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Prosecutor Remains Silent on Nevada ATF Rift
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Posted 17 December 2012 - 08:01 PM
Prosecutor remains silent on Nevada ATF rift
Reno Gazette Journal
Martha Bellisle | Dec 15, 2012
In the three months since the RGJ exposed a rift between federal prosecutors and firearms agents, the Justice Department has begun considering weapons charges in cases left unprosecuted and is again taking guns away from dangerous people.
But questions remain about why the breakdown happened in the first place or whether anyone involved will be held responsible, including Assistant U.S. Attorney Sue Fahami, who has been both criticized and praised by many.
As head of the Reno office, Fahami made the decision to not prosecute cases brought forth by local agents with the Bureau of Alcohol, Tobacco, Firearms and Explosives.
Fahami told the agents in a Sept. 29, 2011, letter that her office would not take their cases until unnamed “issues” were resolved. Those issues were never identified. Federal prosecutors in Reno dismissed or refused more than a dozen ATF cases over more than a year, the RGJ investigation found.
Unable to do their jobs — working undercover to stop illegal firearms trafficking and catch bad guys selling or buying guns and drugs — most of Reno’s ATF agents moved to other states. One agent said in his transfer request that Fahami had “intentionally misrepresented numerous issues regarding ATF agents” to other law enforcement agencies. He said the situation had become intolerable so he was selling his home and moving.
Laurie Levenson, a professor at Loyola Law School in Los Angeles and a former federal prosecutor, said the Justice Department’s response so far “shows that they are taking this very seriously.”
“Based on their actions, I think they’ve made this a high priority,” Levenson said. “They’ve realized they’ve got to clean their own house.”
But what happens next, she said, will depend on what the investigation finds. If they uncover corruption, there could be criminal charges, she said. But if the rift was found to be based on a personal peeve or similar causes, “there could be employment consequences.”
“These people could be fired or disciplined,” she said, adding that findings of “dereliction of duty” could reach up to the heads of each of the agencies.
Fahami continues to oversee the Reno office and has been questioned by justice officials. But officials have also been asking questions about her, the RGJ was told.
Former husband convicted
Fahami’s former husband, Stephen Marich, was convicted last year of embezzling $5.9 million from his former employer, the First National Bank of Ely, during the time that he was married to Fahami.
An FBI investigation cleared Fahami of any involvement, but the bank’s president, John Gianoli, said he continues to question how the couple handled their Reno property after Marich was caught.
Gianoli also said he has been interviewed recently by Justice Department officials from some sort of internal affairs division but declined to reveal the topic. He only said it wasn’t about Marich.
In an email sent to the RGJ late Friday, Fahami said she was cleared of any criminal wrongdoing related to Marich’s case. She also said she did nothing inappropriate or illegal with the Reno property she used to own with Marich.
Messages sent to Nevada U.S. Attorney Dan Bogden asking for comments on the investigation were not returned.
Justice Department officials have not said when the Reno ATF office will be fully staffed again. They also have not disclosed — despite demands for answers from three members of Congress — how much taxpayers spent during the yearlong conflict to cover salaries for ATF agents who were unable to do the work for which they were specially trained.
The public still does not know what was spent to pay for rent for an almost empty ATF office in a downtown Reno high rise or to transfer a half dozen agents to new posts in other states.
U.S. Sen. Chuck Grassley, R-Iowa, has written to the head of ATF for answers to these questions but has not received the information.
Questions for federal agencies
After Fahami sent the letter to the ATF agents and shut down their cases, the agents filed complaints with the Justice Department’s Office of Professional Responsibility alleging misconduct by the Reno U.S. Attorney’s office, according to letters acquired by the RGJ.
But that office refused to handle the complaints and said ATF management and Bogden should deal with the problems, the letters said.
The agents also contacted the ATF Internal Affairs Division in October 2011 and complained about Fahami’s actions. They said Fahami claimed an ATF special agent in Reno lied to her, another letter said.
ATF Internal Affairs officials came to Reno in December 2011 and interviewed everyone involved, they said in a letter to the Office of Professional Responsibility. The officials determined there was a misunderstanding about how two cases were handled but found no evidence to substantiate Fahami’s allegation. They said the investigation should be closed.
Fahami continued to refuse the ATF agents’ cases. Her office also stopped using ATF agents to testify as experts on the interstate transfer of guns in firearms cases. Instead they’ve been using a supervising investigator with the Washoe County District Attorney’s Office, according to court records.
The Justice Department’s Office of Inspector General has declined to comment on the rift. According to its mission statement, the office has a duty to “detect and deter waste, fraud, abuse and misconduct in DOJ programs and personnel, and to promote economy and efficiency in those programs.”
Robert Storch, spokesman for the Inspector General, would only say: “We don’t confirm or deny the existence of investigations.”
But since the RGJ first reported on the rift, officials from Washington, D.C., have come to Nevada to investigate the problems.
“The Justice Department has confirmed to Sen. Grassley’s office that officials have been sent by headquarters to Reno to interview personnel in both the ATF and the U.S. Attorney’s offices,” said Grassley spokeswoman Beth Levine.
A Justice Department investigator has also visited a bank president in Ely, where Fahami lived before moving to Reno.
Wyn Hornbuckle, a spokesperson with the Justice Department, said they “will decline to comment” on whether anyone from the agency interviewed the bank president about Fahami.
Before Washoe District Judge Scott Freeman was appointed and then elected to the bench, he was in private practice and represented Marich in the embezzlement case. Freeman said officials investigated and cleared Fahami of any involvement.
Craig Denney, a Reno lawyer in private practice who used to work as a prosecutor in the U.S. Attorney’s office in Reno, said he worked with Fahami for six years and always found her “to have the highest integrity.”
“She was a very honest, hard-working attorney and a very good person,” Denney said. “She has always been fair to deal with. That’s what you want in a prosecutor — someone who’s fair.”
Fahami's history in Nevada
Fahami, 43, moved to Ely in 1996, a year after earning her law degree from Whittier College of Law, according to court records. She worked as a White Pine County public defender before being elected the county’s district attorney in 1998.
She applied for a judicial position in early 2001 and was one of three nominees sent to Gov. Kenny Guinn. But he picked one of her coworkers instead.
In September 2001, Fahami left her district attorney position to take a job with the U.S.
Attorney’s office in Reno. A Sept. 28, 2001, Associated Press story that reported her departure from the Ely post said there was a “rift between her and the (county) commissioners” concerning staff shortages. Fahami was the only attorney in the office and the commission had not sought to fill two empty deputy positions.
She married Stephen Marich on Aug. 24, 2002. At the time he was a vice president at the Ely bank and had won terms on the Ely City Council in 2001, 2005 and 2009.
They had a daughter in 2003 and a son in 2008.
During that time — from the mid-1990s to 2009 — Marich was embezzling funds from the bank to support a gambling habit, according to court records. Marich maintained treasury bill accounts for customers and used his position to write cashier’s checks and make wire transfers from his customers’ accounts to his, court records said.
Between August 2003 and December 2005, he used wire transfers to convert $1.6 million to his own use, records said. Many of the transfers were to a bank account in the Federation of Saint Kitts and Nevis in the West Indies. Other transfers went straight to online gambling companies overseas, records said.
In 2008, he took money from the T-bill account and bought a single treasury note in the amount of $2.3 million, reports said.
Gianoli said Marich’s actions were devastating for the family-owned bank, the oldest bank in Nevada. Marich’s deceitful behavior was a personal blow to him and his family, Gianoli said.
Marich earned a six-figure salary and received benefits and annual bonuses, Gianoli told the judge at the sentencing on May 11, 2011. Yet he stole millions. At Marich’s sentencing hearing and during a recent interview with the RGJ, Gianoli said that Marich’s behavior from the moment that he was confronted with his crime was offensive.
“There was a nurse, lived in Ely for many years,” Gianoli testified. “Takes care of the elderly, the infirmed. Somewhat of a Sister Teresa of our community. Marich stole all of her treasury bill money.”
Marich also stole from ranch families, the elderly, plumbers, independent contractors, people who spent their lives scratching out a living, Gianoli said. “Marich stole all of their money.”
Marich had taken several days off in December 2009, Gianoli said, and, during that break, bank officials discovered the embezzlement. They collected documents that detailed the crime and when Marich came in to the bank on Dec. 7, 2009, Gianoli said called Marich into his office and confronted him.
“He tried to talk his way out of it,” Gianoli said. “Then he made up a story about needing to get some information off a thumb drive in his car. He excused himself, went to his car and took off for Reno.”
After that Dec. 7, 2009, confrontation, Gianoli contracted authorities. Four days later, Marich signed a quitclaim deed on the house he owned with Fahami, transferring all of his rights, the title and interest in the property to Fahami. On the deed, Marich listed their Somersett house in Reno as his address.
Also that day, Marich faxed a one-line resignation letter to the bank, Gianoli said.
Gianoli told the federal judge during Marich’s sentencing that he believed Marich’s house transaction was a “fraudulent conveyance” designed to keep Marich’s assets from the bank as they tried to recover some of the embezzled funds.
Gianoli also questioned how the couple handled their taxes. Gianoli told the judge at the sentencing, “it is (evident) from our records we have at the bank that Marich obviously filed multiple fraudulent tax returns, joint tax returns, your honor,” Gianoli said. “Therefore, potentially involving his wife in his thievery.”
He said in an interview with the RGJ that he found it “personally offensive and repugnant” that Fahami never contacted Gianoli after Marich was caught.
“What Sue could have done is be a big girl and talk to me,” Gianoli said.
Fahami said in an email that the Somersett home was purchased with her own funds and Marich had no claim to the home’s worth.
“Ultimately, the funds came from the sale of a house I had purchased prior to marrying Stephen Marich,” Fahami said in the email. “Stephen Marich, John Gianoli nor the First National Bank of Ely, contributed to the purchase of the house in any way.”
She also said Marich was the only person implicated in the crime against the bank.
“I was cleared of any criminal wrongdoing,” she said.
Fahami and Marich filed a joint petition for divorce on March 14, 2010 — three months after his embezzlement was discovered. They both listed the Somersett home as their address.
In their settlement notice, they said they would file a joint tax return in 2009 and file separate returns in 2010. Based on his unemployment and lack of income, Marich was not required to pay child support, the settlement said. Fahami was to have physical custody of their two children.
Because Fahami worked in a Nevada U.S. Attorney’s office, Marich’s criminal case was handled by a federal prosecutor in Sacramento. In February 2011, Assistant U.S. Attorney Matthew Segal filed a document in U.S. District Court in Las Vegas claiming Marich embezzled bank funds. That same day, Marich signed an agreement to plead guilty to the charge.
In March, he sold his house in Ely and gave the bank the $46,465 he earned on the sale to go toward restitution.
Marich was sentenced in May 2011 to serve 6.5 years in federal prison starting in July 2011. The judge also ordered him to pay $5.9 million in restitution. Despite that order, the bank filed a civil suit in September 2011 against Marich, in an attempt to collect some of the funds he stole.
Reno Gazette Journal
Martha Bellisle | Dec 15, 2012
In the three months since the RGJ exposed a rift between federal prosecutors and firearms agents, the Justice Department has begun considering weapons charges in cases left unprosecuted and is again taking guns away from dangerous people.
But questions remain about why the breakdown happened in the first place or whether anyone involved will be held responsible, including Assistant U.S. Attorney Sue Fahami, who has been both criticized and praised by many.
As head of the Reno office, Fahami made the decision to not prosecute cases brought forth by local agents with the Bureau of Alcohol, Tobacco, Firearms and Explosives.
Fahami told the agents in a Sept. 29, 2011, letter that her office would not take their cases until unnamed “issues” were resolved. Those issues were never identified. Federal prosecutors in Reno dismissed or refused more than a dozen ATF cases over more than a year, the RGJ investigation found.
Unable to do their jobs — working undercover to stop illegal firearms trafficking and catch bad guys selling or buying guns and drugs — most of Reno’s ATF agents moved to other states. One agent said in his transfer request that Fahami had “intentionally misrepresented numerous issues regarding ATF agents” to other law enforcement agencies. He said the situation had become intolerable so he was selling his home and moving.
Laurie Levenson, a professor at Loyola Law School in Los Angeles and a former federal prosecutor, said the Justice Department’s response so far “shows that they are taking this very seriously.”
“Based on their actions, I think they’ve made this a high priority,” Levenson said. “They’ve realized they’ve got to clean their own house.”
But what happens next, she said, will depend on what the investigation finds. If they uncover corruption, there could be criminal charges, she said. But if the rift was found to be based on a personal peeve or similar causes, “there could be employment consequences.”
“These people could be fired or disciplined,” she said, adding that findings of “dereliction of duty” could reach up to the heads of each of the agencies.
Fahami continues to oversee the Reno office and has been questioned by justice officials. But officials have also been asking questions about her, the RGJ was told.
Former husband convicted
Fahami’s former husband, Stephen Marich, was convicted last year of embezzling $5.9 million from his former employer, the First National Bank of Ely, during the time that he was married to Fahami.
An FBI investigation cleared Fahami of any involvement, but the bank’s president, John Gianoli, said he continues to question how the couple handled their Reno property after Marich was caught.
Gianoli also said he has been interviewed recently by Justice Department officials from some sort of internal affairs division but declined to reveal the topic. He only said it wasn’t about Marich.
In an email sent to the RGJ late Friday, Fahami said she was cleared of any criminal wrongdoing related to Marich’s case. She also said she did nothing inappropriate or illegal with the Reno property she used to own with Marich.
Messages sent to Nevada U.S. Attorney Dan Bogden asking for comments on the investigation were not returned.
Justice Department officials have not said when the Reno ATF office will be fully staffed again. They also have not disclosed — despite demands for answers from three members of Congress — how much taxpayers spent during the yearlong conflict to cover salaries for ATF agents who were unable to do the work for which they were specially trained.
The public still does not know what was spent to pay for rent for an almost empty ATF office in a downtown Reno high rise or to transfer a half dozen agents to new posts in other states.
U.S. Sen. Chuck Grassley, R-Iowa, has written to the head of ATF for answers to these questions but has not received the information.
Questions for federal agencies
After Fahami sent the letter to the ATF agents and shut down their cases, the agents filed complaints with the Justice Department’s Office of Professional Responsibility alleging misconduct by the Reno U.S. Attorney’s office, according to letters acquired by the RGJ.
But that office refused to handle the complaints and said ATF management and Bogden should deal with the problems, the letters said.
The agents also contacted the ATF Internal Affairs Division in October 2011 and complained about Fahami’s actions. They said Fahami claimed an ATF special agent in Reno lied to her, another letter said.
ATF Internal Affairs officials came to Reno in December 2011 and interviewed everyone involved, they said in a letter to the Office of Professional Responsibility. The officials determined there was a misunderstanding about how two cases were handled but found no evidence to substantiate Fahami’s allegation. They said the investigation should be closed.
Fahami continued to refuse the ATF agents’ cases. Her office also stopped using ATF agents to testify as experts on the interstate transfer of guns in firearms cases. Instead they’ve been using a supervising investigator with the Washoe County District Attorney’s Office, according to court records.
The Justice Department’s Office of Inspector General has declined to comment on the rift. According to its mission statement, the office has a duty to “detect and deter waste, fraud, abuse and misconduct in DOJ programs and personnel, and to promote economy and efficiency in those programs.”
Robert Storch, spokesman for the Inspector General, would only say: “We don’t confirm or deny the existence of investigations.”
But since the RGJ first reported on the rift, officials from Washington, D.C., have come to Nevada to investigate the problems.
“The Justice Department has confirmed to Sen. Grassley’s office that officials have been sent by headquarters to Reno to interview personnel in both the ATF and the U.S. Attorney’s offices,” said Grassley spokeswoman Beth Levine.
A Justice Department investigator has also visited a bank president in Ely, where Fahami lived before moving to Reno.
Wyn Hornbuckle, a spokesperson with the Justice Department, said they “will decline to comment” on whether anyone from the agency interviewed the bank president about Fahami.
Before Washoe District Judge Scott Freeman was appointed and then elected to the bench, he was in private practice and represented Marich in the embezzlement case. Freeman said officials investigated and cleared Fahami of any involvement.
Craig Denney, a Reno lawyer in private practice who used to work as a prosecutor in the U.S. Attorney’s office in Reno, said he worked with Fahami for six years and always found her “to have the highest integrity.”
“She was a very honest, hard-working attorney and a very good person,” Denney said. “She has always been fair to deal with. That’s what you want in a prosecutor — someone who’s fair.”
Fahami's history in Nevada
Fahami, 43, moved to Ely in 1996, a year after earning her law degree from Whittier College of Law, according to court records. She worked as a White Pine County public defender before being elected the county’s district attorney in 1998.
She applied for a judicial position in early 2001 and was one of three nominees sent to Gov. Kenny Guinn. But he picked one of her coworkers instead.
In September 2001, Fahami left her district attorney position to take a job with the U.S.
Attorney’s office in Reno. A Sept. 28, 2001, Associated Press story that reported her departure from the Ely post said there was a “rift between her and the (county) commissioners” concerning staff shortages. Fahami was the only attorney in the office and the commission had not sought to fill two empty deputy positions.
She married Stephen Marich on Aug. 24, 2002. At the time he was a vice president at the Ely bank and had won terms on the Ely City Council in 2001, 2005 and 2009.
They had a daughter in 2003 and a son in 2008.
During that time — from the mid-1990s to 2009 — Marich was embezzling funds from the bank to support a gambling habit, according to court records. Marich maintained treasury bill accounts for customers and used his position to write cashier’s checks and make wire transfers from his customers’ accounts to his, court records said.
Between August 2003 and December 2005, he used wire transfers to convert $1.6 million to his own use, records said. Many of the transfers were to a bank account in the Federation of Saint Kitts and Nevis in the West Indies. Other transfers went straight to online gambling companies overseas, records said.
In 2008, he took money from the T-bill account and bought a single treasury note in the amount of $2.3 million, reports said.
Gianoli said Marich’s actions were devastating for the family-owned bank, the oldest bank in Nevada. Marich’s deceitful behavior was a personal blow to him and his family, Gianoli said.
Marich earned a six-figure salary and received benefits and annual bonuses, Gianoli told the judge at the sentencing on May 11, 2011. Yet he stole millions. At Marich’s sentencing hearing and during a recent interview with the RGJ, Gianoli said that Marich’s behavior from the moment that he was confronted with his crime was offensive.
“There was a nurse, lived in Ely for many years,” Gianoli testified. “Takes care of the elderly, the infirmed. Somewhat of a Sister Teresa of our community. Marich stole all of her treasury bill money.”
Marich also stole from ranch families, the elderly, plumbers, independent contractors, people who spent their lives scratching out a living, Gianoli said. “Marich stole all of their money.”
Marich had taken several days off in December 2009, Gianoli said, and, during that break, bank officials discovered the embezzlement. They collected documents that detailed the crime and when Marich came in to the bank on Dec. 7, 2009, Gianoli said called Marich into his office and confronted him.
“He tried to talk his way out of it,” Gianoli said. “Then he made up a story about needing to get some information off a thumb drive in his car. He excused himself, went to his car and took off for Reno.”
After that Dec. 7, 2009, confrontation, Gianoli contracted authorities. Four days later, Marich signed a quitclaim deed on the house he owned with Fahami, transferring all of his rights, the title and interest in the property to Fahami. On the deed, Marich listed their Somersett house in Reno as his address.
Also that day, Marich faxed a one-line resignation letter to the bank, Gianoli said.
Gianoli told the federal judge during Marich’s sentencing that he believed Marich’s house transaction was a “fraudulent conveyance” designed to keep Marich’s assets from the bank as they tried to recover some of the embezzled funds.
Gianoli also questioned how the couple handled their taxes. Gianoli told the judge at the sentencing, “it is (evident) from our records we have at the bank that Marich obviously filed multiple fraudulent tax returns, joint tax returns, your honor,” Gianoli said. “Therefore, potentially involving his wife in his thievery.”
He said in an interview with the RGJ that he found it “personally offensive and repugnant” that Fahami never contacted Gianoli after Marich was caught.
“What Sue could have done is be a big girl and talk to me,” Gianoli said.
Fahami said in an email that the Somersett home was purchased with her own funds and Marich had no claim to the home’s worth.
“Ultimately, the funds came from the sale of a house I had purchased prior to marrying Stephen Marich,” Fahami said in the email. “Stephen Marich, John Gianoli nor the First National Bank of Ely, contributed to the purchase of the house in any way.”
She also said Marich was the only person implicated in the crime against the bank.
“I was cleared of any criminal wrongdoing,” she said.
Fahami and Marich filed a joint petition for divorce on March 14, 2010 — three months after his embezzlement was discovered. They both listed the Somersett home as their address.
In their settlement notice, they said they would file a joint tax return in 2009 and file separate returns in 2010. Based on his unemployment and lack of income, Marich was not required to pay child support, the settlement said. Fahami was to have physical custody of their two children.
Because Fahami worked in a Nevada U.S. Attorney’s office, Marich’s criminal case was handled by a federal prosecutor in Sacramento. In February 2011, Assistant U.S. Attorney Matthew Segal filed a document in U.S. District Court in Las Vegas claiming Marich embezzled bank funds. That same day, Marich signed an agreement to plead guilty to the charge.
In March, he sold his house in Ely and gave the bank the $46,465 he earned on the sale to go toward restitution.
Marich was sentenced in May 2011 to serve 6.5 years in federal prison starting in July 2011. The judge also ordered him to pay $5.9 million in restitution. Despite that order, the bank filed a civil suit in September 2011 against Marich, in an attempt to collect some of the funds he stole.
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