Thursday, June 16, 2011

Liars, Heroes, and Whistle-Blowers

Posted By on Thu, Jun 16, 2011 at 2:49 PM

James B. Stewart
  • James B. Stewart
If you're looking for something heavier than mysteries and self-improvement for summer reading, check out James B. Stewart's new book "Tangled Webs; How False Statements Are Undermining America, from Martha Stewart to Bernie Madoff."

I think it's one of the most important books of the year and one that should resonate with Memphians.

The subject is lying by the rich and powerful and their minions and the difficulty of rooting it out and prosecuting it. Change "America" to "Memphis" and substitute John Ford, Roscoe Dixon, O. C. Smith, Dana Kirk, Logan Young, and Allen Stanford and see if you can make some connections. As a reporter who has covered the federal beat for 25 years, from the Ford trials to Tennessee Waltz and Main Street Sweeper, it sure spoke to me. If you followed those stories, I think you'll like Stewart's book, which includes extensive treatments and fresh reporting on Martha Stewart, Madoff, Barry Bonds, track star Marion Jones, Scooter Libby, and Karl Rove among others.

It should be required reading for journalists, lawyers, and law students.

The money quote for me came on page 436 in James Stewart's conclusion:

"A society that depends only on prosecutors and the judicial system to curb perjury will never succeed. It must be stopped when it happens by others who recognize it for what it is and condemn it. It requires a capacity for moral outrage. We need more Harry Markopoloses (Madoff whistle-blower). But the ultimate responsibility for lying rests with the liar."

Former Memphis federal prosecutor Hickman Ewing Jr. told me he believes that if 100 people were asked for money from a corrupt public official in exchange for approval of a project, about 50 would pay it and get favorable treatment, 40 would decline to pay but would not report it, and only 10 would “do the right thing” and report it and cooperate.

Stewart believes perjury (lies told under oath) and aiding and abetting perjury have gotten worse because of the examples set by Bill Clinton, who perjured himself as president, and George W. Bush, who pardoned Libby. He is hard on the Securities Exchange Commission (SEC) enforcement division for failing to uncover Madoff's Ponzi scheme. He says Bonds and Jones are still lying about their steroid use. He makes you wonder about both the San Francisco newspaper reporters and the attorney who gave them secret grand jury transcripts in the Bonds case. And he praises the stockbroker's assistant who did the right thing in the Martha Stewart case, at tremendous personal cost.

Lying, cheating, and refusal to tell the truth are undermining our financial institutions, our government, and our athletic programs and heroes. "Tangled Webs" came out just as Jim Tressel was resigning at Ohio State after admitting he lied, Southern Cal was being stripped of its national championship in football, and Lance Armstrong was being called a cheater on "60 Minutes" by a former teammate.

Closer to home, we can see the lingering effects of ongoing civil, criminal, and NCAA proceedings. The SEC is about to report penalties and findings in the investigation of what it calls "fraudulent practices" in the James Kelsoe-managed bond mutual funds at Morgan Keegan. That is a civil proceeding at this point, even though the word "fraud" appears repeatedly in the SEC's 2010 charges and investor losses have been estimated at hundreds of millions of dollars. Martha Stewart was convicted and went to prison for reacting to insider information in stock tips that saved her about a week's pay and lying about it.

Allen Stanford and Laura Pendergest-Holt will be back in the news within a year, and we'll learn more about those charitable donations (with other people's money) and bogus CDs. Stanford's ex-roommate James Davis is star witness for the government.

When John Ford is released from prison, possibly later this year, the Tennessee Waltz convictees will all have served their time. The ones who cooperated got the deals; the ones who lied and went to trial got hammered.

The University of Memphis and Tiger fans are still smarting over the basketball team being stripped of its 2008 wins and Final Four appearance because of the evasions of NBA MVP Derrick Rose and John Calipari over Rose's entrance examinations. In Knoxville, the University of Tennessee is cleaning house in the athletic department.

Stewart suggests that perjury is part pathology, part arrogance, and part learned behavior. And to the dismay of judges, prosecutors, and jurors who can be "hung" by a single vote in the face of overwhelming evidence of criminal conduct, it happens because, perhaps more often than we know, it works.

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