BROOKE GLADSTONE: This is On the Media. I’m Brooke Gladstone.

BOB GARFIELD: And I’m Bob Garfield. It might seem perverse to see a silver lining in Trump’s pardoning spree but justice of any kind can feel so distant these days. Take last week’s revelation that Bush-era investigators had found Purdue Pharma to have concealed knowledge of OxyContin's abuse. Prosecutors wanted to indict for conspiracy to defraud but the Bush Justice Department said, settle. The company ended up pleading guilty to, quote, “misbranding” and paid a fine. Whatever became of the perp walk and the fat cats in orange jumpsuits? In his new book, The Chicken[BLEEP] Club, Pulitzer-winning journalist Jesse Eisinger of ProPublica says the DOJ has lost the incentive, the PR battle and simply the will to prosecute white-collar crime. Jesse, welcome back to OTM.

JESSE EISINGER: Thanks for having me back.

BOB GARFIELD: Okay, The Chicken[BLEEP] Club --

[EISENGER LAUGHS]

-- quite a title, please explain.

JESSE EISINGER: So Jim Comey, long before he became FBI director and fired by Trump, was the US attorney in the Southern District of New York, the premier office for white-collar crime, for corporate law enforcement, particularly securities enforcement. In 2002, he came into this office and he gathers all the criminal prosecutors together, he says, how many of you guys have never lost a case? You have to understand these prosecutors, most of them, are relatively young. They all came from elite law schools and got there by going in elite elementary schools on up. They had the best clerkships and they think of themselves as the best of the best of the best. A bunch of hands shoot up ‘cause they’re so proud of their undefeated trial records, and Comey looks around the room and says, well, me and my buddies have a name for you. You’re the Chicken[BLEEP] Club. Your job is not about accumulating a unbeaten record picking on little guys, your job is about justice. And justice requires sometimes taking on the most ambitious cases and not being afraid of losing. And the argument of the book is over the subsequent 15, 16 years, the Department of Justice became the Chicken[BLEEP] Club, writ large.

BOB GARFIELD: Nice talk, son, but --

[EISINGER LAUGHS]

-- Comey’s challenge didn't necessarily comport with even the most recent history of the government's behavior with white-collar crime. Politicians are all law and order about street crime but historically not so hard-nosed when the culprits are in dark suits.

JESSE EISINGER: Yes. There’s never been a golden age where the wealthy and powerful had to fear for their liberty if they committed crime but there have been silver ages and crackdowns throughout American history. After 1929, we create the securities laws that exist to today. That was a significant change. In the S&L crisis, we prosecuted over a thousand individuals, including top executives from many of the top financial firms. We frog marched a Goldman Sachs partner off the trading floor, which was a significant crackdown under Giuliani. In the late 1990s, early 2000, we had an accounting fraud pandemic and then prosecuted many of the top executives from many of the top companies that were implicated. So they were imperfect before but the problem has become much more serious and acute now.

BOB GARFIELD: There have been hard-nosed prosecutors but Stanley Sporkin, who is one of your heroes, yet also accidentally kind of a villain. Let's start with why he’s your hero.

JESSE EISINGER: He’s the enforcement director at the Securities and Exchange Commission in the 1970s, policing all sorts of behavior that corporations had never had policed before. He had a great Colombo routine. He sat on this couch and it was completely hideous. It was faded from some terrible colors from the early ‘60s and he ate his lunch on that and would spew out Jell-O [LAUGHS] when, when he was talking. And defense lawyers would come in very well dressed, highly-paid defense lawyers from the best firms, and they would make their arguments for their clients. And Sporkin would sit on this couch and sink into the cushions and appear to fall asleep. And they would be utterly discombobulated. They had no idea, you know, should we go on with our presentations, is he even listening? And then they would say something and he would spring up and he’d been listening the whole time and he would find the weakness in their argument and he would have them in his power then.

BOB GARFIELD: But one of his great tools, and this gets to his accidental villainy, was something we now know of as a consent decree. What was good about these things, what has gone wrong since?

JESSE EISINGER: He starts cracking down on an epidemic of corporate bribery, especially corporate bribery abroad that was revealed in the Watergate investigation with slush funds. And [LAUGHS] what he does is brilliantly goes after them for not fully disclosing their bribes to the shareholders. [LAUGHS] They don’t have a line item for bribery.

[CLIP]:

STANLEY SPORKIN: When we looked into these funds, we found out they were not only being used domestically in the United States for illegal campaign contributions but being used to bribe officials overseas in connection with the companies' business.

JESSE EISINGER: So he leveraged this to say, cooperate, pay a fine, then don’t do it again. And lots of companies did, and he cleaned up corporate behavior, at least for a while. So in the hands of Sporkin, who was genuinely tough and clear-sighted, this new tool was good. Over time, it became corrupted and it became the kind of thing that they reached for without even thinking about it. And that's corrosive. At some point, people just think that paying fines to the SEC is a cost of doing business.

BOB GARFIELD: But an even more profound inflection point, you say, is the famed investigation and prosecution of Enron and of its accounting firm, Arthur Andersen, which you describe [LAUGHS] in rather thrilling detail. But they were successful prosecutions, weren’t they?

JESSE EISINGER: Right. It’s the high point and the beginning of the end for the Department of Justice. The Enron prosecutions were done the right way. They gathered a SWAT team of specialized prosecutors, locked them in a room, figuratively, then focused solely on that case, the energy trader that was undone by accounting fraud, and its enabler, Arthur Andersen. They had destroyed literally tons of documents related to the Enron audit, clearly trying to cover up all their knowledge of it.

So the Department of Justice wins its trial against Arthur Andersen and then, over time, the PR campaign, aided by the Wall Street Journal Editorial Page, the American Bar Association, even the ACLU, they succeed in changing the conversation from Arthur Andersen's accounting fraud and obstruction of justice to the innocent employees who have lost their jobs.

[CLIP]:

MAN: And it could mean the end of Andersen Accounting, which has already lost scores of clients and has already been forced to throw thousands of workers into the street.

MAN: And now the government is punishing everyone at the company.

WOMAN: They are being punished due to a couple of people that made some wrong decisions.

[END CLIP]

JESSE EISINGER: It’s an amazing PR victory and it’s so effective that it's internalized by prosecutors themselves and not just Republican laissez-faire prosecutors but by Democrats. And by the middle of the oughts, people like Mary Jo White who was the US attorney in the Southern District, then becomes a corporate defense lawyer, then becomes Obama's head of the SEC before going back to her firm to become a corporate defense lawyer. She is saying Arthur Andersen was a mistake. And the head of the Criminal Division of Obama's Department of Justice, Lanny Breuer, is saying prosecuting Arthur Andersen was a mistake. They have decided that we can never prosecute large companies again; there are too many maligned collateral consequences. And this is a disastrous conclusion.

BOB GARFIELD: All right, so counterintuitively [LAUGHS] populist anger is inflamed about the government's pursuit of that group, formerly known as fat cats. That's one incentive for prosecutors and regulators to pull punches. The other, to which you just alluded, is that revolving door between the Department of Justice and the Securities and Exchange Commission and the defense bar. Your implication is that prosecutors were either going easy on pals or feathering their nests for later employment. But isn’t the opposite also actually true, that the, that the most successful prosecutors are the ones who are most valued when they do go into private practice?

JESSE EISINGER: This is the line that you hear from the Department of Justice and from the white-dollar bar all the time, that prosecutors have every incentive to win a high-profile trial, but it’s just not actually the case. What they do instead is they take on tangential cases. You can do a high- profile insider-trading case at a hedge fund and you're not taking on a systemic issue and you're not taking on an institution that jeopardizes tens of thousands of people's jobs, but you still can get that stipple drawing on the front page of the Wall Street Journal --

[BOB LAUGHS]

-- and parlay that into a multimillion-dollar partnership.

But what's really going on at the Department of Justice now in the dirty little secret of corporate law enforcement is that we've outsourced and privatized it to the companies, themselves. What happens is companies hire major law firms and they conduct internal investigations. And the internal investigations are delivered to the Department of Justice and they look professional and dazzling and they’re very thorough but they’re studiously incurious about culpability at the top, not all of them but many of them. It’s akin to asking Donald Trump to investigate himself and Donald Trump hires Rudy Giuliani and his firm to investigate the question. I mean, [LAUGHS] does anybody think that that’s a regime that's going to result in the answer? I don't think so.

BOB GARFIELD: All right, so you're suggesting there has been this ideological shift in this century but aren’t you leaving a couple of things out? One is that after 9/11 the Justice Department took all its attention from white-collar crime, and organized crime, by the way, to focus on counterterrorism. And, maybe, more importantly, after the Wall Street crash. President Obama explicitly stated that he would put the liquidity of markets and the preservation of the fragile global banking system ahead of chasing the bad guys.

[CLIP]:

PRESIDENT OBAMA: There will be time to punish those who set this fire but now’s not the time to argue about how it got set or did the neighbor sleep in his bed or leave the stove on. Right now we want to put out that fire.

[END CLIP]

JESSE EISINGER: I think this was one of the great scandals of the Obama administration, that they did not put more resources to prosecuting individuals after the financial crisis because you could save the system and still prosecute the frauds. And, in fact, they go hand in hand. To have legitimacy in saving the system and lend legitimacy to your reform efforts, you needed to say, we also held bad people accountable. Instead, what we did with bankers after the financial crisis is let most of them preserve their bank accounts, kept many of the top executives in their jobs at the biggest banks that they had just blown up, and now they’re retiring to accolades. And the average person can look around and say, that is an outrage and those guys are getting away with it, and you can’t argue with them.

BOB GARFIELD: Your head must be swimming --

[EISINGER LAUGHS]

-- now that what meager financial regulations were imposed after the 2008 meltdown are now being deregulated again.

JESSE EISINGER: I mean, it’s, it’s stunning that we would have such a short-term memory loss. And the point of the book is that this problem was building before the financial crisis and it persists to today and it affects not just big banks but all sorts of companies, industrials, pharmaceuticals, tech, and it will lead to another grave financial crisis, I don't know when but it's inevitable.

[MUSIC UP & UNDER]

BOB GARFIELD: Jesse, thank you so much.

JESSE EISINGER: Thank you.

BOB GARFIELD: Jesse Eisinger is a Pulitzer Prize-winning journalist for ProPublica and author of the magnificently-titled, The Chicken[BLEEP] Club.

BROOKE GLADSTONE: Coming up, what it’s like to be one of the greatest reporters who ever lived, and a legendary pain in the butt.

BOB GARFIELD: This is On the Media.

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