Two lawyers who used to work in the U.S. attorney’s office for the Southern District of Ohio helped negotiate the settlement with their former office on the civil fraud allegations facing Sherif Aziz and David and Shery Oakes.
The Justice Department in June reached a nearly $2.9 million settlement with the Oakeses and Aziz. They admitted no wrongdoing and were not criminally charged.
Former U.S. Attorney Greg Lockhart represented the Oakeses along with David Reed, both of the Taft Stettinius & Hollister law firm in Dayton. Former First Assistant U.S. Attorney William E. Hunt, who once worked under Lockhart, represented Aziz.
Lockhart left the government for private practice in August 2009, while Hunt retired on Dec. 31, 2010, and now works for the Cincinnati law firm, Dinsmore & Shohl.
Fred Alverson, a spokesman for current U.S. Attorney Carter M. Stewart, said Hunt and Lockhart received no special access to the office while negotiating the settlement.
“We make charging decisions, civil and criminal, based on the law and the quality and integrity of the evidence presented to us, not on the employment history of the defense attorneys,” Alverson said.
The civil complaint — which contained multiple criminal allegations — was filed under seal on Nov. 16, 2010, in U.S. District Court-Southern District in Columbus and handled by Stewart’s office. It was settled more than two years later.
The defendants were accused of fraudulently gaining $5.07 million in federally funded contracts using the Disadvantaged Business Enterprise status of TesTech Inc., which the government alleged was part of the Oakeses companies. Although the settlement agreement included no criminal charges, the government did not give up the right to file criminal charges in the future.
Both Hunt and Lockhart were in the U.S. attorney’s office when the U.S. Department of Transportation’s office of inspector general began scrutinizing TesTech as early as 2008. It is not known when the matter came to the attention of the U.S. attorney in Ohio.
“Especially in instances in which no criminal cases are ever filed, we don’t discuss communications that we’ve had with law enforcement agencies orany deliberations we may have had,” Alverson said.
The U.S. attorney’s involvement became public with the July 7, 2011, raid by USDOT agents and the FBI on the Washington Twp. offices of companies run by the Oakeses and Aziz. Lockhart can be seen in one of the photographs taken by the Dayton Daily News, watching as a man is patted down during the raid.
Alverson and spokespersons for Hunt and Lockhart would not directly address if either man had any contact with the TesTech investigation during their time in the U.S. attorney’s office.
“We have no information that anything Mr. Lockhart or Mr. Hunt did in connection with their representation of the parties in this case was inappropriate,” Alverson said.
Neither Lockhart nor Hunt returned calls seeking comment, and through spokespersons did not directly address whether they were aware of the federal investigation before they entered private practice.
“Mr. Lockhart did represent Mr. and Mrs. Oakes in reaching a successful resolution of matters involving the Justice Department. All of that was well after he left the U.S. attorney’s office and joined us,” said Curt Smith, spokesman for Taft Stettinius & Hollister.
Lockhart was the U.S. attorney for the southern district from 2001 to 2009.
Anna Wright, spokeswoman for Hunt’s firm, released a statement attributed to him: “The civil complaint was filed Nov. 16, 2010, after I was no longer first assistant,” Hunt said in the statement.
Hunt spent more than three decades with the U.S. attorney’s office. He served as First Assistant U.S. Attorney starting in 2001 — making him second in command first to Lockhart and then Stewart. He also spent a month as interim U.S. attorney in September 2009 and was chief criminal U.S. attorney from Nov. 7, 2010, until his retirement at the end of that year.
The U.S. attorney and the first assistant supervise all civil and criminal matters. Hunt supervised only the criminal side during his final two months, Alverson said.
Government ethics rules permanently prohibit employees of the U.S. attorney’s office from representing defendants in cases they were substantially involved in during their tenure, according to Tom Hagel, professor of law at the University of Dayton.
U.S. attorneys also must follow a “cooling off” period — prohibiting all contact with the office they left — for one year. Those with supervisory power are restricted for two years from matters which were under their supervision in their final year.
Hagel said the standards of conduct can be the basis for disciplinary proceedings as well as criminal charges.
Edward Delisle, a Philadelphia attorney with expertise in contracting fraud cases, said prosecutors often wind up as defense attorneys, although he said in the case of Hunt and Lockhart it is a little more unusual because both were U.S. attorneys and ended up defending a case handled by their old office.
He also said it isn’t unusual to see civil settlements without criminal charges. “That does happen from time to time, even in some of the really big ones,” said Delisle. “You don’t have to go find the money if they’re agreeing to pay it.”
The False Claims Act complaint was brought by the U.S. government and former Oakes employee Ryan Parker, who shared in the settlement.
Frederick M. Morgan, who represented Parker, said the “government did a capable investigation and reached a credible result.” He does not believe Hunt and Lockhart’s connection with the U.S. attorney’s office got the defendants a special deal.
“I think the government lawyers involved here and the Department of Transportation displayed tremendous integrity in terms of their dealings with those guys,” Morgan said.