A federal corruption investigation of Sen. Robert Menendez, a powerful New Jersey Democrat, is shaping up to be the next major test of a Justice Department anti-corruption unit that was revamped after it botched the 2008 prosecution of another veteran lawmaker.
The department's long-troubled Public Integrity Section came under fire after Alaska Republican Sen. Ted Stevens' conviction was thrown out because federal prosecutors failed to share evidence with the defense team that could have exonerated him.
FOR THE RECORD
Corruption probe: An article in the March 22 Section A about the federal investigation of Sen. Robert Menendez (D-New Jersey) incorrectly referred to former Rep. Tom Delay (R-Texas) as House speaker. He was the House majority leader.
After the embarrassing defeat, the unit's top leadership and several attorneys were reassigned, including one who later committed suicide.
Now the unit — created in the Watergate era to ferret out political corruption — has the chance to restore its tattered reputation with what is likely to be its first prosecution of a sitting U.S. senator since Stevens.
A decision to file criminal charges against Menendez and a Florida doctor, Salomon Melgen, is expected soon, according to government officials briefed on the case. Menendez is suspected of receiving gifts in return for helping Melgen's business interests in the Caribbean. Both men deny any wrongdoing.
Supporters of the anti-corruption unit say it has learned from its mistakes. It has sharpened its prosecutorial skills with dozens of state and local cases, and shifted its focus away from plea bargains toward winning cases at trial. The Stevens case unraveled in part because the defense moved for a quick trial, catching the prosecution by surprise.
Skeptics, however, note that the unit is still adjusting to its turnover in leadership and hasn't taken the lead on a high-profile national case since the 2012 mistrial and partial acquittal in the campaign-finance complaint against John Edwards, a former senator from North Carolina and Democratic vice presidential nominee.
By de-emphasizing federal targets in favor of local-level officials and policemen, the section has been able to focus on cases where legal issues are more straightforward and convictions are easier to obtain.
In 2010, it dropped several attention-grabbing investigations, including those targeting former House Speaker Tom DeLay, a Texas Republican, over his ties to lobbyist Jack Abramoff; and Nevada Republican Sen. John Ensign, who resigned in 2011 amid allegations of ethics violations.
"I think the Public Integrity Section got totally gun-shy after Stevens," said Melanie Sloan, a former federal prosecutor who is a lawyer for Citizens for Responsibility and Ethics in Washington, a watchdog group. "Since Stevens, they prosecuted John Edwards for a nonexistent crime, and they failed to prosecute John Ensign for clearly established ones."
Since last month, the unit has been running without a permanent director. Jack Smith, the lawyer brought in to rebuild the unit in 2010, left last month for a more junior position as the No. 2 federal prosecutor in Nashville. Raymond Hulser, a veteran of the section who served as Smith's top deputy, is acting director.
A former prosecutor in the unit, who asked not to be identified because he deals regularly with the Justice Department, said that Smith shifted the unit away from complicated white-collar cases. "While I was there, we saw a lot more cases involving police corruption and other low-hanging fruit," he said.
Hulser declined to comment, but Smith defended his and the unit's recent accomplishments.
Smith emphasized that under his leadership, the unit dramatically increased the number of cases that went to trial.
"Instead of prosecuting minor lower-level federal officials, we have been doing a lot of cases in smaller communities," he said. "That does not get a lot of play inside the Beltway, but is incredibly important to the communities."
The unit also assisted the U.S. attorney in Richmond, Va., in securing the corruption conviction last year of former Virginia Gov. Bob McDonnell and his wife for taking gifts from a businessman. In 2013 it successfully prosecuted former Republican Rep. Rick Renzi of Arizona for taking bribes, Smith noted.
But the Menendez investigation will be much harder than the McDonnell case and those involving local-level government officials, experts predict. For one thing, Menendez and Melgen have hired high-powered defense attorneys.
So far prosecutors have been frustrated in their attempts to turn up the heat on Menendez and Melgen, who is also the target of a separate overbilling investigation involving Medicare and Medicaid. It now appears unlikely either will settle or agree to testify against the other, said the government officials, who were not authorized to speak publicly on the case.
"These guys are such good friends, you'd never get them to turn on each other," said a former law enforcement official who has been briefed on the case, also speaking anonymously because the case is before a federal grand jury.
Nevertheless, Justin Shur, the section's former deputy chief, says the unit is well-equipped to handle the Menendez case.
"The section has handled dozens of challenging cases with tough facts and tough laws," said Shur, who was not personally involved in the Menendez case during his time in the unit. "Even if some of those cases might have been a local clerk of a courthouse, there really is no difference at the end of the day."
When news of impending criminal charges leaked this month, Menendez signaled he was prepared to fight. "I have always conducted myself appropriately and in accordance with the law," he said.
The senator, the top Democrat on the Senate Foreign Relations Committee, acknowledged his 20-year friendship with Melgen, but added: "I fight for the things I believe are important. That's who I am, and I am not going anywhere."
Menendez had earlier conceded that in 2013 he flew on Melgen's jet without reporting it on his financial disclosure form. He called it an "oversight," and said he had since written Melgen a check for $58,500.
Melgen, an ophthalmologist in West Palm Beach, Fla., did not return phone calls seeking comment.
Menendez's former chief counsel, Kerri Talbot, and Michael Barnard, his legislative assistant on healthcare issues, have appeared before the federal grand jury twice and "refused to answer questions about Sen. Menendez," according to a summary written by a three-judge panel of the 3rd Circuit Court of Appeals.
Public Integrity prosecutors persuaded a federal judge to force the aides to testify. But before that could happen, attorneys for Menendez and his staffers appealed to the 3rd Circuit.
The higher court asked the judge for more clarification on the matter before it rules on the appeal. Because everything else about the case is under seal, it is unclear where the matter now stands.
If the unit decides to press criminal charges against Menendez, former prosecutors predict the case will restore its credibility.
"My impression is the section is definitely up to the challenge," said Edward J. Loya Jr., now a white-collar criminal defense lawyer in Los Angeles. "They have some of the most capable professionals in the Justice Department."