What Happens Next?

So Harvard University and economist Andrei Shleifer have agreed to pay monetary damages to settle the government civil suit against them. US District Court Judge Douglas Woodlock last Monday gave the parties sixty days to sign the final pact, agree on press releases, cut the checks, etc

That means the reins at last are fully in the hands of Sara Miron Bloom, the federal prosecutor who for eight years has kept the case against them moving forward to its unsurprising conclusion.

Some day between now and August 11, Bloom’s boss, US Attorney Michael Sullivan, will call a press conference to announce the terms of the agreement.

The news that day will consist almost entirely of three numbers: the amount of money that Harvard will remit for breaching its contract to provide disinterested advice to the Russian government; and the sums that Shleifer and his deputy Jonathan Hay, now a London lawyer, agree to pay for the various frauds they committed by secretly seeking, with their wives, to amass fortunes while serving as advisers to the Russian government on salary from the US Agency for International Development.

Some news stories will appear. Then the matter will seem to fade away — pending the appearance of a lengthy magazine article now being reported by author David McClintick (Indecent Exposure, Swordfish).

Before attention turns to prosecutor Bloom, the Swarthmore-educated, Harvard Law School-trained mother of two who withstood tremendous pressures in order to bring the case (and the several other government lawyers who worked closely with her), take a moment to consider the role at the center of the case of Judge Woodlock.

After all, it was thanks to Woodlock that the matter received a thoughtful and above all persuasive hearing — the sort you’d expect from an 58-year-old jurist who may be no more than midway though a particularly interesting career on the federal bench.

Douglas Woodlock was appointed to the district court in 1986 by President Ronald Reagan. He possessed an interesting pedigree: a couple of high school years at Phillips Academy Andover, a distinguished undergraduate career at Yale, capped by being chosen for the secret society known as Skull and Bones by fifteen club members (including George W. Bush) from the class ahead.

After graduation, Woodlock worked for four years as a reporter for the Chicago Sun-Times. He wound up covering the Supreme Court. In 1973, he quit to go to law school, graduating from Georgetown University Law Center in 1975, then clerking for a year for US District Court Judge Frank Murray in Boston.

Ten years later, he was named to the seat on the Boston court vacated by W. Arthur Garrity Jr.

Between times, he practiced law, served four years himself as an assistant US Attorney in Boston, then left the federal courthouse to become a partner at Goodwin Procter — the same old State Street firm that Harvard later hired to defend it against the US Attorney’s suit.

On the bench, Woodlock has taken on a heavy load of cases, won admiration from his fellow jurists for thorough and thoughtful work, and loyalty from his clerks for his personal qualities — as well as a reputation around the courthouse of being something of Renaissance man, with interests in architecture, travel, history and art. Earlier this year, he was cited by the Boston Bar Association, along with Chief Justice Margaret Marshall of Massachusetts’ Supreme Judicial Court, for “judicial excellence.”

Woodlock’s name appeared frequently in the newspapers last summer when he described the holding pen that authorities had arranged for protesters at the Democratic National Convention in Boston as “an affront to free expression” and a “festering boil.” He refused to order changes in it, so lines of people entering the convention center had to file past the site.

The judge probably is better known for the courthouse architecture he has overseen than for any single courtroom decision he has made. He served as chairman of the committee that supervised the design and construction of Boston’s and Worcester’s new Federal courthouses, which in 1996 won him the Thomas Jefferson Award for Public Architecture from the American Institute of Architects.

And as a charter member of the Committee on Security, Space and Facilities of the Judicial Conference of the United States, he advocated forcefully for the design of a series of prize-winning US courthouses around the country in the wake of the Oklahoma City bombing, each featuring enhanced security without surrendering to fortress aesthetics.

Once the government’s suit against Harvard and Shleifer came before him in September 2001, Judge Woodlock sought repeatedly to simplify and streamline the case. The government sought treble damages from Harvard, its team directors and their wives. Almost immediately, he dismissed the charges against the women, who had not been party to the various agreements.  Not long after that, he asked retired District Court Judge David Mazzone to undertake a mediation effort — a negotiation that sources have said collapsed when the government rejected a Harvard offer to return more than $20 million of the original $35 million contract. 

When he let Harvard off the hook for fraud and treble damages in his decision last summer, Judge Woodlock wrote that Harvard couldn’t be faulted for failing to investigate the “rumor-like allegations” about its team leaders and their wives that trickled back to Cambridge. He ruled that the various “red flags” the government had identified never quite reached the level of an actual alarm.  They had more to do with gossip about the provision of various goods and services to Russian officials and their families than with the illegal investments that ultimately brought the project crashing down. “If the applicable legal standard in this case were negligent supervision,” he continued, “the government would have a better case against Harvard.” Instead, the fraud law required proof of actual knowledge or reckless disregard — a standard he said the government had not met.

Later, the judge conducted a three-day trial before a jury rather than decide himself whether Professor Shleifer had been “assigned” to Russia by his contracts and therefore bound by their provisions against conflicts of interest, or whether, as Harvard maintained, he wasn’t covered because he did not move to Moscow from Newton, Mass.The jury took only a couple of hours to decide — against Harvard.

Before agreeing last week to approve a settlement that would obviate the need for another jury trial, Woodlock bristled briefly last week when Professor Shleifer’s lawyer indicated that, from his client’s point of view, the settlement negotiation might not yet be complete.

Four days after Harvard’s commencement had taken place, the judge asked, “Is there any question — is there any question about this? Because I’ve been through this for the past six months, of ‘perhaps’ and then ‘maybe’ and then ‘no’ and then ‘yes.’  And so are we at the end point for purposes of this Court’s responsibilities in this case?”

Martin Murphy, the Shleifer family attorney (earlier he represented Nancy Zimmerman, Shleifer’s wife, in her agreement to pay $1.5 million to settle claims that she had used the Harvard project to pursue her hedge fund’s Russian investments), answered firmly, “Yes, your Honor,” at which point Judge Woodlock closed the case.