Is the Government Bleeding Chiesi into Submission?

The WSJ is reporting that Danielle Chiesi seeks to have the courts suppress certain statements that she made to FBI agents on the morning of her arrest, on the grounds that she was not informed of her rights. The Journal also reports that Chiesi is “running low on funds to finance her defense,” which of course is one of the government’s favorite ways of pressuring targets to capitulate.

In the KPMG tax case and in the Jamie Olis case, prosecutors pressured former employers to violate their legal obligation to provide defendants with the funds they needed for defense. (Wall Street Journal “Chiesi, U.S. May End Spat on Arrest,” by Susan Pulliam and Chad Bray). In other Galleon news, Bloomberg’s David Glovin reports that “ Raj Rajaratnam’s attorney said prosecutors misled the judges who authorized secret wiretaps that formed the basis of a federal insider-trading probe.” The Galleon case represents the first time the government used wiretaps on an insider-trading prosecution, thus elevating the atmosphere of criminality around a practice that ( in most circumstances ) should not be criminal at all.

Conrad Black. Here is an interesting backgrounder on the man, while we await his next court date: August 16.

How about Secret Courts for Businessmen? The new Financial Regulation bill exempts the Securities and Exchange Commission from complying with the Freedom of Information Act. Here is the story from Dunstan Prial of Fox Business: “SEC Says New Financial Regulation Law Exempts it From Public Disclosure.”

And Agent Provocateur Employees? The New York Times’s “Dealbook” notes that Dodd-Frank’s authorization for the SEC to pay whistle-blowers --potentially tens of millions of dollars--could mean that employees may prefer to go to the government rather than to their superiors. Indeed, with such life-changing sums at stake, it is not hard to imagine that some employees may try to induce their co-workers to commit crimes.

What Corporations Are Not. The misconception that shareholders are the “owners” of a coporation and its managers are their “employees” lies behind innumerable attacks on businesses and businessmen. Gretchen Morgenson of the New York Times trots out the canard frequently in her crusade for “corporate democracy” (that is, control of business by union pension funds). Most recently, it seems Al Franken has been spreading this nonsense. Fortunately, the resident bloggers of “Truth on the Market” set him straight. (I wrote about the issue some years back, in the cleverly titled article “Do Shareholders ‘Own’ a Corporation?” )

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