Professor Ribstein at Ideablog is providing consistently insightful observations regarding the troubling trend of prosecutors to take on currently popular but ethically questionable criminal cases against corporate executives. Today, Professor Ribstein explores the agency costs of such prosecutions from the prosecutor’s side, and observes that many of these corporate executive prosecutions are an easy out for the prosecutors:
My point is that catching real criminals is hard work. The reason is that real criminals know that they’re criminals and that they have to work hard at not getting caught. Yet prosecutors are paid to catch crooks, and if they don’t get results they get fired, or at least don’t move onto to the jobs they really want, like governor or senator.
How much easier would be the lives of the Eliot Spitzers of the world if they could go after people who didn’t know they were criminals when they were committing their crimes? Even better — how about if their behavior wasn’t even clearly criminal when it was committed? They wouldn’t cover their tracks, or at least not very well. No more 7 years sitting in cars and talking to Adriana. All you have to do is look at expense accounts, or movies of parties on Sardinia.
Professor Ribstein concludes with these words of wisdom:
Of course we would prefer that prosecutors put the real bad guys away. But it’s nice for them if we let them off the hook when they grab headlines by bagging some slow-moving rich business people.
The best antidote is for the press and the rest of us, instead of lapping up the momentary satisfaction that corporate “thieves” are getting their just deserts, reflect on the damage this is doing to risk-taking, and ask whether this is the best use of prosecutorial resources.
The only comment that I would add to the Professor’s analysis is that federal judges also should play a key role in evening the currently unbalanced playing field in prosecutions of corporate executives.
Federal judges have the power and discretion (at least in areas other than sentencing guideline matters) to rein in questionable prosecutions of corporate executives. For example, federal judges should not allow prosecutors to sledgehammer corporate executives with indictments containing dozens of duplicative counts simply to pressure the executive to cop a plea rather than risk a life prison sentence if he elects to defend himself against the charges.
When principles of prosecutorial discretion are subordinated to the fame of popular prosecutions of corporate executives, the Article III protection from the passions of the moment that our justice system provides to federal judges is one of our society’s most important counterbalances to the state’s awesome prosecutorial power. This protection allows our judges to make unpopular but just decisions. In the current politically-charged climate of white collar prosecutions, true justice requires that our federal judges exercise that power.
Jamie Olis and Tony Soprano
I’m finding myself more drawn into the “problem” of corporate crime — that too much corporate conduct is being treated as criminal. As I said most recently, criminalizing garden-variety agency costs “discourages beneficial risk-taking. . . [and] risks…
I agree that federal judges should try to rein in this madness, but we need to keep a few things in mind: (1) federal judges are government employees who more and more are acting like government lawyers, representing their clients; (2) the Department of Justice, and especially the Leviathan being run by John Ashcroft, has been bullying federal judges by “taking names” of judges who engage in “downward departures” of sentences.
Furthermore, Ashcroft has instructed his dogs in the field to seek the harshest sentences and to load up the criminal counts as to assure victory. (You see, Stalin has 100% convictions, and at the latest count, the DOJ has only 95% convictions of people indicted, so Ashcroft wants to have a perfect record, I suppose.)
All this means that the hands of federal judges are tied. I think that there is even more intimidation of federal judges than has been made public. I simply refuse to accept that all of them are as evil as a few that I have seen in action, or that they are part of a prosecutorial team that is doing little more than greasing the skids of convictions.
Bill Anderson
My experience is necessarily anecdotal, so it is certainly not dispositive. However, I do know most of the federal district judges in Houston reasonably well, and several of the Fifth Circuit judges who live here. None of those judges is the least bit intimidated by the U.S. Attorney’s office here or outside task forces such as the Enron Task Force (as reflected by Judge Hittner’s performance last week in the Lea Fastow plea bargain hearing). Indeed, with one or two exceptions, Houston federal judges will give a criminal defendant a fair trial and will show no favoritism toward the government. So, at least based on my experience here and in other federal districts, I am not convinced that government intimidation of judges or judge bias toward the government is widespread.
However, the seeds of bias are ever present. The reality is that federal judges do not hear many white collar criminal cases, and when they do, they are mostly tax fraud cases. Consequently, the vast majority of criminal prosecutions in federal court are drug-related, particularly in a district such as the Southern District of Texas that shares a border with Mexico. As a result, federal judges see prosecutors much more often than they see defense attorneys, and they see a lot more clear guilty defendants in those cases than in your typical business fraud case. It has to be difficult to change the mindset when the relatively rare business criminal case hits the courtroom, but it’s clear that the nature of a business fraud case based on a disputed interpretation of a complex transaction requires it.
A related problem that I have seen is federal judges who simply do not have the prior experience in complex business transactions or litigation in their careers before taking the bench. This lack of experience leaves a judge ill-equipped to deal with the many of the issues that arise in a complex business case such as Enron. Again, that is not as much of a problem in Houston, where most of the judges had solid business law experienece in private practice before taking the bench. However, it is a problem for younger judges who are taking the bench straight from another government job or after having limited experience in private practice. That lack of depth in complex business transaction can prejudice a defendant in a complex criminal case, where often the prosecution’s theory of the case is fundamentally flawed (as you pointed out in your blog post on the Reliant Resources case) on an elementary economic basis.