As Thursday brought the first criminal indictments tied to the subprime mortgage crisis, attention inevitably has swung to the prosecutors who are leading the charge.
In the cases of Ralph Cioffi and Matthew Tannin, two former Bear Stearns hedge fund managers, their chief adversary is Benton J. Campbell, the United States attorney for the Eastern District of New York. And according to The Wall Street Journal, prosecutors from that Brooklyn-based district may become the foes of many more financial executives.
In some ways, the Eastern District is an unlikely source of white-collar crime prosecutions. The Southern District, based in Manhattan, is closer to the nexus of the financial world, and former leaders like Rudolph W. Giuliani built their fame upon their cases against Ivan Boesky and Michael Milken.
But according to the Journal, the United States attorney for the Southern District, Michael Garcia, is focusing more on terrorism and public corruption charges these days, though it still prosecutes more white-collar cases. And the Securities and Exchange Commission has been criticized for bringing fewer cases to court. (A spokesman for the commission denied that the regulator has gone soft.)
That has left the Eastern District, a smaller, 143-year-old office known more for Mafia prosecutions, as the main investigator into the mortgage markets’ collapse. It’s not surprising in some ways: The Eastern District has hired many former S.E.C. lawyers in recent years, and it has tried to bolster its ties with the commission.
And Mr. Campbell, the head of the district, already has experience working on a major financial prosecution. As Slate points out, the red-headed lawyer — once called a “dangerous Opie” — worked on the Enron Task Force. Coupled with his reputation as a tenacious prosecutor, Mr. Benton holds enormous symbolism as a man at the forefront of two epochal financial fraud cases.
(Still, as Slate also points out, Mr. Benton’s work there didn’t exactly lead to successful prosecutions. Not a single Enron broadband executive tried by Mr. Benton’s team has landed in jail.)
With the district’s zeal for bringing financial cases to court, other executives have cause to worry. Many on Wall Street on Friday have been talking about this quote from Harry First, a professor of law at New York University, to The New York Sun:
A professor of law at New York University’s School of Law, Harry First, pointed out that a former Bear Stearns CEO, James Cayne, told investors the bank had no liquidity issues just days before it went bankrupt. “He could be in deep trouble,” he said.