Is the Justice Department Incompetent?

Photo-Illustration: Intelligencer; Photo: Win McNamee/Getty Images

“I’m here to declare that we are not part of the chickenshit club.”

That announcement came last month courtesy of Jonathan Kanter, the head of the Justice Department’s antitrust division and one of the stewards of the Biden administration’s ambitious, all-purpose antitrust-enforcement agenda. Kanter was speaking at the University of Chicago and was, improbably, in good spirits following a series of high-profile losses for prosecutors in his office. There had been acquittals in separate, closely watched criminal cases in Colorado and Texas, both involving alleged collusion in labor markets, as well as a second mistrial in a much-touted criminal price-fixing case involving executives in, appropriately, the chicken industry. After the department decided to try the chicken case a third time, the presiding judge ordered Kanter, whose job leading the antitrust division’s 700 employees is the first he has ever held at the department, to fly to Denver and explain the decision to him in person.

Kanter’s invocation of “the chickenshit club” was an apparent statement of purpose for a newly emboldened DOJ. The term became popular after the publication of a 2017 book of the same name by Jesse Eisinger, which held, in its simplest form, that government prosecutors failed to pursue big, white-collar criminal cases in the wake of the financial crisis because they were scared of losing.

Kanter argued that the department’s antitrust lawyers would not be deterred by the losses (which he tried, unconvincingly, to portray as partial victories). But a casual follower of the Justice Department’s performance in recent months might have detected a larger trend extending beyond Kanter’s purview overseeing the department’s civil and criminal antitrust cases.

Early this year, an appeals court reversed the convictions of two former Deutsche Bank employees who had allegedly manipulated a financial benchmark rate known as LIBOR. In March, a jury in Texas acquitted the one and only person charged in connection with the department’s investigation of Boeing following two crashes of its 737 Max jets after deliberating for just 90 minutes. A jury in Washington, D.C., acquitted two defendants who had been charged in a campaign straw-donor scheme. (As I have noted before, I used to work in the office that brought the Boeing prosecution and know some of the prosecutors, but I was not involved in the investigation. Before my time at DOJ, I worked on the internal investigation for Deutsche Bank that resulted in the LIBOR prosecution.)

Then last month, prosecutors lost the trial over the alleged plot to kidnap Michigan governor Gretchen Whitmer after a jury acquitted two of the four defendants and hung on the charges against the others. Strictly speaking, this was not a white-collar case (unless you count the fact that so many of the alleged plotters were apparently working for the FBI), but it had some rough similarities — not just a major, highly publicized case that the department tried hard to win but also one in which deterrence was a major objective.

There have been victories, too — most notably the case against Elizabeth Holmes, who was indicted in mid-2018 and convicted following a trial last year after pandemic-related delays. More recent was the conviction in Brooklyn of a former Goldman Sachs employee who participated in a massive bribery and kickback scheme connected to a Malaysian sovereign wealth fund. Outside of the white-collar realm, the department has also been exceedingly busy with the January 6 prosecutions, and whatever concerns some of us may have about the scope and pace of that investigation, prosecutors’ performance in the courtroom has been impressive.

But the slew of recent setbacks has been hard to ignore, particularly in the middle of the department’s effort to tout its white-collar enforcement record and agenda. At this moment, well into the tenure of Merrick Garland, the notion that the department’s major problem is a failure of resolve seems less compelling in recent memory than ever, prompting some legitimate questions. Among them is whether Garland’s vision for the department and his understanding of its difficulties during the Trump years is as comprehensive as it needs to be.

The department’s missteps have already prompted criticism and concern among some observers and former prosecutors. Perhaps the most surprising thing about some of the more sharply critical comments of recent weeks is that they are being made publicly at all — a reflection of how difficult it can be in the ordinary course to have a real discussion among informed observers about the department’s frequent shortcomings. One department veteran, who noted that “DOJ successes ebb and flow” but that “it is often interesting to take stock of a trend,” published a three-part critique that questioned recent “stumbles” and prosecutors’ choice of “misguided targets.” There is an unspoken arrangement among the white-collar bar in which credible defense lawyers typically refrain from criticizing the department publicly on questions of prosecutorial competence. This is in part because, to the extent they are former prosecutors themselves, they may be justifiably reluctant to second-guess decisions that can be challenging. It’s also because many of them — particularly those at large corporate defense firms — are repeat players representing clients before the department, and it can be perilous to criticize prosecutors who can make life difficult for you and your clients. On more than one occasion, I have been amused to read a charitable or otherwise equivocal quote in the press about a loss for prosecutors from a defense lawyer who, in private, had offered me a far more aggressive critique of prosecutors’ work.

I recently asked Eisinger, now an editor at ProPublica, what he made of the department’s recent trial losses, and he tried to put the matter in a broader perspective. His book took its title from a phrase James Comey used while he was the U.S. Attorney in Manhattan in the early 2000s to derisively describe prosecutors who had never lost a case at trial. “If it’s a good case and the evidence supports it,” Comey was quoted telling prosecutors during an internal meeting, “you must bring it.” The shorthand of the catchy title didn’t capture the full breadth of Eisinger’s critique, which included changes in the law over time that have favored defendants, the sophistication and deep pockets of defense firms, and a perceived coziness among prosecutors and the white-collar defense bar.

“The phenomenon I was trying to describe,” Eisinger says, “was a complex constellation of issues having to do with changes in big law practices, the revolving door, the culture of prosecutors and regulators, the decline of the prestige of the civil service, and the courts — the courts’ hostility to charges of white-collar crime and sympathy to white-collar defendants.” Prosecutors had been historically “running up against a series of issues,” he says, “and one of the issues they need to address is fear of losing a righteous case. Another is getting some trial experience.” Indeed, there has been a widely recognized, long-term decline in the number of federal trials, which has meant that federal prosecutors, particularly those investigating complex cases, now find it very difficult to get trial experience, often going years between actual trials before juries. “Going to trial solves three things,” he says. “First, it gives prosecutors more trial experience. Second, it airs evidence publicly, and that’s a good in and of itself. And three, if you’re going to lose, then it normalizes losing righteous cases.”

At his appearance in Chicago, Kanter had offered a breezier version of this theory, which, in its most extreme form, has a conspicuous “heads I win, tails you lose” structure: If the department wins difficult, righteous prosecutions, they deserve praise; if they lose, that is somehow great, too. But a criminal defendant whose life has been turned completely upside down by a failed prosecution probably has less sympathy for this notion. They may even have found it slightly offensive when Kanter informed the audience that he had recently told people in his office to “pump up Tom Petty’s ‘I Won’t Back Down,’ turn it up, put it on repeat, dance like nobody’s watching, and sing out loud over and over and over again.” There are, after all, actual people’s lives at stake.

Eisinger is more attuned to the real-world problems associated with the appearance of a losing streak, particularly in the antitrust arena. “Ideally, they’re gonna win something,” he says. “Eventually, you have to win. It’s unpleasant to lose, and it opens you up to all sorts of very predictable criticism. Of course, the defense bar is going to jump on your losses and throw everything at you,” he added. “You’re incompetent, you’re bringing unwarranted cases, you’re pushing too far, you’re overly aggressive. All the abuse and attacks that prosecutors weather will be brought to bear on you ten times because you’re losing, and if you’re on a losing streak, it’s 100 times.”

There is no simple, single explanation for the department’s recent track record. Every prosecution is factually and legally different, and the result is a function of countless strategic and tactical choices as well as factors, like the judge and the jury, that are mostly beyond prosecutors’ control.
Maybe we can chalk the whole run of losses up to happenstance or a statistical fluke. The department, after all, overwhelmingly wins its criminal cases. But even subtle patterns deserve notice. Last year, The Wall Street Journal reviewed a set of major Wall Street prosecutions since 2016 and found that prosecutors’ conviction rate was under 80 percent. This may still seem high, but once you start to think about it clinically — one in five defendants had gotten off over a period that was supposed to reflect a commitment to prosecuting individuals on Wall Street and provide a corrective to the department’s perceived failures following the financial crisis — the problem becomes easier to spot and the implications more concerning. For one thing, it is bad for prosecutors to lose criminal cases because if they deserved to lose, then they have majorly screwed up the defendants’ lives, perhaps irreparably. A criminal defense in a complex case can take years, and it can wreak extraordinary personal and professional havoc. Winning closely watched, difficult cases is also important for public confidence in the department’s work.

The perception that the Justice Department can mostly win big cases is also crucial to the functioning of the department’s work in its most sophisticated investigations, which relies heavily on the credible threat of overwhelming force at trial and the leverage provided by the ability to give defendants significant breaks if they plead rather than go to trial. That deterrent logic is a major part of how prosecutors flip people, persuade them to cooperate, and elicit guilty pleas, which remain, overwhelmingly, the way that the government resolves its criminal investigations. One of the principal jobs of defense lawyers is to assess the possibility that, if their clients go to trial, they will lose. That assessment relies, in part, on the capacities of the office and the very prosecutors who are pursuing their clients. I worked in an office that had a reputation for losing some of its biggest cases, and this was a real problem; defense lawyers were not particularly scared of anyone in the office, and that in turn meant everyone was working harder on fewer cases.
The recent run of losses at the Justice Department mostly appears to reflect a variety of distinct causes and, perhaps, different forms of suboptimal professional judgment about the strength of the government’s evidence. The reversal of the convictions in the Deutsche Bank LIBOR prosecution seems to reflect a persistent and palpable discomfort among some judges with what they regard as overly aggressive theories of criminal-fraud liability. One prevailing theory concerning the outcome in the Whitmer case is that the agents and informants who were working for the FBI were perhaps themselves the biggest drivers of the plot, reflecting, at least in this instance, an institutionally overzealous effort to pursue political extremists. The result has not drawn the attention it should, particularly since investigating and prosecuting political violence was supposed to be a strong suit for the attorney general who prosecuted the Oklahoma City bomber.

The antitrust losses all seem to have involved prosecutions with conspicuously thin factual evidence of agreements among competitors. Depending on how charitable you would like to be, this may be the result of a poorly conceived effort to use criminal prosecutions to send a message to alter behavior throughout the labor market or the growing pains of a new enforcement regime with dubious ideological and perhaps even political underpinnings. Indeed, if the Biden administration had not been so intent on blaming food-price inflation on unlawful anti-competitive behavior, one wonders if the remaining members of the alleged chicken-price-fixing cartel would be facing a “virtually unprecedented” third trial.

Somewhat surprisingly, it is the Boeing prosecution that has drawn the sharpest, most sweeping rebukes. This was an unusually predictable loss, and it has widely been attributed among observers to a failed and misguided effort to scapegoat a relatively low-level official, the company’s chief technical pilot, Mark Forkner, for broader problems in Boeing and in the government. One of the jurors described the acquittal as “an easy decision” and explained, “We saw it as more a corporate and regulatory failure of communication.” Or as Eisinger puts it, “There was kind of a moral revulsion at charging this low-level guy for something that seemed to quintessentially be a top-down corporate failure.”

Michael Volkov, who prosecuted cases as an assistant U.S. Attorney in D.C. for 15 years, offered an even more scathing account — arguing that prosecutors “bungled” the case, that they “made a terrible mistake by pinning the Boeing fiasco on a single individual,” and that they “did not commit to conducting a true in the dirt investigation and instead outsourced the matter to big law firms who were never going to commit to a detailed organized crime, step-by-step investigation.” A more fulsome federal investigation, he added, “would have been resource-intensive and time consuming but could have resulted in identifying a more comprehensive and far-reaching conspiracy among managers, executives and corporate leaders.”

There is no easy way to ensure that federal prosecutors actually win their biggest cases. We’re talking almost exclusively about acquittals and hung juries, which pretty much by definition means those cases were weak on the evidence. That, in turn, suggests that the cases never should have been charged to begin with and that prosecutors either exercised poor judgment — like failing to properly assess the strength of their evidence or relying too heavily on the results of a company’s internal investigation — or were overly driven by perhaps legitimate political or policy objectives, like cracking down on conduct that adversely impacts labor-market mobility.

The reality is that there ought to be better controls against bringing cases that the department cannot prove. More funding, well-qualified supervisors, and perhaps even stronger norms of conscientious and cautious lawyering would all help. We also seem to be approaching a much-needed reckoning over the government’s reliance on the results of internal corporate investigations. That sounds simple, but it is not as self-evident as it may seem considering that the current attorney general is a man who had not worked at the department for a quarter-century before his nomination and the third-ranking official is someone who, like Kanter, has never prosecuted a case herself.

These people were not selected because of their experience and adeptness at prosecuting people but because of their political and legal stature and their ideological views — a perfectly sound methodology for appointments at that level of the department, at least in the abstract. Garland, however, came into office with a working theory of sorts that seemed to have been derived largely from the prevailing media narrative concerning the department’s performance during the Trump years — that the department’s work on politically inflected cases had been temporarily corrupted by Bill Barr and senior department officials in the Trump administration. One of Garland’s main priorities would be to boost the morale of career lawyers and to insulate them from uncomfortable questions about their work, even if they took part in some of the worst abuses of the Trump years or simply did their jobs very poorly.

The theory had obvious flaws, and institutional morale can be a precarious thing — with indeterminate causal mechanisms that can encompass everything from public perception and thoughtful leadership to the availability of ice cream for grown men and women. Regardless, the department’s record in recent months is a serious threat to senior officials’ interest in revitalizing white-collar enforcement and, for the Whitmer case in particular, improving the department’s work pursuing political extremists. It also reflects the limits of Garland’s managerial vision — a fundamentally mistaken belief that he could fix the department simply by not being Bill Barr and letting career lawyers do whatever they want as long as they picked the right adversaries.

As Garland proceeds in his second year on the job, he would do well to remember that the reality is far messier — and far more challenging.

Is the Justice Department Incompetent?