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A Cloud Over the Enron Case?

Larry Ribstein notes the specter of prosecutorial misconduct and wonders when the press will pay attention. This probably bears watching.

YourLipsAreMoving:
Prosecutors abusing their powers? I am shocked, shocked, I tell you.
3.15.2008 12:33pm
Barry P. (mail):
Skilling absolutely, positively demanded rising profits every quarter. The prosecutors absolutely, positively wanted guilty verdicts. Both brazenly ignored the rules in striving for those goals.
3.15.2008 12:46pm
one of many:
I dislike the equivalence Barry, how many people has Skilling jailed?
3.15.2008 1:28pm
Christopher Cooke (mail):
Well, the irony here is that Skilling may very well be guilty of the crimes for which he was convicted, but the prosecutor's withholding of exculpatory Brady and Jencks Act materials may get him a "get out of jail" card, if true.

Enron was a big financial crime, and those who are in denial about that fact are ignoring the evidence. That said, I always thought there was a possibility that Skilling was willfully blind about what Fastow was up to, and therefore not guilty. The issue to me was always whether the wrongdoing went higher than Fastow, to Lay and Skilling, or not. I think there was some testimony that Fastow admitted to Glisan that he would never be able to "get away" with some of the funds he was paying to himself from the SPEs if "Jeff knew about it." But, Skilling is a very smart guy and not much of a family person. I never bought that he suddenly resigned during the Summer of 2001, right before Enron's meltdown to "spend more time with his family."
3.15.2008 2:43pm
OrinKerr:
I'll be interested to see the government's response. In the meantime, perhaps we should keep in mind that a defense attorney's allegations of misconduct and proof of misconduct are not quite the same.
3.15.2008 2:53pm
Christopher Cooke (mail):
Orin: it is much more fun to make up one's mind before the evidence is in, or even before we hear what the other side has to say.
3.15.2008 3:00pm
Christopher Cooke (mail):
Orin: it is much more fun to make up one's mind before the evidence is in, or even before we hear what the other side has to say.
3.15.2008 3:00pm
BruceM (mail) (www):
The info contained in the brief seems pretty damning. I too look forward to seeing the government's response. I'm sure they'll claim that none of the statements in the notes cited by the defense are material and/or exculpatory. What else can they say? But, they clearly are material and exculpatory.

FBI 302s are inherently unreliable; they are nothing more than a biased FBI agent's interpretation of what a witness said.
3.15.2008 3:36pm
CDU (mail) (www):
FBI 302s are inherently unreliable; they are nothing more than a biased FBI agent's interpretation of what a witness said.
I don't think you can blame the FBI on this one. The Skilling defense didn't even get the FBI 302s, they got "composites" the prosecutors prepared based on the FBI 302s.
3.15.2008 3:51pm
Mike& (mail):
I've followed the Enron from the outset. It was fishy from the Indictment onward. Tom Kirkendall did a great job covering these issues. Anyone interested in the other side should read his blog.

Incidentally, Media bias is a funny thing. The media loves prosecutors, except when there is "prosecutorial abuse."

But the media always hates "evil corporations." So even where, as here, there has been prosecutorial abuse, the media ignores it.

It's a shame Skilling and Lay hadn't been black. You can bet the press would have covered the case much differently. See, e.g., the Jena 6 case.
3.15.2008 6:16pm
OrinKerr:
Orin: it is much more fun to make up one's mind before the evidence is in, or even before we hear what the other side has to say.

Orin: it is much more fun to make up one's mind before the evidence is in, or even before we hear what the other side has to say.


True that. Double true.
3.15.2008 6:20pm
BruceM (mail) (www):
CDU: I thought they got 302s, but the 302s were "composites" based on the agents' raw notes from interviews. There were contradictions between the 302s and the raw notes (which the government always refuses to turn over w/out a court order). Only the FBI makes 302s. They do so whenever they interview a witness. Other agencies have similiar forms with different names. The FBI seems to be at fault here along with the prosecutors, because the 302s the FBI generated were only "composites" of the interviews. I take it that "composite" means just a summary of what was said (and an inaccurate one at that). The prosecutors didn't turn over the notes upon which the "composite" 302s were purportedly based.

All the contradictions and Brady material pointed out in Skillings' brief comes from the 420 pages of FBI agents' handwritten 'raw notes' taken during their interview of Fastow that the gov't didn't turn over until ordered to do so by the appellate court. And there are some seriously exculpatory bits of info in those notes.
3.15.2008 6:21pm
Mike& (mail):
Orin: it is much more fun to make up one's mind before the evidence is in, or even before we hear what the other side has to say.


Yesterday called. One can't ignore a story for months and then snicker, "Wait, these are new accusations. Let's wait to hear what the other side says."

The evidence has been mounting for months. There has been an extensive body of evidence showing that prosecutorial misconduct occurred. These particular accusations are new; but the theme is an old one.

Way back in June, 2007, it was reported by blogs (but not media outlets, of course) that the Enron task for was freezing defense witnesses.

Enron prosecutors kept saying, "We might indict those people that the defense wants to interview." Of course, as was obvious then but is provable now, is that the Enron Task Force did not have any intention of prosecuting any of those witnesses. Committing fraud on the court is prosecutorial misconduct.

Some would say, "Well, Mike, how do you know that they never intended to prosecute those defense witnesses." My answer is: Why didn't they? What changed? At the very least, let's have an explanation. Of course, none has been forthcoming. There's a reason for that.

They wanted Skilling and Lay - period. They wanted the big fish so they could get a lot of attention and then get rich. (You do realize that the lead Enron prosecutor immediately moved to a lucrative position in private practice, no?)

While climbing over someone's body when moving form the public to private sector isn't prosecutorial misconduct in a legal sense, it is indeed shady. And it reveals the cast of characters involved in the Enron prosecution.

So, again, charges of prosecutorial misconduct is not today's news.
3.15.2008 6:37pm
Mike& (mail):
Here is a good starting point for those interested in the Enron Task Force. Note that this post was written over a year ago.
3.15.2008 6:40pm
OrinKerr:
They wanted the big fish so they could get a lot of attention and then get rich. You do realize that the lead Enron prosecutor immediately moved to a lucrative position in private practice, no?)

Mike, how much do you know about the individuals who made the calls on how to prosecute the case in order to make such a accusation? You are accusing the prosecutors of misconduct in order to enrich themselves, and that's not an accusation to make based on flimsy evidence.
3.15.2008 6:50pm
Richard Aubrey (mail):
Any time a case is promoted as the Big Bad Guys against ordinary people, you can count on the press being a cheerleader without regard to facts.
And you had better be watching the prosecution, given the press' shaping of the debate.
See, for instance, the Duke laxer rape case.
IMO, withholding exculpatory evidence ought to be right up there with felony murder.
BTW. If a witness' testimony conflicts with a 302, is the witness considered guilty of perjury?
3.15.2008 6:53pm
Richard Aubrey (mail):
OK.
Are you objecting to the imputed motive or the accusation of screwing the pooch?
3.15.2008 6:54pm
OrinKerr:
Right now the former; I haven't followed the case closely enough to have an informed sense of the latter.
3.15.2008 7:03pm
Christopher Cooke (mail):
I am surprised the defense only got composites of FBI 302s. In the ND Cal, the defense gets the 302s and, often, the notes.

Mike&, please forgive me if I am skeptical about what I read on a blog. There are no qualifications for being a blogger, just a desire to post stuff on the Internet. I would hope that, if the prosecution withheld material, exculpatory information, in violation of Mr. Skilling's constitutional rights, that justice will be done by the appellate court. I just don't know if that happened, and certainly I am not going to assume that it did because someone posted something on the internet saying that it did.
3.15.2008 7:26pm
Bender (mail):
Even listening to the MSM take on this case at the time of Lay's and Skillings's trial it seemed to me that the government's case depended pretty much on what Fastow said. And Fastow was/is clearly a despicable weasel whose lies and manipulations were the foundation of the Enron disaster, who had/has no understanding of even the concept of truth, and who was clearly willing to do anything the prosecutors asked in order to escape the full measure of his richly deserved punishment. I would be surprised at any court that would not, on appeal, discount Fastow's evidence more than the trial jury did; even in the absence of this new evidence.
3.15.2008 7:38pm
Soronel Haetir (mail):

In regard to FBI notes and other such documents, how is it even possible in this age of recording ease that such interviews are even allowed to not be recorded?
3.15.2008 7:39pm
BruceM (mail) (www):
I've never been denied 302s in a case before, for whatever that is worth.

Orin, every prosecutor I know would say there is nothing wrong with wanting to go after a "big fish" in order to get attention and ultimately move up the ladder to a higher-paying job/position so long as there is probable cause that the "big fish" in question committed a crime.

While I personally consider it a conflict of interest when securing a guilty verdict means career advancement (in other words, I contend 99% of prosecutors operate under a conflict of interest), the law as it stands agrees with the prosecutor such that Mike's accusation does not amount to formal misconduct.
3.15.2008 7:41pm
byomtov (mail):
IMO, withholding exculpatory evidence ought to be right up there with felony murder.

A rare opportunity to express agreement with Richard Aubrey.The power a prosecutor exercises over those who come into his sights is awesome. This is, I think, even worse in white collar cases, which can drag on for years, than in ordinary felonies.

The abuse of that power ought to be severely punished.
3.15.2008 7:52pm
BruceM (mail) (www):
Any prosecutor who has a conviction overturned due to actual innocence or prosecutorial misconduct should have to serve the sentence in place of the now-acquitted defendant whose life he/she ruined. As it stands right now, they don't even lose their law license.

Similarly, 4th Amendment violations by the police should not result in exclusion of the evidence, but rather, punishment of the police officer equal to the punishment the defendant receives due to the introduction of the tainted evidence. If a cop violates a defendant's 4th amendment rights to acquire drug evidence and the defendant gets life in prison, the drugs should not be suppressed at trial, but the cop should have to join the defendant in prison for life. This will provide a better incentive to not violate the constitutional rights of suspects while simultaneously maintaining the truth-seeking function of the courts which the exclusionary rule acts against.
3.15.2008 8:04pm
Mike& (mail):
Mike, how much do you know about the individuals who made the calls on how to prosecute the case in order to make such a accusation?


I followed the case from the beginning and read almost every publicly available document. My impression of the prosecutors involved is that they were bad people.

I am also generalizing based on how other prosecutors have behaved. A big time prosecution is a great way to get noticed, get promoted, or get a partnership at a white shoe law firm.

There aren't bigger fish to fry than Roger Clemens? Now I don't know this for a fact, but I would bet my entire 401k that there is a tremendous amount of in-fighting over who gets to prosecuted him.

You could say I'm stereotyping. That's a legitimate point. Often (as here) stereotyping makes sense.
3.15.2008 8:05pm
Mike& (mail):
I should do a master post, collecting some of the best examples of prosecutorial misconduct. I haven't yet because no one seems to care. But for those who do, here is yet another example: Fastow testified on cross-examination that his plea agreement would mean ten years in prison for him. The truth was that, because of his testimony, he would only have to do 6 years in prison. Here's the post noting this.

The judge also exhibited an extremely pro-prosecution bias. Everything from denying a motion to change venue to denying defense requests for witness immunity, the trial court ensured that Skilling and Lay were convicted.

I am absolutely willing to concede that, because of the broadness of the laws that Lay and Skilling were charged with violating, that they may have been technically guilty. But those men did not receive anything approaching a fair trial.
3.15.2008 8:12pm
Fub:
BruceM wrote at 3.15.2008 7:04pm:
Any prosecutor who has a conviction overturned due to actual innocence or prosecutorial misconduct should have to serve the sentence in place of the now-acquitted defendant whose life he/she ruined. ...

Similarly, 4th Amendment violations by the police should not result in exclusion of the evidence, but rather, punishment of the police officer equal to the punishment the defendant receives due to the introduction of the tainted evidence. ...
For me this is beginning to be a trifecta, or something. I agree with BruceM, byomtov and Richard Aubrey.
3.15.2008 8:16pm
BruceM (mail) (www):
Fub: Be careful about agreeing with me on here. Just a word of advice....
3.15.2008 8:19pm
Visitor Again:
IMO, withholding exculpatory evidence ought to be right up there with felony murder.

Well, it is far from what the law and order folks deride as "technical violations" of the Constitution since it impairs the accused's due process right to defend himself and the right to a fair trial. And similarly with respect to the other kind of prosecutorial misconduct alleged in the posts above--prosecution interference with the defense's right to call witnesses in its behalf.

If wilful prosecutorial misconduct is established, the remedy ought to be not mere reversal of the conviction and a new trial but dismissal of the entire case without regard to guilt or innocence. Undergoing trial is a huge ordeal for any defendant. It kills some defendants, as the Enron case itself may show. The wilful commission of prosecutorial misconduct discovered after trial is tantamount in effect to government conduct causing a mistrial and the result should be the same--dismissal.

I recall at least two dismissals for prosecutorial misconduct regardless of guilt or innocence (including one in which I was involved), but I think there are also a few others I've forgotten.

The Pentagon Papers trial of Dan Ellsberg and Tony Russo in Los Angeles. Judge Byrne read his ruling on the motion to dismiss but did not put it in writing. His ruling ignored the approach the Nixon Administration made to the judge with offer of appointment as FBI director.

The Wounded Knee trial of American Indian Movement leaders in Minneapolis. As I recall, there is an F. Supp. opinion memorializing this dismissaal and it relied in part on the dismissal in the Pentagon Papers case.
3.15.2008 8:59pm
TerrencePhilip:
The judge also exhibited an extremely pro-prosecution bias. Everything from denying a motion to change venue to denying defense requests for witness immunity, the trial court ensured that Skilling and Lay were convicted.

So these ruling are evidence of the judge's "unfairness?"

I am curious about whether the motions were meritorious. Is there information to show that they were unable to find an unfair jury?

And what legal merit did the "defense requests for witness immunity" have?
3.15.2008 8:59pm
TerrencePhilip:
er, should have read, "unable to find A FAIR jury"
3.15.2008 9:00pm
Elliot123 (mail):
Can someone very simply state the particular action that Enron took that was criminal? Not a conclusion or a label like "Fraud," but just state the particular action. What did they do that was illegal?

For example, Bernie Ebbers capitalized expenses. Koslowski used company money for personal expenditures. what action did Enron or its officers take?
3.15.2008 9:12pm
ChrisIowa (mail):

Any prosecutor who has a conviction overturned due to actual innocence or prosecutorial misconduct should have to serve the sentence in place of the now-acquitted defendant whose life he/she ruined. As it stands right now, they don't even lose their law license.


Of course there remains the obvious: if a prosecutor later finds he made a mistake even if he properly followed available evidence, resulting in a not-guilty person being convicted, this is a big disincentive for the prosecutor to cooperate in any effort to correct the situation.
3.15.2008 9:59pm
Prosecutorial Indiscretion:
To the extent that the problem involves the 302s omitting exculpatory evidence from the raw interview notes, accusing the prosecutors of any sort of intentional misconduct seems wildly unfounded, especially if no prosecutors were present during the interviews in question. I don't know any federal prosecutor who has ever reviewed the raw FBI notes and compared them to the resulting 302, or even talked about doing so, which is not to say that it never happens but only that the common practice appears to be otherwise. I haven't read the brief, but based on the skeletal outline of facts provided, it's possible the prosecutors had no idea the comments in question were ever made. Without knowing more, any suggestion that this case was tainted by intentional and malicious prosecutorial misconduct should not be taken seriously. That holds doubly so given the nature of this case: it was immensely high profile, and everyone involved surely knew that the defendants would be paying a great many smart and ruthless lawyers an immense amount of money over many years to try to poke holes in any resulting convictions. I suspect the likelihood of prosecutorial misconduct increases in an inverse relationship to the amount of attention a given case gets.
3.15.2008 10:25pm
Liberal Laura:

I'll be interested to see the government's response. In the meantime, perhaps we should keep in mind that a defense attorney's allegations of misconduct and proof of misconduct are not quite the same.


Quite so.
3.15.2008 10:57pm
Visitor Again:
Some of the posters seem to have a very narrow view of what constitutes prosecutorial misconduct. Perhaps it ought to be called governmental misconduct. The government is the prosecutor. The duty to disclose exculpatory evidence extends not only to the attorneys who actually prosecute the case but to the governmental agents investigating it.
3.15.2008 11:15pm
CDU (mail) (www):
Is there information to show that they were unable to find an unfair jury?
Freudian slip?
3.15.2008 11:23pm
BruceM (mail) (www):
Prosecutorial Indiscretion:

That's crap. The prosecutors are the ones who refused to turn over the government agents' rough notes. The defendant asked for them and the prosecutor said no, we don't wanna, and you already got the 302s (which turned out to be summary/composite 302s).

To suggest the prosecutors on the Enron Task Force didn't read every word of every note taken by every government agent involved with interviewing witnesses in the case is absurd.
3.15.2008 11:24pm
Soronel Haetir (mail):

Of course there remains the obvious: if a prosecutor later finds he made a mistake even if he properly followed available evidence, resulting in a not-guilty
person being convicted, this is a big disincentive for the prosecutor to cooperate in any effort to correct the situation.

There already appear to be disincentives for prosecutors to cooperate in such matters. I have yet to read about a case of actual innocence where the original prosecutor didn't fight tooth and nail to maintain the conviction.

I'm not sure I agree that actual innocence on its own should be enough to trigger the suggested penalty. However I've not seen a case of post conviction determination of actual innocence that didn't involve at least some level of police or prosecutorial misconduct.
3.15.2008 11:27pm
Visitor Again:
To suggest the prosecutors on the Enron Task Force didn't read every word of every note taken by every government agent involved with interviewing witnesses in the case is absurd.

That may be right. But there are cases in which prosecutors shield themselves from knowledge so that when the shit hits the fan they can maintain their innocence. They allow other law enforcement agents to do the dirty work and then proclaim lack of knowledge. Or the agents, of their own accord, shield the prosecutors from knowledge. Under Hoover and, after his death in 1972, at least into the mid-1970s, the FBI often did the dirty work while protecting the prosecutors from actual knowledge.
3.15.2008 11:55pm
TerrencePhilip:
I have yet to read about a case of actual innocence where the original prosecutor didn't fight tooth and nail to maintain the conviction.

Could it be that this is an imperfect sampling of such cases?
3.16.2008 12:47am
Soronel Haetir (mail):

Could it be that this is an imperfect sampling of such cases?

Could it be? Sure.

I will, however, note that I've seen cases where a new prosecutor was willing to admit the possibility of error.
3.16.2008 1:03am
BruceM (mail) (www):
I'm not sure I agree that actual innocence on its own should be enough to trigger the suggested penalty.

If not requiring the prosecutor to serve the remainder of the exonerated defendant's sentence (or take his place at the lethal injection), at the very least the prosecutor should have to spend a few years in prison. Wrongful Conviction of Innocent Person is and should be a serious crime. Those guilty should serve at least 5 yrs for a wrongful misdemeanor conviction and at least 15 or 20 for a wrongful felony conviction. Make it a 2nd Degree felony to prosecute and convict a person of a misdemeanor who is factually innocent, and a 1st degree felony to prosecute and convict a person of a felony who is factually innocent. Wrongfully convicting someone of a capital crime while seeking the death penalty (prosecutor gets to choose whether to seek death or not) should be punishable by life without parole. When an innocent, wrongfully convicted person is released from prison, the prosecutor who procured his conviction should be taking his place behind bars.

Of course, there is the problem of secretly lying witnesses. If a state witness commits perjury where the false testimony was material in securing the conviction of an innocent defendant and the prosecutor in good faith and after exercising due dilligence reasonably did not know of the perjury, the witness should go to prison and not the prosecutor. This should be an affirmative defense. However, in most cases, the prosecutors are not only aware or should be aware that the witness is lying, they suborned the perjury with promises of leniency, 5K1.1 substantial assistance / substantial perjury. So I don't see this affirmative defense applying very often.

And an exception to the use of that affirmative defense is for lying witnesses who are police officers and criminals receiving benefits from the state in exchange for their testimony. Such witnesses should be presumed to be perjurors and prosecutors should be deemed to have actual or constructive knowledge that these witnesses are committing perjury against the innocent defendant. "I didn't know my witness was lying to get substantial assistance credit off his lengthy sentence" is simply not a valid excuse for convicting an innocent person. Prosecutors should be responsible for the witnesses they call to the stand, and the testimony they adduce at trial from their witnesses.
3.16.2008 1:23am
kdonovan:
I don't understand why FBI (or other federal) interviews are not routinely recorded. This stuff of relying on notes that some guy took of his impressions of what was said in an interview is crazy.
3.16.2008 1:42am
bobby b (mail):
"If not requiring the prosecutor to serve the remainder of the exonerated defendant's sentence (or take his place at the lethal injection), at the very least the prosecutor should have to spend a few years in prison."

Umm hmmm. And then, once a court expands "misconduct" to encompass negligent supervision of witnesses or cops, or adds the "or reasonably should have known" basis, or simply allows a jury to transform its anger over a sad story about a wrongfully (but understandably) convicted defendant into punishment of the prosecutor simply because he won, with no misconduct involved, well, see how you like your prosecutorial cohort then.

Because you'll drive all of the intelligent people out - who's gonna run that kind of risk when you have better choices? - and instead get those who couldn't get hired anywhere else.
3.16.2008 2:16am
Prosecutorial Indiscretion:
I had not realized the defense specifically requested the notes - at that point, even if the prosecution doesn't want to turn them over as Jencks, they should have combed the notes for any potentially exculpatory evidence. Given the volume of interviews in the case, though, I strongly suspect that the prosecutors did not review every set of notes - though you'd expect Fastow's, of everybody's, would be the notes they'd check. I don't know how accurate Conspiracy of Fools is, but after reading that I felt like Fastow was by far the most culpable person and deserved the most severe punishment.

With respect to my earlier comment, on further reflection I recall several cases where I combed the raw notes for Brady, so I misspoke above. Brady in agent notes is rarely a practical issue - defendants know they're guilty, and they almost always plead out long before the time comes around to check the notes. That rarity, I think, accounts for my earlier misstatement.

What strikes me as decidedly absurd, however, is your proposed strict liability felony for wrongful conviction of an innocent person. Never mind that in your rush to kill off prosecutors you neglect to take into account that generally the decision of whether to pursue the death penalty does not lie in the hands of the person who actually prosecutes the case. If the evidence is strong enough to get a conviction past twelve jurors and a judge, then absent willful misconduct there's no rational justification for jailing the prosecutor. If there is misconduct, I favor of severe penalties. But if a prosecution proceeds in good faith and reaches a wrong result despite the numerous systemic checks in place to prevent such outcomes, it would be ridiculous to punish one actor among many who, in doing his job in accordance with all the relevant rules, achieved that outcome. It would create perverse incentives to refrain from prosecuting cases provable beyond a reasonable doubt for fear of long incarceration. It would reduce demand for prosecutorial jobs, leaving a less-capable pool of applicants for jobs that, as a result of their power and autonomy, should only be filled by people with good judgment and impeccable integrity. I'd quit my job in a second if your proposal were to become law, as under your system I could do everything by the book to the best of my ability and still end up in jail. While convicting an innocent person is an absolute nightmare scenario and every instance of it happening is tragic, the system works pretty well right now and the radical criminal law revolution you propose is disproportionate by many orders of magnitude to the problem and would have consequences that cause vastly more harm than the harm you seek to combat.
3.16.2008 2:32am
TLove (mail):
A pox on all their houses. Is Skilling a criminal. Absolutely. If the prosecutors behaved with the same immorality, then they should share the same cell.
3.16.2008 3:04am
Cara Ellison (mail) (www):
TLove,

I don't think Skilling is guilty of anything at all. "Absolutely"? Have you actually read the trial transcripts?

One thing that haunts me is John Hueston's law review article in which he wrote that there is no proof that Ken Lay or Jeff Skilling did anything wrong but he "just knew" that they were guilty.

Can you imagine if the prosecutor said that in a rape or murder case? Maybe you can; it was essentially what happened in the Duke Lacrosse case when Nifong said he wasn't sure what happened because the "victim" hadn't told him but yeah, those guys were guilty. With a capital G.

Oh, and the funny postscript: I found Hueston's essay on his company website. You however will not. Since the Skilling defense quoted liberally from it, it is perhaps not a shock that the document has since been removed from the company's servers.
3.16.2008 3:40am
BruceM (mail) (www):
Prosecutorial Indiscretion, it's easy to convict a guilty person. It takes a certain degree of talent and ruthlessness to convict an innocent person. I'll concede every now and then the person trying the case may not have been the one to make the decision to seek the death penalty. If the ADA trying the case recommended not to seek death but the DA overruled her and said "we're asking for death in this case and that's final" then I suppose I'd allow for some leniency in the wrongful conviction.

Show me a case of an innocent person being wrongfully convicted where the prosecution did not knowingly and intentionally put on some form of questionable evidence, or otherwise act unethically by withholding brady material, refusing to permit defense examination of evidence, or using the defendant's history against him to say "he's done X in the past so he must have done this crime" (conformity evidence prohibited by 404(b)).

In most cases, without prosecutorial misconduct, the evidence would be legally insufficient to convict. Defendant says he didn't murder the victim and was at home. Witness says he saw Defendant murder the victim. Both Defendant and Witness have no criminal records and are equally well spoken. There's no evidence to corroborate either one of them. Without more, there is absolutely no way a jury could properly and rationally decide to believe one witness over the other - especially beyond a reasonable doubt - and thus the defendant should win by default. And many cases are like this, with one witness. Please tell me how a prosecutor can win such a case without doing something unethically. Prosecutors will respond by saying the jury could decide to believe their witness over the defendant - to the requisite burden of proof, even though there is no corroboration either way and both witneses are equally reliable on paper, because the state's witness wears a shiny badge, or because the state's witness looked the jury in the eye while the defendant did not, or because the defendant's voice cracked at one point while he was speaking, or because the state's witness "just seemed more believable." Sure, it's up to the jury to weigh the facts, but there's no way that it can believe one witness over the other beyond a reasonable doubt when both witnesses are in equipoise in terms of factual reliability. Maybe one witness is more likely than not to be more believable, but certainly not more believable beyond a reasonable doubt. And thus, prosecutors always engage is some form of misconduct to make their case.
3.16.2008 8:27am
Cara Ellison (mail) (www):
Bruce,

You said: In most cases, without prosecutorial misconduct, the evidence would be legally insufficient to convict.
***

There was nothing to bind Skilling to a giant conspiracy, and so the prosecution used literally "the nothing" against him. How is a defendant supposed to defend against Nothing? Prosecutors berated JKS for not keeping notes, then said he didn't keep notes because he was getting rid of evidence. They accused him of avoiding email as not to leave an electronic trail of his supposed nefarious activity. What is a defendant supposed to say to that? You can't prove a negative. I found that to be one of the most devious aspects of the case - the way the prosecutors used his innocence to appear like guilt.

And since when is "he didn't" permissable as evidence? Unless Berkowitz et al know exactly what criminals do in every circumstance, it seems ridiculous to say he wasn't acting like a criminal, therefore he's also a CONSPIRING criminal.

If you'll excuse the expression: Seriously? WTF?

Though it was too late at this point to matter, Sherri Sera, Skillings longtime assistant, said during sentencing that in over twenty years of working for the man she'd never seen ANYTHING that would indicate Skilling was involved in criminal enterprise. That's always stuck with me. He trusted this woman with his entire life. All his communication flowed through her. Yet she knew nothing. Saw nothing. Because NOTHING was there.

And that's what convicted him: nothing.
3.16.2008 1:51pm
Soronel Haetir (mail):

Prosecutorial Indiscretion:

As I said before I'm not sure conviction of an innocent person should be enough on its own to trigger such penalties. However I do believe the standard for proving misconduct should be extremely low. As for your comments about needing the very best people in positions with such power my answer would be that their power should be pared back.

I would justify such action on the basis that right now the pendulum is far too far into the leinency direction. Take Nifong as an example, even without a conviction his actions should be enough to trigger criminal penalties against himself.

Another example, though not strictly tied to prosecutors would be the police torture cases out of Chicago. You aren't going to convince me that the prosecutor's office as a whole didn't know those activities were going on. I find it abhorrent that statute of limitations protect those with the best chance of covering their crimes.

As for your statement that the proposed solution is greater than the problem: Right now no one gets punished in these cases for their behavior. Do you have a better solution for curbing in the reckless outlook that leads to these results?
3.16.2008 2:02pm
byomtov (mail):


I disagree with punishing a prosecutor when a conviction is overturned due to actual innocence, if there was no misconduct. Still, misconduct ought to be pretty severely penalized.

I do think that prosecutors ought to be more restricted in what they can and can't do. Granting favors in return for testimony has always struck me as highly suspect. After all, it really is just bribery.
3.16.2008 2:50pm
Steve2:
BruceM, I disagree strongly with your assertion that "Maybe one witness is more likely than not to be more believable, but certainly not more believable beyond a reasonable doubt." I think a jury can properly, rationally, and correctly decide that "even though there is no corroboration either way and both witneses are equally reliable on paper" one witness is lying through their teeth (a reasonable conclusion about a complainant in a sexual assault case absent physical evidence of sexual contact), or couldn't possibly know what they claim to know (a reasonable conclusion about any defense witness testifying to consent in a sexual assault case), is severely mistaken, or otherwise giving testimony that doesn't matter.

Anyway, how does the People's Republic investigate and try financial crimes? That white-collar crime carries real punishments, up to and including the death penalty, rather than fines and other meaningless slaps on the wrist as in the U.S., is one of the admirable things about the Chinese legal system, but is the quality of the investigation and trial of an order with the quality of the punishment following a conviction?
3.16.2008 3:09pm
BruceM (mail) (www):
Cara Ellison: Yeah, if you want to improve the fairness and quality of the criminal justice system overnight by making one little change, get rid of the crime of "conspiracy" ... it's too easy to convince a jury that someone may have kinda sorta knew about something that some other people kinda sorta may have been doing. That's where things like "he didn't" become circumstantial evidence.

Steve2: One witness may not be lying through his teeth, though. One may be mistaken. Eyewitnesses are mistaken all the time. It's been shown time and again to be the most unreliable form of evidence. So the defendant is not lying through his teeth when he says he was at home and didn't kill the victim, and the witnes is not lying through his teeth when he says he saw the defendant do it. Both can be quite confident and sincere about their testimony.

Even if one witness does seem twitchy and nervous and studders and stammers on the stand, he could just be nervous. That alone shouldn't be enough evidence to use to convict someone of a crime beyond a reasonable doubt. You think someone should be in prison because he gets nervous when their life is on the line and someone is a better public speaker than he is? I don't think you really think that, but it seems like you do.

Harsher punishments are never more admirable. You really want to execute people for not filing Currency Transaction Reports for deposits or withdrawls over $10,000? Jeez.
3.16.2008 3:43pm
Steve2:

You really want to execute people for not filing Currency Transaction Reports for deposits or withdrawls over $10,000? Jeez.


Not at all, the harm caused isn't severe enough. But financial crimes involving a large enough amount of money? Absolutely. The extreme example would be Bernard Ebbers: there is no doubt in my mind that execution is an appropriate result of committing fraud that causes $11 billion of harm. Ditto the harm done by the crimes that Lay, Fastow, Skilling, et al. were accused of. Ditto the fraud underlying Stoneridge v. Scientific-Atlanta: I believe participating in an eight-figure fraud ought to expose you to the possibility of a death sentence.

As for the whole testimony issue: "So the defendant is not lying through his teeth when he says he was at home and didn't kill the victim, and the witnes is not lying through his teeth when he says he saw the defendant do it. Both can be quite confident and sincere about their testimony." Absolutely, both can be quite confident and sincere about their testimony rather than deliberately lying, but one of them is wrong, and I don't think resolving the question of "who's wrong?" through a presumption of innocence is any more acceptable than resolving it through a presumption of guilt would be. I should point out this is due to my dislike for the adversarial system: all it cares about is having the jury answer the question "Does this specific defendant walk or go to prison/the gallows?", whereas I think a jury's job ought to be answering three questions: "What happened? Who caused it? What gets done to them?" through an inquisitional process. In my mind, saying "There's no reason to believe one more than the other" isn't acceptable when they're saying mutually exclusive things. One's right, one's wrong, and that jury gets to keep digging until it figures out which.
3.16.2008 5:43pm
BruceM (mail) (www):
Steve2: my point is that resolving which witness is right may not be possible by the requisite burden of proof (thus the defendant wins by default).

There are simply some cases where there is absolutely, positively, no matter what questions can be asked or evidence dug up, way to determine which witness is correct.

Consider this example:

A guy goes up to a cash register and buys something. The clerk gives him $5 change. The customer says "Uh I paid with a $20 bill, you owe me $15 back." The clerk says "No you gave me a $10 bill, I only owe you $5." Assume neither of them have criminal convictions for fraud or theft or perjury.

Now consider two scenarios. First, the customer is arrested and prosecuted for attempted theft. The clerk testifies under oath that the customer/defendant only gave him a $10 bill and was lying to get more change back, a common street hustle. Second, the customer sues the store (civil suit) to get the $10 he says the store took from him by giving him the wrong change.

Assuming no other evidence (no fingerprints, traced bills, video tape, etc.), I contend that that as a matter of law the state cannot prove its criminal case against the customer beyond a reasonable doubt, no matter how convincing a witness the clerk is. On the other hand, I do believe a jury could legally find for the plaintiff-customer in the civil case, though I'd be somewhat skeptical of the verdict.

Do you not agree?

Implicit in a jury's verdict is answering the questions "what happened, who did it, etc." If they find for one party, those questions are answered, unless they're legally irrelevant. Two people robbed a store and the clerk was shot, both robbers saying the other one pulled the trigger. Both will be charged with murder and it doesn't really matter who pulled the trigger. Maybe it should... I've never liked the idea of party liability to crime, every person should be charged with an individual crime, not aiding or abetting or coconspiring or whatever.
3.16.2008 7:09pm
David Schwartz (mail):
Basically, the accusations in this case were that Fastow arranged deals that had the effect of creating the appearance of profits that didn't actually exist.

For example, one way to do this would be for me to buy a truck for $10,000. Then I sell it to you for $20,000 with a secret promise that I'll buy it back from you for $30,000. This allows me to record a $10,000 profit on the truck without having to also record an obligation to buy the truck back from you.

Then you can sell me the truck for $30,000 and you get to record a $10,000 profit. Some quarter when I'm going to exceed earnings targets anyway, I can sell the truck at a loss.

That's the simple version of what they were accused of.

The fly in the ointment, at least with regard to the Nigerian barges is:

1) It looks like there was no secret promise to buy back the barges. Instead there was a promise to help them sell the barges to third parties.

2) The barges were ultimately sold to an uninvolved third party at a profit to everyone. This makes it hard to believe the other sales weren't justifiable. (For the trick above to work, you have to know the truck isn't worth the $20,000 you're paying for it. If it's really worth $20,000, I can just sell it for $20,000.)
3.16.2008 11:04pm
David Schwartz (mail):
Oh, to add to my truck analogy, suppose that the evidence at trial that there was a secret promise was someone (A) who was told by someone else (B) that there was a secret promise to buy the truck back. B also testifies that he told A about the secret promise.

In this analogy, the withheld evidence would be that B gave a completely plausible (and legal) reason for lying to A about there being a secret promise even though there wasn't one and claimed that this was specifically what he had done.
3.17.2008 8:44am
Richard Aubrey (mail):
As I recall, when the late Queen of Mean ("taxes are for little people") was on trial for various tax offenses, there would be a huge crowd to watch her come in and out of the courthouse.
There can be little more boring than a tax trial. But when the defendant is promoted as some kind of preternatural demon, people will take the time to go downtown or wherever to watch them come in and out of the courthouse.
Which tells me that the idea of rationality in this kind of enterprise is just about completely absent.
It would be strange if the prosecution were completely invulnerable to such an atmosphere, even if they hadn't actively promoted it.
People will say "Enron" as a shorthand for any number of Very Bad Things without a clue as to what exactly went on, or didn't.
Two things impress me about this. One is the Enron shareholders who are outraged that the truth was kept from them so they were not warned in time to unload their shares to some unwary chump to take the hit.
The other is the fake trading floor set up to impress visiting potential investors. It has been reported that over 100 people were involved. Nothing got out? Can we put the local business journalists on a sodium pentothal drip and ask what they knew and when they knew it?
3.17.2008 10:58am
Cara Ellison (mail) (www):
Richard,

You are the first person I've encountered who actually voiced one of my thoughts re: the shareholders. I will even go a step further and say that those who are taking any money from the Enron settlement fund are basically saying, we want the fraudulent money that was rightfully ours. Well, make up your mind, was it a good company or a bad company and if its a bad company, by taking the profits you become party to fraud.

And the Potemkin Village trading floor was another myth. It was a fake story by Jason Leopold (Jason is a bad name to give a kid who grows up to be a journalist). Never happened.
3.17.2008 2:35pm
Richard Aubrey (mail):
Cara.
Thanks for the info ref Leopold.
It seems to be a resilient myth.
3.17.2008 3:31pm
Cara Ellison (mail) (www):
Leopold has quite a colorful history of lying about Enron. An article Leopold wrote for Salon in 2002 used a mysterious email that nobody could verify to prove that Thomas E. White, secretary of the Army, was involved in accounting practices that led to the collapse of Enron while he was vice chairman of Enron Energy Services.

Paul Krugman (D-NYT) cited the article for an Op-Ed piece critical of Mr. White. Later he wrote that he was not sure Mr. White was indeed the author of the email in question and "As long as the authenticity of the message remains in doubt, it should be considered unsubstantiated. I erred by citing it in my column."

Anything with a Leopold byline, you're free to ignore.
3.17.2008 4:23pm
Richard Aubrey (mail):
So, Cara.
How much of the Enron hysteria would you say is Leopold's resonsibility?
I ask that question because hysteria gives cover for underhanded prosecution tactics and the more of the first, the more likely the second.
See Duke.
3.17.2008 5:36pm
Christopher Cooke (mail):
Richard and Cara: You point out one issue that has long be-deviled economists and others in assessing harm cause by shareholder fraud, which is identifying the true victims from the speculators and those who didn't lose any money from fraud. However, I will say it is likely that there are thousands of people who bought Enron's stock when its price was inflated due to materially false financial information published by the company. They are not all saying "gee, I wanted to be able to dump my stock on some other unsuspecting sucker" and many might say"I wouldn't have bought Enron's stock at all if I knew this information was false." So, however you slice it, there are some innocent victims of this debacle, but I agree that not every Enron shareholder is a victim.
3.17.2008 6:07pm
Cara Ellison (mail) (www):
Richard,

I think Leopold was a small player. The series of 30 or so Wall Street Journal articles starting at the end of the summer 2001 plus Bethany McLean's "Is Enron Overpriced?" article was, I think, the bigger impetus to the collapse. Leopold was just trying to cement the bad reputation by making up crap about fake trading floors and incriminating emails.

Christopher, I have to quibble with the allegation that "materially false" information was published by Enron. If that were so, then sure, hang them up by their toenails. But they didn't lie - and even McLean, who detests Enron, will admit that indeed their earnings reports and all SEC filings were perfectly kosher.
3.17.2008 6:24pm
Christopher Cooke (mail):
Cara: absolutely, positively Enron's SEC filings were not Kosher.

Enron guaranteed the liabilities of the SPEs they set up, with their stock. None of those transactions should have been booked as sales of assets and Enron should have been made to assume all of the liabilities of the SPEs. That is why Fastow pled guilty.

But, I try to keep an open mind about Skilling/Lay, and their knowledge of, or involvment in, any hanky panky.
3.17.2008 6:55pm
Cara Ellison (mail) (www):
Okay, please show me where you see that the SECs were not kosher. Or a balance sheet. Or any other piece of paper that shows their financial condition. Because after reading the court transcripts, appeal briefs, books, magazine articles, blogs, analysts on tv, etc. I've never seen one single thing that said the filings were improper. In fact, Bethany McLean, paragon of anti-Enron virtue, says in her ridiculous novel, that it was all there in the SEC filings.

Fastow pled guilty for a lot of reasons - same as all the other executives. He was being pressured by an enormous wall of government authority to talk. When the feds start throwing around terms like, "thirty years", sure, defendants/suspects will start to pay attention. The funny thing is though, if you read the supplemental brief quoting the aptly named Fastow Notes, the story he told the FBI/DOJ and the story he told on the stand seemed to have nothing in common. So even if he pled guilty, he's so full of crap that his word at this point means nothing, has no weight at all.

Perhaps one fact distinguishes him from the others: he actually did benefit from the SPEs. But the SPEs were not improper. Skilling said at trial that in retrospect they were "a horrible idea", but that is a business judgement in retrospect - not a crime.
3.17.2008 7:36pm
Cara Ellison (mail) (www):
Correction: Skilling said at trial that LJM was a "horrible idea." LJM was a partnership, not a Special Purpose Entity. Raptors was an example of an SPE.

Fastow benefited from his role at LJM.
3.17.2008 8:14pm
Christopher Cooke (mail):
Cara: Enron itself restated its SEC filings, which is a legal admission that they were materially inaccurate.
3.18.2008 1:14am
Christopher Cooke (mail):
Cara: A Special Purpose Entity can and frequently is a partnership, the two concepts are not mutually exclusive. You are confusing the form of a business entity with the accounting purpose of it. A SPE is an entity that is set up to acquire an asset from another business. I forget the details of the accounting rules at the time of Enron, but it was essentially that the SPE would be considered a separate business from the corporation that sponsored it if a certain percentage was owned by outside investors (I believe this number was 2 percent), it had independent management and its risks were independent of the sponsoring business. SPEs were frequently used for very legitimate purposes. Airlines, for example, use SPEs to acquire the planes that Boeing or Airbus builds for them. The SPE would be funded with money from institutional investors, as well as from the corporation. The airlines lease the planes from the SPEs. This allows the airline not to have the asset and the depreciation costs associated with it on the airline's balance sheet, while the SPE and its investors get the lease payments from the airlines. Now, as I recall, Enron set up a series of SPEs using Star Wars names (Fastow was a big fan), and used Enron's stock to guarantee the SPEs from losses, which is what Sharon Watkins complained about in Aug. 2001 as being totally wrong (and she was right).
3.18.2008 1:32am
Cara Ellison (mail) (www):
>>SPE would be considered a separate business from the corporation that sponsored it if a certain percentage was owned by outside investors (I believe this number was 2 percent),
>>>

3%, actually.

>>>
Now, as I recall, Enron set up a series of SPEs using Star Wars names (Fastow was a big fan), and used Enron's stock to guarantee the SPEs from losses, which is what Sharon Watkins complained about in Aug. 2001 as being totally wrong (and she was right).
>>>

Sharron had a lot of allegations. But at the time that Enron was in business, all the SPEs comported with GAAP. Furthermore, any "secret side deals" which is what I think you're getting at when you talk about "guarantee from losses" simply did not exist. Jeff Skilling said repeatedly on the stand that there were no side deals:

Petrocelli and Skilling on direct:

Q. Were you - had you - were you aware of some other name used to describe a series of illegal side deals between Enron and LJM?

A. No, I wasn't.

Q. Were you aware of some kind of list of secret side deals between Enron and LJM?

A. No, I wasn't.

Q. Were you ever told about any secret side deals between Enron and LJM?

A. No.

Q, Did Mr. Fastow tell you?

A. No.

Q. Did Mr. Causey tell you?

A. No

Q. When is the first time that you heard of something called "secret side deals"?

A. I believe probably sometime in early 2002. I think it was shortly after Sherron Watkins' memo came out.


Then when the Skilling supplemental brief came out, we discovered that Skilling was telling the truth and Fastow was lying about there being any guarantees against losses. The "list of secret side deals" is the supposed Global Galactic list, which the supplemental appeal brief blew out of the water.
3.18.2008 2:27am
Christopher Cooke (mail):
Cara: Causey and Fastow admitted that there were side deals. Skilling may or may not have known about them, but there were side deals. That is why they --Fastow, Causey, Glisan-- pled guilty. The SPEs did not comport with GAAP, and that is why Enron restated its financials.

The appellate brief "blows" out of the water whether there was exculpatory evidence in the FBI's notes of their interviews with Fastow (which, according to their brief, there were, in terms of Fastow saying he did not share the contents of the Global Galactic List with Skilling). The brief does not address whether this list was genuine, at least not in portions that I have seen quoted on Ribstein's website, just whether Fastow told Skilling about it.

Another "deal" that had a side deal was the Nigerian barge transaction with Merrill Lynch. The emails on that deal show that Enron (Fastow) offered to take back the barge the next quarter. That is not a true sale, and recording it as such violates GAAP rules on revenue recognition. I forget the rest of them, but I suggest you look no further than Enron's own SEC filings, which summarize all of the transactions that the company booked in a materially incorrect manner, which is why Enron restated its financials (before it collapsed).
3.18.2008 4:43pm