I have a deadline this week, so I promised myself I wouldn't blog today. However, I then saw Peter Henning's post linking to a brief filed by Enron prosecutors in the Enron Broadband trial. (For background on the trial and current conviction of Kevin Howard, read Tom Kirkendall's October post.) In response to a brief filed by Howard's attorney's to vacate his conviction on five counts relating to various types of fraud, prosecutors have conceded that four of the counts should be vacated, but not the fifth. The theory behind the turnaround is that these counts were based on the "theft of honest services" theory that was debunked and limited by the Fifth Circuit recently in the Enron Nigerian Barge case. The prosecutors concede that under the Fifth Circuit's interpretation, the honest services theory of fraud would not apply to Howard's actions. The question remains whether Judge Vanessa Gilmore will vacate the entire conviction or just four of the five counts.
Of course a bigger question remains. One of the threads underlying these Enron trials is that executives should not be able to artificially inflate the stock price through creative accounting methods designed to achieve just that result. Now we want these executives, who benefitted from the inflated stock price, which harmed investors, to be punished. Sarbanes-Oxley even requires executives who restate financials to regurgitate any compensation or bonuses received that were based on the higher financials. What about artificially obtaining plea bargains and even convictions through creative prosecution methods designed to achieve just that result? Now that courts are pushing back on the techniques of the Enron Task Force, do we get to clawback the benefits the members of that Task Force have received? Do we go get the ones who "got out early" and are enjoying their huge salaries at fancy New York firms, who hired them based on their inflated win record?
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11. Posted by Preston on November 17, 2006 @ 3:18 | Permalink
Business folks aren’t popular and are easy marks, particularly in times of stress. Consider the learned, and alarming, commentary by Fischel, Langbein, Ribstein and others. Sure business folks have some resources, but the government has many more as well as tremendous powers that go well beyond simply being able to advance “novel theories of criminal liability.” Consider the shameful “perp” walks and press conferences that poison the jury pool, the dumping of millions of documents gathered by legions of FBI agents and others into “discovery” depositories without identifying which ones if any its intends to rely upon, and the creation of long lists of “unindicted co-conspirators” that work both to stop those who have exculpatory evidence from either talking to the defense or testifying on their behalf, and perhaps more perniciously to allow the government to avoid the laudable limitations on the use of hearsay evidence. The most alarming abuse of power involves the plea “bargaining” power, with the use of the word “bargaining” nearly euphemistic. See, e.g., U.S. v. Joyeros, 204 F.Supp.2d 412, 425 (E.D.N.Y. 2002)(“there is no equivalence of a bargain between defendant and prosecutor and between entrepreneurs. For example, a party to a contract generally may not induce another party to agree by threat of criminal prosecution, whereas the nature of a plea negotiation is that not consenting necessarily results in further criminal prosecution”). And don’t forget the alarming efforts by prosecutors to force companies to waive the attorney-client privilege and cut off payment of defense costs.
I’m certainly not saying business folks don’t commit crimes. But I’m familiar with the Enron prosecutions and can say first hand that most of the Enron “convictions” were wrongful. Enron had popular support? It’s demonization had begun long before it collapsed, and went hyperactive afterwards. Skilling’s lawyer Bruce Hiler said it best; “The minute they printed those Enron Task Force business cards, what did we think was going to happen?”
Alarming? You bet.
12. Posted by Jake on November 17, 2006 @ 16:31 | Permalink
A whole lotta people think they are smarter than the jurors who returned the verdicts against Lay and Skilling. The people asserting this superiority, predictably, appear to be lawyers.
13. Posted by Preston on November 17, 2006 @ 20:01 | Permalink
Jake, I think you miss the point, though I suppose it's a hard one for a lot of folks to accept. These jury trials ain't fair.
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