Oh My Fraud

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Caleb Newquist: Hello and welcome to Oh My Fraud, a true crime podcast where the criminals don't commit aggravated murder. They commit aggravated identity theft. I'm Caleb Newquist.

Greg Kyte: And I'm [00:00:30] Greg Kyte.

Caleb Newquist: Greg, just so the audience is aware, and I know some people know this, but if there's any newcomers, aggravated identity theft is a real thing. Yeah. And I believe is one of your favorite crimes that we get to talk about on this show.

Greg Kyte: It I don't know if I'd say favorite. It definitely holds a fond place in my heart just because the name is so damn weird. Uh, because aggravated identity theft makes you think of, like, identity theft. Where, where, like, the social security number was [00:01:00] smudged and hard to read, and it just really pissed him off while he was trying to do it right.

Caleb Newquist: Yeah. It wasn't. It's not demure. Identity theft, is it?

Greg Kyte: No, no, which is very, very light penalties for demure identity theft.

Caleb Newquist: Right. Yeah. Um, Greg, I have exciting news.

Greg Kyte: Tell me, what is it?

Caleb Newquist: I mean, you already know what it is, but, um, it's it's it's that we have another former prosecutor on the podcast today. Yeah.

Greg Kyte: Another former prosecutor. [00:01:30] My, actually, that's not that's not feigned excitement. Uh, with two in a row. Both. Uh, home run, uh, interviews. Uh, but, yes, I did know that. And today, just to get the audience up to speed. Uh, our our guest is Miriam Baer. She is the vice dean and centennial professor of law at Brooklyn Law School in Brooklyn, Brooklyn. She has been in academia since the mid 2000, but she started her career as a as a law clerk and then as a law associate, [00:02:00] and then spent five years as an assistant U.S. attorney in the Southern District of New York. And Caleb tells me, by virtue of the words that I'm reading right now, that is a big damn deal.

Caleb Newquist: Yeah, it is. The Southern District of New York is it contains the oldest federal court in the history of the United States. Sexy. Yeah. 1814. And over that long, long period of time. Yeah. Many notable and political figures have served as judges and U.S. [00:02:30] attorneys in that district. For example, Sonia Sotomayor, the Supreme Court justice. She was the youngest and first Hispanic judge to serve in the Southern District when she was appointed in 1991. And then two notable U.S. attorneys include James Comey, the former FBI director. That pissed pretty much everyone off circa 2016 2017. And, uh, as well as former New York City mayor and current national disgrace. Rudy Giuliani, there's [00:03:00] a there's a two notable US attorneys out of the Southern district for you.

Greg Kyte: But before we get to the interview, let me just remind you that if you or your organization or conference is looking for a live presentation on fraud or ethics, then that is something that we do, and we promise our presentation will be the opposite of lame.

Caleb Newquist: Uh, webinars we do those two also. Not the lame kind and.

Greg Kyte: The opposite of.

Caleb Newquist: Lame kind. Right? Opposite of lame kind. Uh, we we and we can work clean [00:03:30] if you need fraud and ethics knowledge without swears. So send us an email. Oh, my. Fraud at earmarks. Com to get more information on pricing and availability.

Greg Kyte: Okay, enough of that. As I said, Miriam Baer is our guest today and her law career has spanned across time and space. Uh, really defying the time space continuum and the multiverse. Diverse. Uh, so with with no further ado.

Caleb Newquist: This is what happens [00:04:00] when I don't write Greg's words. Everybody. This is what happens. No, she's had no Myriam's had a very interesting and interesting career, and we get into a lot of it. So rather than Greg and I just talking about it, we're gonna switch over to our conversation with Myriam Bear.

Greg Kyte: Oh my. Fraud.

Caleb Newquist: So I'm gonna get something superficial and out of the way. Uh, Myriam, I noticed that you went to Princeton in the early [00:04:30] 90s. I did, so I have to ask you for my own out of my own curiosity. Did you know Ted Cruz?

Miriam Baer: I did.

Caleb Newquist: You did?

Miriam Baer: I did. So he was one year ahead of me. Okay. I didn't know him particularly well in college, but he also went to Harvard Law School, so I. And I was in his evidence class, I believe.

Caleb Newquist: Okay. And.

Miriam Baer: Um. [00:05:00]

Greg Kyte: Dish. Come on. We want punchy. Miriam. Bring out punchy.

Miriam Baer: Okay. Okay. So, um, I do remember this. Uh, we had a non-technical word. Wacky, uh, evidence. Professor named Charles Nelson. And Nelson was quite famous in those days for both his teaching style, which was certainly unconventional, and his examination style. Okay. So the examination was some wacky version of, like, we had to break into groups and make our own multiple choice [00:05:30] questions, which he then took some of those and that ended up on the exam. And then there was a weird essay and it was all that kind of stuff. Yeah. And so it was typical Harvard Law School. So lots of students were stressed out about it at the time. This is back when we got grades.

Caleb Newquist: And losing sleep.

Miriam Baer: And anyway, I remember running into Ted after the exam and again, it was an open ended exam so you could write whatever you wanted and somehow tie it to evidence. And I remember running into him and [00:06:00] I said, oh, what did you think of the exam? Which is always a terrible question to ask because it's just a post mortem kind of thing that's never going to lead to anything good. But I remember him actually saying, well, I did write about Kierkegaard. And I'm like, I don't even know who that is. I don't know what that is. I'm not talking to you. And I walked away and I said, and that's the only, that's the really only I mean, a few other things I remember, but like, yeah, I just remember at that time being like, yeah, that was a mistake. I shouldn't have asked him that.

Caleb Newquist: Nice. Thank you.

Greg Kyte: Not too bad. I name dropped Kierkegaard. How about you?

Miriam Baer: Pretty [00:06:30] much. I felt like an idiot. Yes.

Greg Kyte: Any any ancient Polish, uh, politicians that you dropped in your essay?

Miriam Baer: I believe, though I got an A, so, you know, I'll take that one. And there you go.

Greg Kyte: Oh, good. Good, good.

Caleb Newquist: Oh my God. Well, thank you for indulging me. Uh. Um. Well. And and thank you for agreeing to. Come on. Um, uh, this is a real treat for us, uh, because, uh, most of the time when we talk about, uh, fraud and the the prosecution piece of it, [00:07:00] uh, there's lots of speculation and just bait and the stuff that we can dig up in our research. But, um, before we get to all that good stuff, uh, just tell us about you, like, what's kind of your life story, and, you know, 2 to 3 minutes. Okay.

Miriam Baer: So, um, I, uh, went to college at Princeton University. I grew up in East Northport, New York. Nice little place in Long Island. And, uh, when I went to law school, I had no thought of becoming a prosecutor. [00:07:30] I thought I would probably, uh, work at a law firm. Uh, you know, to me, I just wanted the social mobility of, you know, the idea of making. I'll admit it. I wanted to make money. I liked litigation. People told me that I'm very good at arguing. So I thought if someone's going to pay me to argue, that's a that's a good thing. Yeah, and I didn't fall in love with the the class known as criminal law. Uh, in law school, partly because it focused very much on [00:08:00] sort of the theory of why do we punish people. So it was very philosophical. And then it also had a chunk of sort of interpreting statutes. So you tended and this is true even to today, if you take criminal law at law school and pretty much everyone does. Most law schools, it's mandatory that first year class almost always focuses on learning what we call the model penal codes. That's really state codes. And you tend to learn, um, criminal law [00:08:30] by learning about homicide. And partly that's because homicide is what we call graded right. It has different types of statutes based on your mental state. So that's why there's a difference between manslaughter and murder, right. Murder is about the intentional killing. Manslaughter usually involves something like recklessness, right? So you learn. It's a way we teach. And also like.

Greg Kyte: Aggravated murder versus just peaceful.

Miriam Baer: Murder. Well, yes. Peaceful, yes. But the idea of you are talking about the fact that there are statutes [00:09:00] that have these add ons. In fact, it's coming up with Luigi Mangione, um, who, um, is allegedly, uh, you know, charged with, uh, killing, uh, United Healthcare's, um, uh, CEO. You may have noticed, you know, there's this whole thing in New York, can he be charged with first degree murder? And it turns out to be charged in New York State with first degree murder. There has to be this add on, right? So there has to be some specific additional aggravating factor. Whereas if you [00:09:30] just intentionally killed someone not peaceful, but certainly very harmful, we would call that second degree murder. So it turns out that ends up being what you learn in the One-l first year law school class. So I didn't even think about white collar crime. Um, except that I found the topic of things like fraud interesting. So I was the kind of person who might read like a book like Michael Lewis's Life. I think it's Liar's Poker. Is Michael Lewis, right? Like that kind of stuff. Um, [00:10:00] I remember reading about Ivan Boesky and thinking, oh, this is sort of interesting stuff. Um, and then I clerked for a judge, um, Jane Roth, who was wonderful in Wilmington, Delaware. She was on the Third Circuit. So US Court of Appeals for Third Circuit.

Miriam Baer: That was the first time I came into contact with. There were a few cases that involved this thing I'd never heard of called the Federal Sentencing Guidelines. So in the United States federal system, you what really matters is your even though at that time it was mandatory. Now it's advisory. [00:10:30] But these things called sentencing guidelines are really, really important. So that was my first time like even learning about that. And then I went to a firm, I went to this very fancy firm called Cravath, Swaine and Moore. I actually worked on an antitrust case the first year I was there, but then my second year I was on a securities fraud case and it wasn't a criminal case, but it was still, you know, big lawsuit with important documents. And you start to learn about this was back in the days. So I think we're talking, um, I graduated [00:11:00] in 90. So this would be like 1998, 1999. This was the beginning of companies being accused of manipulating their books, right? Cooking their books, manipulating their books. Doing things with reserves. Right. So, you know, getting a crash course in that. And one thing people don't realize when you go to law school, I mean, I did take the initial accounting for lawyers class, which at least I know what the word amortize means, I think, although I won't tell you right now.

Miriam Baer: Um, but at least I knew [00:11:30] some language and stuff like that. But I think people don't realize the degree to which lawyers in particular are generalists, right? So after three years of law school, I absolutely did not have, uh, forensic accounting skills. And yet, you know, as a second year associate, I was thrown onto some huge, um. Hey, this company's been sued in a class action suit for accounting fraud. This was back in the days when, right after [00:12:00] a company's, uh, you know, had a this was when there were all these restatements, right? You had these restatements, and then suddenly the stock would drop, and then a whole bunch of people would start filing suit. And it was so interesting. Right. Like if you had looked at any of these law firms, even though the partners were very skilled and very good litigators and certainly knew what they were looking for, and certainly we had experts advising us. But the associates themselves, we knew some stuff, but we were expected to pick up the lingo as we went [00:12:30] along. Right? We kind of had to learn on the job. Then from there, I went to the US Attorney's office, and at that time this was the US Attorney's Office for the Southern District of New York. Um, widely thought this is Manhattan. Widely thought as sort of the preeminent federal prosecutor's office for really white collar crime.

Miriam Baer: I would say white collar crime and other crimes, frankly, terrorism, organized crime. At that time, the person who hired me and was the US attorney was [00:13:00] Mary Jo White. Very widely respected. And, you know, your first year when you get to the US Attorney's office, again, you are a generalist. You are just learning everything possible about the federal criminal system. And so you're in something called general crimes, and you still do get a fair amount of at least I did I in that first year, even though I also had my share of crimes that we wouldn't call white collar crime. [00:13:30] I did have sort of, uh, mail fraud, wire fraud type cases of, say, like $1 million or less. So not baby, because nothing in the federal system is real. You know, I wouldn't call them baby cases, but they were, you know, still minor compared to what was going on in the Securities Fraud Unit or the Major Crimes Unit. Um, and it was a way for me to learn. How do [00:14:00] you collect evidence to show that someone defrauded someone? Right. And it was also a way for me to learn what are the elements of mail and wire fraud? How do we go about proving that? What is what do these statutes say? And that was really also my first time learning about the United States sentencing guidelines, which at that time were mandatory.

Miriam Baer: They are for a bunch of reasons. They are now advisory. And that has to do with the Supreme Court, a major holding about the guidelines themselves and whatnot. But, um, [00:14:30] the guidelines are what determine your sentence, at least as an anchor, right? In other words, if you're a judge and you're trying to figure out, you know, how much time should someone spend in jail because of a fraud they perpetrated? It is not. And this is in my book, right? We hear on television is the statutory maximum. So we'll hear so and so faces 30 years in prison or 60 years in prison. And what that is, is you've just someone's basically [00:15:00] counted up the number of counts, looked at the, you know, total statutory maximum and just added them up mechanically. And that's not actually what we do when we're trying to figure out when when judges actually sentence. That's not what they're doing as an initial matter. They'll find out. They'll figure out what is your loss amount or intended loss amount. And then from there that's going to plug into some number under the sentencing guidelines also depending on some additional aggravating factors. And so [00:15:30] that's was something I learned really even in that first year at the US Attorney's office.

Caleb Newquist: So. Oh, sorry. I just just a couple of minor things I want to just go back to quickly. Uh, you probably you didn't really touch on this, but like, the fact that you clerked in Delaware. That was. That's kind of like cool ground zero for corporate law, right? So, like, whether you realize it or not, you were kind of you were laying a foundation for possibly a career in understanding [00:16:00] how, uh, businesses break the law and, and what happens when, when they go to court.

Miriam Baer: So, I mean, yes and no. Uh, it was such an interesting place. Wilmington. Uh, so, yes. So one nice thing about Wilmington, and I'm sure this is true today, is that it is a very nice place to be a judicial clerk. Yeah, because it's a relatively small city. Um, and as a result, all the clerks, anyone who's clerking for a federal judge [00:16:30] or for the Chancery court or for the Delaware Supreme Court, and I'm sure this is true today. We used to used to all get together, you know, once a week for lunch, and we became friendly with each other. And there are sort of a limited number of spaces where everybody lived. Right. It's like a finite number of, like, apartment buildings. There aren't that many apartment buildings, period. And so as a result, a lot of us, you know, Chancellor Alan Clark, lived next door to me in my apartment building just randomly. Right. And so, yes, [00:17:00] in that sense, you know, one was very aware of, you know, sort of the Delaware bar. And of course, I absolutely did know about, you know, Delaware's importance to corporate law. On the other hand, I was working for a federal appellate judge.

Miriam Baer: So my likelihood of coming into contact with corporate law issues was still relatively slim unless I was interested in it. Right. In other words, I was in the milieu and I met people, and it was kind of interesting. [00:17:30] And that made for, you know, an exciting kind of place to be. And I was also I really valued getting to know these clerks. But I can't say to you that, oh, and because of that, I knew so much about corporate fiduciary duty. Because I know that that that wasn't true, although I did find in law school. So this is one interesting thing. Whereas criminal law didn't really excite me in law school, I took corporations not expecting that I would like it. And I thought, wow, this stuff's really interesting, right? [00:18:00] It's kind of like that is like the cops and robbers, right? These folks fiduciary duty and they weren't loyal or where you had, you know, these mergers and freeze outs and all these sort of folks, kind of, if I'm allowed to use this word, screwing each other over. Yeah.

Greg Kyte: That was you can you can go you can go harder in the paint than that, Mary.

Miriam Baer: Okay. So I like that stuff and, and I, you know and that was I also when I read like barbarians at the gate. Right. So these were fun. Uh, you know, that to me definitely [00:18:30] got me excited. Um, so when I had been. So anyway, I went to the US Attorney's office, sort of learned there was this whole new world of federal criminal law. And again, so you're learning on the job. Um, you know, and that is true of most of the incoming US attorney's offices, uh, especially I think, you know, if you think of the sort of big, uh, city offices. So if you were to look at the US Attorney's office in Southern District, Eastern District, which is Brooklyn, if you were looking [00:19:00] at, you know, sort of the equivalent in DC or Chicago, what you're getting are a lot of, you know, sort of smart, uh, folks who, uh, are admittedly ambitious, who've gone to pretty good schools, did well in those law schools, and now they're coming, uh, and do feel they at least at the time I was there and I'm sure uh, I do think this continues. They believe in the mission, right. There's a mission, which is we know there are folks out there who are violating law, and [00:19:30] our job is to vindicate the rule of law and to investigate violations of law and to be careful. I will say that is something that Mary Jo White very effectively imbued in us as prosecutors, right? That this is an incredible power you have. You should use it wisely, and you should be sure when you go forward, uh, you know, with charges, uh, that there's real fact that, you know, to back up your charges and your allegations. Right? Greg. [00:20:00]

Caleb Newquist: You had a question, right?

Greg Kyte: Oh, my gosh. I've got like, a million questions, right. So one of which that just came up when you started talking about you mentioned sentencing guidelines a couple of times. Um, and, and I and I'm, I'm familiar from like the bleachers with what sentencing guidelines are. Um, when, uh, are there sentencing guidelines that apply? Not because when I think about that, I think about like sentences in terms of like jail time, stuff like that. Are there also sentencing [00:20:30] guidelines for like, uh, required? Uh, like, what's the word I'm thinking about when you have to pay back the money that you stole?

Miriam Baer: Okay, so, um, you're talking about fines and restitution.

Greg Kyte: Restitution? That was the.

Miriam Baer: Word that is a little different, because that's based on the idea of here's who, uh, has been harmed, and we have a particular victim. And if you pay back this victim. So that's not really about I mean, there you would expect, uh, there would be some accounting. And then the judge just says, and you will pay x, y, z in restitution. [00:21:00] Yeah. Fines are different. Fines would have potentially. Um, and it's been a long time since I looked at anything, but, you know, fines would be something either there would be statutory fines or statutory maximum that cap fines and there might be and I'd have to look at the guidelines on fines. Now one thing there is, you know, I thought you were going to get to and I'll wait. I'll fast forward to this. But when we talk about corporations and we criminally prosecute corporations, where it gets confusing is [00:21:30] a lot of times the government doesn't actually charge the the corporate, the corporation. Right. And so what happens is they enter into this thing called a deferred prosecution agreement. Yes. And so they're you're under not the United States sentencing guidelines. You're under this other document that has been developed over the years, which are the federal principles of prosecution, which the DOJ came up with. And over time has, you know, tweaked every once in a while. And that's now part of the Justice [00:22:00] Manual that sort of says, hey, prosecutor, when you're contemplating what to do with this corporation, here are the factors you could consider.

Miriam Baer: Right. So that's its own world and that plays some role. Um, it doesn't play the same kind of role that the sentencing guidelines play. The sentencing guidelines are. You're right, by the way. They are very much keyed to how much jail time am I looking at? Right. And it is literally a grid. And the grid basically. I mean, you can see boxes [00:22:30] and all this kind of stuff. And on one part of the grid, one axis is what is your criminal history? Now, for white collar offenders, that's almost always they have almost no criminal history. Right, right. Which you would think is very good for them, obviously. Um, but when you're talking about how much time they can expect to spend in prison, a lot of that, again, there's a different table that you have to consult, which is we call the fraud loss table. So how much [00:23:00] fraud did this involve? How much loss did the. How much intended loss. Right. Because it might have been you know. And that's where especially if you're talking about a corporate accounting fraud for example, those numbers are we sometimes we say they're off the grid. That's what we mean by off the grid. They're so big that they're not in any box. You're already so much you're just looking at an insane amount of time in prison. Oh, you see what I mean?

Greg Kyte: Yeah. I thought off the grid meant that you, like, had solar panels and like, a composting toilet. [00:23:30] What it really means is that you're going to jail forever. I I've been confused for years about that.

Miriam Baer: It depends on, as they say, context.

Greg Kyte: Is everything okay?

Miriam Baer: I'm sure it still does mean composting toilets somewhere. So be careful with how you go with that.

Caleb Newquist: But so then. So then, if I may, I'm going.

Greg Kyte: I'm going to be living off the grid. That's what I'm going to tell. That's what I'm going to tell everybody when I go to jail.

Caleb Newquist: You'll you'll be, you'll, you'll be in jail until Star Trek becomes reality.

Greg Kyte: Right.

Caleb Newquist: So, um. So, yeah. So then [00:24:00] just to kind of illustrate this for the audience, that's why you could maybe have, for example, we, we one of our cases was the case of, uh, Darren Berg, who ran a Ponzi scheme in Washington state. And, um, I think it was the biggest Ponzi scheme in Washington state. But yeah, it was it was like $150 million or something.

Miriam Baer: And that's a huge amount.

Caleb Newquist: Right? That's a that's an enormous amount. And I think, Greg, do you recall I don't recall what his sentence ended up being.

Greg Kyte: It doesn't matter because he he broke out of jail.

Caleb Newquist: He did break out of jail. But [00:24:30] like but he but he he was sentenced. His sentence was you know, it wasn't a short sentence, but it wasn't like in the case of, like, the easy one is Bernard Madoff, who was sentenced to 125 years or something. I think.

Miriam Baer: 150.

Caleb Newquist: Yeah. Right. And so, like in the case, and even though those are both in both cases, just the scale of Madoff's fraud was was was a key determinant in him getting 150 years versus someone who does, like, you know, $150 [00:25:00] million. Yes. Still a lot of money, especially relative to the victims. But if I understand the sentencing guidelines, right, um, it could be like 15. It could be 15 years or 20 years or maybe 20. Well, that's where okay.

Miriam Baer: So, you know, sort of toggles back and forth for a much smaller fraud. Okay. Say just say much smaller. Say it's $1 million fraud. And Um, they're the statutory maximum. So you've got two layers. First you've got. I was charged under mail [00:25:30] fraud. And how many counts have I been charged? And so you're Bernie Madoff. That's how they got to 150. Like they just counted up all the counts and they added everything up, right? And, you know, you can charge me in multiple counts because there's the actual conspiracy to defraud. There also often is multiple defrauding. Right. And so there could be underlying activities that I can say each of these was a fraud. It's like each victim or something or each time I spoke to you to get more money, that's another fraud. But there also could be [00:26:00] I could charge you under different fraud statutes. So say I'm a doctor who defrauds Medicare or something like that. I might have both a wire fraud, but also a health care fraud. Right. And so there are these ways in which those numbers can start to look remarkably high. If we're talking about the statutory Maximum relative to what you've actually done. Okay. But but for certain defendants, it's the flip, which is, uh, [00:26:30] you stole $1 billion, and there's just nothing in the guidelines range that even comes close to getting there.

Miriam Baer: So in that case, you know, you're already off the grid. You're like, the highest that the guidelines could give you. So now the statutory maximum actually kicks in, right. In other words. Yeah. Because then it's like oh well look at the statutory maximum. I mean, in the case of Bernie Madoff and I actually said this at the time in a blog post, I said, you know, there was something about Madoff that was just so, [00:27:00] you know, it seems like almost looking back at it, like once in a lifetime, right? I mean, he ran this massive scheme for years. It was deliberate. He made tons of money off of it. Um, certainly some of his victims were wealthy, but some of them weren't. Actually. There were definitely folks, you know, who were kind of victims where you said, wow, that's horrible. He had people who were working for him and doing this for him. So he had a conspiracy. [00:27:30] And at the time of his sentencing, and I believe the judge did bring this up, he showed no real remorse. Right? I mean, I remember his statement he made at his sentencing was sort of something like, I'm sorry. I was trying to be good to my investors, which is absurd.

Miriam Baer: You know, it's absurd, right? And so and no one stood up for him either. None of his family members came forward and said, you know, my dad may have been a fraudster, but he was this really good guy in some [00:28:00] other part of his life. And that does happen in other cases. Right. Yeah. Yeah, yeah. So there was sort of it was this perfect storm so that the judge I think had to say this was terrible. And, you know, clearly it's not about incapacitation. If you give a sentence of 150 years. Right. Because quite frankly, 20 years would have incapacitated him. It's more about that is really about using the sentencing as a statement. You know, here's who [00:28:30] we are as a society or something like that. Um, you know, query whether that's good, because then what happens is every new fraud after that, someone's able to say, well, it wasn't Bernie Madoff, right? So, you know, I'm not sure that that's the right thing to do. Uh, on the other hand, I agree, um, that there was something incredibly nefarious about that Ponzi scheme because what was remarkable about it was how long it lasted and how able he was to keep it going. [00:29:00]

Greg Kyte: It just kind of a follow up question, sort of to the to the like you were saying, where it's like there's one case, but there can be multiple different frauds and multiple different charges. And just from looking at your CV, you were in the Southern District of New York like because and you even mentioned terrorism. That was one of the cases that you covered. You were there during nine over 11. You were there during all the aftermath of 911. Were you there when people were sending anthrax?

Miriam Baer: Yeah. So and [00:29:30] I should say, I never worked in the terrorism unit. I worked on, uh, so I started with General Crimes then. And this is a pretty standard thing. Then I went to the narcotics unit, and actually, that was where I learned I actually worked on two wiretaps. So I learned something about wiretaps. I learned a lot more also about how you use, um, cooperating defendants, how you interview cooperating defendants. How do you use cooperating defendants in the sense that cooperating defendants can where [00:30:00] we say wire, but we really mean they're consensually recording a conversation with someone else. That's not a wiretap. Wiretapping is when you're really tapping a phone, unbeknownst to the phone holder, that actually requires far more, uh, oversight by the judge, as it should. So I learned about search warrants. Right. So I spent a lot of time, and some of that really does carry over to more sophisticated and complicated white collar criminal law, um, investigations, including [00:30:30] money laundering. So I certainly did my share of money laundering investigations. I did bank fraud, and I certainly spent some time with health care fraud. Towards the end, so I started I did my narcotics sort of tour of narcotics, narcotics. And then I went into what at the time was called Major Crimes. I think that's now called major frauds. But it really was essentially, it could have even back then been called that. You basically when you went into Major Crimes, you spent a lot of time with different types of frauds. And that actually also was when I learned about [00:31:00] statutes like the Hobbs Act. And I learned about that before, about like, for example, bribery program bribery, that's called 18 U.S.C. 666. You guys, I'm sure, love the fact that. Yeah, 666.

Caleb Newquist: My favorite.

Miriam Baer: Yeah. So that's how the federal government is able to bring fraud and bribery claims against local officials. Because if you are a local official in charge of like, for example, a department that receives, I think it's $10,000 during the year from the federal government, which is not a lot [00:31:30] of money. Right? Um, any kind of fraud or bribery, and it doesn't have to be tied to that particular dollar. Again, the government has jurisdiction and can bring that case under 18 U.S.C. 666. So that was the kind of stuff I was doing. And, uh, yes, that was when I don't think it was anthrax, but it was whatever it was that people were supposedly sending, because I remember that suddenly everything had to go through, any kind of mail had to be X-rayed. So I don't remember what exactly it was. Maybe it was anthrax, but it was. This was when [00:32:00] we had those scares. Uh, so yes, I remember all of that. Uh, and it's interesting because in about six months later, we all were sort of in our own minds. And obviously it is not true for the people who experienced nine over 11 in a very personal way, but it is weird how your brain adjusts and I don't know, 6 or 8 months later we were all prosecuting our cases and back to sort of the everyday life of the office, which is not to take away from the fact that obviously for the folks in the terrorism unit, it was quite different. [00:32:30] Yeah, but that that certainly did happen. Um, and then I was there, you know, I left around the time where Sarbanes-Oxley I think was just, I'm trying to think had already been enacted. Yeah. Yeah.

Greg Kyte: So it was 2004 when you left. Right.

Miriam Baer: Right, right. Yeah. So it was. Yeah. Sorry.

Greg Kyte: Yeah. No, your timeline is exactly right with Sarbanes-Oxley.

Miriam Baer: Yes, yes. And so what had happened was I knew that as much as I liked being at the US Attorney's [00:33:00] office, I kind of knew from my own personality. I didn't love always being in the trenches, litigating. I actually really liked investigating, so I loved the investigating Getting part. I also had had a little bit of. It was the first time my final year there, I started to do some of these corporate prosecutions, so I had a sense of the policy issues there, and I suddenly was sort of interested in policy. Um, and so, you know, when you've been at the US Attorney's office [00:33:30] for 4 or 5 years, you start to get calls from recruiters. And I found myself interested in going in-house, and I noticed and it was several companies. Um, so it wasn't just the one I went to were looking for former prosecutors to staff up their compliance departments. Right. And often they were looking for lawyers. So it depended, you know, some it was standalone compliance. For the most part, it was you were going to working at least at the time when I was interviewing, you were going to be working in the general counsel's office. [00:34:00] But you sort of your specialty was going to be compliance. And that's how I ended up at Verizon. My boss, Alexandra Ruby, was also a former prosecutor from the U.S. Attorney's office, she actually had been a terrorism prosecutor, but she was a compliance person. And we were really this it was sort of an exciting time to jump in to compliance. I'm sure it's always exciting time to jump into compliance. It was.

Greg Kyte: Exciting. I don't think that sense has ever been said [00:34:30] out loud. Ever. So an exciting time in compliance.

Caleb Newquist: No I know. I've known a lot of compliance people over the years, and they they like it.

Miriam Baer: I liked it. I loved it. And, you know, we worked on. And so this is going to sound to you. Um, you know, we worked on the code of conduct, right? Our code of business conduct day. And should it be super granular? Should it be, you know, there were all these interesting questions. And to me, open toed shoes.

Greg Kyte: With or without stockings.

Miriam Baer: It's important. [00:35:00] Yeah. But it was you know what? It was collaborative. It was interesting. It was interesting because it appealed to someone like me who was who is interested in language, and for me, it ended up being a wonderful bridge to me, thinking about eventually going into. And you can see, obviously, given what I'm telling you, right? I thought it was really interesting to work on a code of conduct, which meant that maybe I should be thinking about teaching. There you go. Right. Because it appealed to me in that way. Um, the only negative I can say about working for [00:35:30] a company is, you know, unlike the US Attorney's office, which will never move because it is the US Attorney's office for the Southern District of New York. And when you work for a big company, the big company can move. Yeah. And so not long after I got there, uh, Verizon moved a big chunk of its corporate headquarters out to, uh, new Jersey. And that was not really. And it wasn't meant to be. It was not an easily commutable distance to Manhattan. And so that was sort of [00:36:00] and my husband and I were having this conversation and I said, well, if we do this, we're going to have to move to somewhere like summit or some city in in new Jersey where we'd have to sort of be half and half. And, uh, he said to me, well, is this your forever job? Because, like in other words, his feeling was, if we're going to move, he wanted to make sure this was something I wanted to do for a really long time.

Miriam Baer: And without even thinking, I said, now, the only job I'd ever really make you move for is is academia. And he said, oh, well, why don't you do that? And [00:36:30] I said, yeah, I took a little time off. And then I went to NYU in what was called their lawyering program, learned how to teach, taught what was called a first year lawyering, which is kind of like that first year, I don't want to say legal writing, that's some of it. But you also learn a lot about the strategy involved in being a lawyer. Um, and then eventually, after two years there, I came to Brooklyn, where I have now been here since 2008. So I came to Brooklyn, which is a nice story. Um, literally, that was, [00:37:00] I guess, the fall of 2008, and I think it was October. I remember saying to my husband, hey, whatever evening it was, I said, what's going on with. I guess it's right. Lehman brothers. Oh, yeah. Yeah. And I remember him saying, oh, they'll figure something out. And I and I think I went to the supermarket or something. I came back and he said, oh my God. Yeah. Yeah. And that was pretty much. And that was, uh, a pretty, uh, major, uh, just change, uh, you know, just start a new job in that situation. [00:37:30]

Caleb Newquist: So this is a great place, uh, to break in because I wanted to ask you something before. We're going to definitely ask you about your book, because we're. Greg and I are both, uh, very.

Greg Kyte: Intrigued.

Caleb Newquist: And intrigued by the subject matter. Um, but before we get to that, I wanted to ask you, during your time at the Southern District, one of the things that comes up on our show a lot is, uh, you know, why certain? Uh, [00:38:00] why why either a person gets charged or a company gets charged with a crime versus not getting charged with a crime. And I think, you know, I think 2008, I think the financial crisis during that time, I think a lot of people continue to debate whether or not criminal charges were, uh, appropriate. Yeah. Appropriate or called for, uh, at that time. But ultimately it was it was mostly just civil actions, to the best of my recollection. But in any case. But then you have things like Elizabeth Holmes [00:38:30] and and Sam Bankman freed and and just some and those are just recent examples. But I'm just curious if what can you share with us that helps? Maybe just average folks understand why prosecutors say, yep, that's we're going after those people. We don't care how rich they are. We don't care who they work for. They're we're going for it. Right. Um, versus, uh, nope. Uh, we don't have the case or. Yeah. What are the factors that are that goes into those decisions?

Miriam Baer: I think [00:39:00] what I would urge everyone and remind everyone, and I do have a nice chapter in the book. Chapter five that really talks about some of this is I think there's a tendency to look at the scope of the harm. You know, in the public and in the press. And so someone says, well, he caused all that horrible harm. Why aren't you prosecuting him? Or he caused that all that harm, and he's really rich and got wealthy. Why aren't you prosecuting him? And the answer is well, because. [00:39:30] So two possible answers. One answer is, well, I'm bound by the statute, right? And criminal statutes aren't just based on you caused harm. Right? There has to be, um, if you look at certain statutes, there's some sort of what we call the actus reus, right? There's some kind of activity. Right? So there was a scheme to defraud. Um, so that's number one. Number two is how easily can I prove your what we call mens rea? Did [00:40:00] you intend this. So being a world class jerk is not criminal. The same thing as violating the mail fraud statute or the wire fraud statute. And that's where.

Greg Kyte: There's no anti asshole legislation.

Miriam Baer: Um, I will leave that. Yeah. Okay. Um, okay. Yeah. Yeah, yeah. Anyway, um, so, so so, you know what? We don't. Here, I'll. I'll take you on on that one. We don't want that. Um, I don't want a statute that says we shall put blank [00:40:30] holes in prison because we're worried about how broadly that could be interpreted. I don't want someone interpreting that. I'm a blank hole and I go to prison. So instead, we look at my activities. And that's why we ask, Did Miriam defraud someone? Was there intentional scheme to defraud? And we particularly do want that in the sense that we don't want to punish people simply because they did something stupid or risky, because there are a whole bunch of people doing lots of stupid or risky things, and you don't want to necessarily leave that up that up to [00:41:00] prosecutors to say which stupid or risky person shall be criminally prosecuted, because that could turn into, especially now, today, in a very polarized world, a rather bad outcome. So all of that is to say, hey, we've got statutes and we have to abide by those statutes. Now, what I talk about in the book is I actually think, though, there's really two kinds of thresholds that most prosecutors are dealing with.

Miriam Baer: One which is well known and one which isn't as well known. So the well known one is, hey, do we have the [00:41:30] statute? What are the elements? And that's the kind of thing, like someone like me goes to law school to to learn or to teach. And you could open up a case book. And if you wanted to know. Okay, what do I have to prove for a wire fraud case? Have I got, you know, misrepresentation or. I've got some material misrepresentation? Do I have a use of the wires? Like all that kind of stuff? Yeah. In reality, though, there's that. And I call that the threshold of liability. Okay. Now, lots of people in people in this world, and especially [00:42:00] in the corporate world, have crossed that threshold at various points of their lives for both really bad crimes and lesser crimes, but would still count as crimes if all facts were known. We'd all say, yeah, yeah, that's a federal crime, right? Um, but there's the threshold of liability. And then there's this other threshold, which is when does the prosecutor feel she has a viable case? And that's what I call the threshold of viability. [00:42:30] Okay, so I know I'm getting wonky here, but.

Greg Kyte: No, we're with it. Okay.

Miriam Baer: My whole theory is if you had these two lines that, you know, especially what happened with the financial crisis, as, yeah, there were folks who had passed the threshold of a liability, but the prosecutors weren't sure they were over the threshold of viability. And then on top of that, now stay with me. This is fun. Um, no, it's really good.

Greg Kyte: Yeah. It is. You've got it. You fish in a barrel with us. [00:43:00] We're here.

Miriam Baer: Yeah. Okay, so remember, you have these sort of two prototypes or. Okay. So when I ask you, is this a fraud case or is there a fraud or. I'm asking a prosecutor, have we met? You know, do we have enough here? We know from. So the book borrows a lot from the linguistics literature. So if I ask you, is this a chair? Okay. You could in your mind say, oh, what's a chair? A chair is this thing with, like, a bench and a back and it has four legs. Right. That's how we would, you know, if you [00:43:30] wanted to sort of define a chair, you define it. That's not actually how you think of a chair. You think of a chair as you have a prototype in your head of what a chair is. And then if I show you a bench or a couch or one of those cute stools you can buy from Williams-Sonoma. And I ask, is that a chair? Your brain is asking, how much does that pouf from Williams-Sonoma differ from my prototype? So if we think in prototypes. What I'm trying to say is I think prosecutors like other humans, they think in [00:44:00] prototypes. And when someone says, is this a fraud case? Is it a viable fraud case? They think in their minds about what most recently was viable, right. And what was most recently viable. And in their heads. In 2008 were the cases they had 1 in 2001, 2002. And those cases were these accounting frauds, where there was somebody like a whistleblower and who had been saying, hey, we're defrauding people.

Miriam Baer: And then like, there was retaliation, like, [00:44:30] hey, I got fired after saying that. And you had like, you know, you had like real you had these things that other people have talked about, like great evidence of fraud. Right? Yeah. And you had people saying, yeah, let's call the number X when it's really Y, and when you have evidence like that and that now sticks in your head, oh that worked. That goes into your calculation of what's part of the prototype. On top of that, you have that very early case [00:45:00] that the government brings against the two Bear Stearns hedge fund managers, where this is about whether they defrauded their investors as the market was falling. Right. And the problem is you didn't they didn't testify against each other. So you didn't have some internal insider who comes forward. You didn't have them on a wiretap. You didn't have the voicemails. Right. So you didn't have any of that. And I think one of them may have even lost some of their [00:45:30] own money. But but the bigger issue was you had emails that at least a good, talented attorney could say, well, there's some ambiguity here. And this goes back to the point that, no, the mail and wire and securities fraud aren't there to punish people who are misguided or even just who are sort of generally reckless people like reckless personalities. The idea is you got to show a scheme to defraud. And so I'm saying, as prosecutors were looking for the prototype, when they didn't find [00:46:00] the prototype, then they dug in their heels and said, hey, I just don't have enough evidence now.

Miriam Baer: That was bad, because then you had all of these outsiders who also had lost a lot of money, and they understandably came to the conclusion in their minds, it's just the government is corrupt. It's just one set of elites covering another set of elites. So it's terrible. You know, and think what people don't realize. It was really terrible for the Department of [00:46:30] Justice, right? It was bad for the Department of Justice. And that's why, by the way, when they do find and happen upon one of those cases where they do find that kind of evidence and that person is rich. That's why I think they actually do like to make a big point of saying, but but look, hey, we're not Totally captured. We're not in the pockets of the rich. We brought this case against Sam Bankman-Fried. We brought this case against Elizabeth Holmes. But notice [00:47:00] those cases. You have cooperators, right? And you have also. They were very much benefited. Both Elizabeth Holmes and Sam Bankman-Fried were the kinds of defendants where if you're the lawyer, it's kind of that bare knuckle moment because they constantly talk all the time. Yeah. And when you constantly talk all the time, eventually you say things that are inconsistent. And so that kind of, um, behavior of trying to mislead people starts to shine through. And, [00:47:30] and I think that's where. So it's really interesting. Right. Why does the government, you know, aggressively pursue some wealthy fraudsters? Because when they have the evidence, they actually want to show the world, hey, we're the good guys.

Greg Kyte: Right. Gotcha. So, yeah, if you're a wealthy fraudster, uh, just taking notes. Keep your damn mouth shut. Gotcha. Understood? Yeah.

Caleb Newquist: I think it is.

Miriam Baer: Fair to say you cannot. I mean, I think I will say, I think [00:48:00] it is remarkable that there are some folks out there that think they can talk their way out of a fraud. Um, and that that that that is interesting to me.

Greg Kyte: Yeah. Right. So, like, it makes sense within the context where we're saying is you try to talk yourself out of the fraud and you're and and probably the person who's taking your testimony is going, yeah, keep going, keep trying. Because. Yeah. Yeah. Is that it?

Caleb Newquist: Yeah.

Greg Kyte: Yeah. I love that.

Caleb Newquist: Uh, Greg. Greg's got some great questions about the book, so, uh. [00:48:30] Greg. Fire away. Okay.

Greg Kyte: So, yeah. So I, I can't say I've read your book cover to cover. I read everything that was the free sample on Amazon. So, uh, so I'm, I'm like, I'm super. I'm super prepared for this. Um, but one of the things, one of the things that I did see in that sample is, is that you said that there were ways in which our white collar statutes fail us as a society. Um, and, and so I'm wondering, like, [00:49:00] in what ways do they fail us as a society? In what ways are white collar statutes confusing or misleading and with what ways? And this is very this was very interesting. In what ways do they generate pro? Do they fail to generate pro-social norms because you you touched on all that and I'm, I'm tell me everything.

Miriam Baer: So we normally think of criminal law again as there's this thing happening, the prosecutor brings a case and then, uh, you know, the defendant ends up in again, I'm going to [00:49:30] end up with jail. And we think of I think the jail outcome is whatever good or bad is coming out of it. It's all about, you know, the person has been acted upon, they're in jail, and that's deterring others in some form of retribution. And that also it's incapacitating that person like Bernie Madoff. And what I want to say is actually the statutes that themselves that we actually use, like the fancy gobbledygook that's in the actual charging document matters. The language matters because. And [00:50:00] so this is my point about failing us. It conveys information. It matters how many frauds we prosecuted last year. And it matters that we know as much granular information as possible. Now the government collects all sorts of information. So that's not I'm not saying the government isn't collecting information, but our statutes actually make it harder for the government to collect information in a way that tells us something both about what's going on on the ground and what our government is actually doing [00:50:30] in response to what's going on in the ground. So I start off in chapter two. In chapter one starts off by saying, hey, there's this big debate. Are we over criminalized or under enforced? Right. And, you know, you can find plenty of people who say both. And then chapter two really dives into this point, which is, first of all, even if you wanted to know how much fraud was there last year, write the word fraud has different meanings.

Miriam Baer: So if you look at some of, you know, the accounting [00:51:00] finance people and the way they estimate it, they're not looking at criminal fraud, they're just looking at fraud. That's a big difference, right? So just that alone is an issue, which is we don't use the same language. We don't use the same dictionary, if you will. It's not interoperable. And on top of that, we have these issues with the ways in which we count up how many incidents there were, how many charges there were, which was the lead charge. And then even the sentencing. All [00:51:30] of these different agencies are using slightly different material definitions and even databases, right. So a we're not collecting we're collecting lots of information, but it's unusable right. On top of that when we then you know, and this is my point, is the statutes themselves are confusing us. So we have a series. And so at the end of the book, so, you know, all these there's all these various things that the book then goes through of what's wrong with our statutes. So one thing I talk about is our fraud [00:52:00] statutes, for example, are flat. Okay. And what I mean by that is they don't have gradation. So homicide I can look up in New York State if I wanted to and figure out how many first degree murders were there, as opposed to second degree murders as opposed to manslaughter type cases or whatever.

Miriam Baer: Yeah, I if I look up fraud, it's just all falling under the fraud umbrella of mail fraud or wire fraud. And it really doesn't matter that you were charged a mail fraud and I was charged in wire fraud from a moral valence. It just means you use the mails and I use [00:52:30] the wires, right? Right. And in fact, today sometimes people we charge them both because you use a little bit of both right. Yeah. So yeah that's not telling you anything. And again I could look at the sentencing guidelines but that's a whole different set of materials. So they're alone. The statutes aren't providing information. Okay. The statutes are sort of hiding something. Okay. And I don't mean the government set out to do that. I'm just saying, because of the way we wrote these statutes, they are not transparently conveying information in an efficient way. Another way that we have [00:53:00] these issues is we have what I call bundled statutes. So there is a statute called the Hobbs Act. Now, the Hobbs Act really came about more in response to organized crime. And so it's intended for interstate robberies. So if when I say the interstate robberies, I mean, like that could also include any robbery affecting interstate in or affecting interstate commerce, which means if you rob a 7-Eleven, that's a Hobbs Act robbery that can be charged as a federal statute. Now, here's [00:53:30] what's crazy.

Greg Kyte: About the wait, but but why? Why is that? Because there's 7-Eleven in multiple states.

Miriam Baer: Because 7-Eleven gets all of its food. You know, 7-Eleven is bringing in food and money. Yep yep yep. I mean so that's an example. But that's just to the side. But here's the thing about Hobbs act robbery. The Hobbs Act in that same statute and it's a very short statute, punishes robbery, interstate extortion, but it also punishes this thing called bribery under, you know, extortion under color of official [00:54:00] right, which is essentially bribery, accepting bribes as a local person. Now, that's very different from robbery.

Greg Kyte: Right?

Miriam Baer: It's all under the same statute. Yeah. Okay. Um, and so that's an example to me of when you bundle like that, you are raising the likelihood that that won't all get teased out and properly recorded. So one thing I want to do is unbundle.

Greg Kyte: Okay.

Miriam Baer: Then I want to do is with these statutes like mail and wire fraud, I want [00:54:30] gradations at least some. You could have aggravated fraud, mail fraud, even, you know, misdemeanor fraud. Right? You don't have to have 15 gradations. That's not good. But you could have some gradation, right? And then I also call for some degree of like consolidation. I don't think it's good to have 19 different types of obstruction statutes. Okay. Or, you know, 19 different types of fraud statutes. And I think all of this would do when I say fail us is we have this world. And actually, Stephanos [00:55:00] Bibas, who is a judge on the Third Circuit in Philadelphia, wrote years ago when he was a law professor about this problem, which is we have insiders and outsiders in federal criminal law, and the insiders are the defense attorneys who know this stuff really well. The prosecutors, even some defendants out there who really know the system well, people who know the system well. Judges. Right. We sort of know what the words mean, but the rest of the world sort of looks out and says, what? What? [00:55:30] What's that? And that's not you have.

Caleb Newquist: To hire a lawyer to figure out what the words mean.

Miriam Baer: Right. And that that's not okay. So well, that's good for lawyers but that's not good for society. And it leads to this level of, um, people feeling estranged from the system and feeling like this system is rigged. This system is just government elites, you know, covering, and we can't really trust them. And so that's when I say the statutes are failing us. They're failing us because they're not providing information. [00:56:00] And when statutes fail to provide information that, you know, and this is my general view, is the criminal law system, the federal criminal law system has an information producing mission apart from its mission of reducing crime, deterring crime, incapacitating crime. The system itself should produce information because we are the ones in charge. If we, as you know, voters and whatnot, and we can't do that job if the system [00:56:30] doesn't give us information or information that we could get at.

Greg Kyte: So so with that is then so So you mentioned the whole, uh, what did you say over, uh, over enforced and under enforced.

Miriam Baer: Criminal, over criminalization and under enforcement. We've got these two arguments going on at the same time.

Greg Kyte: So is your are you saying that the whole when we get to the information side of everything that you're just talking about is really what you're saying is the over overcriminalization and [00:57:00] under enforcement is that is that are you saying that's a perceived reality, or are you saying that's actually what's happening? Because I guess if we were able to have accurate information and we were able to have different gradations of of crimes that aren't degraded, I don't know, uh, or it's.

Caleb Newquist: Kind of one size.

Miriam Baer: Fits all. Yeah. Right.

Greg Kyte: Yeah. But but if so, if the information was perfectly, uh, categorized and perfectly, uh. Yeah.

Miriam Baer: Perfectly organized information, [00:57:30] would we say, which one would we say?

Greg Kyte: Well, then would we say it's not over criminalized. It's not under-enforced.

Miriam Baer: I believe I have a sentence in here and I'd have to find it where I say look. The story may be really bad. It probably still is bad, but it's probably bad in ways that we think are different in how it's bad. So if that makes sense. In other words, just if we had perfect information. No, I'm not saying we would say, oh, this federal criminal system is fantastic and it's all good. Okay. No, I'm not saying that. But I am [00:58:00] saying if you want to have a better understanding of where the problems are and how you fix them, you need better information. And one thing the book is trying to say is, hey, I'm not in any way saying the world is perfect. It certainly isn't. But one thing the book says is I really am pushing against in the book already is, you know, it came out in 2023, but really, you write it, you know, I wrote it in 21 and 22. I was trying to push back against what I perceived as a sort of politicization and sort of sound [00:58:30] bite, you know, like all these sound bites I think are really unhelpful for policy and reform, making, you know, reform. Absolutely. And so it is a wonky book trying to say, please, um, let's not get into these sound bites and, hey, these statutes, if we fix them or tried fixing them, maybe we can start thinking in a more, you know, problem solving orientation instead of just saying prosecutors are evil and they're all really rich and just want to help the rich [00:59:00] guys that I don't think leads to anything.

Greg Kyte: Okay. So real quick note, real quick note to Zach, our editor. Would you please cut that out as a sound bite? We can use that. All prosecutors are. We're just gonna. No, no. Okay, okay. So. So real quick. I know we're running a little late on time, but I'm interested. Do you have, like, what's a very poignant story about, uh, overcriminalization. And also just flip side of that, do you have a poignant story [00:59:30] of, uh, Under enforcement that you could that just to kind of illustrate your point that comes from your best selling book, uh, Myths and Misunderstanding of White Collar Crime, available now through Cambridge University Press and Amazon.

Miriam Baer: And I should say, I don't know that best selling is I don't wish to engage in wire fraud. If I tell you, you, dear audience, can make it bestselling. Yes, I think it was. It was soon to.

Greg Kyte: Be best.

Miriam Baer: Selling, soon to be. I think it was best selling like the day it came out and [01:00:00] my mom bought 20 copies, so that was nice. Excellent, excellent. Okay, so, um, you know, in terms of examples or things that make me think, um, you know, I sort of go through this. It was interesting. Um, it's not poignant, but I go over the Varsity Blues case, um, with my students. Um, and it's always interesting because over time I see different reactions to it. So Varsity Blues, of course, are these parents who lied [01:00:30] to get their kids. You know, who engaged in different behaviors to help get their kids into college. And I think, you know, there's no question all of it's horrible. Um, but one of the interesting things, because of how you charge fraud, right. And who's defrauding whom was the parents are the ones mostly the parents, you know, who got in trouble, you know, and then they ended up with different degrees of punishment depending on, on what happened [01:01:00] and, and whatnot. But the institutions that were not, for the most part punished, um, were the universities. Right? And they were played off as the victims almost to a t, my students found that, um, there was a problem with that, right? That the way the government had to package its story, you know, made it seem like these universities were victims.

Miriam Baer: And the idea was, [01:01:30] yeah, come on, you kind of know this has been going on all along. And to some degree, um, maybe you benefit. And that said to me that whatever way you should deal with this type of behavior, which of course is terrible. Um, it wasn't clear to me that criminal law was doing anything to really fix it. So that is an example of I don't know if it's over criminalization, because I certainly think what the parents did was wrong, but it is an example of relying on criminal law to to fix a social [01:02:00] problem in a way that I don't think is really useful. Like, you know, there were issues there with students and how they are applying for these, for example, these scholarships, you know, remember, some of it was the portraying someone as an athlete when they're not really an athlete. And then they, you know, they were, you know, bribing the coaches. And, you know, to the extent there were deep social issues there. Criminal law didn't fix it. Right. And so that's an example to me of it's not over criminalization, but it's an example of [01:02:30] over reliance on criminal law to fix social problems that need other approaches.

Miriam Baer: And whatever it is, it's not coming from criminal law. And, you know, so that's an over reliance on under stuff. Um, and you know, look, I think what is interesting and the information that's come out after the financial crisis and look, I'm not the accounting experts you are, but I have seen some of the work, um, by um, I think it's Piskorski, Saru and Witkin, [01:03:00] which is they have a paper from 2015 where they were able to figure out, you know, that one of the big problem in the mortgage backed securities market was, I guess there was misrepresentations at some point in those markets on who had second liens. Right? So in other words, you're more likely to go, I guess, belly up, right, if there's a second lien, right? Yeah. And that that information wasn't getting out to I to, I guess, investors if I'm understanding this correctly, but somehow. [01:03:30] Intermediaries in the market weren't bringing that that information to the fore. Now that's an example of you might say, oh, if someone purposely hid that information. Yeah that's fraud. But what was interesting to me is when does that paper come out? It's like I'm talking about a paper that I saw. It came out in 2015. Right. Little late.

Greg Kyte: Little, little on the tardy.

Miriam Baer: Side. Yeah. And they did it by looking at, um, you know, these different databases and then matching. So it sounded like it must have taken hours to match [01:04:00] to try to figure out where the second liens were and why they weren't even actually being exposed. Why do I bring all that up? Because I don't think a prosecutor's office is going to catch that again. And, you know, Jack Coffey at Columbia, who's another professor you should certainly look up. Um, he's written about this in his book on corporate crime that, you know, that the idea of, you know, young prosecutors as generalists, you know, aren't going to really catch this. Right. But so that does go to you know, that [01:04:30] is an example of under enforcement. Now again though, you might say sure. That's why you can't criminally prosecute it on the back end or won't be able to criminally prosecute it on the back end very easily. But that does go to the idea of under enforcement also reflects the idea that we're not regulating enough, right? If we're doing a better job of regulating, we should be doing a better job of getting more information at the front end.

Miriam Baer: So I'm a big fan of of front end regulation and figuring out what kind of information you would have wanted. Now that I leave to my finance [01:05:00] friends, they they're the ones who I would expect to fix these things, at least by saying, here's what better regulation you need. But, you know, I thought that was really interesting when when that paper came out, um, and then I again, I'm not an accounting expert, but what I could understand of it, I thought there was no way, you know, a prosecutor's office even throwing tons of prosecutors at this. I don't know, they would have been able to find all this, right? And do it in [01:05:30] a way that they could boil it down. Maybe I'm wrong, but I think that's again, another reason why you wouldn't see those kinds of cases in the aftermath of the financial crisis. Whereas, yes, you know, cases where someone literally is lying and then, you know, firing the whistleblower, which is about as obvious as you can be. Yeah, we'll see more of those in the future.

Greg Kyte: Right. But so is that is that a is that a problem that is [01:06:00] even possibly surmountable? Because I've got to think that this just with this case about the paper that came out seven years after the financial crisis began. Um, so many people are like, oh, that financial. That was horrible. Let's study that. Let's try to. So so you've got I mean, I'm sure there's even a I mean, I guess I'm assuming that there's a statute of limitations that probably came into play, things like that. And you've got this, but you've got academia where you're at now looking at going, oh, that there's some there's got to be some lessons [01:06:30] learned there. And you unpack that over many, many years. And finally you go, oh, we found the lesson. And then like you said, it's already been prosecuted or a statute of limitations have passed or.

Miriam Baer: Something, even if you had found that. By the way, when we talk about human beings, um, so, uh, you know, this, this story of Leon's, would we have found that the CEO was aware of it? Right? Probably not. Right? Probably not. Right. Yeah. And so, again, you know, the [01:07:00] the public hungers for the very top person to fall. Right? They don't want to hear that. You got mister mid-level dude. Right, right. You know, um, a.

Caleb Newquist: Regional controller right in, in little Rock, Arkansas.

Greg Kyte: And that might fall into your overcriminalization thing, right? At least in perception, where it's like the CEO should have gone to jail, but instead the the mid-level guy who was writing the email was went to jail.

Miriam Baer: And everybody who he can prove now, the mid-level guy, [01:07:30] if he really was taking, you know, orders from the CEO, you would hope then he could say, well, hey, look, it's the email. I was taking orders. But if it's just know I did that because I kind of thought that's what I was supposed to do. Right. Right. Yeah. That's not the same thing. Um, and that goes to a different issue, which is there is this sort of class element to how we perceive whether or not the government's done a good job. Right. When it's a high class person, we think, oh, good, you got [01:08:00] the bad guy. When it's someone who's not high class. But still we have the activity. I think we feel a greater strains. You know, we feel more uncomfortable. Right. Right now, to a certain degree, corporate criminal liability is supposed to make us feel a little better about that. That's why you go after the corporation as a whole. Hole, right? Yeah, but I don't know. I mean, I don't think the fact, you know, um. I don't know that if there had been a actual, you know, criminal prosecution of [01:08:30] Lehman as Lehman, it was defunct anyway, like there was nothing. Exactly.

Greg Kyte: Yeah. Yeah. Well, we we even we just talked to another litigator. Same kind of thing with, with Enron where it was like. Or Arthur. It was Arthur. Was it Arthur Andersen?

Miriam Baer: Andersen went belly up. Yeah, it was.

Greg Kyte: It was Arthur Andersen. So it's like we have a sweet case against Arthur Andersen, but they don't exist anymore, so who cares?

Caleb Newquist: Well, no, it was what.

Miriam Baer: It was is they caused that. But Enron did die. Right.

Greg Kyte: Yes. Yeah.

Caleb Newquist: For in the Andersen case, it was, um, when it got overturned by the Supreme [01:09:00] Court, there was nothing left. There was nothing left. So it's like you can't bring Andersen back from the dead. Even if the Supreme Court said 9 to 0. Right, right.

Miriam Baer: You interpreted the statute wrong. I mean, that was really a very technical interpretation of statute. Yeah, yeah.

Caleb Newquist: Um, Greg, do you have any other questions? I know we're getting close on time.

Greg Kyte: Oh, I've got, I've got a couple like real zingers here to. End to end with. Uh. So first off, uh, what's your favorite steakhouse in New York City? I need to know.

Miriam Baer: Oh. Oh, actually [01:09:30] it's nearby. Um, wait, but if I tell you, then everybody will go.

Greg Kyte: Oh, okay. We'll just whisper it into your microphone.

Miriam Baer: Okay. Very fine. Um, uh, you know, uh, well, I really like. Cheddar cheese, which is not really a true steakhouse, but it's like a nearby, like, kind of. It has that saloon. Feel. And. Yeah. And you can get, like, you know. So, uh, that that is my favorite restaurant.

Greg Kyte: Say the name. Of cheese. Yeah.

Miriam Baer: C e c c h I apostrophe s.

Greg Kyte: Okay. Uh, any thoughts on Keens [01:10:00] Steakhouse?

Miriam Baer: I have not been there in a long, long time.

Greg Kyte: But you have been.

Miriam Baer: I think I have, yes.

Greg Kyte: I went when I was on a trip, uh, b, uh, after Covid, when Covid was receding, but before the Delta variant. I was in New York with my daughter, so restaurants were actually open for open for just a minute. We went to Keynes, had the best meal of our lives. And then the two times I've been back to New York City since then. Just have not been able to get in.

Miriam Baer: But you didn't get Covid from going to the restaurant, so I didn't.

Greg Kyte: I didn't yep. Uh, next question. You [01:10:30] grew up in Long Island. Can you lay on us a just a sweet, thick, Long Island accent?

Miriam Baer: Oh, okay. I mean, talk.

Greg Kyte: Talk, talk. Yeah. Yeah. Well, you talked about this guy named Coffey, who was another professor.

Miriam Baer: I can't say Jack Coffey's name under the Long Island. I will not do that.

Greg Kyte: Okay? It was a stretch. It's not. Yeah. Okay. But. Yeah. So those are my real must, must ask questions. Okay. Uh, Caleb, anything you ask.

Caleb Newquist: My final [01:11:00] question that I like to ask people is, uh, what still surprises you about this field?

Miriam Baer: Oh, I don't know that things do surprise me. Um, I think what surprises me is sometimes about how the perception of someone changes and how we do. We do change our perceptions of the crime. And the person I'm thinking of a little bit is I'm sort of feeling and again, when I say we, I'm looking at the public. I may be wrong about this, but I feel like the SPF [01:11:30] public perception may have changed just a little bit.

Caleb Newquist: Sam Bankman-Fried yeah, yeah.

Miriam Baer: Yeah. I'm wondering if there's a little bit of a change there in a reassessment.

Miriam Baer: I'm not sure.

Greg Kyte: Yeah. And there's been a bit of a I mean, you know, the public perception of Luigi Mangione hasn't changed. He's still got sweet abs and.

Miriam Baer: I will not I think it's terrible what he did if he again as alleged what he is alleged to have done I think is terrible and I so I will use this to go on a rant and say that is not the way we we [01:12:00] survive or improve our world.

Greg Kyte: But he's got a nice anyway. Okay, agreed.

Miriam Baer: I'm not going to go there.

Greg Kyte: I'm not and I'm not going to disagree with you either.

Miriam Baer: Yeah, it's a pretty awful I feel For. I feel for, uh, terrible for the CEO and his family. I mean, the CEO and his family. Yeah, but I also feel it seems like this is heading towards. It's also a very sad story. If, in fact, Mr. Mangione had some sort of a mental break. It's a very [01:12:30] sad story for his family as well.

Caleb Newquist: Yeah.

Caleb Newquist: For sure.

Miriam Baer: Yeah.

Greg Kyte: Okay, so back to the note. Keep your damn mouth shut, I just.

Caleb Newquist: Oh, man. Uh, Miriam, this was so fun. I hope you had fun.

Miriam Baer: I did have fun, I did good. Thanks, guys.

Miriam Baer: Thank you. You asked really great. It was really fun.

Caleb Newquist: Good. Good.

Miriam Baer: Thank you.

Greg Kyte: Wonderful meeting you.

Caleb Newquist: There you go. Uh, that was Greg and I with Miriam Bear. [01:13:00] Uh, Greg, we learned a lot. I'm curious if there's something top of mind for you that you learned from our conversation.

Greg Kyte: Yeah. Uh, well, first off, there's a steakhouse that I have to try.

Caleb Newquist: Oh, yeah.

Greg Kyte: Right. But I but I already forgot the name of it. So I have.

Caleb Newquist: Chichis.

Greg Kyte: Right? Chichi. Chichi. Chichi. Chichi. Cc's. Coochie. Yeah. Well, a Google search or a close listen.

Caleb Newquist: I have the answer machine in my hand.

Greg Kyte: There you go. Well, uh. But but no, um, Miriam was just [01:13:30] a a fascinating guest. I think the things that I learned was, again, just how, uh, the whole concept of overcriminalization and underenforcement and how those two things, like, I mean, a what they are, I was not those were two concepts. I was not I mean, obviously not that I hadn't thought of them, but, uh, delving into them with her and that being a main topic of her book, uh, that that was very interesting. And how [01:14:00] they even play into each other, uh, where Overcriminalization and Underenforcement are almost like yin and yang, uh, where if you're if you're not, if you're not taking out the the the big public bad guys and the only people you can have a case against and have any justice serve as some little guy, that's not satisfying to public perception. Then then yeah, you've got you've got a problem with the overcriminalization and under enforcement.

Caleb Newquist: Yep. Yep. [01:14:30] And I think for me, I think when, when she got into kind of the nuances of how they decide to prosecute a case and I think the, the financial crisis era. Yeah. Yeah. Um, that, that stuff I think is, is very illuminating. Like, it just it does it does help explain why ultimately, at least the biggest of the big fish were never prosecuted. Yeah. And why? Um, and and why that's so unsatisfying for for all of us. Um, and and so that that makes a [01:15:00] lot of sense. And, gosh, um, I don't know if we got a semester's worth of law school out of that conversation, but it feels like we've got maybe you know, we got we got we got some free law education there, Greg.

Greg Kyte: We did. Well, it was also it was also interesting, uh, that what she said about how when everything happened with the financial crisis of 2008, it was kind of like one of the things I learned was, oh, uh, lawyers and litigators are human beings. Yeah. Where it was like, oh, well, when we did this before, it was just [01:15:30] it was served up fresh and hot for us. You know, the last time this happened, we didn't have, you know, it was like this, but this time it's very different and we don't know what the hell to do. And and to me, I'd be like, yeah, you do your lawyers, but it's like, oh, you don't. Because we all have limited experience and we use our we use our past experience to inform our present circumstances. And that's that. That was I thought that was very interesting nuance to throw into kind of what everyone feels about how, [01:16:00] uh, the 2008 financial crisis feels like it was bungled in a justice kind of way.

Caleb Newquist: Right? Yep. Um, I want to make sure, uh, we we plug her book. I don't think we said it in the intro, but Miriam's book is Myths and Misunderstandings in White Collar Crime. And you can get it wherever you get books.

Greg Kyte: Um, it's a it's a soon to be bestseller.

Caleb Newquist: Yeah. I'm kind of interested to read it, to be honest. Yeah, I mean, absolutely. Like, it's, uh. She said [01:16:30] it's wonky. And I actually could probably go for some, uh, white collar wonk.

Greg Kyte: It is wonky. Uh, I'm convinced of that. And clearly she has a proclivity for wonkiness. But also just in the little like snippets that I read preparing for the episode, there are some very, very interesting, uh, unknown stories in there, especially some of the little stories that that I read, you know, condensed stories about the, uh, overcriminalization side of things. Just. [01:17:00] Yeah, like like a, like a fisherman who, uh, who was charged on obstruction of Of justice because he tossed a fish overboard.

Caleb Newquist: Oh that's.

Greg Kyte: Fantastic. So, just a teaser.

Caleb Newquist: I like it, I like it that. See that? See, that should be a blurb on her book jacket.

Greg Kyte: I was hoping, honestly, when I was fishing for, for, for for poignant stories, I was in my mind, I was rooting for the fish story. So. But now you have to buy the book to get.

Caleb Newquist: To buy the story.

Greg Kyte: Sorry. [01:17:30]

Caleb Newquist: All right.

Greg Kyte: Okay, that's it for this episode, remember? Soren Kierkegaard was not a famous Polish politician. He was, in fact, Ted Cruz's campaign manager in 2016.

Caleb Newquist: And also remember, 18 U.S.C. 666 is a Criminal Code section for theft and bribery, not Satan's Social Security number.

Greg Kyte: If you want to drop us a line, send us an email at omnifrog@earmark.com. Caleb, where can people find you out there on the internet?

Caleb Newquist: They can find me on LinkedIn. [01:18:00] Caleb Newquist. Greg, where are you? Are you on LinkedIn?

Greg Kyte: I am, and actually I posted things the last two days. You'll be very proud of me. I caught up on all my DMs and I accepted so many connection requests.

Caleb Newquist: And by the time this episode airs, you will have another insurmountable backlog of messages and connections.

Greg Kyte: I will have ignored my LinkedIn for a month, and will, and likely will feel guilty enough [01:18:30] to get on there to to check it again. So yeah, I'm on LinkedIn. Greg Kyte, CPA.

Caleb Newquist: All My Fraud is written by Greg Kyte and myself, our producer Zach Frank. Rate review and subscribe to the show wherever you listen to podcasts. If you listen on earmark, you can earn CPE credit. It's January now. I'm talking about the future when I'm actually in the past. But I know it's January when you're listening to this and you might be thinking, oh, I don't need CPE anymore. Yeah. And the the truth is that you do.

Greg Kyte: So [01:19:00] shut the hell up. You do need it. You're still driving a car. Listen to a podcast and get some credit. It's easy, don't you? Didn't you learn a lesson from last month when you spent the whole all of Christmas binging CPE? Knock it off. Do better.

Caleb Newquist: Greg's right. People. I hate to admit it, but he's right.

Greg Kyte: For my final episode on this show, take your CPE like you intend to. Damn it. That's why I'm quitting. It's just so frustrating. With [01:19:30] people and their CPE regimen.

Greg Kyte: Jesus Christ.

Greg Kyte: Join Caleb next time for more avarice, swindlers, and scams from stories that will make you say. Get your CPE in a timely manner.