September 25, 2005
The "CSI Effect" on White Collar Crime Prosecutions
Reuters has a story (here) about the white collar crime conference at Georgetown University this past week in which U.S. Attorney Alice Martin noted the effect of a lack of forensic evidence on the prosecution by her office of former HealthSouth CEO Richard Scrushy, which ended with an acquittal. She lamented the fact that jurors said there was no "fingerprint" evidence linking Scrushy to the documents in the case, nor did he say "fraud" on any of the audiotapes. The so-called "CSI Effect" to which she referred is based on the television shows that have cases solved through careful scientific analysis of physical evidence that links the perpetrator to the crime (along with more than a few lurid details to keep the viewers' attention). In white collar crime cases, it is rare that any such forensic analysis will play a role in the prosecution, and in the vast majority the defendants admit to the underlying transactions and argue about their intent or lack of involvement in the decisions.
While I don't dispute that many jurors do not have a good understanding of how the criminal justice system works, I think the focus on the "CSI Effect" is overblown. Television shows about lawyers have been around for years, and jurors perceptions of the legal system have been shaped by programs stretching back to "Perry Mason." One can argue that legal programs are more pervasive than before, but not all make the system look cut-and-dried or focus exclusively on forensic analysis. Some episodes of "Law and Order" consider the gray areas of the law, and occasionally a defendant is not convicted, although that has become rarer over the years. One can also argue that real life prosecutions of defendants as diverse as O.J. Simpson, Bernie Ebbers, and Scott Peterson have as much effect on perceptions about the criminal justice system as any weekly drama.
The statements made by the Scrushy jurors are as much about their doubts regarding the government's evidence as they are a possible reflection of how a criminal prosecution is perceived. Perhaps the jurors were not mislead by their view of the system, but instead were demanding from the prosecution a clearer link between Scrushy and the fraudulent accounting beyond just the word of admitted criminals (i.e., the five guilty CFOs, among others), and they simply noted that some sort of objective evidence would have bolstered the prosecution's case. It seems a bit disingenuous to blame the jurors -- and the media -- for the outcome of the Scrushy prosecution when juries were able to handle complex accounting issues in the successful prosecutions of Ebbers and former Adelphia Communications officers John and Timothy Rigas, neither of which involved any of the forensic evidence used to solve all those crimes on the many CSI's that populate television. (ph)
10 Bedrooms, 12 Baths, Motivated Seller
A Wall Street Journal article (here) discusses the sale by former WorldCom CFO Scott Sullivan of his palatial house in Boca Raton. Sullivan was sentenced to a five-year term of imprisonment for his role in the accounting scandal at the company, a significantly lower sentence due to his cooperation with the government. As part of his settlement of the securities fraud class action suit, Sullivan agreed to turn over the proceeds from the house sale. After first putting in on the market in 2003 for $23 million, the house was sold for $9 million. There's nothing like a motivated seller to drive down the asking price.
Along the same lines, the Journal reports that Alberto Vilar, the founder of the Amerindo Investment Advisors who is under indictment for fraud, has put his 20-room New York Co-op (6 bedrooms, 9 baths) on the market for $14.5 million. Information about the apartment is available from the broker here. Vilar spent almost a month in jail after his arrest earlier this year when he could not make the $5 million bond. Yet another motivated seller, and you know how tough those co-op boards can be in scrutinizing potential purchasers. (ph)
Considering the Kozlowski & Swartz Sentence
The weekly New York Times column What's Online (here) reviews co-editor Ellen Podgor's post discussing the 8-to-25 year sentence imposed on former Tyco CEO Dennis Kozlowski and CFO Mark Swartz and arguing that the prison term is too harsh given the status of the defendants as first-time offenders. (ph)