John Lester, the Air Force vet who buzzed Hillary Clinton at this week’s candidate forum with a tough question on her mishandling of classified information, is a smart guy. And that’s not the only reason he’s got me jealous. I have been trying since the e-mail scandal broke 18 months ago to think of a good example to convey the fatuousness of Mrs. Clinton’s “I never sent or received anything ‘marked classified’” talking point (which, as I explain here, she has now morphed into “I never sent or received anything with a ‘header’ labeling it ‘classified’”). While I’ve been spinning my wheels, Lieutenant Lester has come up with a great example.
He posited it Thursday in an interview on Fox with Neil Cavuto (aside: How great to have Neil Cavuto back, and looking so fit). Since I have a bit more time and space to develop Lieutenant Lester’s example, I’ll be more expansive.
Let’s say you are the chief executive officer (CEO) of a publicly traded company. You’re sitting at your desk when an e-mail from the chief financial officer (CFO) comes in. It says: “The company had a great quarter! Huge — way, way better than projected! Plan is to announce the results at presser next Tuesday.”
After a fist pump or three, you then e-mail your son, explaining, “Sorry, I need to cancel that lunch we were going to have next Tuesday. It’s quarterly-report time and my company’s got unbelievably great news to break. We’ve got a press conference that day to announce it. Gonna be a bombshell!”
Your son reads the e-mail. He picks up the phone and calls a broker with instructions to buy 20,000 shares of stock in your company. The broker buys the stock. Then, on Tuesday, shortly after your company holds its big press conference announcing far-better-than-expected quarterly earnings, the stock price zooms through the roof. Your son promptly sells the stock at a mega profit. He’s so thrilled, he even buys you that BMW you’ve been eyeing.
On these facts, which are hardly unheard of, is there any chance that the FBI, the SEC, and the Justice Department would not come a-hounding? Any chance you and your son would not be hit with a felony-laden indictment for trading stock based on confidential insider information?
Well, let’s think about this.
What if the FBI asks to interview you before deciding whether to recommend felony charges. You tell the Feebs, “Gee, I had no idea the information in the CFO’s e-mail was confidential. Have a look at the e-mail: it isn’t marked ‘confidential’ anyplace. In fact, there isn’t even a ‘(C)’ in the margin, and there certainly isn’t a big, bold ‘confidential’ header on top. How could I possibly have known it was confidential information that I wasn’t allowed to transmit in casual e-mail exchanges with my son? And how could I have known he’d use the information to make a killing in the stock market?”
Of course, when your son gets his shot at an FBI interview, he tells the same story. “Dad’s e-mail? There were no markings or headers saying it was ‘confidential’ — how was I to know? Plus, he didn’t exactly tell me to go buy some stock . . . he just said he needed to cancel lunch because the company was going to announce great news at a press conference. And, well, sure I bought him a Beamer. But it wasn’t a kickback — I just love my dad. Isn’t that right, Dad?”
Hold on a second there: Isn’t that right, Dad?
Now, I know what you’re thinking: C’mon, we get that this is a hypothetical, but we should try to keep it real, right? Why would the FBI ever let the CEO be in the room for the son’s interview? Doesn’t the FBI always keep suspects apart during interviews — you know, so the agents get a better idea of whether the suspects are telling the truth?
Well, funny thing about that. I forgot to mention this part of our hypothetical: Just before the son’s interview, the son’s main lawyer tells the prosecutor, “It so happens that the CEO is a lawyer, so we want him to help represent his son. I know the government is investigating both of them on suspicion of unlawfully trading on confidential information. But I read someplace that you guys let Cheryl Mills sit in as a lawyer on Hillary Clinton’s FBI interview when you were investigating both of them for unlawfully transmitting classified information. We’d like that arrangement, too.”
Okay, you can stop laughing now.
#share#There’s no way we little people are getting the Hillary-Cheryl treatment. That’s not for us. It’s for the connected few the Justice Department doesn’t want to cross because the connected few could be running the Justice Department in a few months.
Sonny is not going to be allowed to have dad the CEO-with-a-law-degree present at the interview when they are subjects of the same criminal investigation.
The FBI director is not going to hold a press conference to explain that he recommended against charging the CEO and his son.
Nor is the FBI director going to appear before Congress to explain that, because there’s just not enough proof of criminal intent, “no reasonable prosecutor would ever charge a case like this.” The Justice Department is not to going rationalize that, because nothing in the CFO’s e-mail said “confidential,” the CEO may not have known that information about quarterly earnings was confidential.
The Justice Department is not going to drop the case against the CEO. Nor is it going to decline prosecution of the son. It is not going to give them the benefit of the doubt. It is not going to make like Mr. Magoo and say, “Well, we can’t really prove the CEO knew it was illegal to transmit the non-public information, so we surely can’t prove the son knew it was illegal to trade on that information.”
To the contrary, what happens in the real world is that the CEO and his son get the book thrown at them. An eminently reasonable prosecutor tells the court that the defendant’s claims about lacking knowledge and criminal intent are laughable: It matters not a whit that the e-mails in the case had no headers or markings indicating they were confidential; instead, because of the CEO’s position, he is expected to know that he must not disclose important non-public information that could dramatically affect the stock price. It is no defense that the e-mail wasn’t marked, because culpability hinges on the content of the information, not the labels on the document.
What’s more, the reasonable prosecutor will point out, it makes no difference that the CEO did not explicitly tell his son to go out and buy stock before the company’s press conference. At a minimum, it was recklessly irresponsible of the CEO to mishandle the confidential information this way. Because of that recklessness, the son was able to cheat the market . . . and the CEO then got a new car out of the ill-gotten profits. Case closed.
#related#That’s the justice that most people who are not Hillary Clinton get.
Interesting, isn’t it? Unlike Hillary Clinton, a CEO is not required to get training in how to handle confidential information before getting access to it. A CEO is not required to sign a document that says, “I understand that confidential information can be marked or unmarked.” And a CEO is not trusted with the intelligence secrets on which the national security of the United States depends.
And yet, despite all that, the CEO is expected to know what he may and may not do. If he breaches his fiduciary duty, the CEO gets indicted, convicted, and sentenced to prison. Unlike Hillary Clinton.