Saturday, November 22, 2008
Mary Jo Rides Again
"On Sept. 25, as the world financial crisis escalated, two of New York's most powerful lawyers met for lunch in a restaurant near Wall Street with a name that recalled happier times: Bull Run. They were Michael J. Garcia, the [US] attorney in Manhattan, and Andrew J. Cuomo, the state attorney general. Both men's offices have histories of moving aggressively against financial fraud, and of vigorously defending their turf when other prosecutors try to compete for their cases. ... First came the bust; now comes the inevitable flood of investigations and possible prosecutions. State and federal prosecutors are looking at a range of companies, from Fannie Mae and Freddie Mac, the mortgage finance companies that were effectively nationalized in September, to Lehman Brothers, the Wall Street bank that collapsed last month in the largest bankruptcy in [US] history. But the crisis is so widespread that there has been another phenomenon--cooperation among prosecutors, especially in New York, where in the past they have not been shy about bumping elbows and sometimes had to resolve conflicts at the highest levels of the Justice Department. ... Two people familiar with the Lehman investigations said the case had been divided among the three offices [Manhattan, Brooklyn and New Jersey] because there were too many avenues of inquiry for any one office to handle. ... The decision to cooperate can be advantageous to prosecutors. Under the arrangement in the swaps investigation between Mr. Garcia and Mr. Cuomo, for example, some of Mr. Cuomo's lawyers would be designated as 'special' federal prosecutors to enable them to participate in secret grand jury proceedings. ... Mr. Garcia's office has said it is looking into whether federal laws were violated, while Mr. Cuomo, with a broader mandate as the state's attorney general, can seek industry reforms, legislation, civil settlements and other remedies. ... Mary Jo White [MJW], who served as [US] attorney for the [SDNY] from 1993-2002 and is now in private practice, said there were risks of intense public pressure 'to put scalps on the wall--"how could something as bad as this happen if nobody did something wrong?"' 'You have to distinguish between arguably bad risk-taking,' she said, 'and someone who has actually violated the law.' ... But for now, the public cooperation between prosecutors, notably Mr. Garcia and Mr. Cuomo, has caught the attention of the legal community, largely because of the history of turf battles involving the [US] attorney for the [SDNY]. ... In 1997, for example, Ms. White, then the [US] attorney, allowed one of [Paul] Shechtman's clients, who had been charged in a securities case by Robert M. Morgenthau, the Manhattan district attorney, to plead guilty to federal charges. That effectively stopped Mr. Morgenthau from pursuing his case. Mr. Morgenthau's office complained, but Ms. White responded that to prosecute the crimes 'under only state law diminshes their seriousness'," my emphasis, Benjamin Weiser and Ben White at http://www.nytimes.com/, 31 October 2008.
"The [SEC] said it won't take disciplinary action against its enforcement chief and others who were criticized in a report by the agency's inspector general [IG]. The clearance of SEC enforcement chief Linda Thomsen and David Nelson, head of the agency's Miami office, came amid a congressional review of the agency's performance in recent years. Recent SEC [IG] reports have highlighted potential issues raised by a revolving door between the government and industry. One report by the [IG] found Ms. Thomsen had improperly released information about an insider-trading investigation involving hedge fund Pequot Capital Management and John Mack, a well-known Wall Street executive. The [IG] concluded Ms. Thomsen improperly relayed information when she told lawyer [MJW], who was working for Morgan Stanley's board and vetting Mr. Mack as a potential chief executive, that there was smoke but not fire in the investigation. ... The SEC's chief administrative-law judge ... said Ms. Thomsen did disclose to Ms. White information about the status of the SEC investigation, but '[t]here are no indications that Thomsen's disclosure was committed maliciously or for gain, or was frequently repeated.' ... SEC [IG] David Kotz said he was 'surprised and disappointed" by the decision", my emphasis, Kara Scannell at the WSJ, 8 November 2008.
Whenever my "favorite" Fed, MJW comes up, I assume I have a "target rich" environment. Hey MJW, get the joke, "target", like "target notice" sent to persons under federal investigation? Just checking. Wouldn't want to overtax your intellect. I remember your using your office in 1997, improperly in my opinion, to derail Manhattan DA Morgenthau's prosecutions, a man I disagreed with from time-to-time, but who I believe to be incorruptible. Unlike the SDNY's AUSAs and US Attorney. MJW, why worry about "scalps" now? What did you do as US attorney for nine years? Had you taken more "scalps" of "persons of consequence" to use Frank Kafka's term, we might not be in this mess today. But had you, you might not be back at Debevoise and Plimpton (D&P). Can one's future employment prospects at "Justice" influence his exercise of "prosecutorial discretion" today? Yes, MJW, we want scalps. How about starting with John Mack (JM)? I'm sure if Mike Garcia's (MG) successor spends even the $9 million spent to prosecute Martha Stewart for nothing, he can find something to incarcerate JM for. No, MJW, we need not distinguish anything. Save your comment for jury closing argument. I say, paraphrasing Franklin Delano Roosevelt, "Investigate and investigate, indict and indict and convict and convict". No deals, no quarter; public jury trials. MJW "allowed" someone to cop a plea instead of letting Morgenthau try the case. Why? Did you protect someone Mary? Come on, don't be shy. Tell us all about it. If so, who? "Diminishes their seriousness?" What does that mean?
What's going on here, given the SDNY US Attorney's office history of questionable, in my opinion, prosecutorial decisions? I surmise MG realized with Bush's approval rating at about 20%, his office had little credibility and he "rented" some from Andrew Cuomo (AC). AC, watch your back when in bed with the "White-Garcia Mob". If you have designs on New York's governorship, following Thomas Dewey, your involvement with this "operation" could end your political career. Why did MG pursue Eliot Spitzer? Why did MG expend federal prosecutorial effort on that? AC, watch yourself and assume nothing in dealing with these characters.
The federal "revolving door" revolves once more. According to her biography at D&P's website, MJW graduated from Columbia Law School in 1974. She was Judge Marvin Frankel's law clerk, then worked for D&P from 1976 to 1978. She was a SDNY AUSA from 1978 to 1981. From 1983 to 1990 MJW was a D&P litigation partner. From 1990 to 1993 she was with the Brooklyn US Attorney's office, 1993-2002, SDNY US Attorney, then back to D&P. "White's practice concentrates on internal investigations and defense of companies and individuals accused of involvement in white collar corporate crime, of [SEC] and civil securities law violations, and of other major business litigation disputes and crises. For her criminal work, she leads a Debevoise team that includes ten former Assistant U.S. Attorneys with extensive experience in major commercial investigations and prosecutions. Ms. White's recent representations of public record include: ... A Special Committee of the Board of Tommy Hilfiger which conducted an internal investigation in connection with a federal criminal investigation resulting in a decision by the US Attorney for the [SDNY] not to criminally prosecute the company. ... Under Ms. White's leadership, the [US] Attorney's Office for the [SDNY], sucessfully investigated and prosecuted numerous cases of national and international significance", my emphasis. Doesn't this give you warm and fuzzy feelings and increase your confidence in the SDNY US Attorney's Office? We don't know who MJW declined to prosecute or why? Do we? I would have liked the SDNY US Attorney's Office to have indicted Tommy Hilfiger, but MJW's biography is apparently a D&P sales tool aimed at prospective clients, "See, Tommy Hilfiger wasn't indicted, you won't be either. Trust us, we have CLOUT where it counts". Is this what D&P is saying? MJW's D&P biography reminds me of Monty Python's Flying Circus, "Snap snap, grin grin, wink wink, nudge nudge, say no more". MJW's D&P team "includes ten former Assistant U.S. Attorneys" I thought, "Hmm, could an enterprising, fearless go-for-broke, politically inclined AUSA with brass cojones use this as an "admission against interest' or a a co-conspirator statement after a James determination? More from MJW's D&P biography, "When [MJW] left her post as US Attorney for the [SDNY] in January, 2002, she was acclaimed for her nearly nine years as the leader of what it widely recognized as the premier US Attorney's office in the nation". By whom? MJW never prosecuted anyone at Kidder Peabody or GE for 1994's Joe Jett debacle did she? Under the most charitable interpretation I can credit, MJW never figured out what happened at Kidder. Under less charitable interpretations, duh.
The SEC is hopeless, top to bottom. An administrative-law judge fined Joe Jett $8.4 million for nothing, my 12 September 2007 post, and Thomsen walks! A travesty. Thomsen knowingly and wilfully released information. That she did not gain, nor did it frequently (how often is "frequently"?) nor maliciously is irrelevant. Isn't it? Suppose one commits a murder. Will he be prosecuted for "only one time"? Is motive an element of crime? I thought mens rea refers to intent to commit the act, not whether or not one intended to break the law by virtue of the act. "Whoever corruptly, or by threats of force, or by any threatening letter or communication influences, obstructs, or impedes or endeavors to influence, obstruct or impede the due and proper administration of the law under which any pending proceeding is being had before any department or agency of the [US], ... Shall be fined under this title, imprisoned not more than 5 years or, ... or both", 18 USC 1505. Could an aggressive AUSA shoehorn MJW's actions into an indictment under this statute? Maybe. I think it's worth a shot. Besides, the peasants would love seeing a former US Attorney and SEC enforcement chief indicted. The SDNY US Attorney's office could turn the trial into a big moneymaker on pay per view. Why not, people pay millions to see pay per view fights? UFC is on pay per view. Why not US v. White and Thomsen? The Las Vegas bookmakers could take bets on which counts would yield convictions. Then on the sentence length. Hundreds of millions could be made.