Crime in the Suites An Analysis of Current Issues in White Collar Defense

A Blog About Current Issues in White Collar Defense

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May 22, 2020


By: James Trusty

While much of the focus on the Japanese prosecution of high-profile executive Carlos Ghosn has been on his spectacular private jet escape from Japan while hidden in an instruments case, his prosecution actually raises much more profound issues about white collar criminal prosecution in Japan and in the United States. Ghosn is an indisputably talented executive at the highest reaches of the auto manufacturing and sales business. He rescued Nissan and turned it around into a highly profitable manufacturer. The alliance he formed between Nissan, Renault, and Mitsubishi was hailed as a revolutionary move, and one that boasts roughly 470,000 employees working in almost 200 countries. But after a Nissan internal investigation claimed that it had discovered “significant acts of misconduct,” Mr. Ghosn was arrested and initially jailed for 130 days as the pretrial proceedings in his Japanese case rolled interminably on. The government’s claims, first brought out by an unidentified whistleblower at Nissan, are that Ghosn was under-reporting his income and personally using company assets. As evidence trickled out to Mr. Ghosn’s team of lawyers, he apparently reached the conclusion that his ultimate conviction was assured, and he fled to his country of birth, Lebanon, a locale with no extradition treaty with Japan. The colorful fatherson duo who apparently helped in his escape are now facing possible extradition to Japan for their own charges, as was described in a Massachusetts federal district court yesterday.

To draw commonalities between the criminal justice systems of Japan and the U.S. is an exercise fraught with peril. The Japanese criminal case has no jurors–just a panel of three judges who preside over the proceedings and render a verdict. Pretrial hearings are held about once a month, with the idea being that the panel and prosecution can narrow the initial charges down to a lean (and mean) accusation to be handled expeditiously at the trial stage. These hearings double as discovery disclosures – allowing the prosecution to parcel out information in stages, with the defense absorbing the blows and fighting back without a complete picture of the prosecution. Those proceedings typically stretch longer than the trials themselves, and the conviction rate at trial is a staggering 99%. Japanese sentences tend to be lighter than those in the U.S., with Ghosn’s current charges, four counts of filing a false financial statement, each carrying a maximum penalty of 10 years of imprisonment and a fine that is the equivalent of about $90,000. It would take a lengthy term paper to explore the Japanese system’s treatment of non-citizens, but Ghosn’s foreign ancestry and citizenship could arguably have an effect as well.

Wearing Them Out

Before we could simply embrace Ghosn’s claim that the Japanese system is rigged, and totally distinct from our own white-collar prosecution process, there are some areas of potential overlap worth noting. First, any practicing attorney familiar with federal cases will tell you that the government often tries very, very hard to detain high-level white-collar defendants pending trial. The prosecutors couch their argument in terms of flight risk or danger of “economic harm” (continued fraudulent conduct) but is that truly the issue in these cases? Sure, rich guys have a better chance of fleeing to some island community and adopting a new persona, but this is an extremely rare outcome, particularly as it has become hard for anyone other than James Bond to live “off the grid.” Other prosecutors will throw the affluence card into the mix – “why should your guy buy his way out of jail when some working slob charged in a blue-collar crime stays locked up?” Well, for starters, white-collar crime, by definition, does not involve acts of violence. The crimes can be serious and harmful things, but it is still not quite the same as pistol-whipping a storeowner for his cash register’s bills or sexually assaulting a nearby schoolchild. Further, many whitecollar defendants have the legitimate ability to point to stable families, a fixed residence, successful 2 employment, and even a variety of productive or charitable things that they have done over the years to help their community. These are all valid factors for a court to consider when deciding whether pretrial detention for an unproven case is appropriate. Presumably prosecutors are aware of many of these life histories, so why push so hard for detention? The answer is pressure. White-collar defendants often have no criminal records and no experience with something as difficult as “gen[eral] pop[ulation]” in a local jail that holds federal defendants pending trial. Once locked up, federal white-collar defendants tend to be worn out, and to fall right in line with the 90% of all federal defendants who plead guilty. Add in some pre-trial asset forfeiture, and the defendant sees his or her world crumbling before even reviewing discovery materials. In short, locking up a white-collar defendant increases the likelihood of a plea, keeping the prosecution’s conviction rate high while making the judges happy that one more complex case has been resolved without tying up court resources.


Another commonality between the U.S. and Japanese systems might be more of a troublesome trend than anything empirically provable—Carlos Ghosn claims that Japanese prosecutors were both withholding exculpatory evidence and orchestrating leaks to impair his ability to receive a fair trial, or at least to tarnish his reputation. I am happy to stipulate that most prosecutors do not engage in that kind of behavior, but a little of it goes a long way. Obviously, the failed prosecution of then-sitting U.S. Senator Ted Stevens has become the iconic case for the government violating its obligation to play fair with the defendant. Whether it’s simply a form of tunnel vision by an obsessive prosecutor or investigator, or something worse, the number of backhanded government moments seems to be on the rise. To avoid political controversy, I won’t wade into the Inspector General Report on FISA Court abuse or how the FBI’s “defensive briefing” of President Trump also included, in essence, a sting operation on Michael Flynn, but the politically-charged case of Paul Manafort’s trouble does provide one nonpartisan event worth considering. On the day Manafort was sentenced in the U.S. District Court in Washington, D.C., a state prosecutor in New York held a well-covered press conference to announce he had charged Manafort with the same conduct in New York, and that this was done to ensure that a pardon (inherently limited to federal crimes) would not allow Manafort to “escape New York justice.” The press conference was literally to make the political point that the New York District Attorney wanted to stop Donald Trump from “getting away” with a pardon of Manafort. All of this against the backdrop of a state constitution with strict Double Jeopardy protections that exceed those of the 5th Amendment. Not surprisingly, the case was later dismissed on those grounds. One does not have to sympathize or like Paul Manafort to acknowledge that there is something wrong with a prosecutor hot-dogging it with the media to fight with Trump while violating the rights of the accused, who was literally a footnote to the otherwise politically-motivated indictment and announcement. And, of course, we recently had an FBI Director who publicly announced inculpatory facts against Hilary Clinton before announcing the non-prosecution that an actual prosecutor should have been handling. This comes with the territory when the Director has a “special employee” who provides self-serving leaks to the New York Times. Maybe the fairness of a trial accompanied by lots of media is less endangered in Japan’s non-jury system, but either way it is not hard to understand a defendant’s frustration at hearing his or her case play out with journalists rather than jurists.

The Crucible

Imagine being the innocent white-collar defendant. You are incarcerated in a local jail, discovery materials are only coming over in either a trickle or an overwhelming flood of terabytes without indices, and then 3 you find out the prosecution is charging your loved one(s). Immediately after Ghosn stuffed himself into the equivalent of a newfound frog’s shoebox with airholes, the Japanese prosecutors charged his wife with perjuring herself. It is not uncommon for federal prosecutors to dangle the possibility of charging family members, for example, as being accessories or for harboring a fugitive, as a means of inducing the lead target’s guilty plea. In the Boston SAT scandal case, where parents and coaches bought into a bribery scheme to ensure admissions into elite universities, having the temerity to reject an early plea offer from the government has quickly led to superseding indictments full of more serious charges and suggestions that other family members, even children, might end up charged. This is not to suggest that there is something inherently unethical about expanding the investigation’s targets or charges – this is absolutely common and usually justifiable from a law enforcement perspective. But don’t think for a moment that it reflects “newly-developed” evidence in most cases – it is usually a deliberate effort to turn the screws on the main target, injecting new thoughts of “chivalry” into a stalled plea agreement process.

Inhuman Success

Is there something about white-collar crime that translates into a higher conviction rate? In the U.S., jurors may not harbor sympathy towards the highest class of businessmen or businesswomen. Perhaps prosecutors have perfected the use of greed themes in their jury addresses (“the rules didn’t apply to Mr. X,” or stoking envy with claims of opulent ostrich-hair coats). Maybe even without such prodding, U.S. jurors give a very short leash to these defendants, feeling that their “advantages” in life warrant no slack when there are credible allegations of wrongdoing. It is clear that these white-collar defendants can become lightning rods for social opinion, as in the Boston SAT case, and seemingly more so than the defendants comprising the daily barrage of violent crimes that pop in and out of the system with depressing regularity. But envy or a desire to see falls from grace does not explain the Japanese 99% conviction rate. Any human-based production that can boast 99% predictability is worth looking into. Are the investigations and prosecutors so methodical and reliable that only super-strength cases are making it to the point of trial? This seems particularly unlikely in that most white-collar cases turn on intricate issues of the defendant’s intent or willfulness. Proving criminal intent is always a more circumstantial and challenging aspect of a trial than merely showing agency, i.e. “that guy pulled the trigger.” If white collar defendants are typically better represented (Mr. Ghosn has a dozen lawyers and publicists at his disposal) because of their access to high dollar law firms and gunslingers, why is the conviction rate so high? We can opine that it’s due to the absence of jurors and the use of professional judicial panels, but the answers are not clear and the similarities in tactics (and results) with the U.S. system remain.

We live in an era where criminal justice experts like Kim Kardashian have steered people from across the political spectrum to contemplate the effectiveness of mandatory minimum sentences, and a broad swath of our citizenry are in agreement that non-violent defendants should not face draconian punishment. Federal sentencing guidelines in white collar cases cling to a thoroughly unscientific and inflated calculation of “loss” that pushes judges to either impose a draconian sentence or face a government appeal for varying below the established guideline range. It may be time for someone to take a hard look at how the system handles white collar defendants – everything from detention to discovery to sentencing guidelines. If we do not take a critical look, we risk making every executive like Carlos Ghosn face grinding wheels of justice more suitable for Bernie Madoff and his ilk.