The Perry Prosecution And Giving Prosecutors The Benefit Of The Doubt
/Seemingly every day brings news of one or more high profile prosecutions of major institutions or political figures. Frequent recent targets include the likes of big banks (JPM, Bank of America, Citigroup), pharmaceutical companies (Prizer, GSK), and state governors (Blagojevich, Walker, Christie). Probably you read the headlines and never get too much into the details of the alleged conduct or of the law allegedly violated. It's way too complicated to try to figure out, and anyway, why would prosecutors be going after these guys if they didn't do at least something wrong?
And that's why the current criminal prosecution of Governor Rick Perry of Texas is doing such a great service to the country. There's nothing complicated about it. He threatened to, and then carried out, a veto of funding for a state office headed by a political rival who had been convicted of DWI. Isn't that his job? How could it possibly be a crime? Anybody can understand it completely in less than 10 seconds. This prosecution is blatantly outrageous overreaching. The myth of the prosecutor in the white hat has been busted.
And thus you see the voices on the Left that are usually completely reliable in defending any and all initiatives beneficial to the Democratic party drawing the line on this one. For example, Obama political guru David Axelrod tweeted: "Perry indictment seems pretty sketchy." Or, from Ben White of Politico: "It seems quite perverse to indict a governor for exercising his clearly delineated constitutional authority." Or, from Jonathan Chait of New York Magazine: "The indictment of Rick Perry is unbelievably ridiculous." And so forth.
So now that you understand that it is entirely possible for a prosecutor to engage in gross misuse of his powers and office in furtherance of personal and political objectives, let me suggest to you that the Rick Perry prosecution is just the bare little tip of the tip of the iceberg. As venal as many politicians and business people may be, prosecutors, on average, are just as venal and probably worse. And the more high profile the prosecution, the more likely it is to be some kind of a vehicle to get some prosecutor's name in the press, at the expense of the lives and careers of people who did nothing wrong but happened to be in the way at the time.
I've covered the subject multiple times here, but as isolated instances rather than as a pervasive phenomenon, which is what it is. So it's time to bring some of this together in one place.
For example, in the world of the big banks, it seems like one or another of them settles yet another threatened prosecution for one or multiple billions literally every week or two. On July 1, 2013 in Annals Of Government Self-Promotion, Big Bank Edition, I covered some dozens of dubious settlements between big banks and various prosecutors and regulators, including a $25 billion settlement of five of them with 49 state AGs over alleged wrongful activities in enforcing underwater mortgages. Then on July 25, 2013 in Our "Disinterested, Neutral, Expert" Regulators In Action, it was a settlement of about $500 million by JPM with FERC for what to all appearances was a perfectly legitimate energy trading strategy that embarrassed the regulators by being too successful. On September 24, 2013 in More On The Government's "Sick Game" With J.P. Morgan, it was a $920 million settlement by JPM over the London Whale trading losses that to any rational observer should have been no concern to prosecutors or regulators whatsoever. In recent months I've been failing to pay attention to this issue, even as Citigroup and JP Morgan did $7 billion and $13 billion settlements last year over allegations of misrepresentations as to mortgage backed bonds. The latest in this line is a recently announced proposed settlement of BofA with Justice for some $17 billion, largely over the activities of BofA's ill-fated acquisition Countrywide. Didn't BofA take over Countrywide as a favor to the federal regulators? That won't help you when they need a scalp!
I've also been writing for years about the endless prosecutions of pharmaceutical companies for what is called "off-label marketing," that is, promoting drugs for uses not specifically approved by the FDA. My first article on this subject was in 1999, and a more recent post was December 4, 2012 (The Second Circuit Stands Up For Free Speech). If the drug has been established as safe and effective, aren't truthful statements about it protected by the First Amendment? You would think so, but check out this 2009 roundup from Bloomberg of huge settlements paid by pharma companies for threatened prosecutions over the exercise of their rights, including what is dubbed "the largest criminal fine in U.S. history" of $1.19 billion paid by Pfizer in 2009. No corporate entity will actually take these cases to trial, but an individual got himself convicted in 2009 and took his case to the Second Circuit in 2012, where the appeals court upheld his constitutional rights against prosecutorial overreach. But just because they're dead wrong, don't get the idea that the prosecutors are going away on this one.
Insider trading? The prosecutor's office for the Southern District of New York has been completely consumed for multiple years with a jihad against what they falsely call "insider trading," even though the majority of the cases are not against insiders at all but rather against investment professionals who have made the mistake of making too much money and attracting attention as a potential useful scalp. I covered the thinness of the prosecution legal theories on July 13, 2014 in The Impending Demise Of The Insider Trading Jihad. An appeal contesting the legal theories has been argued in the Second Circuit, and a decision is expected imminently. Of course in the mean time the poor schmos have had to endure millions in legal fees and suffer a conviction as the price of seeking to vindicate their rights to behave lawfully and earn a living. Eighty or so other people who were not willing to go through that hell have had guilty pleas coerced out of them. But Preet Bharara has great name recognition here in New York.
Check out if you will the new indictment against Federal Express for the sin of shipping prescription pharmaceuticals from what the feds contend are illicit online pharmacies. The indictment alleges "money laundering," or, in other words, as a FedEx spokesman put it in the Memphis Daily News, "FedEx, of course, requires customers to pay for our services." FedEx points out in its defense that it has been asking the feds for years for a list of objectionable pharmacies, but the feds decline to provide one. No surprise there. And by the way, the same Memphis Daily News article notes that UPS settled with Justice last year over similar allegations for $40 million.
Looking for more? Then look, for example, at the careers of Eliot Spitzer or Rudy Giuliani, who each rode a series of phony but big name prosecutions to fame and higher office. They are the model that hundreds of other young and ambitious prosecutors try to follow.
I can't see any reason why prosecutors are entitled to the slightest benefit of the doubt. Thanks to the Perry prosecution for helping others to learn this important lesson.