Analysis: Former prosecutors weigh in on Strauss-Kahn case (Reuters)

NEW YORK (Reuters) – Even by the standards of a salacious and unpredictable international scandal, it was a whirlwind week in the Dominique Strauss-Kahn sexual assault case.

On Sunday, Strauss-Kahn's accuser, Nafissatou Diallo, 32, broke her silence and anonymity, telling the world in televised and print interviews her version of the incident with the former International Monetary Fund chief. Diallo, a hotel maid, alleges Strauss-Kahn forced her to perform oral sex on him and attempted to rape her at an upscale Manhattan hotel on May 14.

Strauss-Kahn, 62, who had been seen as a possible French president, has denied any wrongdoing.

On Tuesday, prosecutors requested and received a second postponement of the next court date in the case, originally scheduled for July 16. It is now scheduled for August 23.

On Wednesday, Diallo met with prosecutors behind closed doors for more than eight hours.

The next day, a tearful Diallo appeared before a sea of cameras in a Brooklyn church, as her attorney accused prosecutors of abandoning her.

Yet through all the dizzying developments, the case remains in limbo. Despite speculation the prosecution would collapse after significant doubts arose regarding Diallo's credibility, a spokesperson for Manhattan District Attorney Cyrus Vance Jr. insisted the office was still investigating.

Interviews with eight former Manhattan prosecutors found agreement the case was an uphill climb, but no clear consensus on whether Vance should -- or would -- continue to prosecute Strauss-Kahn.

"Every juror has to be convinced beyond a reasonable doubt that she's telling the truth," said Bennett Gershman, a former Manhattan prosecutor and a law professor at Pace University. "The burden is enormous on the prosecutor. Do they want to go ahead with a case that seems so difficult?"

'TREASURE TROVE' FOR DEFENSE

Several former prosecutors said the decision to allow Diallo to speak publicly about the incident could create inconsistencies the defense would try to exploit at trial. Her credibility is already under siege after prosecutors said she lied about her past and about the immediate aftermath of the alleged attack.

"You're creating a treasure trove of material for the defense to dig into," said Jeremy Saland, a defense lawyer who worked as a prosecutor under Vance's predecessor, Robert Morgenthau.

Others have suggested that the media appearances show that Diallo's attorney, Kenneth Thompson, no longer believes the criminal case will hold up. Thompson argued on Thursday that she was forced to come forward to counter "lies" about her, including a report in the New York Post claiming she worked as a prostitute. Diallo has sued the Post for libel over that report.

The publicity could also backfire if it appears to be an effort to extract money from Strauss-Kahn to settle a potential civil lawsuit. Thompson has said she will file a civil claim soon.

Thompson's comments seemed to reflect his own uncertainty over whether the criminal case will proceed.

On Wednesday, following Diallo's meeting with prosecutors, Thompson said the discussion "went well." When questioned on Thursday about that assessment, he appeared to backtrack.

"You know, yesterday when I said it went well, I think that you read too much into that," he said in response to a reporter's question. "It was a meeting, I got out of it, I came outside. I don't know what the district attorney will do."

'PRETTY IMPRESSIVE SHOW'

But some observers say the media blitz could succeed in bringing pressure to bear on Vance's office.

"My sense is that they want to be done with it and they want to dismiss it," said one former city prosecutor who did not want to be named. "But, having said that, the victim has put on a pretty impressive show this past week."

John Moscow, the former deputy chief of the district attorney's investigations division, said the physical evidence was strongly suggestive of a forced encounter. That could be enough to overcome doubts about her credibility, Moscow said.

"Here's how I look at it: if she were run over by a car, would you still have a case?" he said. "Yes, you would. I just don't see any reason at all not to go forward."

Matthew Galluzzo, a former Manhattan sex-crimes prosecutor, said Diallo's story about being gang-raped in her home country of Guinea, which she later admitted was inaccurate, could be devastating to the case.

But Daniel Bibb, another former prosecutor, said jurors could forgive her, since she apparently told it to gain political asylum and entry into the United States.

"In the average rape case, I would say that discovery of a prior false allegation of rape is fatal to the prosecution," he said. "In this case, I'm not so sure, simply because her motives in claiming rape were not malicious."

Even if Vance goes ahead with the prosecution, former prosecutors say a conviction of Strauss-Kahn will be hard to secure.

"If what I've read and seen is accurate, it appears to me that this case will ultimately be dismissed," Saland said.

But like most of the prosecutors interviewed, Bibb warned it was impossible to assess from the outside whether the case will continue.

"I don't know what the right decision is," he said. "I don't have all the facts."

(Reporting by Joseph Ax and Noeleen Walder; Editing by Jesse Wegman and Peter Cooney)

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Former soft drink CEO pleads guilty in Pa. fraud (AP)

PITTSBURGH – The former CEO of a defunct Pennsylvania soft drink company pleaded guilty to using two sets of books to obtain $875 million in credit and equipment leases for the failing company, including more than $27 million he spent on a mansion, collectible toy trains and rare jewels.

The scheme orchestrated by Gregory Podlucky resulted in $628 million in losses to various lenders and equipment companies that did business with Latrobe-based Le-Nature's Inc., Assistant U.S. Attorney James Garrett told a judge Monday. Charlotte, N.C.-based Wachovia Corp. lent $285 million just before the fraud was uncovered in late 2006.

Most of the lost money was poured into the business, which reported about $300 million per year in revenues in the early 2000s, when its actual sales were about one-tenth as much, Garrett said. The prosecutor described Le-Nature's as "a failed enterprise (that) lost huge amounts of money every year."

Podlucky, 51, of Ligonier, pleaded guilty to one count each of tax evasion, mail fraud and money laundering.

Under a plea agreement, Podlucky faces a likely 20-year prison sentence when he returns to court Oct. 20, though his attorney, Alexander Lindsay Jr., reserves the right to argue for a lesser term. Podlucky and Lindsay declined to comment as they left the courtroom.

Among other things, Podlucky had the drink-maker's graphics department create phony checks and other banking documents that were used to fool auditors into believing the inflated sales figures, Garrett said.

"The defendant procured extensions of credit on the basis of false financial statements, that was the nature of the scheme," Garrett told reporters.

Not all of the money lent to Le-Nature's was lost because equipment used as collateral for some financing was recovered after the company went belly-up and because some of the $875 million involved refinancing of older debt, Garrett said.

Garrett said Podlucky directed the scheme with the help of the company's former accounting director, Tammy Jo Andreycak, of Latrobe, who pleaded guilty to bank fraud, conspiracy and other charges in April 2008. She has yet to be sentenced because the extent of her cooperation is a factor in her sentence.

Podlucky's 37-year-old brother, Jonathan, and Donald K. Pollinger, the owner of a Charlotte, N.C.-based equipment company, pleaded guilty last week to charges related to the scheme. They agreed to serve five-year prison sentences. Former company director Andrew Murin Jr., 53, of McMurray, is scheduled to change his not guilty plea on Tuesday.

Latrobe-based Le-Nature's made bottled waters, teas, juices and nutritional drinks before it was forced into bankruptcy in October 2006 after a Delaware judge found company officials may have engaged in financial fraud. Garrett said that happened after a group of minority investors tried to get money out of the company, a claim that led to a court-appointed custodian who uncovered much of the fraud.

Federal agents who searched the company's headquarters reported finding a secret room containing millions of dollars' worth of valuables, including gold, silver and platinum jewelry and diamond-rich watches. They also seized an 8,000-piece model train collection.

Podlucky and other company officials were indicted in the fraud scheme in 2008. Earlier this year, Podlucky; his wife, Karla, 49; and their son G. Jesse Podlucky, 30, were indicted on money laundering charges for allegedly selling or trying to sell millions of dollars' worth of gold, jewels and other valuables allegedly bought with the stolen money.

In pleading guilty Monday, Podlucky told the judge, "I did it all in my sole capacity."

But Garrett said Podlucky's statement doesn't affect the ongoing prosecution against his wife and son, whose defense attorneys didn't return calls.

Podlucky allegedly spent $1.14 million on collectible toy trains, $15.84 million on jewels and nearly $11 million on the family's Ligonier mansion, though the home is in such poor shape the government isn't attempting to seize it.

As part of the plea agreement, Senior U.S. District Judge Alan Bloch will require Podlucky to pay restitution yet to be determined. Podlucky is also forfeiting more than $1.3 million in an investment account.

The tax evasion charge stems from a 2005 joint return Podlucky filed claiming $495,000 in income and $147,000 in tax owed. In reality, Podlucky diverted more than $7.1 million to himself that year and should have paid more than $1 million in taxes, Garrett said.

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Former Philadelphia hospital executive accused of embezzling (Reuters)

PHILADELPHIA (Reuters) – The former executive vice president and general counsel for Children's Hospital of Philadelphia was accused of embezzling $1.7 million from the prestigious facility, authorities said on Thursday.

Roosevelt Hairston Jr. hid the theft from the hospital known as CHOP by creating shell companies, opening bank accounts in their names and establishing phony offices for them, the U.S. Attorney's office said.

Hairston, 56, of suburban Malvern "used the funds he stole from CHOP to live a luxurious lifestyle, purchasing real estate, a yacht with a captain to maintain the yacht, high-end automobiles and many other luxury items," prosecutors said in a statement.

Prosecutors say the fraud started in 1999 and continued until February of this year.

Hairston also is accused of lying to co-workers and his personal assistant and stealing the identity of a friend, the charges said. The government also charged that he failed to report income from the scheme to the Internal Revenue Service.

Hairston's lawyer, Howard Bruce Klein, said: "Roosevelt has made huge mistakes in his life and has admitted financial irregularities."

Klein said the admissions came when a firm investigating the situation for CHOP interviewed Hairston.

"There is a whole other side to Roosevelt," Klein said.

He said Hairston has led a public interest law center, worked with hungry and homeless people and mentored students and that he hoped those activities would be taken into consideration as the case proceeds.

(Reporting by Dave Warner; Editing by Ellen Wulfhorst and Jerry Norton)

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