Honest Services Fraud—John Richard Olsen

While the Antitrust Division [hereinafter AD] of the US Department of Justice primarily investigates allegations of anti-competitive behavior, it is extremely important to realize that any number of other charges may be brought during an investigation into alleged antitrust activity.^[1] For example, the Antitrust Division is currently investigating allegations of price-fixing, bid-rigging, kickbacks, and tax evasion in the anthraquinone and glyphosate industries in the Northern District of Georgia.^[2] Yesterday, the AD announced that it had secured a guilty plea from John Richard Olsen, “the former general manager of Chemical Products Technologies [hereinafter CPT].”^[3] The charges against Mr. Olsen are the second to arise out of the investigation; ‘[i]n June 2005, Patrick Crowe III, [Mr.] Olsen’s subordinate, pleaded guilty to a two-count felony charge.”^[4]

The interesting thing about both Mr. Olsen and Mr. Crowe, neither have been charged with antitrust violations; instead, Mr. Olsen was charged with filing false tax returns and participating in conspiracies to commit mail fraud and honest services fraud, while Mr. Crowe was charged with conspiracies to commit mail fraud and honest services fraud.^[5] The AD’s press release, however, alleges that Mr. Olsen “received kickback payments from the owner and operator of an independent trucking company, through a sham company owned by a co-conspirator, in exchange for ensuring that the trucking company received business from CPT.”^[6] The same allegations were announced when Mr. Crowe’s guilty plea was announced last June.^[7]

There is another interesting aspect to Mr. Olsen’s guilty plea. He has been charged with “two separate conspiracies” to commit mail fraud and honest services fraud, which can be charged under the fraud-related conspiracy statute, 18 U.S.C. § 1349, which states that any person who conspires to commit a fraud-related offense will be punished in the same manner as a completed fraud-related offense. And as we have discussed before, the Principles of Federal Prosecution suggest that prosecutors should bring charges under the most serious offense that is consistent with the nature of the defendant’s conduct, and that is likely to result in a sustainable conviction. That would mean that Mr. Olsen would potentially be facing more than 20 years in prison, a fine, or both, for pleading guilty to conspiracies to commit mail fraud (18 U.S.C. § 1341) and honest services fraud (18 U.S.C. § 1346). However, he pleaded guilty to the general conspiracy statute (18 U.S.C. § 371), which carries a maximum jail sentence of five years.^[8] This suggests that Mr. Olsen has agreed to cooperate in the investigation in exchange for being charged with less-severe crimes, and for the opportunity to have his sentence even further reduced at sentencing.

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[1] See AD, Antitrust Division Manual Ch. II.B.1., last visited Mar. 29, 2006.
[2] AD, Former Georgia Chemical Company Manager Charged with Participating in Fraud Schemes and Filing False Tax Returns, Mar. 28, 2006.
[3] Id.
[4] Id.
[5] Id.
[6] Id.
[7] See AD, Former Chemical Salesman Agrees to Plead Guilty to Conspiracy Charges, Jun. 23, 2005.
[8] AD, supra note 2. Mr. Olsen also pleaded guilty to violation of 26 U.S.C. § 7206(1), which carries a maximum jail sentence of 3 years.