One of the most egregious aspects of the federal government’s criminalization of business during the post-Enron era has been the prosecution tactic of threatening to go Arthur Andersen on companies if they fulfilled a corporate policy or obligation to pay the defense costs of the company’s business executives against whom the prosecution was pursuing criminal charges. U.S. District Judge Lewis Kaplan called the government in on the carpet for this tactic in the KPMG case, but the government got away with the tactic in a number of other cases with disastrous consequence for the individual defendants.
Once of those was the sad case of former Dynegy executive Jamie Olis in which the prosecution threatened Dynegy with indictment if the company followed its corporate policy of paying for Olis’ defense of a government’s indictment against him. As a result, Dynegy stiffed Olis for his defense costs and Olis — who is not a wealthy man — was forced to scrape together funds for what amounted to a skeletal defense at trial. Dynegy’s forced betrayal of Olis undoubtedly contributed to the disastrous result at trial as Olis was convicted and sentenced to over 24 years in prison. Much later, after the Fifth Circuit Court of Appeals overturned that abomination, Olis was resentenced to about six years in prison.
But now for the rest of the story. After Olis was convicted, Terry Yates, Olis’ trial counsel, filed a civil lawsuit against Dynegy seeking to recover damages in the amount that Dynegy should have paid him for Olis’ defense. The case went to trial in state district court in Houston earlier this month, but flew under the radar screen of the media. So, it was with great interest that I read the following short blurb in the Chronicle’s “Around the Region” column yesterday:
Jury wants Dynegy to pay lawyer
A jury said Tuesday that Dynegy owes $2.5 million in legal fees and damages to the lawyer of former Dynegy worker Jamie Olis.
The state court jury determined Dynegy committed fraud when it did not pay Terry Yates, Olis’ attorney during the November 2003 trial, for representing him during the trial. Olis was found guilty and sentenced to 24 years in prison but later had his sentence overturned and reduced to six years.
Yates was awarded $500,000 in legal fees and $2 million in damages.
A spokesman for Dynegy said the Houston-based energy company respects the jury’s verdict but is still considering its options, including an appeal.
The Reuters story on the jury verdict is here. Here’s hoping that Yates is able to obtain a judgment based on the jury verdict and collects every dime of the damages. I only wish that the government lawyers who strong-armed Dynegy into welching on the company’s obligation to defend Olis and deprived him of at least a fairer trial are the ones who would have to pay Yates.
