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Prosecutorial Injustice

Rule of law takes a big hit at DOJ.

By 7.18.14

Sen. Ted Stevens after his arraignment, July 31, 2008 (UPI)
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Licensed to Lie: Exposing Corruption in the Department of Justice
By Sidney Powell
(Brown Books, 456 pages, $28.95)

The performance of the U.S. Department of Justice in the Ted Stevens and Enron prosecutions were hardly its finest hour. In fact, as Sidney Powell demonstrates, those efforts were marked by unethical tactics facilitated by vague laws that were used to charge conduct that was not criminal. Notwithstanding the outrageous prosecution tactics, some of the prosecutors who played fast and loose with their constitutional duty to disclose information to the defense have been promoted, leaving personal and corporate wreckage behind them.

Sidney Powell served as an assistant U.S. attorney for ten years and has since developed a practice representing clients in federal appeals. She was contacted to help with the appeal of Arthur Andersen and then undertook to represent one of the Enron-related Merrill-Lynch defendants, Jim Brown, on appeal. Powell explains that she rarely represents criminal defendants on appeal and generally doesn’t represent them unless convinced of their innocence. In the end, Arthur Anderson prevailed in the Supreme Court, but was destroyed, and Brown was convicted and served time, although Powell convincingly demonstrates the unfairness of the proceedings against him.

Critical to Powell’s work in these troubling cases is the law regarding the obligations of prosecutors. As Powell notes, the U.S. Supreme Court’s decision in Brady v. Maryland (1963) requires prosecutors to disclose evidence that is exculpatory to the defendant before trial. A 1972 decision extends Brady to evidence that can be used to impeach, or raise questions about the reliability of, a witness’s testimony. Such evidence can come from a variety of sources including statements to the police and grand jury testimony.

Powell demonstrates that DOJ’s Public Integrity Section (PIN) and Enron prosecutors effectively thumbed their noses at this obligation by producing summaries that were incomplete, misleading, or false, and otherwise stone-walling defense requests. In one example, the government produced a two-page summary of more than 1,000 pages of one key Enron witness’s statements to the FBI and her testimony before the grand jury and the Securities and Exchange Commission. There is no way that such a summary could have fairly advised the defense of the existence of exculpatory or impeachment evidence.

Enron’s meltdown in late 2001 led to the indictment of, among others, Arthur Andersen and Jim Brown. The indictment of Arthur Andersen destroyed a company that started with 85,000 employees in some 2,300 offices worldwide.

While Arthur Andersen was convicted of “obstruction of justice,” it was charged under the 2000 version of the witness tampering statute, which made it a crime to “knowingly … corruptly persuade another person … with intent to … cause” that person to “withhold” documents from, or “alter” documents for use in an “official proceeding.” The indictment involved the destruction of documents before Arthur Andersen received notice of an “official proceeding” and included the whole company even though the misconduct took place in the Houston office and involved only a handful of employees.

The conviction came after the trial judge told the jury that it could find Arthur Andersen guilty even if it “honestly and sincerely believed that its conduct was lawful.” The Supreme Court unanimously held that the jury instructions failed to convey the need to prove that Andersen’s conduct was “knowing” and “corrupt.” As then-Chief Justice Rehnquist noted, “[I]t is striking how little culpability the instructions required.”

One noteworthy point about the indictment of Arthur Andersen is the insouciance of the prosecutors when asked about the consequences for the company. DOJ’s claims that it considered “all appropriate charges” and that “serious charges have serious consequences” pale next to the smoking hole they left in their wake.

Brown was one of several Merrill Lynch executives who were indicted for their part in a transaction with Enron. The legality of that transaction, which involved the procurement of an electricity-generating barge for use in Nigeria, turned on whether Enron would use its best efforts to remarket Merrill Lynch’s share of the barge’s cost or would guarantee to buy that interest back. The “best efforts” option was legal, while the “guarantee” was not.

Brown was indicted on and convicted of several charges, including perjury and obstruction of justice in connection with his grand jury testimony about that transaction, which he opposed. In the grand jury, Brown was asked to give his understanding “accurate or not” of a phone call that he was not party to and was indicted for perjury when his understanding didn’t match the prosecutors’ theory of the case. Plus, Brown was indicted for depriving Enron, which he did not work for, of the honest services of Andrew Fastow, a crook in his own right, when Brown got nothing from the deal. The charges should have been laughed out of court.

Instead, Brown was convicted and spent time in federal prison in New Jersey. He got no relief from the Fifth Circuit on direct appeal or from the Supreme Court. He didn’t even get a new trial after demonstrating the gross inadequacy of the prosecutors’ summaries of witness interviews and testimony.

Powell’s showing is eye-opening. At trial, while the prosecutors tried to show that the barge deal involved an illegal Enron guarantee, Brown and the other defendants insisted that it was a “best efforts deal. Brown had to do that without Jeff McMahon, Enron’s former Treasurer, who had talked to the FBI but was threatened with indictment in his own right. Enron Task Force prosecutor John Hemann told the court, “McMahon called Merrill Lynch and he cut a deal… and what was the deal? … that was the guarantee that Merrill Lynch got from [] McMahon.” (Emphasis added.)

He did so, even though the raw notes of DOJ’s interview of McMahon included, “Disc[ussion] between Andy [Fastow] and ML [Merrill Lynch]. Agreed [Enron] would use best efforts to help them sell assets.” (Emphasis added.)

In other words, what McMahon told the government more than once was the opposite of what the government told the court. And, it was exculpatory, which means that it should have been disclosed to Brown before trial, not years later.

The prosecution of Alaska Senator Ted Stevens is another example of the shady prosecutorial tactics. On July 29, 2008, four weeks before the primary election, Stevens was indicted on seven counts of making false statements with respect to gifts that he allegedly received. Those gifts were said to be the product of underpayments for services received in connection with the remodeling of his house. Significantly, Stevens was not charged with receiving bribes. About three months after he was indicted, Stevens was found guilty of the charges.

PIN’s work began to unravel about two months later, when an FBI agent filed a complaint with DOJ’s Office of Professional Responsibility alleging that, among other things, the prosecutors failed to disclose evidence favorable to the defense and sent one key witness back to Alaska so that he was not available to testify. The trial judge held three of the DOJ trial lawyers in civil contempt and demanded that USDOJ review its records for undisclosed evidence. That review produced not just exculpatory evidence, but evidence that also contradicted key parts of the prosecution case. The trial judge then appointed a respected private sector lawyer to investigate DOJ’s misconduct; the report of more than 500 pages was devastating.

Powell’s book leaves a bitter taste. As she shows, the PIN and Enron prosecutors “worked way too hard to make something a crime that wasn’t, and they… all fought producing the real documents and anything [exculpatory or impeaching] way too long and too hard.” They put winning ahead of doing justice and representing a sovereign “whose obligation to govern impartially is as compelling as its obligation to govern at all.” The rule of law took the hit.

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About the Author
Jack Park is an attorney with the Atlanta law firm Strickland Brockington Lewis LLP.