]]]]]]]]]]]       DREXEL: HANGED WITHOUT A TRIAL        [[[[[[[[[[[[
                          by Joseph Nocera,             (12/31/1988)
                  contributing editor of Newsweek
           Op-Ed page of The New York Times, 12-30-88

             [Kindly uploaded by Freeman 07656GAED]

 You  know that old saw about how, as a society, we can't  afford  to
impinge  on the constitutional rights of some obvious rat because  it
could eventually erode the rights of all of us?
  How  --  to cite the most common example --  the  Government  can't
censor pornographic magazines because that could be the first step to
censoring,  say,  the New Yorker?  How our liberties and  rights  and
guarantees  as citizens are so fragile that they must be defended  at
the very fringes of society -- at Nazi rallies and mob trials?
  Until  last  week, I never put much stock in that  particular  saw,
seeing  it mainly as an example of civil libertarianism gone amok,  a
Chicken Little theory that denied both reality and common sense.
  Then,  last  week,  the giant investment  banking  firm  of  Drexel
Burnham  Lambert settled with the Government on the eve of being  in-
dicted.  Now everything looks a lot different.
  The club the Government used to bludgeon Drexel into submission  --
causing  the  firm to ante up $650 million and plead  guilty  to  six
felony counts rather than face indictment -- was RICO, the  Racketeer
Influenced and Corrupt Organizations Act.
  If "racketeer" conjures up visions of gangsters,it should; although
the definition of a racketeer-influenced organization is  wonderfully
broad,  at least from the point of view of an  ambitious  prosecutor,
there is no question that the legislation was intended to put the mob
out  of business.  The argument was made that the Justice  Department
needed a truly onerous weapon in order to have a chance in the  fight
against organized crime, and that RICO was that weapon.
  How  onerous is this law?  Extremely:  Anyone convicted  under  the
statute  faces, in addition to lengthy prison terms, the prospect  of
triple damages, the forfeiture of all illegal profits (plus interest)
and  so  on.  No problem with that, of course;  people  convicted  of
serious crimes, whether mobsters or investment bankers, ought to face
serious penalties.
  No, the problem with RICO is the extraordinary amount of punishment
it exacts before anyone is convicted.  Merely by bringing the indict-
ment,  the  Government  is allowed to  immediately  impound  all  the
defendant's significant assets on the grounds that these assets  will
be  turned over to the Government anyway once the guilty  verdict  is
in.
  This is an astounding power for prosecutors, for it gives the  Gov-
ernment the ability, quite simply, to put a company out of business.
  This  is  not an exaggeration.  This past  August,  the  Government
brought a RICO indictment against a secutities firm called Princeton/
Newport Partners.  Although prosecutors sought less than $500,000  in
illegal profits, they wanted a bond of nearly $24 million!   Because,
like any securities firm, Princeton/Newport Partners needs capital in
order  to  function,  the mere fact of the indictment  forced  it  to
liquidate.
  Remember,  now,  there has been no trial.  Nobody  has  been  found
guilty of anything. But the firm is finished, ruined by the financial
terms of RICO and the stigma of being labeled a "racketeer."
  I do not mean this to be a brief for Drexel.  It seems to me  quite
plausible that the firm committed the crimes it has been accused  of.
But  there  is  something  fundamentally  wrong  when  Drexel's  pre-
indictment  options were either to sell  or be ptu out  of  business.
Getting the chance to fight for its honor in court was never part  of
the equation.  Drexel has already been found guilty -- not by a  jury
but by the Unied States Attorney.
  What is offensive about the law is this: It presumes guilt.  In  so
doing, it violates one of the civil liberties we hold most dear as  a
society  --  namely, that we are innocent until proven  guilty  in  a
court of law.
  RICO makes a mockery of this right.  Of course, no one seemed to be
bothered  by  this trampling of basic rights when it was  "only"  the
basic rights of mobsters that were at stake. But now the victims  are
more "respectable"; consequently, there is growing sentiment that the
law chould be rewritten by Congress.
  Great,  except  the rewriting the business comminity  has  in  mind
would  still allow RICO to trample on the rights of  mobsters,  while
protecting  those in the securities industry.  One would  have  hoped
that the securities industry would see now that the old saw has  some
validity  after all.  First is was mobsters, then  securities  firms.
Who will be next?
  Don't rewrite RICO.  Abolish it.  The Chicken Littles got this  one
right:   When you violate the rights of mobsters, you   violatte  the
rights of us all.

                           *       *        *


Return to the ground floor of this tower
Return to the Main Courtyard
Return to Fort Freedom's home page