The Idiot Defense is a satirical term for a legal strategy where a defendent claims innocence by virtue of having been ignorant of facts of which the defendent would normally be expected to be aware. Other terms used for this tactic include "dumb CEO defense", "dummy defense", "ostrich defense", and "Sergeant Schultz defense".

The term was popularized as result of a number of high-profile corporate accounting scandal defendents claiming that all wrongdoing was performed by others, without the defendent's knowledge or consent.

Examples

John J. Rigas

John Rigas, the founder of Adelphia, was charged with conspiracy, bank fraud and securities fraud. Rigas' defense asserted that he expected the Adelphia board, lawyers, and external accountants to provide him warning of any possible abuse. In his closing statements, Rigas' lawyer asked "Does [John Rigas] have a right to believe that things would be done properly, that adequate and appropriate disclosures were made, that the lawyers and the accountants and the personal accountants would make sure of that?"

Rigas was convicted on July 8, 2004.

Walter A. Forbes

Walter A Forbes, former CEO of CUC International, was charged with 16 counts in relation to inflated earnings statements from CUC before it mergered with HFC Inc. to form Cendant. During his trial Forbes testified to working on "the strategy vision part, talking to key clients ... ." He also claimed he was "much more valuable to shareholders doing that than being in day-to-day operations." Forbes' attorney, Brendan Sullivan Jr., summarized "The defense of Walter Forbes is that he didn't know about it."

The jury in the Forbes' case returned on January 4, 2005. While convicting another defendent, they failed to reach a verdict on the charges against Forbes.

Bernard J Ebbers

In this case Bernie Ebbers, former WorldCom CEO, claimed that $11 billion in fraud was committed by the company's CFO, Scott Sulivan, and other subordinates without Ebbers' knowledge. During his criminal trial, Ebbers testified "I was shocked. I couldn't believe it, I never thought anything like that would have gone on. I put those people in place. I trusted them. I had no idea they would do anything like this."

Bernard J. Ebbers was convicted of all charges on March 15, 2005.

Richard M. Scrushy

Richard M. Scrushy, founder and former CEO of HealthSouth, is the first CEO to be charged with violating the Sarbanes-Oxley Act. Scrushy's defense lawyer, Jim Parkman, asked during the trial "That's what y'all did and how you planned it, so (Scrushy) wouldn't know what the whole picture was?"

Scrushy's trial is still on-going.

Kenneth L. Lay

Ken Lay has been indicted on charges of securities fraud, wire fraud, and making false and misleading statements in relation to the Enron collapse. In a 60 Minutes interview before his trial, Lay said "I don't think I'm a fool. But I think I sure was fooled." He was also added "But I can't take responsbility for the criminal conduct of someone inside the company."

Kenneth L. Lay is awaiting trial.

Other uses

Critics of George W. Bush and Tony Blair have also used "idiot defense" to describe the two leaders basing claims of Iraqi weapons of mass destruction on reports from their respective country's intelligence agencies.[1] [2]

Barry Bonds' admission of possible steriod use, and claim that he was unaware of any steriods at the time, have also been described as an idiot defense.[3]

References

• O'Brien, Tim: "'Dumb CEO Defense' Spares Cendant Chairman From Prison", New Jersey Law Journal , (January 19, 2005)
• "Enron's Lay says he was duped, not dumb", Houston Chronicle, (March 14, 2005)
• Reeves, Jay : "Scrushy Defense: Fraud Hidden From Ex-CEO", Associated Press, (March 9, 2005)
• Syre, Steven : "The 'idiot' defense", The Boston Globe, (January 18, 2005)
• "The Idiot Defense", Los Angeles Times, (March 6, 2005)
• Harrigan, Susan : "'Embattled CEOs wise up to dummy defense", Newsday, (March 16, 2005)

See also

• Chewbacca Defense
• Twinkie defense