Saturday, June 16, 2007

An Ostrich Visits the Black Trial

U.S. District Judge Amy St. Eve accepted the government's request to instruct the jury considering the fate of Lord Conrad Black and three other defendants that they may find the defendants had the requisite intent if they were willfully blind.  Known as the ostrich instruction, the government can prove the intent for the various fraud counts by establishing the defendant's purpose to engage in the alleged fraudulent scheme or by showing that there were indicia of wrongdoing but they chose to turn a blind eye to the red flags -- i.e., they stuck their heads in the sand.  The advantage is that the government can secure a conviction on proof that might not be sufficient to show an actual fraudulent intent, allowing the jury to infer it based on a defendant's acting in the face of facts indicating a substantial problem.  This is awfully close to recklessness, but not quite because the prosecution must still prove knowledge of the circumstances giving rise to the willful blindness. 

The trial is taking place in Chicago, so there is no better person to explain the issues related to the ostrich instruction than Seventh Circuit Judge Richard Posner, who wrote in U.S. v. Giovannetti, 919 F.2d 1223 (7th Cir. 1990):

The most powerful criticism of the ostrich is, precisely, that its tendency is to allow juries to convict upon a finding of negligence for crimes that require intent.  The criticism can be deflected by thinking carefully about just what it is that real ostriches do (or at least are popularly supposed to do). They do not just fail to follow through on their suspicions of bad things. They are not merely careless birds. They bury their heads in the sand so that they will not see or hear bad things. They deliberately avoid acquiring unpleasant knowledge. The ostrich instruction is designed for cases in which there is evidence that the defendant, knowing or strongly suspecting that he is involved in shady dealings, takes steps to make sure that he does not acquire full or exact knowledge of the nature and extent of those dealings. A deliberate effort to avoid guilty knowledge is all the guilty knowledge the law requires. (Italics added)

A judge instructing the jury along these lines runs a substantial risk of reversal if there is not a sufficient basis for the instruction because it effectively allows the jury to return a guilty verdict on evidence that might not support a finding of the requisite intent.  The instruction has been a feature in other high profile white collar crime prosecutions, notably that of Bernie Ebbers of WorldCom and Jeffrey Skilling of Enron.  Is the instruction warranted in this case? Lord Black and the others did not testify, and the government's key witness, F. David Radler, testified primarily about the knowledge of the defendants -- save perhaps former general counsel Mark Kipnis -- regarding the non-compete agreements.  Nevertheless, the government gets the benefit of the ostrich instruction that may make it easier to convict on the fraud counts.

The defense rested after a little less than two weeks, and Judge St. Eve has set aside an entire week for closing arguments.  With four defendants, each will probably get about a day before the jury after the government presents its argument, and then the prosecution gets the last word.  It may be interesting to see how many times Radler is called a liar or some synonym for being dishonest by defense counsel, particularly Lord Black's attorney Edward Greenspan.  After listening to the lawyers for a week, the jurors will probably welcome the relative peace of deliberations.  A Chicago Tribune story (here) discusses the decision on the ostrich instruction. (ph)

Fraud, Prosecutions | Permalink

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Tracked on Jun 21, 2007 2:48:46 AM


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