Judge declares mistrial in case of watchdog group

By Frederic J. Frommer

Associated Press

WASHINGTON (AP) -- A judge declared a mistrial Monday in the case of a watchdog group accused of violating federal law when it shared a whistle-blower settlement with a government economist 14 years ago.

U.S. District Judge Colleen Kollar-Kotelly made the call after the eight jurors in the civil case could not come to a unanimous verdict. The Justice Department claimed that the Project on Government Oversight and then-government economist Richard A. Berman had violated a ban on supplementing the salary of an executive branch employee.

The jurors split 7-1 in favor of the government against both POGO and Berman. The jury deliberated last Thursday afternoon, all day last Friday, and just a half-hour Monday before the judge called a mistrial. Both defendants had faced fines, but no jail time.

At issue was POGO's nearly $400,000 check to Berman in 1998 for his work exposing oil companies' underpayment of oil royalties to the federal government.

The case has dragged on for a decade, with two previous government victories reversed on appeal. The Justice Department did not immediately respond Monday to a question of whether it will try the case again.

Separately, Berman has appealed a judge's pretrial order that would force him to cough up the $383,600 POGO gave him. The order was not affected by the mistrial.

POGO's executive director, Danielle Brian, said the group hoped that "the Justice Department's persecution of POGO is over" and that the government would not pursue the case any further.

Berman said the government has been chasing him ever since he blew the whistle on the oil royalty issue.

"I find personally defending myself against the infinite resources of the Department of Justice very intimidating, and look forward to it being over," he said.

In 1996, POGO asked Berman to join its false claims lawsuit against major oil companies for underpaying royalties to the government. He declined, but the group agreed to pay him a one-third share of its take from the lawsuit.

The following year, POGO filed its lawsuit in the U.S. District Court for the Eastern District of Texas. The group alleged that the major oil companies had violated the False Claims Act by undervaluing oil they extracted from federal and Indian lands, and therefore underpaid royalties to the U.S. The U.S. government intervened in that and other false claim suits, leading to settlement agreements that ultimately totaled $440 million. Under the False Claims Act, whistle-blowers can share with the government in any recovery of money based upon their disclosures. POGO's take was $1.2 million, and in 1998 it gave Berman a check for $383,600. The front of the check said it was a "Public Service Award."

In 2003, the Justice Department filed a civil complaint against both POGO and Berman, and won its first victory in a judge's ruling the following year. U.S. District Judge Thomas Penfield Jackson ruled that the payment illegally supplemented Berman's salary as an economist for the Interior Department.

But in the U.S. Circuit Court of Appeals for the District of Columbia faulted Jackson for concluding, without a trial, that the money was compensation for his government work, rather than for what he did as a whistleblower outside the scope of his work, as POGO argued.

So, in 2008, the case went to trial and a jury decided that POGO and Berman had violated the law. By then, Jackson had retired and a new judge, John D. Bates, was overseeing the case. Bates assessed a civil penalty on Berman equal to the money he had received from POGO. But the judge, concluding that POGO had given the check in good faith, penalized the group only $120,000. (Bates presided over the new trial, too, but was out Monday, so Kollar-Kotelly filled in for him.)

In 2010, the appeals court said Bates made a mistake in instructing the jury that it was irrelevant whether POGO and Berman knew the activities Berman was being compensated for were part of his official responsibilities. The appeals court said that it was important whether the defendants knew.

In closing arguments last week, Justice Department lawyer David Finkelstein said the case was about trust, which he claimed POGO and Berman had both violated. He said that POGO had based its 1997 lawsuit on work that Berman did on the royalty issue, and cited memos that Berman had sent to his superiors on the topic. Finkelstein also noted that the letter POGO sent to Berman along with the check mentioned his decade of work on the oil royalty issue.

"This was precisely his job," Finkelstein said. "You can call it whistleblowing. It was his job to do this."

Ross Nabatoff, a lawyer for POGO, said that the work his client was compensating Berman for was whistleblowing work. As to the memos that Berman sent to his superiors, Nabatoff said, "Where's he going to send them -- Dairy Queen?! He's going to send them up the chain!"

A separate ruling by Bates still could force Berman, who is representing himself in court, to repay the money. In March, Bates agreed with the Justice Department that Berman had breached his fiduciary duty to the government by working on royalty issues that could help POGO win its lawsuit. Berman appealed, but the appeals court said it was premature.


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Published: Wed, Dec 19, 2012