Thursday, September 4, 2014

If you provide a financial disincentive, who cares?

So anyways, I've been writing about white collar crime lately. There was my Tuesday post about misdoings in Progreso, Texas, and my more recent post about SDVOSB fraud. In addition, the FBI has discussed another case - this one involving artificial inflation of revenue by some ArthroCare Corporation executives.

All of these resulted (or will result) in convictions.

Jose Vela, mastermind of the Progreso fraud that cost taxpayers, was sentenced to 151 months in prison.

The SDVOSB fraud, which resulted in $23.5 million of fraudulent contracts, could put Ram Hingorani in prison for up to two years.

And finally, the ArthroCare Corporation case, which resulted in losses (including shareholder losses) of $750 million, resulted in a 20 year sentence for former ArthroCare Corporation Chief Executive Officer Michael Baker.

Are these sentences too light? Too harsh? Consider the effects of white collar crime. Sam Antar:

White-collar crime is more brutal than violent crime. The actions of one or a few corrupt public officials and corrupt businessmen can affect the livelihoods of thousands, even millions of people.

But on the other hand, Antar says the following:

Many people mistakenly believe that strong punishment such as long prison sentences is a major deterrent to white-collar crime. Recently, many white collar criminals have received very stiff prison sentences, which I firmly support. At best, it holds those guilty of white-collar crime accountable and responsible for their actions. However, strong punishment does relatively little to prevent white-collar crime. Often, we watch prosecutors pound the podium in front of the cameras and claim that their latest successful case sends a strong message to fraudsters to stop doing crime. However, white-collar criminals don't listen to the rhetoric of prosecutors. No white-collar criminal discovers ethical behavior and stops doing crime because another criminal ends up in prison. While white-collar criminals take precautions against failure, they do not plan on ever ending up in prison.

Well, a white collar conviction will often scare the offender straight, right? Not necessarily:

The criminal career paradigm has become an increasingly important perspective in the study of street crimes, but it has generated little interest among scholars concerned with white-collar criminality. Behind this neglect lies a common assumption about white-collar criminals. Although street criminals are assumed highly likely to recidivate, white-collar offenders are thought to be “one-shot” criminals unlikely to be processed in the justice system after their initial brush with the law....Findings show that white-collar criminals are often repeat offenders.
blog comments powered by Disqus