By Peter Gorenstein
Convicted felons and former captains of industry Jeff Skilling and Conrad Black caught a break Thursday: The Supreme Court ruled to limit the reach of a federal fraud law that prosecutors used to convict both men. The decision doesn’t set them free but does send their case back to the lower courts and opens the possibility of retrial.
“This is the worst possible time for this case to come up,” says Damien Hoffman, co-founder of Wall Street Cheat Sheet. The conviction of Skilling, Black, Enron Chairman Ken Lay, and former WorldCom CEO Bernie Ebbers helped fuel the last bull market in the mid-2000s says Derek Hoffman, Damien’s brother and business partner. “When they were put behind bars there was a turn in investor sentiment.”
What we need to fuel another bull market, the Hoffman brothers contend, is a new round of perp walks and convictions for those responsible for the crash of 2008. “So long as investors think another Dick Fuld or Bernie Madoff is lurking on the next corner, gold, guns and canned soup will seem the safer bet,” they write in a recent article.
Here’s a few of the names the Hoffman Brothers think belong behind bars
– Joseph Cassano — the former head of AIG’s financial products unit. Under his watch the company amassed massive amounts of risk that lead to the biggest bailout in U.S. history. There’s very little chance of Cassano facing time, however; Federal prosecutors recently dropped their investigation against him.
– Dick Fuld — Lehman Brothers CEO who watched his house of cards come tumbling down, bringing the global financial system to the edge of the collapse.
– Angelo Mozilo — The Countrywide CEO helped fuel the subprime madness. His company’s lack of due diligence is a prime reason for the foreclosure problem. Mozilo also co-founded IndyMac, the large California bank that was seized by the FDIC in July 2008.
– Stanley O’Neal — the former Merrill Lynch CEO pushed the firm to aggressively market and trade CDOs. O’Neal left with the firm on the brink of collapse before Bank of America purchased it. For all his good work, O’Neal was fired but left with a golden parachute and options valued at $161.5 million at the time.
– Fabrice “Fabulous Fab” Tourre — the banker at the center of the SEC’s criminal fraud complaint against Goldman Sachs. “People need to know the Goldman’s of the world don’t have politicians in their pockets and that the American markets are a safe place to put your money,” says Damien.
The Hoffman Brothers also note that during the S&L scandal of the 1980s over 1,000 people went to jail. To date only two Bear Stearns hedge fund managers have even gone on trial. Both were acquitted. Meanwhile, Skilling is serving a 24-year sentence in Colorado. For now…