They arrived at the federal courthouse in lower Manhattan by the dozens this week, groups of everyday New Yorkers wandering in throughout the day, some wearing business suits, some puffy down jackets. One wore a hockey jersey and cut-off pants.
They filled out extensive questionnaires in the first step of a weeks-long process aimed at selecting impartial jurors for the criminal trial of Martha Stewart.
Prosecutors say Stewart dumped her stock in ImClone Systems after getting an inside tip that it was about to crash, then lied about the circumstances to federal investigators. She says she received no insider information.
The unusually large scale of this prosecution illustrates the difficulties in bringing charges of white-collar crime against high-profile defendants. This trial is expected to last at least six weeks. Just picking the jury will take longer than many less-prominent criminal matters involving issues of life and death.
Tackling corporate fraud at the highest levels is certainly tough–and Stewart may well demonstrate her innocence. The government has had its share of struggles in some recent prosecutions. The obstruction of justice case against Internet banker Frank Quattrone ended in a mistrial. The courtroom battle involving Dennis Kozlowski, the chief executive accused of looting Tyco, started some 20 weeks ago.
The Enron Corp. debacle shows every sign of dragging on for years, even amid reports of a breakthrough plea deal involving former finance chief Andrew Fastow and his wife.
It is important to note, though, that an unfortunate pattern of shying away from these demanding cases is being reversed.
A little more than a year after its inception, the Justice Department’s Corporate Fraud Task Force has obtained more than 250 convictions. It has brought cases against 600-plus defendants and momentum is building as prosecutors develop their expertise.
It was shameful when those behind the savings-and-loan disaster of the 1980s largely got off the hook. Only a few faced criminal penalties in scams that cost taxpayers billions of dollars. Now the Justice Department has come to accept that only the likelihood of significant prison time provides a sufficient deterrent to the corporate crime that has shaken investor confidence in U.S. business.
In addition to enforcing the Sarbanes-Oxley Act, which dramatically increased penalties for white-collar offenses, the government is bringing more extensive charges, toughening plea bargains and seeking stiffer sentences.
This represents impressive progress in a remarkably short time. It’s hard going, and setbacks will occur. But it is essential for restoring trust in American free enterprise.
