White-Collar Crime

Prosecutorial Discretion And Unpredictability

It might be nice if the buzzword of prosecutorial discretion wasn't "arbitrary."

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question manProsecutorial discretion is the guiding principle of our criminal justice system. Our federal criminal statutes are broad and admit of many interpretations. Courts have done some work to cabin those statutes and reign them in, but, really, our system relies on prosecutors recognizing that, sometimes, they just shouldn’t make a federal case out of it.

Prosecutorial discretion gets particularly interesting in some areas where there are already administrative agencies that have civil enforcement authority. Why go criminal in a case that may not really warrant a jail sentence, when a civil enforcement action is available? And, now that I mention it, what does “really warrant a jail sentence” mean?

Dealbook had a good piece on this recently in insider trading cases.

The piece observes that an insider trading case appears to be more likely to be brought by DOJ rather than the SEC these days, then frames the issue this way:

An interesting question is why there has been a push to turn cases that once might have resulted only in civil charges into criminal prosecutions, which carry a much more significant social stigma along with the threat of prison time. What makes a particular instance of insider trading so wrongful that the government’s most powerful law enforcement weapon — a criminal conviction — is used on defendants who pose little threat to society beyond their own avarice?

When I talk to clients about whether their case is likely to become criminal or stay in an administrative or regulatory action — and this is true across a broad range of administrative agencies — clients want to know what the rules are about when a case can go criminal. That seems like a very reasonable question; a government that runs on laws should have rules about when something is prosecuted versus when it is just a civil enforcement action.

But those rules don’t exist. And trying to figure them out by looking at what DOJ does is not a project that is likely to be terribly satisfying.

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Q If a criminal case does not occur, however, then it raises the question about what criteria differentiates a case in which the S.E.C. acts alone against a corporate official accused of tipping others and one in which the Justice Department pursues a conviction. Figuring out why some cases result in criminal charges is made more difficult by the fact that prosecutors have broad discretion in deciding whether — and when — to file charges, and need not explain why one set of circumstances results in a criminal action.

Dealbook explores three options — the amount of money involved, whether the person DOJ is prosecuting is in a position of trust, and whether there’s likely to be a media splash. Each is a possible explanation in some cases, but each has problems both as a justification for why the exercise of prosecutorial discretion based on this factor is appropriate, and as an explanation for the charging decisions DOJ makes.

Ultimately, Dealbook concludes that,

The cost of a criminal prosecution on the defendants can be significant, from the legal fees required to defend a case to the public opprobrium and collateral consequences that attach to a conviction. What makes one case more susceptible to a prosecution than another remains something of a mystery, which may be the best deterrent the Justice Department has to try to prevent insider trading.

As I read that, the suggestion is that DOJ maximizes its deterrent value by being completely unpredictable about when it employs the heavy penalties of criminal prosecution.

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Unpredictability in meting out a severe response can be effective, to be sure. Tuco Salamanca did pretty well with that strategy. But, as effective as it is, it lacks moral legitimacy. Like a drunk dad who keeps his kids in line because they can never tell when he’ll beat them for acting out, DOJ may be able to increase compliance from the public. But, at some point, the arbitrary use of state power becomes worse than the conduct it’s meant to deter.

Matt Kaiser is a white-collar defense attorney at KaiserDillon. He’s represented stockbrokers, tax preparers, doctors, drug dealers, and political appointees in federal investigations and indicted cases. His twitter handle is @mattkaiser. His email is mkaiser@kaiserdillon.com He’d love to hear from you if you’re inclined to say something nice.

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