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What Robert Mueller Learned From Investigating Enron

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What Robert Mueller Learned From Investigating Enron

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FBI director

Reprinted with permission from ProPublica.

This story was co-published with The New York Times.

It seems safe to assume that nobody read Donald Trump Jr.’s damning emails with a Kremlin-connected lawyer more closely than Robert Mueller.

Mueller, the special counsel investigating possible ties between the Trump campaign and Russian officials, will surely be making calls to everyone involved in the now infamous meeting, including the president’s son; the president’s son-in-law, Jared Kushner; and his campaign chairman at the time, Paul Manafort.

As he does, the question is whether Mueller will be able to build a case that goes all the way to the top.

That could depend on what lessons he learned from overseeing the task force that investigated one of the biggest fraud cases in American history: the collapse of the energy giant Enron.

In December 2001, Enron filed what was then the largest corporate bankruptcy in American history. Just weeks later, Mueller, then the FBI director; Deputy Attorney General Larry Thompson; and the assistant attorney general for the criminal division, Michael Chertoff, formed the Enron Task Force, an elite team of FBI agents and federal prosecutors assigned to investigate and prosecute crimes related to the Houston-based energy trader. Andrew Weissmann, who recently joined Mueller’s Russia team, later led the task force.

The Enron team was patient and learned from its investigative and trial mistakes. After its yearslong run, it set a high-water mark for complex, high-profile financial inquiries, successfully indicting and imprisoning almost all of the company’s top executives.

Early on, the Enron team also won a jury conviction of the Arthur Andersen accounting firm, Enron’s auditor, on an obstruction-of-justice charge. That experience could prove valuable as the Russia team investigates — among many possible routes — whether President Trump obstructed justice when he fired James Comey, the FBI director.

Prosecuting the Enron executives went slowly. Not until 2006 did a jury find the former chief executive, Jeffrey K. Skilling, and the former chairman and chief executive, Kenneth L. Lay, guilty. (Lay died before sentencing.)

The frauds Enron was accused of were audacious. The company had hidden debt in a complex web of off-the-books companies and had faked its profits. Yet prosecutorial success was not inevitable. Skilling and Lay pleaded ignorance, blaming lower-level employees and arguing they had relied on the advice of their attorneys and auditors. The government did not have damning emails or wiretap evidence from either man. Prosecutors may face a similar challenge with Trump, who tweets but reportedly does not use email.

The Enron team got off to an auspicious start, with the Department of Justice providing adequate prosecutorial resources. Mueller helped recruit talented prosecutors and investigators from around the county and then got out of their way.

He and other top Justice Department officials then gave their team political cover. Enron and its executives were particularly close to the Bush family and top Republican officials. Early on, the team interviewed White House officials about their recollections. Republican political operatives voiced displeasure, but the team persisted.

The task force conducted its investigations effectively, flipping lower-level employees to build cases against the top bad actors. The Enron team made aggressive and risky moves. For example, it shocked Houston high society by charging the wife of Andrew Fastow, the chief financial officer, with tax evasion to put pressure on him. It worked. Fastow began to cooperate with the government. (His wife pleaded guilty.) Every prosecutor knows this strategy works, but for various reasons today, few put in the painstaking work needed to penetrate the sophisticated legal defenses of highly paid executives.

As it proceeded, the task force weathered relentless attacks. First, critics charged it was moving too slowly. Later, white-collar defense lawyers accused the team of intimidating witnesses and overzealously charging executives. The legal establishment particularly criticized the prosecution of Arthur Andersen. The government won at trial in 2002, but the Supreme Court overturned the verdict three years later on a narrow issue involving jury instructions.

Despite its successes, the Enron Task Force emerged with a mixed legacy thanks to its trial losses and reversals from higher courts. Among them, the Supreme Court reversed part of the Skilling verdict.

Today, many Justice Department officials have learned the wrong lessons from the Enron experience, accepting the idea that the task force was overzealous. Even Democratic appointees like Mary Jo White, President Obama’s chairwoman of the Securities and Exchange Commission, and Lanny Breuer, his assistant attorney general for the criminal division, came to believe the prosecution of Andersen had been a mistake.

Drawing the wrong lessons has consequences. In subsequent years, the Justice Department did not assign prosecutors to work solely on financial crisis cases. While the Bush Justice Department had acted quickly to create the Enron Task Force, the Obama department allowed plans to create a similar task force, after the banking collapse of 2008, to die amid bureaucratic infighting.

It was no surprise, then, that the Justice Department never put any top bankers from the biggest banks in prison after the financial crisis. Forgetting what went right with the Enron prosecutions has contributed to a problem that still plagues the Justice Department: It has lost the will and ability to prosecute top corporate executives from the largest corporations.

Today Mueller’s team is operating in an even hotter kitchen than the Enron Task Force did. The president has repeatedly called the investigation “a witch hunt,” and rumors abound that he could fire Mueller any day. A Trump ally, former House Speaker Newt Gingrich, has grumbled conspiratorially that the former FBI director was the “tip of the deep state spear” aimed at the president.

But the Enron Task Force may have given Mueller a hide thick enough to protect him from those attacks. More than that, Enron honed skills he’ll need now in the Russia investigation, which may well touch on money laundering, secrecy havens, complex accounting maneuvers, campaign finance violations — and multiple lies.

As I talked with Mueller’s former Enron Task Force colleagues in recent weeks, it became clear to me that he believes the Enron team was successful — and understands why. That means his special counsel team will probably move more slowly than people anticipate. But it might also shock people with its aggressive investigative and prosecutorial tactics. If Trump and his advisers committed crimes, Mueller will find them.

Jesse Eisinger is the author of The Chickenshit Club: Why the Justice Department Fails to Prosecute Executives.

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21 Comments

  1. Aaron_of_Portsmouth July 14, 2017

    The nation is undergoing a harrowing transformation that will require a lot of pain to be endured—not just by victims of the GOP, and other political entities for whom corruption is now considered normal— but individuals like the Trump’s, Kasowitz, and countless others will have to pay some sort of price. The degree of the punishment will be determined by that unknowable Essence—“The best of judges” as cited several places in the Qur’an.

    For the sources of instability and rancor to think that they are immune to retribution is a grand mistake.

    “O Son of Being! Busy not thyself with this world. For with fire We test the gold, and with gold We test Our servants.”

    Reply
    1. Erikarbenjamin July 15, 2017

      Google is paying 97$ per hour! Work for few hours and have longer with friends & family! !pa273d:
      On tuesday I got a great new Land Rover Range Rover from having earned $8752 this last four weeks.. Its the most-financialy rewarding I’ve had.. It sounds unbelievable but you wont forgive yourself if you don’t check it
      !pa273d:
      ➽➽
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      Reply
  2. BDD1951 July 14, 2017

    I remember when Enron went belly up. A man in my town thought he had $80,000 in his retirement fund and when they released his money there was only $8,000. He had retired and he and his wife were going to travel on that $80,000. What a shame. They probably made one trip. I also remember that he took the Enron plane to Washington D.C. for Dubya’s inauguration with the elder Bushes as passengers. Enron donated $250,000 to Dubyas inauguration day.

    Reply
    1. Eleanore Whitaker July 15, 2017

      I know what you mean. A friend of mine worked at Enron in Nebraska for 30 years. She had $33,000 in her Enron retirement fund. It shouldn’t have surprised anyone that Kenny Boy, a friend of the Bush family since Daddy ’41 and Skilling an attack dog monster who lived higher on the hog than Madoff on his own employees retirements were outed.

      These guys always think they are oh so superior and know it all. Madoff is going to die in prison. Skilling got 14 years while some of their inhouse accountants got 45 years.

      When Enron blew through all of their employees retirements, it opened the door to other companies doing the same. Big Insurance is the only industry that still gets away with this kind of extortion.

      Now, my friend in NB has to work long past SS eligibility age just to survive. Don’t wonder why I refer to greedy men as rotten bastards who need to be hung upside by their balls.

      Reply
  3. Lynda Groom July 14, 2017

    I’m sure he is finding even more than he could have imagined at the start. In fact I believe we are still in the beginning of the findings, not the end of the beginning. This fiasco is going to be with us for a very long time. The evil runs deep with that bunch in the WH.

    Reply
    1. Ruthwnumbers July 17, 2017

      Google is paying 97$ per hour! Work for few hours and have longer with friends & family! !pa125d:
      On tuesday I got a great new Land Rover Range Rover from having earned $8752 this last four weeks.. Its the most-financialy rewarding I’ve had.. It sounds unbelievable but you wont forgive yourself if you don’t check it
      !pa125d:
      ➽➽
      ➽➽;➽➽ http://GoogleFinancialJobsCash125BuzzGreatGetPay$97Hour ★★✫★★✫★★✫★★✫★★✫★★✫★★✫★★✫★★✫★★✫★★✫★★✫★★✫★★✫★★✫★★✫★★✫★★:::::!pa125l..,……

      Reply
  4. RichFromShowMe July 15, 2017

    While the Left goes bonkers, Vlad, the Impaler, is having the last laugh.

    While Mueller attempts to stitch together a case on the only non-government-official involved (a private citizen) he ignores the elephant in the room; i.e., the DNC and their corrupt organization, the SOS’s Play-for-Pay and other obvious glaring examples of true corruption in Washington, deCeit.

    Reply
    1. dbtheonly July 15, 2017

      Snort of derision.

      One finds it hard to believe you are really this clueless. One might instead be warranted in assuming you are also on the Russian payroll. Defend Trump by deflection.

      Reply
      1. RichFromShowMe July 15, 2017

        There is no “deflection” is my post, it only points out the super-obvious facts the Left and it’s captive Special Prosecutor seems to be ignoring.

        Thanks for the reminder . . . . I need to send Vlad an EMail for last months work on his behalf 🙂

        Reply
        1. Eleanore Whitaker July 16, 2017

          Denials, denials, denials, denials…The Alt World of Bitchy Richie. Why don’t you post your sob stories on a right wing site and get the hell off this one since no one agrees with you?

          Who do you think you are? John the Baptist, come to announce the Good News? You only make a royal ass of yourself trying so heard to force your BS on the rest of us.

          Time for you to take a hike. There are lots and lots of right wing sites, some paid for by Putin. Get there. You are wasting your time and ours.

          Reply
      2. dpaano July 17, 2017

        Why is it that when articles like his come out, it’s actually the trolls that “go bonkers.”

        Reply
        1. dbtheonly July 17, 2017

          I’m not sure what brings out the trolls, but their claims are getting sillier by the week. Trying to reignite the “scandals” of a year ago. Indeed.

          The overt deflection has reached the funny stage to me. One wonders if they really consider this stuff important. It beats talking about Trump and his manifest failings.

          Haven’t seen much of you lately. Good news I hope.

          Reply
          1. Cuff July 17, 2017

            Did you see what I told you over at Ollie’s place about Cuffman? Well it’s official, he got the 3rd BandHammer!!!! Boom

            Reply
    2. Eleanore Whitaker July 15, 2017

      While the right tries desperately to FORCE themselves on us and rape our incomes, WE are covertly resisting.

      The reality of Putin is that he was and still is KGB. Or as he publicly stated during his Russian campaign, “Once a KGB, always a KGB.”

      The RNC is up to their asses in trouble right now. We all know it was the RNC who took money laundered by the Russian and handed to Trump to allow Trump to run on the GOP ticket. No one else but the RNC is to blame.

      Now, I find it amusing that Trump is desperate to be rid of Prince Rinse. Trump knows if Rinse spills his guts about “where” Trump got that $100 million he taunted Hillary with in the 2nd presidential debate, “I donated $100 million to MY campaign. How much did YOU donate to yours?” that would seal the cesspool Trump is already wallowing in.

      The more the right wing and Trump lie, the worst it gets for them but they are too stupid to realize that. They just go along their merry way believing they have ALL of the people ALL of the time buffaloed. Think again.

      Reply
      1. RichFromShowMe July 16, 2017

        “While the right tries desperately to FORCE themselves on us and rape our incomes, WE are covertly resisting.”

        Now isn’t that a stupid comment . . . since President Trump was inaugurated the Stock Market has gone up around 15%+, more Americans are working than anytime under the obamba Regime, illegal immigration has decreased by around 70%+, ISIS is being exterminated, Mosul is recovered, hundreds of obamba’s economy-ending mandates and regulations have been reversed and even the Left, at least those who have Common Sense, are seeing the light 🙂

        I assume “covertly resisting” covers physically attacking Conservatives and Independents, destroying public property and generally making fools of themselves? 🙂

        Reply
        1. Eleanore Whitaker July 16, 2017

          Hey dipshit. That isn’t what my neighbors who work on Wall Street and board NYC buses every day are saying. And NO the stock market is NOT up. It’s up and down like a yo yo. Read the WSJ once in a while you lying SOB.

          More Americans are NOT working. The DOL reported jobs in the US were down to just over 100,000. Not exactly the great numbers of the Obama Administration…Ooooooh now your ass is getting pinched from that fact you can’t admit.

          So..Where are the coal mining jobs? IN the US moron. Not Siberia that is. Where are the 3,000 GM jobs your shitbagger claims he saved? GM says they are shipping those last 300 remaining jobs to Mexico.

          Why isn’t Mexico paying for that wall? Where is the free healthcare Lard Ass promised? I’d say your boy can’t get a goddamn thing done even with a House and Senate Majority and a TX oil boy on the SC.

          If you are going to lie, do it with someone who is dumber than you. I get the real skinny about Wall Street from my 2 best friends who are Wall Street financial managers for the past decade and both of them say that Trump’s policies will end up with another crash before the end of 2017. Nice work moron.

          Reply
          1. RichFromShowMe July 16, 2017

            Fully realizing you ignore FACTS, one last, final, try:
            http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=DJIA

            Obamba jobs:
            http://www.npr.org/2017/01/07/508600239/what-kind-of-jobs-president-has-obama-been-in-8-charts

            Trump jobs:
            https://data.bls.gov/timeseries/CES0000000001?output_view=net_1mth

            The coal market will come back when China and Europe starts buying our coal after President Trump puts trade “embargo’s” back on nations who trade with “kim is ill” in North Korea.

            As for Free-Stuff, moochers, evidently like you(?) had best wake up . . . . the obamba Socialism is coming to an end and we’re going back to Capitalism and Free Markets . . . your Wall Street friends will like this a lot.

            Your friends on Wall Street are talking about the normal cycles in the market, like now, Intel is down, but in a month or two it will be back on top . . . . same with most market sectors other than storefronts which are going by the way of the buggy whip . . . the only ones that will survive are specialty stores carrying items not available on the internet with next day shipping.

            Reply
          2. Eleanore Whitaker July 16, 2017

            My friends on Wall Street all have MS or higher degrees in financial management. They don’t rely on NPR for financial news like you do. They know NPR is now owned by Rupert Murdoch who back in 2007 told a journalist, “my journalists publish only what “I” tell them to.” And this is the source you claim is so valid?

            Why not Financial Times or the Wall Street Journal. All you do is make an idiot of yourself.

            What’s the matter narrow mind? Too much narrow mindedness on the right wing sites and you don’t get enough attention?

            Try flying with the flock you do best with …well fed crows who don’t go around looking for prey like you do.

            Reply
    3. Delguy64 July 15, 2017

      Not meaning to be insensitive but,you’re an IDIOT!!!

      Reply
    4. johninPCFL July 19, 2017

      Interesting that one of Mueller’s first hires was the prosecutor who secured the latest perjury conviction for lying on a security clearance form.

      Reply
  5. notafoxfan July 15, 2017

    having blinders on and being ignorant of the truth has served a lot of people well..whats that old saying about “there are none so blind as he who will not see”…mr Mueller will eventually get to the entire truth of any corruption,money laundering, or illegal (hardly transparent) activity from trump,his associates and his campaign..there is also that little thing of “follow the money”, as don junior in an interview just a few years back said that trump got all of his financing from Russian sources,which he will not admit to..mr putin is ex kgb and he knows well the ins and outs of using or playing on peoples weaknesses to promote his own agenda…

    Reply

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