfson's foundation was sending to Fortas, Mr. Morgenthau contacted Mr. Katzenbach's successor Ramsey Clark, told him of the deal, and suggested that he tell Chief Justice Earl Warren to consider delaying his retirement. Mr. Morgenthau says Mr. Clark never informed Warren. Wolfson had powerful friends.

Just like viewers at the end of a "Law and Order" episode, observers of the legendary D.A. are treated to one more twist in the tale.

Posted by Wintermute 2 at December 29, 2009 09:15 AM