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USA: Breathing Down Neck Of White-Collar Crime

by Caitlin LiuLos Angeles Times
August 1st, 2004

 As U.S. attorney in L.A., Debra Yang has made corporate fraud a priority. Admirers call her a tiger; critics say she's overzealous.

Before the criminal fraud case involving the French bank Credit Lyonnais was finally settled for $771 million, the fractious negotiations between French officials and U.S. prosecutors often came close to falling apart.

But Debra Yang, the U.S. attorney in Los Angeles who has made corporate fraud one of her top priorities, would not be deterred.

Despite efforts by French powerbrokers to lobby the White House as well as the State and Justice departments to drop the prosecution, those familiar with the case say, Yang pushed what had been a stalled investigation forward. The pressure kept the bank at the negotiating table, and when the settlement was announced in December, it was among the largest in a criminal case in U.S. history.

In January, Credit Lyonnais, two other corporations and a corporate officer pleaded guilty to making false statements to federal banking regulators in connection with the illegal takeover of the insolvent Los Angeles-based insurance company, Executive Life.

Another executive pleaded guilty in February to causing Credit Lyonnais to make false statements, and an accountant pleaded guilty in June to helping conceal the illegal acquisition.

At the center of the case was the diminutive 44-year-old Yang, whose office last year filed 13 corporate fraud cases, the second most in the nation, after the Northern District of Alabama, which filed 16, according to the federal government. Federal prosecutors in New York City, the epicenter of U.S. financial markets, filed eight.

The cases by Yang's office targeted 43 corporate or individual defendants, the most in the country. The Alabama office went after 20 defendants, while New York's named 10.

Southern California has so many corporate fraud cases partly because it is home to many publicly traded companies. But Yang's aggressive posture critics call her heavy-handed also plays a role, lawyers say.

"The U.S. attorney's office in Los Angeles has distinguished itself in the pursuit of white-collar crime," said Jan Handzlik, former chairman of the American Bar Assn.'s national white-collar crime committee, whose clients include some targeted by Yang's office. "Many defense attorneys consider this to be the golden age of white-collar crime prosecutions."

Defense attorneys in the Credit Lyonnais case did not return calls or declined to comment publicly on Yang. But they privately called her overzealous in her prosecution and stubborn during negotiations.

"She stuck to her guns couldn't be shaken from it," one attorney said.

Those who know Yang say she seems to thrive on taking on powerful offenders who she believes have abused their positions of privilege.

"I'm very much a patriot. I really enjoy doing what is right," said Yang, who oversees about 265 federal prosecutors in a region encompassing seven counties from San Luis Obispo to San Bernardino.

From her 12th-floor downtown Los Angeles office, Yang, born in Chinatown, can gaze out at her grandfather's house and her grade school. "It is not lost on me that if my ancestors had not come to this country, as a Chinese girl I could either be in a very menial position or I'd be dead," she said.

Associates and friends say Yang is well-suited to fight corporate crime, because it requires a mastery of complicated legal issues and the confidence to go after well-heeled, often politically connected offenders.

Yang is a former commercial litigator who once worked as a rank-and-file federal prosecutor. She was a supervising Superior Court judge in Hollywood when she was appointed to her post two years ago.

At 5 feet 1, Yang is often the shortest person in a room. She can be disarmingly charming, even girlishly bubbly. Courthouse security guards like her because she greets them by name. Such cheeriness, uncommon in the male-dominated and often stuffy world of corporate law, has sometimes led people to underestimate her savvy, resolve and organizational skills, those who know her say.

While on the phone recently with a reporter, she sheepishly admitted that as she chatted about her childhood, anti-terrorism efforts and plans to bake cookies from scratch that evening, she also was typing a note to a subordinate, e-mailing a fellow U.S. attorney on an investigation and writing a memo to her environmental crimes unit.

As a judge, she took such good notes during trials that whenever a lawyer asked for testimony to be read back, she sometimes beat the court reporter to the punch, producing quotes word for word.

Last year, her office was lauded in a Justice Department report for cracking down on such publicly traded companies as eConnect, L90 and Newcom and securing convictions for securities fraud.

Yang and her prosecutors "have worked aggressively to root out corporate corruption wherever it is found," her boss, Atty. Gen. John Ashcroft, said in a statement.

Her office was also cited for how it handled Homestore Inc., bringing charges against former officers but not the corporate entity. Three former Homestore executives pleaded guilty to fraudulently inflating reported revenue, while innocent employees kept their jobs.

Yang is also known for strategizing with other agencies to better coordinate investigations and prosecutions.

"We have limited resources," said Richard Garcia, head of the FBI's Los Angeles division. "She's looking for big cases with impact."

In the Credit Lyonnais case, the bank was suspected of illegally taking over Executive Life, at one time the largest life insurance firm in California.

The case not only threatened to hold a foreign government culpable for a crime but also targeted executives who happened to be close friends of French President Jacques Chirac. The defense team included former top officials from the U.S. Justice Department.

For more than a year, the case languished within Washington. But after Yang took office in 2002, she convinced her higher-ups that criminal charges were warranted.

The case never went to trial, which could explain why it hasn't attracted the attention devoted to other corporate prosecutions, such as those of Adelphia or Martha Stewart, lawyers say.

Not everyone was pleased with the settlement. Maureen Marr, an advocate with the Action Network for Victims of Executive Life, said Credit Lyonnais should have suffered "more than a financial slap on the wrist."

Credit Lyonnais, which is now owned by Credit Agricole, was allowed to keep its banking license so it could continue doing business in the U.S.

"Policyholders lost over $4 billion," Marr said. "The fact that Credit Lyonnais can still conduct business in this country is shameful."

But others said the deal lessened disruption to financial markets, and, by maintaining the bank's assets in the U.S., made it easier for plaintiffs in a pending civil case to collect a judgment if they prevailed.

"Debra Yang, to her credit, stood up to all of this and said, 'A crime's a crime no matter who committed it.' She made it clear she wasn't going to be intimidated," said Gary Fontana, an attorney representing California's insurance commissioner in a civil case involving the bank. "But for her personal intervention, the criminal prosecution probably would have died. From where we sit, she was a tiger."

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