This Kristin Hays-Tom Fowler/Chronicle article picks up on an aspect of the six-year sentence assessed to former Enron CFO Andrew Fastow earlier this week that has largely been ignored in the media but noted earlier here.
The Enron Task Force elicited testimony from Fastow during the Lay-Skilling trial that represented to the jury that Fastow was a more credible witness because he had agreed to a minimum ten-year prison sentence and, thus, had no incentive to lie.
As we know now, Fastow had not really agreed to anything of the sort and, in fact, successfully petitioned U.S. District Judge Ken Hoyt for a lighter sentence. The article quotes several experts — including former Enron Task Force director Andrew Weissmann — who express surprise that the Task Force did not attempt to require Fastow to serve a minimum of ten years.
Although interesting, the article fails to address the most troubling aspect of the Fastow sentencing hearing — that is, the apparent failure of any of the attorneys involved to inform Judge Hoyt about how the Lay-Skilling jury was misled by Fastow’s testimony.
When Judge Hoyt finds out about that he was not informed about that, my sense is that he is not going to be pleased.
The public reaction to the Fastow sentence has been fascinating and reflects the dubious nature of the Justice Department’s regulation of business-through-criminalization policy.
Viewed in a vacuum, the Fastow sentence is reasonably fair. Fastow effectively embezzled millions from Enron and ruined the careers of several other Enron executives who he induced to participate in the embezzlement. Six years is a harsh sentence, so Fastow is certainly not getting off lightly.
However, the Fastow sentence was not handed down in a vacuum.
Not only did Fastow and the Task Force prosecutors mislead the jury in order to convict Lay and Skilling, they trampled justice by needlessly ruining the careers of the four Merrill Lynch executives in the Nigerian Barge case and they are currently doing the same thing to the three U.K. bankers in the NatWest Three case.
There is simply no way to reconcile Fastow’s sentence with the six-year sentence handed down to Jamie Olis — who did not steal anything and refused to tell lies about others — or the seven-year sentence of former Enron chief accountant Richard Causey, who also did not steal anything and who has not testified against anybody.
The death of Ken Lay from defending himself against a weak and unjust case, as well as the effective life sentence likely faced by Jeff Skilling, further underscore the confusing message conveyed by the Fastow sentence.
As Larry Ribstein has repeatedly observed, criminal cases involving business executives have become a sort of lottery, incrementally undermining the principles of justice and respect for the rule of law upon which the success of American society is largely based.
If we lose respect for those principles, then “do you really think you could stand upright in the winds [of abusive state power] that would blow then?
Tom,
I’m curious to know what you think Judge Hoyt will be displeased. At the time Andy Fastow offered his testimony, he would not have had any knowledge of what his actual sentence was going to be, so his statements to hte Lay-Skilling jury were not necessarily misleading. For Fastow to have gone off on a tangent speculating what options Judeg Hoyt might have taken would have been inappropriate.
A successful attorney in out system of justice is not one who holds candor before the tribunal as paramount. Rather, success comes from knowlingly misleading triers of fact so that a perception desired by the attorney is created. In the case of Andy Fastow’s sentencing, what was exhibited was highly successful lawyering. How could Jude Hoyt take exception to an exhibition of such fine lawyering? Once would think Judge Hoyt would commend Andy Fastow’s attorneys, not scold them.
Charles, a reasonable interpretation of Fastow’s Lay-Skilling testimony was that he had agreed to serve a minimum of ten years in prison. The Task Force offered that testimony for the purpose of making Fastow appear to be more credible because he had nothing to gain (such as a reduction in his sentence) by testifying favorably for the Task Force’s position against Skilling and Lay.
As we now know, this was not true. After concluding his Lay-Skilling testimony, Fastow petitioned for and received a shorter sentence than ten years. The Task Force did not object. Bully for Fastow and his lawyers.
However, it is important information for a sentencing judge that Fastow had testified in Lay-Skilling that he was going to receive a harsher sentence than he requested and recieved. Inasmuch as it is highly unlikely that Judge Hoyt would have known about Fastow’s Lay-Skilling testimony, the attorneys for the Task Force and Fastow should have disclosed it to him. They may have — I haven’t yet seen the transcript of the hearing, but news reports indicate that no such disclosure was made. If not, then the failure to disclose that testimony — seperate and apart from the issue of whether the Task Force elicited false testimony from Fastow in the Lay-Skilling trial — is, based on my experience with Judge Hoyt, something that he would view with great concern.
Finally, Charles, I agree with you that Fastow’s attorneys did a good job for him in the sentencing phase and, as I’ve noted earlier, I think it’s still a harsh sentence. However, I question whether it is truly a good job from an ethical standpoint if key information was not disclosed to the judge.
Tom,
While I would personally LOVE to see Judge Hoyt issue a ruling that excoriates Andy Fastow’s counsel for what we all understand to be a concerted scheme to create an impression before the Lay-Skilling jury that Andy Fastow (and / or his counsel) had reason to believe at the time was not true and accurate, I can’t see it happening. As i said earlier, candor before the tribunal in the federal court system is a quaint and antiquated custom that has long been cast aside, much like powdered wigs.
If Andy Fastow’s counsel had been honest and forthcoming at all times, they would have most likely been sued for malfeasence by Andy Fastow.
While we like to act as if candor before the tribunal is a canon of our jurisprudence system, it is not. Rather, the ability to mislead is what both generates huge fees for defense counsel and encourages others to “give it a shot” and to commit acts similar to what Andy Fastow committed.
Andy Fastow is not stupid. Far from it. He made what thousands of other will make in short order – a calculated gamble that, in the rare event they get caught, that their attorneys will be able to mislead the jury to allow them to walk scot-free.
Judge Hoyt could well serve the interests of jurisprudence by issuing a ruling from the bench that attempts to re-establish the sanctity of candor before the tribunal, but he won’t. Sadly, he will send a signal to others to give it a shot, lawyer up and play the system.
The end result is the Andy Fastow affair is that people will know that if you get caught, hire a good attorney and the odds are you will give up part of your gains, sit in club fed at government expense while the millions they let you keep earn compound interest and your 10 year sentence will actually be just over 4.5.
Bottom line, Judge Hoyt will remind people that at the end of the day, crime pays if you wear a Brioni suit.
Certainly there are some significant problems in our judicial system, as this case demonstrates, but unlike the previous comment seems to argue that, since this is just the way it is we should all merely accept it, and Iím not sure I agree with that assessment. In this particular case, though, I donít know exactly how it could be fixed. In the original post, the bigger complaint than Fastow not being entirely truthful is that his sentence does not seem particularly just when seen in comparison to those whom he led into criminal acts and then helped to convict. His actions at Enron seem to be the worse of those convicted and yet his sentence is no worse. Part of this is incompetence of prosecutors in using a big fish to convict small fish. Part of it is the fault of those small fish who refused to cooperate, perhaps because they didnít view their own roles as significant. But part of it is simply due to the fact that each defendant faced a different trial, with different defense lawyers, different judges, different prosecutors, and different jurors. Unfortunately (in this case anyway), when you are dealing with different variables you canít account for how harsh a jury or judge will view the evidence placed before them. It does expose, I suppose, one of the holes in our system — that justice on any given day may feel differently about a given case.
Six years??? Thatís just it??? I personally think he deserves worst than that, say, 25 years or so. In addition to that he should be forced to pay all of those people who have lost their life and/or retirement savings.
Yes I agree with the guy above. 6 years is nothing, blame it.