FIFA Indictments, Corporate Compliance, Alfred Kinsey and Robert Lee

Shaving too close.

Shaving too close.

Law360’s Zachary Zagger has a nice piece on the FIFA prosecution and quotes, among others, Jack Sharman:

“Given this many defendants and the fact that there is going to be at least some who are going to cooperate, it would not surprise me if there wasn’t a second wave of charges or people coming out of the woodwork, people you have not heard of yet,” said Jackson R. Sharman III, a white collar criminal defense attorney with Lightfoot Franklin & White LLC.

“If it is going to survive, it is going to have to have a more rigorous compliance structure than some of the items that have come across thus far,” Sharman said suggesting that it may need to create something like a corporate board of directors or an inspector general-type official to address compliance issues directly.

Here is a link to the full article:  3 Things To Watch Out For In The FIFA Corruption Case

Compliance drill.

Compliance drill.

We have spoken with the Wall Street Journal previously about the FIFA case: FIFA Indictments and the Notion of Global Compliance:

Jackson Sharman, a white collar specialist at Lightfoot, Franklin & White LLC, says that the case shows that the notion of a swelling, global compliance culture may be exaggerated. Attorneys and compliance professionals often make the mistake of believing their concerns about bribery are representative of the organizations where they work, he said. “It’s dangerous to assume that a legal regime is being internalized by everybody, because clearly it’s not,” Mr. Sharman said. “Assuming that others think the same way as you think can be fatal.”

Setting others aside, it can also be fatal to your enterprise if you fail to understand how you going about thinking through compliance questions.

Robert Edward Lee

Robert Edward Lee

Much has been made recently of Confederate images and names.  On the compliance front, I invoked Robert E. Lee last year in a post about McKinsey, General Lee and the Culture of Compliance:

Except perhaps for “paradigm” and “silo,” the word “culture” is one of the most abused in the vocabulary of compliance, ethics and consultants.  (I once heard a consultant say that he needed “a high hover over the silos.”  I thought it an ironic mash-up about drones and agriculture; it was not).  Yet, “culture” has a meaning in the broader world; in commerce; and in compliance.  “Culture” represents a gear-shift in compliance and ethics, and can be smooth or bone-rattling.

 

Not Robert Edward Lee.

Not Robert Edward Lee.

(For the careless reader, note that the title refers to McKinsey, the consulting firm, not to Alfred Kinsey, the sex researcher).

 

 

Global or domestic, “compliance” comes in three flavors — criminal, civil and regulatory.  Sometimes, you get a mouthful of all three at once.

Why is that?  And, what to do about it?

A few thoughts here:

 


FIFA Indictments and the Notion of Global Compliance

Well played?

Well played?

In an article by Joel Schectman for the Wall Street Journal and its “Morning Risk Report,” Jack Sharman is interviewed about the idea of a global compliance regime in light of the recent indictments of FIFA officials:

Jackson Sharman, a white collar specialist at Lightfoot, Franklin & White LLC, says that the case shows that the notion of a swelling, global compliance culture may be exaggerated. Attorneys and compliance professionals often make the mistake of believing their concerns about bribery are representative of the organizations where they work, he said. “It’s dangerous to assume that a legal regime is being internalized by everybody, because clearly it’s not,” Mr. Sharman said. “Assuming that others think the same way as you think can be fatal.”

Read the full article here: The Morning Risk Report: FIFA Allegations Shows Old School Bribery Lives On

Compliance drill.

Compliance drill.

There will doubtless be much fodder for discussion in the FIFA cases — bribery, FCPA, jurisdiction, cooperation and many more issues — but here here is a good place to start.


ABA White-Collar Crime Committee Winter/Spring 2014 Newsletter

Suit looks tight.

Suit looks tight.

Here’s the ABA White-Collar Crime Committee Winter Spring 2014 Newsletter.

 

 

 

 

Good articles on:

  • INTERNATIONAL WHITE COLLAR CRIME AND DEFERRED PROSECUTION AGREEMENTS
  • CORPORATE COMPLIANCE PROGRAMS IN THE UNITED STATES AND IN ITALY:
    ARE THEY THE SAME?
  • GIVE ME BACK MY BOOKS AND RECORDS: APPLICATION OF RULE 41(G) IN RESPONSE TO FEDERAL SEARCH AND SEIZURE WARRANTS
  • HOT ISSUES IN CIVIL ASSET FORFEITURES
  • THE BOARD’S ROLE IN ANTI-CORRUPTION COMPLIANCE: GUARDIAN AND GUIDE
  • SEC ARGUES FOR BROAD CONSTRUCTION OF DODD-FRANK ACT
    WHISTLEBLOWER ANTI-RETALIATION PROVISION
  • DOES THE GREEN LIGHT MEAN GO?: WILL SEC’S NEW RULES FOR SMALL OFFERINGS INCREASE STATE ENFORCEMENT ACTIONS?
  • NEW PROPOSED RULES INCREASE GOVERNMENT CONTRACTORS’
    RESPONSIBILITIES FOR PREVENTING HUMAN TRAFFICKING
Thoughtful.

Thoughtful.

We have written on several of these issues, as well, including deferred prosecution agreements.

 


Criminals In Ties: Contract Law and Reservoir Dogs

Mephibosheth and David.

Mephibosheth and David.

The interplay between law — especially criminal law — and theology is more subterranean and nuanced than many give it credit for.  The same is true of civil law, as here:  Contract Law and Reservoir Dogs

A contract is an exchange of promises: “I promise to do x if you promise to do y.”  Each party must undertake an obligation—called “consideration”—for the contract to be binding.  A simple unilateral promise with no consideration (“I will give you my car on Monday”) is not usually binding.  These law-rules about obligations in our daily lives provide a contrast to the covenant that the Lord makes with David and to the way that David treats Mephibosheth, Jonathan’s son.

Off to compliance training.

Off to compliance training.

Tarantino’s Reservoir Dogs (1992), of course, shaped an entire generation of criminals-in-ties on film.  We have discussed crime and theology before, at Spare the King and Seize the Spareribs, in what may be the only paragraph in English to discuss both King Saul and John D. MacDonald’s fictional private eye, Travis McGee.


Dude, That’s My Lighter: Lacrosse, Suspensions, the Fourth Amendment and the White-Collar Thanatos of Zero Tolerance

Early adopters.

Early adopters.

The relationship between lacrosse and white-collar crime is not obvious, although for much of its 20th century history the sport was powered by mid-Atlantic and New England prep-school products whose high schools also provided several All-American rosters of white-collar defendants.  And even for perfectly lawful activities, there has long been a close relationship between lacrosse and Wall Street, as shown in this 2008 Wall Street Journal article about how On Lacrosse Fields, A Battered Bank Is Still a Player

The story of how these Maryland lacrosse players’ case moves into court  raises some curious insights, though, into matters of compliance and internal policing, not to mention Fourth and Fifth Amendment issues that can figure prominently in white-collar trials:

Families of two former Maryland high school lacrosse players have filed a federal civil rights lawsuit against school officials alleging that the teens were suspended for having dangerous weapons after an unconstitutional search of their equipment bags turned up two small knives and a lighter.

The lawsuit alleges that school officials in Talbot County, on Maryland’s Eastern Shore, violated the students’ constitutional rights to due process and their protections against unreasonable search and seizure in 2011 when they boarded the team bus to investigate a tip about alcohol and took action against the teenagers for items the students said they used to maintain their lacrosse equipment.

The Leatherman.

The Leatherman.

The items were a lighter and a knife.

Leftover from a Doobie Brothers concert (1978).

Left over from a Doobie Brothers concert (1978).

The suspensions were reversed by the state board of education, and the players filed a federal civil rights action:

The Maryland State Board of Education ruled against the school system in 2012 and ordered that the students’ records be cleared of the incident. The state’s decision was a rare reversal of student punishment and appeared to be in opposition to the zero-tolerance policies that have taken hold in schools across the country.

Lawyers with the nonprofit Rutherford Institute, a civil liberties advocacy firm, filed the lawsuit last month in U.S. District Court in Baltimore, seeking monetary damages from the Talbot County school board and four current or former school officials. It comes at a time when U.S. Education Secretary Arne Duncan has urged that out-of-school suspensions be used as a last resort for school-related incidents.

Before we recoil from the lighter and the knife, and begin to mutter about terrorism, consider this:

No alcohol was found, but during the search, Graham Dennis, then a 17-year-old junior, volunteered that he had a small knife, which he used to fix his lacrosse sticks, inside his gear bag.

School officials took the knife as well as a Leatherman tool they found and called police. The teenager was led away in handcuffs and suspended for 10 days.

A teammate, Casey Edsall, also a 17-year-old junior at the time, was suspended for having a lighter in his gear bag. The teenager said it was used to seal the frayed ends of strings on his lacrosse stick.

In its 2012 ruling, the Maryland board [i.e., the panel that reversed the school’s decision] said knives and lighters don’t belong at school but concluded that “this case is about context and about the appropriate exercise of discretion.”

The state board said the coaching staff had tacitly approved the use and possession of the items and that players had openly used them on the bus.

The facts are relatively obvious; their implications, less so.

High school varsity, but lacking Wi-Fi.

High school varsity, but lacking Wi-Fi.

First, students should not have lighters and knives at school.

Second, knives and lighters are frequently necessary to work on lacrosse heads and their stringing.  For a YouTube video on the subject by a mildly-hungover guide, try YouTube Burning String Tips

Third, the school — through the actions of the coaches — approved the open use of knives and lighters on the bus.

The decision of the Maryland state school board is appropriate.  For us, though, it is the board’s note about “context” and the “appropriate use of discretion” that is pertinent both for the thanatos of internal compliance and for the sometimes over-reaching character of white-collar criminal investigations and prosecutions.

(As a refresher: “Thanatos,” a minor Greek deity and the son of Nyx, was the personification of death.  The word now refers to an impulse towards death or self-destruction).

Whose street?  And, does the defendant live on it?

Whose street? And, does the defendant live on it?

First, both the sport and Wall Street have had bad press that at times have made them targets for politicians, activists and prosecutors of all stripes — sometimes with justification, sometimes not.

No doubt, lacrosse has had a tumultuous recent history, starting with the Duke lacrosse case  in which players were falsely accused of rape.

The burden of proof and a university's shameful behavior.

The burden of proof and a university’s shameful behavior.

That case ended with the prosecutor’s suspension and surrender of his license to practice law after an ethics complaint against him.

Prosecutor Michael Nifong

Prosecutor Michael Nifong

Separately, there was later a murder charge against the woman who falsely accused the Duke players, a charge of which she was convicted.  More recently, a member of the University of Virginia men’s lacrosse team murdered a member of the Virginia women’s team.

 

Second, “zero tolerance” is an antonym to “context.”  Context — the business, social, cultural and ethical landscape in which a person operates — is precisely what many compliance programs and white-collar investigations lack.  As in the Maryland lacrosse-suspensions matter, a policy of “zero tolerance” is a often a cover for something else (especially the fear of civil, administrative or criminal liability) other than solicitude for the people, institutions or values that are offered in justification of the policy.

Third, an appreciation of “context” would introduce the concept of proportionality, whether externally (for example, in grand jury investigations) or internally (for example, in compliance-program investigations).  The former investigations are distorted by the fact that many (perhaps most) of the folks at the levers of white-collar investigations have little or no experience of the industries, professions and services being investigated.  Without such experience and context, it is understandable that one tends to see a Red under every bed.

"Senator McCarthy, the compliance staff is ready to meet."

“Senator McCarthy, the compliance staff is ready to meet.”

The latter investigations are distorted by the business internal impulses and pressures under which they operate.  A compliance investigation that leaves significant risk on the table is a failed compliance investigation.

In fairness, though, at times the internal compliance investigation can suffer from over-familiarity, and can fail to see the customary as also potentially criminal.

Alger Hiss at the CrossFit breath-holding competition.

Alger Hiss at the CrossFit breath-holding competition.

And, of course, there are plenty of actual criminals, some of them of distinguished pedigree, even if those investigating and accusing them are clumsy.

Fourth, just as we have an odd body of Fourth Amendment law within the schoolhouse door, we have too casual a view within the corporate boardroom of Fourth Amendment protections.  Much as businesspeople shrink from asserting their Fifth Amendment rights, however wise such an assertion might be, they tend to think of the Fourth Amendment as the province of drug dealers, terrorists, pornographers and the faculty of Harvard Law School.  Both views arise from the otherwise common-sense notion that, “if you have nothing to hide,” why not testify, or be searched?  The “nothing to hide” rationale fails in the context of most white-collar crime, however, because what incriminates is intent, rather than the object or statement itself.  A loan application can contain an error, or it can be a false statement.  A check can be a commission or a kickback.

Burn here.  And here.  And there.

Burn here. And here. And there.

Such considerations come into play in most compliance and white-collar investigations, even those less important than burning the ends of the shooting strings on your lacrosse stick.

Dude.


McKinsey, General Lee and the Culture of Compliance

Except perhaps for “paradigm” and “silo,” the word “culture” is one of the most abused in the vocabulary of compliance, ethics and consultants.  (I once heard a consultant say that he needed “a high hover over the silos.”  I thought it an ironic mash-up about drones and agriculture; it was not).  Yet, “culture” has a meaning in the broader world; in commerce; and in compliance.  “Culture” represents a gear-shift in compliance and ethics, and can be smooth or bone-rattling.

McKinsey

McKinsey

Consider this story about  McKinsey’s culture in the wake of insider-trading scandals:

For a quarter of a century, except for a brief stint as a currency analyst at Rothschild, Mr. Barton has worked at McKinsey, the consulting firm with more than 1,400 partners and 18,500 employees around the world. And that is why he is facing the most daunting task of his career: as McKinsey’s global managing director, he is trying to change the culture of the firm that shaped him.

There are two reasons that Mr. Barton is on this mission: Anil Kumar and Rajat K. Gupta. Mr. Kumar was a McKinsey director who, in 2010, pleaded guilty to insider trading charges and publicly acknowledged giving corporate secrets gleaned on the job to Raj Rajaratnam, a founder of the Galleon Group hedge fund, in return for cash. Never in the history of the firm had a partner been charged with violating securities laws.

A year after the Kumar scandal, the Securities and Exchange Commission filed a civil complaint accusing Mr. Gupta, a Goldman Sachs board member and former McKinsey managing director, of telling Mr. Rajaratnam about a $5 billion investment in Goldman by Warren E. Buffett’s Berkshire Hathaway at the height of the financial crisis. Mr. Gupta, a revered former partner who had been elected managing director three times in a row, serving at the helm for a decade, was ultimately convicted of criminal charges of leaking boardroom business. He awaits the outcome of his appeal, even as insider trading charges continue to occupy prosecutors. The trial of Mathew Martoma, a former trader at SAC Capital Advisors, run by Steven A. Cohen, started last week in Manhattan, not long after another SAC trader, Michael S. Steinberg, was convicted of trading on corporate secrets. SAC itself pleaded guilty in November to violating insider trading laws.

So where does that lead Mr. Barton?

At McKinsey, Mr. Barton has been trying to prevent another disgrace: a “third man,” as some have put it. McKinsey is known for what it calls its culture based on values and trust — a culture that was created and nurtured by Marvin Bower, its longtime managing director. The values that Mr. Bower instilled included putting the clients’ interests above the firm’s, providing independent advice and keeping confidences. These ideas were imparted from one generation to the next, mentor to apprentice. But after Mr. Kumar’s arrest in late 2009, Mr. Barton, who had been elected to head the firm just months earlier, decided that the honor-driven, values-based system was not enough. What the firm needed was some rules.

“We needed more safety moats around the castle,” he says. “We have this values/trust culture. I get that. Now we have a little more edge.”

The rest of the article details why some in the firm think this a great idea while others pan it.

Multiple rules in the compliance handbook.

Multiple rules in the compliance handbook.

Given the size and diversity of his organization, I applaud Mr. Barton.  For better or for worse, if there is no more “values/trust culture” to be poured in from the top, then the only reasonable thing to do is add “a little more edge.”  Like edging your lawn: it seems to grow luxuriantly by itself, but you don’t want grass clogging the sidewalk.

On the other hand, rules — especially rules that are applied to thousands or tens of thousands of employees, perhaps in dozens of countries — are blunt instruments.  They hack at the lawn, rather than trim it.  In addition, people sometimes revolt against the governing values, but they always revolt against the governing rules.  Finally, the rules do a much better job of describing how you transgress than how you non-transgress.

The Collonade.

The Colonade at W&L

Consider the example of my alma mater, Washington & Lee University in Lexington, Virginia and the Honor System created by President (formerly General) Lee:

The mid-1800s saw the development of honor systems at many colleges. Lee replaced the elaborate disciplinary rules of Washington College by a single standard: “Every student must be a gentleman.” He intended for the young men under his charge to acquire a sense of responsibility based on truth, honor, and courtesy. Lee also placed a premium on civility and spoke to each student as he passed him on campus, encouraging by his example the same show of respect between students.

Today’s honor system, administered by students, has been a unique feature of Washington and Lee University for well over a century. It is based on the fundamental principle of mutual trust among students, faculty, and staff that students attending Washington and Lee will not lie, cheat, steal, or otherwise act dishonorably. With the rule of civility, exemplified by the W&L “speaking tradition,” Lee’s legacy of honor continues to permeate academic and social life at Washington and Lee University and serves as a model nationwide.

 

An Honor System works well at W&L and poorly at many other universities for several reasons.  Some of those reasons illumine the strengths and weaknesses of many corporate compliance programs.

Robert Edward Lee

Robert Edward Lee

First, as implied above, it is a system, not a code:

Young gentleman, we have no printed rules here.  We have but one rule and that is that every student must be a gentleman.

— Robert E. Lee to student Wallace E. Colyar (1866)

Although there are more rules and regulations today in Lexington than there were formerly, the Honor System coalesces around a concept (‘honor”) rather than dividing between thou shalts and thou shalt nots.  Despite lip-service to soft concepts in compliance programs, most come down to crypto-Scriptural commands.

Second, the Honor System is single-sanction.  There is one penalty — dismissal — without regard to the severity of the offense.  In other words, it does not seek proportional justice.  Most corporate compliance officers who tried a single-sanction system would get fired.

Third, it marries two starchy concepts: “honor” and “duty.”  President Lee cherished the latter as much as the former:

The forbearing use of power does not only form a touchstone, but the manner in which an individual enjoys certain advantages over others is a test of a true gentleman.

The power which the strong have over the weak, the employer over the employed, the educated over the unlettered, the experienced over the confiding, even the clever over the silly–the forbearing or inoffensive use of all this power or authority, or a total abstinence from it when the case admits it, will show the men in a plain light.

The gentleman does not needlessly and unnecessarily remind an offender of a wrong he may have committed against him. He cannot only forgive, he can forget; and he strives for that nobleness of self and mildness of character which impart sufficient strength to let the past be but the past. A true man of honor feels humbled when he cannot help humbling others.

“Duty,” for many employees in highly-diversified, extremely large global organizations is a term roughly co-extensive with “pay.”

Fourth,Washington & Lee is a liberal-arts college, not the org-chart Tower of Babel that many large-company compliance officers must deal with.  Coalescing around a concept (like “honor” or “duty”) rather than submitting to a rule or a checklist is easier when at least a core group is composed of individuals who possess more experiences, taboos, creeds and rituals that unite them than divide them.  (Or, at a minimum, they perceive such to be the case).

Corporate compliance programs cannot readily have the grace of the Washington & Lee Honor System — much as (a biased alumnus says) the corporate officer, director or employee without the benefit of a W&L education cannot readily have the grace of a W&L alum.  Both require work; both produce imperfection.  But, as the effort of McKinsey’s Mr. Barton demonstrates, both are commendable.

 


It’s Only A Fine

(Here, there and everywhere)

(Here, there and everywhere)

One would expect fines In civil and criminal enforcement actions to bear some relationship to both the offensive conduct and the statute that authroizes the fine, but that’s rarely the case.  Rather, they’re the product of strategy, tactics, raw power and solid horse-trading, as outlined by Professor Peter J. Henning: Fines, Without Explaining How They Were Calculated

In particular, Professor Henning notes:

For an individual, it is difficult to resist the broad authority granted to the S.E.C. to impose significant monetary penalties. For companies, the civil penalty is more a matter of how much they are willing to pay because limitations on the amount of a penalty seem to be largely irrelevant to the final settlement.

When JPMorgan paid a $200 million penalty to settle the S.E.C. case related to the London whale trading, it acknowledged violating the books-and-records provisions of the securities laws by not properly reporting the losses in its chief investment office. The bank lost over $6 billion from the transactions, something shareholders had to bear on top of the civil penalty.

It is difficult to see how the penalty relates to the statute authorizing a maximum penalty of $800,000 for each violation, especially when the case did not involve any claim of fraud or reckless conduct. JPMorgan was unwilling to fight the S.E.C., which described only a limited set of violations but still extracted a substantial penalty.

When the government agrees to a settlement imposing civil penalties on a company, the amount appears to have been reached through negotiation without any effort to explain how the payment was calculated. Of course, the beneficiary is often the United States Treasury because some penalties, like the $2 billion for the mortgage securities settlement, go straight to the government’s coffers.

A few more fines before quarter's end?

A few more fines before quarter’s end?

The bounty aspect noted in the last sentence is a strong undercurrent.  Where scalps help the agency budget, there’ll be more scalps.


Tuomey, Stark, FCA and Advice of Counsel

This has been a long saga, even by FCA standards: Judge orders Tuomey to pay $276.8 million for Stark, False Claims Act violations (via ModernHealthcare.com).

In summary:

A federal judge ordered South Carolina’s Tuomey Healthcare System to pay $276.8 million for violating laws that bar hospitals from paying doctors to refer Medicare patients for treatments.

On Tuesday, U.S. District Judge Margaret Seymour ruled against Tuomey (PDF) on virtually every post-trial issue and granted the government’s request to impose $39.3 million in Stark penalties and another $237.5 million in False Claims Act fines. Seymour also rejected Tuomey’s attempts in legal filings to nullify the verdict.

The damage amount is believed to be the largest of its kind against a community hospital in U.S. history, involving more than 21,000 Medicare claims that a jury said violated the Stark law and the False Claims Act. The claims were worth a total of $39.3 million.

Here’s the post-trial order and opinion.  Note especially the discussion of the jury’s rejection of the advice of counsel defense.  If you retain a lawyer, you have to be careful about terminating the relationship.

 


Deferred Prosecutions and Decisions Not To Indict

Two recent articles in @Dealbook are worth noting because of their discussion of what goes into two very important parts of the American enforcement system: deferred prosecution agreements and a prosecutor’s decision to not indict.

File:BigBenAtDusk.jpg

In For a Better Way to Prosecute Corporations, Look Overseas,  Brandon L. Garrett (a professor at University of Virginia School of Law) and David Zaring (an assistant professor of legal studies at the Wharton School of the University of Pennsylvania) discuss the spread abroad of an American idea — the deferred prosecution agreement:

The favored new tool of the corporate prosecutor, the deferred prosecution agreement, is being actively exported to other countries. In these agreements, prosecutors allow large corporations to avoid a criminal prosecution entirely by agreeing to pay a fine and adopt reforms. Five years after the financial crisis, many doubt whether prosecutors have taken business crime seriously enough, and some of the blame is laid on lenient deferred prosecution agreements.

We can learn some lessons about how to better hold corporations accountable for crimes, though, from the way these types of prosecution agreements are now being used across the globe. After passing detailed legislation approving their use, the British government has circulated plans for a potentially more rigorous deferred prosecution agreement program.

One should note, however, that DPAs are not cakewalks for companies, and that they represent a great savings in prosecutorial resources (as well as allowing the Government to declare victory and go home, when it might be otherwise faced with a difficult case of proving criminal intent.

 

Open handcuffs

“Intent” is addressed in On JPMorgan and What Makes a Criminal Case,  by Peter J. Henning, a professor at Wayne State University Law School, focuses on the unreviewability of decisions not to prosecute:

The case of the so-called London Whale presents an interesting contrast in how the government pursues corporate wrongdoing. While two lower-level employees of JPMorgan Chase were formally indicted last week for their role in the credit derivatives trading that caused over $6 billion in losses, the bank itself faced only civil charges that it settled by paying $920 million. No higher level individuals were accused of violations.

The easy explanation, of course, is that the wealthy and powerful avoid their comeuppance while those less fortunate face the wrath of prosecutors. This is a common refrain when the law is enforced against some, but not others who appear to be in the same situation, whether it be mom-and-pop stores accused of food stamp fraud or drug laws used primarily against the urban poor.

The fact is that prosecutors and the police have enormous discretion over whether to bring charges against someone, with a decision not to charge a crime virtually unreviewable by the courts. The American criminal justice system puts enormous faith in those who decide how the criminal law is enforced because prosecutors do not have to disclose what went into their decision not to pursue charges.

. . .

So what standard makes a case criminal rather than civil, and when should individuals be accused of misconduct or allowed to avoid charges? The answer is left up to the prosecutor, who decides whether there is enough evidence and what is the best use of available resources.

There is no realistic prospect of judicial review of a decision not to file charges. In Inmates of Attica Correctional Facility v. Rockefeller, a case arising from the Attica prison riot in 1971 in which federal prosecutors did not file civil rights charges for the death of inmates, the United States Court of Appeals for the Second Circuit found that “the manifold imponderables which enter into the prosecutor’s decision to prosecute or not to prosecute make the choice not readily amenable to judicial supervision.” That means there is no recourse if the prosecutor decides not to pursue a case, unless another office steps in and decides to file charges on its own.

The lack of transparency over a decision not to file charges benefits those who were investigated. If prosecutors had to explain why charges were not filed, such a statement could cause significant harm to a person’s reputation with no readily available means to rebut any claimed misconduct.

Yet it remains disquieting when the same actions result in criminal charges for some but only a civil case for others, and no individuals are held responsible for misconduct at a company. In the end, we are left to trust that prosecutors have made good decisions.

Although it would be interesting to learn, on a record before a judge, why some people and companies are charged and others not, the reputational, personal and economic harm would be enormous.


Weekend: GCs on Boards and Gin in Ice

 Notes For the Weekend:

 

I tend to agree:  No, General Counsels Should Not Be On The Board.  The conflicts can be too great.  GCs sometimes have a hard enough time, as it is, being honest brokers and, as the saying goes, speaking truth to power.

Especially good corruption, bribery and FCPA collection from Corruption Currents  (via@WSJRisk).

 

 

 

 

 

 

 

500 Pearl St. logo

As always, a good summary of white-collar news from @WaltPavlo and 500 Pearl Street.

 

And finally . . .

The best “coffee-table” book I have read on martinis is The Martini: An Illustrated History of an American Classic by Barnaby Conrad III:

A chilled, crystal glass; the purest gin; a touch of dry vermouth–vigorously shaken, not stirred–and a plump, green olive. The martini was and still is more than just a cocktail. Originally mixed in the nineteenth century, it became an American icon in the twentieth, and the favorite drink of such luminaries as Franklin D. Roosevelt, Winston Churchill, Jack London, and Ernest Hemingway. Bernard De Voto called the martini “the supreme American gift to world culture,” while H. L. Mencken declared it “the only American invention as perfect as a sonnet.”

The first book of its kind to explore the drink’s wide appeal, this volume serves up a fabulous cocktail of martini-inspired art, cartoons, collectibles, advertisements, and film stills that reveal how deeply this classic has permeated every aspect of American culture, from literature and film to politics and high society. Complete with bartending lore, traditional martini recipes, literary excerpts, memorable scenes from James Bond movies, and more, The Martini offers a toast to this intoxicating symbol of the American dream.