S&P Lawyer Keker Brings ‘Slashing and Smashing’ TacticsAndrew Harris
San Francisco lawyer John Keker, the Vietnam War platoon leader who later prosecuted Oliver North and represented clients from Eldridge Cleaver to Lance Armstrong, may deploy his “slashing and smashing” approach to defend Standard & Poor’s Financial Services LLC.
The securities rating company and parent McGraw-Hill Cos. were sued by the U.S. Justice Department on Feb. 4 for allegedly inflating rankings mortgaged-backed securities and downplaying their risks to maximize their own profits.
The federal government seeks as much as $5 billion in penalties. Standard & Poor’s, which faces similar allegations in lawsuits by about 16 states including California, Missouri and Illinois, has denied wrongdoing.
Keker will work with the company’s New York law firm Cahill Gordon & Reindel LLP and its partner Floyd Abrams. Keker, 69, a founding partner of Keker & Van Nest LLP, was once voted by 100 of his California colleagues as the first lawyer they’d hire if charged with a serious crime.
“His name was mentioned more often than any other when our surveyed lawyers were asked who they’d turn to,” California Lawyer magazine reported in 2001.
‘Slashing and Smashing’
In a 2003 Bloomberg News profile, Keker said he honed his “slashing and smashing” defense tactics in white-collar crime trials and corporate litigation. He didn’t respond to an e-mailed request seeking comment on his hiring by S&P.
Lawyers from both firms will be in court for any trial, Abrams said today in a phone interview.
“John Keker will have a central role in the trial of this case if there is a trial,” Abrams said. “Cahill Gordon and I will be working with him.”
Abrams said the precise division of labor among the lawyers hasn’t been determined.
Cristina Arguedas, a criminal defense lawyer who has known Keker since 1980, said the two have represented co-defendants in at least 30 cases.
“He’s not afraid of anything,” she said.
“He’s not your typical big firm, white-collar lawyer. He’s a real fighter. He lives to try cases,” said Arguedas of Arguedas Cassman & Headley in Berkeley, California. Her clients have included former San Francisco Giants outfielder Barry Bonds, who was convicted of obstructing a federal probe of performance-enhancing drugs, and former Atheros Communications Inc. Vice President Ali Hariri, who pleaded guilty in the Galleon Group LLC insider-trading probe.
Keker’s greatest strength, she said, is his ability to “see defenses that other people maybe don’t see and make them simple to understand.”
“He is a criminal defense lawyer,” Arguedas said of Keker. “You can see that in all the ways in which he approaches the case. He’s not a government guy. He never was a government guy.”
Cahill Gordon has defended Standard & Poor’s from allegations of bond ratings hype leveled by attorneys general in Ohio and Illinois.
“Cahill is our firm,” Edward Sweeney, a Standard & Poor’s spokesman, said yesterday in a phone interview.
Last year, Abrams successfully argued against an appeal by Ohio, which in 2011 lost a case claiming five public employee pension funds were misled by securities’ ratings assigned by S&P and two other firms.
In November, Abrams’s firm failed to win dismissal of a year-old case against Standard & Poor’s brought by Illinois Attorney General Lisa Madigan.
A state court judge in Chicago rejected defense arguments that the alleged misrepresentations by Standard & Poor’s were opinions, making them speech protected by the U.S. Constitution’s First Amendment.
“I don’t have any magic First Amendment wand in my pocket for this one,” Abrams, 76, said Feb. 5 of the U.S. allegations in a Bloomberg Television interview.
‘S‘It’s not a First Amendment case because the government is alleging that S&P didn’t believe what it said,’’ Abrams said. “The First Amendment doesn’t protect against that.”
Abrams denied Standard & Poor’s had committed any fraud in rating collateralized debt obligations from 2004 to 2007.
“The ratings were independent,” he said. “The ratings were the best judgment by S&P at the time about what the future would bring.”
Catherine Mathis, a Standard & Poor’s spokeswoman, said in an e-mailed statement after the Justice Department sued that the company would defend itself against “these unwarranted claims.”
“Claims that we deliberately kept ratings high when we knew they should be lower are simply not true,” she said.
The federal case was assigned to U.S. District Judge David O. Carter in Santa Ana, California.
Carter, 68, was nominated by President Bill Clinton in
1998. Before becoming a federal judge, he was an Orange County homicide prosecutor and a California state court judge. He earned a Bronze Star and a Purple Heart during his service with the U.S. Marine Corps in Vietnam.
Keker graduated in 1965 from Princeton University in New Jersey and served as a U.S. Marine Corps infantry platoon leader in Vietnam, according to a biography on his law firm’s website. After being wounded and retiring from the corps in 1967, he graduated from Yale Law School in 1970 and clerked for Supreme Court Chief Justice Earl Warren from 1970 to 1971, according to the website.
Keker’s clients included Cleaver, the Black Panther Party leader. He was part of the special prosecution team in the case against North, the U.S. Marine Corps lieutenant colonel enmeshed in the Iran-Contra scandal that enveloped the later years of President Ronald Reagan’s second term as president.
White-collar defendants represented by Keker have included former Enron Corp. Chief Financial Officer Andrew Fastow and investment banker Frank Quattrone,
He defended Quattrone in successive trials on charges of obstruction of justice and witness tampering. The case against Quattrone was based partly on e-mails in which the Credit Suisse banker allegedly told subordinates to “clean up” their files after learning of a pending grand jury investigation into the firm’s allocation of shares in initial public offerings.
While the first jury deadlocked in 2003, the second convicted Quattrone on the obstruction charge in 2004. Keker sparred with U.S. District Judge Richard Owen at both trials, accusing him of interfering with the defense.
During the first trial, Owen likened Keker to “a fire hydrant on the corner of somewhere in New York City in the summer and I can’t turn you off.”
Prosecutors dropped the case after the U.S. Court of Appeals in New York threw out the conviction in 2006 and ordered a new judge be assigned.
Later that year, Keker won leniency for Fastow, who had pleaded guilty to separate counts of conspiracy to commit wire fraud and securities fraud, then testified against Enron founder Kenneth Lay and Chief Executive Officer Jeffrey Skilling.
While Fastow’s plea agreement called for a 10-year prison term, Keker cited his client’s cooperation with prosecutors and got a reduction to six years.
Keker also represented class action attorney William Lerach, who had recovered more than $7 billion for investors who sued Enron. Lerach pleaded guilty to paying client kickbacks and agreed to forfeit $7.75 million.
Representing Armstrong, the competitive cyclist who admitted in January to doping during his career, Keker and his firm spoke with federal investigators in 2011 about Armstrong’s belief that information from a grand jury probe had been leaked to the media.
“The leaker(s) have made it abundantly clear that these leaks come from the investigation’s inner circle,” Keker said in a court filing in July 2011. The leaking was similar to what happened in a federal investigation of steroid use among Major League Baseball players, he said.
Keker’s firm asked for a court order directing investigators to show why they shouldn’t be held in contempt for violating grand jury secrecy rules.
The U.S. Attorney’s office in Los Angeles announced Feb. 3, 2012, that a criminal investigation of Armstrong’s team was closing without charges being brought.
Abrams said today that his new co-counsel was “retained for his extraordinary skill as a trial lawyer.” The free speech advocate said his own role in the litigation, while it will be active, has not yet been defined.
The case is U.S. v. McGraw-Hill Cos., 13-00779, U.S. District Court, Central District of California (Los Angeles).