-Caveat Lector-
January 30, 2001
Politics & Policy
In Indicting Marc Rich, Prosecutors Used Tactics Later Reined In by
Supreme Court
By DAVID S. CLOUD and JERRY MARKON
Staff Reporters
THE WALL STREET JOURNAL
Maybe Marc Rich's lawyers had a point.
The indictment against Mr. Rich that was invalidated by Bill
Clinton's pardon was based in part on aggressive prosecution
tactics later reined in by the Supreme Court and the Justice
Department, legal experts say. While that argument wouldn't have
come close to completely negating the massive tax-evasion case
against Mr. Rich and co-defendant Pincus Green, it was heavily
emphasized in the effort that persuaded Mr. Clinton to pardon the
pair of fugitives, who now live in Switzerland.
"I don't sit here to tell you that I know about Mr. Rich's
character," says Mr. Rich's lawyer Jack Quinn, the former White
House counsel who persuaded Mr. Clinton to issue the pardon. "I
do sit here to tell you that the case that was brought against
him was wrong."
Political repercussions in the case are continuing. President
Bush criticized his predecessor's last-minute pardon but said he
wouldn't try to revoke it, a move that some administration
lawyers had researched. "I was troubled by the decision the
president made. I would not have made the decision," Mr. Bush
said. "But, nevertheless, he was the president; he had the right
to do so, to make that decision, and he did. And I'm going to
protect that privilege not only for me, but for future presidents
as well."
The nub of the charges against Messrs. Rich and Green was an
alleged scheme to circumvent profit and price controls on oil and
to evade taxes on resulting illicit profits. In bringing the
indictment, though, prosecutors employed a then-novel and
aggressive use of the Racketeer Influenced and Corrupt
Organization Act of 1970.
The law, originally aimed at organized-crime figures, lets
prosecutors lump a series of allegedly criminal acts into a
pattern of conduct. It's an attractive option for prosecutors
because the law includes stiffer penalties and authorizes the
government to freeze an allegedly corrupt company's assets prior
to trial, with an eye toward seizing them later, thereby
pressuring defendants into plea talks. In the case of two Rich
companies, the tactic worked; they pleaded guilty in 1984 to
false statements and tax evasion in a $200 million settlement, a
move their lawyers now say was necessitated by corporate
survival, not by a sincere belief in their own guilt.
At the time of the indictment in 1983, RICO had rarely if ever
been used in a major white-collar crime case. But the Justice
Department's guidelines since 1989 have restricted the use of
RICO in tax cases. "Tax offenses are not predicates for RICO
offenses," says the Department's United States Attorneys' Manual.
The indictment also uses mail-fraud charges to bolster the tax
case, which could run afoul of another guideline that discourages
mail-fraud charges when the mailing is "used to promote or
facilitate a scheme which is essentially only a tax-fraud
scheme."
Moreover, the Rich indictment includes several mail-fraud charges
based on allegedly fraudulent reports to the Energy Department.
But in 1987, the Supreme Court ruled that mail-fraud laws don't
cover violations of "the intangible right of the citizenry to
good government." Congress later overturned the ruling, but Mr.
Rich's alleged offenses occurred earlier, so arguably they were
governed by the high-court ruling. Even a former Rich prosecutor
says that might be valid. "I think it might have been a
legitimate argument," says Otto Obermaier, former U.S. attorney
for the Southern District of New York.
To Mr. Obermaier and others, such arguments don't justify a
pardon. "If it was such a weak case, then why did they become
fugitives?" says former prosecutor Morris Weinberg. "The essence
of this case was not a RICO case, it was in essence a tax-fraud
case. You can argue that the law may have changed, but it hasn't
changed on avoiding $48 million in taxes."
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Kadosh, Kadosh, Kadosh, YHVH, TZEVAOT
FROM THE DESK OF:
*Michael Spitzer* <[EMAIL PROTECTED]>
~~~~~~~~~~~~~~~
The Best Way To Destroy Enemies Is To Change Them To Friends
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