Corporate crime and the presidential election

As I've often said, I don't do politics, and therefore I'm not "endorsing" a particular presidential candidate on this blog. But one candidate has implicitly made an issue out of something that do cover on this blog – the appropriateness of corporate criminal liability. And I've made clear that I do not consider this a plus.

Tom Kirkendall links a NYT story discussing Giuliani's career as prosecutor as one of "three founding stones" in Giuliani's career. The article observes that now that Giuliani is busy courting the business community "he rarely talks of his financial sector prosecutions." But the article reminds us of what Giuliani himself does not – that he rose to prominence by "surf[ing] a wave of popular revulsion with Wall Street.. . . He treated stockbrokers, rhetorically and legally, as gangsters, replete with RICO cases." Here's more:

His crowbar tactics had a rough logic. Financiers are tough prey, safeguarded by the finest lawyers. His deputies threatened to chase down targets and worry about untangling the details later.

“The benefit was that people cooperated a lot quicker when the cases were treated aggressively,” said Edward J. M. Little, a former Giuliani deputy. “No one got hurt except those who richly deserved it.”

That judgment depends on one’s perspective. Gerald B. Lefcourt, a defense lawyer, talked with prosecutors after the Princeton/Newport raid. He was particularly disturbed that prosecutors applied a law intended for mobsters to the highly technical world of Wall Street finance. “Rudy told me that my client would face 40 years in prison and a forfeiture of his assets,” said Mr. Lefcourt, who represented one of the Princeton/Newport defendants. “That strikes me as quite dangerous and unconstitutional.”

The courts overturned the racketeering case against Princeton/Newport and, in a separate case, tossed out the insider trading conviction of the stockbroker John Mulheren.

Mr. Giuliani also cut generous deals with those who cooperated with him. (“Minimal sentences for maximal felons,” the columnist Murray Kempton wrote in Newsday.) Ivan Boesky, the Wall Street arbitrageur, admitted making more than $100 million with stolen information. Yet he pleaded guilty to a single securities violation and kept his foreign bank and brokerage accounts. In return, he agreed to provide evidence against other people. Martin A. Siegel, also of Drexel Burnham Lambert, took suitcases of cash from Mr. Boesky and was sentenced to two months in prison in exchange for offering to inform on Mr. Freeman, Mr. Wigton and Mr. Tabor. Prosecutors authorized their arrests before turning to the grand jury. Mr. Giuliani later dropped the indictments, but vowed to bring bigger ones. “This is the tip of the iceberg,” Mr. Giuliani said.

He found no iceberg.

In August 1989, the United States attorney’s office announced that Mr. Tabor and Mr. Wigton would not be charged. “I exercised to the best of my power the power of mercy,” Mr. Giuliani added. “That doesn’t mean I didn’t get it wrong sometimes.” As for Mr. Freeman, he passed a lie detector test, and none of Mr. Siegel’s allegations held up to legal scrutiny. Investigators with the Securities and Exchange Commission examined Mr. Freeman’s case years later and, in an extraordinary move, let him resume his career. By that time, he had pleaded guilty to a count of mail fraud. He had taken a glum view of his chances at trial. “It was truly a surreal experience,” Mr. Freeman said yesterday. “Had the prosecutors conducted an even cursory examination of the evidence prior to the arrests,” he added, “this whole tragedy could have been avoided.”

And Tom K adds: "Not mentioned in the article is Giuliani's prosecution of Lisa Jones, which reveals far more about Giuliani's true character than what is presented in the NY Times puff piece."

You may want to embrace Giuliani for one of his other "founding stones" -- that he cleaned up NY (the average price of a Manhattan apartment is now around $900,000) and he showed up for work on 9/11. Maybe you'll conclude that this says something good about the social and foreign policies he'll support when he's running a nation rather than a city – where you have to prevent attacks, and where you can't just send the criminals to New Jersey.

Or maybe not. I offer this reminder for what it's worth.

Comments

[M. Hodak]

During the late 90s, I allowed as to how Giuliani was doing a good job as mayor, but that I would not vote for him because of his persecution of Wall Street. He was a state-backed bully, doing what he felt he could get away with.

Ironically, Milken may support Giuliani because, aside from a tolerable sympathy for his fiscally conservative politics, Guiliani is the candidate most likely to finally pardon Milken of his convictions. Not that Milken is the type of person to sell his vote, but at least he's gotten something close to an apology.