Prisoners are persons whom most of us would rather not think about. Banished from everyday sight, they exist in a shadow world that only dimly enters our awareness. They are members of a "total institution" that controls their daily existence in a way that few of us can imagine. "[P]rison is a complex of physical arrangements and of measures, all wholly governmental, all wholly performed by agents of government, which determine the total existence of certain human beings (except perhaps in the realm of the spirit, and inevitably there as well) from sundown to sundown, sleeping, walking, speaking, silent, working, playing, viewing, eating, voiding, reading, alone, with others. . . ." It is thus easy to think of prisoners as members of a separate netherworld, driven by its own demands, ordered by its own customs, ruled by those whose claim to power rests on raw necessity. -- Justice William Brennan, dissenting in O’Lone v. Estate of Shabazz, 482 U.S. 342, 354-55 (1987).

Tuesday, April 8, 2008

Enron: Deconstructing the Myths

[This post contains many links for those readers who wish to explore this matter more. There is simply no way I can possibly cover this topic myself in a single article.]

I recently discovered a wonderful blog called Houston's Clear Thinkers by Houston lawyer Tom Kirkendall. Among many other topics, he decries "the increasing criminalization in American society of ordinary business practices." So much of what he says, from the more professional/academic perspective of a lawyer, echoes the stories I heard in prison. There are SO MANY men sentenced to YEARS in prison for conduct that AT MOST should be a civil offense (mine included, although it is a trivial example). It seems all that is required to form the basis of a fraud case is a disgruntled customer, employee, or investor, or other "victim" of a business decision gone bad.

(As an aside, there is a lesson here: business people should bend over backwards to address and resolve grievances before the "aggrieved" escalate their problem to the government. Rarely does a perceived "vicitm" call the feds before first attempting to get relief from the business. Many guys end up in prison, not because their conduct was fraudulent, but because they were arrogant jerks who were "right" and refused to satisfy the concerns brought to them. It pays to be nice.)

In particular, Kirkendall has done a great job deconstructing the popular myths concerning Enron and anyone associated with it (e.g. Arthur Anderson). See all of his Enron articles here, which includes The Enron Task Force Laid Bare (3/24/08) demonstrating "what is wrong with the Department of Justice's regulation of business-through-criminalization approach in the post-Enron era."

For example, commenting on Jeffrey Skilling's sentencing hearing (back in 2006), he says:

"By now, we all know the myth -- Enron was merely an elaborate financial house of cards that a massive conspiracy led by the greedy and lying Skilling and the late Enron chairman Ken Lay hid from innocent and unsuspecting investors and employees. The Enron Myth is so thoroughly accepted that otherwise intelligent people reject any notion of ambiguity or fair-minded analysis in addressing facts and issues that call the morality play into question. The primary dynamics by which the myth is perpetuated are scapegoating and resentment, which are common themes of almost every mainstream media report on Skilling and Enron ."
After witnessing the incredible human cost of the Enron prosecution, it appears that much of the work of the Enron Task Force is unraveling.

Perhaps the most shocking example is the trial of Jeffrey Skilling and Ken Lay. Skilling's appeal describes in excruciating detail the shocking level of prosecutorial abuse. If their claims are true, and it is hard to see how they cannot be true, it is the prosecutors, not Skilling, that should be in prison.

Kirkendall's summary, "The Stench of Prosecutorial Abuse," is MUST reading. He includes a link to Skilling's supplemental brief (which I read while watching the NCAA basketball championship game last night... who says men can't multi-task!) that details the abuses, which essentially involves the government intentionally scripting Andrew Fastow's testimony (almost the entire case against Skilling came down to whether you believed Fastow or Skilling) as well as withholding clear exculpatory evidence (the notes from Fastow's original interviews which "evolved" after his plea deal) confirming Skilling's testimony and incriminating Fastow's.

Furthermore, echoing a tactic I heard about in prison, but found hard to believe, the government identified over 100 unindicted co-conspirators in the Lay-Skilling case.

What does this mean?

An unindicted co-conspirator is someone the government believes was part of the conspiracy but chooses not to prosecute, usually because they were a relatively small player in the conspiracy and they "cooperated" with the government. Implicit however in such a status is the threat that co-conspirators will not remain unindicted for very long if they cooperate with the defense (e.g. by consenting to be deposed) because they might provide testimony that impeaches the prosecution's main witnesses. (Unindicted co-conspirators only provide background cooperation, they do not actually testify at a trial, because that exposes them to cross-examination, something the prosecution does not want.)

What if the defense wishes to call one of these unindicted co-conspirators as a witness (in order to either provide exculpatory testimony or impeach the testimony of a prosecution witness)?

Well, that witness's lawyer will (correctly) instruct his client to claim his 5th amendment right against self-incrimination, knowing that the government will prosecute his client for testifying.

You might ask? Well that's better than nothing. After all, when the jury hears all these witnesses taking the 5th amendment in response to defense questioning, they will get the hint and realize that the defendant is innocent (or, at least, the government hasn't proven its case).


When a judge is informed in advance that a witness is going to "take the 5th," the rules forbid the judge from letting that witness take the stand. Nice... so the jury never knows that these people exist.

Thus, the effect of the government identifying over 100 unindicted co-conspirators is that Lay-Skilling cannot depose or otherwise utilize the testimony of these individuals, who very well could provide exculpatory testimony. Of course, if the prosecutor is aware of ANY exculpatory evidence, they are required to turn it over to the defense. At least, that's the theory.

(One day, I will tell the full story of a fellow inmate who suffered a similar injustice, when a witness with exculpatory testimony was named an unindicted co-conspirator by the government. This man, a devout Mormon, father of 7, married for 30+ years is in prison for 4 years for being the outside accountant of a company that hired illegal immigrants. He was convicted of conspiracy to harbor illegal immigrants. Horrible, horrible case.)

Skilling's lawyers have asked for his case to be dismissed with prejudice (that is, the government cannot retry him). In the words from their supplemental brief:

"Skilling's life has been destroyed. His ability to receive a fair trial has been irretrievably lost....Even more important than punishing the government, however, dismissal with prejudice is necessary to remedy the grave injustice and prejudice to which Skilling has been subjected. Skilling was forced to spend tens of millions of dollars defending against the largest criminal investigation in the history of the Department of Justice. He was forced to sell his home and virtually all his personal possessions. The rest of his assets have been frozen. His family has been subjected to ridicule, scorn, and physical threats. Skilling had restricted bond provisions for years, enhanced bond provisions through trial, and subjected to home confinement for six months after conviction. He has been incarcerated in federal prison for 15 months, during which both his parents passed away. He was compelled to defend himself in the face of the Task Force’s intransigent refusal to disclose exculpatory evidence. His attorneys have fully disclosed his defense theories and strategies. Worst of all, the jury pool has been hopelessly tainted by countless reports calling
Skilling’s conviction 'justice,' 'closure', and a badly needed 'exorcism.'”

I will close with an editorial comment by Kirkendall:
"I've often noted on this blog that fair-minded people can disagree over whether the government's prosecutorial power is an appropriate tool to regulate business. However, my fervent hope is that even those who favor using the state's awesome power to criminalize merely questionable business transactions will be appalled by what the prosecution did in the criminal case against Skilling and Lay, as well as the other Enron-related criminal cases. In truth, none of us would be able to survive, as Thomas More reminds us, "in the winds that blow" from the unjust exercise of the government's overwhelming prosecutorial power. I continue to hope that Jeff Skilling's unjust conviction and sentence are reversed on appeal, not only for his and his family's benefit, but also for ours."



Denise Fehr said...

Bill, I love the Thomas moore story on the link I followed. Thanks for the Houston's Clear Thinkers blog!

Bill Bailey said...

Wow, I can't believe someone actually took the time to read the whole post (which you had to do in order to get to the Thomas More quote)! Thanks for your comment.

This whole subject deserves so much more treatment... especially from the mainstream media. Until you have been on the receiving end of the overwhelming unfair advantage the government has in the legal process, you just assume that the process is fair. After all, this is the US of A. What really got my attention was the comment of a staff person at Pensacola Federal Prison Camp just before I was released: "We have the greatest country in the world but the worst system of justice." This, from a woman who has spent 12 or so years working in a federal prison, incredulous at the sentences men are getting for relatively minor offenses.

Denise Fehr said...

I always read all of your posts. They are so right-on.
My spouse is in a FPC, and he has heard similar comments from some of the staff on unfair sentencing. On the other hand, some of the staff (fortunately only a very small few) are total jerks and not at all as smart as most of the inmates, just love the power trip.

Take a look at my blog, for how I have been handling being the one left at home.

I'm so glad you started posting again. Thank you so much!

Anonymous said...

Bill: Your post is great, do you realize that after the enron saga, white collar and public company officers have become a huge target. I know there is some abuse going on, but most is civil or should be civil (like your issue) or the executives you mentioned in your posts. I think putting a smart man like skilling or kowlaski in FPC is a complete waste. These people are business leaders with too much to offer then to sit at camp. The Govt should take everything from them assets and money hit them hard in the pocket, leave them homeless for their crimes, but imagine the good they can bring if given a chance (jobs, taxes, corporations). What has happened and I belive that this is a mandate by the current administration to go after business people hard. Another form of TAX (collect restitution, fines in the billions). The defense lawyers scare the fees out of their white collar clients and then get a poor plea deal. I believe that sooner than later there will be no incentive to do business with such unfair practices in this country. This will be costly in the long run. This is just my opinion (looking at your post from another side).