Monday, September 29, 2008


"Worst Crisis Since '30s, With No End Yet in Sight" - The Wall Street Journal

As the Pillars of the American Financial Empire crumble, politicians promise salvation but end up in childish bickering and finger pointing which sends Wall Street plunging and Main Street panicking about the future. Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, N.J., told Reuters today, "There's a monster amount of fear out there. This is global contagion." Henry Herrmann, CEO of mutual fund company Waddell & Reed, told Bloomberg News that if Congress doesn't come up with a plan, and soon, “the damage is unimaginable!"

Everyone, including the two men battling for President, blames the greed and excess of corporate America; and people rightfully begin to ask: “How was this allowed to happen?” Historically, in times of crisis, when crime runs rampant and order turns to chaos, the most often asked question is: “Where were the police?” It's a good question. One which I will try to answer in the next few blogs.


I was litigating cases in Southern California at the time of 1992 riots after the Rodney King verdict, and as much of South Central L.A. burned, and people died, the cry went out again, “where are the police?”

As Jews around the world celebrate Rosh Hashanah, I am reminded of a law enforcement course I took at the Holocaust Museum in Washington D.C. entitled “Where Were the Police? Lessons Learned from the Holocaust.”

While we go about trying to find a solution to the current crisis and ensure it doesn't happen again, it behooves us to ask what happened, and what role did law breakers have in it? The next obvious question then is, "where were the law enforcement and regulatory agencies as bad actors were quietly but devastatingly undermining America's financial pillars?"
As the Chief Law Enforcement Official in the State of Utah, I can tell you that when it comes to enforcing financial laws from antitrust to mortgage fraud and all manner of corporate white collar crime, My AG colleagues around the country and I(of course, guided and supported by our very capable staff attorneys and investigators) have been on the job, suing CEOs of major corporations, Wall Street big wigs and sub prime mortgage giants, and prosecuting financial crimes by Fortune 500 companies.

I have lectured around the country to corporate executives and their in-house lawyers on the power and authority of state attorneys general in policing corporate greed and excess. My lecture is consistent and forthright. I believe strongly in the greatness of a free market economy which best protects the consumers of America by igniting competition, encouraging innovation and ensuring the development of products and services which better our lives at prices we can best afford. In a 2004 satirical piece called “In Defense of Excess,” Times columnist Michael Kinsley, explained it this way:

“The magic of capitalism, as explained by Adam Smith and his followers, is that it channels individual greed into activities that benefit all of us.”Greed is good," declared Michael Douglas, playing a corrupt financier in the movie Wall Street. More accurately, greed is inevitable. It is part of the human condition. And in moderation, economists argue and history demonstrates, greed is no bad thing. Free-market economies could not function if we were all Mother Teresa.”

But I have also consistently warned that where the human capacity for greed is left unchecked, unfortunately, there are those who will cheat and lie and steal and circumvent the rules and break the law and that is where the Rule of Law and Law Enforcers like myself must, and will, step in to protect consumers and hold law breakers accountable; thereby leveling the playing field for those in the majority who obey the rules and are often put at a competitive disadvantage by the “greedheads” and crooks like Ken Lay and Jeffrey Skilling of Enron, Dennis Kozlowski of Tyco, Bernie Ebbers and Scott Sullivan of WorldCom and John and Timothy Rigas, the father and son who bankrupted Adelphia Communications.

In August of 2002, The Wall Street Journal recognized me as one of six "tough guy" attorneys general who were “gaining clout and influence beyond state borders.” The article concluded that the six "united crime busters" are helping shape national policies by winning cases and "chasing bad guys."

Stay tuned for Part II...

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