Spring in the air, will there be any Lehman canaries?
WSJ reports today that Legal Experts Say a Lehman Criminal Case Would Be Difficult.
Peter Henning follows white-collar crime issues for DealBook.
Henning notes that the bankruptcy examiner’s report filed by Anton Valukas on Lehman discusses accounting gimmicks reminiscent of how Enron tried to prop up its balance sheet in 2001 before it collapsed.
Henning writes the canary in the coal mine for whether there will be a criminal case is if we see executives below the executive suite agreeing to cooperate. Prosecutors work from the lower levels of management and then work their way up the chain. A criminal case will need cooperating witnesses to flesh out what happened because the documents and e-mail alone will not be enough to prove intent.
Henning notes that, accounting fraud cases generally take at least 18-24 months to develop, at which point the government will decide to proceed or allow the investigation to lapse. We are almost to that point, so the next few months will be crucial to seeing whether any criminal charges emerge from the collapse of Lehman Brothers. As the TV announcer says, “Stay tuned.”
In the now nearly 10-year old ENRON case, a powerhouse team of lawyers for former Enron CEO Jeffrey Skilling filed into the Supreme Court earlier this month to argue that Skilling's conviction on fraud, conspiracy and insider trading was constitutionally flawed and subject to jury bias. ABC News reported on Skilling and received 51 comments.
Skilling's lead lawyer, Sri Srinivasan of O'Melveny & Meyers, told the Supreme Court justices that the trial court judge had subjected Skilling to "deep-seated bias" in the community when he had refused Skilling's requests to have the trial moved from Houston. WSJ reported that Skilling received a Supreme Mixed Reception.