While nominally about the Gibson Guitar raid, this article is actually a great primer on abusive prosecutorial tactics businesses are increasingly facing
Prosecutors who are looking for an easy “win” know that businesses roll over. A public raid on its offices, or an indictment of its officers, can destroy a business’s reputation and viability. That makes the owners easy to intimidate into a plea bargain.
If they choose to fight, they face the full wrath and fury of the feds. In the Gibson raids, the SWAT teams were deployed even though Gibson had offered its full cooperation to investigators. Such raids are increasingly used to intimidate citizens under suspicion. The orchid importer, a 65-year-old with Parkinson’s, was shoved against a wall by armed officers in flak jackets, frisked, and forced into a chair without explanation while his home was searched
The government also attempts to get low-level employees to “finger” their bosses. For example, the feds threatened Gibson employees with long prison sentences. This is not a search for truth, but an immoral attempt at extortion to win convictions. Investigators examine the lives of “little fish” and use minor, unrelated violations (smoking a joint, or exaggerating income on a loan application) to pressure them to back the government’s case against their employers. Mobsters have experience with threats like this, but a secretary or an accountant is scared to death by the threat of prosecution.
A favorite ploy of prosecutors in these cases is to charge defendants with false statements based on their answers to the investigators. The sentence for this can be five years in prison. No recording is made of the interviews — in fact, the feds prohibit taping the interviews — and the agents are not stenographers. They cannot possibly recall the exact wording of the questions and the answers. Yet after the interview, they will produce a “transcript” replete with quotes throughout. And if a witness says he did not actually say what the agent put in quotes, it is the witness’s word against a fine, upstanding federal agent’s. Staring at a five-year sentence will get most people to say whatever the government wants them to.
The feds also pile up charges. According to Juszkiewicz, the Justice Department warned Gibson that each instance of shipping a guitar from its facility would bring an added charge of obstruction of justice. Prosecutors routinely add extra counts to stack potential prison sentences higher. For instance, faxing invoices for the wood would be charged as wire fraud. Depositing the check for the sale of the guitars would be money laundering. The CEO’s telling the press he is innocent would bring charges of fraud or stock manipulation. The intent is to threaten such long sentences that the targets plead guilty rather than risk decades in prison.
Prosecutors further tighten the screws by seizing the assets of the company, a tactic once used against pirates and drug lords but now routinely used to prosecute white-collar crimes. The federal agents seized six guitars and several pallets of ebony during their initial 2009 raid against Gibson. Federal law allows assets to be seized not just from convicted criminals, but also from those never charged. Owners must prove that the forfeited property was obtained legally; otherwise, the government can keep it. That gives the government incredible leverage, because without the seized inventory and bank accounts, the business will most likely go under. How can Gibson make guitars if the wood is being held by the government? How can it service customers when the government took its computers as evidence? How can it pay lawyers when its bank accounts were seized? Asset forfeitures bring to mind a similar twist on the law uttered by the Queen of Hearts in Alice in Wonderland: “Sentence first, verdict afterwards.”