“Fantastic Lies” and Corporate Criminal Prosecution

When the past is dug up in documentaries (or docudramas), events are often sensationalized.  This practice is of long pedigree: Shakespeare was not above amping up an old story when it suited his needs.  Unfortunately, few filmmakers are at Shakespeare’s level, and the sensationalism ends up being no more than that.  The viewer has no better sense of the past than he did when he began.  The only sense the viewer has is the sense that she has been had.

30-For-30On the other hand, from time to time a documentary digs up the past but cools down the facts, making them approachable in a way that would have been impossible at the time.  The participants have aged or died; passions have cooled; and political or emotional scar tissue has formed.

Such is the latter case with the recently released ESPN “30 for 30” film about the Duke lacrosse case, Fantastic Lies.

 

Produced by Marina Zenovich with only a modest amount of cooperation from the players and their families and essentially no cooperation from anyone else, the film is superb. It is commendable for reasons of both art and entertainment, but there are lessons to be drawn from Fantastic Lies to the benefit of American corporations and business people who think they understand some of their most treasured institutions, including two at the heart of the film: the criminal justice system and the elite university.
No joy.

No joy. (AP Photo/Gretchen Ertl)

In case you have been lost in Donald Trump’s hair for the last dozen years, the Duke lacrosse case involved a group of varsity lacrosse players at Duke who held a party. Two strippers were paid to provide entertainment at the party.  One of them, an African-American woman named Crystal Mangum, claimed that she had been sexually assaulted, verbally abused and threatened with racist epithets.

The case ignited a PC firestorm and witch-hunt, a hunt that would have been academic tragicomedy were it not for the local district attorney in Durham, Mike Nifong, who indicted three players. The lacrosse coach was forced to resign, the season was canceled and the national media had a feeding frenzy.

Very attentive now.

Mr. Nifong, very attentive now.

Nifong was ultimately shown to have withheld exculpatory evidence that demonstrated conclusively that Mangum had not been assaulted by any person at the party.  He was disbarred, the players exonerated and lacrosse reinstated at Duke.

Zenovich tells the story almost exclusively through the combination of the words of the (relatively few) participants and witnesses who would speak with her, plus contemporaneous footage of court appearances, lacrosse games, social media posts and state bar disciplinary proceedings.  It is a narrative presented with skill, calmness and wonder at how such hysteria happens.

I have written about the Duke lacrosse case and white-collar crime problems before: Dear Colleagues All: University Discipline, Sexual Assault and The Department of Education and Title IX, University Discipline, Sexual Assault and Parallel Proceedings and The Old College Try, and The New College Tribunal.

Those observations were largely in the context of the much larger problem wrought by the federal Department of Education’s Office of Civil Rights (or “OCR”).  The OCR interprets (or misinterprets) Title IX to force colleges and universities to hold Star Chamber-like proceedings in matters of campus sexual assault.  (Consider this March 10, 2016 letter — Lankford Letter DOE Title IX — from Senator James Lankford (R-OK), Chairman of the Subcommittee on Regulatory Affairs and Federal Management, Senate Committee on Homeland Security and Governmental Affairs).

Setting aside the significant implications for students and universities, what can we take away as business people from Fantastic Lies?  Here are five thoughts to post in the break room:

Real charges can result from actual innocence.  Do not assume, because you have not done anything wrong, that you will not be charged with and convicted of a crime. Innocent people are charged with and convicted of crimes every month (and probably every week) across the country.  Prosecutors are not clairvoyant, and they are not divine even when they act in good faith. When they act in bad faith (which is rare), or when they are negligent, incompetent or just don’t understand the business events they are looking at (which is much more common), innocent people will get charged with crimes, and juries will sometimes convict them.

Do not assume that “the truth will out.”  The Government has overwhelming discretionary power.  The proceedings of a grand jury are secret, manifested by the fact that a witness’s lawyer may not even accompany her client into the room. Agents are intimidating, and citizens think they have to speak with him.  The disclosure of “Brady” information – that is, exculpatory information — is wholly within the Government’s control. This is precisely the kind of information that Nifong, the prosecutor in the Duke lacrosse case, withheld.  (If you have doubts about whether these sorts of things happen with troubling frequency, read Criminal Law 2.0 by federal court of appeals judge Alex Kozinski.  It first appeared in the Georgetown Law Journal Annual Review of Criminal Procedure, but do not worry.  It is written in clear, plain English).

Fight back, early.  The players and parents in Fantastic Lies did not fully understand what was happening until it was too late.  Just as a parent or student cannot rely upon bland reassurances from education bureaucrats in crisis, a corporation or executive cannot put too much weight on comforting words and hinted support from agents, regulators or prosecutors.  Assume that something bad is happening and do something about it.

Shut up. When one is investigated, the impulse to share one’s innocence is almost overwhelming. Especially in a high-profile investigation, that impulse will rarely be rewarded because your words will be twisted, compressed and taken out of context.

Before electronic court filings.

Before electronic court filings.

I hope you have money. The defendant students in the Duke lacrosse case did not win simply because they were innocent. They won because their parents were able to afford a team of some of the best criminal defense lawyers in North Carolina.   For the purposes of this discussion, the difference between the Duke lacrosse players and the Scottsboro Boys is not race. The difference is cash on hand.

The Innocence Project

The Innocence Project

If you are moved by the film, as I was, you may want to look into the work of The Innocence Project, which “was founded in 1992 by Barry C. Scheck and Peter J. Neufeld at the Benjamin N. Cardozo School of Law at Yeshiva University to assist prisoners who could be proven innocent through DNA testing. To date, more than 300 people in the United States have been exonerated by DNA testing, including 20 who served time on death row.”

Here is more reaction to Fantastic Lies, from the lacrosse community and elsewhere:


The Freedom of Little Joe Cartwright: Tax Crime, Edgar Allan Poe, Noir Film and Lacrosse

Notes for the week.

Prosecuting Individuals

Federal criminal tax lawyer Jack Townsend blogs at Federal Tax Crimes.  Here is his note on Prosecuting Corporate Employees, particularly in the tax context:

I have previously blogged on Professor Brandon Garrett (UVA Law) who have carved out an academic niche on how the Government deals with corporate crime, particularly large corporate crime (the too big to jail group). See e.g., Judge Jed Rakoff Reviews Brandon Garrett’s Book on Too Big to Jail: How Prosecutors Compromise with Corporations (Federal Tax Crimes Blog 2/10/15), here. At the risk of oversimplifying his arguments, I summarize them in part relevant to this blog entry: When the Government goes after corporate misconduct, it too often focuses only on the corporation in terms of criminal sanctions and not the individuals, particularly those higher up the chain, who committed the underlying conduct. Corporations cannot go to jail; individuals can. Prosecuting and convicting individuals in addition to corporations could, he thinks, provide more front-end incentive for individuals to forego illegal conduct within the corporations. However, as fans of tax crimes know at least anecdotally, it is hard to convict higher level corporate officers for conduct that their underlings actually commit. The poster child example is the acquittal of Raoul Weil, a high-level UBS banker who “remoted” himself from the dirty work of actually servicing U.S. taxpayers seeking to evade U.S. tax. See e.g., Raoul Weil Found Not Guilty (Federal Tax Crimes 11/3/14; 11/6/14).

Mr. Townsend goes on to discuss the DOJ’s Yates Memorandum and new work by University of Virginia law professor Brandon Garrett.  Professor Garrett’s website (Federal Organizational Prosecution Agreements) is the best compendium of deferred-prosecution and non-prosecution agreements.

Michael Landon ("Little Joe Cartwright") being served with a subpoena (1968)

Michael Landon (“Little Joe Cartwright”) being served with a subpoena (1968)

Another useful Townsend post addresses a common issue — the Government’s attempt to muzzle the recipients of subpoenas:

In United States v. Gigliotti, 2015 U.S. Dist. LEXIS _____ (ED NY 12/23/15), here, Judge Dearie denied a motion to suppress evidence obtained pursuant to grand jury subpoena that unlawfully contained the following:
YOU ARE HEREBY DIRECTED NOT TO DISCLOSE THE EXISTENCE OF THIS SUBPOENA, AS IT MAY IMPEDE AN ONGOING INVESTIGATION.

Sound familiar?  Read the entire piece at Judge Criticizes Prosecutor’s Use of Language Directing Secrecy for Receipt of Grand Jury Subpoena.  We have written about the grand jury previously herehere and here.  If you are to young (or too old) to remember Bonanza on TV, here is a refresher.  Here is an episode from 1960 entitled — appropriately, for White Collar Wire readers — “Desert Justice”:

Head-on-a-platter and all that.

Head-on-a-platter and all that.

Or Not Prosecuting Individuals?

White Collar Wire should have sent a Christmas goose to Senator Elizabeth Warren (D-MA), who wants more white-collar types to get indicted: 2015 Spurred Billions in Bank Fines, But Not Enough for Warren.  In particular:

In a 10-page report titled “Rigged Justice: 2016,” the U.S. Senator’s staff cited 20 cases in which they say prosecutors showed “timidity” by not pursuing individuals for civil or criminal misdeeds. No executives at Citigroup Inc., JPMorgan Chase & Co., or Deutsche Bank AG were accused of wrongdoing in cases alleging rigged currency markets and the misleading of investors, her office wrote in the document released Friday. The investigations led to their companies paying billions of dollars in penalties.

Senator Warren will have none of the Yates Memo, thank you:

The report even dismisses a recent U.S. Justice Department announcement, known as the Yates memo, in which Deputy Attorney General Sally Quillian Yates heralded a new direction by telling prosecutors to embark on investigations by focusing on people, not companies. “Both before and after this DOJ announcement, accountability for corporate crimes has been shockingly weak,” Warren’s office wrote.

“Shocking to whom” is a good question, but it’s all good for the white-collar bar.  Here is her report.

Good Practices and Bad

A miscalculated penalty, perhaps.

A miscalculated penalty, perhaps.

From the Harvard Law School Forum on Corporate Governance and Financial Regulation and Jon Eisenberg, a partner in the Government Enforcement practice at K&L Gates LLP, here is a useful article (with cases and charts) about the SEC’s use of civil monetary penalties.  Tellingly, and sadly, the authors point out that “these decisions might not survive appellate scrutiny . . .  but very few respondents appeal their sanctions all the way to the D.C. Circuit.”

 

 

Hall monitor?

Hall monitor?

Deferred-prosecution agreements often impose corporate monitors.  Should the reports of such monitors be kept confidential?  A federal judge ordered the release of the HSBC monitor’s report, over the object of both HSBC and DOJ:

A federal judge has ordered the release of a report detailing how well HSBC Holdings Plc has complied with anti-money laundering requirements imposed by U.S. regulators when the British bank was fined $1.92 billion three years ago.

Thursday’s order by U.S. District Judge John Gleeson in Brooklyn is a defeat for HSBC and the U.S. Department of Justice, which complained the release could make it easier to launder money, including for terrorism, and discourage cooperation with law enforcement.

“This case implicates matters of great public concern and is therefore one which the public has an interest in overseeing,” Gleeson wrote, citing the public’s constitutional right of access under the First Amendment.

I cannot speak to the terrorism angle, but cooperation (and thus, monitoring) both work best when company employees have some comfort that what they say and do will be held in confidence, at least within reasonable parameters.  The public’s oversight interest is real, but surely an organization that has paid billions in fines and is living with a monitor is being “overseen” to a reasonable extent, especially when that oversight requires continued cooperation to be effective.

Read the entire article here: HSBC money laundering report must be made public.  To read our earlier posts about DPAs and monitors, go herehere, and here.

Crime Fiction

Digital content, quoth the raven.

Digital content, quoth the raven.

From the good folks at The Rap Sheet, a piece on the nominees for the 2016 Edgar Awards.  Here is the complete list from the Mystery Writers of America.

Thomas Hardy (1840-1928)

Thomas Hardy (1840-1928)

It is not a raven, but there is a bird in  Thomas Hardy’s poem “The Darkling Thrush”:

I leant upon a coppice gate
When Frost was spectre-grey,
And Winter’s dregs made desolate
The weakening eye of day.
The tangled bine-stems scored the sky
Like strings of broken lyres,
And all mankind that haunted nigh
Had sought their household fires.

The land’s sharp features seemed to be
The Century’s corpse outleant,
His crypt the cloudy canopy,
The wind his death-lament.
The ancient pulse of germ and birth
Was shrunken hard and dry,
And every spirit upon earth
Seemed fervourless as I.

At once a voice arose among
The bleak twigs overhead
In a full-hearted evensong
Of joy illimited;
An aged thrush, frail, gaunt, and small,
In blast-beruffled plume,
Had chosen thus to fling his soul
Upon the growing gloom.

So little cause for carolings
Of such ecstatic sound
Was written on terrestrial things
Afar or nigh around,
That I could think there trembled through
His happy good-night air
Some blessed Hope, whereof he knew
And I was unaware.

Crime Noir and Miles Davis

It's Miles. It's cool.

It’s Miles. It’s cool.

On the subject of crime, Apple Music must have intuited that I like noir-ish fiction and cool jazz.  It directed to me a set of Miles Davis that included “Ascenseur pour l’echafaud” (1958), a French crime film by Louis Malle released in the States as Elevator To The Scaffold (or Lift To The Scaffold in the U.K.)  Davis’s horn on the title track is as evocative as it gets, as seen here:

 

ESPN's 30-for-30

ESPN’s 30-for-30

Wishing It Were Fiction: Duke Lacrosse and Due Process

On Sunday, March 13, at 9 p.m. ET, ESPN’s acclaimed “30 for 30” film series will present Fantastic Lies, a film about the the Duke lacrosse case.  Here is an interview with the producer, Marina Zenovich.

Damage done.

Damage done.

We have written about the Duke lacrosse case before, here and here.

 

Depends on how we sell it.

Depends on how we sell it.

In opening statements and closing arguments, the genuine is good.  The cornball or the obscure, on the other hand, are bad.  The same is true of our written work.  As noted by Philip Corbett, master of the After Deadline blog in the New York Times:

[A]n overreliance on anecdotal openings — especially the classic “stranger in the lead” approach — can make our prose feel shopworn rather than vivid. This is particularly true when readers encounter unfamiliar names at the top of two or more adjacent stories, whether in print or online.

 

Read the entire piece: Here’s Someone You Never Heard of. Read On.