Three ex-General Electric traders are seeing the outside sooner than anyone expected after their convictions were overturned. Photographer: Daniel Acker/Bloomberg
Three ex-General Electric traders are seeing the outside sooner than anyone expected after their convictions were overturned. Photographer: Daniel Acker/Bloomberg

It wasn't long after three former General Electric Co. executives were convicted of rigging auctions for municipal-bond investment contracts that they received the ultimate sendoff: A 7,400-word torching in Rolling Stone magazine by Matt Taibbi, the writer who branded Goldman Sachs Group Inc. with the nickname "vampire squid."

"Someday, it will go down in history as the first trial of the modern American mafia," Taibbi began his June 2012 opus about Dominick Carollo, Steven Goldberg and Peter Grimm. "Over 10 years in the making, the case allowed federal prosecutors to make public for the first time the astonishing inner workings of the reigning American crime syndicate, which now operates not out of Little Italy and Las Vegas, but out of Wall Street."

Then came a surprise last week, right before Thanksgiving. A federal judge ordered the men released from prison. An appeals court had reversed their convictions the day before, without explanation. An opinion would be issued "in due course," it said. Bloomberg News ran a short story this week. The rest of the news media barely noticed.

Americans tend to like their crime stories simple: Good guys catching bad guys and sending them to jail. Nuances and complexities can complicate morality tales. The country is still baying for blood after the financial crisis. Folks want the people who they think helped crash the economy locked up and fed bread and water in place of Cristal and lobster.

The case against the former GE bankers is a reminder that high-profile financial-crime cases rarely are cut and dry. Even when prosecutors win, they still might lose later, especially if the defendants can afford top-notch appellate lawyers. Until last week the GE Three were considered criminals. Now they are innocent in the eyes of the law, and we don't even know why yet. It's possible that the government will appeal further and win in the end. A resolution seems far from final.

A reversal like this helps explain why some prosecutors might hesitate to bring difficult white-collar cases to trial. The Justice Department seemed to pull back from pursuing financial-crisis cases after two former Bear Stearns Cos. hedge-fund managers were acquitted of fraud charges in 2009. (One of the jurors said after their trial that she would invest with them if she had the money.) It's easier to rack up wins by going after small fry for simpler crimes.

Carollo, Goldberg and Grimm each had been convicted on multiple counts of conspiracy to commit wire fraud. Prosecutors accused them of paying kickbacks to brokers hired by cities and towns to oversee the bidding on municipal-investment contracts, which local governments use to invest the proceeds from bond sales. Goldberg was sentenced to four years in prison. Carollo and Grimm got three years each.

Although the appeals court hasn't yet explained its decision, the defendants claimed that the statute of limitations had elapsed by the time they were indicted in 2010. They also complained that they hadn't been allowed to finish cross-examining one of the government's key witnesses after he attempted suicide during a break. The government said he couldn't return for further questioning.

What should we make of their sudden freedom? Sometimes justice is rough. Sometimes it seems random. It's often messy. Some judges disagree with other judges' rulings. Some crooks get pinched while others who seem guilty as sin never get charged. Mysteries abound as to why. Insider-trading cases get hot, so other frauds get put on the backburner. The government rarely explains why it chose not to prosecute someone, leaving the public to speculate.

And what are we now to make of GE's own decision in 2011 to enter a non-prosecution agreement with the Justice Department, under which it paid $70 million? As part of that deal, GE made this admission: "From 1999 to 2004, certain former traders who bid on municipal contracts on behalf of the company entered into unlawful agreements to manipulate the bidding process on certain relevant municipal contracts, and caused the company to make payments and engage in other related activities in connection with those agreements through at least 2006."

In other words, the company turned against its former employees. Maybe GE could have beaten the government's rap, given that the former executives' convictions have been overturned. We'll never know. Even if it turns out they got off on a technicality, Carollo, Goldberg and Grimm deserve respect for having the guts to demand that the government prove its case in court. That is something large financial institutions rarely try. Perhaps more should.

One final note: The Justice Department issued news releases to trumpet the former GE executives' indictments, convictions and sentencings. It didn't issue a news release to say that their convictions had been reversed. That sure doesn't look like fair play or justice to me.

(Jonathan Weil is a Bloomberg View columnist. Follow him on Twitter.)