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May 21, 2005

The Chronicle makes a point about DeLay that it failed to make about Enron

Ronnie Earle.jpgA good, old-fashioned snit between Texas political opponents gave the Houston Chronicle an opportunity this week to make a good point about the rule of law and the integrity of governmental investigations. But in so doing, the Chronicle highlighted its failure to apply precisely the same standard to far more egregious examples of prosecutorial impropriety, a good bit of which is taking place in the Chronicle's own backyard.

As this Washington Times article reports, Travis County District Attorney Ronnie Earle (first picture left) -- who is investigating House Minority Leader Tom DeLay's campaign finance methods (previous posts here) -- characterized Mr. DeLay as a "bully" in a speech at a Democratic Party fundraiser in Dallas. Among Mr. Earle's comments were the following:

"This case is not just about Tom DeLay. If it isn't this Tom DeLay, it'll be another one -- just like one bully replaces the one before. This is a structural problem involving the combination of money and power. Money brings power and power corrupts."

Well, level-headed liberals and conservatives agreed that Mr. Earle should not have sullied the integrity of the investigation into Mr. DeLay's campaign finances by taking potshots at Mr. DeLay during a partisan gathering. But Mr. DeLay's hometown newspaper -- the Chronicle -- went even further and published this stinging editorial questioning Mr. Earle's judgment:

Earle's attendance and remarks attacking DeLay at a Democratic fund-raiser last week in Dallas damaged the credibility of his investigation with a stunning display of prosecutorial impropriety.
[I]t is inappropriate for a prosecutor to discuss a case under investigation in a political setting, or to single out a potential target of that probe for criticism.

The fact that Earle refuses to recognize his blunder and would do it again calls into question whether he has the necessary impartiality and judgment to conduct the investigation . . .

The Chronicle's broadside toward Mr. Earle was made all the more surprising by the fact that the local newspaper has been a frequent critic of Mr. DeLay. So, the Chronicle editorial definitely scores some points for objectivity.

However, before the Chronicle editorialists pat themselves on the back too much for their fairness in defending Mr. DeLay against Mr. Earle's imprudent remarks, they need to answer the following question:

Where has that objective viewpoint been over the past several years as other "stunning displays of prosecutorial impropriety" have been perpetrated on business executives, including many right under the nose of the Chronicle in Houston?

weissman2.jpgIn that connection, it has become commonplace for officials of the federal government to conduct a virtual political rally as they flame already well-stoked local emotions against former executives of that favorite corporate pariah, Enron:

"[T]he president's corporate task force, which celebrates its second anniversary tomorrow . . . [has demonstrated that] just the mention of the name Enron evokes images of duplicity and greed," said Linda C. Thomsen, director of enforcement for the Securities and Exchange Commission;

"[T]he corporate culture of Enron guided by Mr. Lay is now synonymous with corporate fraud and greed at its worst. And Enron's crooked 'E' logo depicts the corporate management team at Enron -- crooked," opined Internal Revenue Service Commissioner Mark W. Everson; and

In a December, 2004 interview, the Chronicle reported that Andrew Weissmann (second picture above), director of the Enron Task Force, compared Enron executives to New York mobsters that he previously prosecuted.

Literally dozens of other examples of inflammatory public statements from Enron prosecutors and government officials could be cited.

Spitzer9.jpgMeanwhile, as noted in this earlier post, the Lord of Regulation went on the Sunday talk show circuit recently to condemn Maurice "Hank" Greenberg, one of the targets of the Lord's ongoing investigation into American International Group, Inc.:

"These are very serious offenses," stated Mr. Spitzer gravely. "Over a billion dollars of accounting frauds that A.I.G. has already acknowledged. . . That company was a black box, run with an iron fist by a C.E.O. who did not tell the public the truth. That is the problem."

Now, let's take stock here. In each matter described above, prosecutors have made inflammatory public statements about subjects of their highly-publicized criminal investigations. In Mr. Earle's case, the Chronicle condemns his one imprudent remark in the strongest terms. But what has the Chronicle had to say about the multiple comments of the Enron prosecutors and Mr. Spitzer, which frankly are much more numerous and egregious than Mr. Earle's relatively tame comments?

Nothing. Nada. Zilch.

The Chronicle's blindspot is typical of the mainstream media's apathy toward the prosecutorial misconduct that is taking place these days as big government criminalizes big business. The existence of business fraud at companies such as Enron, WorldCom, Tyco and maybe even AIG does not necessarily mean that there is more misconduct in big business than in any other relatively large organization, such as big government or even big news organizations. Nevertheless, prosecutors such as Mr. Spitzer and those on the Enron Task Force are publicizing these instances of business fraud to generalize arbitrarily against those who are easy and popular targets -- i.e., wealthy (and apparently greedy) businessmen. The Chronicle has embraced this public relations tactic while portraying the Enron Task Force as the defender of noble egalitarianism fighting against the forces of corrupt capitalism.

In the wake of such seemingly simple morality plays, many legitimate business transactions -- most notably structured finance transactions that most prosecutors and journalists neither understand nor do the homework necessary to understand -- are unfairly and incorrectly portrayed as complex business frauds. Completely ignored in the process is the fact that such transactions build wealth in companies for the benefit of shareholders, and that such transactions are usually reviewed and approved by multiple professionals who are experts in such transactions. The misguided nature of the government and the Enron bankruptcy examiner's criminalization of Enron's valid structured finance transactions has been well-chronicled by University of Chicago business professor and structured finance expert Christopher Culp in his recent books, Corporate Aftershock (Cato 2003) and Risk Transfer (Wiley 2004).

So, three and a half years now after Enron spiraled into bankruptcy, the Enron Task Force has completed one trial, and obtained one conviction and one acquittal of former Enron executives (the Task Force is currently conducting a trial against five former Enron executives in the Enron Broadband case). Rather than prosecute clearly criminal conduct, the preferred approach of the Task Force has been to sledgehammer former Enron executives with multi-count indictments so that each of the executives is faced with the prospect of what amounts to a life prison sentence if they risk exercising their Constitutional right to defend themselves against the charges. Yale Law School Professor John Langbein has written and spoken extensively about how the government is manipulating this plea bargain system to pressure people to buckle and accept a plea, even if they are innocent.

Admittedly, some of the former Enron executives who copped pleas -- notably Andrew Fastow, Ben Glisan and Michael Kopper -- stole from Enron and thus, certainly engaged in criminal conduct. However, many others who have entered into plea deals did not engage in any clearly criminal conduct. Rather, they entered into those deals simply because they could not risk either the financial drain or the long prison term that they faced if they attempted to defend themselves against the Task Force's sledgehammer.

In the meantime, just to make sure that public perception remains inflamed against big business targets, Mr. Spitzer and the Enron Task Force continue to make inflammatory public statements and disclosures about their targets that strongly imply guilt and wrongdoing. Again, what has the Chronicle had to say about this unsavory use of the government's overwhelming prosecutorial power?

Nothing. Nada. Zilch.

The preservation of our freedom is inextricably tied to upholding the rule of law, and that includes restraining the government when it attempts to erode the rule of law to convict an unpopular defendant. As noted many times on this blog, this principle is precisely what Sir Thomas More was talking about in A Man for All Seasons when he made the following comments to young lawyer Will Roper, who had just confirmed that he would abuse the rule of law in order to achieve the laudable goal of convicting the Devil of a crime:

"Oh? And Roper, when the last law was down, and the Devil turned 'round on you, where would you hide, Roper, the laws all being flat? This country is planted thick with laws, from coast to coast, Man's laws, not God's! And if you cut them down -- and you're just the man to do it, Roper -- do you really think you could stand upright in the winds that would blow then?"

"Yes, I'd give the Devil the benefit of law, for my own safety's sake!"

The Chronicle is right that even Tom DeLay is entitled to the protection of due process of law in the face of the overwhelming power of a governmental prosecution. But so are former Enron and AIG executives. Not only for their protection, but for ours.

Posted by Tom at May 21, 2005 12:00 PM |

Comments

Your comments and Professor Langbien's revelation about the plea bargain system are absolutely true and average citizens need to know this about our criminal justice system for their own sake. The only part of our criminal "justice" system that is even more egregious than coercing plea bargains is coercing them in conspiracy cases where your ticket to freedom is to testify to the prosecutor's version of the "truth" against anyone who doesn't buckle under to the prosecutor threats. The conspiracy charge is virtually impossible to defend because not only are you having to defend the actions of others in the alleged conspiracy -many who are not even charged- but your defense will require jurors to believe that each cooperating witness is a liar and the average citizen and the average juror simply do not believe the system is what it is. Prosecutor's allege your plea bargain is subject to your telling the "truth" and they leave it up to the defense attorneys that tell you what the "truth" must be in order to win your plea bargain. Then you get to sign a sworn statement and you are forever in the clutches of the prosecution until they are done with you- get caught in your lies and your deal goes away and you face greater punishment so you'd better be believable and substantially assist the conviction of another to save yourself.

In the present big business of business conspiracy prosecutions this control is extreme, abusive and as the Professor states, only a fool would refuse the bargain and take the risk of trial. I hope for the sake of the good and honorable people that prosecutors have been accusing especially those in Houston, that they have the fortune of having worked with very many courageous fools.

Posted by: AM at May 21, 2005 1:04 PM

We salute you, Sir Kirkendall for applying the frightening truth of Langbein's "Torture & Plea Bargaining" article and the harrowing logic of More in "A Man for All Seasons" to the stunning displays of prosecutorial impropriety have been perpetrated on business executives recently -- and especially those with any connection to Enron.

Here's hoping your words carry.

Posted by: Forrest Mason at May 21, 2005 3:35 PM

Outstanding.

Indeed, by my lights, politicians are less deserving of protection from political prosecutions than businessmen. The latter, after all, are living in the private economy and expose themselves to civil remedies when they commit torts. Politicians, though, make a living skewering others for personal political advantage (politics being a zero sum game), so if it happens back one has to work up the energy to care.

The solution, by the way, is obvious. We need a law that says that no prosecutor may run for any elective office within five years of giving up the job as prosecutor. Since that would eliminate the main incentive for a lot of these clowns, we should then bring their compensation closer to private levels. Pay US attorneys a lot of money, but don't let them run for office. That reform alone would change the dynamic in a hurry.

Posted by: Jack at May 21, 2005 3:37 PM

Clear thinking manifest. Langbien words are a fitting postscript;

"Plea bargaining concentrates effective control of criminal procedure in the hands of a single officer. Our formal law of trial envisages a division of responsibility. We expect the prosecutor to make the charging decision, the judge and especially the jury to adjudicate, and the judge to set the sentence. Plea bargaining merges these accusatory, determinative, and sanctional phases of procedure in the hands of the prosecutor. Students of the history of the law of torture are reminded that the great psychological fallacy of the European inquisitorial procedure of that time was that it concentrated in the investigating magistrate the powers of accusation, investigation, torture and condemnation. The single inquisitor who wielded those powers needed to have what one recent historian has called 'superhuman capabilities [in order to] ? keep himself in his decisional function free from the predisposing influences of his own instigating and investigating activity.'"

[?]

"I cannot emphasize too strongly how dangerous this concentration of prosecutorial power can be. The modern prosecutor commands the vast resources of the state for gathering and generating accusing evidence. We allowed him this power in large part because the criminal trial interpose the safeguard of adjudication against the danger that he might bring those resources to bear against an innocent citizen ? whether on account of honest error, arbitrariness, or worse."

Posted by: Preston Tucker at May 22, 2005 2:03 PM

Your accusation of prosecutorial misconduct on the part of the Enron prosecutors is misleading and unfair.

First, you cite as examples of "prosecutorial impropriety" statements by officials at the SEC and the IRS. The problem is that these officials are not Enron prosecutors; indeed they are not prosecutors at all. Including these statements in a post about "prosecutorial impropriety" and "inflammatory statements" by prosecutors about "the subjects of their highly publicized criminal investigations" gives your readers the impression that officials at the SEC and IRS have some authority over or responsibility for the Enron criminal prosecutions. But, as you are probably aware, that is not the case.

2. You provide only one example of an allegedly improper statement by an actual Enron prosecutor, and your description of that statement is misleading. You say that Enron prosecutor Andrew Weissman compared Enron executives to mob bosses he had previously prosecuted. You neglect to mention in what way Weissman had said they were similar, leaving your readers with the impression that Weissman meant to say that Enron executives were just as evil or criminal or dangerous as mafiosi. But that is not what he said:

"Weissmann came to the Enron case after supervising more than 100 attorneys in the Brooklyn U.S. attorney's office and after trying several high-profile organized crime cases, including those involving Vincent "The Chin" Gigante and high-ranking members of the Colombo and Gambino crime families.

He said there are some similarities between mob and Enron cases, particularly the challenge in getting people to admit wrongdoing and turn against others.

He said the basic cordiality in the courtroom in the barge case and the mob cases is the same, though, noting one mobster always said good morning to him."

http://www.chron.com/cs/CDA/ssistory.mpl/special/enron/2953693

Weissman did NOT say that Enron executives were as evil as Tony Soprano, as your post implies, rather, he said that the Enron case is like a mob case in that (1) it's hard to get people to plead guilty; and (2) everyone's cordial in court. Do you really think this is an "inflammatory statement"? Why don't you provide the context, so your readers can make their own judgments based on what was actually said?

Your high-minded rhetoric about the rule of law rings a little hollow if you can't be trusted to be accurate.

Posted by: JP at May 25, 2005 8:08 AM

JP, putting aside whether it's acceptable to compare Enron defendants to N.Y. mobsters in a "nice" way, here are a few more of the dozens of inflammatory public statements that the Justice Department representatives have made to fan the flames of the public's anti-Enron bias:

May 1,2003, Deputy AG Larry Thompson, head of the DOJ's Corporate Task Force:

"Today?s indictments are a significant milestone in our unabated efforts to expose and punish the vast array of criminal conduct related to the collapse of Enron Corporation. They are significant because they encompass a broad range of charged crimes in the Broadband area and with special purpose entity manipulation. Taken together, they bring us closer to a full accounting for the wide range of Enron-related crimes that we are investigating."

http://www.usdoj.gov/dag/speech/2003/050103fastowindictment.htm

May 1, 2003: FBI Director Robert Mueller:

"As the indictments show, this is not a simple case of fraud. Eleven individuals in positions of trust and responsibility made millions as investors lost billions, . . they engaged in deliberate fraud to conceal the company?s poor performance, and to enhance their personal prestige and wealth. They improperly took advantage of benefits designed to encourage the use of renewable energy. They issued false press releases and back-dated documents. In effect, they built a company of smoke and mirrors."

http://www.usdoj.gov/opa/pr/2003/May/03_crm_268.htm

May 15, 2002: Mr. Thompson again regarding Arthur Anderson:

"The destruction of evidence extended far beyond the Houston base. The destruction was not confined to a few individuals but was a substantial undertaking over a period of time."

http://money.cnn.com/2002/03/14/news/companies/doj_andersen/

July 8, 2004, Andrew Weissmann:

"Rather than come clean and tell the unvarnished truth about Enron, Lay chose to conceal and distort and mislead at the expense of Enron's shareholders and employees, people to whom he owed a duty of complete candor. Mr. Lay did not want and did not allow the public to learn what he already knew: That Enron, absent the manipulative schemes, was in dire straits. Criminal cases in America are not brought solely to send messages. They are brought to bring individuals to account for their criminal acts."

"There are, however, two undeniable messages from today's charges: First, to corporate America: Your constituents are owed your complete candor, the unvarnished truth. Second, if you violate that trust, you will be called to account no matter how powerful, no matter how wealthy. No one is above the law."

http://www.pbs.org/newshour/bb/law/july-dec04/lay_7-8.html

March 12, 2003, Enron Task Force prosecutor John Kroger on the indictment of Kevin Howard and Michael Krautz:

"The victims in the fraud are primarily investors who made investments in Enron Corporation relying on the financial statements of the company. Basically, it's an accounting fraud scheme."

http://www.click2houston.com/money/2035762/detail.html

June 15, 2002; Leslie Caldwell, then director of the Justice Department's Enron Task Force:

"We have every confidence in the jury system, unlike Arthur Andersen, which chose to tilt the scales in their favor by obstructing justice. We are going to get to the bottom of the Enron debacle."

http://foi.missouri.edu/enronandetal/aafoundguilty.html

In June, 2002: Ms. Caldwell again said about the NatWest Three: "This complaint shows that we intend to address the conduct not only of Enron but also of those who capitalized on Enron's willingness to enter into accounting-driven transactions that lacked business purpose and served instead merely to enrich those involved."

http://www.detnews.com/2002/business/0206/28/business-526128.htm

May 5, 2005: The U.S. Attorney in the Richard Scrushy trial violated a limine order precluding the prosecutors from talking about the Enron scandal. The prosecutor asked the witness if Enron was "the same company that defrauded investors and laid off many employees, resulting in prison sentences for some people." The Judge admonished the prosecutor for the question and cut short the prosecutor's examination of the witness.

http://www.washingtonpost.com/wp-dyn/content/article/2005/05/05/AR2005050501797.html

As an aside, in connection with the Nigerian Barge case, Enron Task Force prosecutors allowed Sheila Kahanek, who was ultimately acquitted of all charges in the Nigerian Barge trial, to assist Enron prosecutors with regard to Enron Broadband case without counsel while the Task Force was targeting her as a defendant in the Nigerian Barge case. On November 12, 2004, the Chronicle reported that Mr. Weissmann "had no comment" about that situation.

http://www.chron.com/cs/CDA/ssistory.mpl/special/enron/2897984

The foregoing examples are just a few examples of questionable prosecutorial conduct relating to the Enron case that I could pull together in a few minutes in response to your comment. There are many more. If you want to review more, I believe more comments are contained in Mr. Skilling's motion to change venue that he filed in his criminal case.

Posted by: Tom at May 25, 2005 10:46 AM

JP:
You criticize Mr. Kirkendall for giving "the impression that Weissman meant to say that Enron executives were just as evil or criminal or dangerous as mafiosi." Indeed, you counter by saying: "Weissman did NOT say that Enron executives were as evil as Tony Soprano."

In fact, in their Sentencing Memorandum, the government went so far as to suggest that Mr. Bayly (one of the defendants in the NBT) was "analagous to that of a drug kingpin." If this isn't a grossly predudicial attempt to demonize someone involved with Enron, what is?

At sentencing, Judge Werlien made this comment about Mr. Bayly, (the same man the government compared to a "drug king-pin): "I may have never had a defendant before me who had a more glowing and extraordinary record of being a good citizen."

Posted by: F.M. at May 25, 2005 7:08 PM

F.M.

Unless I've misunderstood, the discussion here is about the propriety of prosecutors' statements to the media before a defendant's conviction and whether those statements tend to hinder the fairness of the defendant's trial by stoking up public resentment against him (which makes it more likely that his jurors will be biased). That principle is inapplicable at sentencing. I've never heard anyone question the right of the government to say bad things about the defendant at a sentencing hearing.

Of course, the statements should be accurate, reasonable, etc. Was the comparison you referred to false or otherwise unjustified? I can't tell, because you've done the same thing that the Clear Thinker did when he criticized Weissman. That is, you haven't explained what the comparison was; I don't know in what way the government claimed Bayly was like a kingpin. If, for example, they claimed that Bayly managed the fraudulent transaction without himself being involved in the details and that therefore he should be given an enhancement for that management role, just as that enhancement is applied to managers of drug organizations, then I don't see why that would be improper. In any event, if you want to be persuasive, you should provide the context and link to the quote, rather than hide the ball.

Tom,

If you really think that any comparison between the Enron case and a mob case is by definition inflammatory, even if the comparison is that in both cases the defendants are cordial, then you seem to have a pretty low threshold for when a statement is "inflammatory." And that indeed seems to be the case, to judge by the other allegedly "inflammatory" statements you refer to. Whether those statements are outrageous and inflammatory, as you contend, or whether they are relatively dispassionate recitations of obviously true facts, or whether they are somewhere in between, I'll leave for your readers to decide. They might appreciate links, though, (to a source other than Skilling's lawyers) so they can tell whether your obvious hostility to the Enron prosecutions has caused you to present the statements in the most anti-government light possible, as you did in your initial post. And you might consider the possibility that the reason the media, the trial judges, and others have not raged against these injustices might be that they simply disagree with you on the debatable question of what kinds of public prosecutorial statements are over the line, rather than that they lack your passionate commitment to the rule of law.

Posted by: jp at May 26, 2005 8:23 AM

JP, per your request, links to the statements set forth in my earlier comment have been added.

In regard to your response to F.M., you are correct that I referred to the government's inflammatory public statements and not statements made in court pleadings. However, I agree with F.M. that the prosecution's inflammatory statements in court pleadings are not materially less egregious than their public statements.

Finally, I concede that there are not many in the mainstream media who share my disdain for U.S. government sponsored publicity campaigns in support of criminal prosecutions against U.S. citizens. However, I don't think the judiciary is as sanguine about that state of affairs as the media. Judge Werlein certainly agreed with me in rejecting the prosecution's misleading and inflammatory position in connection with the Nigerian Barge sentencings. Similarly, Judge Bowdre has expressed her dissatisfaction with the prosecution's improper statements in the Scrushy trial. And I am hopeful, based upon the oral argument, that SCOTUS will have a similar view toward the Anderson prosecution. So, I don't believe that it is accurate to characterize the judiciary as being as non-critical as the mainstream media of the government's tactics in this regard.

Finally, although I continue to question the propriety of government sponsored publicity campaigns in support of criminal prosecutions against U.S. citizens, I appreciate your taking the time to express the contrary viewpoint.

Posted by: Tom K. at May 26, 2005 9:57 AM

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