Sunday, October 07, 2007

Congress Seeks To Limit White Collar Prosecutions

From the story U.S. Prosecutors Say New Limits May Help Future Enrons Go Free:

Oct. 1 (Bloomberg) -- U.S. businesses, with the help of civil libertarians, are on the verge of outmaneuvering federal prosecutors and persuading Congress to limit the government's power to pursue corporate fraud.

Lawmakers are considering a measure that would, among other things, bar the government from demanding that companies reveal confidential talks with their lawyers in order to win leniency in plea deals. It would also prohibit federal agencies, including the Securities and Exchange Commission, from demanding that companies fire or cut off legal support for employees under investigation.

Such tools were crucial in helping prosecutors pry loose valuable information in hard-to-prove cases against WorldCom Inc. and Enron Corp. Curtailing them may mean fewer such investigations in the future, putting investors more at risk.

``Pre-Enron, U.S. attorneys never brought these cases, and after this bill is passed, they will quit bringing them again,'' says Lynn Turner, a former SEC accounting chief. ``This is a very clear message from Congress: Don't touch white-collar criminals.''

The Justice Department's guidelines for corporate cases were crafted as it and the SEC sought to cope with the explosion of financial scandals early this decade by offering companies leniency in exchange for cooperation.

That typically means a company reports potential illegality, conducts its own internal probe and waives the attorney-client privilege. Prosecutors say they need such confidential information to ensure against cover-ups and, if necessary, help them freeze assets that might otherwise be hidden or squandered.

No Secret

``It's no secret that cooperation from defendants of all types is a very effective tool we need to use in getting the bad guys,'' says Karin Immergut, U.S. attorney in Oregon and head of a Justice Department white-collar crime committee.

Immergut says the waiving of attorney-client privilege played a vital role in the prosecution of former Chief Executive Officer Bernard Ebbers for the $11 billion WorldCom fraud --he's now serving a 25-year prison term -- and helped the government locate and seize $80 million in cash from financier Martin Armstrong, who pleaded guilty in an investor fraud.

Company documents aided accounting probes at Enron and Adelphia Communications Corp., and helped convict 11 former executives in connection with a $67 million fraud at online real-estate seller Homestore Inc., the Justice Department says.

...

Mobilizing

In the absence of an all-out defense by the department, prosecutors on the front lines are mobilizing to fight the legislation. ``This bill would certainly make it harder for prosecutors to protect victims and the investing public,'' says Immergut. Pointing out that drug defendants are routinely asked to waive their rights if they want leniency, she asks why executives deserve special treatment.

``I frankly find it kind of baffling that people are proposing legislation that protects corporations and corporate officers like CEOs more than other individuals,'' she says.

I think this just shows you who our elected officials really work for. Do you ever get the feeling that it is their own self-interest they are voting on?

1 Comment:

Independent Accountant said...

I am even more skeptical of the Justice Department than you are. However, the DOJ specializes in prosecuting nobodys and letting the big fish free. This crap from the DOJ is just that, crap. A rationalization not to act.