Goldman Sachs is once again in the gun-sights of federal law enforcement, as federal prosecutors have opened a criminal investigation on top of the S.E.C.’s civil suit against Goldman Sachs. Federal prosecutors are notoriously political creatures, and in light of the populist mood gripping the nation at this point, it is understandable that some U.S. Attorneys will want to jump on the political train while it is leaving the station. But as rule of law, this is a disturbing development.
In his 2009 book, Three Felonies A Day, noted civil-rights attorney Harvey Silverglate highlights how federal criminal law, particularly with regards to the byzantine world of financial regulation, is impossibly vague and broad in its definitions of prohibited behavior. As a result, nearly anyone who works in the field commits on average three felonies each and every day. More precisely, they commit an average of three acts which a U.S. Attorney, using vague and broadly worded statutes, can argue are felonies. And because violations are punishable by prison terms which are ridiculously lengthy (a consequence of politicians’ pandering to previous populist waves demanding that they “get tough” on white-collar crime), most intial targets of criminal investigation will jump at a plea bargain offer even when the prosecutor has merely the flimsiest evidence. In doing so, they promise to offer up bigger fish for the prosecutor to bag. In short, it is a criminal justice version of a pyramid scheme built on a process that violates even the most fundamental notions of fairness. But since no one individual can afford to stand up and take the risk of drawing the prosecutor’s ire in the hopes of winning an expensive and drawn-out appeal, the appellate courts never have a real chance to step in.
The result is prosecutions that can be both politically motivated and baseless, but still successful in nailing individuals and institutions to the wall. It is, in short, a rigged process that is in and of itself punishment.
Does that mean Goldman Sachs is innocent? Actually, that is beside the point. It doesn’t matter if Goldman Sachs is innocent. It only matters that it is politically useful. The determinations of guilt are predetermined even though the investigation currently underway is only “preliminary”. The populist rage that is driving this process is emotionally satisfying for some, but the real damage is done to the rule of law. And that means the rule of law might not be around to protect when the populist winds shift and some other group becomes the target of prosecutors’ ire.