Being A Prosecutor Means Never Having To Say You’re Sorry

The movie “Love Story” starring Ryan O’Neal and Ali MacGraw is a bit before my time, but I have seen it on television. There is an infamous line in the movie in which Ali tells Ryan “love means never having to say you’re sorry”. Everyone, including the actors themselves, later made fun of the line because it makes no sense. And, of course, it does not make sense for lovers. However, it makes perfect sense for federal prosecutors!

I have been mulling the implications of my previous post on Rex Shelby and all the federal prosecutors he had to face and defeat until they eventually managed to tag team him into a plea deal. For anyone interested in simple justice, the entire episode is just disgusting. I often hear people, in their best class-warfare mindset, bad-mouth “rich executives” as if wealth itself equates to evil. But no private citizen has enough money, time, and resources to even come close to what the U.S. federal government can throw at them. One of my big disappointments about the Enron prosecutions is that the press did not perform its watchdog role in protecting the individual against the state, and the public largely encouraged the misconduct of the federal prosecutors by cheering them on.

It seems to me that even if justice doesn’t matter to a person, waste of money and resources should. Think about that list of lead prosecutors lined up against Rex Shelby. Each prosecutor had a staff of additional prosecutors, FBI agents, and assorted legal and clerical support — let’s conservatively place that at ten additional people per prosecutor. So far, we are up to about 100 people lined up against Rex at various times over his eight-year battle against the false indictment. Add to that all the support that the federal prosecutors received from various offices of the DOJ, FBI, SEC, IRS, and assorted local federal offices. Add to that the time of various judges and staff at the federal court, the federal appeals court, and the Supreme Court who had to deal with the prosecutors’ false charges against Rex. Add to this staggering amount of wasted resources the time and resources that the staff of the halfway house and the probation office had to spend on Rex during his meaningless punishment. And add to all this actual out-of-taxpayer-pocket cost the opportunity cost of the time and money wasted on hounding an innocent man that could have been spent on pursuing an actual criminal.

Conservatively, this adds up to tens of millions, if not hundreds of millions, of taxpayer dollars spent pursuing a person who everyone essentially admits was innocent. Even at the low end of the estimate, the federal government spent at least ten times more on hounding Rex than it received in settlement from him. Basically, what we have is federal prosecutors committing prosecutorial misconduct at public expense!

And if you really don’t care what happens to businessmen and you really don’t care how much taxpayer money is wasted by prosecutors, don’t you at least care about what can happen to you and your family? If you cannot muster the outrage to stand up in defense of people like Rex when the federal government attacks him without cause, then who is going to stand up for you or your family when it happens to them?

And when will a federal prosecutor ever be required to say he is sorry, not to Rex who I suspect would not believe the prosecutor even if he said it — but to the citizens and the taxpayers of this country who the federal prosecutor is supposed to be serving responsibly in the name of justice.

How Many Prosecutors Does It Take To Fight A Software Engineer?

Here is the list of the lead prosecutors (each of which had their own team of additional prosecutors and other DOJ/FBI staff) that Rex Shelby beat or exhausted before he himself ran out of money for his defense:

John Kroger – Presently the Attorney General of Oregon.

Sean Berkowitz – Presently Global Chair of Litigation at Latham & Watkins, based in the Chicago office.

Ben Campbell – Presently a Partner in the NY office of Latham & Watkins.

Lisa Monaco – Presently Assistant Attorney General for National Security, Justice Department.

Van Vincent – Presently Assistant U.S. Attorney, U.S. Department of Justice, Nashville, TN.

Jonathan Lopez – Presently Deputy Chief, Money Laundering and Bank Integrity at U.S. Department of Justice, Washington, DC.

Jack Patrick – Senior Litigation Counsel at the DOJ, recently prosecuted Allen Stanford.

Peter Katz – Principal at Berkeley Research Group in New York, NY.

The heads of the Enron Task Force that Rex also beat were:

Leslie Caldwell – Presently co-chair of Morgan Lewis’s Corporate Investigations and White Collar Practice, New York, NY.

Andrew Weissman – General Counsel for the FBI.

Sean Berkowitz- See above.

Wow, no wonder the DOJ was so eager to do a plea deal with Rex. Would you want to face the guy at trial who beat this list of prosecutors?!

Who Is Rex Shelby?

This was a search term on my blog recently. It reminded me of “Who is John Galt?” from Atlas Shrugged. This fits because Rex Shelby is like a character from an Ayn Rand novel. Rex is the guy who battled the Feds the longest — he fought tooth and nail until he depleted his personal savings. Rex was the first of the Enron Broadband defendants to take the stand to speak in his own defense and the last to resolve his case.

As I’ve pointed out before on this blog, I have never talked with anyone, including prosecution witnesses, who believe that Rex Shelby is guilty of any criminal activity. And the people who know him well and have worked most closely with him insist that he is simply incapable of anything criminal. And, based on the plea deal he negotiated and the sentence he got, the prosecutors and the judge did not believe him to be guilty of anything either.

Anyway, today is the one-year anniversary of Rex Shelby’s sentencing hearing. How time flies when you’re being punished! Rex has flown through all the most onerous parts of his sentence — halfway house, home confinement, community service — all while maintaining a full-time job in a small software company. Rex has been more productive while under punishment than most people are in their normal lives!

I also find it appropriate that this anniversary falls on the same day as a hearing on the Stevens bill in Washington, D.C. The Stevens bill is an attempt to force prosecutors to actually uphold their Brady obligations which require them to identify evidence favorable to the defendants. The failure of the Enron Task Force prosecutors to uphold this basic obligation is one of the abuses that Rex identified in the prosecutorial misconduct motion he filed during his case. Let’s hope that the Stevens bill will help prevent prosecutors from doing to others what they got away with doing to Rex. I encourage you to write your Senators and Congressmen in support of this legislation.

Trayvon Martin and Enron

I have been paying rapt attention to the Trayvon Martin case, in which a seventeen year old black boy was killed by George Zimmerman, a white twenty-eight year old neighborhood watch captain. Zimmerman claims he was acting in self-defense, while critics claim he was racially profiling and that he had no reason to kill the teen. Racial profiling is odious but perfectly legal among citizens – there is no law preventing me from crossing the street to avoid a black person; that would just be plain old stupidity. But removing that accusation, Zimmerman seems to have been jonesing to shoot someone that night. Florida police declined to arrest Zimmerman, citing Florida’s “Stand Your Ground” law which allows Floridians to shoot to kill if they feel they are being threatened with death or grievous bodily injury. Support for an arrest has grown and today even President Obama commented on the case.

I cringe at this.

Whether or not Zimmerman is arrested, it should have nothing to do with what people want. It should be based entirely on the law. Yet I suspect soon Zimmerman will find himself in handcuffs. Our culture won’t tolerate the optics of this for very long. Guns (after the Fast and Furious scandal) and race (since the 1800s) are American flash points. The people want an arrest and it makes no difference what the law says.

We are witnessing a witch hunt right before our eyes. Make no mistake: I do not support George Zimmerman or his actions. I think he should have been arrested that first night after he killed Trayvon. What saddens me is that popular culture is what is pushing for an arrest – not the law, which is quite clear. If Zimmerman is arrested, found guilty at trial, and then sent to prison, is that justice? Even if he was within his rights of the law? The law says he has to “feel” he is endangered. He doesn’t have to prove it.

The Trayvon Martin case lays bare how mob rule prevails – and it might help illuminate what happened to Enron in 2001. When the company collapsed there was likewise a massive outcry for prosecution. You can see for yourself how the tide of public sentiment caught up to the executives and pulled them under. You can see that the case might be more complex than you’d originally been led by media and industry barkers to believe.

Resist witch hunts, wherever you may find them. Resist them even when everyone you know is cheerleading them. Resist, resist, resist.

An Enron Executive To Protect My Reputation

There is something uniquely female about being alone in the house at night. No matter how secure you might feel during the day, weird fears sneak in under the skirt of night. Sounds seem unfamiliar. As you lie in bed, trying to get comfy, your brain, already loosening in preparation for sleep, begins to spool out horrific scenarios of mass murder and boogeymen. You hear a creek and your eyes open to the penetrating blackness. How easy it would be for some big bulky guy to just blast into your room and open fire, or – worse – slide from your closet where he’s been lurking for days, watching you dress, listening to your conversations, biding his time.

I’m afraid of the dark. I know, I know. It is ridiculous. I’m an adult woman, not a child. And I can take care of myself.

And yet the fear is operating on another level. It isn’t logical, so I can’t talk myself out of it.

Last night I was in bed reading my Kindle – which is just awful for night vision. I kept hearing weird sounds and I kept getting more and more frightened. I turned off the auto-lock on my iPhone, dialed 911, and left it right next to me so if a serial killer jumped out at me, I would just have to touch CALL and help would be on the way. (Again: fear isn’t logical).

When it got too much I emailed an Enron friend who I knew would be awake and told him I was scared and was just emailing him to keep my mind off the fact that there was a serial killer in my house. I wrote, “If the serial killer gets me, tell my blog I wasn’t afraid of anything – especially the dark!”

His reply: “I’ll never reveal your secrets. I’ll tell your blog that you loved the dark – the solitude, the isolation.”

That’s what I need in my life.

After that, I turned off my Kindle and slept like a baby.

Fatboy Will Always Mean Something Else

This advert arrived in my mailbox this morning from AllModern.com, a purveyor of furniture:

Fatboy, the name of one of Enron’s west coast trading strategies, to this day is used as an example of Enron’s evil. Not just the strategy, but the name itself. One need not look far to see naysayers claiming the names were “code names” and implying there was something untoward about them.

To this day I think of Enron when I hear “Fat Boy” or “Death Star” or “Get Shorty”. It’s not a bad way to live.

An Enron Executive’s Response To Andy Fastow’s Speech

At least one Enron executive is looking askance at Andy Fastow’s recent speech in Denver. Regarding Fastow’s comments on ethics, the exec said, “Ethics are like a head of hair. If you have them, it is obvious. If you don’t have them, talking about them is not likely to make them suddenly sprout on you!”

My feeling is that there is something rather prissy and arrogant about lecturing others on ethics. It seems to me that the only people who speak out about ethics are those who have none (such as Sharron Watkins) or who discovered them in prison.

The Enron exec then went on to describe other Fastow mistakes:

If someone asks if your sentence was sufficient, have an answer! “I served what the court ordered” is wormy.

If someone asks how much money you have left, you don’t have to answer them, but try to engage them in the motivation behind the question. Tell her you don’t talk about your personal finances, but ask “Why is that important to you?” And get into a discussion. Also ask her if she is curious about how much money the ETF spent in prosecuting you.

A Price To Pay by David Bermingham Is Now Available

David Bermingham’s new book, A Price To Pay is now available on Amazon. The Kindle version has a special price of £2.05. Mr Bermingham is the second NatWest Three banker to release a book about his experience being prosecuted for crimes related to Enron. Gary Mulgrew recently published, Gang of One. At the Amazon website, there are several videos of Mr Mulgrew speaking about his experience in a Texas prison. They are definitely worthwhile.

Andy Fastow Gives Speech About Enron

Via Denver Post:

Andrew Fastow, the former Enron chief financial officer who went to prison for securities fraud, told an audience at University of Colorado-Boulder Monday night that following the rules isn’t enough.
“When I went
to jail I still thought I was innocent because I had followed the rules,” Fastow told more than 1,000 students at the Leeds School of Business session at Macky Auditorium.

Fastow told the more than 1,200 students that it took him a couple of years to realize he had “used the rules to subvert the rules.”

“Therefore I am guilty,” said Fastow, who completed a six-year prison sentence in December.
The complex off-balance sheet that Fastow created to funnel tens of millions of dollars into executives’ pockets and hide corporate losses contributed to the collapse in 2001 of the energy trading giant, which had once been valued at $60 billion.

“I didn’t think I was committing fraud,” Fastow said. “But the net effect of all these deals was to create a misrepresentation of the company.”
The key problem, Fastow told the students, was that when rules are vague and complex it creates “a business opportunity.”

“There are people who look at the rules and find ways to structure around them. The more complex the rules, the more opportunity,” Fastow said.

That was what Enron was doing, Fastow said, with the approval of the board of directors, attorneys and accountants. “I thought we were freakin’ geniuses,” he said.

“The question I should have asked is not was is the rule, but what is the principle,” Fastow said.
Fastow contacted the university and asked if he could speak to students. He had read an op-ed column, published by Bloomberg BusinesWeek in January, written by Leeds Dean David Ikenberry and Donna Sockell, director of the school’s Center for Education on Social Responsibility. The piece was about the need for deeper ethics training in business schools.

“Enron was an incredible corporate failure,” Ikenberry said. “And this was a unique teaching opportunity.”

Fastow fielded questions from CU students for about 40 minutes tonight. They asked him if he though his punishment was adequate for the harm he had done. Fastow said he had served the sentence the court gave. One student asked how much money Fastow still had. The former Enron executive said that it was none of the student’s businesses.

One asked what Fastow thought about mark-to-market accounting, which allows the value of an asset to be changed as its market value fluctuates. It was another accounting device Enron used to inflate value.

“Mark-to-market accounting is like crack,” Fastow replied. “Don’t do it.”

Wow! I am honestly surprised by this. I thought for sure he’d wait a while before speaking out – so this is great fun to read. His crack about mark to market accounting is a little out of left field but otherwise, just wow.

Also, it pleases me very much that he told the student it was none of her business how much money he had left. He’s right about that, but it seems somehow impolite to say so. Good on him.

Things Enron Executives Have Said To Me This Week

“Your sexual freedom scares the hell out of me!” (Best line all week, I think. But it is only Thursday afternoon.)

“Don’t worry, I won’t tell.”

“Enron was a dog-eat-dog place and I think you overlook that on your blog.”

Me: What are you doing?
He: Playing PS3
Me: Really?

He: What are you doing?
Me: Playing with my mixing board.
He: Is that code for something?
Pause.
Me: It is now.

Modern 3 Little Pigs

This is not Enron related, but I think you should watch it, just the same. Pay special attention to why the three little pigs plead guilty.

Announcement of Kevin Hannon and Greg Whalley’s New Positions

This is a document announcing the Kevin Hannon’s and Greg Whalley’s new positions inside Enron.

A Different Kind of Conspiracy

I bought a few art books tonight for my Kindle, including Chasing Aphrodite: The Hunt for Looted Antiquities at the World’s Richest Museum and was surprised to see a blurb by Kurt Eichenwald on the cover.

Why on earth is he blurbing a book about an art theft? Strange.

A Stupid Lie From A Stupid Woman

An interview with Sherron Watkins cracked me up.

CCR: Did you want to work for Fastow?
WATKINS: At this point I was starting to get disheartened about Enron and started interviewing outside of the company. The way things work is — you need to find a job quickly. You can’t be without a position. I had an offer from investor relations. And I had an offer from Andy Fastow, the CFO.

Andy now all of a sudden had mergers and acquisitions as part of his responsibilities. He is a little bit insecure. And I had worked with him for three years. He wanted someone he knew as part of the M& A activity. It wasn’t a vice president level job.

The investor relations job had really long hours four times a year with earnings releases. So, during those four times a year, you have to come in at 7 a.m. and don’t leave until 10 p.m. My nanny takes night classes.

So, there was no way I could do it.

1. Sherron Watkins has a nanny. She’s one of the 1%!
2. Sherron Watkins didn’t take a job because four times per year she had to work late? She’s lying through her crooked yellow teeth.

In Which I Answer Search Terms

It’s been a while since I’ve done one of these. I’ve deleted a lot of the variations and some of the more mundane ones (“is Enron overpriced”, which I get a lot). Herewith:

ken rice enron
Ken Rice is always one of the top ten searches – usually one of the top five. He’s a popular dude.

michael kopper 2012

van gogh night sky
I can barely talk about my dead boyfriend right now. I’m too emotional after reading his letters and seeing his art in London and then in DC. It’s still very raw for me.

cara ellison halbirt enron

Whoops, you’re a little confused. Cara Ellison Halbirt isn’t the Enron “Cara Ellison.” Cara Ellison Halbirt is a nice lady who lives in Houston. There is also a cool gamer Cara Ellison who, I believe, is Scottish and lives in Japan. I’m a different nice lady.

ben glisan today

john forney enron 2010
2010? Why are you searching for John Forney in 2010?

enron blog

john griebling enron

There are a few things about Griebling in my EBS posts.

david bermingham
Lots of David Bermingham stuff on my blog.

mckinsey illuminati
Dude. You have to know how crazy you sound.

enron wives

enron stock chart

i am enron

public relations campaigns at enron
Hm. I’m curious if this query can be more granular. I’d like to know specifically what this person is looking for.

cliff baxter

essay of the smartest guys in the room- enron
If you plagiarize my epic Smartest Guys post, I will hunt you down and make you pay.

management and leadership enron

carl bass houston and steve

music by movie enron smart class

Wha?

how andy fastow did it
Did what?

how sherron watkins blew the whistle
She didn’t. She traded on insider information, then waddled up to Ken Lay’s office to blackmail him.

when was enron stock declared worthless

I get this one a lot. Stock isn’t really “declared” worthless. Once it sinks below $1, it is delisted from NSDAQ/NYSE and then usually vanishes off the face of the earth.

is there a little bit of enron in all of us
Trying really hard not to type what I want to type here.

nigerian barge + fastow
Oooh I love the Nigerian Barge transaction because it was so simple.

“cara ellison” + indictment
My indictment is irrelevant.

natwest three book
There are two of them now. David Bermingham and Gary Mulgrew have both written books.

using the gordon growth model, explain why the 2001 terrorist attacks and the enron financial scandal caused stock prices to decline.

Come on, sport, use your brain. Quit trying to cheat.

industry secrets of mckinsey
Enron execs who worked at McKinsey tell me McKinsey was much more sinister than Enron. That should add some fuel to your fire.