Alleged Justice Dept. Leniency on White-Collar Crime to Be Probed

The Senate Judiciary Committee plans to investigate the Justice Department’s handling of white-collar crime, committee Chairman Strom Thurmond (R-S. C.) said Friday.

The panel agreed to look into the department’s handling of a series of prosecutions against large corporations after Sen. Howard M. Metzenbaum (D-Ohio) criticized the department for dropping charges against or failing to seek prison terms for individuals in cases involving E. F. Hutton & Co., Eli Lilly & Co. and SmithKline Beckman Corp.

Thurmond said that the hearings will be held in November and that he “will consider” scrutinizing the department’s performance in other cases, including that of Teamsters Union President Jackie Presser.

“If you’re guilty of white-collar crime, there’s a kind of protective cloak thrown around you,” Metzenbaum said. “If you wear a white collar, you don’t get prosecuted.”

He made his comments when questioning the qualifications of Richard K. Willard, acting assistant attorney general in the civil division, to become permanent head of that Justice Department section. The committee unanimously approved Willard’s nomination.

Department spokesman Terry Eastland defended the department’s stance, saying: “We’re happy to have our record examined because we’re proud of that record of prosecuting white-collar or economic crime cases.”

Eastland cited recent department actions, including stiff prison terms for former Deputy Defense Secretary W. Paul Thayer and Tennessee banker Jake Butcher. He said that the department was “breaking new ground” with the Hutton bank overdrafts case and had filed the first charges involving drug companies’ failure to report adverse drug reactions.

But Metzenbaum called the $2-million fine against E. F. Hutton “a drop in the bucket.”

“The Justice Department drops the prosecution of Jackie Presser because he’s an informant” for the FBI, Metzenbaum said. “An informant? Against whom? He’s the biggest of the big. Do you drop prosecution against the biggest of the big to get (his uncle) Allen Friedman, who was a nobody?”

Metzenbaum said that SmithKline faced “only misdemeanor charges” for failing to report adverse reactions to Selacryn, a medicine for high blood pressure. He said also that Eli Lilly was let off with a $25,000 fine for failing to report deaths associated with Oraflex, a drug used to treat arthritis.

“Why, with all of those deaths, (was) no individual (held) responsible?” he asked.