In a white-collar case, the government loves to shine the spotlight on corporate executives’ pay and perks, and for good reason. Research by Julie Blackman, Ellen Brickman and Corinne Brenner, based on surveys about state and federal white- collar-crime trials, found that jurors feel “betrayed” by the personal excesses that are believed to be behind America’s current economic strife.1
One potential juror stated that she believed rich people who wanted to get richer were committing a crime. While she was excused for cause, her comment speaks volumes about attitudes toward white-collar defendants. The researchers conclude that “the reflexive ascription of criminality to the wealthy and the powerful may be the last bastion of acceptable prejudice.”
How best to address this reflexive prejudice when representing a rich, successful corporate executive? Ignore it and hope that the jury will, too? Try for a curative instruction down the road? Attempt to explain away the perks? Or maybe go on the offensive: Of course my client was paid big bucks! He was worth every dime!
History tells us that the government or the media, or both, will focus on any appearance of lavish spending. Hoping the jurors won’t notice is not an option. Better to address the subject head on, as early in the trial as possible.
File a motion in limine. Trial courts have broad discretion in determinations of admissibility based on considerations of relevance and prejudice, and these decisions are not lightly overruled. Move to exclude evidence of your client’s lifestyle, such as references to vacations, automobiles, real estate, use of a corporate jet and other perks. Citing Federal Rules of Evidence 401, 402 and 403, you can argue that in a white-collar case, the government loves to shine the spotlight on corporate executives’ pay and perks.
If the trial court agrees with you, wonderful. You can now focus your energies on defending against the substantive charges. However, in the overwhelming number of cases, the evidence will come in, and here’s why.
The government may argue that evidence of the defendant’s lifestyle or spending is relevant to show motive for committing the alleged crimes in that your CEO client needed large amounts of money to maintain his lifestyle and spending habits. Stated another way, the extravagant lifestyle itself was the underlying motive to commit fraud. While each case turns on its own facts, a successful motion in limine to keep the lifestyle evidence out will demonstrate that:
• The government does not have direct or circumstantial evidence of the charged criminal activity.
• The money spent on the lifestyle was available to your client from a legitimate source (whatever perks he enjoyed were known and sanctioned by the board and/or the shareholders and a part of the employment contract).
• The level of spending during the period of the alleged illegal activity was not atypical.
If the trial court denies your motion, address the issue at voir dire. Research demonstrates that jurors who are highly educated, who earn more money, or who are successful professionals or business owners are less likely to vote to convict white- collar defendants. The less a juror understands of the complexities of high finance and the world of top corporate executives, the more likely she will succumb to the “greedy pigs at the trough” stereotype of corporate executives, bringing her that much closer to a guilty vote.
Bring the issue of wealth and lifestyle out in the open while picking the jury: My client is a successful corporate executive who has been handsomely rewarded by his employer. By any standards, he is rich, and has a lifestyle to match. Is that a crime? Ask the jurors if they know anyone who is a successful corporate executive. Engage them in a discussion of pay-for-performance in corporate America.
Strike a theme: Just because you’re rich, doesn’t mean you are guilty. Wesley Snipes’ lawyers’ successful defense against felony tax fraud charges resonated with the theme: “Crazy ain’t a crime. If it were, half of Hollywood would be in prison.”
Draw the sting. Desensitize the jury to the glamour, beginning with voir dire and follow through in your opening statement.
Address the issue of executive pay. While some CEOs are overpaid or, even worse, paid for incompetence, jurors can only appreciate the difference between pay-for- performance and pay-for-incompetence by first understanding the CEO’s job, the marketplace and the stakes involved.
When a congressman suggested to Ford CEO Alan Mulally that he should take a salary of one dollar, given the near-bankrupt state of his company, Mulally politely declined and took home nearly $17 million in compensation. That seems outrageous until placed in context. Mulally’s payday came on the heels of a billion-dollar turnaround that transformed a $970 million loss at Ford into profits of nearly $700 million just one year later. Knowing that, $17 million doesn’t sound like quite so much.
Strike a theme: Just because you’re rich, doesn’t mean you are guilty. Describing the events of a particular day or week can put the events in a helpful context. Showing how many emails the CEO sent and received on a particular day may help the jury understand, for example, how much time did or did not go into reading a particular one.
Testimony as to how the CEO’s second in command and vice presidents are screened, hired, supervised, paid and rewarded, and that they are expected to do their jobs with little supervision, can also be useful to the jury in understanding the realities of corporate delegation. It’s not enough to say that your CEO client was “busy.”
Rather, demonstrate it and show examples of the scope of responsibility and the complexity of the CEO’s job. This is a sophisticated dance that requires subtlety and credibility.
Remember Bernie Ebbers’ doomed “ostrich in the sand” defense. CEOs cannot pass the buck. This is an important element of what Blackman, Brickman and Brenner refer to as the “Spiderman Challenge” to the presumption of innocence: with great power comes great responsibility. One of the mock jurors in their study opined, “For that kind of money, he had to know what everybody was doing.” Another said, “When you’re running a billion-dollar company, you know what you’re doing. ... He knows exactly what he’s doing.”
Avoiding this mindset by picking the right jury is more effective than trying to disabuse the wrong jury of its notions of CEO omniscience. Research shows that jurors with advanced education and financial savvy understand that high-level executives succeed by delegating and are typically not involved in the accounting details underlying criminal charges. These jurors are more receptive to an argument that the CEO should not necessarily go to jail because he made a bad hire.
Finally, consider allowing your client to testify. Many defense lawyers abhor this idea, and often for good reason; corporate bigwigs can come across as arrogant, entitled and pompous. They are used to barking orders. There is a real risk that their attitude may hurt their case.
On the other hand, the best way to humanize your client may be for him to take the stand. He has a story to tell: how he struggled to climb to the top of the corporate ladder, his successes and failures, being a husband, father, son, brother — a story that offers the jury an opportunity to connect with him.
White-collar defendants often have huge egos, and even in the midst of their own criminal trials can be slow to realize that they do not call the shots in the courtroom — that they have to sit in that witness chair and answer questions until they are excused.
Those “yes sirs” and “yes ma’ams” don’t come easily to our clients. It’s painful to watch, but that’s when the humanization happens. If your CEO can withstand being beaten up by the prosecutor without admitting to any wrongdoing, you will have advanced your cause. If the jurors feel he’s been humiliated or even humbled, their urge to punish further will diminish and their protective instincts may even kick in, allowing them to see your client for who he really is, rather than as a stereotype.
While some defense attorneys shy away from acknowledging and addressing the success, pay and lifestyle of their corporate executive clients for a fear of inflaming the anti-wealth feelings of the jury, it is better to take the bull by the horns. Juror prejudice against wealthy corporate executives cannot be eliminated, but bad jurors can be avoided, or if not, they can at least be educated that prejudice has no place in their decision-making. They may still stick it to your client, but hopefully it won’t be because of his wealth and lavish lifestyle.
This is an edited and condensed version of an article first published in the ABA's Litigation Journal, Summer 2013.
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