Legalized Plunder in the Sierra Nevada

A screenwriter and bestselling journalist tells a story of government corruption, deceit, and injustice in his new book *Scorched Worth*

Episode originally aired on June 3, 2018.

Listen, subscribe, or read the transcript:

Bob Zadek: Hello everyone, and welcome to The Bob Zadek Show, the longest running live libertarian talk radio show on all of radio. Thanks so much for listening this Sunday morning.

This morning’s guest is Joel Engel. Joel has had a long and highly successful career as a journalist for the New York Times and The Los Angeles Times, has authored or coauthored nearly 20 books, including The Oldest Rookie, which was made into a movie, The Rookie. His most recent book, which is relevant to today’s conversation, is called Scorched Worth: A True Story of Destruction, Deceit, and Government Corruption.

Who in this world doesn’t like to start a Sunday morning talking about destruction, deceit, and government corruption? Joel will tell us the story of a spark from a tractor that resulted in 12 years of litigation and ongoing fines of hundreds of millions of dollars and unbelievable deceit and corruption by the government. Joel, thank you for writing the book and welcome to the show this morning.

Joel Engel: Thank you. Good morning.

A False Report and a Convenient Scapegoat

Bob Zadek: Tell us what the story of Scorched Worth is about.

Joel Engel: It begins with a forest fire that that started on Labor Day on 2007 in the Plumas National Forest of the Sierra which ended up burning about 65,000 acres and two investigators, one from the California Department of Forestry, “Cal Fire,” and the other from the U.S. Forest Service, that set out to find what had happened. Almost immediately, however, they determined, without really doing any investigation, that a company called Sierra Pacific Industries, which was one of the largest lumber suppliers in the United States, headquartered in Redding, California, was responsible for it because one of its subcontractors that was there cutting some land for them had started the fire with a bulldozer, that by going over a rock, ignited a spark that on a windy day started the forest fire which spread.

Bob Zadek: The question that puzzles me at the outset, listening to your narrative, is that investigators that were investigating a 65,000 acre fire were able to trace the cause to a spark. How did they find where the spark occurred? And is there a monument marking the rock, like a historic monument? How in the world could they have determined that other than by making it up?

Joel Engel: Well, it is a good question and a self-answering question. They didn’t really investigate it. They ignored all exculpatory evidence, invented inculpatory evidence, and lied repeatedly. Cal Fire and the US Forest Service follows a very detailed protocol for forest fires, and they didn’t follow any of those protocols here because they had predetermined, probably by the date of the fire, that they were going to pin it on Sierra Pacific. They wrote a report that ignored almost anything that they didn’t want to include. And the result, two years later, was a lawsuit filed by the Department of Justice, in the Eastern District of California and the State of California itself to two separate lawsuits. The plaintiffs signed a joint prosecution agreement so that they can continue with the investigation together themselves.

The Department of Justice sued Sierra Pacific for $1 billion, and the State sued for $10 million. The Federal suit was going to be heard first unless Sierra Pacific settled, which is really what they wanted all along.

Bob Zadek: So, the story begins with two moderately low level government investigators that fabricate a story that a tractor hit a rock which caused a spark that burned 65,000 acres. They start with that report, which is impossible to either corroborate independently or to challenge because it was totally made up. So was there a point during the 12 years when it was admitted that the report was phony? Was it ever written in a document, acknowledged, or admitted that the whole thing was a fabrication?

Joel Engel: No. The two governments, both the State of California and the Department of Justice, didn’t admit anything. When the lawsuits were filed, the state attorney general and the US attorney who were prosecuting this case against SPI had no reason to believe that their investigators had lied about anything. However, as discovery went on over a period of three years — and fortunately Sierra Pacific had some excellent lawyers out of Sacramento, the law firm of Downey Brand led by William Warne — a terrific lawyer — they were able to comprehensively dismantle all of the alleged facts in this report that was now two years old. One by one, the facts came to light.

For instance, in order for the fire to have been started by the tractor, they had to place the point of the rock at about 250 feet away from where the fire actually started, which you can see in overhead photos. It’s really phenomenal. But no, the Government kept doubling down. They did some very terrible and unethical things in order to keep the lawsuit going.

Bob Zadek: So now we have this investigator’s report which fabricated the cause of the fire. The report gives birth to a litigation. Now, the feds see a billion dollar as a first offer in terms of what they want to settle against. A company, in an industry that in the far west is despised, because they have the temerity to treat growing timber like a harvestable crop rather than worshiping them. So, they are not a favorite industry. The Feds start a lawsuit seeking a billion dollars — a nice, round number, which doesn’t sound like it was calculated to me. And California asserts a more modest claim for $110 million. So now the lawsuit starts and the lawyers are involved. Now, what happens in the litigation that got your attention and that resulted in the book?

Joel Engel: I spent the last 10 years writing about the criminal justice system and how much power prosecutors have in determining people’s lives. And unless they act in the highest and best interests of the law and justice, you are really stuck in fly paper or a bear trap or whatever metaphor you want to use.

In this case, what stuck with me as I looked at the evidence, is that very clearly the Department of Justice lawyer — the assistant of the United States attorney in charge of prosecuting the case — should have looked at what happened with this fallacious report and dropped the lawsuit.

As a matter of fact, they really needed to do something about the specific Cal Fire investigator who was the author of the report, and they needed to get him out of the field so that he doesn’t file anymore false reports. It is impossible to determine why he did it.I assume it was for cost recovery, because they had a fund, a special off-the-books fund that was used for equipment and things like that. Neat gadgets. So, what got my attention was that the prosecutors didn’t drop the case even when it became apparent that the defense attorneys dismantled the report.

Bob Zadek: Now, just an observation. Over the many years that I’ve been broadcasting, I have done a number of shows on civil asset forfeiture, which as my listeners will know, allows law enforcement to confiscate private property if they suspect it’s being used in connection with, or is the fruits of, a crime. This is a federal statute which encourages states to take that action. As Joel said, the police are allowed by law to retain for their own use a portion of what they confiscate and spend it for police business.

So, they spend it on Mercedes police cars and coffee makers and Cappuccino machines for the police station and stuff like that. @Radley Balko wrote a book called Licensed to Steal, about this fact that police are stealing people’s property.

So, when the law creates bad incentives for public workers, those employees will respond to the incentives. Joel has just explained to us another version of the same awful scenario where the government operates as a kleptomaniac, by bringing actions in order to enrich the government itself, and not to obey the law. So the money they would they would recover in fines goes to their special off-the-books fund.

Joel Engel: Well, one of the ancillary benefits of this lawsuit was that during discovery, the defense attorneys discovered the existence of this fund, because the original demand letter from Cal Fire was for x number of dollars, and a smaller percent of it to be sent in a separate check to this other fund that was called the “fighter fund.” So, when they investigated it they found out that it was an illegal, off-the-books fund that was being used for the benefit of Cal Fire employees, and the funds were disbursed at the power of a single man in the department.

It has now been eradicated because of this lawsuit, but that appears to be the most logical reason for the investigators to have targeted Sierra Pacific. That, and there was some enmity towards a forest products company, but that might not be quite as important. Although there was some personal enmity about this particular company based on some very bad feelings left over from previous fire that the company did not start.

To get back to the issue of conscience, how do some people sleep at night? That is really the core of this. In a civil lawsuit, we can hide things from each other that that isn’t helpful to each other’s cases. But in the case of a government entity suing you, they have, the awesome power of the state behind them. So for them to be hiding a inculpatory evidence or exculpatory evidence and inventing inculpatory evidence is as grotesque a misuse of power as I can think of, whether it’s criminal or civil.

Red Emmerson: Exemplar of the American Dream

Bob Zadek: So we have the government lawyers who in their heart of hearts know, or should have known, that this a garbage case, and yet they continue to prosecute for a billion dollars based upon a phony report. Now let’s just take a little side trip. We’ve talked about SPI as a lumber company. Tell us about SPI and its founder, Red Emmerson.

Joel Engel: Well, the company was founded in 1950 by a man named Archie Aldis. And due to his red hair, he got the nickname ‘Red’ Emmerson and has been known as Red Emmerson ever since. To say he had a Dickensian childhood is not even quite right. I don’t know what’s below Dickensian. He had a truly awful childhood. He has basically been on his own since age eight. He started this company as a tiny small mill in Arcadia, California. And slowly, methodically, by outworking and out-thinking everyone, with only a high school education, he built this company into one of the leading lumber suppliers in the United States. This is still a family-run, private corporation.

It is not a public corporation. So, when you hear that Apple or Microsoft or being sued, you go, “Oh, okay. They’re being sued. I understand how both of them were founded. They were founded by Steve Jobs and Bill Gates.”

But in this case, it’s a family held company. Red’s sons now, George and Mark, still mostly control the company. But this company was built on one acre at a time, and Red became the third largest individual landowner in the United States. It became obvious to Red Emerson as the seventies became the eighties and the eighties became the nineties that the Federal Government was making it more and more difficult to cut down U.S. forest lands and trees that would become lumber in the mills, that are used as the engine of civilization. And so he began buying forest lands, and there was a great deal of resentment about him in certain circles. But this man is remarkable. Every American should salute him because that he created and lived the American dream. He was an extraordinary man.

A Fraudulent Litigation

Bob Zadek: So now we have the government versus Red Emerson. How did the litigation go? It sounds like the government had a pretty weak case and SPI had extraordinarily competent counsel. How did the case play out and what behavior did the government follow during the course of the litigation? And how about the judiciary?

Joel Engel: As the case went on and on, on a daily, weekly or monthly basis, the defendant’s attorneys kept uncovering wrongdoing on the part of the investigators and their wrong assertions. It kept being brought to the attention of the parties, in one brief after another, that the investigators had wanted to only look under the lamp-post for their keys because the light was better there and that was where the payoff was going to be. A great deal of evidence pointed to a young man having accidentally or intentionally started the fire. When people talked to him he had volunteered a lot of self incriminating statements, but they never investigated him.

They never looked at anything having to do with them because to put this on a 20 or 21 year old, a young man with no assets, would mean that there would be recovery. or if they deemed it to be a criminal act, they would have to put him away for 20 years and that would be a big cost to bear for the governments. So they didn’t want to find that and didn’t find that. And although this young man who was deposed several times by the government and by the defense attorneys, this was going to be one of the centerpieces of the case, because, if nothing else, the testimony would show the jury just how badly the investigation had been. And yet, right before trial, the lead U.S. attorney told the federal judge that there was not a scintilla of evidence pointing to anyone else’s guilt in this but Sierra Pacific.

Bob Zadek: We have what is called in law a “fraud perpetrated on the court itself.” When an attorney, who has a very powerful duty to the judge, to the court, and that attorney intentionally misleads the judge, he or she commits a fraud on the court. I invite our friends out there to focus on this issue. The government is our representative. When the government is prosecuting a case, the plaintiff is the “people” (for a criminal case, but it has the same effect in a civil case). So, from the investigator to the administrators in Cal Fire, to the assistant U.S. attorney, they are all performing their acts in our name and on our behalf. And to the extent that happens, we are implicated. In supporting this kind of behavior and not rising up and protest, we are allowing these very bad acts to be done in our name. And that is despicable.

You were telling us about the misbehavior, the withholding of evidence, and the blatant fraud perpetrated upon the trial judge by the government attorneys. What happened next?

Joel Engel: Well, so after the assistant U.S. attorney warranted in a brief to the federal judge that to try to point the finger at anybody else would be basically an arson witch hunt. That was the term she used in the brief, and the federal judge agreed. This prohibited SPI’s attorneys from putting the young man on the stand even though there were many legitimate questions about his involvement. That meant that SPI could still be held responsible for damages even if it hadn’t started the fire. So that forced the company to settle with the Feds. So, the total amount of the settlement was about 22,500 acres and $50 million. And the Feds determined that the settlement was worth $125 million, which allowed them to tout the largest wildlands recovery in the history of the United States. So there were champagne corks popping all over and they were sending out press releases. The biggest problem with that wasn’t discovered until a year later when The State of California was going through with their suit. So, a nearly identical suit was about to be tried by the State of California with the same witnesses and everything.

Then the father of this young man who potentially started the fire, either intentionally or by accident, when he was served by the U.S. attorneys and subpoenaed as a trial witness, told them that the defense attorneys had offered his son $2,000,000 as a bribe, if the son would admit to having started the fire.

Bob Zadek: Oh my goodness.

Joel Engel: The father obviously thought that Bill Warne would have known about this. It turns out that the assistant U.S. attorney kept this to herself. The Feds did a very cursory investigation — I’m sure they suspected from the beginning that it was false — but they did do an investigation. They contacted the attorney who allegedly proffered the bribe and he said he had no idea what he was talking about. They did investigate it and they dismissed it. But what they never did was tell Bill Warne, the defense attorney, or the court, that this had happened. And the reason, I suspect, is that if she had done that, this was a material fact that she was obliged to present to them, and she would not have been able to assert in her pretrial brief that there was not a scintilla of evidence pointing to anybody else.

Joel Engel: Therefore the trial would have gone on and the outcome of that trial can be reasonably supposed by what happened in the State Court. And what happened in State Court was that the Superior Court judge, who looked at all the pretrials filings and at all of the evidence (he’s a very careful man named Nichols in Plumas County. He looked at it and said that this was one of the one of the most egregious miscarriages of justice he had ever seen. He dismissed the entire thing and he fined Cal Fire $32 million for its malfeasance, which turns out to be the largest fine ever administered to a government entity in American history.

Misaligned Incentives: A Need for Judicial Engagement

Bob Zadek: Our libertarian friends out there hold as a core tenet of life and the relationship between citizens and their government the issue of accountability. People should be accountable for their actions and get credit where their actions do a positive good and be punished or suffer consequences if their actions are bad. But what you have just explained to us is that when the government, which is nothing other than us taxpayers collectively, it does bad acts in our name and is fined as a consequence, it is us taxpayers who again pay. We pay twice. We pay for the bad behavior of government and we pay when that bad behavior means that we collectively bear the burden of the fine.

So it pains me to hear this because here we have the bad actors, the government, but you have not told us that any human being on the government side, any human bad actor ever suffered any adverse consequences. So, government workers get a universal free-pass to behave as despicably as they wish. They do so with utter impunity.

Joel Engel: Correct. In this particular case, it was bad that the U.S. attorneys who continued to prosecute the case even though the investigation turned out to be fallacious. But at the core of this, I think the happiest man in this whole saga is the investigator. Because if he was forced to take the stand he would either have to tell the truth that his report was fallacious, or he would have to perjure himself. And either way very bad things would happen to him. Instead, since this has happened he has had at least two promotions that I know about. So he continues to rise in the organization. But because there weren’t trials, he never had to face consequences for what it was that he did.

So the money aside, it’s the legal jeopardy that he has avoided. And I have to say of all things, that is what bothers me most. Now, when Sierra Pacific used as a springboard the State case to try to get the settlement thrown out and undone or go back to court and actually adjudicate this case with the Feds, it was was denied by the District court. Then it went to the Ninth Circuit Court and based on the fact that Bill Warne and the defendant’s attorneys had not been told about the false bribe allegation.

This is where things get very bad in the justice system. Once you’re in it, the force of inertia that keeps the people who had already been adjudicated as guilty is so strong that it is like a Star Trek tractor beam. The Ninth Circuit actually said that it was essentially irrelevant that they had not been told about that because a Brady violation, which was a Supreme Court case in 1963 requiring prosecutors to disclose all exculpatory evidence to the defendants does not apply in civil cases. Now, there’s no reason for that, but the reason the Ninth Circuit turned down the appeal is because of that. So, that is why it is really important on both the criminal level and civil level not to lose at anytime.

Bob Zadek: The astonishing thing is that your book is not a political treatise but a story. But, as I have observed and mentioned during this broadcast, this is so life-affirming for two core libertarian principles. You just mentioned another one when you talked about Judge Nichols who took the initiative to throw the case out at the state level. On the other side of the spectrum, the Federal court was reluctant to go forward. We have talked many times on this show about the issue of judicial engagement — that judges have a duty to engage themselves and to pour through evidence and to tell the government to stop if they are engaging in bad behavior. Judges are the only barrier, and we have in your story, one judge who was a hero who did that. The Ninth Circuit took the other approach. So another takeaway is how essential it is for judges to become what we call an “engaged judiciary,” rather than simply rubber stampers, because the bad actor is the government.

Joel Engel: Yes, I, I agree with you completely. The sad thing is that the judges have to be that backstop. The reason is that you do not get pats on the back for delivering justice. You only get rewarded for bringing in cash or convictions. Human nature being what it is, you have to rely on people’s consciences, which is a very slim thread to base the entire criminal justice system on. The other thing that is really important is having a terrific defense attorney. If you don’t do that or if you can’t afford it you are toast in that sense too. Because the awesome power of the state is very difficult to fight without somebody who really knows how to fight and wants to win.

Bob Zadek: You pointed out the incentive of a prosecutor is to put a lot of notches on the handle of his gun. Humans naturally respond to incentives. So, if you tell a trial assistant U.S. attorney that you get paid for wins, he or she will do everything they can to win. But the incentive, as you have said, should be to do justice. But the trouble is that there is no money in doing justice. There is only money in getting wins at whatever cost. So it is the incentive system that is to be criticized, because it is human nature to respond to incentives. Now, does the story have a happy ending or a sad ending?

Joel Engel: The State of California has appealed to both the Court of Appeal, which is the next level up from Superior Court, and the State Supreme Court, trying to appeal judge Nichols decision, and they have lost both times. The decision stands. They confirmed his findings. As for the Federal case, as I said, SPI appealed to the district court and that failed, and then they appealed to a three-panel judge at the Ninth Circuit and that also failed. And my understanding is that Sierra Pacific, subsequent to the book being published or going to print, has appealed to the Supreme Court. There is always a very small chance that the Supreme Court is going to grant cert to hear the case. They are trying to get the settlement thrown out as a fraud on the court and there is a very small chance of that happening.

I have no idea if this case has a better than usual chance or not. As we are getting near the end of the term, I don’t think that the company has heard back. It is interesting to point out, apropos of what you were just saying, that in the Brady v. Maryland 7–2 decision written by Justice William O’Douglas, that mandated that prosecutors share exculpatory evidence with the defense or suffer sanctions. It was a seven to two decision, written by Justice William O’Douglas, and he quoted an inscription on the walls of the Department of Justice, which says that the United States wins its point whenever justice is done its citizens in the courts. It doesn’t specify criminal courts. It just says in the courts. And so you would think that that would be the standard here. And yet the reason that the Ninth Circuit turned it down and the reason that the company had to try to get some relief that from the Supreme Court was because that standard doesn’t apply in civil cases, which makes no sense at all.

So is it a happy ending or a sad ending? It is the ending that it is, and, like some of the best drama, it is the ambiguities that make it linger.

Plea-bargaining: Habitualized Extortion?

Bob Zadek: Another interesting observation that I have about libertarian principles and your story is that the Federal Government sought a billion in damages. Needless to say, that was not a calculation they made. There is no excel spreadsheet where they did a whole lot of math and they came up with a billion dollars. That was just a very high number designed to induce a settlement. It was a litigation tactic, not a calculation. The reason I mention that is that we have discussed on my show many times how plea bargaining has been used in criminal cases to in effect lock people up. It is a confession even though they might be innocent. Federal and State prosecutors in criminal cases give the the defendant the option of either a term of 45 years or, if the defendant confesses to a lesser offense, the defendant will only be away for five years and with good behavior, two and a half. And two and a half years is much better than 45.

In other words, they use the power of the statute to coerce people into signing confessions and accepting plea bargains. 96 or 97 percent of all criminal cases are resolved by plea bargaining to eliminate the jury system and to exact wins for the prosecution. And here this was the very same tactic.

Bob Zadek: So, once again, core principles that offend us libertarians — core methods of behavior by government — were used yet again. So, how many important core libertarian principles are involved in the wonderful narrative you have told?

You have done us all a great service in writing the book. The book is a page turner. Once you start reading it, you cannot put it down. It is well-documented, well researched, and is a great story. Now, Joel, you have written about a dozen books. How does our audience follow your writings? Do you blog? Do you tweet? How can people follow your thoughts?

Joel Engel: I tweet at @Joel Engel. I also have a website that I don’t use much anymore. I used to blog but I lost some interest in it. I have an Amazon page. It is pretty easy to Google me. As I said, I have spent the last 10 years writing about the criminal justice system. A few years ago I wrote a book called L.A. ’56. It is true crime drama took that place in Los Angeles in 1956 about the abuse of police power

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