Guilty Defendants (You know who you are) The Best Defense May not be the Most Expensive

Floyd Norris of the New York Times recently posted in his Notions on High and Low Finance blog an excellent commentary about Jeff Skilling’s $70 million defense in the Enron fraud in a post entitled “The Worthless $70 million Defense.”

He wrote in part:

“Jeffrey Skilling’s $70 million defense got him 24 years in prison and an order to forfeit $24 million.”

With regards to other corporate scandals he wrote:

“HealthSouth and CUC International, admitted there was a scandal, but insisted they were victims of crooked subordinates. Sometimes the defense worked, sometimes it did not.”

I posted the following thoughts on his blog in response to his commentary:

My Comment and Advice to Guilty Defendants (You Know Who You Are):
The exposed criminal’s “best defense that money can buy” is the truth. A person must take full responsibility for their actions and hold themselves fully accountable without any excuse. They should never rationalize their criminal conduct.

About 20 years ago after 18 years involvement in the massive fraud at Crazy Eddie’s and an additional two years spent obstructing justice and covering up my crimes and others from the government I decided to “cooperate” for the purely selfish reason of avoiding a very long prison sentence.

I cooperated for 4 years thereafter and was the main witness in the criminal trial and five years later in the SEC civil trial.

During my initial 4 years of cooperation (which included over a thousand meetings and discussions) with government investigators and the US Attorney my lawyer was never present (except my initial meeting) and I had no benefit of any legal protection whatsoever. I finally signed a plea agreement after 4 years which was amended at the request of the government twice to increase my criminal exposure.

My sentencing Judge received only 5 letters – 2 from the government and 3 from attorneys representing crime victims. There was none of the usual letters from friends, relatives, and community members.

My sentencing guidelines exposure was 5 years incarceration and the US Attorney recommended 2 years jail time. My statement to the Judge was simple, “I am embarrassed to say I knew what I did was wrong when I did it.”

I never went to prison and my criminal defense cost me far less than any of the criminal defendants mentioned directly or indirectly above in Mr. Norris’s commentary.

While you may disagree with this “law and order” Republican appointed Judge’s decision regarding my admittedly light sentence the fact is that he took into account the truthfulness of my testimony, the fact that I made no excuses, the fact the I used no handler’s (attorneys) in making myself fully accessible to both criminal and civil plaintiff investigators and most of all the fact that I was willing to risk everything (by having no legal protection for 4 years) in helping the government and civil plaintiffs obtain justice.

Everyone has a right to a legal defense. However, I caution the guilty (you know who you are), from my own experience as an admitted venomous criminal it is far better to settle earlier and take responsibility and put it all behind you than to build wings to law firms.

There is a saying among criminals, “some lawyers will defend you to your last dollar.”

Every dollar you save in legal fees and resources you save the prosecutors and civil plaintiffs reduces the damages to your victims and their suffering.

If you are guilty, it is far better to face the mercy of the Court than its anger.

Respectfully,

Sam E. Antar (Former Crazy Eddie CFO)

— Posted by Sam E. Antar

Skilling's Sentence: What It is Good For and What Is Still Required

White collar crime while not a violent crime can be in many ways more brutal in the collective harm in inflicts on our society. White collar crime harms not only the company and its direct victims (shareholders, employees, and company creditors) but the integrity of our financial markets.

When there is any doubt as to the reliability of financial information the collective market capitalization of our public companies suffer resulting in lost wealth such as reduced pensions benefits to retirees, higher costs of capital, and higher costs of debt. Higher costs of doing business reduce employment and taxes. Therefore, white collar crime is a scourge that destroys our economic fabric.

The sentencing of Jeffrey S. Skilling to 24 years and 4 months in prison recognizes these important facts. White collar crime must be taken seriously for what it is – a brutal crime which inflicts collective harm on the innocent and often inflicts collateral damage on society.

However, while we must hold white collar criminals fully responsible and accountable for their actions long prison terms do not by themselves prevent white collar crime.

The sentencing of Mr. Skilling will not stop any crimes in progress or cause any criminal to wake up the next day with any new found morality. Criminals can only be prevented though effective deterrents though barriers such as strong internal controls, effective oversight, and “checks and balances.”

We must require all organization types (businesses, non-profits, and governmental organizations) to have strong and verifiable internal controls. Such internal controls must be monitored, evaluated, and audited by competent fully independent external auditors.

We cannot retreat from the reforms legislated under Sarbanes-Oxley as some persons have proposed but must instead strengthen them with increased educational standards on the accounting profession that enforces this important law. Auditors must do no consulting work for their clients.

We must require the internal audit function to report to an Audit Committee made up of only independent members of the Board of Directors and not report to the CEO or CFO. The internal audit profession must be licensed by the states similar to way CPAs are.

Punishment and prison are important. However, unless integrated with prevention, professionalism (competence), and power (legislation) there will be many more Enron’s to come.