The human cost of questionable prosecutions

Gary%20Mulgrew.jpgOne of the more discouraging aspects of the societal tide of resentment and scapegoating that has permeated the Enron related criminal prosecutions has been the utter lack of perspective or compassion regarding the horrendous human cost of those prosecutions.
We already know the horrendous financial cost (see also here) of those prosecutions. However, the the starkest example of the human cost is what happened to the family of the death of Ken Lay, who endured the decline of a loving father and grandfather as he defended himself against questionable charges that in a less-heated environment would likely never have been pursued. Almost equally barbaric is the unsupportable 24-year prison sentence assessed to former Enron CEO Jeff Skilling, whose children are threatened with the loss of their father for most of the rest of his life.
The Enron-related criminal prosecutions have thrown numerous other families into turmoil, such as those of the four former Merrill Lynch executives (see also here) who were unjustly jailed for a year in the Nigerian Barge case. Dozens more have lived their lives in fear over the past several years as Enron Task Force prosecutors routinely threatened prosecutions against most anyone who could provide exculpatory testimony for a defendant looking down the Task Force’s gun barrel.
But the enormous human toll of these prosecutions was reinforced by this London TimesOnline article, which reports on the heartbreaking child custody case involving the daughter of Gary Mulgrew, one of the former UK bankers known as the NatWest Three who recently entered into a plea bargain of dubious charges against them. Turns out that Mulgrew — while forced to live in the US away from his family for most of the past two years — has had to endure the emotional trauma of having his six-year-old daughter taken by his estranged ex-wife to live in Tunisia with the ex-wife’s new boyfriend, “Abdul.” Based on the difficulty of attempting to enforce Western legal obligations in an Islamic legal system, Mulgrew and his family must be going through a living hell in trying to rescue his daughter from a repressive Islamic culture.
To my knowledge, none of this human drama has been mentioned in the US mainstream media, which has moved on from Enron in its inexhaustible search for the next scapegoats. Wasn’t the damage to families and careers that the government and the mainstream media left in the wake of the Enron-related prosecutions enough to satiate our resentment?
Sadly, I don’t think so.

Pro Dome? Or just anti-Emmett?

dome%20020508.jpegI understand that Ed Emmett is not the Chronicle’s favored candidate for Harris County Judge. But isn’t it a bit odd for the Chron to be fanning criticism of Emmett for showing rare leadership over the pie-in-the-sky Astrodome hotel redevelopment deal (previous posts here)?
Look, this is really very simple. No equity investor or financial institution in their right mind is going to invest upwards of half a billion dollars to redevelop the Dome into a convention hotel. If there were such investors, they would have stepped up in the over three years that this proposal has been floating about town and the financial markets. The fact that the Astrodome hotel would not even have the primary right to use the Reliant Park space that it sits upon for over a month out of the year (roughly 22 days for the Houston Live Stock Show & Rodeo and another dozen or so days for the Texans) only makes the hotel proposal more speculative in nature. That several County Commissioners continue to think that it’s a good idea to pursue the Astrodome hotel project does not make it one. Rather, it simply shows why they are County Commissioners and not businesspeople responsible for creating jobs and turning a profit.
And reliance on a poll of Houstonians to keep the Astrodome hotel dream alive is just plain silly. Sure, most Houstonians would like to preserve the Dome. It’s a landmark and an architectural treasure. But I doubt that poll revealed to its participants that mothballing the Dome over the past three years has already cost the County $12-15 million that could have been spent on improving roads, flood control or park improvements. Similarly, that poll almost certainly did not disclose to its participants the financial risk that the County would be taking if an Astrodome convention hotel craters, as many such hotels tend to do. If a poll is taken with such information supplied to its participants, then my bet is that the number of Houstonians wanting to preserve this financial black hole would diminish rapidly.
Emmett is showing leadership in moving the decision-making process on the Dome along. The Chronicle is playing politics in criticizing him for it. Set a reasonable deadline for proposals, consider them and then either move forward with one that makes financial sense or raze the Dome and build a parking ramp for Reliant Park that would generate revenue to pay off the bonded indebtedness that remains on the Dome. That may not be the sexist thing alternative, but it’s the responsible thing to do.

What was so super about that?

Phoenix%20stadium.jpgWhile most Americans who watched Sunday’s Super Bowl XLII were thrilled with a close game that wasn’t decided until the final seconds, Financial Times ($) Simon Kuper examines why American football does not translate well to other cultures:

. . . few foreigners watch American sports. The media agency Initiative tallies audiences for sporting events, counting only the average number of live viewers who watched from home, and not in places like bars. It estimated that of the Super Bowlís 93 million live viewers in 2005, just three million were outside north America, including nearly one million in Mexico.
Meanwhile, game four of baseballís World Series in 2005 attracted about 21 million viewers in north America and Mexico, and fewer than one million elsewhere (all of them possibly American expats). And the last game of the NBA finals in 2005 drew fewer than one million live viewers outside the US, according to Initiative.
American sports suffer partly from having arrived late: the British empire got everywhere first. Kevin Alavy, an analyst at Initiative, says: ìIf people have been following the same sports for 50 or 100 years in a country, itís hard to break into that.î

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A birthday wish

entitlements.gif.pngDon’t miss Greg Mankiw’s birthday wish:

My birthday wish is for all of us to stop asking what the government can do for us today. Instead, we should focus on what we can do together to prepare the economy for our children and grandchildren. That means getting ready to care more for ourselves in old age, perhaps by retiring later, perhaps by saving more. I hope that when I celebrate my 100th birthday in 2058, my descendants wonít look upon Grandpa and his generation as the biggest economic problem of their time.

Read the entire op-ed. Salient thought for a political season.

An uncomfortable issue for John McCain

pills.jpgThe hypocritical and unproductive nature of the government policy of drug prohibition has been a frequent subject on this blog (see here, here, here and here), so this Radley Balko post about Cindy McCain, John McCain’s wife, caught my eye:

. . .the problem with the hypocritical practice of letting politiciansí family members get off for drug crimes that land normal people in prison is that it doesnít seem to do much in the way of making them more sympathetic. It just hardens them into more militant drug warriors.

Read the entire post.

Can Schiller and Del Grande save Cafe Express?

cafe_express_logo.gifAt one time earlier this decade, the Cafe Express restaurants were among the best “upscale” fast food restaurants in Houston, perhaps anywhere. Then, in 2004, Wendy’s International purchased a majority stake in Cafe Express from the original owners, Lonnie Schiller and Robert Del Grande, who also own the popular upscale Houston restaurant, Cafe Annie.
Wendy’s promptly operated the Cafe Express restaurants like, well, like Wendy’s. No one would confuse their local Wendy’s with an upscale fast food restaurant. It became clear quickly that Wendy’s did not have a clue of how to manage an upscale fast food restaurant chain. Cafe Express suffered.
Reflecting that hope springs eternal, this David Kaplan/Chronicle article reports that Schiller and Del Grande have purchased Cafe Express from Wendy’s (hopefully at a BIG discount). It’s a different and more competitive market in the “upscale” fast food industry now than when Schiller and Del Grand sold to Wendy’s, so there is no certainly that Schiller and Del Grande will be able to infuse Cafe Express with its lost luster. But I’m pulling for them.

WinkingSkull.com

WinkingSkull.com.jpgCheck out WinkingSkull.com, a worthy counterpart to the Visual Medical Dictionary (noted earlier here) in better understanding anatomy and medical conditions.
Along those lines, did you know that “the bacteria count in the plaque on human teeth approaches the bacteria count in human feces?” (H/T Kevin, MD)
Still biting those fingernails? ;^)

Piling on Rosenthal

Rosenthal%20020208.jpgIt’s become fashionable around Houston to be critical of outgoing Harris County District Attorney Chuck Rosenthal. Frankly, much of the criticism is deserved. But given what Rosenthal has been going through in federal court over the past couple of days, one has to wonder whether the media firestorm regarding Rosenthal has reached the point that otherwise rational observers have taken leave of their senses.
Take this latest Chronicle article on the hearing over Rosenthal’s destruction of emails that he had been ordered to turn over in connection with a civil lawsuit in federal court. The Chron article, which is representative of the newspaper’s vitriolic coverage of Rosenthal’s political demise, calls the hearing a “contempt hearing” in which the judge could “hold Rosenthal in contempt, . . .[and] put the DA behind bars for six months.”
H’mm. I don’t think so.
Although the plaintiffs in the civil lawsuit are having a field day excoriating Rosenthal in court and in the media, I can’t see how the judge could hold Rosenthal in contempt of court, at least at this stage. The plaintiffs’ motion (see here) essentially requests that the judge hold Rosenthal in criminal contempt of court because of Rosenthal’s destruction of email evidence and failure to comply with the court-ordered procedure for reviewing the emails. The motion doesn’t call for Rosenthal to be held in civil contempt. There is no need for the court to take coercive action and Rosenthal would not be able to take any action to purge the contempt, anyway. The destroyed emails are gone for good and Rosenthal can’t do anything about that.
Thus, Rosenthal — who isn’t even a party to the civil lawsuit — is accused of criminal contempt, but he has been provided none of the protections that due process of law requires for a criminal defendant. Inasmuch as Rosenthal’s allegedly contemptuous conduct did not take place in the courtroom, the trial judge does not have the power to hold him in criminal contempt without a full-blown trial on the criminal contempt charges. Indeed, the trial judge cannot even be the judge in Rosenthal’s criminal contempt trial because the judge is a potential witness in that trial.
Likewise, the plaintiffs’ lawyer in the civil lawsuit cannot prosecute a criminal contempt case against Rosenthal. Rather, the contempt charge must be referred to the U.S. Attorneys’ Office, which then decides whether to prosecute Rosenthal based on an evaluation of the evidence and and the charges. If the U.S. Attorney decides to do so, then Rosenthal is entitled to the due process protections that any criminal defendant is entitled to receive, including notification of the specific charges, trial by jury, and confrontation of the adverse witnesses. The circus going on right now over in federal court doesn’t come close to fulfilling those Constitutional safeguards.
So, I don’t think Judge Hoyt is going to hold Rosenthal in criminal contempt and throw him in jail. Even if Judge Hoyt were to do so, the Fifth Circuit would likely stay the commitment order and eventually overturn it. The Chronicle and Rosenthal’s many other detractors can continue to revel in the lame duck DA being filleted in a public court hearing, but at least provide Rosenthal due process of law. We in Houston have already seen what happens to the unpopular public figures of the moment when those protections are ignored.

JÈrÙme Kerviel channels Tom Cruise

tom-cruise-acting%20crazy.jpgIn this clever Financial Times op-ed, John Gapper lucidly explains why the business world will always be dealing with risk-takers such as JÈrÙme Kerviel, the alleged ìrogue traderî at SociÈtÈ GÈnÈrale whose trades are responsible for the $7 billion plus hit that the bank took earlier this month.
According to Gapper, it’s because Kerviel went crazy like actor Tom Cruise, except there was a method to Kerviel’s madness. Although Kerviel’s trades were bizarre and risky, they had a certain crazy logic because traders have big incentives to risk everything for stardom:

In recent days we have witnessed two men taking leave of their senses. In one case, however, there was method to the madness.
The first is Tom Cruise, the Hollywood film star and devoted Scientologist. In a clip made for members of the cult-like religious movement, Mr Cruise can be seen laughing manically and claiming special powers to help the victims of road traffic accidents because of his faith. He seems utterly deluded.
The second is JÈrÙme Kerviel, the ìrogue traderî at SociÈtÈ GÈnÈrale accused of losing his bank Ä4.9bn. Mr Kerviel did not make money for himself by his trading. Instead, as Jean-Claude Marin, the Paris prosecutor, said this week: ìHe wanted to show that he was worth as much as the others around him. He truly believed that … everyone would recognize his financial genius.î
Crazy, right? That is what Mr Kervielís former bosses, most of whom are either out of a job already or soon will be, think. Rather than sticking to his assigned role as a lowly arbitrage trader, Mr Kerviel tried to become a star. ìI think that he is completely mad,î says one banker.
Well, not completely. Actually, there is a good argument that Mr Kerviel acted in a financially rational manner, although he broke both his contract and ñ allegedly ñ the law. He had as firm a grasp of superstar economics as Mr Cruise, one of the worldís best-paid film actors.
The basic principle of superstar economics, which applies to both entertainment and investment banking, is that a few people take most of the rewards. If you can establish yourself as a top talent either on screen or on a trading floor, you gain status and get rich.

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The never-ending City of Houston corruption probe

City%2Bof%2BHouston%2BSeal.gif.pngIt’s been a couple of years since I last blogged on it, and it’s been over two and a half years since the new defendants were first mentioned as potential targets in the probe, but the feds finally got around last week to indicting Andrew Schatte and Michael Surface, the principals in the Keystone Group who have made a living over the past decade or so managing big construction projects financed by the City of Houston and other municipalities. The press release on the indictment is here and a copy of the indictment is here. For unknown reasons, the U.S. District Clerk’s office did not post the indictment publicly until yesterday, which is about as long as it took for the Chronicle’s editorial staff to comment on the indictment.
The indictment alleges that Schatte and Surface bribed former City of Houston building services director Monique McGilbra to gain favor on a couple of big City of Housotn building projects for which they were competing. The feds allege that the bribes were both direct (not so big) and indirect (much larger), the latter of which were allegedly funneled through Garland Hardeman, McGilbra’s former boyfriend who Schatte and Surface hired to work with them in obtaining the contracts. McGilbra, who copped a plea back in 2005, will be singing like a canary for the prosecution in this case.
Not enough is known about Schatte and Surface’s defense strategy at this point to know what will be the most important issues in the case. However, one has to wonder why the U.S. Attorneys’ office — which has been investigating corruption in the City of Houston administration of former Mayor Lee P. Brown now for six years — waited for over two and a half years after McGilbra had fingered Schatte and Surface to bring the charges against the two? Similarly, when did the feds notify Schatte and Surface that they were targets of a criminal probe? If it was some time ago (as it would appear), then why was Surface serving on the Harris County Sports & Convention Corp board for the past two years while being the target of a federal criminal probe?
The feds need to wrap this matter up.