IWIF buyout may be seized

Bromwell severance targeted by prosecutor in corruption case

January 13, 2007|By Matthew Dolan | Matthew Dolan,Sun reporter

Federal prosecutors want to seize the $400,000 to be paid to former state Sen. Thomas Bromwell Sr. in return for his stepping down from the leadership of Maryland's largest insurance fund for injured employees.

In papers filed in U.S. District Court in Baltimore, Maryland U.S. Attorney Rod J. Rosenstein argued that the severance package Bromwell received last month from the Injured Workers' Insurance Fund should be targeted for forfeiture as part of the public corruption case against the Baltimore County Democrat.

Attorneys for the Bromwells, in a separate filing late last month, asked the presiding judge to stop prosecutors from allowing a jury to hear secret tapes made of Bromwell, calling the recordings largely irrelevant and potentially prejudicial.

U.S. District Judge J. Frederick Motz has yet to rule on either issue, but his decisions could be critically important as Bromwell and his wife, Mary Pat, prepare for a trial scheduled to begin in March.

Lawyers for the Bromwells did not return calls yesterday for comment, but earlier they appealed forfeiture issues in the case, arguing prosecutors imperiled their clients' ability to defend themselves. Their appeal is still pending.

Last year, U.S. attorney's office moved to seize thousands of dollars' worth of bank accounts, pensions, retirement accounts, cars and real estate from the Bromwells and their co-defendant, W. David Stoffregen.

That move crippled Stoffregen's ability to pay for his own attorney. Stoffregen, the former president of Poole and Kent who pleaded guilty last month, was forced to seek a federal public defender. He subsequently withdrew his appeal on the forfeiture issue.

The couple was indicted in October 2005, charged as part of a wide-ranging racketeering conspiracy. The case has already produced six guilty pleas in cases related to the investigation.

Prosecutors allege Bromwell cashed in on his ability to steer multimillion-dollar public projects by illegally accepting bribes from Stoffregen, including discounted home renovation work and a no-show job for his wife.

The conspiracy case also includes a forfeiture action against Bromwell and his wife that has already frozen most of the couple's assets.

Rosenstein's latest legal move is certain to raise questions in the case about the extraordinary power of federal prosecutors and their ability to confiscate financial resources from a defendant who is presumed innocent.

"We're going to wait for the judge to rule. I'm not going to comment on it, while it's pending," Rosenstein said in an interview yesterday.

Speaking generally, the state's top federal prosecutor said that "the principle here is that once there is an indictment, the law allows the government to seize assets to make sure that they are available in the event that the courts find that they should ultimately be forfeited."

The federal appeals courts have generally held that it is lawful for prosecutors to target substitute assets because ill-gotten proceeds might be difficult to trace or might have been spent.

"Some people think it's only done in drug cases," he said. "But it's done routinely in financial fraud cases as well. Think about Enron."

Using the legal principle known as substitute assets forfeiture, Rosenstein asserted in court papers that the severance cash and a lump sum payment representing his vacation time and other benefits at IWIF should be seized, if the Bromwells cannot produce the funds from other means.

According to the indictment, the Bromwells could be liable for as much as $5.6 million in proceeds that prosecutors allege were obtained illegally.

Under court rulings on federal racketeering law, prosecutors are able to estimate the money involved in the criminal conspiracy and then target those assets before trial. If they cannot find all of the allegedly ill-gotten gains, prosecutors can identify and seize the so-called "substitute" assets.

The same issue could be vital now for Bromwell, whose future and annual salary at IWIF ended late last month when the agency announced it had severed ties with its embattled leader. Its board agreed to pay Bromwell $200,000 immediately and another $200,000 over the next year in exchange for the agency's CEO to step down before his trial, expected to last several months.

Bromwell also received health insurance coverage through the first half of 2008 and the option to buy his company car under a separation agreement with IWIF, which Bromwell has overseen as president since 2002.

The quasi-public agency has not named a permanent replacement for Bromwell. A message left through a spokesman for IWIF Chairman Dan McKew was not returned yesterday.

In a separate part of the case, the Bromwells' attorneys are attempting to keep a jury from hearing hundreds of hours of clandestine recordings made of Bromwell before his indictment.

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