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Tuesday, September 20, 2011

Solyndra Execs Should Not Talk Before Congress

The beleaguered chief executive officer and chief financial officer at under-investigation Solyndra Corporation reportedly will invoke their Fifth Amendment rights against self-incrimination in scheduled testimony Friday before a House energy committee.

Solyndra, the company which received approximately $535 million in federal loans and then weeks ago declared bankruptcy, is under investigation by the federal government.

The Reuters news agency reportedly gained access to the letters from the executives' lawyers, which presumably alerted the subcommittee to the executives' intent to remain silent; CNBC has since also reported this story.

The executives' refusal to talk and to invoke their Fifth Amendment rights is a smart strategy. Frankly, it is the only strategy. These executives have nothing to gain by speaking in an environment where anything they say, and even the manner in which it is said, will be considered evidence and dissected for its potential in aiding a criminal prosecution of them.  Admittedly, this strategy will compromise or sacrifice their reputations, but the alternative is to give ammunition to a bloodthirsty mob.  Regardless of what is said, the content of their statements will assuredly be parsed and dissected for potential use in a prosecution.  At a minimum, there would be attempts to prove that any of their statements to the House committee were knowingly false and thereby prosecutable as false statements under Section 1001 of Title 18 of the United States Code which proscribes false statements to agents of the federal government.  (This was the statute under which Martha Stewart was successfully prosecuted.)

Although the investigation of Solyndra is in its infancy, it is a safe presumption that the top executives are already possible "targets" of an active federal criminal investigation. The word "target" means that the person to whom it is applied is considered a likely defendant.

In such a case, and definitely in a politically-charged investigation like this, no potential defendant owes anyone an explanation for remaining silent. The flames are too high and the mob too rabid at this point. Those factors will cause, rightly or wrongly, the investigation to produce scalps to justify a conclusion already reached. In all likelihood, no matter the official denials and invocation of the mantra of "presumed innocent until proven guilty," somewhere it has been decided that these executives are guilty -- that is, of something, some crime which as of yet cannot be declared, determined or proven.

Moreover, any testimony or other public statements that is made gives other prospective cooperating witnesses -- that is, others whom the government has successfully intimidated into "cooperating" with an investigation on the promise of getting a government recommendation for a more lenient sentence in exchange for their "substantial assistance" in the investigation -- material with which to fabricate a false yet plausible-sounding story as to what they did and said. 

Business failure by itself is not and should never be considered a crime. Investigations of business failures under the guise of protecting the public are really witch hunts designed to effect bad public policy, that is, that the government will use its prosecutorial power to determine what businesses succeed or fail.

The real misconduct, consisting likely of horrible business judgment but not necessarily any crime, was the government's decision to loan money to a company which apparently did not warrant loans from private banks. Pretextual investigations, in which the conclusion was first reached and the ensuing activities are performed merely to justify the subsequent prosecutions, should not now ensue because policymakers want to hide their mistake.

Eric Dixon is a New York investigative lawyer who works on complex matters, including those which involve government investigations.

Eric Dixon
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