Richman Senate Testimony on Corporate Fraud

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September 18, 2007 (NEW YORK) – Columbia Law School Professor Daniel Richman cautioned a Senate committee today against imposing legislative limits on the Justice Department’s negotiating tools when prosecuting white collar corporate fraud cases. He also called on the committee to beef up the financial resources for such prosecutions.

 

Richman’s testimony before the Senate Committee on the Judiciary came as Congress debates whether to impose limits on negotiations between federal prosecutors and corporate entities over attorney-client and work product privilege waivers.

 

Noting that ``the entire federal criminal justice system is based on a culture of waiver,’’ Richman said there’s always a risk that prosecutors will be too quick to demand waivers and that lazy prosecutors will piggyback on investigative efforts of corporate counsel, bringing `cheap’ cases that ought not to have been prosecuted. ``But there are risks on the other side as well, particularly given the tight resources in the white collar enforcement area,’’ he says in his testimony.

 

With that in mind, Richman said Congress should ``massively increase the funding and resources available for white collar enforcement. …It would be regrettable indeed if we simply waited until the next spate of headlines about corporate fraud and then played catch-up. And even worse if we waited until the next Enron….’’

 

Richman warned that legislative action would create a ``cottage industry of prosecutorial abuse claims….And each claim of abuse could offer defense counsel the opportunity to put a prosecutor or two on the stand… Moreover, the possibility of an intrusive inquiry into prosecutorial motivation might itself lead prosecutors to shy away from a worthy case.’’

 

``For now, at least, I strongly believe that Congress should stay its legislative hand,’’ Richman concluded.

 

For the full text of Richman’s testimony, click here.

 

Daniel Richman, Professor of Law, is former Chief Appellate Attorney and Assistant United States Attorney, Southern District of New York, 1987-1992 and Consultant, Department of Justice, Office of the Inspector General, 1997-2000.

 

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