Newly installed Attorney Melinda Haag in San Francisco is now personally reviewing a criminal copyright investigation, which is independent of the civil case won by Oracle last year, one attorney familiar with the probe said.
The decision on whether to prosecute that case comes as Haag tries to make Northern California a hub of white collar enforcement that rivals New York. And it is just those types of headline-grabbing, high impact prosecutions that observers say have been lacking from federal gumshoes in the Bay Area.
In an interview with Reuters, Haag, who took over the job last August, said big prosecutions send a message, and it is important for her office to send them.
High profile cases have deterrent value just because people are paying attention, she said.
Haag would not confirm or deny any criminal investigation surrounding SAP. Spokespeople for SAP and Oracle declined to comment.
With its robust financial services sector, high-tech giants and biotech start-ups, Northern California has long been viewed as a natural location for corporate crime enforcers.
But when the FBI recently banged down doors in Silicon Valley to nab insider trading defendants, San Francisco federal prosecutors found themselves making perfunctory court appearances on bail, before the cases were shipped back East for the heftier legal battles.
The realm of insider trading -- particularly the case around hedge fund Galleon -- is probably the most glaring example of Manhattan federal prosecutors taking the lead over their Bay Area colleagues.
Hedge fund founder Raj Rajaratnam heads to trial in New York next week, even though a swath of the alleged criminal conduct, related guilty pleas, and a probe of expert networks used by hedge funds have come from Silicon Valley, generating strong business for California defense lawyers.
Haag flashes a wry grin at the Galleon case and notes that New York took charge before she became U.S. Attorney.
If the misconduct occurred here, the witnesses are here, and the evidence is here, the case should be handled here, Haag said. New York may beg to differ, and we may have to have some conversations down the road.
Ten years ago, current FBI director Robert Mueller was U.S. Attorney in San Francisco and the office was front and center in several cases, eventually taking a big role in the Enron Task Force. But under Mueller's successor, Kevin Ryan, several experienced white collar prosecutors -- including Haag -- left for private practice.
White collar crime case charges dropped by half in five years to a low of 62 in fiscal year 2005, according to U.S. Department of Justice statistics.
The case figures started to come back up under Joseph Russoniello, Haag's immediate predecessor, but the best known recent Bay Area federal case is the upcoming perjury trial against baseball home run king Barry Bonds over performance enhancing drugs.
Haag's ambitions also face some budget realities. Eight job offers to prospective prosecutors -- which were already accepted by the candidates -- have been held up in Washington due to a hiring freeze, Haag said.
HIGH BAR IN SAP CASE
A criminal copyright case against SAP could be tough.
The allegations against SAP have been public since Oracle sued in 2007, claiming that an SAP subsidiary wrongfully downloaded millions of Oracle's files. SAP is seeking to reduce the $1.3 billion verdict.
Even though SAP admitted to liability in the civil case, if federal prosecutors brought a case against the company or any individuals they would have to prove an element of willfulness that Oracle didn't, said Eric Goldman, a professor at Santa Clara University School of Law.
Willfulness in a criminal context is a very high bar, Goldman said.
Speaking generally, Haag said prosecutors' speed is an important factor in encouraging tech companies to come forward when they are hacking victims. Otherwise they may remain silent.
Sometimes these companies do make a business decision that they don't want to report it; they don't want the publicity, she said.
Haag has added two prosecutors to a group devoted to health care fraud in the district, which has been a Justice Department priority nationally. It was part of a larger office reorganization that had some prosecutors still settling into new offices in January.
That process, Haag acknowledged, led to lost time, and she knows that charging cases is the key to publicizing her office's efforts.
My mantra with people here is this is a wonderful case, a great case that you're investigating, and no one knows about it, Haag said. So let's get it resolved.
(Reporting by Dan Levine, editing by Gerald E. McCormick)