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THE NATION | THE TURBULENT ECONOMY

An Arresting Symbol, in Handcuffs

July 25, 2002|LISA GIRION | TIMES STAFF WRITER

Just as Charlie Sheen's stockbroker in the movie "Wall Street" was hauled in handcuffs across an ersatz trading room floor, the early-morning rousting of Adelphia founder John Rigas on Wednesday was rich with the symbolism of scorn for what many have come to view as a new age of greed.

Many victims of the stock market declines and corporate layoffs have wanted to see at least one corporate chieftain suspected of wrongdoing in handcuffs. And the arrest of the white-haired Rigas served up a big helping.

With none of the deference typically afforded such masters of the universe, the corporate executive was subjected to a surprise arrest at his New York apartment, placed in handcuffs and marched outside. The scene, captured by television cameras, was the kind of "perp walk" usually reserved for heinous murder and sex-crime suspects.

The arrests of Rigas, two of his sons and two associates for allegedly looting $1 billion from the company were "a clear message to corporate wrongdoers that handcuffs and a jail cell await those who violate the trust placed in them," said William Kezer, head of the New York federal Postal Inspection Service, which took the suspects into custody.

The arrest was so widely publicized that it was credited as a possible factor in the stock market's tremendous surge Wednesday.

"The arrest in and of itself demonstrates that the government and this administration is going to use these guys as an example," said former prosecutor J. Michael Nolan Jr., a white-collar criminal defense lawyer with Lowenstein Sandler in New York.

"This is a question of stabilizing the markets and stabilizing public confidence," he said. "I'm sure the White House has someone who was monitoring every part of this case and said, 'If you've got a big case and can bring it now, bring it. These guys aren't going to get away with this stuff.' "

Among white-collar and celebrity suspects, such arrests are about as common as 100-year floods.

Take the case of Philadelphia 76ers basketball star Allen Iverson. Iverson was allowed to turn himself in earlier this month after allegedly barging into an apartment with a handgun looking for his wife.

In making such a public show of Rigas' arrest, federal authorities took a page from the book of one of New York's most famous prosecutors, Rudolph W. Giuliani.

It was under Giuliani that a stunned Wall Street watched as agents cuffed several executives for alleged criminal activity. Those dramatic arrests came after criticism that Ivan Boesky, accused of insider trading, got kid-glove treatment.

High-profile arrests are executed for a variety of reasons, including a decision by a prosecutor or an arresting officer that the suspect deserves the humiliation, said Harold Krent, dean of the Chicago-Kent College of Law.

Another reason, he said, is to make a point.

"This may get people to stop and stand up and take notice in a kind of crude and blunderbuss way," Krent said.

"Some say you need occasionally to make a very public statement that society won't tolerate white-collar cheating because it has a high societal cost," he said. "It may not be a coincidence that this comes in the wake of all the revelations about Enron, WorldCom and Global Crossing. We are much more willing as a country to denunciate and heap our scorn on those who perhaps are responsible for the economy beginning to nose-dive."

But the use of arrests for goals other than furthering a prosecution has been criticized as unfair, Krent said. "Some people find it immoral, because we are taking advantage of one person to drive a point home."

Rigas' lawyers had attempted to arrange for their client to surrender on his own accord--quietly and privately. Instead, Rigas, looking dazed, ended up on television in footage that played throughout the day.

"All [prosecutors] had to do was call their attorneys up and say, 'An indictment is coming down tomorrow and we want your client to be in court' " today, Nolan said. "That would have been normal. These guys aren't a flight risk. They have too many assets in the United States. Where are these guys going?"

If flight was not a factor, the only reason to make a spectacle of Rigas' arrest was to send a message to investors and corporate executives that white-collar criminal prosecution is no longer business as usual, legal experts said.

With corporate scandals driving investors away from the stock market, they said, Rigas' showy arrest may be only the beginning of a vigorous prosecutorial and public relations campaign against corporate malfeasance.

"They might have wanted to show ... 'It's a new day, corporate America--look out. We will come after you,' " said Sandra Jordan, a law professor at the University of Pittsburgh and a former federal prosecutor.

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