A “Blow” to the Office: How We Think About Failed Prosecutions

By Matthew Skurnik*

Prosecutors seem to be caught in a bind.

Last week, the Manhattan D.A.’s high-profile fraud trial against three former leaders of the now-defunct law firm Dewey & LeBoeuf came to an anticlimactic end with the judge declaring a mistrial.  After more than 22 days of deliberation, the jury agreed to acquit on some charges, but deadlocked on the majority of the more than 150 counts.  The press characterized the result as a “blow” for District Attorney Cyrus Vance.

Several weeks before, the U.S. Attorney for the Southern District of New York, Preet Bharara, suffered his own “blow” when the Supreme Court denied cert. from a Second Circuit decision overturning two major insider trading convictions.  The convictions were part of Bharara’s larger crackdown on insider trading in the hedge fund and expert networking industries, with the Second Circuit’s decision forcing Bharara to drop charges against seven others who were part of that effort—itself another “blow.

At the same time, the political winds are turning fast in the direction of more individual prosecutions in corporate white-collar cases.  What started as a critique about a lack of C-suite prosecutions stemming from the financial crisis has now hit the mainstream.  The Justice Department recently announced a policy shift toward increasing its focus on individuals when investigating and prosecuting corporations, and Hillary Clinton has made individual prosecutions a central tenet of her plan to regulate Wall Street.

For the Justice Department, this is a sharp departure from practice.  Since even before the financial crisis its preferred strategy has been to charge the firms themselves, enter into deferred- or non-prosecution agreements, extract enormous fines, and monitor the firms as they institute new compliance measures.  It’s a nice method for the government because it involves no trials, no appeals, no juries—so no opportunity for the government to lose.  The problem, however, is that it quickly starts to look like culpable employees are getting away with murder, while shareholders are left footing the bill for massive fines.  Moreover, these sorts of corporate crimes—on Wall Street and elsewhere—seem to keep happening.  So the conventional wisdom has now become that we need the deterrence that only the threat of jail time can offer.

The thing about prosecuting individuals, however, is that it can get messy.  Unlike corporations, which will practically always settle charges, individuals sometimes exercise those pesky constitutional rights to trial.  And with trials comes swaths of unpredictability: judges, juries, witnesses, appeals.  This means that sometimes the government is going to lose.  And here is where prosecutors find themselves in a bind: on the one hand they are supposed to be focusing on individuals in white-collar cases, but on the other every time this riskier strategy results in a loss the prosecutor is chastised.

Addressing this issue requires more than just recognizing that prosecutors have a tough job to do.  It’s prosecution 101 that you shouldn’t bring charges unless you are convinced that the defendant is guilty and you can prove it.  The human cost to a defendant of being charged with a crime and facing trial is tremendous even if the end result is acquittal.  But even when bringing the case was the right decision at the outset, the unpredictability of trial will sometimes mean that the prosecutor still loses.  And in these cases, we need to stop thinking about their result as a “blow” to the Government.   This common view has the potential to chill the exact thing that so many are clamoring for: a focus on individuals over corporations in white-collar cases.  In the end, if everybody plays their part right—the prosecutor properly brings charges, the judge fairly adjudicates, and the jury fairly finds for the defendant—then that’s not a blow, that’s justice.

 

* Matthew Skurnik is a 3L at Harvard Law School.



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