Friday, January 14, 2005

Prosecution Strategy in Ebbers Trial

An article in the Wall Street Journal (Jan. 14) discusses the strategy of the U.S. Attorney's Office in the prosecution of Bernie Ebbers.  The article states:

If it's up to the prosecution, the trial revolving around the largest accounting fraud in U.S. history may end up having relatively little to do with accounting.

Part of the reason for the prosecution's likely trial strategy: Past trials of corporate scandals show that most jurors are unlikely to be interested in lengthy and technical explanations of shady accounting maneuvers. For example, a recent trial of four former midlevel executives at Qwest Communications International Inc. failed to yield any convictions after seven weeks focused on accounting matters and voluminous e-mail exchanges.

The KISS (Keep It Simple, Stupid) strategy is standard fare in white collar crime cases, although the Manhattan DA's office seemed to miss that point in its mind-numbing six-month trial of Dennis Kozlowski and Mark Schwartz, whose retrial begins soon (see Wall Street Journal story here).  The problem for the government in the Ebbers case is that the accounting issues, largely focusing on whether certain items should have been capitalized or expensed as incurred, will have to be addressed at some point.  One defense strategy may be to focus on the arcane accounting issues (is that repetitive?) to essentially bore the jury to death in support of its "Honest-but-Ignorant CEO" defense (earlier posts here and here).  In effect, if the jurors find this stuff incomprehensible, then isn't it likely Ebbers did too?  The tug-of-war will be interesting to watch to see how much the government can shift the focus of its financial fraud/conspiracy case away from the underlying accounting issues. (ph)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2005/01/prosecution_app.html

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