U.S. Rep. Frank Pallone (D-Long Branch) is asking former U.S. Attorney Christopher Christie for a "clarification" of his testimony before the House Judiciary Commercial and Administrative Law Subcommittee in June.  Pallone is the co-sponsor of legislation to reform the process used to select federal monitors in deferred prosecution agreements.  Christie, who was New Jersey's federal prosecutor from 2002 to 2008, is now the Republican nominee for Governor.

Pallone wants Christie to address his role in setting legal fees for former U.S. Attorney General John Ashcroft's firm to monitor a DPA with Zimmer Holdings.  Christie had initially said that he was not involved, but e-mails show that had some involvement.

"I would like to offer you the opportunity to try to reconcile your remarks to the subcommittee about your selection of federal monitors," Pallone wrote in a letter to Christie today.

The full text of Pallone's letter:

Dear Mr. Christie,

After examining your testimony before the Commercial and Administrative Law Subcommittee at the June 25th hearing on deferred prosecution agreements, I would like to get clarification from you on a number of your statements on the selection of federal monitors to oversee these DPAs.  A comparison of your testimony to the committee, along with previous statements and emails, reveals a series of discrepancies and apparent contradictions that require an explanation. 

In particular, you previously stated that you were not involved in setting the fee for former Attorney General John Ashcroft's law firm for its monitoring contract with Zimmer Holdings and that no one objected to the compensation. 

However, documents that came to light immediately before the hearing showed that Frederick Robinson, the attorney for Zimmer Holdings, had e-mailed your First Assistant U.S. Attorney, Michelle Brown, to say the company and its lawyers were "shocked" by Ashcroft's "proposed fee agreement."  Further, in your prepared statement to the committee you said there was no "impasse" over fees awarded to federal monitors and those companies granted DPAs.

Specifically, you testified:

"The Office was not involved in the fee negotiations.  Intervention by the Office would only occur if the company and the monitor were at a genuine impasse in fee negotiations.  No such impasse occurred."

However, an e-mail sent to you by Zimmer Holdings’ defense attorney, Frederick Robinson, on October 17, 2007 stated:

"Chris, As you know, Zimmer has been in discussion with the Ashcroft Consulting Group ("ACG") regarding certain provisions of the Monitor Agreement, most of which concern the financial arrangements between the parties. Although everyone has approached these negotiations in the utmost good faith, it appears that the parties have reached an impasse on certain key issues."

In your responding e-mail on October 19, 2007, you wrote:

"Rick - I have reviewed your e-mail. I am very disappointed that this matter has not been resolved by your client. I am not convinced that this dispute is at the point where it cannot be resolved between your client and the Monitor. Therefore, I will not be resolving these issues on the merits. I am telling you that I expect your client to return to this issue directly with the monitor with an eye towards resolving this issue yourselves in short order. We have a great deal of work to do at Zimmer. I fear the serious revelations brought to my attention yesterday by the Monitor's team are just an example of the significant issues that Zimmer and the Monitor are going to need to address and resolve together in short order. We cannot afford to be distracted by anything other than bringing Zimmer into compliance with the DPA and federal law. Take another stab at resolving the substantive issues raised in your e-mail directly with the Monitor. Please update me next week on the progress that has been made by your client and the Monitor."

Another point I would like to see clarified is your testimony that U.S. Attorney David Kelley, whom you appointed as a federal monitor, and the Securities and Exchange Commission both found that your brother, Todd Christie, had committed no wrongdoing.  In fact, the record shows that your brother reached an individual settlement with the SEC in which the commission found that he broke stock exchange rules. The settlement agreement on October 15, 2008 reads as follows:

"During the Relevant Period, in IBM and AOL, [Todd] Christie executed hundreds of trades that constituted interpositioning, which generated thousands of dollars in profit for his firm's proprietary account at the expense of customer orders, and hundreds of trades that constituted trading ahead, which generated thousands of dollars in customer harm...As a result of the conduct described above, Christie violated the aforementioned NYSE rules and violated Section 11(b) of the Exchange Act and Rule 11b-1 thereunder."

I would like to offer you the opportunity to try to reconcile your remarks to the subcommittee about your selection of federal monitors.

As a sponsor of the Accountability in Deferred Prosecutions Act of 2009, this information is necessary to fully understand the practices and to reform the system in the most effective way.  It is also needed to get an accurate understanding of the testimony of other witnesses at the hearing and to reconcile any contradictions or misstatements.  These are congressional responsibilities we should all take seriously.

I look forward to your cooperation and full response.

Sincerely,

FRANK PALLONE, JR.
Member of Congress