Miracles do happen. The Houston Chronicle reports that a state district judge has done the unthinkable: declared the death penalty unconstitutional. Texas – the capital of capital cases and executions – now finds itself channeling the likes of California and other “blue” states that have wrangled with the constitutionality of the death penalty and found it to be cruel and unusual. 

Perhaps the the biggest import of the decision is that Judge Kevin Fine emphasized that one can assume that innocent people have been executed (an allusion to the Cameron Todd Willingham case, perhaps?).  In his decision Judge Fine posed the rhetorical question: ”Are you willing to have your brother, your father, your mother be the sacrificial lamb, to be the innocent person executed so that we can have a death penalty so that we can execute those who are deserving of the death penalty?…I don’t think society’s mindset is that way now.”

Predictably, the response from the Texas Attorney General was swift, labeling the decision as “an act of unabashed judicial activism.” Texas legal scholars and lawyers doubt the decision will withstand appellate review.

The case itself is unremarkable in the realm of death penalty cases.  John Edward Green, Jr. alleged shot and killed a Houston woman and her sister in 2008. Despite Judge Fine’s reference to innocence, this case does not appear to be one where the defendant alleges he is actually innocent of the crime.  Instead, Green’s lawyers argued that Texas law related to jury instructions in death cases violates the United States Constitution’s prohibition on cruel and unusual punishment.

The decision itself is groundbreaking, but soon will be buried under the Texas dirt once the appellate courts get a hold of it.

In what is perhaps a predictable move, the federal bankruptcy judge overseeing the ruins of Bernie Madoff’s investment empire approved the contentious method used by trustee to calculate victim losses.

The New York Times reports that Bankruptcy Judge Lifland ruled that the individual investors’ losses should be defined as the difference between the cash paid into a Madoff account and the amount withdrawn before the fraud collapsed in mid-December 2008.

This ruling decidedly disadvantages the investors who argued that their claims should be valued on the balances shown on their final account statements. The result is a significantly reduced claim amount that duped investors might be able to recover.

It is a harsh result, but the reasoning makes some sense. Ultimately, this is a Ponzi scheme, which by its nature is a fraudulent endeavor. Because of this, the final account statements upon which investors relied cannot reflect legitimate “securities positions” for claim valuation.

The trustee and the investors/creditors do not have the same goal in the Madoff case. The trustee has a duty to maximize the value of the bankrupt estate for the benefit of all creditors. The individual creditors are, rightly so, motivated by their self-interest. The trustee is looking to bring as much property into the estate as possible, and remedies are only as good as the evidence. At the end of the day, the existence of a Ponzi scheme thwarts investor efforts.

In the Madoff case, the bankruptcy trustee calculated investor losses to determine whether an investor had a valid claim in the bankruptcy or whether there are funds that can be recovered by the estate.  Such determinations not only positioned the mob of unsecured creditors against each other (old investors with potentially legitimate profits vs. new investors who bought in when the scheme was in full swing), but also left the trustee with few allies in the quest for assets.

Indeed, while investor “restitution” in many Ponzi schemes uses the  “cash in, cash out” method, Madoff isn’t the average Ponzi scheme.  Ponzi schemes do not have an average shelf-life to measure; the Madoff scam spanned more than a decade (and perhaps dates as far back as the 1980s) and came to a crashing end with an estimated $65 billion in losses. Madoff’s approach involved the purchase of blue-chip stocks and then taking options contracts on them to limit losses.  Madoff did not promise unmatched profits to the countless investors who placed money with his investment firm. Rather, he offered more modest and consistent gains to elite clients usually at a rate of 10%.  Many Ponzi schemes promise to deliver returns of 20% or more, but Madoff’s more restrained output contributed to the fraud’s longevity.  This strategy of steady returns was often described as “too complicated for outsiders to understand,” since Madoff was reluctant to give details on how the investments worked.

Judge Lifland acknowledged that “the complex and unique facts of Madoff’s massive Ponzi scheme” defied any simple analysis. “It would be simply absurd to credit the fraud and legitimize the phantom world created by Madoff” when determining victim losses, he said.

No doubt the issue will wind its way up to the Second Circuit – the investors are many and they are angry. A case can run with that momentum almost indefinitely.

• Really, GM? At least keep a straight face when you say that auto execs are underpaid. http://ow.ly/186Qi. What about your former employees? #

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• Really, GM? At least keep a straight face when you say that auto execs are underpaid. http://ow.ly/186Qi. What about your former employees? #

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California is often the nation’s trend setter: fashion, green technology, locavore movement, and, these days, budget woes.  True to form, another “left coast” idea has moved east.  New York has joined the handful of jurisdictions that permit familial DNA searching to identify suspects. 

Quietly and quickly approved in December 2009, a state rule provides that DNA found at a crime scene that fails to exactly match the DNA of a person already contained New York’s DNA database can nonetheless be used to search for suspects if the DNA closely resembles that of someone on file.

The premise of this strategy is uncomplicated. Family members share genetic traits, and it would be reasonable to conclude that a partial DNA match indicates that a relative of a person in the database is the unknown suspect. Thus, the search can be narrowed to family members of the person who clearly didn’t commit the crime in question (since that person’s DNA does not precisely match the crime scene sample).

I’ve written about the inherent pitfalls of this approach.  While no one wants to rally against legitimate crime fighting tools, there are also issues with literally bringing the investigation into the family room. By any other name, an investigation of this source is based on guilt-by-relation, and since families can be expansive, the investigation would affect more innocent people than guilty.

California has the most aggressive approach to using familial DNA searches as an investigation technique, and other jurisdictions have followed suit. Notably, there is no national standard for how close a DNA profile has to be to qualify as possibly related to the database offender.

Law enforcement officials say the policy frees forensic scientists from sitting on potentially valuable evidence that they had not been able to turn over to local police departments.

As I said in my article, we’re well past debating whether these policies should be implemented at all, however, there needs to be informed discussions about repercussions, regulations, and limitations in connection with these policies.

• Innocence Project hits its 250th Exoneration! http://ow.ly/141aO #

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• Obama bumps up budget for science – how about funneling some of it to K-12 science education? http://ow.ly/12V98 #

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• Anti-abortion activist guilty of murder in Kansas. http://ow.ly/11UgI #

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