TABLE OF CONTENTS INTRODUCTION I. COOPERATION'S CONTEXT II. THE DETECTION EFFECT OF COOPERATION A. Neoclassical Economics and Deterrence B. Cooperation's Detection Effect 1. Eliciting Information 2. Altering Criminal Conduct Ex Ante 3. Leveraging the Benefits of Stealth C. Some Limitations on the Detection Effect 1. Government Abuse 2. Inaccurate and False Information a. Unintentionally Inaccurate Information b. Information Overload and Agency Costs c. Cooperator Lies i. Minimization Lies ii. Criminal History Lies iii. Lies About Others D. Conclusion III. THE SANCTION EFFECT OF COOPERATION A. Background on Cooperator Sentencing B. Three Factors that Increase the Sanction Effect 1. Excessive Cooperation 2. Excessive Discounts 3. Excessive Optimism IV. THE SANCTION AND DETECTION EFFECTS COMBINED A. Measuring the Interaction of Detection and Sanction Effects 1. The Presumed Magnitude of Detection 2. Three Possibilities B. Reducing the Sanction Effect: A Difficult Endeavor CONCLUSION Introduction
Cooperation is a pervasive component of criminal prosecutions. (1) Criminal defendants and their attorneys routinely offer information and assistance in the prosecution of other criminals in exchange for leniency at sentencing. (2) Criminal laws that cover a broad range of conduct and long sentences that apply upon conviction have combined to create substantial incentives for criminal defendants to trade their assistance in exchange for leniency. Given cooperation's popularity as a criminal law enforcement tool, (3) as well as its increasing importance in regulatory settings, (4) this Article reconsiders the long-held presumption that cooperation deters criminal conduct. (5)
This analysis has implications not only for criminal law, where cooperation is most prevalent, but for other areas of government regulation, where public actors have steadily increased their reliance on the promise of leniency to induce the flow of information and assistance from individuals. (6) Moreover, it moves the cooperation discussion forward in a more productive way. Currently, the proponents and detractors of cooperation talk past one another. Supporters argue that it benefits society by increasing the government's ability to detect and prosecute crime. Detractors contend that it is unfair to defendants (usually, those who have failed to secure an agreement) and provides the government with excess discretion and power. Cooperation's critics therefore seek procedural reforms, such as taping cooperating defendants' statements before they testify, or limiting prosecutors' discretion to choose or decline cooperation once a defendant has volunteered to assist the government. These reforms may make cooperation more costly (to the government) and more legitimate (in the eyes of noncooperating defendants), but they do nothing to help us address the core question of whether cooperation deters crime.
Drawing on economics and, to a lesser extent, behavioral psychology, the Article examines cooperation's value by unpacking the motivations of the government agents who supply cooperation agreements and the defendants who demand them. (7) The neoclassical theory of deterrence holds that the rational person refrains from engaging in wrongdoing when the expected costs of such wrongdoing--the sanction modified by the probability that it will be imposed--exceed its expected benefits. (8) Cooperation deters wrongdoing by increasing the government's ability to locate, identify, and prosecute those who flout the law. (9) This is the "Detection Effect" of cooperation; by trading leniency for information and assistance, the government increases its ability to identify and prosecute wrongdoers, and by increasing the expected cost of criminal conduct, the government's use of cooperation arguably deters crimes. This is the primary, if not exclusive, justification upon which cooperation's supporters often rely.
Apart from the Detection Effect, however, cooperation provokes an entirely different response from potential wrongdoers: cooperation reduces the sanctions of those who successfully cooperate and receive leniency at sentencing. Accordingly, it encourages criminals to expect reduced penalties to the extent they believe they are likely to become cooperators and receive discounts for their valuable services. This is the "Sanction Effect" of cooperation, and it has received little to no sustained analysis in the literature examining cooperation.
The Sanction Effect competes with the Detection Effect; the former increases incentives to commit crimes, while the latter decreases them. (10) When the individual perceives a greater Detection Effect than Sanction Effect, the expected costs of his criminal conduct increase; if those expected costs exceed his expected benefits, he will be deterred. (11) But what if the criminal perceives a stronger Sanction Effect than Detection Effect? in that case, the policy reduces deterrence. (12) This is because the policy effectively reduces the expected cost of engaging in wrongdoing. Add to the mix cooperation's administrative and transactional costs, and we may have a policy whereby we literally pay for more crime.
Cooperation thus is a complex process that places competing pressures on the costs and benefits of committing crime. (13) Although traditional discussions of cooperation accept the premise that the Detection Effect overwhelms the Sanction Effect and then criticize cooperation's many collateral costs,14 their implicit assumption may not always be the case. Moreover, if the Sanction Effect exceeds the Detection Effect, our attempts to remedy this problem may upset other components of an already fragile sentencing ecosystem. For all of these reasons, future analyses of cooperation must question its overall effect on deterrence.
This Article explores this problem in four parts. Part I lays out the backdrop for the Article's analysis. It briefly reviews the common criticisms of criminal cooperation and observes that despite these critiques, cooperation remains quite popular and may be migrating beyond its traditional criminal law context, most notably to the Securities and Exchange Commission (SEC), whose Enforcement Division chief notably announced the Division's plan to ramp up investigations by relying on cooperators. (15) Part I then goes on to explain why organizational cooperation, whereby corporations cooperate with regulatory authorities in order to reduce fines and avoid criminal indictments, is significantly different from individual cooperation, which is the core focus of this Article.
The remainder of the Article then considers whether and when cooperation is most likely to deter or fail as a law enforcement tool. Using the federal criminal justice system as its case study, (16) Part II starts by exploring the Detection Effect of cooperation on individual wrongdoers. Part ii attempts to lay out the reasons why the Detection Effect exists and identifies those characteristics of cooperation (the government's inability to use information effectively, the possibility that defendants may lie, the potential for government abuse) that place a downward drag on the Detection Effect.
Part III proceeds to consider the other side of cooperation, namely, the Sanction Effect. Presumably, any cooperation policy inherently reduces the sanction that defendants--at least those defendants who believe cooperation is a plausible outcome--expect to receive. Part iii, however, attempts to identify those phenomena that might inflate the Sanction Effect beyond efficient levels. They include (a) extending agreements to too many defendants, (b) paying them too generously, and (c) either causing or failing to debias the defendants' optimism regarding the likelihood of their cooperation and leniency they might receive at sentencing. Through all of these, government actors may undermine cooperation's value as a crime-fighting mechanism.
Part IV then considers the interplay between Detection and Sanction Effects. This Part begins by addressing the common perception that the Detection Effect will likely outweigh the Sanction Effect since defendants are substantially more attuned to changes in the probability of getting caught than changes in a given sanction. Despite this behavioral truism, Sanction Effects may be particularly pernicious in the cooperation context when defendants perceive a probable sentence of no incarceration instead of a mere reduction in incarceration when they cooperate. (17) Accordingly, it may not be the case that the Detection Effect is always stronger than the Sanction Effect.
in any event, even when the Detection Effect outweighs the Sanction Effect, we still should be concerned that our cooperation policy is less effective than we presume it to be. Even worse, when the Sanction Effect exceeds or matches the Detection Effect, society clearly loses, either by encouraging more crime or by implementing a costly policy that fails to reduce crime.
Finally, as Part IV explains, when government actors attempt to cure this imbalance, additional costs arise. For example, one way to cure the Sanction Effect is to raise the baseline sanction for an underlying crime. This, however, creates greater differences in how we treat cooperators and noncooperators at sentencing and therefore increases incentives for defendants to lie in order to secure cooperation agreements. Those falsehoods, in turn, reduce the government's ability to detect true wrongdoers. In other words, an attempt to cure the Sanction Effect may simultaneously harm cooperation's Detection Effect. Thus, cooperation's pathologies, even when acknowledged, are difficult to cure.
Part V concludes by considering the policy implications of the foregoing analysis and calling for more research. Even where cooperation has been relatively "formalized" in the federal criminal justice system, our knowledge of cooperation is informed by the limited data released by the Sentencing Commission,...