Preet Bharara, former U.S. attorney in Manhattan, listens to former FBI director James Comey, left, during a Senate hearing in June. Jesse Eisinger writes that Bharara prosecuted Wall Street’s small fish amid wrongdoing by the big players. (Andrew Harrer/Bloomberg News)

One would not realize that the United States has the highest rate of incarceration in the world by examining prosecutions of white-collar criminals. Senior bankers, Fortune 500 execs, Big Eight accountants and white-shoe lawyers are the thugs who brought us the 2008 financial meltdown, the worst since the Great Depression. For the unspeakable misery these corporate swindlers caused — the decimated retirement funds and the massive unemployment — not one top executive has gone to prison. Rather, U.S. prisons are teeming with the poor and the powerless.

The Chickenshit Club” is Jesse Eisinger’s powerful lamentation of a justice system as upside down as 0mortgages left in the wake of corporate greed. The book’s title is drawn from a speech by James Comey, the recently deposed FBI director, when he served in the early 2000s as the head federal prosecutor in Manhattan. The club, Comey explained to new lawyers in his office, is a dishonor society for prosecutors who have never lost a case. Eisinger, in this brave and elegant takedown of the U.S. Department of Justice, makes it clear that he shares Comey’s view that government lawyers who pursue only slam dunks are more concerned with winning cases than doing justice.

Members of the club, according to Eisinger, a senior reporter at ProPublica, include former attorneys general John Ashcroft and Eric Holder; Mary Jo White, who led the Securities and Exchange Commission during the Obama administration; and Preet Bharara, one of Comey’s successors as chief federal prosecutor in Manhattan. Eisinger castigates Bharara as a showboat whose press agents — Bharara landed on the cover of Time with the headline “This Man Is Busting Wall St.” — were more effective than his prosecutors.

As Wall Street’s head law enforcement agent, Bharara pursued relatively small fish, such as insider traders at small hedge funds, but not big banks or top officers at the most powerful corporations. As a result of this virtual immunization from prosecution, Eisinger writes, “bankers at the biggest institutions sold defective products, misrepresented them, played games with their own finances, and almost crashed the global financial system, save for a multitrillion-dollar taxpayer bailout” — all with impunity.

Bharara’s wimpiness was, in Eisinger’s view, a product of Justice Department culture, which largely gives corporate criminals a pass. It wasn’t always this way. In 1909, the Supreme Court ruled that corporations themselves, as well as their employees, can be criminally prosecuted. The feds have rarely pursued white-collar criminals with the same zeal as other offenders — as Eisinger puts it, “the rich and powerful have always been rich and powerful” — but there have been periods when corporate crime has been more of a law enforcement priority.

(Simon & Schuster)

Robert Morgenthau, the crusading head federal prosecutor in Manhattan in the 1960s, asked, “How do you justify prosecuting a 19-year-old who sells drugs on a street corner when you say it’s too complicated to go after the people who move the money?” He brought cases against elites such as James Landis, a former chairman of the SEC and dean of Harvard Law School, and Roy Cohn, who was Sen. Joseph McCarthy’s chief counsel during his infamous communist witchhunt hearings in the 1950s. Morgenthau lost his case against Cohn, who went on to represent a young businessman named Donald Trump.

Back then, losing cases against lawyered-up white-collar defendants didn’t matter as much to the feds, who twice more unsuccessfully prosecuted Cohn (he was disbarred shortly before his death in 1986). But that changed following two federal prosecutions shortly after the turn of the century. In 2002, the Justice Department targeted Arthur Andersen, which was then one of the five largest accounting firms in the country. The next year the feds brought a related prosecution against top executives of Enron, a Houston-based energy concern.

In those cases, gutsy prosecutors went for the kill — figuratively, as in charging Lea Weingarten, wife of Enron Chief Financial Officer Andrew Fastow, with filing a false income tax return, in an effort to get Fastow to cooperate; and literally, as when their prosecution led to the demise of Arthur Andersen. Some 18,000 people had already lost their jobs when, three years later, the Supreme Court overturned the accounting firm’s conviction, but Eisinger’s central concern is the chilling effect the failed prosecution had on the feds.

According to Eisinger, the resulting legal and political fallout traumatized the Justice Department. Prosecutors essentially stopped pursuing criminal sanctions against corporations and dramatically ratcheted down prosecutions of individuals suspected of white-collar crimes.

In Eisinger’s melodramatic proclamation, “Andersen had to die so that all other big corporations might live, free of prosecution.” He does not have a persuasive rebuttal to the legitimate concern that when a corporation itself is charged, it’s the innocent low-level employees who suffer the most, while many of the more culpable senior-level officials just move on to other cushy jobs in the financial sector.

Nor does Eisinger address the precept that guided me, as a public-corruption federal prosecutor in the 1990s, to decline many more cases than I pursued. The Justice Department manual states that prosecutors should not bring cases unless they think they can win at trial. This standard allows some offenders to escape prosecution, but it is arguably an efficient use of limited prosecutorial resources. Evidence of financial fraud often consists of complicated paper trails, rather than smoking guns. Lawyered-up defendants are rich enough to out-resource the government, and massive expenditures for exhaustive investigations, jury consultants and fancy trial exhibits have a way of ginning up reasonable doubt. Former attorney general Holder may have made a responsible decision to prioritize prosecutions of trigger-happy police officers or corrupt elected officials. There’s no shortage of bad guys out there, so why waste time on “dogs” — the term we prosecutors used for cases that were probably losers?

Jeremy Bentham, the great philosopher of criminal law, thought punishment should be declined when its costs outweigh its benefits. In Eisinger’s enthusiasm for criminal sanctions, he falls prey to the same zeal for punishment that brought us the mass-incarceration culture that he correctly decries.

Still, the book’s sustained outrage makes it a compelling read. The consolation prize for not doing justice as a federal prosecutor appears to be moving to an elite D.C. or Wall Street law firm and making millions of dollars a year representing the other side.

Eisinger provides story after story of skittish federal prosecutors outmaneuvered by a revolving door of senior officials, including Jamie Gorelick, deputy attorney general during the Clinton administration, who went on to a partnership at WilmerHale, an elite D.C. law firm where her clients include BP, which she represented in the oil spill case, and Jared Kushner, President Trump’s son-in-law and senior adviser.

Even the man who coined the term eventually joined the club. Comey became the deputy attorney general during the George W. Bush administration. There he declined to prosecute the accounting giant KPMG for questionable tax shelters. Comey’s rationale, remembering Arthur Andersen, was that he didn’t want to put another accounting firm out of business.

Eisinger is a fearless reporter. He apparently does not care much about eating lunch on either Wall Street or K Street. Any lawyers who have prosecuted or defended white-collar cases over the past 30 years are likely to go first to the book’s index to look for their names, and more than a few will be crushed by what they read. Unlike the Justice Department’s approach to white-collar criminals, Eisinger’s important and profound book takes no prisoners.

THE CHICKENSHIT CLUB
Why the Justice Department Fails to Prosecute Executives

By Jesse Eisinger

Simon & Schuster. 377 pp. $28