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.
Absolutely right -What the WSJ doesn’t focus on is once pressure mounts and defendants buckle, the deals that people are forced into are contingent on providing “substantial assistance” in the prosecution of another. In a federal conspiracy case, it takes only one co-conspirator to point at an accused co-conspirator for the federal prosecutor to make his case. And juries as well as the public are so ready to believe that anyone, regardless of their education and ability, who are making 6 and up to 7 figures must be evil and willing to commit a crime to continue making that kind of money. Never mind that everyone else at their level who are not accused of crimes in the same company are equally paid. Gee- These poor old prosecutors have to actually convict someone to and actually get in the papers a few times before they can start making that kind of money for themselves!
Considering most of these new white collar cases are complex and unclear and focus on intent and knowledge of a crime, how easy would it be to get one frightened person to give in and provide previously undocumented testimony claiming there was in fact secret intent and secret knowledge? Much Too Easy considering the awesome weapons at prosecutors’ disposal: Unmatchable Amounts of money and resources; Unmatchable Power to coerce companies to fire the accused and cut their employees off from defense and conduct slanted “internal” investigations where the goal is known -to build a prosecutors case against some employees(or else we are next says the board); Unmatchable Time to wait out the inevitable when people’s lives are on hold for years or in some very sad cases, are lost for years while the legal system grinds along with no compassion and no remorse for its devastating failures; and Unmatchable Trust from the kind of people that believe in doing their duty and that respect their government and so serve their jury duty. The failure at issue is giving extreme power and deference to prosecutors who deserve to be prosecuted themselves for their intentional and malicious acts against good and honorable citizens. People better start taking notice and getting angry because the longer these prosecutors unjustly damage lives with no fear of repercussions, rather, they are personally rewarded, the more likely one of you or yours will fall into this expanding system where the laws can be made retroactively and only God will help you then.