Prosecutorial Impunity An appeals court winks at false evidence that destroyed a hedge fund.
https://www.wsj.com/articles/prosecutorial-impunity-1508280857
Federal appeals judge Alex Kozinski has noted that abusive behavior by prosecutors is reaching “epidemic proportions.” That epidemic will get worse after Tuesday’s ruling by the Second Circuit Court of Appeals absolving prosecutors for using false information to put David Ganek’s hedge fund out of business.
A three-judge panel, led by prosecutorial soft-touch Reena Raggi, overturned a lower court ruling and found that prosecutors and FBI investigators have immunity from Mr. Ganek’s suit seeking damages. The court ruled that immunity applies even though prosecutors falsely claimed Mr. Ganek had traded shares based on what he was told was inside information.
An FBI informant in fact testified that he had never told Mr. Ganek the information had been illegally obtained, and an FBI agent corroborated that testimony. Yet the FBI and prosecutors included the false claim in an affidavit to obtain a warrant for a highly publicized raid on Mr. Ganek’s firm. Mr. Ganek was never charged, but the negative publicity forced him to roll up his Level Global fund in 2011.
Prosecutors deserve some measure of immunity lest they be sued every time they lose a close case. But immunity should not be impunity, and Judge Raggi’s opinion all but provides it by refusing to let Mr. Ganek’s suit proceed to gather evidence about whether prosecutors knew the information was false.
Her opinion says this doesn’t matter because the search warrant against Mr. Ganek’s firm would have been justified even without the false information. Yet the trial judge looked at the same facts and concluded the opposite. Judge Raggi’s ruling means in practice that there is no mechanism for an innocent person like Mr. Ganek to seek redress if a claim is a lie, and no legal remedy.
This is incentive for prosecutors to think they can get away with lying as long as they have other evidence to dress up a warrant. Never mind that in this case the warrant was used to justify a raid on an innocent party and destroy his business.
The Ganek raid and smear were typical of former federal prosecutor Preet Bharara’s method in his assault on Wall Street. The smearing continued even during the oral argument at the Second Circuit. Sarah Normand, an assistant U.S. Attorney, accused Mr. Ganek of participating in “a scheme with regard to many, many pieces of inside information from many public companies.”
This was long after her office had decided not to charge Mr. Ganek. But instead of remorse or an apology, Ms. Normand doubled down on prosecutorial innuendo.
Mr. Ganek could appeal, but the Supreme Court is unlikely to take a case that hangs on such a factual dispute. The Justice Department could discipline the prosecutors for spreading false information, and it ought to investigate whether it was a lie, but Justice is an insider’s club. The only real check on prosecutorial abuse are judges willing to enforce standards of honesty. Judge Raggi has set a standard that will encourage more dishonesty.
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