I read a very interesting article yesterday on NYTimes.com, by John Kinnucan of Broadband Research. The FBI “invited” him to wear a wire and essentially entrap clients. He said no, and he told his clients about the FBI’s request. Of course, some are skeptical about his FBI story, but it makes for interesting reading and raises some good points pertinent to my forensic accounting practice.

Some may say that if Kinnucan was innocent, he should have just worn the wire to prove he was on the up-and-up. His article explains that it wasn’t quite so simple. The FBI said they believe Kinnucan and his clients were guilty, and they threatened to arrest him immediately.

If the FBI had the evidence to prove these people were guilty, why did they need the wire?

They probably don’t have the evidence, and that’s why they’re trying to strongarm Kinnucan. What do you think happens once Kinnucan voluntarily lets them into his life? When do the sneaky tactics stop? What does the FBI “ask” him to do next?

Kinnucan says that he thinks some people would see his cooperation as some sort of admission of guilt. And he felt trying to entrap  his clients (who he believes are innocent) would be wrong. He says he’d rather stand up for what he believes is right.

And in this case, what is “right” is in a huge gray area. We’re talking about research activities that companies have been engaging in for years. These companies research public companies, and sell that research to others who will buy and sell stocks based on the research. When does research cross the line into some sort of “insider trading”? It is often hard to tell, and Kinnucan says that it appears the federal government is trying to retroactively make certain research activities criminal, when these activities have been accepted as standard industry practice for years.

And this is why I do criminal defense work. Because the government has vast resources, and can choose a target and pursue them relentlessly. The government doesn’t necessarily have to be on the side of right. In this case, it looks like Kinnucan’s business is being destroyed. And he might not have done anything wrong. He deserves a defense against whatever charges the government may bring against him.

Even if he did something wrong, he deserves to be punished only for what he actually did. It’s common knowledge that law enforcement often pushes the envelope to try to gather evidence against other defendants or find other parties to charge with crimes. Someone has to stand up for the rights of these defendants. And someone has to keep our government honest, because it’s too easy for them to cross lines if defendants are left to their own devices.

The white collar defense cases that I work on often involve complex financial calculations. The defendants need someone who can understand the numbers and the theories the government is relying on for its prosecution. The defendant needs someone to correct the errors and make sure that the defendant is being punished only for the fraud that actually occurred, not the fraud that may be alleged.

One Comment

  1. Jim Boyle 12/01/2010 at 12:46 pm - Reply

    And this is why I enjoy your articles with what appears to be an exacting approach that explains a situation. Thanks

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