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6/11/2005

New York Attorney General Eliot Spitzer and "Prosecution by press release" and leaks

From the WSJ:
Mr. Sihpol is the exception to the usual Spitzer rule of using strong-arm tactics to coerce settlements out of business. The Attorney General has become famous for assailing a business practice that is either controversial or legally ambiguous, and then using leaks via the media and the threat of indictment or the destruction of an entire company to force his targets to surrender. . . .

Corporations are all too willing to settle with prosecutors, because their reputational risk from going to trial is greater than paying a fine and giving Mr. Spitzer his "victory." We've seen this with the big Wall Street investment banks and more recently Marsh & McLennan. In this case, Edward Stern, the former head of Canary Capital and a member of one of America's wealthiest families, paid a $40 million settlement to make Mr. Spitzer go away. . . .

However, Mr. Sihpol had his freedom to lose. In addition to fighting Mr. Spitzer, he had to sue his former employer, Bank of America, to pay his legal fees. (According to his lawsuit, the bank sought to check with Mr. Spitzer before it originally decided not to pay.) One lesson here is that juries, forced to make a decision about a defendant's fate, want to make sure that the alleged behavior is in fact criminal. Prosecution by press release won't do in court.


The WSJ gets this exactly right. Eliot Spitzer is one of the most abusive prosecutors around. Prosecutors have absolutely enormous power and Spitzer has a dangerous combination of seemingly willing to do anything to accomplish his goal as well as having almost no limit on the goals that he feels are desirable.

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