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[00:00:29] The question on council's mind today is first, how is it possible that one third of council members were indicted on corruption charges just last year? And two, how can they restore the public's trust?
[00:00:57] Bribery and corruption of public officials. It's so common we're no longer surprised that it happens. But that doesn't mean we're not disappointed. We're disappointed because we had a hand in voting or not voting for them. Because they're supposed to be looking out for our best interests and those of the community. And because it makes us more cynical about whether public officials can ever be trusted.
[00:01:25] The good news is that most public officials can be trusted. There are far more local elected officials than there are state and federal ones. Local politicians tend to be more trustworthy. They're closer to the people, and the decisions they make impact their lives as much as they do their constituents. They're also more likely to be cornered in the local grocery store than a U.S. senator.
[00:01:49] But the higher you go up the political chain, the more removed politicians are from the people. Stakes are higher, and so are the temptations. Plus, the cost of running campaigns is vastly higher, so compromises must be made. I'm Jim Grinstead, and today we're talking about bribery, corruption, and the abuse of the public's trust.
[00:02:18] Politicians will get their due, but so will business and industry. So how was it that one-third of Cincinnati's counsel was indicted in one year? For that, we go back to the 1920s, when Cincinnati followed Kansas City's lead and went to a city manager form of government. In another episode, we tell you how Pendergast created a political army to rule Kansas City.
[00:02:47] It's a model used successfully by Chicago's Mayor Richard J. Daley and other power brokers such as Organized Crime. A city manager was supposed to remove politics from Cincinnati's government in favor of professional management. For Cincinnati, it worked until 2020 when developers filled some council members' pockets in exchange for votes to support their projects. After the arrests, the Cincinnati Council once again faced the need for reforms.
[00:03:15] Four key proposals are going to be discussed today in this meeting. The first is a motion that keeps council from being involved in the negotiations of any development deals. Then a motion to call a blue ribbon panel to study the development deal process in Cincinnati. Another motion to create a Cincinnati Ethics Commission. And finally, an ordinance to amending financial disclosure. Council members would now need to report gifts of $75 or more. The remaining council members say reform and today's meeting is imperative.
[00:03:45] That was Jasmine Stiles of WCPO. During one of the trials, the public found out how the fraud was uncovered. He's a developer, a former Bengal player. His name is Chinadum Ndukwe. He says he started working with the FBI after P.G. Sittenfeld, the former councilman, called him and told him every major developer in town was going to donate $10,000 to him. And he expected him to do the same. He said he felt pressured, preyed upon.
[00:04:11] And he told jurors here hours ago, quote, there's been a culture of that expectation to give to these politicians. That's why I wanted to help. And Ndukwe is the government's cooperating witness. He recorded phone calls to Sittenfeld. He introduced him to undercover agents who were posing as developers and investors, all interested in a major project near the convention center. He added earlier today, quote, in my opinion, I believe the city of Cincinnati has been extremely corrupt for a very long time.
[00:04:40] WCPO again, and reporter Evan Millward. In business, bribery and corruption spread from the top down. And by down, we mean Mexico. And by the top, we mean Walmart.
[00:05:06] The Securities and Exchange Commission said that for 11 years, the top brass at Walmart knew bribes were being paid to Mexican officials to clear the way for new stores. The company made the payments through a third party. The SEC charged Walmart under the Foreign Corrupt Practices Act, which prohibits companies from paying bribes to foreign officials.
[00:05:29] The company ended up settling with the government for nearly $300 million for activities between 2000 and 2011. Today, Walmart is the largest retailer in Mexico. And Reuters reports that in 2022, its net profits in Mexico were $603.8 million, more than twice its earlier fine. The Walmart story was originally reported by the New York Times.
[00:05:59] It's easy enough to say that, well, that's just how business operates there. What's a company to do? The answer is, follow the law. U.S. law. But there's a lot of wiggle room in that law. And there are times when certain payments are legal. Joseph Hoffman of the Indiana University Mayor's School of Law explained it to the PBS NewsHour.
[00:06:26] Well, basically, any payment made to a foreign government official in an effort to try to get them to do something that is either against the rules of law of that country or an effort to get them to exercise their discretion to allow an American company to expand or to do business or even to maintain business in that foreign country would be classified as a bribe.
[00:06:50] Now, the FCPA has a specific exception for what are called facilitating payments. These are generally described as payments that are made to facilitate or to speed up the issuance of a permit that would already be something the company would be entitled to get under law. Or, for example, to turn on a utility like the company wants to get the electric turned on or the water. These are facilitating payments and they're not considered to be bribes.
[00:07:20] But if you read the New York Times story carefully, a number of the allegations go way beyond anything that could reasonably be described as facilitating payments. For example, payments to get zoning approvals. These are not automatic. They're not something that the company is entitled to. They involve exercises of discretion by local government officials and payment to get those zoning approvals would be a bribe.
[00:07:47] The great state of Illinois is the home of Honest Abe, but the state has been a breeding ground for corruption for a long time. This tale involves AT&T and former Speaker of the House Mike Madigan. Madigan faced federal charges of bribery, racketeering, and conspiracy. He was the ninth legislator to face charges within four years.
[00:08:10] Someone dropped a dime on Madigan, and that led to five charges against the former president of AT&T Illinois for conspiring to deliver a $22,500 payoff. The cash allegedly went to a close ally Madigan's. AT&T Illinois was charged with one count of using an interstate facility to promote unlawful activity and has agreed to pay $23 million.
[00:08:36] As long as the company cooperates fully, that charge will be dropped in two years. Republicans said that not enough's been done in Illinois to eliminate such corruption. The newest corruption allegations mirror in many ways the much larger and more brazen scheme carried out by top executives of electric utility giant ComEd.
[00:08:59] That company's admitted to paying a million dollars in bribes to members of then Speaker Madigan's inner circle in exchange for big rate increases that hit consumers. The feds now claim that Paul Laschiazza, then president of AT&T Illinois, sought to grease the passage of certain legislation AT&T wanted by arranging a $22,500 payoff to a close associate of then Speaker Madigan.
[00:09:28] That was Mike Flannery of Fox 32 in Chicago. Remember kindly old Marcus Welby? If you weren't a child of the 70s, probably not, but Welby was a doctor who made house calls in the middle of the night where he healed hearts and minds. The idea of prescribing medicines that weren't good for his patients would not have entered his mind, nor would accepting kickbacks from drug companies.
[00:09:53] Today, drug reps with bright smiles and free lunches for the medical office staff have a major influence on what drugs are prescribed. They know these indirect gifts will gain them access to those who write the prescriptions. This practice is known in the industry as detailing because it supposedly provides details to physicians about drugs and how they work.
[00:10:15] Drug companies don't do this to be friendly. They do it because they know it works. In fact, they know a terrifying amount about nearly every prescription coming out of a doctor's office. Every time a patient goes into a pharmacy to get a prescription filled. The information is sold to drug companies who send it to laptops out in the field. So we see everything that the doctor does, how many prescriptions he prescribes of our medication and the competitor's medication. If the computer shows a doctor's not prescribing as promised.
[00:10:44] All you have to do is say, hey, you're banging out a lot of prescriptions for the competitor's drug and not mine. What's going on? That's John Oliver of HBO's Last Week Tonight with John Oliver. Drug companies are a bit like high school boyfriends. They're much more concerned with getting inside you than being effective once they're in there. And their marketing budgets reflect that. In 2012, research showed that drug companies spent more than $3 billion a year marketing to consumers in the U.S.,
[00:11:12] but an estimated $24 billion marketing directly to healthcare professionals. That's $3 billion on research, $24 billion on marketing. Since then, detailing has been curtailed by many doctor's offices, but staff members are still eligible for free meals. To replace their close contact, the reps contact doctors, tell them they are highly considered within the industry, and are invited to make a speech to their colleagues.
[00:11:41] Not at some stuffy university, but some place like Hawaii that is conductive to undistracted learning. A doctor, of course, will be paid for his or her time, and all expenses are included. There may even be a stipend. What's not to love about it? Those attending such conferences may make their own presentations, or at least be able to ride off the trip as a professional education expense.
[00:12:09] And who can forget that wonderful scam that created an opioid crisis in the United States? A scam that devastated communities, involved huge numbers of corrupt doctors, and killed tens of thousands of people. Here's a clip from the PBS Frontline series which looked deeply into the crisis and how the drugs were marketed.
[00:12:35] April Moore was a new sales rep at the time, working for one of Berlikoff's handpicked managers. She was told to focus on one doctor in Chicago, Dr. Paul Madison. Sunrise Lee was my manager. She told me, you want to get Dr. Madison out to do speaker programs, push speaker programs, because that's money.
[00:12:57] I was told there were going to be approximately 11 to 13 doctors, and not one doctor showed up. Dr. Madison saw one of his friends. So Sunrise had Dr. Madison's friend and the date forge signatures of other doctors that were supposed to be at this dinner program, so that Dr. Madison could get paid. He got anywhere between $1,200 to $1,500 for that speaker program.
[00:13:28] Dr. Kapoor insisted on actually tracking the number of prescriptions that the speaker prescribed, which had never been done at any other company I've been involved in. Dr. We were getting daily data, a report that would show a correlation between the number of dollars that they were paid in honorarium to speak by INSYS therapeutics, and the number of dollars that they provided to INSYS via prescriptions of subsys.
[00:13:55] Again, minimum of $2 for every $1 we spent. Dr. Madison made an estimated $86,000 in speaker fees and wrote at least $1.2 million in subsys prescriptions. He told us he didn't do anything improper with the speaker programs or over-prescribed subsys. He hasn't been charged with a crime related to INSYS, but his medical license was revoked in Illinois.
[00:14:25] Frontline also found that reps were encouraged to push high-dosage formulations rather than lower dosages as the higher dosages were more profitable. In 2017, the Brookings Institution reported,
[00:15:02] End quote. Purdue Farm was considered among the worst offenders, and in 2020, the Justice Department said Purdue admitted that from May 2007 through at least March 2017, it conspired to defraud the United States by impeding the lawful function of the Drug Enforcement Administration.
[00:15:27] Purdue represented to the DEA that it maintained an effective anti-diversion program when, in fact, Purdue continued to market its opioid products to more than 100 healthcare professionals. Purdue also reported misleading information to the DEA to boost Purdue's manufacturing quotas.
[00:15:45] Additionally, the conspiracy involved aiding and abetting violations of the Food, Drug, and Cosmetic Act by facilitating the dispensing of its opioid products, including OxyContin, without a legitimate medical purpose and thus without lawful prescriptions. Purdue also admitted that between June 2009 and March 2017, it made payments to two doctors through its doctor-speaker program to write more prescriptions of Purdue's opioid products.
[00:16:13] Also, from April 2016 through December 2016, Purdue made payments to Practice Fusion, Inc., an electronic health records company in exchange for referring, recommending, and arranging for the ordering of Purdue's extended-release opioid products. Purdue pled guilty, so when time came for punishment, the company agreed to a criminal fine of $3.5 billion and an additional $2 billion in criminal forfeiture.
[00:16:43] Separately, the Sackler family, which controlled Purdue, agreed to pay $225 million in damages to resolve its Civil False Claims Act liability. In 2016, the remaining 40 members of the Sackler family were worth $13 billion, which made them the 19th richest family, according to Forbes. Since then, the figure has shifted due to litigation and settlement fines.
[00:17:10] As of September 2021, Bloomberg estimated the Sackler family's wealth had dropped to about $11 billion. We've looked at scams in cities, states, and industry, and now it's time to examine a really big fish. The U.S. Navy. Navy officials accepted favors and money in exchange for vital intelligence.
[00:17:38] The man who set up the scam is Leonard Francis, also known as Fat Leonard. Fat Leonard conned high-ranking naval officers of the U.S. 7th Fleet into scheduling their ships and supporting vessels into ports that he controlled. He would then resupply the ships and overbuild the U.S. government. The side gig to all this was to sell the information of where the ships would be, and when, to foreign governments.
[00:18:05] That information would give the governments important data about ship movements. The brass was happy to do it because while they were in port, they were plied with hookers, drugs, booze, and parties. If someone wanted something, legal or not, Fat Leonard could provide it. He even gave officers nice presents they could take home to their families.
[00:18:29] Wikipedia says U.S. prosecutors filed criminal charges against 33 individuals in connection with the Fat Leonard scandal. Of those, 22 pleaded guilty, Francis himself, four of his top aides, and 17 Navy officials. Separately, five Navy officers were charged with crimes under the Uniform Code of Military Justice and were subjected to court-martial proceedings.
[00:18:55] After being diagnosed with cancer in 2018, Fat Leonard was released from jail and put under house arrest. Brace yourself because this next part will be a complete surprise. He escaped. Officials with the U.S. Marshals Service say that it is clear that Francis, who faces 25 years behind bars, had been planning this move. Neighbors tell police they had noticed U-Hauls going in and out of his home in the days leading up to his escape, but failed to report it.
[00:19:24] It's one of the biggest corruption cases in the history of the U.S. Navy. And this man, Malaysian defense contractor Leonard Francis, is at the center of it. The mastermind behind a complex bribery scheme in which Francis supplied naval officials with travel, lavish gifts and prostitutes in exchange for classified information, which Francis used to overbuild the U.S. government by at least $35 million. That was CBS 8 in San Diego.
[00:19:53] But fear not. In September of 2022, Fat Leonard was captured in Venezuela. NBC News explained how it happened. The director of Interpol Venezuela says Francis got to the country from Mexico with a stopover in Cuba. He was apprehended by Venezuelan authorities at the Simon Bolivar International Airport while trying to eventually get to Russia, according to a Marshall spokesperson. Francis was on house arrest due to health issues, including a bout with kidney cancer.
[00:20:21] He was arrested in 2013 and pleaded guilty to offering $500,000 in bribes of luxury travel, prostitutes and free hotel rooms to Navy officers. A court then finding he overcharged the Navy to the tune of roughly $35 million for servicing vessels and lured ships to his port in Indonesia. All of it in exchange for classified information now faces 25 years in prison.
[00:20:44] Fat Leonard knew where the ships were going and he was capable, possibly, of providing that information to other parties. Or someone he contracted, subcontracted to might have done that. Then there's the question on all our minds. How the hell did he get out of an ankle monitor? You would think it would be very difficult to get a GPS monitor bracelet off. However, I spoke with a law enforcement official who used to work for the FBI.
[00:21:10] He said it's actually not that hard. It appears that he cut it off using some heavy scissors in his house. The reason many people who have these bracelets on don't do it is because they know they're going right back to jail. And in fact, there was an alert that was issued as soon as the monitor was dislodged. However, by the time authorities got there, he was already gone. There was no disincentive in this case for Fat Leonard not to take it off because he was planning on leading an international excursion. Fat Leonard is now back in custody, or at least he was at the time of this recording.
[00:21:38] Big Pharma and apparently the medical community remain willing to prescribe unnecessary drugs and overcharging us for the privilege. City and state officials still had their hands out, not for campaign contributions, but to abuse the public trust so their wallets get fatter. Usually a scam or con relies on trickery, but in these cases, it was simply greed.
[00:22:04] If you enjoy the podcast and want to support it, please consider doing so via Patreon. For just $10 a month, you'll help us keep the lights on so we can continue to create great content for you. You can sign up at patreon.com. That's p-a-t-r-e-o-n dot com. Then search for scams and cons. There'll be a link in the show notes. We'll be back in two weeks. Thanks for listening.
[00:22:35] My name is Bill Huffman, and I am a former Cleveland news producer, and I am now the host of the podcast, Who Killed? I began the show focusing on the unsolved murder of Amy Mihaljevic. And now each week, I explore a different case with a focus on some of the victims who don't get the attention they deserve. I have a deep catalog of over 225 episodes, so there is a guarantee there will be something for you.
[00:23:02] Who Killed is an Evergreen Podcasts, Killer Podcasts, and Slow Burn Media production. Subscribe today, wherever you get your favorite shows. See you soon! You've seen this. need my favorite videos. I think