After Stevens, what about Skilling?

Well, at least Ted Stevens got some justice. The Justice Department moved to set aside his conviction because it "recently discovered" that prosecutors withheld from the defense its notes of an interview with a major witness that contradicted his later testimony. Seems there’s something called the Brady Rule that requires the government to turn those notes over. This was only part of the prosecutorial misconduct in this case.

Now let’s think back to another case – that of Jeff Skilling, who’s currently rotting in jail. In order to convict Skilling, prosecutors had to prove he knew of the fraud perpetrated by underlings, notably including one Andy Fastow. A key part of their case on this point was a so-called “global galactic” document that Fastow testified he went through with Skilling detailing illicit side deals.

Funny thing, though: this critical document, like something out of a spiritual, once was lost then it was found, in Fastow’s safe deposit box. At trial, as I discussed at the time, Skilling’s lawyer wondered if the document didn’t "show up when you were making your deal with the government?"

As for that deal with the government, Tom Kirkendall has noted that what was supposedly a ten-year sentence somehow mysteriously morphed into a six-year sentence (a fourth of the time Skilling got).  If you had already shown a tendency toward fraud, might you create a document to save yourself four years in jail?  What might a jury think about that? 

Then, whadyaknow, it turns out that the government had not turned over to the defense raw notes of an interview with Fastow in which, as I discussed at the time Fastow told the Task Force he “doesn’t think [he] discussed list w/ JS.” Shades of Stevens. 

As the defense argued:

This obviously exculpatory statement was not included in the Task Force’s “composite” Fastow 302s given to Skilling. Nor was it included in the “Fastow Binders” the Task Force assembled for the district court’s in camera review of the raw notes. It is not possible that this omission was inadvertent. Fastow’s statement is one of the most important pieces of evidence provided during all his countless hours of interviews. Moreover, in preparing both the composite 302s and Fastow binders, the Task Force extracted and included other—relatively inconsequential—statements from the same interview date and even the same page of notes.

How important was all this? Consider that Enron prosecutor John Hueston’s crowing in a law review article about his triumph in convicting Skilling and Lay despite obvious problems with his case:

In a trial involving allegations of earnings manipulation and disputes over the defendants' respective understandings of the application of often arcane accounting rules, proof of criminal intent was of critical importance. Assembling such evidence proved challenging, however, as both Skilling and Lay clearly relied on the advice of inside and outside counsel, as well as their auditors. For instance, although Skilling resigned from Enron for “personal reasons” after a mere six months as C.E.O. and only four months prior to the company's bankruptcy in December 2001, he later took steps seemingly inconsistent with alleged criminal intent. Prior to Enron's collapse, he offered to return to the company as its steward, and in the weeks prior to bankruptcy he took several steps toward engineering and personally financing a private buyout. As forcefully argued by his counsel at trial, what fraudster would seek to return to what he understood was a collapsing house of cards? 

Hueston knew he had a problem with Fastow, as he discussed in the article:

If the defense was successful in portraying Fastow as criminally independent of Skilling and Lay, and without credibility in describing the involvement of Skilling and others in the accounting side deals set forth in Fastow's handwriting in the Global Galactic document, the jury would surely discard his testimony by the time Glisan was called to the stand months later.

Hueston then detailed how he skillfully set traps for the prosecution in his direct of Fastow. But he knew about the vulnerability on the authenticity of the Global Galactic agreement. Consider footnote 71:

Anticipating that the defense in its cross examination of Fastow might suggest that the Global Galactic agreement was fictional, we exercised our right to withhold Loehr's Jencks Act statements until the conclusion of Fastow's testimony. See 18 U.S.C. 3500 et seq. These statements revealed Loehr's ability to corroborate key aspects of Fastow's testimony about the document. For all other case-in-chief witnesses, prosecutors provided statements in advance of the time frame set forth in the act.

Yeah – but what about those raw notes of the Fastow interview?

Skilling's lawyer argued in the brief linked above:

By depriving Skilling of key exculpatory evidence that Fastow conveyed in his interviews, the Task Force was able to skew the proof and convince the jury to accept Fastow’s word over Skilling’s. As the Task Force later told Fastow’s sentencing judge and recounted in a law review article, Fastow’s testimony and credibility were the cornerstones to convicting Skilling.* * *

Tom Kirkendall adds:

The initial Fastow statements set out in the Skillling brief were not only not as damning as Fastow's trial testimony, they were irreconcilable with that trial testimony and described completely legal activity, even by Fastow. Consequently, had the Enron Task Force not been able to to pry Fastow off his original story, the core of the Task Force's case against Skilling and Lay would have have contradicted by Fastow, who was Skilling's main accuser at trial. And the fact that the DOJ did not disclose to the Skilling defense team how Fastow's incriminating testimony evolved over time from his exculpatory initial statements while Fastow and the Task Force were negotiating a dubious plea deal is beyond reprehensible. What is the DOJ going to say now, that they didn't disclose the exculpatory earlier statements to Skilling's defense team because Fastow was protecting Skilling in these initial meetings? Yeah, right.

Kirkendall, who has been on top of this case from the beginning, providing perspective the mainstream press has almost totally missed, says:

So, because of prosecutorial misconduct, the Justice Department decides to move for dismissal of the political corruption case against former Alaska senator Ted Stevens * * * Meanwhile, Jeff Skilling, who created billions of dollars in wealth and thousands of jobs by revolutionizing risk management of natural gas prices for producers and industrial consumers, sits in a Colorado prison cell under the weight of a barbaric 24-year prison sentence. Skilling's conviction involved even more egregious prosecutorial misconduct than the Stevens case. The criminal case against Skilling was materially weaker than the case against Stevens, too. It is a sad reflection of the current state of American rule of law that the DOJ readily concedes prosecutorial misconduct against a legislator, but ignores it in a shaky case against a businessperson who created many jobs and great wealth

Comments

[Ed Unneland]

"Meanwhile, Jeff Skilling, ... sits in a Colorado prison cell...." Did they put him in Florence?

[Ed Unneland]

Ah, not all the Bureau of Prisons facilities at Florence are of the Administrative Maximum variety.

[diane]

This information is right on the mark...the DOJ in Houston during the 2001-2005 time period was under the push of the the WH to make cases in Houston by any means. (Thompson Memo) All one has to do is review the job they did on the El Paso energy traders for reporting MTM prices to an Industry news letter. No Justice was even close to this trial.