So, as Peter Lattman reports, most recent Enron Task Force director Sean Berkowitz is the latest in a long line of former Task Force prosecutors who parleyed prosecuting unpopular Enron executives into a more lucrative career than government work.
Berkowitz led the team that obtained convictions against Jeff Skilling and Ken Lay, but his main attribute as the Task Force director is that he was not as bad as his predecessor, Andrew Weissmann, who was primarily responsible for the economic and human carnage of putting Arthur Andersen out of business and of sending four Merrill Lynch executives to prison for over a year before their utterly unjust convictions were vacated and, in one case, reversed.
However, one interesting item about Berkowitz arose shortly after the Lay-Skilling trial when the New York Magazine reported that Berkowitz was having a whirlwind romance with Bethany McLean, the co-author of the original Enron expose’, Smartest Guys in the Room.
Inasmuch as McLean had covered the trial for Fortune magazine, both Berkowitz and McLean were careful to state publicly that they didn’t start dating until after the conclusion of the trial.
However, several reporters who covered the trial confided to me after the romance became public that they had suspected something was up between the two during the trial because of how chummy they had become.
All of which reminded me of something that occurred at an early stage of the Lay-Skilling trial. Taking a page from this earlier post that criticized the Wall Street Journal’s coverage of the trial, lead Skilling lawyer Daniel Petrocelli sent a letter to the Fortune editor pointing out the rather clear conflict of interest that McLean and her Smartest Guys co-author, Peter Elkind, had in covering a trial in which they had a vested interest in the outcome.
As this Talk News Biz post relates (the entire letter, published by Fortune on March 2, is here, but you have to scroll down), Petrocelli noted as follows:
It is ironic that so much of Elkind and McLean’s criticism of Enron has been based on their claimed outrage about a conflict of interest at Enron. These two have an obvious financial interest in having the trial — or at least the public’s perception of the trial — turn out consistent with the one-sided and ultimately cartoonish depiction of Enron and my client in their book and in the so-called documentary to which they have lent their names and other support.
To which the Fortune Editor — presumably not yet aware of the budding Berkowitz-McLean relationship — replied self-righteously as follows:
Peter Elkind and Bethany McLean are journalists of the highest reputation, as well known for their integrity as they are for their knowledge of Enron. While they have certainly chronicled the failings of the company and its management, they have neither a rooting interest nor a financial interest in the outcome of the trial.
Yeah, right.
Tom,
Take off your defense attorney nothing-should-be-illegal goggles for a minute and imagine you are talking with Jeff Skilling as his personal counsel at the earliest stages of his little escapade at Enron and think what you would say to him when he finished explaining what he was about to do. What would you tell him? At the very least, you would tell him that anytime anyone gets pulled before a federal judge (and i’m not even talking Vanessa Gilmore here), they need to recognize the legal process is incredibly unpredictable. That alone should give people reason to steer clear of illegal schemes.
You are complaining that the Enron crew wasn’t treated fairly by the system. The reality is that few are treated fairly by the federal judiciary. You are placing the blame on the prosecutors, but they are only playing the game the way the game is designed to be played. Quit blaming the prosecutors and look at the system itself. Judicial refore should be one of our highest priorities as a nation, but it isn’t even on the radar screen.
Personally, I steer clear of the federal judiciary because I understand that federal judges cannot be depended on to apply the law in any given case. It is well known that the law says what any given judge says it does. In the appellate courts, the justices do everything possible not to have to overturn district judges who they know professionally, socially and very well may have sang with in the Whiffenpoofs.
Bottom line, Skilling, Causey, Furst, Rice and anyone else involved with the Enron saga knew what they were doing and knew they were crossing the line into illegal activities. The thought either they wouldn’t get caught or that when caught, they wouldn’t be held accountable. What they got was the wild card – the unexpected outcome that results in our system.
Blame the system, not the prosecutors. They played the game they way it has been designed to be played.
Charles, you cover quite a bit of ground here. However, I don’t agree with a number of your statements.
Yes, litigation is inherently risky and the federal criminal justice system is not perfect. However, what has occurred in connection with the Enron-related criminal litigation and several other recent business-related criminal prosecutions is that the government is gaming the system in a manner that undermines basic Constitutional protections. You are correct that the judges should have done more about this, just as Judge Kaplan has done in the KPMG litigation in New York. However, my point is that the prosecutors have a professional responsibility not to abuse the system in the first place, and there appears to be little disincentive within the Justice Department to restrain such abuse.
I do not believe that a number of the people who you list believed that they were engaging in crimes in regard to Enron. In fact, other than Fastow and a relative few of his minions who were involved in embezzling money, I am not convinced that anyone at Enron was engaged in criminal wrongdoing. Does that make me right? No, but I suggest to you that when the government engages in such abuses of the system as icing witnesses wiht exculpatory testimony for Lay and Skilling, that indicates that even the government prosecutors have serious doubts regarding the validity of the charges.
Does the fact that prosecutors have gotten away with such abuses indicate a systemic problem? Maybe. However, as Judge Kaplan has shown in the KPMG litigation, there are measures available in the current system that can be deployed to stop such abuses. But you are right that judges have to be willing to identify the abuse and then deploy the measures. That willingness has been sadly lacking in the Enron-related criminal litigation.