In the recent case the SEC v. Brian Stoker, Citigroup marketing dude or something, the jury found Brian not guilty. The NY Times made a big deal about a note the jury wrote along with their "Not guilty, Citigroup!" verdict. Something like, "Don't give up, SEC! Keep at it even though we found in favor of the criminal enterprise."
Brian's crime was helping sell a $1 billion collateralized debt obligation (CDO) mortgage bond deal. Citigroup was one of the leaders in structuring CDO deals, which basically consisted of worthless-to-the-nth-power paper dressed up in opaque luxury wrapping. Regulators felt that:
Mr. Stoker, who prepared marketing materials [in other words, the prospectus that tells a customer what he/she is buying] for the deal, knew or should have known that he was deceiving investors by not disclosing that Citigroup helped pick the underlying mortgage bonds in the CDO and then bet that its value would decline. When the housing market collapsed [which Citigroup was counting on], Citigroup's clients lost money while the bank made a bundle.
Stoker's lawyer, John W. Keker, had an ingenious defense, breathtaking in its simplicity.
Instead of getting into all the gobbledygook about securitization, subprime option ARM mortgages, liar loans, paid-off Triple A credit rating agencies, toxic waste repackaged as the aforementioned CDOs which everyone at Citigroup knew were worthless but sold it to its unsuspecting customers anyway while betting it would fail, Keker went in another direction entirely.
He showed the jury an illustration from the children's book, Where's Waldo?. This illustration had lots and lots of characters in it and Waldo, too. If you found Waldo (who I think had a red and white striped scarf) you won. His lawyer compared Stoker to Waldo:
[R]eaders are challenged to find the hidden title character. He likened his client to Waldo, suggesting that Mr. Stoker, 41, was a blip in Citigroup's vast CDO universe.
Travis Dawson, student at Baruch College, the biz school of the CUNY set, said that the Where's Waldo? allusion resonated.
So what's the moral of the story? Explain financial fraud in terms of children's books exculpating your client (he's not the devious Cat In The Hat, he's the sweet-faced Linus in Peanuts) and you've got it made in the shade. That is, if you even go to trial.
