Sunday, February 1, 2009

The SDNY Cesspool

"It's no defense for an executive who bends the truth to say that he did so only to prevent a run-on-the-bank-type situation, says one criminal-defense lawyer. (The lawyer requests anonymity because in this climate, he notes, such an on-the-record statement might lose him some business opportunities). ... Today's crisis has placed under the forensic microscope scores of reassuring assertions made by CEOs and CFOs during earnings calls or 'investor day' gatherings or breezy, on-camera flirtations with Maria Bartiromo that have proved, sometimes within hours, breathtakingly off the mark. ... So there's an angry mob with pitchforks assembling, and they want to see some heads on spikes. While former Enron CEO Jeff Skilling could at least try to have his case transferred out of Enron-devasted Houston, the credit-crisis targets will have no such card to play. ... 'This is the ugliest enforcement environment I've ever seen in my professional career,' says one criminal defense lawyer, who also asks for anonymity. ... Accordingly, Carl 'Chip' Loewenson Jr. [CCL], co-head of Morrison & Foerster's [M&F] white-collar defense unit in New York City, sees an impending collision of two powerful opposing forces. 'No one--not-Fannie, not Freddie, not Lehman, not AIG, not ... Cox, not ... Bernanke--thought it would get as bad as it has gotten,' he says. "This weighs against proving criminal intent.' ... The job of prosecutors is not to ferret out the root causes of what went wrong with the economy. That's a task for historians. The prosecutors are to look for unambigous, intentional wrongdoing--and since a lay jury will be the official scorer here, the simpler the wrongdoing, the better. While it might be true, for instance, that investors were misled by the way companies handled mark-to-market accounting of derivatives, a prosecutor who makes that the centerpiece of his case will end up with a swearing contest betweeen opposing accounting experts--a morass in front of a jury. ... It does not appear that the subsequent near collapses of Wachovia and Citigroup--each once unimaginable in itself--has yet triggered any criminal scrutiny at all", my emphasis, Roger Parloff (RP) at Fortune, 19 January 2009.

Did "anonymous lawyer one" advise his clients to prevaricate? Isn't it terrible? A company with US traded stock has fraud victims all over the US. Thus no change of venue makes sense. If this is the "ugliest enforcement environment" "anonymous lawyer two" ever saw, how lax has enforcement been up to now and still is? Do the SDNY US attorney's office and NY BigLaw still play musical chairs? It looks like business as usual in Manhattan. How does CCL know what others knew? CCL, tell a jury this in closing argument. CCL, I think you are full of crap. If Bernanke saw this economic devastation 24 months ago, would he have said it? Your defense: "All these guys were stupid, so is my client". Fool or knave is for the jury. CCL, "How do we know when the chairman of the Fed is lying? Every time he moves his lips", Barron's 1979 joke. Will you CCL, move to disqualify every venireman who reads Barron's? How will that play on page one of the WSJ, NYT, etc.? Go for it! The NY Daily News headline will read, "Defense Attorney Wants Dummy Jurors"! You got those balls? I agree, Cox and others' statements are admissible on this issue. So? They are no element of securities, mail or wire fraud, so no basis to dismiss an indictment. RP, this is terrible reporting. What does the NY BigLaw-SDNY US attorney's office complex (NYBL-SDNY-C) fear? Federal criminal law's Mike Nifongization! No more squashed prosecutions paid for in NY BigLaw partnerships; NY BigLaw unwilling to be seen with DOJ personnel for fear someone will catch the meeting on a cell phone camera and post it on the internet; no off-the-record discussions of anything; lost "process" control. A "process" that sent Craig Gile, my 25 June 2008 post to prison, link: The "process" did not indict anyone at Citigroup over the $49 billion SIV accounting fiasco, my 15 December 2007 post, link: Well Dassin, how about it? Here's two "names" for a start, Bob Traficanti and Sally Krawcheck. Well Dassin? If I wrote the indictments for you, would you pursue them? Even better, Citigroup's $800 million Old Lane purchase. Phew! The jury just need conclude Old Lane was bought pursuant to to a scheme to pay Vikram Pandit. This looks like a slam dunk Dassin. We want adversarial lawyering to replace the NYBL-SDNY-C 30-year kabuki dance. We peasants want no more NYBL-SDNY deals "in the interest of justice", i.e., the DOJ's interest! We want open jury trials. Dassin, who do you work for anyway? Will a lay jury be "the official scorer"? It depends on what Dassin & Co. keep from the jury. I take nothing that comes from the NYBL-SDNY-C at face value. What are you talking about RP? I have long believed Citigroup insolvent. Citigroup is still with us because of the Fed bailout. RP, I accuse you of uncritical reporting, or of being a knowing stooge of the NYBL-SDNY-C. What say you? See my 9 November 2008 post, link:

Having seen CCL's quote I looked at M&F's website. CCL has his two Ivy League degrees, AB Princeton 1979, JD Yale, 1983. He was a SDNY AUSA from 1985 to 1990. MJW was a SDNY AUSA from 1978-81 and in private practice from 1983-1990. I'll bet you two are BFFs. CLL, did you ever represent plaintiffs in a securities fraud class action case? Did I miss that in your M&F bio? M&F's "Practice Group Brochure" reads, "For decades, in jurisdictions around the country, we have successfully represented issuers and their officers and directors in private securities litigation, including class actions and derivative suits. We also have extensive experience in class action and derivative litigation. Many of our victories are reflected in published judicial decisions that have shaped the law. We have also regularly represented issuers and individual officers and directors in civil and criminal government investigations and litigation, including enforcement actions brought by the SEC, the Criminal Division of the Justice Department, and various state Attorneys General. ... Our Securities Litigation, Enforcement and White-Collar Defense Practice Group includes more than 150 attorneys and other professionals in our 17 offices worldwide. The Group includes prominent attorneys with decades of experience, four former state and federal criminal prosecutors and former SEC enforcement attorneys". I'll bet.


Anonymous said...

Hopefully the mobs will dreg them kicking a screaming out of the temple and tar and feather then hang them all.

Anonymous said...

Errr... good use of the term "Cesspool"... Wikipedia sayeth:

In the UK a cesspit is a sealed tank for the reception and temporary storage of sewage; in America this is simply referred to as a "holding tank".

Because it is sealed, the tank must be emptied frequently — in many cases as often as weekly.

Because of the need for frequent emptying, the cost of maintenance of a cesspit can be very high.