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Prosecutorial Discretion

Prosecutorial Discretion

Let's be honest with ourselves: many ordinary human beings - with the usual frailties, ego, and desire for riches - are susceptible to the lure of easy wealth from corruption.  We are deluding ourselves if we want to believe that lawyers who invest some of their time as prosecutors are somehow universally beyond the reach of corruption.

We've never read an acceptable justification for the unique American construction known politely as "prosecutorial discretion".  For reasons unknown, we bequeth unto government lawyers, regulators, and prosecutors this overwhelming moral challenge.  These government employees are granted the power to decide who they will enforce our laws and regulations against.  This power is dangerous!  It is dangerous because the near infinite resources of the government can be unjustly applied, or withheld, to benefit the relations of corrupt officials.  These wrongfully benefited relations may be defined by race, organized crime affiliation, or the mere prospect of future employment.

Corrupt prosecutors and regulators have two methods to benefit their illicit associates: they can look the other way when their associates break law & regulations, and they can apply over-enforcement against the honest competitors of their associates.

DOJ & SEC Lawyers Trade "Justice" for Jobs

The most deeply entrenched corruption, and most damaging to our nations economic survival, involves the indirect corruption of DOJ & SEC officials.  Corrupt officials of our justice and financial regulatory systems have easy access to a power which can be abused to benefit certain private entities.  These private entities later return these "favors" as indirect corruption, an age old practice with the historical Latin name: quid pro quo.  The power that these corrupt officials abuse is known as prosecutorial discretion - and the quid pro quo that they (or their spouse, relative, or associate) receive can include: obtaining a partnership in a law firm, obtaining a no-show or other special job, prostitution services which sometimes involves minors, cash, or benefiting from phony commercial transactions set up merely to benefit the corrupted official.

One of the most sinister forms of indirect corruption is when a public official intentionally "looks the other way" in the face of some criminal conduct, organized crime, or activity which otherwise fails to conform to appropriate regulations. 

We will illustrate with a simplistic example:

Imagine that a police officer always looks the other way when a gang burglarizes a Best Buy store, or a Sears warehouse.  Imagine that later on, as a form of quid pro quo, the gang gives the officer some cash, or a share of the loot.  In this hypothetical, the officer intentionally doesn't do his job in return for something of value.  While it's true to say that the police officer didn't directly rob the store, even the young children of your Average Caveman understands that this police officer is still guilty of a crime.  Aiding and abetting the criminals, and profiting indirectly from the robbery.  This example was given just to show an easily understood form of indirect corruption.  We don't want to pick on police officers, because the rampant corruption in the U.S. legal system goes far beyond what any network of police officers could ever do. 

Unfortunately, this same sort of scheme is rampant in our legal and financial regulation systems

The sad truth is that our enforcers work briefly in a revolving door promising the hope of vast riches in private practise.  The outrageous crescendo of financial malfeasance and crime is the direct result of scores of DOJ and SEC lawyers who were more interested in their own selfish interest than in putting the criminals behind the biggest dollar value crimes in prison.  For these lawyers, putting a stop to the largest frauds which threatened our financial system was not as important as securing (or returning to) their own lucrative law firm partnership.  Obtaining a hedge fund job for a spouse or other family member is another valuable form of quid pro quo.  The American people need to stop accepting the bogus assumption that prosecutors should be allowed the discretion to ignore crimes by powerful entities.  

Consider what corrupt prosecutors and regulators can easily do.

Evil government lawyers and regulators stand to earn extraordinary riches by abusing their power. Prosecutors and regulators can agree to look the other way in the face of violations in return for money, or favors for their relations. Corrupt officials can also decide to harass innocent businesses and persons who happen to be some sort of threat or competition to organized crime associates of the corrupt officials.

Consider a new automobile manufacturer in the U.S. who refused to employ extortionate organized crime organizations which dominated the industry and "owned" someone with prosecutorial discretion within the DOJ. The new auto company could be effectively prohibited from starting a new business, shut down, by the DOJ (or EPA or any corrupted government "business") as an illegal "punishment" by the corrupted government for failing to pay homage (a/k/a extortion) to this organized crime entity. (Perhaps one day an honest media and academia might collaborate on a truth finding mission to explain the decades long delay of the development of fully electric cars in the U.S. but, we digress.)

How could a prosecutor get away with failing to prosecute a crime? Just ask Eliot Spitzer. If he were to answer honestly, Spitzer would say that engaging in a frenzy of prosecutions of arbitrary entities who were unaffiliated with the corrupted official was quite effective, indeed.  Spitzer's penchant for pretermission was obscured by press coverage of his flamboyant, yet essentially ineffective, prosecutorial opera.  Spitzer's protégé Andrew Cuomo shares much in common with the abuse of prosecutorial discretion, including overlapping organized crime activity which they protected in New York State.

Unfortunately, prosecutorial discretion devolves into a commodity which is sold by corrupt public officials and bought by their organized crime affiliates.

Isn't the sale of Prosecutorial Discretion illegal?

Of course.  As BankruptcyMisconduct has already explained, when any government official who willfully fails to do his job engages in Honest Services Fraud.  But when such an official who engaged in Honest Services Fraud also receives anything of value as an inducement or in return for this fraud of honest services upon the government (including a post government job at a law firm, hedge fund, or bankruptcy services firm) then we have an instance of Racketeering, a/k/a Organized Crime.  We have strict laws against this under the RICO Act which include draconian forfeiture provisions. 

RICO Forfeitures Loom Against Illicit Prosecutorial Discretion Beneficiaries

Essentially, the vast enterprise engaged in organized crime can lose the totality of the financial assets of their associated enterprises to the extent that any financial amount can be shown to have flowed between them.   Yes, any amount (like one dollar) of illicit funds related to this fraud are subject to complete forfeiture to the U.S. government.   See the RICO Act and read about its forfeiture provisions.

So, not only is the abuse of Prosecutorial Discretion illegal, but we citizens have the right to punish the corruption within government by confiscation of the assets of the widely dispersed criminal enterprises which benefited from this corruption.  Could this include law firms, hedge funds, major corporations, brokerage and banking institutions, and accounting firms?  Yes, absolutely.

When does Prosecutorial Discretion not apply?

Good question.  We'll provide some easy answers.  A lawyer who is not a prosecutor by definition does no hold prosecutorial discretion.  Thus, when one lawyer sees activity by another lawyer which is criminal or even unethical there is no discretion in deciding on reporting criminal and unethical conduct:  such conduct must be reported at a minimum to the state bar.  Even more serious is the obligation on reporting conduct which is merely suspected as being criminal.  A bankruptcy judge, or a trustee (which includes a broad range of persons including U.S. Trustees, private trustees, as well as a Debtor In Possession) is required by Title 18 of the U.S. Code § 3057 to report in writing every suspected crime to the appropriate district attorney.  In fact, regulations specify that the employee evaluations of U.S. Trustees includes review of each such government lawyer's section 3057 criminal referrals.   A Federal Special Prosecutor will have a field day tracing through these paper trails.

Free Advice for Bankruptcy Pros Who Have Witnessed Misconduct & Prosecutorial Discretion

If any reader of BankruptcyMisconduct has some second thoughts about their work for any institution which might fall under some misconduct or criminal cloud, take heed:   You should seriously consider pro-actively approaching a prosecutor and cutting a deal. 

When you do so, choose some mechanism to privately document your lawful actions, lest a corrupt layer within the DOJ rats you out, or counter-attacks by abuse under Color of Law.  Likewise, low and medium level DOJ employees ought to consider laying enough CYA memos and paper trails so that their own actions, or thwarted actions, don't land on them personally.  If your attempts to follow your oath are being sabotaged from within the DOJ, your oath demands nothing less than fighting against internal corruption.  One step below fighting internal corruption, is plane old CYA.  

So if you are a junior or associate member of an accounting firm, law firm, sell side, buy side, consulting firm, investment banking firm, or any other entity which accepted revenues in the face of corrupt acts by professionals or investors in a bankruptcy proceedings, we suggest you move now before you become a designated scape goat to save your bosses ass.  Come to think of it, senior partners and management might want to do something too.  "The early bird gets the worm", even guilty birds.  Late birds become jail birds.