I Was Set Up by the FBI

Leader's Edge Magazine
March, 2005 Issue
By Jim Brown

No longer stymied by a federal gag order, former Louisiana Insurance Commissioner Jim Brown speaks his mind, declares his innocence and points the finger at the FBI.

Editor's Note: Former Louisiana Insurance Commission Jim Brown recently published a book about his fight with the federal government and conviction for lying about a crime that was never committed. In an exclusive article for Leader's Edge, Brown tells his side of the story and about what it's like to be one of the good guys, until the good guys turn on you.


I gave hundreds of speeches in 12 years as Louisiana’s elected insurance commissioner. To lay groups, I often explained that insurance is to protect someone against a possible eventuality. To the more informed in the business, I referred to it as “the development of probability theory allowing the statistical likelihood of damage to be calculated.”

It all boils down to the odds of something bad happening.

There are no sure bets in insurance, but I would have laid odds on this one: though my two predecessors were embroiled in scandal, there was absolutely no way I was ever going to have a run-in with the federal government. I was the good guy, making insurance fraud cases against crooks who were then prosecuted by the Feds. I thought I was on their team. Boy, was I in for a surprise.

My world changed dramatically in September 1999. Just weeks before my re-election to a third term, I was blindsided with a 56-count indictment involving insurance fraud. I was stunned, and I felt betrayed by my government. False and outrageous charges were undermining some 30 years of honorable public service. Remember the opening lines of Franz Kafka’s The Trial? “Someone must have slandered Joseph K., for without having done anything wrong he was arrested one fine morning.” That’s exactly how I felt. Slandered and deceived. Persecuted by those who are supposed to protect.

When I was first elected as Louisiana’s top insurance regulator in 1991, I had quite a mess to clean up. The two commissioners before me served jail time for taking bribes from questionable characters in the insurance industry. Insurance companies were not being regulated. Thousands of claims owed to policyholders were unpaid. A number of insurance companies were broke and should have been shut down years earlier.

After many long hours working with a thoroughly trained young staff, I was able to build a new department from scratch. Our effort garnered positive attention from all corners.

The Journal of Commerce concluded that, “Louisiana’s new insurance commissioner is making good on his promise to clean house.” The Baton Rouge Advocate said my changes “have helped turn Louisiana from a state with a tarnished image to one that appears to be headed in the right direction.”

We completely restructured insurance regulation in Louisiana. I shut down some 45 insolvent companies and made more than 100 criminal referrals to the FBI and other law-enforcement agencies. “A big part of our success in getting convictions of insurance executives is that we have been given cases that are eminently take-able,” the U.S. attorney in New Orleans told Best’s Review magazine. “Jim Brown’s office gives us cases we can get convictions on.”

Eight years went by, and I was comfortably on my way to being re-elected for a third term when all hell broke lose. The FBI and the local U.S. Attorney’s Office had been investigating former four-term Gov. Edwin W. Edwards. This was nothing new, as Edwards had been under a microscope for most of his political life. This time, the investigation centered on gambling licenses. But in the process of taping his telephones, the Feds overheard discussions concerning Edwards’ representation of a financially impaired insurance company called Cascade. Little stock was put in the insurance angle because there were no victims. Every policyholder was paid, and the state suffered no losses. So how could there be a crime?

But the charges rained down in 1999, including 13 counts of my making false statements to an FBI agent. These charges were based on a 30-minute interview that I viewed as routine and of no consequence. But that interview clearly marked the beginning of a long nightmare.

Who Wants to Be First?

Aspects of the charges against me and the subsequent trial were, my lawyers and I discovered, unprecedented. I was the first statewide public official in this country to be indicted just a few weeks before re-election. I was the first public official in this country to be put under a gag order minutes after I was indicted, severely limiting my ability to speak out fully in my own defense. I was the first public official to be tried by an anonymous jury—one of the most secretive trials in U.S. history. The jury in my case was selected behind closed doors with the press and my family barred from the courtroom.

But here was the real backbreaker: I was prohibited from seeing the FBI agent’s handwritten notes of my interview. I became the first person in the history of the United States to ever be convicted of making false statements yet denied the right to review the handwritten notes of those false statements. It just had never happened before.

Even more bizarre, a co-defendant in my case, a lawyer from Shreveport, was also charged with making false statements by the same FBI agent. He was able to get the handwritten notes from the prosecutors, and he effectively used those notes to show that statements he made were true. So he gets the handwritten notes and is found not guilty. I don’t get the handwritten notes, and I am convicted.

However you look at it, it was a real miscarriage of justice. After my conviction, the press weighed in, nearly unanimous in their condemnation of what happened to me.

“Brown was the victim of an FBI trick, which may not meet the legal definition of entrapment but will strike any fair-minded layman as dirty pool,” the New Orleans Times-Picayune intoned. “He had, after all, done nothing wrong. The feds did notch up one success, and they should be ashamed of it. It was a dud case from day one.”

And from the New Orleans Gambit Weekly, “Years from now, they’re going to call it the Jim Brown Rule: if you’re a public official in Louisiana, do not talk to the FBI. Not under any circumstances. Not even if you’re innocent and have nothing to hide. Especially if you’re innocent and have nothing to hide. There’s little justice to be found in his conviction.”

The Fifth Circuit Court of Appeals backed the trial judge, essentially saying it would be too much of a burden on the FBI to have to keep anything handwritten. What was important, the court said, was the testimony of the agent. Who cares if his handwritten notes might contradict his testimony? It matters not that the obvious “best evidence” would be the contemporaneous handwritten notes taken at the time of the interview.

Press reaction to the appeals court decision was equally supportive. The Times-Picayune continued raising questions about the unjust decision, saying the case against me was “incompetent and unscrupulous, the prosecution’s theory of the case utterly preposterous and the trial a travesty.” Pretty strong stuff from the state’s largest paper.

Two years after my conviction, the handwritten notes were made public. Not surprisingly, they revealed distortions in the typewritten statement the FBI agent prepared days after the interview. The notes do not support the charges on which I was convicted. The notes also differed dramatically from a number of statements the agent made at my trial.

In one example, the agent testified that I lied by telling him during the interview that I had not discussed “settlement issues or what it would take to settle” the Cascade matter with various people, including Edwin Edwards. The agent’s typed statement makes repeated references to “settlement issues,” but the phrase appears nowhere in his handwritten notes. That’s because I never said that I didn’t discuss settlement issues. During the interview, I denied negotiating with these people or being part of the final settlement negotiations on the Cascade matter. And that was the truth.

In any other federal circuit in the country, I would have received the handwritten notes before my trial. And I would have been found innocent.

On Second Thought…

While I was serving a six-month prison sentence, one of the jurors read the handwritten notes and called a press conference. She made it clear that she and other jurors she’d spoken to would not have convicted me of making false statements if they had seen the FBI agent’s notes during the trial. She told the press, “I wish I could go back and change it. I never thought he would go to prison.”

The juror had one final comment: “I believe in the system far less after being on that jury.”

Bittersweet? Of course, but legally, it really made no difference. There is no legal procedure to reopen the case and reverse my conviction. What’s done is done. If you live in Louisiana, the truth doesn’t matter.

Is my heart still full of bitterness? Not really. What happened to me was an aberration. When the U.S. Justice Department unloaded on Edwin Edwards, I was caught in the crossfire. But I do miss being an insurance regulator. I had the unique opportunity to build an insurance department from scratch, and in some way, touch the lives of hundreds of thousands of Louisiana citizens. On the international scene, I played a key role in the reconstruction and renewal of Lloyd’s following major financial problems in the early 1990s.

Not a day passes when I am not asked about the injustice that took place. At the movies, in restaurants, just about anywhere my wife and I go, people stop us to express their regrets and support. I would like to put the whole experience behind me, but it’s not that easy. I will always be sustained by the belief that I was right and by knowing that, even when justice failed me, I didn’t back down.

Was the time I spent in public life worth all the tragic events that happened at the end? That’s not hard to answer. I thoroughly enjoyed my 28 years as an elected official, but I can’t change the way it ended. Garth Brooks said it pretty well: “Our lives are better left to chance. I could’ve missed the pain, but I’da had to miss the dance.”


The Case of Jim Brown:

Convicted of lying about a crime that was never committed.

Insurance Commissioner: December 1991–April 2003

Indicted: September 1999, just before election to third term

Charged: 43 counts of mail, insurance and wire fraud, conspiracy and witness tampering, and 13 counts of making false statements

Convicted: November 2000 on seven counts of lying to an FBI agent; acquitted on all other counts

Sentenced: March 2001

Served: Six months in Oakdale, Louisiana, federal prison

Released: April 11, 2003 probation ends this year

In 1996, the FBI wiretapped Louisiana Gov. Edwin Edwards’ home phone in an investigation related to extortion for riverboat gambling licenses. Edwards and others were convicted in May 2000.

The wiretap that led to Edwards’ prosecution also generated the charges against Insurance Commissioner Jim Brown, who was well regarded for bringing some integrity back to the state’s system of insurance regulation. The tap disclosed 71 conversations related to Edwards’ legal representation of David Disiere, who owned Cascade Insurance Co. Disiere had hired Edwards to help advance the rather heated liquidation negotiations with the receivership judge. Some of those discussions were with Brown.

The prosecutors charged that Edwards, Brown, Disiere and his attorney Ronald Weems, insurance duty judge “Foxy” Sanders, and Louisiana Receivership Office Director Robert Bourgeois all engaged in a complex trading of favors related to the Cascade settlement. Edwards supposedly offered Sanders a way to influence closure of a federal grand jury investigation. The government said Brown wanted Edwards to help him run for a U.S. Senate seat and regain authority over receiverships (ceded to Sanders in 1995). Disiere’s “prize” allegedly was an incentive for a court-appointed investigator not to pursue legal action or a criminal investigation of him.

In January 1999, Brown and the other defendants were indicted on 43 counts of mail, insurance and wire fraud, conspiracy and witness tampering. Brown’s indictment also covered 13 charges of making false statements to federal officials. Sanders, Disiere and Bourgeois pleaded guilty to reduced charges.

At the end, Brown was convicted of seven charges of lying to an FBI agent. The jury acquitted Brown, as well as his co-defendants, of all other charges.

“Jim was left being convicted of lying about a crime which the jury said did not occur,” says John Hill, the Gannett Capitol reporter for the Baton Rouge Business Report “Believe me, as a political journalist in Louisiana, I have had a career of going into courtrooms covering trials, and most of the time you can say they deserved to be there because they were greedy. In this instance, what did Jim Brown do? Well, he approved a settlement agreement that everybody agreed to.”

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