Jack Kemp

Sitting right alongside the Fifth Amendment and the Supreme Court's interpretation of it in its Miranda decision, Section 1001 makes it a crime to "knowingly and willfully make any materially false, fictitious or fraudulent statement or representation in any matter within the jurisdiction of the executive, legislative or judicial branch of the United States," even if you are not under oath. The sweep of Section 1001 and the unchecked discretion it gives to federal prosecutors are awesome.

Insider-trading regulations are so broad and vague that if someone comes to learn more than others about information relating to a particular firm or industry, then the Securities and Exchange Commission is perfectly able to rule that possessing - and acting upon - that knowledge is a crime. That's why it is impossible to draw a line around what is and isn't permissible under the regulations, which leaves anyone engaged in business open to the arbitrary whim of federal prosecutors.

Even though the federal government's indictment does not charge Stewart with the underlying insider-trading crime for which she was originally investigated, it is charging her under Section 1001 for lying to the FBI and the SEC during its investigation of those charges. On top of that, the federal government charges her with securities fraud for public statements she and her attorney made proclaiming her innocence of insider trading in efforts to halt the decline of her company's stock price.

I am not soft on corporate wrongdoers, and I agree with Michael Novak that "corporate corruption is a poison dart aimed right at the heart of capitalism." (In the spirit of full disclosure, it also should be known that I co-founded and chair Corporate Diagnostics, a firm that advises public and private company executives and their boards on the development of practical strategies and solutions to highly complex business issues.)

By the same token, rogue prosecutors are poison darts aimed right at the heart of our democracy. It's time for Congress to rein them in.

First, Congress should reform insider-trading laws. Second, Congress should tightly circumscribe prosecutors' ability to bring charges under Section 1001. The practice of intimidating and harassing individuals into violating Section 1001 should be stopped. The only way a person should be charged under Section 1001 is if he or she is also charged with the underlying crime that triggered the original investigation during which the alleged false statement or representation was made.

Third, government authorities should never be permitted to scare people into giving up their constitutional right to silence. Therefore, Congress should outlaw all statements by authorities relating to a person's refusal to talk, and the showing that any such statement occurred should ipso facto be considered intimidation and not only preclude the bringing of a Section 1001 charge against the person but also automatically trigger sanctions, and perhaps prosecution, of the government official who engaged in the intimidation. These would all be very good things for freedom.

Jack Kemp

Jack Kemp is Founder and Chairman of Kemp Partners and a contributing columnist to Townhall.com.
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