Revolving Door Employment Violation Prosecutions
The "revolving door" phenomenon refers to the movement of individuals between roles as public officials or regulators and roles in industries affected by the legislation and regulation they formerly helped shape. While such movement is not inherently illegal, certain restrictions are imposed to prevent conflicts of interest, undue influence, or misuse of insider information.
Revolving door employment violations often fall under ethics, anti-corruption, conflict of interest, or post-employment restriction laws. These laws can be federal, state, or agency-specific, and typically impose "cooling-off periods", lifetime bans, or specific job-function bans.
Below is a detailed explanation of this type of violation with more than four detailed case studies that have been prosecuted or led to significant legal outcomes in the United States.
⚖️ Key Legal Framework
18 U.S.C. § 207 – U.S. federal statute that outlines post-employment restrictions on former federal employees.
Ethics in Government Act of 1978 – Introduced key disclosure and restrictions for federal employees.
State Ethics Laws – States like California, New York, and Texas have their own revolving door statutes.
Administrative and Inspector General Actions – Many revolving door cases are handled internally by agencies or referred to the DOJ.
🚨 Notable Revolving Door Employment Violation Cases
1. United States v. Van Raalte (DOJ Prosecution)
Court: Federal
Date: Early 2000s
Facts:
Van Raalte, a former Department of Defense (DoD) official, went to work for a defense contractor shortly after leaving government service. He participated in procurement decisions affecting the contractor just before leaving the DoD.
Violation:
He violated 18 U.S.C. § 207(a)(1) by communicating with the DoD on behalf of his new employer regarding matters in which he was personally and substantially involved while in government.
Outcome:
Van Raalte was prosecuted and entered into a plea agreement, resulting in fines and a restriction from future lobbying activities.
Importance:
Illustrates how even informal advocacy or communications can trigger a Section 207 violation if the former employee was previously involved in related matters.
2. The Darleen Druyun Case (Air Force & Boeing Scandal)
Court: Federal (criminal case)
Date: 2004
Facts:
Darleen Druyun was a top Air Force procurement officer. While negotiating a $23 billion tanker lease contract with Boeing, she was also negotiating for a high-paying executive position at Boeing.
Violation:
She negotiated private employment while still involved in official matters affecting her future employer. She also took actions favoring Boeing to increase her value.
Outcome:
She pleaded guilty to violating conflict of interest laws and was sentenced to 9 months in prison. Boeing executives were also affected — the CFO was fired and prosecuted.
Importance:
One of the most high-profile revolving door cases. It showcased the dangers of simultaneous employment negotiations and public procurement responsibilities.
3. SEC v. Peter J. Bacanovic (Martha Stewart Scandal – Revolving Door Element)
Court: SEC enforcement and criminal court
Date: 2003–2004
Facts:
Peter Bacanovic, a former broker, was involved in insider trading with Martha Stewart. While not a classic post-employment violation, the case involved a former regulatory employee misusing insider information in private sector work.
Violation:
While not directly prosecuted under revolving door statutes, it illustrated how misuse of confidential government-acquired knowledge can result in insider trading violations and regulatory crackdowns.
Outcome:
Bacanovic was sentenced to 5 months in prison. Stewart also served time.
Importance:
Reinforces how revolving door risks intersect with insider trading and fiduciary breaches.
4. SEC v. Robert M. Foster (Former SEC Employee)
Court: SEC administrative and federal court
Date: 2007
Facts:
Foster, a former SEC employee, went to work for a law firm and began representing clients before the SEC on matters he had worked on while in government.
Violation:
He violated 18 U.S.C. § 207(a)(1) and SEC ethics rules by appearing before his former agency within a year of leaving, and on the same matters he was involved in.
Outcome:
He was barred from practicing before the SEC and fined. Administrative sanctions were imposed, including a cease-and-desist order.
Importance:
This case emphasized that even lawyers must respect cooling-off periods and post-employment restrictions.
5. State of California v. Michael Peevey (CPUC Scandal)
Court: California State Ethics/Criminal Investigation
Date: 2015
Facts:
Michael Peevey, former President of the California Public Utilities Commission (CPUC), was found to have maintained a too-close relationship with Southern California Edison, including meetings and emails regarding cases while still at the CPUC.
Violation:
Though not fully prosecuted, the scandal led to an investigation into violations of state ethics laws, particularly ex parte communication restrictions and future employment influences.
Outcome:
His actions led to a statewide ethics reform for public utility officials, though criminal charges were not pursued due to evidentiary challenges.
Importance:
Demonstrated the appearance of impropriety and influence that arises when regulators interact with industry insiders too closely, especially when future employment is involved.
6. United States v. William J. Lynn III (Ethics Waiver Controversy)
Court: No formal charges – ethics controversy
Date: 2009
Facts:
Lynn, a former Raytheon lobbyist, was appointed as Deputy Secretary of Defense. Federal ethics rules (Obama-era) restricted lobbyists from serving in agencies they had recently lobbied.
Violation:
Though not prosecuted, his appointment required an ethics waiver due to potential violations of revolving door rules and lobbying bans.
Outcome:
He received a presidential waiver, which sparked debate over the enforcement and credibility of anti-revolving door rules.
Importance:
Showed how ethics rules can be waived or circumvented politically, even if they exist on paper.
🧩 Key Themes from These Cases
| Theme | Explanation |
|---|---|
| Personal and Substantial Involvement | Former officials cannot work on matters they handled directly while in government. |
| Cooling-Off Periods | Time-based bans (e.g., 1 year, 2 years) are common; violating them can lead to sanctions. |
| Negotiating Employment While in Office | Officials must recuse themselves if seeking employment with a company they regulate. |
| Misuse of Insider Information | Using non-public information from government service in private employment is often criminal. |
| Ethics Waivers and Loopholes | Political appointments and waivers can weaken enforcement of revolving door laws. |
🏛️ Conclusion
Revolving door employment violations pose serious threats to public trust and institutional integrity. As the cases above show, even when not criminally prosecuted, such violations often result in fines, disqualifications, policy changes, and public scandals. Governments continue to struggle with balancing professional mobility and ethical boundaries.
RELATED Blog
0 comments