Crime and Punishment: Statutory Tools

• Author: Miriam Weismann
• Pages: 21-44

21

C 3

CRIME AND PUNISHMENT

STATUTORY TOOLS

“White-colla r criminalit y in business is expressed most frequently in t he for m

of misrepresentation in f inancial statements of cor porations, manipulat ion in

the stock exchange, c ommercial bribery, bribery of public off icials direct ly or

indirect ly in order to secure favorable contract s and legislation, misrepres en-

tation in advertisi ng and salesmanship, embezz lement and misapplication of

funds, short weig hts and measures and misgradi ng of commodities, tax frauds ,

misapplication of fu nds in receiverships and bank ruptcies. These are what A l

Capone called ‘t he legitimate rackets.’”

I. Fraud

Corporate crime is pri marily financia l crime. This chapter describes the most com-

mon forms of financial f raud in terms of various statutory crim inal offenses, includ-

ing: mail fraud a nd wire fraud, the proverbial scheme and ar tifice to deprive the

victim of money or property u sing the mails or the wires; ba nk fraud, which is closely

. Edwin H. Sutherland , White-Collar Criminality, in C  P: R  W-

C C ,  (Neal Shover & John Paul Wright, eds ., Oxford Univ. Press ).

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22 Crime and Punishment

related to mail and wire f raud; money laundering, hiding the source or natu re of cash

generated in violation of some other provision of federa l law; bribery of public offi-

cials; program f raud by t heft; tax fraud, including il legal slush funds or false report-

ing; securit ies fraud and the application of Rule (b)(); “process crimes” including

obstruction, perju ry, and false statements; and conspiracy. The disc ussion is aimed at

identifying t he most common forms of corporate and organizational misconduct a s

opposed to the nuanced aspec ts of any particular statute.

In terms of corporate prosecutions, thes e crimes are typif ied by discreet finan-

cial trans actions or a pattern of transact ions. The crimes are usual ly engineered by

management and/or employees of the corporation. They are often not complex and

do not involve much technical knowledge of fina nce or accounting. Most prosecutors

and practitioners understand t he targeted transact ions in fairly short order. Often,

the most complicating factor is t he paper. Usually there is lots of it, and the cri mes

are pieced together by federal agents exp erienced in such matters from the Federal

Bureau of Investigation (FBI), the Internal Revenue Ser vice (IRS), the Postal Inspec-

tion Service, a nd other federal agencies. Because these ca ses are labor intensive, pros-

ecutors routinely seek to simplif y the charges, opting to prosecute t he easiest case

under the most straig htforward statute. However, after /, most of the available case

agents were reassigned to antiterrorism task forces reducing the number of white

collar crimi nal prosecutions. Despite Department of Justice (DOJ) attempts to put

a positive spin on the statistics i n it s 2008 Corporate Fraud Task Force: Report to the

President, an enforcement study covering the period –, shows that from

 to , prosecutions of frauds against fina ncial institutions dropped  per-

cent, insurance fr aud cases dropped  percent, and securit ies fraud cases dropped

 percent. In the  budget cycle, t he FBI obtained money to fund the hiring of a

single agent for crimina l investigations.

The Transactional Records Access Clear inghouse (TRAC), which compiles its

statistics t hrough Freedom of Information Act requests to the DOJ, provides fur ther

insight into national profi le a nd enforcement t rends on a mont hly and annual basis.

The fiscal ye ar  report of FBI convictions, includi ng statistics throug h June

, shows that monthly convictions for cu rrent FY  were down . percent

from the same period s the year before, and down . percent from five years before. 

According to the data for the month of June , t he government reported  con-

. Available at htt p://www.usdoj.gov/dag/cftf/corp orate-fraud.pdf .

. Eric Lichtblau, David Johnston, & Ron Nixon, F.B.I . Struggles to Hand le Wave of Fin ancial Fraud

Cases, N.Y. T, Oct. , .

. Based at Sy racuse University, TR AC gathers, researches , and distributes i nformation about staf fing,

spending, a nd enforcement activit ies of the federal governme nt. http://trac.syr.edu /.

. Transactional Acces s Clearinghouse , Convictions for June  , http://trac.syr.edu/t racreports/

bulletins/ jfbi /monthlyjun/gui/ (Oct . ).

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