Bear Stearns prosecutors protest too much

by Kurt Schulzke on July 3, 2008

A June 26 NPR report confirms suspicions I first expressed on June 20 that the Bear Stearns indictments distort facts, casting them in the most unfavorable light possible. I’ve reached the point in reading indictments that I disbelieve 90 percent of what they contain. A disturbing percentage of prosecutors are either blantant liars (maybe trained by Worldcom accountants?) or they go off half-cocked, substantially lacking essential context.

Who to blame? Mothers, professors, law schools? Hard to say, but one thing’s sure: they have a huge credibility problem.

Here are key excerpts from NPR:

Prosecutors used a trail of e-mails to accuse Cioffi and Tannin of conspiracy, wire and mail fraud. They said Cioffi and Tannin wrote a raft of e-mails to each other worrying about the possible collapse of the subprime mortgage market while assuring investors all was well. . .

Half a dozen hedge fund managers contacted by NPR said the e-mails excerpted in the indictment were far from unusual. Internal e-mails are often emotional. One day a hedge fund manager might think he is doomed — in one e-mail Tannin said that if the figures on subprime mortgages were accurate the funds were “toast,” — only to be buoyed by some unexpected opportunity the next day. It is possible that Cioffi and Tannin actually thought they could ride out the crisis, they said.

People close to the case tell NPR that when the full e-mails come out, they will present a very different picture than the one currently painted in the indictment. They say the e-mails are taken out of context and excerpted in such a way as to put both men in the worst possible light. . .

“If the government is cherry-picking selected e-mail, that’s a powerful argument for the defense,” said defense attorney Simon. “If they can say, ‘What about these e-mails, how come they aren’t in the indictment?’ That could be a very different situation.”

Former prosecutor Michael Bachner is now a white-collar defense attorney. He says that from what he has gleaned in talking to Cioffi’s and Tannin’s lawyers, there is much in the e-mails that could exonerate the two men.

“Conversations I have had with defense counsel leads me to believe the case is not nearly as strong as the government would lead everyone to believe,” he said. . . .

I think so. Full story at NPR.