Eisinger explores “Why the Justice Department Fails to Prosecute Executives” in this book that introduces us to the heyday of criminal prosecutions for white collar crime to its nadir today.
“The Department of Justice is a loose federation of ninety-four offices around the country, each a realm unto itself, run by a U.S. attorney who is almost untouchable by headquarters in faraway Washington, D.C…The [SEC] has civil powers and must team up with various offices of the Department of Justice when a securities law violation turns into a criminal investigation….Of all of these offices, the Southern District of New York, located at the bottom tip of Manhattan, has the smartest and ablest prosecutors in the land. Any alum of the office will be happy to verify that.”Eisinger’s detailed introduction to the men and women of the Southern District of New York begins with the Enron investigation, and later he tantalizes us with early peeks at the careers of Comey, Chertoff, Holder, Ruemeller, Weissmann, Breuer. There were plenty of folks who tried going after the big guns, Paul Pelletier, Jim Kidney, and Jed Rakoff for a few. There is a reason these last three men’s names are not as well known as the others. It’s not because they were less able. It’s because they dared to challenge powerful forces in business and government. They didn’t lose so much as get sidelined and discredited. They weren’t part of the cabal using the revolving door from government to business and back.
The title of this book comes from a statement James Comey made in an early speech to lawyers in the Southern District when he was appointed head by George W. Bush in 2002. He exhorted the prosecutors to bring cases whether or not they felt they could win. “If it’s a good case and the evidence supports it, you must bring it,” he said, otherwise you would be a member of the chickenshit club, cowering before powerful forces arrayed to stop your investigations.
What Eisinger tells us later is that many prosecutors working during the financial crisis of 2007-08 never even looked for evidence of wrong-doing. Lips and teeth, I think to myself. The chief financiers responsible for the toxic asset meltdown and the chief prosecutors responsible for bringing them to justice are like lips and teeth.
Seeing early glimpses of now-famous actors in our government drama is informative for what we didn’t know when we were reading laudatory newspaper articles about what they accomplished in the past. Eisinger has long shed his rose-colored glasses and is critical of how the Department of Justice leadership evolved into a group who was reluctant to bring cases, cases that had merit and enough evidence to expose and shame these organizations in public, even if the U.S. government never got a cent of ill-begotten gains back. The public might be able to handle some portion of the payback--witness the difficulties Bank of America experienced for years after its thievery, lies, and overextension became daily news.
Much is made of the headliners like Preet Bharara, former U.S. Attorney of the Southern District until fired by D.J. Trump this year, but Eisinger deconstructs his cases and finds him wanting as well, eager to go after the “easy” cases involving insider trading. Eisinger goes further, showing us how difficult and unsure major fraud cases against, say, the head of Goldman Sachs, but how necessary if the public is to have any faith in the fairness of the system.
“The Southern District [under Preet Bharara] did not bring criminal charges against big investment and commercial banks. The office did not take on the power structure of American finance. Bharara did not charge top executives at the biggest companies. After the biggest bubble and financial crisis in generations, bankers at the biggest institutions sold defective products, misrepresented them, played games with their own finances, and almost crashed the global financial system, save for a multitrillion-dollar taxpayer bailout, the most important prosecutorial office in the country took on hedge funds. It was a prosecutorial non sequitur.”The Obama administration “engineered preventive measures to stave off similar future crises” or, in the words of Brooklyn Law School scholar K. Sabeel Raman, ‘prioritizes “good” government over “democratic" government.’ There would be no feeding the populist thirst for blood, but neither did we see justice.
In 2005 the Supreme Court took up mandatory sentencing in United States v. Booker, giving judges more latitude in sentencing, the result of which executives are more inclined to take their chances than to plead guilty or plea bargain. This appears to be a corollary to the notion that corporations can police themselves. What has become glaringly obvious in the past twenty years is that corporations serve themselves.
Eisinger, whether or not you agree with him, is a terrific read. He gives a level of granularity that many will not have heard in alcohol-fueled late-night back-slapping sessions. It is useful for proponents of his tough-on-crime stance to see how we got to this point where it can appear corrupt business has government regulators over a barrel. And it can be useful for opponents of this view to see what is getting the public mad as hell.
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