The petition sets forth the request of Mr. Marc Rich for a Presidential Pardon. Mr. Rich [is an] internationally recognized businessm[a]n and philanthropist who [has] contributed over [$135'000'000] to charity in the past twenty years, and who [has] donated countless hours to humanitarian causes around the world.
Mr. Rich seek[s] a pardon even though [he] never [has] been convicted of a criminal offense in the United States or any other country. However, [he] and two of [his] companies were wrongfully indicted nearly twenty years ago, primarily on tax and energy charges stemming from their participation in oil transactions under then-existing Department of Energy oil regulations and controls. Those controls, deemed to be unworkable, incomprehensible and counterproductive, were abolished by President Reagan in one of his first official acts in January, 1981.
Mr. Rich [has] complete defenses to the indictment. While the indictment makes many accusations, the prosecution admits that tax-related charges were the core of the case. Yet two of the country's leading tax professors have analyzed the tax treatment of the transactions at issue, and concluded that they were correctly reported. Nevertheless, Mr. Rich remain[s] under indictment. This is so even though [his] companies have resolved all charges, and all others who engaged in similar transactions were pursued civilly, or not at all.
This Petition for a Pardon seeks to put an end by resolving an otherwise intractable situation between Mr. Rich and the United States Government, and by righting an injustice that has persisted for nearly two decades. Without a Presidential Pardon, there is little if any chance that this matter will be resolved. The current situation is the unfortunate result of unfair and unwarranted treatment of [a man] against whom no criminal charges should have been brought. A Presidential Pardon will promote the interests of justice, will rectify a wrong, and will finally put this matter to rest.
MR. RICH [WAS] SUBJECTED TO AN UNPRECENDENTED CRIMINAL INVESTIGATION, A UNIQUE INDICTMENT BASED ON NOW-DISCARDED AND REJECTED THEORIES, AND AN AGGRESSIVE PROSECUTION FOR ALLEGED REGULATORY VIOLATIONS THAT DID NOT OCCUR
The investigation, indictment and persecution of Mr. Rich for alleged crimes arising out of the Department of Energy's oil regulatory program was unprecedented, unique, and fundamentally unfair.
A. The Oil Price Control Program
The criminal case began as an energy investigation that had its roots in the federal oil price control program instituted in the 1970's in response to the energy crisis.
An elaborate array of statutes and regulations empowered the [U.S.] Department of Energy ("DOE") to limit the prices and profits on crude oil sales in the United States. Oil and oil-trading companies in the United States and around the world, including Marc Rich + Co. International Ltd. ("MRI", a Swiss subsidiary of MRAG [Marc Rich + Co AG] that operated in the United States), were affected by these laws and regulations. These rules soon proved to be unworkable.
While it was in effect, the price control regime established an extremely complicated pricing structure for producers' first sale of domestic oil, differentiating between three classifications of crude oil that were otherwise identical, and even could have originated from the same well. [T]he DOE regulations limited the profits that were allowed to be earned by oil trading companies, such as MRI, which purchased crude oil and then resold it to others in the distribution chain. The DOE regulations limited existing resellers' average monthly profits by assigning to each reseller a DOE-calculated "permissible average markup" on regulated crude oil transactions.
B. The Prosecution of Marc Rich and [others]
In September 1983, a criminal indictment of MRAG, MRI, Mr. Rich [and others] was filed by the U.S. Attorney for the Southern District of New York. A superseding indictment was filed in March 1984. Both versions of the indictment include allegations of tax evasion, conspiracy, mail fraud, wire fraud, racketeering, and violations of regulations restricting purchases of oil from Iran during the hostage crisis.
The indictment – in addition to unfairly singling out these individuals and these companies for criminal enforcement when all others engaging in similar activity were pursued, if at all, in civil regulatory actions - is fatally flawed. This was the first use of the RICO ["Racketeer Influenced and Corrupt Organisations"] statute in a business transaction context. Following the indictment, the United States Government recognized the misuse of RICO in tax fraud cases and issued guidance explicitly stating that tax offenses are not predicates for RICO offenses. The Iranian counts were added to the indictment to incite public opinion against the defendants. In essence, the prosecutors accused Mr. Rich of causing the companies to trade with Iran when, under the applicable regulations, the companies were permitted to trade with Iran. The prosecutors quietly dropped the Iranian claims against the companies, but never dealt with the claims against the individuals.
The alleged tax evasion was the core of the indictment. The indictment contended that MRI, a Swiss corporation, had evaded more than 48 million dollars in United States income taxes on its oil trading activity. Essentially, the United States Attorney's Office alleged that regulated oil was sold at profits exceeding the permitted maximum level, and the reporting of the excess profits was evaded by secretly diverting them offshore.
The tax treatment of the transactions in the indictment, however, is governed by a U.S.-Swiss tax treaty, which was ignored by the prosecution. The transactions in issue were consistently reported in accordance with the tax treaty.
The propriety of this tax treatment has been confirmed by the independent analyses of two of the nation's leading tax experts - Professors Bernard Wolfman of Harvard Law School and Martin D. Ginsburg of Georgetown University Law Center. Professors Wolfman and Ginsburg submitted their conclusions in writing to the U.S. Attorney's Office over ten years ago, but their offer, renewed on several occasions, to discuss their submission with the Office was repeatedly denied.
Following the indictment, the United States Attorney's Office pursued the companies and individuals aggressively both in Court and in the press, and put extreme pressure on Mr. Rich, who [was] residing in Switzerland at the time, to come to the United States to stand trial.
Mr. Rich refused to leave Switzerland because of concerns that [he] would not be viewed in a fair and objective fashion in what was certain to be a highly-publicized trial. The U.S. Attorney's Office requested the extradition of Mr. Rich from Switzerland despite knowing that Switzerland did not view these alleged offenses as extraditable crimes. The Swiss Government refused the request as incompatible with Swiss law and the terms of the U.S.-Swiss extradition treaty.
Meanwhile, the United States had frozen the assets of MRI, which had been renamed Clarendon during this period, thereby making it virtually impossible for Clarendon to do business in the United States. A fine of $ 50,000 a day also was levied on MRAG by the District Court in connection with discovery disputes; this fine continued to run even after the Swiss authorities enjoined the companies from producing a handful of documents that remained in Switzerland. Huge RICO forfeitures also were pursued. Clarendon's ongoing business was completely disrupted and most U.S. employees lost their jobs. Under the circumstances, a settlement seemed to be the only way for both sides to bring the matter to conclusion while still preserving the company.
C. Settlement with the Corporations
In October 1984, to save the ongoing business entities, MRAG and Clarendon entered into a plea agreement that fully settled the case against these companies. MRAG and Clarendon pleaded guilty to several charges of making false statements and Clarendon, in addition, pleaded guilty to two counts of tax evasion. Altogether, they paid a total of approximately 200 million dollars in back taxes, interest, fines and foregone tax deductions, an amount far in excess of any taxes, penalties or interest which might have been assessed in a civil tax proceeding. In return, the United States Government lifted the freeze placed on company assets and removed all other restrictions on MRAG's and Clarendon's ability to do business.
The surrender by the companies was as unfair as it was inevitable. The Department of Justice, finally recognizing the coercive effected of overdrawn forfeitures, adopted rules in 1989 prohibiting prosecutors from seeking forfeitures or pretrial restraints that are disproportionate or disrupt normal, legitimate business activities. This, however, came too late for the companies.
D. Post-Settlement discussions with the Department of Justice
Despite the settlement with the companies, the criminal indictment against Mr. Rich remains in effect. While counsel for Mr. Rich have pursued efforts to engage in settlement discussions with the Southern District of New York periodically over the past 16 years, these discussions have not come to fruition. Indeed, the Office takes the position that it will not even discuss the matter while Mr. Rich continue[s] to live outside of the United States. In fact, however, the Southern District has negotiated with numerous other absent defendants over the years, and the Department of Justice has no such policy against such negotiations.
As recently as this year, Mr. Rich through counsel, sought once again to reach a negotiated resolution of Mr. Rich's status, and offered to begin a dialogue by having Professors Wolfman and Ginsburg meet with tax experts in the Department of Justice. This proposal, however, was vetoed by the Southern District.
THE OFFENSES ALLEGED AGAINST MR. RICH NEVER HAVE BEEN CHARGED AGAINST SIMILARLY SITUATED INDIVIDUALS OR CORPORATIONS
The transactions that are the subject of the indictment were heavily counselled and lawyered by major U.S. accounting and law firms, and they were conducted with major U.S. oil companies. Nevertheless, Mr. Rich [was] the only individual target, and the Swiss companies MRAG and Clarendon were the only corporate entities pursued criminally for activities that were widely engaged in by the oil industry at the time.
The unique manner in which Mr. Rich [has] been treated over the past twenty years provides yet a further reason for a pardon. We are unaware of any basis - and certainly the Department of Justice has asserted none - for treating Mr. Rich in a fundamentally different manner than others who commonly engaged in similar transactions or actually participated in many of the same transactions covered by the indictment.
A PRE-CONVICTION PARDON IS A CONTEMPLATED AND APPROPRIATE USE OF THE PRESIDENTIAL PARDON POWER
In the present case, the normal operation of the enforcement of the criminal laws has failed Mr. Rich and we believe that it has failed the United States as well. There should be no doubt that the nearly 20 year-old indictment against Mr. Rich should never be successfully prosecuted because of changes in both the law and DOJ policy, and, as Professors Ginsburg and Wolfman have concluded, there was no underreporting of tax. Mr. Rich repeatedly [has] sought to resolve the situation by having [his] counsel meet with the United States Attorney's Office for the Southern District of New York. [His] efforts to persuade that Office of Mr. Rich's innocence have failed. This failure, however, has not been based upon the Office's careful review of the merits of its case but because the Office has refused to reconsider its position.
Under the circumstances, then, this case will not be resolved through trial, settlement or the withdrawal of the indictment. The only process that will resolve the controversy and allow Mr. Rich the full opportunity to pursue [his] humanitarian efforts, is for the President of the United States to pardon Mr. Rich.
Finality, fundamental fairness and justice – these three principles motivate and inform the Presidential Pardon request of Mr. Rich. Given the length of time that this matter has been pending - and the absence of any potential for a negotiated resolution, a pardon is not only in the best interests of Mr. Rich, but also of the United States.
top
