The U.S. Attorney for the Southern District of New York is expected to lead the Justice Department’s investigation into WorldCom’s accounting besting his Mississippi counterpart.
That means U.S. Attorney James Comey’s office heads three of the biggest corporate scandal probes in recent history: WorldCom, Adelphia and ImClone.
Comey and U.S. Attorney Dunn Lampton of the Southern District of Mississippi, near WorldCom’s headquarters, had each lobbied to run the high-profile inquiry into the fallen No. 2 long-distance carrier. Justice spokesman Bryan Sierra said Wednesday that Lampton had been ”recused” from the inquiry. He would not comment further.
The decision to assign the case to New York may have partly reflected concerns that Lampton had a possible conflict of interest. Lampton owns as much as $15,000 in WorldCom stock, according to a financial disclosure report he signed June 10 and filed with the Justice Department.
Also, he received $5,500 in campaign contributions from WorldCom employees in his unsuccessful run two years ago for Congress, says the Center for Responsive Politics, a campaign finance watchdog group. President Bush appointed Lampton U.S. Attorney after Lampton’s congressional defeat.
Lampton acknowledged Wednesday that he owns the stock and received the campaign contributions. But he said they came from people who were former WorldCom employees. He declined comment on the decision to assign the case to New York.
Another point in favor of the New York office may have been its vast experience probing white-collar crime as a result of its proximity to Wall Street firms. It has one of the nation’s largest financial crime units. ”They have the most experience of any office in the country in securities fraud,” says Robert Mintz, a former U.S. prosecutor who now heads the white-collar crime defense practice at McCarter & English in Newark, N.J. While Comey’s caseload is ballooning thanks to the recent spate of corporate scandals, it’s unlikely the office will be strained. ”They will simply readjust their resources and hire more prosecutors if they need to,” Mintz says.
The decision, he says, also may have stemmed from Justice’s possible intent to try the case in New York. A Mississippi jury could pose concerns of a hometown bias toward WorldCom, he says.