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Speaker 1: It's the most important decision in a criminal case. Should

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Speaker 1: the defendant take the stand and testify in his own defense?

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Speaker 1: Three former No More mortgage bond traders are making the

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Speaker 1: ultimate bet. Not only are they not testifying, they're not

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Speaker 1: presenting any witnesses in their defense against fraud charges. They're

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Speaker 1: betting that the prosecutor's evidence is too weak to convict them.

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Speaker 1: The trio or among more than a half dozen bond

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Speaker 1: professionals who have been charged with misrepresenting prices to customers

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Speaker 1: and a crackdown on abuses in the bond market. Joining

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Speaker 1: us is Robert Hockett, professor at Cornell Law School. Bob

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Speaker 1: on TV and in the movies, the defendant usually presents

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Speaker 1: witnesses and often takes the stand. But how often in

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Speaker 1: real life does the defense rest its case without presenting

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Speaker 1: any witnesses? Uh? It's it's it's fairly rare, but it's

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Speaker 1: certainly not unheard of. I mean, it happens often enough.

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Speaker 1: Typically it happens as a results but particular calculation that

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Speaker 1: the defense performs right there, basedly asked, um, you know,

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Speaker 1: is there is the the likely good that the particular

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Speaker 1: witness might uh yield? You know? For the defendant likely

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Speaker 1: or unlikely to be outweighed by any sort of negative

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Speaker 1: impact or any prejudicial impact as they say that those

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Speaker 1: witnesses might have. And the defense in this case seems

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Speaker 1: to have had very much in minds the way in

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Speaker 1: which calling expert witnesses harmed Jesse Litback in the lit

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Speaker 1: Back decision that was handed down. Just need a couple

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Speaker 1: of I guess last month or maybe two months ago. Yeah, Bob,

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Speaker 1: what is the Jesse Litvack conviction on just one count

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Speaker 1: on on the after it went up to the appeals court?

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Speaker 1: What does that tell us about whether this is a

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Speaker 1: good strategy. I mean, I can imagine an argument that hey,

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Speaker 1: you know, clearly, you know, a jury can be convinced

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Speaker 1: that that somebody violated the law, so you better put

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Speaker 1: on a really good defense. Yeah. So, um, I think

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Speaker 1: it doesn't really tell us a great deal because it's

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Speaker 1: not altogether clear why calling the expert witness that he did,

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Speaker 1: or even where they're calling the expert witness that they

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Speaker 1: did harm lit Back. So what lift Back did was

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Speaker 1: called the witness to testify to the effects that everybody

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Speaker 1: lies in these markets, and that in consequence, the buyers

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Speaker 1: of the bonds, don't really take seriously the claims that

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Speaker 1: the sellers make, even when the sellers, um, you know,

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Speaker 1: sort of puff up the prices that they claim to

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Speaker 1: have paid for those bonds. Right. So, in essence, what

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Speaker 1: Liftback did was it was he just said, he said, look,

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Speaker 1: the prosecution has not substantiated the so called materiality or

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Speaker 1: show that the materiality requirement here has been met. He

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Speaker 1: hasn't shown that. In other words, the misrepresentation that lift

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Speaker 1: Back made actually affected the decisions of the buyers. Uh.

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Speaker 1: And given that fact, um, you know, the materiality requirement

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Speaker 1: has not meant and therefore the case hasn't been successfully

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Speaker 1: made out. The problem was that in order to estab

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Speaker 1: published that there wasn't really materiality here, the defense essentially

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Speaker 1: relied on witnesses who testified to the effect that, well, look,

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Speaker 1: everybody lies in these markets, and so nobody really makes

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Speaker 1: a decision on the basis of these misrepresentations that are

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Speaker 1: made by the sellers, and therefore this misrepresentation that lit

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Speaker 1: Back made wasn't material and it didn't really matter. The

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Speaker 1: thought is that that might have backfired in the sense

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Speaker 1: that you know, a your judge injury or not. Typically

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Speaker 1: impressed by arguments to the effect that, well, everybody does it.

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Speaker 1: And so I think the defense in this case probably

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Speaker 1: have decided that the same effects might be had in

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Speaker 1: this particular case if they were to call witnesses who

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Speaker 1: testified to that same effect. So then what is their defense.

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Speaker 1: Their defense is going to be that the prosecution has

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Speaker 1: to prove beyond the reasonable doubt that the defendants are guilty.

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Speaker 1: And in effect, what's going to happen is the defense

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Speaker 1: lawyer is going to say, look, this case is very weak.

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Speaker 1: In the particular. These are the ironments that have to

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Speaker 1: be met in order for a charge like this to stick. Uh.

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Speaker 1: And furthermore, again, the prosecution has to prove beyond a

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Speaker 1: reasonable doubt that every element that has to be proven

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Speaker 1: indeed has been proven. And now look at what they've

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Speaker 1: actually presented to you. They presented you these these prosecution

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Speaker 1: witnesses who simply doesified X, Y and Z, not particularly persuasive,

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Speaker 1: not particularly powerful um. And basically that's what they're going

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Speaker 1: to sort of rest their hang their hat on. They're

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Speaker 1: going to say, Look, it's up to the prosecution to

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Speaker 1: prove that there's absolutely no room to doubt here whether

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Speaker 1: the defendant was guilty or not, and this substantial burden

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Speaker 1: they have they simply have not met. It's a risky strategy,

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Speaker 1: but that's what they're going to try to do. So

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Speaker 1: at the risk of all our simplifying. Is is it

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Speaker 1: the case that Jesse Littback tried the everybody does it

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Speaker 1: defense and these guys are doing more of a we

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Speaker 1: didn't do it kind of defense. Uh, I mean, that's

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Speaker 1: almost right. I think I would just slightly all to

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Speaker 1: that and say that they're trying the prosecution has improved

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Speaker 1: that line of defense. Right, So rather than our doing

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Speaker 1: affirmatively that oh, you know, we didn't actually do this,

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Speaker 1: or what we did really didn't matter, or what we

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Speaker 1: did really wasn't wrong or illegal, instead of doing that,

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Speaker 1: they're simply saying, the prosecution has to prove to you

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Speaker 1: beyond any doubt that indeed the defendants did this did

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Speaker 1: these deeds. And that's what they've failed to do. And

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Speaker 1: that's again kind of risky, right in the sense because

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Speaker 1: they're saying, basically, it's it's possible that, yeah, maybe we

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Speaker 1: did do it, but the prosecution has not proven beyond

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Speaker 1: any doubt that we've done it. That's what the prosecution

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Speaker 1: has to do. Insofar as the prosecution hasn't managed to

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Speaker 1: do that, you have to find us. In a sense,

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Speaker 1: that's essentially the strategy that they're adopting. And again it's risky,

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Speaker 1: but I think that apparently they have started as even

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Speaker 1: riskier to try the lift back form of defense, pursuant

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Speaker 1: to which you have defense witnesses set supplies to the

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Speaker 1: effect that well, everybody lies anyway, therefore it's okay, or therefore, um,

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Speaker 1: the lines weren't material, and therefore this particular requirement that

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Speaker 1: has to be met in order to make a charge

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Speaker 1: like the stick has not been met. Bob, it sounds

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Speaker 1: like the government had a lot of evidence they during

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Speaker 1: two and a half weeks. They had witness testimony, transcripts

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Speaker 1: of electronic chats, and they also had a tape of

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Speaker 1: a conversation that the defense tried mightily to keep out. Yep,

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Speaker 1: it's pretty damning looking evidence, at least on the surface.

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Speaker 1: I mean, of course, I haven't been there at the

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Speaker 1: trial watching the drama, but from everything I've read about

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Speaker 1: and everything that I've heard from people who are actually

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Speaker 1: have been present during some of the proceedings, it sounds

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Speaker 1: like it's pretty damning evidence. Um. In effect, you've got

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Speaker 1: the smoking gun of the actual lies, and then you

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Speaker 1: actually also have witnesses testifying that the lives mattered to them,

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Speaker 1: but they actually made decisions on the basis of the

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Speaker 1: wise and that in that sense, the lies were material,

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Speaker 1: not merely immaterial. Uh. And they're saying that, yeah, we

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Speaker 1: got dodops um. And the defense, you know, the lip

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Speaker 1: back defense, was no, they can't really have been dooped

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Speaker 1: because these are really sophisticated players and they know that

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Speaker 1: basically everybody tells lies in this market, and therefore they

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Speaker 1: can't really have been in fluent spot them and blah

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Speaker 1: blah blah. But that doesn't tend to be an especially

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Speaker 1: convincing sounding defense if you have a lot of witnesses

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Speaker 1: to go in there and say, no, actually, I was

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Speaker 1: influenced by this. I actually took them seriously. I took

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Speaker 1: him at his word. I believed him, and it mattered

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Speaker 1: to me, and it really affected that my decision as

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Speaker 1: to how much I was willing to pay. It's kind

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Speaker 1: of hard for juries and for judges, I think, to

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Speaker 1: ignore that kind of thing unless the prosecution witnesses are

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Speaker 1: you know, seem really fifty when they say these things, right,

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Speaker 1: and unless they kind of look like they're sort of

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Speaker 1: crying crocodile tears about having been duped um. But but

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Speaker 1: absent that, it's a pretty compelling sort of case to make,

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Speaker 1: and everybody do it doesn't defense doesn't really work very well,

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Speaker 1: and of course Mr Witbeck found this out. Um these defendants,

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Speaker 1: I think, for that reason, are avoiding that form of defense.

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Speaker 1: But instead what they're doing is relying on and I

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Speaker 1: think an equally if not more risky strategy, which is

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Speaker 1: the effect that well, you know, maybe we didn't, maybe

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Speaker 1: we didn't, but the prosecution really has to prove beyond

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Speaker 1: a reasonable doubt we did, and they haven't succeeded in

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Speaker 1: doing that. That's, uh, you know, that's pretty risky straty

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Speaker 1: to me, I mean, between the proverbial rock and a

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Speaker 1: hard place in this case. But we will find out,

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Speaker 1: because the case is going to be going to the

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Speaker 1: jury soon. As always a pleasure to have you on

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Speaker 1: Bloomberg Law. That's Professor Robert Hockett of Cornell Law School,