Rising to the challenge issued over the weekend, UCLA law professor and corporate law authority Steven Bainbridge has analyzed the new data on the Air America affair contained in a Wall Street Journal article today (subscription only, but free AP version here). Steve writes an opinion of great sophistication and erudition, so any attempt to summarize it would do an injustice to the brilliance of my friend. Just notice that word 'fraud' is employed by the cautious scholar, Professor Bainbridge.

This is a developing scandal which threatens to engulf the recently—founded mini—net, and possibly send some people to the slammer. Let's watch and see how those who have been hyper—critical of Enron, deal with potential corporate crime from left wing would—be media moguls. Having been promoted to near—iconic status via endless flattering stories in the New York Times (where it was given the highest—prominence billboard, a Sunday Magazine cover story) and lesser propaganda organs, the financial downfall and the reported near—insolvency leave egg on a lot of faces. If actual fraud proves to be involved, there should be a lot of red faces among the lefties underneath all that egg.

Today's Journal story carries a delicious quotation from one of the actors involved:

"When you believe you're doing work for the greater good, you don't question as much," says Javier Saade, a former Air America executive vice president. "People never questioned the curves and obstacles on the road. People just said, 'We're on the road.' "

That certainly sounds like the liberal approach to social programs. Convince yourself of your own good intentions, and nevermind the practical issues. Of course, when market disciplines are at work, you can't just go back for more money whenever troubles arise, the way you can when the taxpayers are on the hook for the consequences of your foolishness.

Posted by Thomas   06 21 04

update: Steve has added to his website the comment that he is discussing civil liabilities, rather than criminal fraud. However, "The securities fraud claims by investors in Air America could lead to criminal charges by the Justice Department if Cohen and/or Sorensen willfully misrepresented material facts or omitted material facts they had a duty to disclose." 

In all liklihood, any action will be civil rather than criminal. But we can always hope Ken Lay will have company as a criminal defendent.