Feds on a winning streak
TEXT OF INTERVIEW
SCOTT JAGOW: Last week, former Qwest CEO Joseph Nacchio was convicted on 19 counts of insider trading. This was the last trial in a series of big corporate fraud cases: Enron, WorldCom, Tyco, HealthSouth. Newsweek’s Allan Sloan says along the way, federal prosecutors finally figured out how to win.
ALLAN SLOAN: Somewhere along the line, possibly in on of the Tyco cases, I don’t know, the government figured out that it’s much better to keep it simple so that somebody can understand what you’re talking about. Pare down the case and, you know, they now tell stories instead of throwing everything at the wall to see what sticks.
JAGOW: And how about the punishment that these CEOs are getting now? I mean has the message finally come across?
SLOAN: The government finally has figured out how to get a couple of high-profile people, which in theory will scare the rest of them, we call that deterrence. Meanwhile the government is losing several low-level cases but you generally don’t read about those. They have not lost a high-level case now for a long time. I mean the message is very clear: You see CEOs with net worths of hundreds of billions of dollars who are defended by very competent, high-priced attorneys and they still end up in the big house, well that oughta scare people straight. From where I sit, it’s working.
JAGOW: Yeah it’s no joke. I mean these guys are going away for a long time. Nacchio could get the rest of his life in prison.
SLOAN: A lot of these guys, their lives are over. And the other message is, if you’re someone lower down whom the government wants to turn, instead of duking it out and going to trial, maybe you oughta take a small criminal conviction and turn on your superiors, which is how they got Nacchio. They got all sorts of people below him in the food chain to turn state’s evidence.
JAGOW: I guess the bottom line is that the government has learned from all of this.
SLOAN: Right. The government has figured out how to explain stuff in a language approaching English. And my great fear now is that some of these prosecutors having learned this are going to decide to become business journalists and columnists and then they’ll become competitors of mine and then I’ll be in real trouble.
JAGOW: Alright Allan Sloan thank you.
SLOAN: My pleasure Scott.
JAGOW: Allan Sloan, the Wall Street Editor for Newsweek magazine. In Los Angeles, I’m Scott Jagow. Thanks for listening and enjoy your Monday.
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