As I understand it, Sara Miron Bloom and Stephen Huggard had three theories of the case. The first theory was that Andrei had stolen some of the AID money–had funneled it into his bank account. That turned out to be false. The second was that AID money had been used to fund analysts doing due diligence for Bracebridge-Farallon investments. That turned out to be false.

The fact that Bloom’s and Huggard’s first two theories of the case were simply wrong did, I think, influence the situation, and is a big reason behind the absence of a Grand Jury indictment here.

The third theory they came up with was that Andrei had filed a false claim against the government by stating that the Russia Project was following all the conflict-of-interest rules. That was the theory that led to the civil settlement.

…at the Boston federal courthouse by Assistant U.S. Attorneys Sara Miron Bloom and Stephen Huggard.

Bloom and Huggard gathered evidence for a year and presented witnesses and documents to a federal grand jury for two additional years. Though they wanted a criminal prosecution, the government, in the end, filed civil charges only.

WHEN AN AGENCY OF THE U.S. government determines that crimes have been committed, it prepares a “criminal referral” to the Department of Justice, which evaluates the case and decides whether to prosecute. AID made its referral in June 1997. The Justice Department approved the case and assigned it to the U.S. Attorney’s Office in Boston and the FBI. On July 10 a meeting of FBI agents and federal prosecutors was convened at…

As I understand it, HIID had drawn the line by saying that *employees* of the Russia Project couldn’t have family members who were investing in Russia, but that *consultants* to the Russia Project could–and told Shleifer that he was a consultant…

If these reporters got the facts wrong, then defenders of Summers and Shleifer need to correct those inaccurate facts. The following attack in the Harvard Crimson doesn’t cut it.

The recent outcry over the Shleifer matter underscored divisions in the [Harvard] Faculty. While many professors have brandished harsh words to describe the University’s handling of the case, Harvard economists have been virtually unanimous in defending their colleague.

Glimp Professor of Economics Edward L. Glaeser said last week that the Institutional Investor article “is a potent piece of hate creation—not quite ‘The Protocols of the Elders of Zion,’ but it’s in that camp.”

If these reporters got the facts wrong, then defenders of Summers and Shleifer need to correct those inaccurate facts. The following attack in the Harvard Crimson doesn’t cut it.

The recent outcry over the Shleifer matter underscored divisions in the [Harvard] Faculty. While many professors have brandished harsh words to describe the University’s handling of the case, Harvard economists have been virtually unanimous in defending their colleague.

Glimp Professor of Economics Edward L. Glaeser said last week that the Institutional Investor article “is a potent piece of hate creation—not quite ‘The Protocols of the Elders of Zion,’ but it’s in that camp.”

It seems to me that some veterans of the Iraqi war might wish to look into that civil war era law!

As I understand things, Larry warned Andrei to be careful before things blew up, and afterwards recused himself: that he couldn’t be involved in deciding what to do about the mess or even be looking over others’ shoulders to figure out what went wrong.

It’s not a criminal matter: Andrei never intended to defraud anybody of anything. It is a civil matter: Harvard promised the U.S. government that it would use the AID grant money to run a squeaky-clean conflict-of-interest-free advisory program, it did not do so, and the government wanted its money back.

On the legal side, there is this Civil War-era statute–basically that if you sold substandard boots to General Grant’s army the government could get back the money it had paid you plus three times more in damages, and only had to convince the judge and jury that it was more likely than not that the boots were substandard. As it applies here, as I understand it, the Boston U.S. attorney’s office could have gotten a judge and jury to fine Harvard $160 million if they could have shown that it was more likely than not that the Russia Project had not fulfilled its obligations under its contract with the government. The fact that the case was settled for $30 million tells you something about the government’s estimates of its chance of success in front of a civil jury.