Longtime Houston attorney Tom Kirkendall's observations on developments in law, business, medicine, culture, sports, and other matters of general interest to the Houston business, professional, and academic communities.
The silliness of the federal governmentís security theater policy has long been a common topic on this blog. But if you thought that the governmentís security theater jobs program is bad, check outthis first installment of the Dana Priest-William Arkin/Washington Post series on the explosion in the hiring of government contractors and employees doing top-secret work for the governmentís intelligence agencies and programs:
After nine years of unprecedented spending and growth, the result is that the system put in place to keep the United States safe is so massive that its effectiveness is impossible to determine. . . . Analysts who make sense of documents and conversations obtained by foreign and domestic spying share their judgment by publishing 50,000 intelligence reports each year ñ a volume so large that many are routinely ignored. . . . Every day, collection systems at the National Security Agency intercept and store 1.7 billion e-mails, phone calls and other types of communications. The NSA sorts a fraction of those into 70 separate databases. The same problem bedevils every other intelligence agency, none of which have enough analysts and translators for all this work.
The first Post installment goes to detail the utter failure of the matrix of government intelligence resources to generate the quantity or quality of intelligence that would justify the billions of dollars being spent on them, while telling the all-too-familiar tale of Congress failing to require any meaningful accountability from the intelligence agencies.
But with the explosive growth in the intelligence and security theater bureaucracies, as well as the growth in government that is just beginning in regard to Obamacare and the 2,000-plus page Dodd-Frank financial regulation reform legislation — and not to overlook the bloated bureaucracy that already exists to enforce the federal governmentísabsurdly-complex tax laws ñ what happens when out-of-control government growth crashes?
As noted in April when the Securities and Exchange Commission brought its lawsuit against Goldman Sachs, the case was destined to settle with Goldman paying a hefty settlement, which the SEC announced last week. But Larry Ribstein expands on that thought in this timely post on what the proposed settlement means to the folly of the current reform movement regarding governmental regulation of financial firms:
The SEC is heralding the $550 million settlement in its suit against Goldman as ìthe largest penalty ever assessed against a financial services firm in the history of the SEC,î and ìa stark lesson to Wall Street firms that no product is too complex, and no investor too sophisticated, to avoid a heavy price if a firm violates the fundamental principles of honest treatment and fair dealing.î Surely the agency had a strong incentive to try to use the Goldman settlement to obscure the memory of Madoff, Stanford and the Bank of America settlement. Meanwhile,todayís NYT concludes its Goldman story with a quote suggesting Goldman got off lightly.
The truth is far more disturbing: the SEC got a big payday in what would have been seen as a strike suit had it been a private securities class action lawyer. [. . .]
What clues on all this can be gleaned from a settlement that involves a huge amount of money but only an admission of a ìmistakeî?
The bottom line is that this suit has proved to be no more than a common ìstrikeî suit, no better than the sort of private securities class actions that triggered Congressional reform 15 years ago. Instead of attorneysí fees, the SECís objective appears to have been purely political. In the end it extracted a ransom payment from Goldman so the firm could reclaim its reputation and get back to business.
The court must now review the settlement. It should take a cue from the dissenting Commissioners and reject it because of the puzzling and troubling inconsistency between the amount of the settlement and Goldmanís meaningless admissions. The SEC should have to prove exactly what Goldman did wrong. This will force Goldman to either litigate or make a meaningful settlement. Goldman is hardly an object of pity at this point. In any event, the issues here go far beyond Goldman to, among other things, the proper role and function of the SEC.
It is sad that the SEC not only cannot be trusted to find fraud, but that it can no longer be trusted to litigate and settle cases involving the supposed frauds that it finds. But this is where we find ourselves in the days following ìfinancial reform.î
Expecting the SEC to regulate a firm as sophisticated as Goldman Sachs effectively is about as rational as investing oneís entire nest egg with Bernie Madoff or Allen Stanford.
Geoff Shackelford provides a good overview of how the R&A’s fiddling with St. Andrews’ iconic 17th hole is likely to have unintended consequences during this weekend’s Open Championship.
Jesse Schell, who teaches game theory at Carnegie Mellon, provides his spot-on observations regarding the future of teaching and education. (H/T Jon Taplin).
After Le Affaire Rosenthal and the ensuing change at the top levels of the Harris County District Attorneys Office over the past couple of years, it’s easy to forget that the local D.A’s office was a model of stability and excellence during the previous generation.
Johnny B. Holmes, who ran the D.A.’s office for 21 years before retiring in 2001, is still relatively well-known to many Houstonians. But less well-known is that Holmes inherited a well-organized D.A.’s office from Carol Vance, who was D.A. from 1966-1979 and literally transformed the local office from a small-town outpost into one that other major cities copied.
I pass this along because I just finished reading Vance’s autobiography,Boomtown D.A. (White Caps Media 2010) (it’s not available through Amazon at this time, so I bought my copy through the publisher’s site). For any long-time resident of Houston, it is a thoroughly enjoyable read. And for any attorney practicing in Houston, it is an essential read.
Vance was involved in his share of juicy cases, so the chapters on those cases are the meat of the book. Vance’s big cases include the John Hill case of Blood and Money fame, the cases arising from the TSU race riot of 1967, the prosecution of two corrupt judges (District Judge Garth Bates and Supreme Court Justice Don Yarbrough), the amazing transformation of former UH professor Gerry Phelps, and the prosecutions of Elmer Wayne Henley and David Brooks, who were the sidekicks to the worst serial killer in Houston history.
Moreover, just as interesting to me as the big cases is Vance’s explanation of how the D.A.’s office grew from a relatively small office that was easily overwhelmed by a big case into one that could take on virtually anything that was thrown at it. Vance had many people helping him with this task and he is effusive in his praise of those folks, many of whom went on to become successful judges and attorneys in Houston after leaving the D.A.’s office. And Vance has a field day describing his interactions with Houston’s formidable criminal defense bar, including such legends as Percy Foreman and Richard “Racehorse” Haynes.
But most impressive is Vance’s description of his efforts after leaving the D.A.’s office in becoming one of the leaders of prison care and reform in Texas. The Carol Vance Prison Unit in Sugar Land is named for him and has one of the lowest recidivism rates of any prison in the U.S., a result of that unit’s robust Christian ministries that Vance nurtured and promoted.
Carol Vance is a remarkable man who became Harris County District Attorney at a key time in Houston’s history. We are all the better for that. Check out his book and learn why. You won’t be disappointed.
Update: The book’s editor, Kit Sublett, passes along that Carol Vance will have a book signing at Brazos Bookstore on July 22nd, and that the book signing scheduled for July 31st at Murder by the Book has been postponed. Mr. Sublett also advises that the book is available at all Houston-area Barnes and Noble stores and the Barnes and Noble website.
Does the end of convicting a business executive of a crime justify the means by which government prosecutors accomplish it?
James Brown, the former Merrill Lynch executive and one of the defendants in the Enron-related criminal case known as the Nigerian Barge case, has to be asking himself that question as he continues to endure what is now his seventh year of prosecutorial hell.
The Nigerian Barge prosecution was baseless from the start and, as later developments revealed, trumped-up to boot.
But as Brown’s Supplemental Memorandum below filed this past Friday explains, “trumped-up” is too kind a term to describe what the prosecutors did to Brown and his fellow Merrill co-defendants.
A quick history of the case is helpful. After prosecuting Arthur Andersen out of business in the intensely anti-business post-Enron climate of Houston in 2004, the Enron Task Force threatened to do the same to Merrill Lynch unless the firm served up some sacrificial lambs, which the firm did by offering up Brown and fellow Merrill executives Dan Bayly, Robert Furst, and William Fuhs.
Through a deferred prosecution agreement with Merrill, the Task Force hamstrung the Merrill defendants’ defense by limiting access to other Merrill Lynch executives who were involved in the barge transaction and who would have testified favorably for the defendants. To make matters worse, the Task Force then intimidated other potentially exculpatory witnesses by threatening to indict them if they cooperated with the Merrill defendants’ defense.
Thus, after bludgeoning a couple of plea deals from former Enron executives Ben Glisan and Michael Kopper, the Task Force proceeded to put on a paper-thin case against the Merrill defendants, which was good enough to obtain convictions in Houston’s deeply-hostile environment in 2005 toward anyone having anything to do with Enron.
Of course, most of the convictions were vacated on appeal (and in Fuhs’ case, thrown out completely). However, each of the Merrill defendants served over a year in prison during their appeal while their families endured the substantial human cost of this and other misguided Enron-related prosecution.
Even after the convictions of the Merrill defendants were vacated, the Department of Justice initially threatened to pursue a retrial of the three remaining Merrill executives. But then the DOJ recently dismissed all charges against Bayly, while Furst cut a favorable plea deal that will lead to a dismissal of the remaining charges against him.
So, logic dictates that the DOJ would dismiss its charges against Brown, the only remaining defendant. Right?
Well, not so fast.
The DOJ has inexplicably teed up another trial of Brown, who was the only one of the Merrill defendants who was convicted on additional charges of perjury and obstruction of justice for having the temerity of protesting his innocence to the grand jury that originally investigated the Nigerian Barge deal. Brown’s new trial is currently scheduled to begin on September 20.
But in the meantime, Brown’s legal team has been leafing through enormous amounts of exculpatory evidence that the Enron Task Force withheld from the Merrill defendants in connection with the first trial back in 2005, but which the DOJ has recently been forced to disclose.
The result of the Brown team’s effort is set forth below in the Supplemental Memorandum in support of a motion for a new trial for Brown on the perjury and obstruction charges (the downloaded version of the memo is bookmarked in Adobe Acrobat to facilitate ease of review). The memorandum details the appalling length that the Enron Task Force went during the first trial in suppressing exculpatory evidence in favor of Brown and his co-defendants and generally disregarding the rule of law in order to obtain convictions. As the memorandum concludes:
The conclusion is now inescapable that the ETF engaged in a calculated, multi-step process to deprive Brown of his constitutional right to Due Process. (1) They repeatedly denied the existence of Brady material, told this court they had met their Brady obligations and fought vehemently against producing anything [exhibit reference and footnote omitted]. They highlighted only selected material in a veritable garden of Brady evidence — much of their selections being vague, tangential or marginal — while working around clear, declarative, relevant exculpatory material even in the same page, paragraph or document. (3) When ordered by the Court to produce summaries to the defense, they further redacted even the Brady material they had themselves highlighted and withheld the crucial facts that they had highlighted as Brady. (4) They egregiously capitalized on their misconduct at trial by making assertions that were directly belied by the exculpatory evidence they withheld. . . .
The memorandum goes on to set out dozens of Brady violations, including charts that compare the exculpatory statements that the Enron Task Force withheld prior to the first trial with the incriminating statements that the Enron Task Force extracted from witnesses during that trial.
Folks, this is really bad stuff. But as bad as it is, I have not seen any mention of it in the mainstream media.
When is the mainstream media going to realize that the scandalous behavior of government prosecutors in prosecuting business executives in connection with the Enron case dwarfs the true crimes that were committed at Enron?
Or is the media’s stubborn refusal to challenge the Enron narrative an even bigger scandal than the prosecution’s misconduct?
An insightful Fault Lines segment examines how prison systems have become America’s largest psychiatric hospitals, with a substantial focus on the Harris County and Texas prison systems.
The silliness of the federal governmentís security theater policy has long been a common topic on this blog. But if you thought that the governmentís security theater jobs program is bad, check out this first installment of the Dana Priest-William Arkin/Washington Post series on the explosion in the hiring of government contractors and employees doing top-secret work for the governmentís intelligence agencies and programs:
