When Robert Mueller was tapped to investigate Russian meddling in last year’s presidential election, white-collar defense attorneys in Washington pumped their fists and readied their invoices. Donald Trump and his inner circle have hit up practically every white-shoe law firm in town: Covington & Burling, Miller & Chevalier, Morgan Lewis, Hogan Lovells, Norton Rose Fulbright. For decades, veteran litigators from these firms have defended everyone from George W. Bush and Jack Abramoff on the right to Bill Clinton and John Edwards on the left. More lawyers might have offered their services if their bank clients had not already been subpoenaed for information related to potential money-laundering charges.

THE CHICKENSHIT CLUB: WHY THE JUSTICE DEPARTMENT FAILS TO PROSECUTE EXECUTIVES by Jesse EisingerSimon & Schuster, 400 pp., $28.00

The initial attorneys for Jared Kushner and Paul Manafort, two of the Trump insiders most implicated in the scandal, came from WilmerHale, the same firm that Mueller left to become special counsel. Trump’s hires—Ty Cobb and John Dowd—have known Mueller for years. Despite rumors that Trump would fire Mueller, Cobb and Dowd have praised the special counsel’s honesty and professionalism. Rather than act as adversaries to prosecutors, defense lawyers have presented themselves as members of the same team, eager to cooperate with the investigation. “We’ve been helpful to him,” Dowd said of Mueller, “and he’s been straight with us.” Kushner’s lawyers, for their part, were the ones who provided prosecutors with the notorious emails about Donald Trump Jr. meeting with a Russian lawyer and a lobbyist. According to USA Today, Trump’s lawyers have even passed messages of “appreciation and greetings” from the president to Mueller.

This is part of a familiar dance between government lawyers and their colleagues in the defense bar. Far from being entrenched opponents, prosecutors and defense attorneys are often colleagues who have spent years working together in the same white-shoe firms—and who fully expect to do so again in the future. The coziness, in fact, goes a long way toward explaining why the government has failed to indict and prosecute corporate criminals at the highest level. According to a study by the Transactional Records Access Clearinghouse at Syracuse University, federal prosecutions for corporate crime plunged by 29 percent between 2004 and 2014—a time that saw a massive housing bubble and collapse built on unconscionable fraud.

How did this happen? Close relationships on both sides of the negotiating table create not only a disinclination to play hardball but also career incentives for leniency. Add to this legal rulings over the past decade that have effectively placed handcuffs on prosecutors, and it’s easy to see why no major bank executive saw the inside of a jail cell after the financial crisis. But the biggest constraint on indicting corporate criminals lies in the minds of the men and women of the Justice Department.

Jesse Eisinger’s terrific book, The Chickenshit Club, explains how we got here: how prosecutors lost their tools and, more importantly, their nerve. While Eisinger focuses mostly on the missteps of law enforcement agencies under Bush and Obama, it’s a sobering read for anyone eagerly anticipating the demise of the Trump cartel. In recent history, America has dealt with grifters like Trump with kid gloves. In fact, that’s part of the reason he’s in the White House today.


Eisinger’s narrative features several luminaries from the Trump-Russia investigation. The book’s title comes from former FBI director and Trump dinner companion James Comey, who used the term “chickenshit club” to refer to prosecutors who never lose a case because they never take a risk. Later, Comey showed a hint of the same cowardice when he asked subordinates to negotiate with auditing firm KPMG instead of filing suit in a tax evasion case. There’s also Mueller, who co-chaired the Enron Task Force, which Eisinger holds up as a model of how to go after corporate wrongdoing.

Beginning in 2002, the well-funded, well-staffed Enron Task Force engaged in five years of “pick and shovel work,” unearthing every aspect of the failed energy trader’s accounting scandal. They flipped lower-level employees to reach the bad actors above; they even interviewed one subject three times to break him down. To get to the chief financial officer, Andrew Fastow, they indicted his wife for tax fraud. And the task force didn’t confine the investigation to Enron but attempted to track down every Wall Street banker and accountant who facilitated the deception. In the end, their diligence led to convictions for nearly every top executive at the firm, including the chairman, Ken Lay (who died before sentencing), and CEO Jeffrey Skilling. Persistent pressure and solid lawyering proved that you could take on corporate crime and win.

But the Skilling conviction would later get partially reversed by the Supreme Court, which restricted prosecutions under the “honest services fraud” statute to explicit cases like bribery or kickbacks. A conviction against Enron’s accounting firm, Arthur Andersen, for shredding evidence also got overturned on a technicality. More important, the Andersen case prompted monumental pushback from the business lobby against the entire notion of corporate accountability. Arthur Andersen collapsed shortly after its conviction, likely because it did such a bad job monitoring Enron and WorldCom, another accounting fraudster. But the business lobby argued that it was the government’s rush to judgment that brought the company down, sending thousands of low-level accountants to the unemployment line. Since then, corporate America and its defenders have been quick to cite Andersen as a cautionary tale whenever a corporation has found itself in trouble. The costs to blameless employees, they argue, are too high.

Business lobbyists never mentioned that many Andersen employees simply got jobs with other accounting firms. But over time, the Justice Department internalized the critique. Both Mary Jo White, chair of the Securities and Exchange Commission under Obama, and Lanny Breuer, who led the Justice Department’s criminal division, labeled the Andersen prosecution a mistake, because individual employees were the ones who suffered the most. Consumed with such considerations, white-collar prosecutors revised their policies on corporate accountability. They talked themselves out of hard-charging investigations, precisely at the moment when the global financial crisis revealed an orgy of wrongdoing throughout the financial sector. “Andersen had to die,” Eisinger writes, “so that all other big corporations might live.”


When the financial crisis hit, Obama and Congress did create a financial fraud enforcement task force, but it became little more than a press release factory, a repository for existing cases rather than an investigating force. After the Justice Department bungled a major case against two Bear Stearns traders in 2009, prosecutors preemptively decided they just couldn’t beat Wall Street, no matter the evidence. The Financial Crisis Inquiry Commission referred numerous cases to the Justice Department for criminal prosecution, but no action was taken; officials never even brought in high-profile targets such as former Citigroup board member (and Clinton Treasury Secretary) Robert Rubin for an interview. A massive scandal involving millions of false documents presented to courts in foreclosure cases garnered a Justice Department settlement for pennies on the dollar.

Eisinger reveals this story of backpedaling and cowardice through the eyes of the few who resisted it. There’s Stanley Sporkin, the legendary slob who ran enforcement at the SEC in the 1970s, and his protégé Jed Rakoff, later a federal judge, who would raise a lonely voice to ask how accountability had vanished. There’s Paul Pelletier, the Justice Department attorney who spent years chasing malfeasance at insurance giant AIG, only to have higher-ups squash the case. There’s James Kidney, a 26-year SEC veteran beaten down by weak enforcement. Most corporate defendants, his boss Reid Muoio told him, are “good people who have done one bad thing.”

Muoio was a shining example of the new career path for prosecutors: a graduate of Yale Law, several years in private practice, then rotating into government. As deputy chief of the SEC division responsible for going after fraud involving complex financial instruments, Muoio whittled down cases that involved widespread criminality in an organization—like Goldman Sachs scheming with hedge funds to knowingly sell investors garbage mortgage securities—into a single civil suit against one midlevel staffer. Proving conspiracy in such cases, Muoio argued, was simply too difficult. Like other high-level enforcers, he viewed such investigative hurdles as dead ends, rather than challenges to overcome.

Eisinger is truly damning on how the Obama administration handled white-collar crime. The Justice Department became little more than a way station for once and future partners at top law firms like Covington & Burling; Attorney General Eric Holder had a corner office waiting for him at Covington’s new headquarters when he stepped down. That corporate law background brings with it a comfort with power, a courtesy and respect for the good people who might have done one bad thing.

This merger of prosecution and defense, plucked from the same talent pool, influences how cases are conducted. Lacking resources at the SEC, Sporkin invented the internal investigation, where defense attorneys are tasked with gathering facts about their own clients. But outsourcing white-collar investigations makes prosecutors overly reliant on whatever the defense chooses to give them, and deprives the Justice Department of institutional knowledge. Today, federal prosecutors rarely question the targets of their own investigations, instead trading evidence and queries with defense attorneys. Findings in cases are negotiated, not discovered; frontal assaults on high-powered law firms are eschewed. To launch one, Eisinger writes, would create “social discomfort.” Prosecutors would have to take on their mentors, their friends, and their future bosses.

If it’s easier to get a corporate plea bargain than to win a conviction against a top executive, that’s the path prosecutors will favor. If it’s easier to design a deferred prosecution agreement than to take down a company abusing its investors or customers, that’s the path. If it’s easier to make headlines with seven-figure fines than to undertake the painstaking work of obtaining justice, that’s the path. If there isn’t 100 percent certainty of a conviction, then discretion—some would say spinelessness—argues for settlement. Every prosecutor knows that, in the end, those who take the easier path will enjoy rewards, and those who challenge power won’t. Eric Holder got a corner office and a lucrative partnership. James Kidney, who pushed for aggressive prosecution at the SEC, got a small retirement party, where he said, in a speech that leaked, “For the powerful, we are at most a toll booth on the bankster turnpike.”


As Mueller’s case against Trump has developed, it has clearly evolved into an investigation of financial fraud. Mueller wants to know whether Russian oligarchs used Trump and his network of businesses to liberate cash and evade taxes, and whether they returned the favor by meddling in last year’s election. Paul Manafort’s real estate transactions and involvement with pro-Russian interests in Ukraine involve classic signs of money laundering. So do large loans by German financial giant Deutsche Bank to Trump and Kushner’s real estate interests, also potential money-laundering vehicles, and deals with the Bank of Cyprus, where Commerce Secretary Wilbur Ross was once vice-chairman. Mueller and his all-star team of prosecutors are scrutinizing purchases of Trump properties by Russian nationals, partnerships between Trump and Russia in a New York housing development and a Toronto hotel, and even Trump’s choice of site for the 2013 Miss Universe pageant in Moscow.

This shift into financial crime drops the probe into the same accountability-free zone that has offered nothing but disappointment over the past decade. Consider the recent case involving the Russian-owned real estate firm Prevezon Holdings, which was accused of laundering money from a tax-fraud scheme into luxury apartments in Manhattan. In May, right before it was scheduled to go to trial, the case was abruptly settled for $5.9 million, with no admission of guilt. And contrary to rumors that the Justice Department meddled in the case to assist Prevezon (whose lawyer was the one who met with Donald Trump Jr.), it appears the U.S. attorney for the Southern District of New York, Joon Kim, simply walked off the battlefield. A well-sourced Daily Beast story in July reveals how prosecutors thought they might lose because the jury wouldn’t understand complex transactions involved in the scheme. So they punted.

In the Trump probe, Mueller has displayed flashes of doggedness that recall the Enron Task Force. His team impaneled a grand jury to gather evidence. They subpoenaed banks that worked with Paul Manafort and questioned his son-in-law Jeffrey Yohai, applying pressure to get Manafort to flip. The FBI even raided Manafort’s home, not trusting Trump’s former campaign manager to cooperate with document requests. Trump’s lawyer, John Dowd, responded by complaining that Mueller hadn’t exhausted other, less invasive options to obtain the documents and suggesting that the Trump team might try to suppress the information in court—the type of threat that can ward off a timid prosecutor.

Eisinger recently argued that Mueller learned from the Enron Task Force how to slowly build a case, let investigators do their job, and take the most aggressive line possible. But ultimately, he’ll be working within a structure committed to protecting the powerful from prosecution. Frustration with a special justice system for elites helped create the rage that fueled the rise of Trump. But a special justice system for elites might be exactly what the president needs to escape his Russia problem.