Lanny Breuer Admits That Economists Have Convinced Him Not to Indict Corporations

I’ve become increasingly convinced that DOJ’s head of Criminal Division, Lanny Breuer is the rotting cancer at the heart of a thoroughly discredited DOJ. Which is why I’m not surprised to see this speech he gave at the NYC Bar Association selling the “benefits” of Deferred Prosecution Agreements.  (h/t Main Justice) He spends a lot of his speech claiming DPAs result in accountability.

And, over the last decade, DPAs have become a mainstay of white collar criminal law enforcement.

The result has been, unequivocally, far greater accountability for corporate wrongdoing – and a sea change in corporate compliance efforts. Companies now know that avoiding the disaster scenario of an indictment does not mean an escape from accountability. They know that they will be answerable even for conduct that in years past would have resulted in a declination. Companies also realize that if they want to avoid pleading guilty, or to convince us to forego bringing a case altogether, they must prove to us that they are serious about compliance. Our prosecutors are sophisticated. They know the difference between a real compliance program and a make-believe one. They know the difference between actual cooperation with a government investigation and make-believe cooperation. And they know the difference between a rogue employee and a rotten corporation.

[snip]

One of the reasons why deferred prosecution agreements are such a powerful tool is that, in many ways, a DPA has the same punitive, deterrent, and rehabilitative effect as a guilty plea:  when a company enters into a DPA with the government, or an NPA for that matter, it almost always must acknowledge wrongdoing, agree to cooperate with the government’s investigation, pay a fine, agree to improve its compliance program, and agree to face prosecution if it fails to satisfy the terms of the agreement.  All of these components of DPAs are critical for accountability.

But the real tell is when he confesses that he “sometimes–though … not always” let corporations off because a CEO or an economist scared him with threats of global markets failing if he held a corporation accountable by indicting it.

To be clear, the decision of whether to indict a corporation, defer prosecution, or decline altogether is not one that I, or anyone in the Criminal Division, take lightly.  We are frequently on the receiving end of presentations from defense counsel, CEOs, and economists who argue that the collateral consequences of an indictment would be devastating for their client.  In my conference room, over the years, I have heard sober predictions that a company or bank might fail if we indict, that innocent employees could lose their jobs, that entire industries may be affected, and even that global markets will feel the effectsSometimes – though, let me stress, not always – these presentations are compelling. [my emphasis]

None of this is surprising, of course. It has long been clear that Breuer’s Criminal Division often bows to the scare tactics of Breuer’s once and future client base. (In his speech, he boasts about how well DPAs and NPAs have worked with Morgan Stanley and Barclays, respectively.)

It’s just so embarrassing that he went out in public and made this pathetic attempt to claim it all amounts to accountability.

Marcy has been blogging full time since 2007. She’s known for her live-blogging of the Scooter Libby trial, her discovery of the number of times Khalid Sheikh Mohammed was waterboarded, and generally for her weedy analysis of document dumps.

Marcy Wheeler is an independent journalist writing about national security and civil liberties. She writes as emptywheel at her eponymous blog, publishes at outlets including the Guardian, Salon, and the Progressive, and appears frequently on television and radio. She is the author of Anatomy of Deceit, a primer on the CIA leak investigation, and liveblogged the Scooter Libby trial.

Marcy has a PhD from the University of Michigan, where she researched the “feuilleton,” a short conversational newspaper form that has proven important in times of heightened censorship. Before and after her time in academics, Marcy provided documentation consulting for corporations in the auto, tech, and energy industries. She lives with her spouse and dog in Grand Rapids, MI.

24 replies
  1. Karen Pooley says:

    What the government doesn’t realize is that the lack of prosecutions means we now want the government’s heads on pikes in our town square. The populace understands that the corporations only are allowed to continue this felonious behavior because our government is allowing it.

    Jill Stein 2012!

  2. scribe says:

    Imagine, if you will, just how effect the deterrent of the criminal law would be, if the prospect of a long stay at FCI-pound-you-in-the-ass was a reality, rather than a notional threat.

    FWIW, the last corporate executive I remember going to jail was Joe Nacchio, formerly the head of QWest, who was sent up for alleged stock manipulation or something. IIRC, the profit projections didn’t come true.

    Of course, the profit projections didn’t come true after Nacchio said “I think that’s illegal and therefore won’t play” to the NSA when they came “asking” for QWest’s “cooperation” in installing some gear. For some reason, QWest didn’t get government contracts it was supposed to.

    But none of that ever got to the jury.

  3. joanneleon says:

    Well, if Mr. Breuer has proven that DPAs are so effective, why don’t we try it across the board with all criminal matters with individuals? Or perhaps just nonviolent crimes?

    Anyway, wow, this guy just told us that the big banks scare him into not indicting them, basically. If there are any defense lawyers out there not using this tactic, they sure will now. I’d also love to know which economists are advising him (and how much they are being paid to do so).

  4. rosalind says:

    “Extortion 101” now added to MBA programs across America.

    the crime of Extortion now removed from DOJ book’o’crimes for da Banksters.

    got it.

  5. der says:

    – “Our prosecutors are sophisticated. They know the difference between a real compliance program and a make-believe one.”

    And they also know the difference between a crap make-believe do-good government job trying to indict rich lawbreaking assholes and one where you can make real $ defending them:

    – “When one well-to-do Hamptons couple discovered that their new $2million house was being built too far from the curb they promptly smashed it down and started again.

    The mistake, which is estimated to cost up to $150,000, happened after construction workers used the wrong site plan.

    After returning from vacation Eric and Margaret Friedberg saw that their Southampton Village house was quickly beginning to take shape – just in the wrong place.

    But by the time the couple, both former government prosecutors, spotted the error the first floor construction was complete and work had begun on the second floor framing.

    Read more: http://www.dailymail.co.uk/news/article-2167854/Take-Hamptons-couple-demolish-house-building-blunder-doesnt-leave-room-pool-garage.html#ixzz26UBVHnF0

  6. Frank says:

    I hope these same economists read stories to Lanny Breuer before bedtime and keep the lighty-light on so the boogey man won’t get him.

    Poor poor deluded Lanny et al, the real systemic risk is the current system. Noodle on that for a little bit ivy league economists that is to say if you aren’t incentivized to say otherwise (which I highly doubt).

    Fraud never had it so good, I’m actually jealous.

  7. posaune says:

    Geez. . . I’m reading this while watching Götterdämmerung on MPT. We need Brünnhilde to set the whole bunch to . . . . well, never mind.

  8. keepon says:

    @emptywheel [email protected]:35pm

    TOTAL AGREEment!! Use of public office for PRIVATE GAIN despite the fact that Breuer is (supposedly) JUSTICE. In fact Breuer is: GOTTERDAMERUNG, MAFIOSI, GODFATHER GODFATHER!

    Where are all the other PERPs today who willfully shoved this Nation INTO this ‘race to the bottom’ free fall-Paulson, Lewis, Mozillo? ‘Livin’ LARGE’ no doubt leaving Breuer/Holder behind to keep the trail under cover, choking out the middle class.

    Listen again to the NYU Barofsky-Spitzer-White-BREUER interview where they ‘dis’ the ‘revolving door’ as hogwash, and how ‘soooo very hard’ it is to bring provable criminal cases. SELF serving COVERUP. Breuer poo-poo’s robo-fraud as ‘small potatoes’ and alludes to pursuit of criminal ‘big fish.’ Just wait and see he tells us.

    Just let Bill Black and company in there. They’ll show these leaches what criminality. Al Franken ditched Bill Black sooo fast it gave you whip-lash back in March:

    http://econintersect.com/b2evolution/blog1.php/2012/03/08/william-black-washington-testimony

    out of fear that Black would eviscerate the ongoing prosecutable criminality. Franken threw a wet blanket over Black’s revelations re: criminality post haste before Black exposed these kabuki-lawmen.

  9. zot23 says:

    Imagine if this was a run of mill criminal investigation:

    “I know I was picked up for murder, but you can’t put me in prison for it. It would ruin my finances, decimate my family, put my kids on food stamps, and dishearten the entire community. No, the only responsible thing to do is to turn me lose and make me swear (in secret of course) to never do it again. Unless I want to. Cheerio mates, I’m off!”

    I mean fuck a duck, the only question I have is how is it possible that the DOJ lawyers are now not on the hook for criminal behavior by refusing to prosecute criminal behavior?

  10. kate says:

    Basically as it stands now, we have laws that supposedly are for everyone. Corporations have been declared by the Supreme Court; people. It is clearly and very painfully obvious that the same laws that apply to us do not apply to the big banks and fraud street. To make all the law breaking legal they just need to pass a new law simply exempting (name of our favorite big banking buddies) and fraud street from those laws that they have blatantly been allowed to break with no penalties. It would make these ridiculous legal rulings in favor of forgery, false and phoney assignments and paperwork, fraud, illegal foreclosures, theft of investor money with “worthless” mortgage backed securities, etc., etc., etc., easier to swallow. Jeeze, what a sad state of affairs!

  11. [email protected] says:

    The Obama administration has been a 100% neocon administration from the beginning, so to suggest one individual, after they’ve reappointed even Bush inner circle types like Marc Grossman, Victoria Nuland, Robert Mueller III (grandnewphew of Richard Bissell, and who’s wife is the granddaughter of Gen. Cabell) is somewhat nebulous and misleading.

    All of this administration are bad, just like the last administrations going back to Reagan — a neocon continuum from 1980 on…

  12. keepon says:

    then came Corzine, Dimon & ‘the black whale,’ and of all things- LIBOR !!! Does DOJ need a magnifying glass? Not at all:

    “Our prosecutors are sophisticated. They know the difference between a real compliance program and a make-believe one,” says Breuer.

    Pinnochio syndrome. Same as the “regulators” who let it all slide downhill. DOJ- SAME Model. One doesn’t need to be sophisticated to see what’s playing out here. DOJ is surrendering the Nation through a rigged bannana republic election where the only choice is which crook you’re going to vote for.

    What was the USA, model to the world, has ceased to be.

  13. myshadow says:

    “Lanny Breuer is the rotting cancer at the heart of a thoroughly discredited DOJ.”

    That rot starts in the oval office. From the beginning, the understanding has been any in the ‘financial services business’= banksters are immune from prosecution.
    brueuer and holder serve at the pleasure of the President and there hasn’t been a single move to prosecute ANYONE.
    It has been the position stated by the President in a presser last October that ‘nothing done was illegal’.

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