Inquiry which was why does it appear that the Justice Department failed to prosecute executives . So, lets begin. Why . Guest thanks so much for having me. I can later this conversation. So i think this is the flip side of mass incarceration in this country where we have a too. Justice system. One group of people disproportionately poor to support the people of color are punished too seriously, to punitively. And that was that what im writing about which is a class of people rich and powerful who seem to have impunity to commit crime. Im talking about executives at the highest levels of Corporate America, not just bankers, not just in the aftermath of the financial crisis. This is been a problem thats been building before the financial crisis. It persists today and it affects not just executives of the big banks but industrial companies, retailers, pharmaceutical companies, tech companies. This is a pervasive problem with bringing Corporate America to heal. Host in your book you talk about the fact that never really was a golden age of enforcement of the laws come what an Corporate Executives and corporations file extender to talk more about a silver age. And so try to forget how we got here. I noticed in your book you said the following, maybe you can address this. The aftermath of the 2008 call for aggressiveness. The people demand it. The politics were favorable pick the department of justice had chances to bring cases against companies and executives. Public trials would present the evidence. Juries would have decided if crimes have been committed that this fear of failure took gold when it did is tragic. Is that it . Is this all about a fear of failure . When you enter, tells about the title. I feel like have to ask. Guest here is a major part of this. Concern about losing hence the time of the book. The title of the book comes from jim comey, and viewers will know that that jim comey. He was far just recently as fbi director by donald trump before this 15 years ago he was u. S. Attorney in the Southern District of new york. And as you know the Southern District of new york is the premier office of the department of justice, now the prestigious office is also the main justice but then this was the place where the hottest shots went, the brightest stars in the prosecutorial, and he gathered them all together and he gave them a speech. He started off and he was focusing love to talk and he said how many of you have never lost a case . A bunch of dance shoes of the these guys are the best of the best of the best. Did go to the best law schools, best clerkships. They are the brightest and if you ask and they will attest to that. Theyre very proud of the record. Then he said the ambulance happening for you guys, the Chickenshit Club and the hands go back down. People are feeling a little sheepish. What does he mean by that . What used to go on to say . He says your job is not about winning. Your job is not about preserving an undefeated record. Your job is about doing justice. Justice requires ambitious cases. Raising your site so youre not taking off the foldable, the low hanging fruit but going up against the most powerful wrongdoers in society and not be worried you cant take them on and that you might, you might lose the case. Unfortunately, after that period of time which starts with a can of 5. , the silver age when the government prosecutes enron, talk you executives from income, tyco, those names. In he remembers those hur aftert theres a big backlash which i writing a book that interchanging the department of justice culture makes an fearful of trying these top executives. Host thats fascinating and im really glad that you mention james comey because is not the only familiar name that we see in this book who represent elevating courage over a career ambition. I think i see that a as a themen the book. Its wonderful that these prosecutors had a role model who was encouraging to take risks come to try to do justice and not just build the resume. But something did change. You mentioned during the enron era when the prosecution of enron occurred and i think it wound down about 2004. You talk about that. The book is filled with people, Robert Morgenthaler, ray croft and so on. We even see Robert Mueller think of another going in which you might bring up. It seems like theres these folks that you repair who were courageous, who stood up for justice but then something changed. I wonder whether elizabeth warren, her expression, comes into play. But what happened . We can find at any time in history courageous people. Is it something the people or is it the system. What change . Why those people not in those positions now . When did the change happen . Guest its a great question. It certainly is the case that some of it is actually the people, but i think the larger issue is that they are institutional incentives because if you think that largely the department of justice is filled with dedicated Public Servant or very intelligent who want to do good job. But there are, im glad you mentioned, that the are some people that i consider heroic. Imperfect but really trying to do a good job of bringing justice. One of the guys, a hero early on in the book is stanley and a largerthanlife character. He probably was the most important bureaucrat in the 1970s. He was director of enforcement through the 70s. He wasnt time he worked at the security and guest he wasnt the head of the sec but is probably regarded as the most important cop on the beat for companies throughout the 1970s. Hes a huge guy, big personality. And he had these loyalist young guys working for them, mostly guys, and terrify them. He would sit on a couch in a giant office and people had a table in his office, huge office and his young guys were working on Different Cases and he would sit on the couch and work on these cases, a brief period of time and then he would bring in the lawyers for people at the sec was of the city. He on the couch and his buttondown employees would present their arguments for why their clients were not guilty. He appeared to nod off on the couch and he would sink into the couch and he was a hideous looking couch with terrible array of discussing colors from the 1950s, and he would sink into the seat and it would appear to nod off and the lawyers had no idea what to do. They didnt understand, she we continue our presentation . Is his the asleep . Is a listening . They would continue the presentation in the kind of halting way. And he would wake up and season something that typically been listening the whole time and he had this brilliant ray of eviscerating their arguments. He was in their power and you control all conversations. So he was really a guy who put Corporate America on its heels to a variety of interesting techniques. He is one hero of the book. But, unfortunately, what i say is his innovation in some 30 years later, 40 years later souring and becoming kind of corrupted, and krups the way the sec and the doj to business today. Host talk about that innovation. The sec mission at tha the times solely to protect investors. He was then part of the sec where he was a career, a career employee. He was running, he had a job that was not a political appointment so he wasnt one of the commissioners. He didnt really have political power by the filters are within the organization the way you are describing by being quirky and brilliant and popular with his staff. You mention even though he was courageous there was innovation that got distorted later. Could you talk about what went wrong and what the unintended consequences was at this . Guest and his political protection in congress from both sides of the aisle, republicans and democrats, and so much so that when they were interviewing future sec, candidates to be sec chair, they would say going to keep him in office . So his he was a powerful even though he is not the head of the agency. He had a variety of innovations but two of them were one coming want to go after gatekeepers the way we think of investment banks, law firms and accounting firms. The ones that Companies Need to go public on the public markets. They have together books audited. They have to have legal opinions and investment banks. What he thought was if we go after those firms, then they will be on guard for fraudulent companies. We will use their leverage as the gatekeepers of this company to protect shareholders and the public from fraudulent companies. That was a Great Innovation. Hes kind of influence in that way by another hero of the book Robert Morgenthaler whose abuse attorney in the Southern District. Throughout the 60s and really kind of starts the whole idea that they both should go after accountants and lawyers and also that they should have sort of raise their sites in higher class of corporate whitecollar criminal. Host so whereas sporkin is in washington, d. C. , the security and Exchange Commission working a as a top lawyer in the Enforcement Division as folks may be where the sec only a Civil Enforcement authority. They cant create, they cant have criminal fines or put people in jupiter if you want to work on a criminal case the sec needs to reach out to the department of justice which also has a d. C. Office but you mentioned earlier in our conversation that one of the more prominent of the 93 offices is in the Southern District of new york, the most prominent and you mention Robert Morgenthaler was the head lawyer there. So they had to have a good working relationship if they wanted to bring them all cases. Guest and in a 60s and 70foot even more prominent than it is today because there are fewer offices around, in the country in the department of justice at the point that did these cases. So really when families want to do something criminal with whitecollar corporate crime, hes got to go to the Southern District. He comes in in the 70s but morgenthau has set this pattern and morgenthau, sporkin is at the sec in the 60s. So what they are doing, there are two kinds of enforcement. What theyre doing criminally is focusing on individuals. They dont prosecute companies. They dont think of prosecuting companies at all to the 60s and 70s. They emphasize going after the highest level individual executives they can. Host individual accountability for criminal wrongdoing. Guest exactly. They have the power to do this. There is a 1909 Supreme Court ruling that says it theres one employee in the course of his or her job who commits a crime, you can prosecute the company. But they dont do it. Its just not the practice. Reason is that they think of corporations as a piece of paper and they think that individuals commit crimes and they want to deter individuals so they want to prosecute individuals. As well see that changes over the next decade. It sort of changes because of an innovation that sporkin brings in the civil arena for the sec where he realizes that the acc is under resourced and can leverage the resources it has by making companies voluntarily come clean on various automatic things that theyre doing. The main thing that he is focused on is hes watching watergate and he is seeing how their allegations of slush funds going to campaign donations, and he realizes its a very technical out the vote on tax evasion kind of brilliant idea where he says these guys have these slush funds to make Illegal Campaign donations, discoveries, Major Companies like texaco. If we look at the books and records, we will not see the line item for secret slush fund. Bribes. And, therefore, what we can do is we can say you been misrepresenting your books and records to the public. So come clean now and then we will enter into a consent decree. You dont have to admit that youve done something wrong. Later they are not allowed to deny theyve done something wrong but they settle and they cleaned of books up. In the early part, this is the Great Innovation because companies are generally scared of Stanley Sporkin. They hate sporkin and did not want him on their case. They do come in and did you come clean. Then it becomes perverted over the course of the next 40 years. Host the innovation, that enforcement of the sec, Stanley Sporkin had figured out was we are under resourced just make i have a slight we are under resourced, we dont have access to what folks are really thinking. We rely on the company and their lawyers and say if you fess up and settle with us, then we get a win and maybe hopefully you will behave better and all will be better. Guest we will make the Companies Work for us, is his innovation. Make them start to examine their own behavior, put them on notice for a variety of things you put them on notice or activities that before that no one was saying was wrong, no one was scrutinizing, this is why they screamed bloody murder because all of a sudden they are being held to a new standard of behavior. But they do, doing a lot of bribery. Thats the kind of thing that you talk to the pleas, this is before bribery is technically illegal. So hes got to get them on this technicality of the books and records, then sporkin because of his intrepid enforcement i shares, brings about the foreign corrupt practices act in 1977 if im correct, and makes it illegal to bribe officials, foreign officials, Foreign Government officials. So this is a really Great Innovation. Sporkin is working with young prosecutors in the Southern District like another hero of my book, jed, who learns and admires sporkin and really emulates him and then becomes a defense lawyer and then later a judge, and he takes on the sec, the same as addition that sporkin had worked for when the judge sees the sec is having become degraded. Want to return to a restarted which is what went wrong and what changed. To some degree when i think much about i i think about it as kind of one of the reverse makeovers. Its like a before and after but the picture doesnt look as good at the end. Whats interesting is we have these examples of the high tide or the silver age. We have the 70s we just talked about but we also many people look back at the enron prosecution and say those were a success, copy it, other than the conviction of arthur anderson, the counting of from was overturned by the Supreme Court. There are many people have not looked at this as close as you have who think jeff who went to jail, a ceo, and kenneth lay who was chairman and later became ceo was also convicted, although he did die before he was sentenced. And many of us have read the book and seen the movie enron the smartest guys in the room. In terms of again the general public and folks who have to study disclose who we think thats another success story. We can also say i skipped a place in between, we have the silver era you talk about. We also have the thousand people who were prosecuted in connection with the savingsandloan debacle under george bush senior. Then we have under george bush junior we have what looks like a successful prosecution of the bad guys in enron. The folks are really waiting and waiting. We think the bankers did something wrong. There is kind of a list of folks and activities you mention which we can get to you, what happened. What i think is so fascinating about your book is a fault lines were there. Well before the Obama Administration takes over. In other words, what it seems like, this is what it want you to talk about, is that the culture and the knowledge and the practices of the department of justice have already been weakened. There had been a shift. So can you talk a bit about what caused the ship just to see the conversation a little bit more. Im wondering similar to what you talk about with Stanley Sporkin how much another innovation that occurred under Mary Jo White in 1994, the prosecution agreement changed things. What weekend the doj so that by the time president obama took over in 2009 it wasnt prepared to handle this crisis . Guest great question. Enron is i think a successful prosecution. So what do they do with enron . Bob mueller is head of the fbi and Larry Thompson is the Deputy Attorney general under ashcroft and Michael Chertoff who is the head of the Criminal Division of the department of justice form a task force. What they do is they pluck talented prosecutors from all over the country and essentially locked them in the room, at a fork which although although in some feeling like they literally are locked in a room, working 18 hours a day for years to look at one case. And by contrast, to skip ahead in the story of one of the things the Obama Administration doesnt do is create any kind of Operational Task force of prosecutors who was supposed to be looking at specific types of issues or banks and actually focusing on them solely. So theres no prosecutor in the wake of the financial crisis whose job it is solely to look at financial crisis cases. She is juggling insidertrading cases and some by the skin case, and then some financial crisis case. Its a really major problem. Thats one thing. They are focused. Theyre concentrating. They are dedicated to it and they have patience and they work for years and years. They are not brought to trial until 2006. The task forces from the beginning of 2002. 2002. It takes years to do this. These cases are extraordinarily complex. One thing to note about the cases is they never did any stupid stuff on email. Which is sort of the way that we may cases now. Prosecutors know theyre supposed to find th