Issues
What can any of us, the average citizen, do to fight back against prosecutorial corruption? After all, the powers of government are enormous and the gears of reform grind slowly, if at all. The best we can hope for is transparency—demanding that our public officials remain accountable to their citizens. We can voice our discontent with the lack of checks and balances that protect average citizens and keep government power under control.
That’s especially true for State and Federal prosecutors who remain, for the most part, beyond the normal constraints of the law. Certainly, in extreme cases where a misdeed occurs, they can be chastised or even punished for their behavior, but such actions are rare enough to serve as little or no deterrence to the temptations of ambition, corruption or politics. In the end, we rely on the integrity of our public officials—and our campaign to hold them more accountable.
Speak Out!
Email the Department of Justice here
Contact the Attorney General or the Office of Professional Conduct here
What are the Issues?
When the government threatens to bring charges against an individual or a corporation, it holds almost all the cards. The stakes of a formal indictment (much less a conviction) are simply too high for most people or corporations to risk. Threats of a filing often confer instant infamy on the accused. Considering the enormous powers of the government and facing potentially harsh judgments in the court of public opinion, corporations threatened with criminal prosecution have frequently been loath to fight these accusations even when convinced they were innocent. Often, there is not even an intention by the government of going to trial. Instead, prosecutors have perfected a more powerful tactic: exploiting the threat of business losses and using the hammer of the media to force capitulation. It’s called extra-judicial punishment, and it’s rampant in the federal courts and among U.S. Attorneys. There four major areas of concern:
RICO:
The major hammer used by prosecutors in white-collar crimes has been the threat of filings under RICO—the Racketeer Influenced and Corrupt Organizations Act (commonly referred to as the RICO Act or RICO). Enacted in 1970, it was intended to make it easier to prosecute organized crime figures, but it has been applied in many other cases as well, most recently against corporations. While the option of filing RICO charges against corporations has been available for years, there were only a handful of such cases before the Enron fiasco and the corruption scandals that marked the recession of 2001-2003.
Thompson Memorandum:
A prosecutorial boomlet started after the drafting of the so-called Thompson Memorandum, a document issued in January 2003 by the Corporate Fraud Task Force, established in response to the public revulsion over the corporate blowups. Thompson was designed to help prosecutors decide whether to charge a corporation, rather than or in addition to individuals within the corporation, with criminal offenses. The guidelines were considered unusually tough because they required that companies must turn over materials from internal investigations and other formerly privileged work products, waive attorney-client privilege, and not provide targeted executives with company-paid lawyers.
The Thompson Memorandum is thin on specifics, which gives government attorneys a tremendous amount of leeway in its use. Some legal scholars have raised concerns that the memorandum encourages the waiver of many of the protections that our legal system is based upon. The practical effect of the Thompson Memorandum has been to effectively curtail the funding of attorney fees for accused employees (even if they are innocent), to say nothing of making the waiver of a corporation’s attorney-client privilege a nearly foregone conclusion. It certainly has handed prosecutors wide discretion to determine when formerly sacrosanct legal protections should be waived and the consequences if a corporation should refuse. In effect it established an incentive for government prosecutors to launch campaigns against “corporate crime.”
Plea Bargaining:
Considering the government’s enormous credibility and unlimited resources, it behooves almost anyone facing the government in court to consider plea-bargaining even if innocent. U.S. Attorneys are extremely successful at what they do. Defendants either plead guilty or are found guilty in more than 85 percent of the cases. The U.S. Court of Appeals rules in the government’s favor, in whole or in part, in more than 92 percent of the cases. The incentives for the accused—lose your reputation and a little money or risk losing everything, including your freedom—are powerful deterrents for arguing the truth of your case.
Companies have very strong incentives to reach plea bargains even if they are innocent and even if they believe they have a significant chance of prevailing at trial. The rules of fairness go out the window with just the threat of a filing. Companies are subject to a variety of state and federal regulations and license requirements that effectively make it difficult, if not impossible, to function once they have been indicted. Government sanctions can range from license suspension or revocation, to exclusion from participation in government programs, or from bidding on government contracts. Without warning, therefore, a company must choose between settlement and what could amount to a corporate death sentence—it happened with Arthur Anderson—inflicted almost the day the complaint is filed and long before the courts can review the case.
Sentencing Guidelines:
Driven by concerns of disparate treatment and undue leniency in punishment, Congress created an independent agency in the mid-1980s that formulated a new set of standards to limit the discretion of federal judges. What seemed fair in theory has often turned out to be disastrously unfair in practice. The guidelines set aside with one of the keystones of the U.S. judicial system. True justice in sentencing requires an individualized assessment of the offender and the offense, leading to a moral judgment imposed by judges with skill, experience and wisdom. Instead, judgment is replaced by the wisdom of a mechanical bureaucracy. As a consequence, judicial discretion was restricted and average sentence length increased.
Although these guidelines are no longer mandatory—the law was changed in 2005 after the SCOTUS found that the guidelines, as originally constituted, violated the Sixth Amendment right to trial by jury—prosecutors often use the threat of likely sentences to squeeze guilty pleas, even from the innocent. Under the guidelines, the accused Fischer superintendents faced a likelihood of 10 years in jail and up to $250,000 in fines if they were found guilty in a trial. The judge had little wiggle room to alter a potential sentence and was expressly forbidden from considering personal characteristics like the defendant’s family responsibilities and employment history. Those who were charged but believed they were innocent faced a wrenching choice: they had to decide whether to follow their conscience and invite large fines and jail time; or lie—“admit” they were guilty and turn an accusing finger at someone else, in this case Fischer Homes, thereby escaping with a slap on the wrist. Under such an Orwellian threat, a plea bargain of guilty, even if one is innocent, can seem attractive.
In recent years corporation after corporation has capitulated to government demands in cases in which their guilt was in doubt. For many corporations, a plea bargain is one of few available exit strategies from this crisis. The vast majority of corporate cases are resolved via plea bargains—jury convictions account for less than 10 percent of all convictions. Consequently, corporations often accept plea deals even when they are convinced of their innocence.
The government’s power—the U.S. Attorneys’ power—is overwhelming. Everyone recognizes the corruption of excessive power built into the system. There is no doubt it encourages plea bargains by innocent companies and executives regardless of the merit of the underlying allegations. It’s not farfetched to say that the American system of prosecuting corporate fraud conveys so much power to prosecutors that it mirrors the inquisitorial practices common in European countries, but without the safeguards built into those systems to provide some constraints on prosecutorial power.