Fabrice Tourre, an ex-Goldman Sachs VP who made $2 million when he was just 28, was found liable for fraud after his lawyers used a strategy some legal experts called very risky.
His lawyers didn't call a single witness to defend him in the SEC's civil case accusing him of misleading investors in a mortgage deal called Abacus 2007-AC1.
The young Tourre, who was the only Goldman exec to go to trial over the deal, has been called a mere "cog" in the Goldman machine.
Many lawyers predicted the SEC would lose the case.
"Mr. Tourre’s lawyers put on the Arthur Fonzarelli defense — “Aaaayy” — by resting without calling any witnesses. This is a high-risk strategy that tells the jury the opponent’s case is so weak that the opponent need not deign to respond," law professor Peter Henning wrote in The New York Times on Friday.
However, Tourre's lawyers — a high-power team bankrolled by Goldman — probably had some good reasons for deciding not to call a single witness. For one thing, the SEC's lawyers would have cross-examined any witnesses the defense put on the stand.
"It is not unheard of that a defense witness does more harm than good for your case," white collar defense lawyer Barry Slotnick told Business Insider.
The other reason Tourre's lawyers didn't call any witnesses is because Tourre himself was called to the stand by the SEC. The government can't force defendants to testify in criminal cases, but it can in civil ones like the fraud case brought against Tourre.
Since he was technically the government's witness, Tourre's lawyers were able to make their case by "cross-examining" him, says Solomon Wisenberg, co-chair of the white collar defense group at Barnes & Thornburg.
"Obviously, they thought he was their best witness," Wisenberg told BI.
It's impossible to know whether his lawyers' decision not to call any defense witnesses (Tourre was a prosecution witness) was to blame for the outcome of the case.
"There is no question that the economic climate and the prevalent anti-business attitude played a part in the verdict," Slotnick says. "We expect an appeal."
Because this is a civil case, Tourre does not face any jail time. He could be barred from the securities industry, though, and have to pay hefty civil fines.
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