I’ve represented a decent number of people who have been accused of fraud.
Some folks who are accused of fraud are really truly unambiguously guilty. They were presented with an open cookie jar, they thought no one was looking, and they took a cookie (metaphorically). They were presented with a morality test and they just didn’t pass.
Like Glenn Frey teaches us in Smuggler’s Blues, “It’s the lure of easy money; it’s got a very strong appeal.”
Other cases have a lot more nuance.
Most federal prosecutors, I find, tend to see cases as not terribly nuanced. They tend to think that each case is a morality test. Once you get the facts figured out, for the typical AUSA, the moral judgments follow pretty quickly.
My sense, though, is that the world is almost always less clear and clean, even when you have all the facts.
With that background, I read with interest James Surowiecki’s piece — “Do the Hustle” — in the New Yorker a few weeks ago about America and its con men. (And, yeah, I know, it was a few weeks ago. You finish the New Yorker right when it comes out? I didn’t think so.).
What does the con man tell us about America?
Surowiecki writes about con men and why we love them. We celebrate them with The Wolf of Wall Street and American Hustle. Con men have been with us since before the Civil War.
As he writes:
It seems that con artists, for all their vices, represent many of the virtues that Americans aspire to. Con artists are independent and typically self-made. They don’t have to kowtow to a boss—no small thing in a country in which people have always longed to strike out on their own. They succeed or fail based on their wits. They exemplify, in short, the complicated nature of American capitalism, which . . . has depended on people being hustlers in both the positive and the negative sense. The American economy wasn’t built just on good ideas and hard work. It was also built on hope and hype.
These are not, I think, the typical characteristics of the kind of person who becomes a federal prosecutor. While a con man may have no boss to kowtow to, the average AUSA has layers of hierarchical bureaucracy to work through – one boss simply wouldn’t be enough.
Federal prosecutors succeed or fail less on their wits than on the months of wiretaps they’ve requested, or the mountain of government resources they’ve marshaled.
AUSAs are not hustlers, in any sense.
One can see how AUSAs poorly understand hustlers. And, as someone who has spent a lot of time explaining the motives and world view of AUSAs to accused hustlers, it’s not often that con men understand the people trying to put them in prison.
But what if a little hustle is necessary to make Americans great?
Surowiecki makes some nice points about how blurry the lines between capitalist and crook can be:
Take the building of the American railroads, which both spurred industrialization and laid the foundation for a truly national economy. When the Central Pacific Railroad (the western spur of the transcontinental railroad) was built, the four men who started it, including Leland Stanford, set up an outside construction company in which they were the sole shareholders, and used that company to milk the Central Pacific for tens of millions of dollars in excess construction costs. The building of the Union Pacific Railroad led to the same kind of self-dealing and pocket-lining and reckless overbuilding, while railroad financiers like Jay Gould made enormous sums via stock schemes and dubious takeovers. The result was one of the biggest cons the country has ever seen, with huge losses for investors and huge fortunes for the moguls. Still, we ended up with a national transportation system.
Or, to take a more modern example:
In a dynamic economy, getting people to wager on unknowable (and often unlikely) futures is essential. The greatest business icon of our era, Steve Jobs, was legendary for his “reality-distortion field,” which allowed him to convince people that improbable outcomes were not just possible but certain. Jobs’s endless rehearsals for his public presentations and his scripting of every moment for maximum effect—these are all straight from the con artist’s playbook. So, too, is the sense of conviction he projected.
What separates a con man from Steve Jobs? They’re both selling a reality that doesn’t exist. They’re both trying to get someone to buy into a future that exists only in their heads.
Surowiecki thinks Steve Jobs is okay where a con man is not because Steve Jobs delivers:
Of course, the fundamental difference between entrepreneurs and con artists is that con artists ultimately know that the fantasies they’re selling are lies. Steve Jobs, often enough, could make those fantasies come true. Still, that unquantifiable mélange of risk, hope, and hype provides both the capitalist’s formula for transforming the world and the con artist’s stratagem for turning your money into his money.
But, having met a whole lot of folks who would be described as con men, I’m pretty sure that as an empirical matter Surowiecki is just wrong. Many — perhaps most — of the people prosecuted for fraud do not actually think that they aren’t going to deliver. They don’t know that the fantasies they’re selling are lies. Or, at least no more than Steve Jobs knew his fantasies would come true. Too often, it’s only a lie in retrospect when the money doesn’t come through.
When someone who is not a hustler — indeed, lives as anti-hustler a life as one can — sees someone selling them hype, you can see why that person would see a con artist. But, as Surowiecki points out, not all hustlers are running a con, even if all of them are selling a fantasy.
Matt Kaiser is a partner at The Kaiser Law Firm PLLC, a boutique litigation firm in Washington DC, which handles government investigations, white-collar criminal cases, federal criminal appeals, and complex civil litigation. You can reach him by email at mattkaiser@thekaiserlawfirm, and you can follow him on Twitter: @mattkaiser.