After criticizing the Wall Street Journal yesterday for running a listless article about prosecutorial misconduct in the Enron-related criminal cases, it’s only fair to note that the WSJ editors do much better today in this editorial ($) (see this related NY Times article) decrying the fact that nine defendants — including eight former KPMG partners — have been sold out to the government by the firm (see also this post) and face criminal prosecution for tax shelters that have never even been determined to be illegal from a civil standpoint (here are the previous posts on the KPMG tax shelter saga). The WSJ notes as follows:

The KPMG case attempts to short-circuit the messy business of proving that a tax shelter is illegal by using the power of prosecution to target the tax advisers directly. And by cutting them off from the support of their firm through the threat of a death-sentence indictment of KPMG itself, the government seems intent on compelling the accused to cop a plea or settle the case, and so deny them their day in court.
Tax evasion is a serious matter, but so is a criminal indictment for conspiracy. KPMG’s partners in this case believed they were selling shelters that were entirely legal, and the underlying legality of those shelters has never been formally challenged. Yet the government has come down on those accountants and tax lawyers as if they belonged to the mob. A case of curiouser and curiouser, said Alice.

The Journal should be complimented for addressing the misuse of criminal law in the KPMG case, which is another example of the criminalization of business generally that has taken place in the U.S. since the hyper-publicized demise of Enron. However, precisely the same situation that is taking place with regard to the KPMG defendants — i.e., defendants sold out by their employer and pre-emptive criminalization of business conduct before it has even been determined to be illegal from a civil standpoint — has already resulted in egregious miscarriages of justice in the sad case of Jamie Olis and in the Enron-related Nigerian Barge case and Coyote Springs case. It’s convenient to criticize such conduct when the target is a high-profile executive or former partners in a highly-publicized accounting firm. But where has the WSJ been with regard to those lesser-known but equally misguided prosecutions, which have already resulted in untold misery to the imprisoned executives and their families?
Oh well, better late than never, I guess.