The Chickenshit Club: Why the Justice Department Fails to Prosecute Executives

by Jesse Eisinger

From Pulitzer Prize–winning journalist Jesse Eisinger, “a fast moving, fly-on-the-wall, disheartening look at the deterioration of the Justice Department and the Securities and Exchange Commission…It is a book of superheroes” (San Franscisco Review of Books).

Why were no bankers put in prison after the financial crisis of 2008? Why do CEOs seem to commit wrongdoing with impunity? The problem goes beyond banks deemed “Too Big to Fail” to almost every large corporation in America—to pharmaceutical companies and auto manufacturers and beyond. The Chickenshit Club—an inside reference to prosecutors too scared of failure and too daunted by legal impediments to do their jobs—explains why in “an absorbing financial history, a monumental work of journalism…a first-rate study of the federal bureaucracy” (Bloomberg Businessweek).

Jesse Eisigner begins the story in the 1970s, when the government pioneered the notion that top corporate executives, not just seedy crooks, could commit heinous crimes and go to prison. He brings us to trading desks on Wall Street, to corporate boardrooms and the offices of prosecutors and FBI agents. These revealing looks provide context for the evolution of the Justice Department’s approach to pursuing corporate criminals through the early 2000s and into the Justice Department’s approach to pursuing corporate criminals through the early 2000s and into the Justice Department of today, including the prosecutorial fiascos, corporate lobbying, trial losses, and culture shifts that have stripped the government of the will and ability to prosecute top corporate executives.

“Brave and elegant….a fearless reporter…Eisinger’s important and profound book takes no prisoners (The Washington Post). Exposing one of the most important scandals of our time, The Chickenshit Club provides a clear, detailed explanation as to how our Justice Department has come to avoid, bungle, and mismanage the fight to bring these alleged criminals to justice. “This book is a wakeup call…a chilling read, and a needed one” (NPR.org).

Genres: Nonfiction, Politics, History, Law, Business, Economics, Finance

Audiobook

First published July 11, 2017

Reviews

[Trish · Rating 5 out of 5]

Eisinger explores “Why the Justice Department Fails to Prosecute Executives” in this book that introduces us to the heyday of criminal prosecutions for white collar crime to its nadir today.

“The Department of Justice is a loose federation of ninety-four offices around the country, each a realm unto itself, run by a U.S. attorney who is almost untouchable by headquarters in faraway Washington, D.C…The [SEC] has civil powers and must team up with various offices of the Department of Justice when a securities law violation turns into a criminal investigation….Of all of these offices, the Southern District of New York, located at the bottom tip of Manhattan, has the smartest and ablest prosecutors in the land. Any alum of the office will be happy to verify that.”

Eisinger’s detailed introduction to the men and women of the Southern District of New York begins with the Enron investigation, and later he tantalizes us with early peeks at the careers of Comey, Chertoff, Holder, Ruemeller, Weissmann, Breuer. There were plenty of folks who tried going after the big guns, Paul Pelletier, Jim Kidney, and Jed Rakoff for a few. There is a reason these last three men’s names are not as well known as the others. It’s not because they were less able. It’s because they dared to challenge powerful forces in business and government. They didn’t lose so much as get sidelined and discredited. They weren’t part of the cabal using the revolving door from government to business and back.

The title of this book comes from a statement James Comey made in an early speech to lawyers in the Southern District when he was appointed head by George W. Bush in 2002. He exhorted the prosecutors to bring cases whether or not they felt they could win. “If it’s a good case and the evidence supports it, you must bring it,” he said, otherwise you would be a member of the chickenshit club, cowering before powerful forces arrayed to stop your investigations.

What Eisinger tells us later is that many prosecutors working during the financial crisis of 2007-08 never even looked for evidence of wrong-doing. Lips and teeth, I think to myself. The chief financiers responsible for the toxic asset meltdown and the chief prosecutors responsible for bringing them to justice are like lips and teeth.

Seeing early glimpses of now-famous actors in our government drama is informative for what we didn’t know when we were reading laudatory newspaper articles about what they accomplished in the past. Eisinger has long shed his rose-colored glasses and is critical of how the Department of Justice leadership evolved into a group who was reluctant to bring cases, cases that had merit and enough evidence to expose and shame these organizations in public, even if the U.S. government never got a cent of ill-begotten gains back from their coffers. The public might be able to handle some portion of the payback--witness the difficulties Bank of America experienced for years after its thievery, lies, and overextension became daily news.

Much is made of the headliners like Preet Bharara, former U.S. Attorney of the Southern District until fired by D.J. Trump this year, but Eisinger deconstructs his cases and finds him wanting as well, eager to go after the “easy” cases involving insider trading. Eisinger goes further, showing us how difficult and unsure major fraud cases against, say, the head of Goldman Sachs, but how necessary if the public is to have any faith in the fairness of the system.

“The Southern District [under Preet Bharara] did not bring criminal charges against big investment and commercial banks. The office did not take on the power structure of American finance. Bharara did not charge top executives at the biggest companies. After the biggest bubble and financial crisis in generations, bankers at the biggest institutions sold defective products, misrepresented them, played games with their own finances, and almost crashed the global financial system, save for a multitrillion-dollar taxpayer bailout, the most important prosecutorial office in the country took on hedge funds. It was a prosecutorial non sequitur.”

The Obama administration “engineered preventive measures to stave off similar future crises” or, in the words of Brooklyn Law School scholar K. Sabeel Raman, ‘prioritizes “good” government over “democratic" government.’ There would be no feeding the populist thirst for blood, but neither did we see justice.

In 2005 the Supreme Court took up mandatory sentencing in United States v. Booker, giving judges more latitude in sentencing, the result of which executives are more inclined to take their chances than to plead guilty or plea bargain. This appears to be a corollary to the notion that corporations can police themselves. What has become glaringly obvious in the past twenty years is that corporations serve themselves.

Eisinger, whether or not you agree with him, is a terrific read. He gives a level of granularity that many will not have heard in alcohol-fueled late-night back-slapping sessions. It is useful for proponents of his tough-on-crime stance to see how we got to this point where it can appear corrupt business has government regulators over a barrel. And it can be useful for opponents of this view to see what is getting the public mad as hell.

[Athan Tolis · Rating 3 out of 5]

It’s been said, and I for one tend to agree, that in November 2016 the American public punished the Democrats for not having successfully (or otherwise) prosecuted any senior Wall Street executives during the eight years following the crash 2008. I was hoping that this book was the one that would help me decide if that’s true.

Author Jesse Eisinger, kicks off bombastically, in early 2002, with the appointment of James Comey (yes, the one who went on to star in the Hillary vs. Trump operetta) as the 58th US Attorney for of the prestigious Southern District of New York. The first time Comey assembled his crew he asked everyone who’d never lost a case to raise their hand. The go-getters who did were in for a surprise: “me and my friends have a name for you guys,” he announced. “You are the members of what we like to call the Chickenshit Club,” his shorthand for guys who failed to prosecute hard cases for fear of losing.

Sadly, that is as good as it gets. It’s where the book peaks. It has a style that works fine for a full-page spread in the newspaper, but totally breaks down when you convert to a longer format. You cannot paste together fifty such articles and hope the readers will string together a narrative.

A story does emerge, of course. It is the author’s account of how the entire justice system (and Comey with it!) has turned into one giant “Chickenshit Club.” Sadly, it reads like a project that was abandoned at some stage, picked up later and rushed to print before somebody had bothered to actually turn it into a book.

Eisinger has evident passion for the subject and has done extensive research. He’s not quoting from others, he’s tracked down all the protagonists in the book who are still alive and has gotten their story straight from their mouth. In short, he is clearly is a first-class journalist.

He would make, at best, a second-class prosecutor:

If “The Chickenshit Club” was meant to be written as a modern-day “J’Accuse” against the accommodation between big business and the modern legal complex, it falls well short. The author’s gone out there, he’s listed the individual crimes, he’s done the groundwork, he’s found all the evidence, but at grave risk of losing the interest of the jury (you, his reader) he feels compelled to call every possible witness to the stand; he does not walk you through the motive (you almost need to infer it); he certainly fails to follow judge Fleming’s advice (p. 80) to “try a thin case.” Worst of all, he does not bother with a closing statement. You will look in vain for the chapter that wraps up the main ideas of the book. (pp. 194 – 201, with 130 pages still to go, are the sole attempt)

Depressingly, he does not even dream, for one second, of pointing out what we can do to make things better. In rather un-American fashion, no attempt is made here to point at a better future if we try a bunch of solutions.

The story is not told linearly. It starts “in medias res” with the Enron trial in year 2000, it stops well short of the 2008 crisis, it goes back to the Great Depression and the Pecora trials all through to the glory years of the 1980’s, from where we are transported back to AIG, Lehman, Merrill, Goldman etc.

For all of the author’s efforts to liven up the book by giving the main actors’ biographies, those main actors are, well, lawyers. I must have counted at least a hundred lawyers’ names. I’m not only talking legends like Ferdinand Pecora and Robert Morgenthau. Here’s a heavily abridged list of important people who play a significant part in this book, all lawyers, in real-world chronological appearance: Stanley Sporkin, Peter Fleming, Kathy Ruemmler, Leslie Caldwell, Sean Berkowitz, Bob Fiske, Sheirah Neiman, Bob Mueller, Paul Pelletier, Justin Weddle, (Judge) Lewis Kaplan, Tom Hanusik, Jemes Tendick, Colleen Conry, Adam Safwat, Lanny Breuer, David Ogden, Ben Lawsky and Jim Kidney. That’s on top of marquee names I’d heard before picking up the book, people still on TV today (or at least on TV in living memory) like Rudi Giuliani, Michael Chertoff, Larry Thompson, Eric Holder, Jed Rakoff, Andrew Cuomo, the ubiquitous Preet Bharara, Mary Jo White and James Comey. It’s fair to say that at least half of them get a biographical note in the book. Judge Rakoff gets 8 (count’em) pages! Tolstoy really has nothing on Jesse Eisinger.

For every single legal episode in the book, the book goes into minutiae that would arguably not even be appropriate for a full-page, in-depth spread in the newspaper. I doing so, the author drowns his story in the detail, which is a crying shame, because it’s an important story. So allow me to summarize “the Chickenshit Club” for you the way the author never does:

1. After the Great Depression and the excess that led to it, the law for the first time became serious about “white collar crime,” a term that was defined by Edwin Sutherland (pp. 59-63)

2. Enforcement had a “silver era” that lasted into the late eighties, when the likes of Boesky and Milken were jailed. The talismanic enforcer of the times was the SEC’s Stanley Sporkin. (pp. 63-82)

3. When in December of 1975 the CEO of United Fruit (Leon Black’s dad Eli) jumped out of the window of his 44th floor NYC office to avoid the embarrassment of going to court to defend his company’s actions in the Honduras, an important precedent was set: since it was impossible to sue Black, the government sued his employer, United Fruit. The company pleaded guilty in July of 1978 and paid a $15,000 fine. The prosecutor at the Southern District who prosecuted the case was one Jed Rakoff (pp. 83-89) This was not a good development, and planted an important seed: “Investigations of top executives are more time consuming. They require better evidence, since the executives are much more likely to go all the way to trial rather than plead guilty. An executive can go to jail. A company can not.” (p. 198)


4. A further development that traces its roots to the 1970’s relates to the defense of white-collar crime. Until the 1970’s criminal defense had been 100% the work of specialized boutiques. By 1980, the top law firms had realized that criminal defense “started to look like business that was not only respectable, but also lucrative.” (p.91) The book lists some of the first prosecutors who left their jobs working for the government to join the newly-formed white collar practices of the top law firms.

5. The final piece of the puzzle was the Deferred Prosecution Agreement (DPA). After a suggestion by her deputy, Sheirah Neiman, Mary Jo White secured the first DPA against a large corporate in 1994. Until the Prudential agreed to a $330 million DPA in 1994 for misdirecting small investors to risky investments, Deferred Prosecution Agreements had only been used for petty or juvenile criminals. (pp. 93-98) Neiman, additionally, penned the “Holder memo” regarding the principles for charging corporations and the factors prosecutors should consider when deciding if they would indict a corporation. (pp. 98-101)

6. Within the space of ten short years, negotiating DPAs had become a science, with a dance all of its own, involving set pieces where first lawyers from the two sides would meet, the questions would be set for the defendants and then the prosecutors would finally meet with executives . Significantly (perhaps MOST significantly), the “internal investigation” defendants had to conduct as part of the settlement became a massive source of lucrative fees. Lucrative enough to hire and pay the very best: When Bank of America had to defend itself after the collapse of 2008, its defense was led by none other than the inventor of the DPA, Mary Jo White herself!

“In 2016 the government scale topped out at 160,300. A top partner at a good firm can easily make $3 to $4 million a year. In the meantime, the cost of living in the nation’s most coveted and powerful cities has skyrocketed. A prosecutor’s salary has become more difficult to live on, while in private practice a partner’s income has dramatically outpaced inflation.” (p. 201) Eric Holder’s career truly stands out here: “When he was attorney general, Eric Holder made $199,700 a year. As a newly returned Covington partner, Holder, who in 1999 reportedly pulled in $2.5 million, including deferred compensation, when he left the firm to head up Justice, would make many times that.” (p. 189)

“The rise of the internal investigation had an unappreciated consequence,” Eisinger further argues. “Setting up an enforcement regime based on cooperation and compliance hurt the government’s ability to conduct investigations on its own. Prosecutors look upon sprawling multinationals in despair. They believe they cannot take on giant corporations without their compliance and cooperation. The law firms do the investigating. Prosecutorial skills erode. The government has outsourced and privatized work –to the misbehaving corporations themselves”. (p. 196)


Internal investigations really come under the microscope and are revealed for what they are: on top of being the way to earn massive fees, they are long-drawn recruitment events for big law “During settlement negotiations, the prosecutors want to appear tough to the defense lawyers on the other side of the table. They want to dazzle them with their knowledge of legal precedent, mastery of details, and bargaining skills. But young prosecutors also want their adversaries to imagine them as future partners. They want to be seen as formidable, but not unreasonable. They want to demonstrate they are people of proportion.” (p. 199)

“Prosecutors who push too aggressively court social discomfort and few young assistant US attorneys are willing to do so. Young Justice Department hires are typically products of elite American educational institutions. They tend to be among the most ambitious students, their youths given over to endless hours slaving to achieve the highest grades, to please mentors and tutors, to get into the best middle schools, high schools, colleges and law schools” (p. 200) “a legal career has become the reliable route to an upper-middle-class life, analogous to working for IBM in middle management in the 1950s.” (p. 200)


7. The watershed event which changed the course of justice was the collapse of Enron. The victory the government won when it jailed Enron’s principals turned decidedly pyrrhic when, in its zeal to go after Enron’s enablers, the SEC put Enron’s (robo-shredding) accountants, Arthur Andersen, under so much pressure that they went out of business, but not before having succeeded in “putting a human face” on the thousands of its accountants who lost their jobs. When the Supreme Court reversed the “guilty” verdict on Andersen Consulting in 2005, the scene was set for an enormous reversal (pp. 1-58) A number of “mea culpa” style speeches are included regarding the fall of Andersen Consulting (including by eventual SEC head Mary Jo White (p.107) and by prosecutor Lanny Breuer (p. 57)) which demonstrate how much the Andersen bankruptcy changed opinion


8. The seminal case that showed the course of justice itself had changed was the case brought against KPMG, who were found to have aggressively marketed sophisticated but illegal tax shelters to rich individuals. This is the case where in the related Senate hearings Carl Levin famously urged the KPMG partner who had offered “I don’t know how to change my answer” to “try an honest answer.” (p. 127)

Represented by Skadden Arps, KPMG completely refused to cooperate in the case. Prosecutors Justin Weddle and Sheirah Neiman would not back down either and the scene was set for a showdown in court. The same James Comey who had decried the “Chickenshit Club” attitude a short 3.5 years earlier, now deputy attorney general, (and after consulting with Attorney General John Ashcroft) prevailed over his prosecutors to “come back to the table” and discuss a settlement with KPMG. On August 29, 2005 KPMG paid a $456mm fine and laid out in detail how their schemes worked.

Crucially, in line with the guidelines set by the Holder memo, but also perhaps as the result of Weddle having threatened “if you have discretion re fees –we’d look at that under a microscope,” KPMG had stopped paying Skadden Arps’ fees for the defense of some of its indicted executives, including its former chairman, Jeffrey Stein.

The indicted executives’ defense was based on the sixth amendment of the constitution. On June 27, 2006 Judge Kaplan acquitted Stein and accused the prosecution of “letting its zeal get in the way of its judgement” and of having been “economical with the truth.” He went on to say that prosecutors “deliberately or callously prevented many of these defendants from obtaining funds for their defense that they lawfully would have had.” That was the end of the Thompson memo.

In what must still function as a strong warning to prosecutors, Weddle ended up having to go to Romania to find work. Much better to follow the way of Mary Jo White and Eric Holder!

Beyond what all this meant for the motivations of all players, the guidelines themselves were officially changed and the Holder memo was banished to history.

Jesse Eisinger nicely summarizes this whole episode. In his words (and here his Pulitzer-winning credentials are evident) this was either:
• “a victory of a company against the unfair pressure and power brought to bear by the government. A justified reassertion of Sixth Amendment rights” or
• “an example of how the government is outdueled and outgunned at court” or
• “a fight, predominantly by major law firms, to preserve a funding stream for a lucrative and growing area of practice –in essence, protecting the ability of law firms to receive compensation through indemnification and advancement.”



9. Next comes a long list of cases where corporates basically wiped the floor with the government.

The options backdating scandal happened right after KPMG and most prosecutions fizzled.

In 2005, the Qwest communications CEO was indicted for selling shares when he knew targets would be missed. He was convicted in April 2007. The conviction was overturned in March 2008

In 2005 AIG entered with Gen Re two 500mm sham transactions whose sole purpose was to help Gen Re massage earnings. In February 2008 five defendants were convicted, but Hank Greenberg was never prosecuted. In August 2011, the convictions were overturned.


10. Finally, we make it to the 2008 financial crisis and the way it was handled by the Obama administration. The author explains the motivations of the government well. Rather than punish companies and executive and hurt the economy, the choice was made to go down the South African-inspired path of “truth and reconciliation.”

Except there was no truth and no reconciliation (which is the title of the chapter in the book), because an essential element of the defense of a corporation was NOT to admit guilt. “The Justice Department argued that the large fines signaled just how tough it had been. But since these settlements lacked transparency, the public didn’t receive basic information about why the agreement had been reached, how the fine had been determined, what the scale of the wrongdoing was, and which cases prosecutors never took up.” (p. 197) The public did not want to tax corporations anywhere near as much as it wanted justice, basically, and it was denied that justice. “A trial is nearly the only place where the entire criminal justice system is put to the test of truth” and “a system of justice that chiefly operates behind closed doors will sooner or later be a system that leads to abuse.” (p. 226) Those trials never happened.

The government, under Preet Bharara went for the easy headlines and chased after cases that were at best tangential to the crisis, such as Rajaratnam, Madoff and Stanford. The author is caustic when assessing Bharara’s motivations: “It’s a hell of a thing to tell someone they will spend the next three years of their life where we have virtually no evidence, whereas you can work on a case where you have evidence.” (p. 232) The Southern District passed on the Bear Sterns hedge fund case and “some Manhattan prosecutors felt private vindication” when the Brooklyn US Attorney who picked up the case and lost. (p. 232) By then, they were fully paid-up members of the “Chickenshit Club.”

Between the fears of the government for the economy, the “Chickenshit” attitude of the prosecution, the vast difference in resources between prosecutors and defendants and the changes in the law, which now favored the defendants, the scene was set for the great whitewash of 2008-2016.

The author gives the full (and I mean it!) detail of the main cases, and intertwines them with a mini-biography of judge Jed Rakoff, the very same man who had secured the conviction of United Fruit some three decades earlier and is the only senior guy who comes out of this story smelling of roses:

How Bank of America did not tell anybody about the bonuses it had promised to Merrill executives ahead of the takeover, with a full account of how Jed Rakoff sent the settlement between the SEC and Merrill back in September 2009, only of course to have to accept an only slightly higher settlement later.

The Goldman Sachs / Paulson / Abacus /IKB case where only a 28-year-old Frenchman ended up being indicted. Even his direct superior, Jonathan Egol, was spared. Goldman was only charged with omitting information that would have been useful to investors in Abacus. It was left to Senator Levin’s committee and the press to bring the line of command to light, as well as Tom Montag’s famous “shitty deal” email (regarding a different deal, it has to be noted!). Goldman settled for $550 million. At his going away speech from the SEC, prosecutor Kidney, who had investigated the case, said that “For the powerful, we are at most a tollbooth on the bankster turnpike.”

The backdoor bailout of Wall Street via AIG and how Obama-appointed Lanny Breuer refused to prosecute AIG despite the fact that that prosecutors Paul Pelletier, Adam Safwat and James Tendick had the perfect case in AIG: “AIG FP executives knew they were facing huge losses, had motive to hide them, took steps to do so, made erroneous statements, and misled investors” (p. 278). In Joe Cassano, they also had one of the great villains of the crisis to present to a jury, up there with Dick Fuld and Angelo Mozilo. They also ought to prosecute Cassano’s underlings, Forster and Athan and flip them all the way up to Greenberg. But Obama’s appointee made sure this never occurred.

The October 2011 Citigroup $285mm settlement on a mortgage investment, which was originally also rejected by Jed Rakoff. “When a public agency asks a court to become its partner in enforcement, the court, and the public, need some knowledge of what the underlying facts are: for otherwise, the court becomes a mere handmaiden to a settlement privately negotiated on the basis of unknown facts, while the public is deprived of ever knowing the truth in a matter of obvious public importance.” (p. 300) In March 2012 a Second Circuit Court of Appeals panel stayed his decision and attacked his reasoning, saying “the scope of a court’s authority to second-guess an agency’s discretionary and policy-based decision to settle is at best minimal.”

And there you have it. If you think this was longwinded, confusing and a bit too precious, that’s because you have not read the book!

[Nick Slater · Rating 5 out of 5]

If you hate what Wall Street has done to America and you want to understand how it happened (even if your eyes glaze over at the first mention of "securities" or "derivatives"), you will love this book. Eisinger cuts through the financial jargon and bureaucrat-speak to tell a story with rich characters and a narrative that screenwriters for "The Big Short" would envy. Highly, highly recommended for anyone who loves a story that's as informative as it is entertaining.

[Kressel Housman · Rating 4 out of 5]

Another reader compared this book to THE BIG SHORT, and it’s fitting both in style and in content. Both books tell the personal stories of people involved with highly complex financial crimes to help clarify that complexity to the layperson. (To be honest, Michael Lewis did a better job of it.) More importantly, though, this book answers the question that THE BIG SHORT leaves off with; that is, with all this fraud going on, why wasn’t anybody charged? The answer is right in the title. They were chicken.

The title comes from the now-famous James Comey, who used the phrase to describe prosecutors who’d sooner settle than lose a case. When he was the chief prosecutor at the Southern District of New York, the court with jurisdiction over Wall Street, he told his underlings that it is better to lose while fighting and publicizing injustice than to settle and let the perpetrator get off with a fine and a non-disclosure agreement. The author states that Comey didn’t always practice what he preached, but he’s pretty hard on quite a few highly prominent people in this book, namely President Obama, Eric Holder, and Preet Bharara.

So, how did prosecutors become so chicken? Unsurprisingly, it was a number of factors. For example, in what the author calls “the silver age” of prosecuting white collar crime (there was no golden one), prosecutors invented new ways of getting corporations to cooperate, but eventually, the corporations used those agreements to their own advantage. On top of that, the incentives for lawyers hoping to advance in their careers lead them toward settlements instead of losses. Related to this is the criticism leveled specifically against Preet Bharara. He took down hedge fund managers for insider trading, but he didn’t go after the biggest fish. Taking them down would take more time and effort, so he chose the safer bets. On top of that, there’s the underfunding of the courts as compared to the private firms, and the “too big to fail” problem. President Obama is often blamed for being too cautious, but if taking stronger action ran the risk of making the economic downturn worse, you can see why he and Eric Holder made the choices they did. The big banks are holding the rest of us hostage.

I must admit, my concentration was pretty poor through much of this book. It was definitely not easy. But at the end of it, when I understood just how much time it can take to build an iron-clad case against a white collar criminal, I was willing to be patient with Robert Mueller’s investigation. So what a surprise that on the very same day that I finished the book, I learned that the indictments were imminent. And now they’ve happened. So perhaps the days of chickensh—t prosecutions are over. Go to it, Robert Mueller!

[David Dayen · Rating 5 out of 5]

A fascinating narrative that begins with how US law enforcement used to get white collar crime right - not even two decades ago - and how it all fell apart. Unfavorable rulings and extreme timidity have created a special class of citizenship for corporations and their executives, a class that need not fear accountability for criminal misconduct. This is a must read for understanding that transformation, and the deep rot in our system of prosecuting white collar crime.

[The Pfaeffle Journal (Diane) · Rating 4 out of 5]

very disheartening read.

[Siv30 · Rating 4 out of 5]

"Jed Rakoff had started to grasp something awful: the SEC was no longer the agency he once admired. This incompetence would never have happened under Sporkin. It wouldn’t have happened throughout the 1980s and 1990s. He recalled Richard Breeden, the chairman of the SEC under the first George Bush, once declared that he wanted to see corporate executives who violated the securities laws “naked, homeless, and without wheels.”12 Now the agency was scared."

בשנות ה - 80 משרד המשפטים האמריקאי תבע יותר מ- 1000 מנהלים ובנקאים ואף הכניס את חלקם לכלא, אבל בעיקבות המשבר של שנת 2008, לא נכלא אף מנכ"ל. הסופר אייזינגר שואל בספר מדוע אף מנהל לא הועמד לדין לאחר המשבר של 2008? הרי מישהו גרם לו.

המשבר הפיננסי של שנת 2008, הוא אחד המשברים הכלכליים החריפים ביותר שפקדו את העולם. הוא החל בארה"ב עם משבר הסאב פריים (משבר המשכנתאות שנבע ממתן משכנתאות ללווים שיכולת ההחזר שלהם מוטלת בספק) והתפשט כמו אש ברחבי העולם.

אייזנגר טוען כי שינויים תרבותיים ופוליטיים שהתרחשו החל מאמצע שנות ה- 2000 עירערו את היכולת ואת הנחישות של התובעים המובילים בארה"ב להעמיד לדין את המנהלים והתאגידים הסוררים עד כי בשנים 2012 - 2015 מקרים של עבירות צווארון לבן היוו רק 10% מהמקרים המטופלים במשרד המשפטים.

אייזנגר מציין את נקודת המפנה לאחר קריסת אנרון והעמדה לדין של מנכ"ל אנרון ורו"ח של החברה ארתור אנדרסן. השתלשלות עיניינים אומללה, יסורי מצפון מטופשים ומעשה מרכבה של יחסי ציבור מעולים שנרכשו בכסף טוב, שיכנעו את הציבור שהתובעים במשפט אנרון ואנדרסון היו נלהבים ואגרסיביים מידי. הם, גרמו להרס החברה שהפסיקה לפעול ולפיטורי אלפי אנשים מעבודתם.

אבל אנדרסון לא קרס בגלל המשפט ופס"ד - אייזנגר כותב:

"The case against Andersen was overwhelming. The firm destroyed documents, with one partner pleading guilty. The firm did not go out of business undeservedly. Moreover, the prosecution did not lead to any economic or financial crisis, as the firm and its lawyers warned. The SEC had begun contingency planning for Andersen’s collapse, worried about the cascading effect that it would have on investor confidence as corporations scrambled both to switch auditors and clean up their accounting. The agency had even brought together Enron creditors, pensioners, and shareholders to try to push a modest settlement with Andersen to avoid its collapse. After the indictment, however, markets didn’t crash. Corporations just found other auditors. In the following months and years, investors the world over came back into the American capital markets. Most of the cashiered Andersen workers and partners found work quickly. The victory of Andersen PR’s efforts is all the more improbable given that the greatest fears about the consequences of Andersen’s prosecution went unrealized."

בעקבות כך, התפתחה תרבות שבה משרדי עורכי דין מובילים מספקים הגנה משפטית למנהלים. תרבות ריווחית עבור האליטה של משרדי עורכי הדין. אלה בתמורה פעלו לגייס את טובי התובעים של משרד המשפטים והציעו להם שכר מעוור עיניים. אותם תובעים שחששו מהסכון הטמון באיבוד הסיכוי העתידי להצטרף לאחד מהמשרדים הגדולים הללו, פעלו להגיע להסדרים עם התאגידים כחלופה להעמדה לדין. ההסדרים הללו היו טובים לשני הצדדים: לתאגידים ששילמו קנס ולתובעים שקיבלו יחסי ציבור מצויינים ונצחונות שניתן להציג לעיניי הציבור. שיטת הדלת המסתובבת היא מאבות החטאים.

אייזנגר אינו חוסך שיבטו גם מהמערכת המשפטית שהתגייסה לטובת המנהלים והתאגידים: בשלל מהפכים של פסקי דין ובאמפטיה כלפי הנוכלים בחליפות המערכת המשפטית יחד עם הפוליטיקאים הצרו את צעדי התובעים ופירקו בהדרגה את הכלים שהיו לתובעים להתמודד עם עבירות צווארון לבן שגם כך הן עברות מסובכות להוכחה ומורכבות להבנה. מורך ליבם של הפוליטיקאים והשפעותיהם על בית המשפט העליון במינויים שהם עושים דירדרו את המצב עוד יותר והובילו לאי שיוון ופער מהותי בין היחס של המערכת המשפטית למנהלי התאגידים והתאגידים לבין העבריינים הלא מיוחסים. אייזנגר מצביע על העיוורון המוסרי של המערכת שהפכה עם השנים לסבלנית כלפי הונאות בקנה מידה מזעזע.

האבסורד המרתיח ביותר הוא שבעלי המניות והציבור שילמו את הקנסות ואת מחיר ההונאות. ממשל אובמה העדיף לשלם מילארדים כדי להכשיר את השרצים מאשר להסתכן במשפט עם חבר מושבעים שגם יכול להוביל לזיכוי.

כנאמר "הציבור מטומטם ולכן הציבור ישלם" ולהזכירכם כי השיר נכתב במשבר מניות הבנקים של 1983 ללמדנו כי אין חדש תחת השמש מה שהיה הוא שיהיה גם אם בקצה השני של הגלובוס.

אייזנגר מצייר את פניה הרבות של השחיתות בפרקים ארוכים שהולכים ומחריפים את התיסכול מעומק ההונאות התאגידיות שהציבור האמריקאי סבל למול תהליך ההתפרקות של משרד המשפטים האמריקאי ואיבוד זכות הקיום שלו.

מאז ימי ג'יימס קומי, שקרא לתובעים במשרד המשפטים שלא להיות Chickenshit (במובן של חסרי משמעות ושוליים) התובעים במשרד המשפטים איבדו את הנוצות שלהם והם אינם תורמים לכך שארה"ב תהיה מקום צודק יותר.

[Kara · Rating 4 out of 5]

I think this is a really important book, and I learned a ton from it. This book investigates the Justice Department’s unwillingness to prosecute individuals, or even to insist that companies admit wrongdoing, after the days of Enron and Arthur Anderson. This was especially apparent following the financial crisis. Eisinger does a masterful job researching and telling the story.

My only negative comment was that there are tons of people to keep track of and Eisinger does not tell the story totally chronologically, and the combination of those two things made this a little hard to follow for me at times. I’d lose track of people and timelines.

I also liked this FCPA Blog interview with Paul Pelletier following the release of the book: http://www.fcpablog.com/blog/2017/9/2...

[Mehrsa · Rating 4 out of 5]

If you haven't read the Divide by Matt Taibbi, read that one first. If you read that and loved it, come here for some more detail. It's a great book and it's a total tragedy of justice that more banks weren't prosecuted.

[Simon Mee · Rating 2 out of 5]

I don’t want to dislike The Chickenshit Club. It’s not even obviously bad. All the parts are there, the author is a Pulitzer Prize winner, and there is nothing obviously wrong.

It just does not fit properly.



Premise

The Chickenshit Club contends that there has been a trend away from prosecuting individuals or companies due to weak-willed prosecutors, regulatory capture, public sentiment (often from that populist rag The Wall Street Journal) and a corporate friendly judiciary bench. As Eisinger puts it:

Today's Department of Justice has lost the will and indeed the ability to go after the highest-ranking corporate wrongdoers.

Instead, the relevant authorities are negotiating poorly enforced settlements, with 419 from 2002 to 2016, after having done 18 in the previous 10 years.

The Chickenshit Club aims to turn this into a narrative, running from 2002, wait, no, the-1970s, wait, let’s-skip-the-80s-and-run-from-the-mid-2000s, wait, actually-there’s-some-really-cool-guys-to-talk-about, some real intellectual giants:

“I will fucking kill you! Never fucking do that to me again in front of my charges!”

There are two unquestionably strong chapters: The introduction, which summarises it all; and Chapter 10, where lawyers take the revolving door between the government and those legal organisations that are responsible for the both oversight and defence of corporations. The rest, while written smoothly and containing several good points, is poorly edited both within and between chapters. There’s inconsistent use of past and present tenses; pointless asides that take the reader away from the main thread; too much focus on individuals; and a failure to properly explain the financial basis for transactions, particularly Goldman Sachs’ bundling of toxic mortgages. There’s also a weird old-school conservative bent that I do not feel is supported by the evidence, particularly emphasising shareholders as representing some wide group when over 80% of shares are owned by the richest 10%. So, unfortunately, it’s a bad book.

There’s also a couple of other things that niggle me…

All Work and No Play Makes Jack a Dum Dum

The Chickenshit Club has a reflexive worship of hard work in the legal sphere, even when the public demands otherwise:

Prosecutors needed to move cautiously. They had to sift through the complexities to find the potential crimes. However the public and the press did not understand or sympathize

There’s a scene described as a Glengarry Glen Ross moment where an investigator screams at her team that there is no Christmas or dentist appointments or firearms trainings. This is portrayed as a good thing, demanding dedication to the job. It a sign of brilliance not to be bothered by interruptions such as meals. We are introduced to people who tell newspapers that they worked twenty-two hours a day, another often putting in sixteen hours a day. Some worked longer hours than most.

It's all meaningless.

The same chapters speaking of hard work are replete with examples of prosecutorial misconduct or incompetence. At best, cases won by these hard workers are overturned on appeal, rendering it pointless. The case that was the Glengarry Glen Ross speech foundered on appeal due to the prosecutors picking their charges badly. The reader is drawn to the conclusion that the harder you work, the worse at your job you will be. I doubt that is the intention but it suggests that Eisinger did not think properly about context in his narratives. What does being a hard worker mean in these situations? If it isn’t valuable to the narrative, then Eisinger is just being a fluffer for his characters.

I Need a Hero

There’s two major characters in The Chickenshit Club: Paul Pelletier ( "If you agree one more time, I am going to rip off your head and shit down your neck”) and Judge Jed Rakoff. There’s some issues with the former, such as making him a centrepiece of some outsized Miami Mafia, but I will focus on the later.

Rakoff’s a genius, humble bragging an IQ of “merely” 154 compared to his mother’s 182. So, very cool, just like the law that he loves:

He loves it as the guardian of society's morality. He loves its endless complications. He loves the history and tradition.

He loves to submit articles on the law waxing lyrical on some point, like how the mail fraud statute is our Stradivarius, our Colt .45, our Louisville Slugger, our Cuisinart - and our true love. He invented law as a prosecutor when using the “criminal” acts of foreigners to justify charging US companies. He has continued this trend as a judge, such as with a novel challenge to the death penalty. I mean he’s a genius, right?

He made quick decisions and wrote clearly, without jargon or muddle. “He thinks he’s the smartest guy in the court, and in almost every instance he’s right,” one lawyer said. Remarked another, “His bravado and bravery are very alluring.”

This is frankly cringe. Particularly where Judge Rakoff gets push back from every other party (including the government) on two major occasions. It’s interesting to compare and contract Judge Rakoff’s conduct and treatment in the book with that of Judge Lewis Kaplan. Judge Kaplan is hardly a sympathetic character, whether in the book or after (see Chevron and Steven Donziger), but is he not just the flip side of the same coin? Both are judges who run wild with the law and consider themselves justified in doing so. The Chickenshit Club implicitly appoints Judge Rakoff as the people’s champion, which is dangerous idolatry. It is easy to see his reasoning as brilliant when you agree with the result but it undermines the institution of law just as much as Judge Kaplan’s corporate worship does. Judge Rakoff will not always sit on the bench, and if you permit him to do things as you wish because he is a judge, then you have to permit judges you don’t like to do the same. I feel like Eisinger did not work these consequences through.

It is a shame, but this book does not work.

[Joseph Kratz · Rating 4 out of 5]

A really eye-opening look at white collar prosecutorial failure and excellent journalism; sadly it feels so small fry in the context of today’s legal failings and crisis

[Daniel · Rating 5 out of 5]

This book really ought to be taught in schools. It can be dry reading, but the portrait of profound corruption that emerges is genuinely shocking. Beginning with the Reagan administration and getting worse with each successive administration (of both parties) since, we've essentially evolved the law in The United States to boil down to the idea that only poor people are responsible for their own actions. Wealthy people can always blame someone else.

Oh, you caught him red handed stealing from his clients? That's okay because he was forced to by his company so the company is responsible, rather than him. Oh, now you want to try the company? You can't do that because it would hurt innocent employees at the company or be bad for the stock market. Oh, you actually managed to make the case in court and the people responsible were convicted? An Appeals court judge will just overturn it on the grounds that you were mean to rich people. This is the cycle. Over and over, every road leads to another person pointing the finger at someone else and no one anywhere is required to take responsibility for their own choices and behaviors. There is always an excuse. There is always some story.

If a good prosecutor manages to get convictions despite all of this, big law firms will offer that Public Servant millions of dollars to come help the same people they convicted get away with it in the future. Meanwhile, they'll pay politicians to intercede on their behalf and recruit judges to overturn any attempt at responsibility. Of course, technically, they are just "donating money to the politicians they believe in" but donations are always followed by corruption. As soon as the donations go through, politicians will start talking about "prosecutorial overreach" and how the government is going after poor innocent "job creators" just because they steal from their own customers. Naturally, the only examples of "prosecutorial overreach" are cases where rich people are the targets. If you're poor, then they are just chasing justice with appropriate passion. There never seems to be any reason to intercede in those cases.

If one judges by politicians' actions, the only injustice in America is that people are mean to rich people. Shooting unarmed men in the street for no reason is just good policing, they seem to claim. But don't you dare try to arrest anyone with money or you'll be called on the carpet for "going too far" and if you don't stop at that point, your career will be destroyed. Law firms will blackball you and even district attorney offices won't hire you because they get a call from some Senator or Congressmen who explains that employing that person will only aggravate the government.

It's a truly sad state of affairs and there's no sign of any change coming to this issue. No one with any authority is interested in fixing this at all. They're simply too beholden to the donors/criminals. Even the CFPB only really goes after fines from companies and goes into it assuming it will sign a deal granting immunity to every executive in question (though obviously the immunity does not include low-level employees, who are still held responsible for their actions) and the company itself will not even be required to admit it did anything wrong. Besides, the fines are designed to make sure the company made more money on the scam than the fines cost them, so they keep at it. Why wouldn't they? Isn't that what crooks do?

[Scott Siegling · Rating 5 out of 5]

I finished reading "The Chickenshit Club: Why the Justice Department Fails to Prosecute Executives" by Jesse Eisinger this evening. I highly recommend the book, it gives the history of fighting corporate malfeasance since the 1970s, with special emphasis on and after Enron/Arthur Andersen. That debacle activated the corporations and their lobbyists, and with horrible Attorney Generals like Ashcroft and Gonzales it was a shoe in, while the appellate courts seemed to be the most corrupt in overturning guilty verdicts.
Meanwhile, Eric Holder was even worse than Gonzalez in prosecuting. He created a 200 person task force to investigate Wall Street with no ability to press charges.
End result is that the public perception, despite the news media, of Wall Street getting away with ruining the economy and paying fines is exactly correct. And the fines the corporations pay out are paid by stockholders, not executives.
Trump would not have won had Obama prosecuted actors in the 2008 debacle, but there is a case to be made that the Justice Department was so weakened by then that it essentially couldn't.
Huge amounts of reform needed is the takeaway.

[Josh Friedlander · Rating 2 out of 5]

If you ask people why so few bankers and executives went to prison after the financial crisis, you're likely to get one of two reactions. Some (the legalists) will tell you that being greedy and reckless is not a crime; the few who did beyond reasonable doubt break the law did pay for it, but for the most part they didn't, and you cannot punish people who have not committed crimes. Others (the moralists) will say that their escaping justice is due only to their money and connections, and that all of them without distinction should be hauled onto the tumbrels.

I'm by nature closer to the legalists, but I also think that there is major, systemic injustice in the big picture of financial regulation, which is tough but not impossible to remedy. This book sketches some of the stories and personalities behind the news, with a journalistic flair which enlivens the somewhat dry material (and I understand the need for such considerations in a commercial book), but is frustratingly thin on root causes. Eisinger, a ProPublica journalist with years of experience at the Wall Street Journal, gives the prosecution's view of hunting down elite white-collar malfeasants, and tries to explain why they so often fail.

The primary reason appears to be that they often opt for settlements (referred to by James Comey - a Southern District prosecutor before he ran the FBI - as "chickenshit") rather than go to trial and risk losing. The reason for that has to do with a general judicial trend towards weakening prosecutors (partly based on an expansive interpretation of the Sixth Amendment not really afforded to lower-level criminals), including the dropping of something called the Thompson memorandum (which inter alia blocked firms from paying for expensive lawyers for former employees), and the overturning of some prominent successful convictions in the Appellate and Supreme Courts. But why has this happened? Eisinger is frustratingly unclear. It seems unfair to call prosecutors chickenshit for not investing scarce resources in cases which might not only not result in convictions but could in fact set precedents making future cases more difficult.

The Supreme Court ruled in 1909 that corporations may get criminal sanctions, but Eisinger explains that there has always been uneasiness about it. If individuals in a company commit crimes, they should pay the price, but why should the firm as a whole pay? This punishes the innocent: junior employees who knew nothing about it, employees who joined after the crime happened, widows and orphans invested in the stock. However, in practice it can be tricky to prove individual culpability. It's rare that executives explicitly get together and agree to do crime (and leave evidence of it). Even an outrageous fraud like Enron took enormous work by prosecutors to convict, and later led to a judicial backlash against prosecutorial overreach. An organisation combines a whole group of people, and often crimes are emergent from stresses of work, miscommunication, implied but unspoken ethical rules...Thus the idea of fining the company instead.

The problem with this is that companies can only really be threatened with fines, which they can usually just set aside money for. And if you try break them up, you have moral hazard - jobs lost, innocent parties harmed. As a recent example, Boeing - badly and inefficiently run for years - did not deserve a bailout, but the government also can't allow its thousands of employees to be stranded. (One way of ameliorating this is charging systemically important companies "moral hazard insurance" during the good times; the FDIC fees paid by banks are in some ways similar.)

So (in Lenin's words) what is to be done? Eisinger's only idea seems to be a wave at the idea of reducing the revolving door between public and private practice, to which end he suggests diversifying the pool of prosecutors to include those from outside elite law schools and the Acela corridor. (Sally Yates, a University of Georgia JD, earns his approval.) I've thought of a few more ideas.

Firstly, criminal defence attorney pay should be capped. This seems obviously democratic and just, and I can't think of any downsides - though I'd be happy to be corrected, since otherwise this seems so obvious you'd think someone would have tried it by now. There is no reason why the rich, be they drug dealers or CEOs, should get the finest legal minds that are denied to everyone else, and perhaps this would incentivise more of the best lawyers to stay in public service. (Eisinger notes the order-of-magnitude disparity between prosecutor and defence salaries in the Second District, scene of most Wall Street prosecution.)

Secondly, the rare executives who are caught must get enhanced sentences pour encourager les autres. This one is more controversial, but sentencing needs to be proportionate to the victim. If they are avoiding prison time, they must be, in the memorable phrasing of a former SEC chairman, "naked, homeless and without wheels".

Thirdly, a company that receives a government bailout, may pay no dividend for some set period, and zero bonus for executives who were there before the bailout was paid. In fact, their salaries should be forfeited.

Fourth, and most radically, I submit that the burden of evidence should be on a corporate executive in proving that he or she did not know that some crime was committed, not on the prosecution. Eisinger recalls the Lehman Brothers CFO's attorney saying his client "wasn’t a numbers guy...He had been relying on what his underlings told him, and no one raised red flags to him" This is risible and infuriating. Literally what are you getting paid the big money for (worth discussing in itself, but outside the scope of this already overlong review) if you don't make decisions and aren't accountable for them!? That accountability and culpability should be a legal part of the job; if a junior employee commits fraud, the boss can sit in jail for it. This will incentivise executives to really invest in company ethics, rather than just enhancing shareholder value.

But the truth is that often the law is made only afterwards, the exploited loophole closed. I don't think there is anything to be done about this, and it is possible that many of the follies of the 2008 financial crisis were of this type. Similar to the Red Queen scenario of corporate tax avoidance, financiers exploiting loopholes will always be part of the system, and is not something that I think can or should be criminalised.

Lastly a quote I liked (from SEC lawyer James Kidney) that didn't really fit anywhere else in this review: "Satisfy the long and sell to the short is legal...Satisfy the short and sell to the long is fraud." (In other words, you may sell the other end of a sophisticated deal that you're confident about to short sellers, but you may not sell to long sellers the other end of a deal you think stinks, at least not without clear disclosure.)

[Mandy · Rating 5 out of 5]

Essential reading for understanding why the Justice Department and other regulators have been so hopeless when it comes to holding businesses and their executives accountable for misconduct and fraud. Not only does the book carefully examine how their investigative and prosecutorial skills have withered away, but he connects the loss of capacity to a pernicious revolving door and big law clubiness that makes discussion of the public interest nearly verboten.

[Richard · Rating 1 out of 5]

Great title but full of minutiae only a Federal Prosecutor might care about... after being away from this book on a 3k motorcycle trip I'm not about to pick it up again.

[Ethan Groothuis · Rating 4 out of 5]

Come for the solid journalism, stay for the crushing disappointment in our institutions!"

[Sai Rao · Rating 4 out of 5]

great but lots of typos

[Abraham · Rating 5 out of 5]

Wow! It truly is something to read a book and realize that questions you never had are being answered while at the same time revelations upon past streams of thought are being affirmed!

And Eisinger in this book does a good job of both. This book was as much infuriating as it was joyful to read-- as someone who hopes to practice in the field one day. Reading about how Main Justice alongside the Southern District of New York (SDNY) played the game (and what a game it was) with deferred prosecutions and the like was mind-blowing quite frankly.

Michael Chertoff and these early heroes with a mission like Stanley Sporkin and Judge Jed Rakoff were my heroes in this book. Everyone else somehow learned to become a shill, this revolving door of DOJ-to-white collar firms, was imperceptible. DOJ after the financial crisis had a real opportunity to try these cases, and growing up young at the time-- this term 'too big to fail' was something of a misnomer in my head. 'How could that be' I thought. But be, it came to be. Because the highest officials were intimidated by these corporations and businesses. And Rakoff, a hero that comes away from this book saw through that with these DPA's that would punish shareholders and defer responsibility, and attempted to stop these sham agreements in its place

“Over 50 percent of the most serious fraud and larceny culprits were recidivists,” writes University of Virginia law professor Brandon Garrett, a rate “about the same as robbery and firearms offenders and far higher than drug traffickers.”

This statistic was painful to read. And in any other network of crime, subsequent penalties would be hashed out permanently. However, because of the conglomerate that is Wall Street, mAIN street’s opinion gets no hearing nor say.

Moreover, how an entity like the Department of Justice can be riddled with ineptness and people who did not have the experience to try some of these cases therefore letting it expire, in cities like Seattle and California and all over the Unite States where help was warranted, but never asked for is beyond the pale! The most powerful part of our United States Government--The Federal Government, numerous times did not prosecute obvious crimes—because it was too complicated. They did not do what they so believed to be right.

And finally, I was wondering when I would get to the title. And to find out that James 'Jim' Comey created this chickenshit speech/club and went to do everything that he abhorred was truly something else. Hypocrisy does not even come close. " The go-getters and resume builders" that he had harped on positively were now supposed to let cases where Securities Fraud and other devious machinations just go.

Look, this is a fabulous book, with insights that I could only dream of. And for that, a hearty thank you to Mr. Jesse Eisinger. That being said, it is very disappointing that the system (criminally) that claims to be the best in the world, so often falls at the feet like a lapdog lapping water, of big corporations, CEO’s, and their subordinates, because a smoking gun is filled with too much Jargon. That is not a good enough reason Main Justice and Co-horts to not prosecute crimes. It was striking because seeing how the failure in previous cases Enron, Bank of America, and the Thompson memorandum--respectively; lead to this morale where careers where sacrificed, and easy cases in their place pursued against even public opinion was staggering, but more so illuminating. It made sense, and I won't fault Main Justice or SDNY for that. But at some point and time, that creed that flows around the offices at the DOJ about doing the right thing and believing in the cases-- at some point need to get back to that. The American people are counting it. This country cannot sustain itself if justice is handed down haphazardly or even contradictory on the most powerful people. That is Oligarchy. We need prosecutors to prosecute and TRY cases in court, gain experience and not settle, with DPA's that silence everyone.

[Linda · Rating 4 out of 5]

What do Countrywide, Washington Mutual, Lehman Brothers, Citigroup, AIG, Bank of America, Merrill Lynch, Morgan Stanley have in common? Not one was indicted for the financial crisis that hit the U.S. in 2008. Why?
This book presents numerous reasons, not all of them palatable. I'm not sure I understood every nuance, but I certainly got the drift that the taxpayers will continue to pay the piper and the lawyers involved.
The book title comes from a comment that James Comey made upon his arrival at the premier Southern District of New York as the lead attorney. Upon seeing the number of hands raised of lawyers in the office who had never lost a case, he proclaimed, "You're all members of 'the chickenshit club.'" (Meaning they hadn't venture enough if they hadn't lost a case.)
Why should I be the only one whose blood boils? Read this book.

[Scott · Rating 3 out of 5]

I've always respected grunt-level prosecutors -- theirs is not always an easy (and at times thankless) job. I've always been wary of banks, corporations, defense attorneys and politicians -- I think a fair number of them are all about the money and/or looking out for #1. After reading this detailed work I'm not sure how average Americans still have faith in some of the systems of our country. As Lee Iacocca wrote in regards to poor decisions by the government "'Stay the course?' This is our country, not the damned Titanic!"

[Geoff · Rating 5 out of 5]

This book is amazing.

Among other lessons from the book, I take away the following: Trump is just another spoiled man like myriad others from (or strongly akin to those from) the cupboards of our corporate leadership, ever unwilling to be held accountable for anything at all. Scandalous behavior that would be punished anywhere else-in neighborhoods, families, schools—is simply blameless in the eyes of the law when done by titans of the business world, which utterly hamstrings prosecutions. The gymnastics used to legally avoid prosecution for wrongdoing are simply breathtaking-in the exact way our current Administration takes our breath away with its unceasing chutzpah, shamelessness, and ineptness. The links are strong. Regulators past and present are also handicapped by judges increasingly groomed to see corporate malfeasance as just boys being boys (ordinary greed and arrogance but not fraud, per one SEC leader, who was too chickenshit to prosecute), by political leaders inclined to see business as godlike and blame-free, no matter how often terrible and socially harmful fraud is committed, and by their own ineptitude and fears of failure. (Much as Congress keeps looking the other way each time the current Administration ups the stakes in its litany of outrageous behaviors.) The revolving door between luminary corporate law firms and Justice, the SEC, and other government agencies basically seals the door shut on any remaining hope for change or justice. No, Trump and crew are not new-they are the same. They are our American legacy. Holder, Breuer, and many others appointed by Obama did nothing. Nothing! We deserve what we now have, I suppose. But it’s too bad because, as this book so wonderfully shows, the crimes are devastating and routine-and so much more should be done, and made transparent to Americans who are more and more mad at each other rather than the true wrongdoers harming their well-being: businesses too big to fail and too big to be reined in by regulators and agencies too utterly captured by business to do anything about it.

Just an amazing book, and so devastating and sad.

[Colin Scott · Rating 3 out of 5]

Felt like a series of long form pieces but still a good read.

[Correen · Rating 5 out of 5]

I have a personsal rule for selecting books. I do not read books that have profanity in the title. This time I broke the rule because the book sounded both interesting and valuable -- and the title might even be appropriate. It was. This book is about the men who placed their personal desires or greed above health and security of our nation and other nations and about the persons who either tried and failed or did not attempt to prosecute them.

The author contends that we will not reign in large corporations unless we hold both the corporation and its leaders including CEOs and other culpable high level officers responsible for their actions. As corporations have grown in power and size, many persons at the highest levels have kept themselves at arm's length from information that could make them responsible for wrong doing. Employees of lower rank then take the proverbial sword for their bosses or nobody is charged. Even the action against the corporation is taken in such a way that the company and its leaders admit no wrong and pay a meaningless fine.

The author contends that such action does not protect our economy, either in this country or others and it sets a dangerous precedent.

It is a fascinating and enlightening read.

[Tim Dewald · Rating 4 out of 5]

Alarming and depressing. Frustrating and illuminating. If you wonder why it seems so easy to fill prisons with low-level drug offenders, but impossible to hold those responsible for the financial crisis accountable for their crimes: this book is for you.

This book elucidates, through a sometimes convoluted and messy weave of disparate characters and events, the complete collapse of white collar prosecution in the United States.

Like many of us, the book’s greatest strength is also its greatest weakness: an exhaustive look across decades at what has led to the failure of our justice system in these prosecutions.

This should inform the way you read it, but not deter you from picking it up. It’s a bit like a case file. The evidence is presented and it is at times your job to piece together the narrative.

[Shivakumar Srinivasan · Rating 5 out of 5]

Of the 100’s of books which goes to describe and explain many of the white collar crimes, including the Enron Fiasco or the GFC of 2008, and many more, this remarkable book goes indepth to explore the one thing none of the other books did, Why were none of the senior executives of all these companies, who were guilty , ever prosecuted? Its a tour de force of the evolution of the US legal system and prosecution of white collar crimes and packed with tons of anecdotes and aide stories , many of which never made it to mainstream media.
Written from a the perspective of the govt prosecuting many of these corporates, it provides great insights into the working of the IS legal system and how the govt builds cases and how many off them fail to acheive any meaningful prosecution of the C-Suite executives. A must read for those interested in these kind of stuff.

[James · Rating 2 out of 5]

Scattered writing with too much about trivial persons.

One quote was interesting:
"Liberals made a political choice to favor social reform over resistance to business impunity"

The appeal courts have gutted many laws about business fraud,
congress needs to rewrite these.

I think the majority of amerikans now think the entire federal gov is one big chickenshit club.

Look at all the votes Sanders and Trump got in the last election.

In spite of libtard media attempts to discredit him,
support for Trump and other disruptors will continue until the "system" is changed.

Anger is still growing in amerika.
And that includes me, even tho I've done extremely well financially the last 9 years.

[Lauren Lindley · Rating 4 out of 5]

I picked this up after a disappointing read in Elizabeth Warren's most recent book regarding the same subject. I heard a Terry Gross interview with Eisinger and realized that his recount of the failures of the DoJ in our current economic client were going to be significantly more thorough than Warren's, which they are. If you are looking for a fairly detailed, but not droll account of everything from Enron to the recent bank bailouts, this is the book for you. In the end, a well written incredibly informed but disheartening look at how our world is incredibly not fair.

[Tim · Rating 4 out of 5]

Great read on why corporate criminals don't go to jail anymore. Eisinger's research is fascinating as he follows the last 15 years and the impact of political appointees on corporate prosecution including at the DOJ and SEC. He shows how hard working public servants have been continually undercut by their bosses and gone soft on corporate crooks.
The level of detail is impressive but Eisinger is not dry and writes a powerful narrative with real people.

[Gregg · Rating 3 out of 5]

This phenomenon—trial avoidance—occurs in other areas as well. It is disheartening to see how big business managed to insulate themselves so significantly from the regulatory process. The book rambles through many financial crimes with too many disaggregated characters to be considered a coherent book. I wish the focus was on 1 Case and used that to show how the system has morphed for the worse.