February 03, 2004

Fake Crimes

Studies show Americans close to being the worst educated and least aware population among first world countries. Americans easily stumble into war and give up their rights because of exaggerated fears of terrorists and criminals. Americans have been losing accountable government, liberty and justice for a long time. At some point these values become irretrievable.

Consider justice. The US has the highest rate of incarceration in the world and imprisons 6 to 10 times as many people as any other industrialized country. Between 1990 and 2000 the US population increased 13%. The US prison population more than tripled.

There are hundreds of thousands of innocent Americans in prison. They are there because the criminal justice system no longer works to discover the truth of a crime, but to convict at all cost whoever happens to be charged with a crime. And they are there because the US criminalizes more acts than any other country in the world, including tyrannical police states.

In the US there are three categories of prisoners: the guilty, the innocent, and those convicted as a result of prosecutors’ interpretations of vague and broad statutes that deem conduct to be criminal that reasonable people—and every other country—do not recognize to be criminal.

For example, in the Martha Stewart case, the prosecutor criminalized her exercise of her constitutional right to declare her innocence. He said it constituted fraud for her to declare her innocence and tacked on the charge. Remember that if you ever stand before a judge.

Almost everyone in prison is wrongfully convicted, even the guilty. According to the US Dept. of Justice (sic), 95% of criminal convictions result from plea bargains. What is a plea bargain but self-incrimination, conviction without a trial by jury and without a test of the evidence against the defendant.

An uninformed public believes plea bargains to be sweet deals for criminals. Sometimes they are, but more often pleas result from prosecutors piling on charges until the defendant, innocent or guilty, cries “uncle” and gives up.

Prosecutors not only coerce defendants, they coerce witnesses to give false testimony. Sometimes coercion takes place behind closed doors. Other times it takes place in full public view.

Consider husband and wife defendants Andrew and Lea Fastow in the Enron case. The Fastows have two young children. In order to coerce “cooperation” and testimony against Enron executives, the federal prosecutors threatened to put both father and mother in prison, effectively rendering the two young children orphans.

In Harvard law professor Alan Dershowitz’s immortal words, Andrew Fastow is being taught not only to sing but also to compose.

To keep his wife out of prison, he will give the prosecutors whatever testimony they want against his bosses.

The American public watches all this in plain view and then believes the testimony!

You may think that Enron officials deserve what they get. But do you approve of the illegal and unethical methods used to produce the convictions? In effect are the prosecutors as guilty of criminal behavior as those they pursue?

“Junk bond king” Michael Milken was put into a similar situation. Unless he agreed to a plea, the prosecutors threatened to indict his younger brother.

If prosecutors can so easily frame the wealthy and politically connected, what do you think happens daily to the inner city poor?

Prosecutor Rudy Giuliani was a master at using the media to destroy the reputations of his victims, thus pre-empting a trial where evidence of a crime could be tested. Giuliani climbed over the bodies of his high-profile victims to become mayor of New York and a 911 hero.

Now it is Martha Stewart and mutual funds who have been targeted as a prosecutor’s path to a political career.

Martha Stewart is falsely charged with “insider trading,” an offense of which she cannot be guilty as she is not an insider and had no information from an insider.

Legal scholar and law school dean Henry Manne has shown (Wall St. Journal, 1-8-04) that prosecutor Eliot Spitzer’s charges against mutual funds are largely trumped-up. The offenses are partly the unintended result of a Security and Exchange Commission “reform,” which capped redemption fees that mutual funds used to discourage market timers.

Prosecutor Spitzer’s claims about mutual funds are based, not on law, but on an academic paper written at the Stanford University Graduate School of Business. In other words, the prosecutor has a “theory.” Professor Manne has shown the academic paper to be incorrect. What we are witnessing is a mutual fund witch-hunt based on an incorrect academic theory.

And Americans think they live under a rule of law!

No doubt some mutual fund managers exercised bad judgment and some may have broken some rules. But Spitzer’s ambition has blown the cases out of proportion. We certainly do not want to criminalize bad judgment. It is hard to find a worse case of bad judgment than the Bush administration’s invasion of Iraq.

Paul Craig Roberts was Associate Editor of the WSJ editorial page, 1978-80, and columnist for “Political Economy.” During 1981-82 he was Assistant Secretary of the Treasury for Economic Policy. He is the author of Supply-Side Revolution: An Insider’s Account of Policymaking in Washington.