Public defender: Former Assistant U.S. Attorney provides an inside look on fraud prosecution.

• Author: Ascierto, Jerry
• Position: Q & A - Interview

Jeffrey Bornstein has a unique perspective on fraud. He served the U.S. Attorney's Office in San Francisco for 19 years, most recently as an assistant U.S. attorney, senior litigation counsel for the criminal division, white collar/securities fraud unit.

As an assistant U.S. attorney, Bornstein served as a trial lawyer specializing in white-collar criminal cases. He has tried more than 25 criminal and civil cases, including revenue recognition, insider trading and Ponzi schemes, and has worked on many others, such as market manipulation cases relating to California's energy crisis.

Now a partner with San Francisco law firm Kirkpatrick & Lockhart Nicholson Graham LLP, Bornstein concentrates on white-collar crime/criminal defense and securities enforcement.

CalCPA sat down with Bornstein to get his perspective on prosecuting fraud, the Enron trial, the effects of the Sarbanes-Oxley Act and how federal scrutiny of stock option backdating might play out.

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* Tell us about some of the high-profile cases you've helped prosecute.

There's a pending case against the former CFO of what was then Network Associates. Two other people have pled guilty--the former controller and another high-ranking finance executive. It's a revenue recognition case alleging that channel stuffing, side deals and other arrangements artificially inflated revenue.

I also prosecuted the former CFO and the CEO of Unify Corp. in a revenue recognition and insider trading case. It involved similar kinds of issues--side letters and side deals--relating to software sales.

I also prosecuted an ERISA health insurance fraud scheme. The defendant set up an entity that people could join to buy health insurance. He claimed that the insurance came from Lloyds of London, and a friend of his, an insurance broker, gave him a certificate showing what coverage from Lloyds would look like. But it was only a sample certificate; there was no real insurance. I thought that case was particularly egregious. It was very emotional to listen to some of the victims' testimony--they thought they had health insurance but found they were on the hook for their medical bills.

Another case involved an investment adviser and preacher in Napa County, who went to churches and talked to parishioners about investment strategy. He used his religious faith to connect with people. He convinced them to invest with him and basically just stole their money and used it for his own personal expenses. Some parishioners lost hundreds of thousands of dollars.

I also worked on a number of E-Rate cases involving fraud in a government-sponsored program to bring internet access to poor schools across the country. As a result of the investigation, two major corporations pled guilty to wire fraud and antitrust violations, and paid millions in fines and restitution. It was important not only locally for the San Francisco School District, but also for other districts that were taken advantage of.

Another prosecution involved Department of Housing and Urban Development properties.

There were some very large landlords in charge of some of these properties all around the country that were taking advantage of loopholes in the HUD program to line their own pockets. In addition...