Online Extra: A Talk with Justice's No. 2

You can't prosecute your way to morality, says James Comey Jr., but he does believe in the power of deterrence for white-collar crime

James B. Comey Jr., the new second in command at the Justice Dept., clearly has his work cut out for him. As Deputy Attorney General, everything goes through him: Comey is Justice's key liaison to the White House, he heads the Corporate Fraud Task Force, and oversees all U.S. Attorneys offices.

He joins Justice at a critical time. The public has high expectations in the war on terrorism as well as the fight against corporate crime. And in a Presidential election year, he'll have to do some fancy footwork to navigate Washington's political landmines. Already, Comey has taken on oversight of an investigation into an Administration leak of the identity of CIA operative Valerie Plame now that Attorney General John Ashcroft has recused himself.

By all accounts Comey has both the credentials and the personality for his new job. A career prosecutor, he most recently was U.S. Attorney for the Southern District of New York. His high-profile cases have become household names: Martha Stewart, Frank Quattrone, and John Rigas and sons Timothy and Michael. And he has won several terrorism-related convictions. Comey is regarded as dedicated, wickedly funny, and irreverent.

"Because he doesn't have a political agenda and he doesn't have an ego, he's going to do great," predicts Richard Cullen, former Virginia Attorney General and a partner at McGuireWoods in Richmond, Va. On Feb. 6, Comey spoke to BusinessWeek's Lorraine Woellert about the challenges ahead. Edited excerpts of their conversation follow:

Q: A lot of regulation is already in place that's meant to keep execs in line. So how does the criminal division [at Justice] fit into the system?


We don't kid ourselves into believing that we are the answer. You cannot prosecute your way to morality. Just as it's a parents' job to raise a child who has an internal sense of what's right and wrong, in an ethical culture it's a company's job to raise employees that way, to foster an environment in which people wouldn't consider moving numbers from one column to another to fool the shareholders.

We are the big bad prosecutors who send a message that if you cross a brightly drawn line, we're going to put you in jail for a long time. My hope is that that offers an excuse for good behavior.

Q: What about the deterrence factor?


One of the things that makes it so rewarding to be a white-collar prosecutor is that deterrents actually work. Your mission is to influence the audience of would-be crooks, and that audience can be influenced because they pay attention in a way that drug dealers don't.

That audience is exquisitely sensitive to pain and has a lot to lose. So they're smart, they pay attention, they see the pain, and they want to avoid it.

Q: You mention cracking down on people who cross a "brightly drawn line." But in white-collar crime, is the line really so bright? If you have a murder, there's a body. With white-collar crime, isn't there often disagreement about when the line has been crossed?


The mission in violent crime is connecting actors to the action. In white-collar cases, it's very, very different. At the end of the day in the white-collar case, no matter how complex it is, we will unwind it, and we will know the transaction. We know what off-balance-sheet partnerships were used, where the money went, where the memos were. But what we have to still prove is that when the people engaged in that transaction they knew they were doing evil, they knew they were doing wrong.

I'm not saying drug cases are easy, but all I have to do is connect you to the kilo. In a corporate fraud case I've got to connect you to the transaction and prove what was in your head when you did it, to a jury of 12, unanimously beyond a reasonable doubt. That's really hard to do.

Q: So how do you read peoples' minds?


We have a gift, 20th century's gift to law enforcement -- e-mail. It's a window into the mind that I didn't have when I started as a prosecutor. And people are much more honest in e-mail than they are on the phone or in print.

Q: The job of a U.S. Attorney is always political to some degree, but you're arriving at a politically sensitive time -- a Presidential election year. How will you handle it?


The short answer is I don't know. It's going to be a challenge. I'm going to try to be the way I've always been, which is decent and honest to people. But I think there are a lot of decent and honest people here, despite what you read.

Q: So how well do you know the Attorney General?


As member of the Attorney General's advisory committee, I got to play basketball with him.

Q: Did you win?


No, we did not. It was mostly the other U.S. Attorneys' fault. But it was pretty tough. He has a number of ringers on his staff.

Q: Well, besides his game, what's he like?


I really like him....I see a tremendous dichotomy between the way people perceive him and the way he is. I don't know another public figure whose public image is so at odds with [who they really are]. He really is funny, smart, and nice, and I really like talking to him. But you say that to some people, and they say, "Are you really just saying that?" No, I'm not.

Q: You have a reputation for integrity and honesty, but Washington tends to bring out the worst in people.


Enough people told me that when I was looking at the job from New York that frankly, I was a little nervous about it. Someone said that my soul was up for grabs. You know, that's fairly sobering stuff. But I don't think my soul is up for grabs.

Q: There's a theory that you left New York so you wouldn't have to be there if the Martha Stewart case went downhill.


Regardless of the outcome of any particular case, I hope the reputation of the U.S. Attorney in Manhattan and the Justice Dept. is that we believed what we did was right, and we were always fair.

The Southern District in New York has lost a lot of high-profile cases over the years because it's an office that has the courage to try to do the right thing against great odds. I don't want to live in a system where everybody gets convicted all the time. That tells me that the system is rigged, or the prosecutors are only picking the low-hanging fruit.

Q: You've been called the Energizer Bunny of prosecutors. Why is that?


Delay kills. Too often, especially in the white-collar arena, prosecutors work a case, work a case, and work a case, and then finally bring it [to trial] when it's perfect and everyone's ready to plead guilty. The problem with that is the public sees a crime committed, then they see nothing until their kids are out of college.

What we're trying to do at Justice is real-time enforcement -- to narrow the window between when people saw something bad happen and when someone is held accountable. In addition to deterrence, there's a notion of almost restorative justice. People need to see their sense of fairness and justice restored. If you don't bring a case in the next three years, people get the sense that the system is fixed, the rich guys get away, and nothing happens.

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