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Legal Impoverishment

The impoverishment of defendants is a basic strategy of federal prosecutors. Prosecutors use impoverishment as a means to cripple the ability of an accused person to defend himself. This, of course, gives the prosecutors a huge built-in advantage over the defendant in plea bargaining and in trial preparation.

First, the prosecutors seize as much of a defendant’s assets as they can get away with, including the defendant’s life savings — this is money not available to the defendant to fund his defense. Then, they force a defendant into the incredibly expensive task of trying to defend himself against the wealthiest entity in the world, the U.S. federal government. As one Enron defendant told me:

“Fighting the federal government cannot be done halfway. To have any chance at all of defending yourself, you must decide that you are willing to put everything on the line, including everything you have earned over your lifetime. You must do this because you know you are fighting an organization without a conscience which wants only to win, and it will do anything it can get away with to beat you. Guilt or innocence, right or wrong, justice, the facts … these are of no concern to federal prosecutors after an indictment has been brought — they only want your scalp.”

A defendant knows that, if he actually exercises his Constitutional right to defend himself, he is likely to lose most or all of his life savings — this is true whether the defendant wins or loses at trial or in the appeals court. As I wrote in an earlier post, “being a prosecutor means never having to say you’re sorry.”

Is it any wonder that trial by jury is so rare? It should be a national embarrassment that 97% of all federal cases pursued by the Department of Justice (DOJ) last year were resolved by guilty pleas, not by trials. In the American system of justice, a defendant must be bold, almost to the point of rashness, to try to defend himself at trial — just getting to trial is likely to impoverish his family. A plea bargain deal is simply good economics for most defendants — pleading guilty of some crime is usually the best practical decision for a defendant, even when he is innocent.

Let me give you three examples of the Feds’ use of impoverishment in the Enron Broadband Services (EBS) cases.

Michael Krautz, an accounting executive at EBS, was acquitted of all charges after two trials. Michael not only lost his savings, but he also went into debt defending himself — and when he was exonerated, he was still in debt.

Scott Yeager, a marketing executive, won acquittals at trial and then was re-indicted by the Feds and threatened with a second trial. Scott eventually had all charges dismissed based on an appeals victory at the Supreme Court. However, even in “victory”, Scott could not recover his life savings, most of which were lost in his defense.

Rex Shelby, a software engineering executive, also won acquittals at trial and then was re-indicted by the Feds and threatened with a second trial. Rex was ready and eager to go to trial, but exhausted all his life savings and could not afford the expense of a second trial. He entered into an obviously contrived plea deal — the deal itself was favorable to Rex. However, the tragedy of this example is that Rex wanted to go to trial to exonerate himself, but had been so impoverished by the Feds that he could not afford to do so.

These EBS examples are not rare — just about any attorney can give you lots of additional examples. Clearly, the strategy of impoverishment has served the federal government well, but has done so at the expense of justice and fairness.

Impoverishment is an extra-legal practice that needs to end. I will follow this post up with another post in which I propose some reforms for ending the practice of impoverishment.

Cara Ellison

3 Comments

  1. Cara, you hit the nail on the head. As a victim of former “Federal Prosecutor” John Kroger, I learned first hand how the Legal Impoverishment tactic works. In my case they made false press releases that I was “pumping raw sewage into the creek” and went so far as to issue public health warnings. They recently admitted to the court that it never happened, but they still want my scalp anyway.
    Kroger and his henchmen demanded all of my financial records from the company that not only owned the resort and sewage system, but of all other unrelated companies (I have been developing real estate for 20 plus years). I was successful several times in quashing the request (the judge ruled in my favor that the State was not entitled to the information as it was not relevant to this case) Kroger then issues secret criminal subpoenas to my lenders requesting my financial information, and then used that information to figure out what lenders, partners, city officials, etc to contact to instill doubt in their minds about my credibility. This was in the midst of one of the worst financial crisis’s (early 2009 to 2010) I literally had bank presidents calling me and asking “Patrick, what is going on?” they were scared to death. It was next to impossible to come up with cash to keep feeding the attorney’s while trying to protect my partners and keep my other financial commitments. They succeeded in bleeding me dry, but the fight still continues. This month and next will be big. I am still optimistic, but honestly, the only thing I have left is my tenacity and my optimism. I will never give up. Ever.

  2. You need to tell your story as much as possible. Kroger is a bully and uses his power to put innocent people in prison. Breaking them emotionally, financially and any other way he can is part of how he abuses his power. Your story is a shame and another example of how Kroger is such an evil person. He is typical of prosecutors, unfortunately.

  3. Reblogged this on lucasdevelopment and commented:
    Cara, you hit the nail on the head. As a victim of former “Federal Prosecutor” John Kroger, I learned first hand how the Legal Impoverishment tactic works. In my case they made false press releases that I was “pumping raw sewage into the creek” and went so far as to issue public health warnings. They recently admitted to the court that it never happened, but they still want my scalp anyway.
    Kroger and his henchmen demanded all of my financial records from the company that not only owned the resort and sewage system, but of all other unrelated companies (I have been developing real estate for 20 plus years). I was successful several times in quashing the request (the judge ruled in my favor that the State was not entitled to the information as it was not relevant to this case) Kroger then issues secret criminal subpoenas to my lenders requesting my financial information, and then used that information to figure out what lenders, partners, city officials, etc to contact to instill doubt in their minds about my credibility. This was in the midst of one of the worst financial crisis’s (early 2009 to 2010) I literally had bank presidents calling me and asking “Patrick, what is going on?” they were scared to death. It was next to impossible to come up with cash to keep feeding the attorney’s while trying to protect my partners and keep my other financial commitments. They succeeded in bleeding me dry, but the fight still continues. This month and next will be big. I am still optimistic, but honestly, the only thing I have left is my tenacity and my optimism. I will never give up. Ever.

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