
Has It Become Impossible to Prosecute White-Collar Crime? - cryoshon
http://www.bloomberg.com/news/articles/2015-10-21/has-it-become-impossible-to-prosecute-white-collar-crime-
======
cubano
Articles like this utterly piss me the fuck off.

A few weeks ago, I was doing _hard_ time with people who, due to fairly
outrageous "re-offender" statues, were serving 15 years for stealing $50
items, or 5 for walking out of Home Depot with a couple hundred dollars in a
cart.

These assholes steal millions, often from the elderly who trusted "the
system", and just walk away scot free because the jury doesn't understand it?
It is beyond outrageous and really shows, to me at least, how our entire CJS
in the US has become an sick disgusting joke.

I got 15 months for having a small amount of heroin and an oz of weed...I
almost lost almost everything I owned and left my clients in a big mess, and
these guys don't get any time or even a felony conviction to mess up their
lives like mine does?

Fuck them and fuck the douchebag prosecutors who are afraid of losing one damn
case and messing up their all important conviction ratio.

[edited]

~~~
disposition2
> jury doesn't understand it?

Everytime I hear a finance person use the excuse of 'you wouldn't understand'
to a complex, I can't help but correlate it to a developer who's obfuscated
code tell another developer they wouldn't understand, without acknowledging
that they obfuscated the code.

I'm sure I understand, you just don't want me to because then it would be
obvious you are just ripping people off to make more money for yourself /
company. Kind of like how the government has used 'enhanced interrogation'
rather than the common definition of torture to get around breaking the law.

~~~
ChuckMcM
I wonder if a form of activism here might be to seek out Jury duty as a way to
make sure the Jury does understand. To be honest I have never even thought
about walking down to the Superior Court building and saying "Hi, I'm here to
volunteer to be on a jury, what do you have today?"

~~~
nicholasjarnold
This raises an interesting point, but neglects the fact that it's not possible
(for good reason if you think about it) to simply volunteer for jury duty. In
order to be eligible in most (all?) jurisdictions one must simply register to
vote.

Neglecting the fallacy of the presumption that one can just volunteer, it is
interesting to think about the way the world might be shaped should "more
educated" individuals be the ones who solely shape public policy and case law.
It's not very democratic in the pure sense of the meaning, but certainly
interesting as a thought experiment.

~~~
ghaff
>In order to be eligible in most (all?) jurisdictions one must simply register
to vote.

I've seen states at least claim that being registered to vote is not necessary
to be called for jury duty. It gets a bit hand-wavy after that but supposedly
they also draw from, at least, driver licenses as well.

~~~
6502nerdface
Simply filing state income taxes as a resident is enough to get you in the
(potential) jury pool for your locality, at least in NY.

------
rayiner
In my previous job, I saw a lot of federal criminal cases come up on appeal.
In nearly every "blue-collar crime" case, it was clear the prosecution had the
defendant dead-to-rights. E.g. the defendant tried to sell drugs to a cop;
they arrested him and found X grams of cocaine on his person; they searched
his house and found Y more grams.

Now, there is huge room for debate about, e.g., whether selling drugs should
be illegal or whether people should receive jail sentences for stealing a TV.
But in those prosecutions it's exceedingly rare that there is any doubt about
whether the defendant actually did what he was accused of doing. The line
between legal conduct and illegal conduct is clear and it's easy to prove when
someone has crossed it.

White-collar crime is totally different. Selling stock, making out like a
bandit on a deal, screwing someone on the other side of a transaction, losing
a bunch of someone else's money--all those things can be legal or illegal
depending on what you knew or said while it happened. Proving knowledge and
intent beyond a reasonable doubt is really hard to begin with, and especially
so when it comes to subject matter (like financial transactions) that are
complex and difficult to understand.

And frankly, you wouldn't want it any other way. You _really_ don't want the
government coming up with creative prosecutions to get guys who did "bad"
things but followed the letter of the law. That's not a society you want to
live in.

~~~
VLM
One interesting distinction is white collar is often very binary. You did or
did not have insider knowledge before you did that trade?

On the other hand for blue collar / property / violence crimes there are a
bazillion analog levels. There are many levels and layers of criminal charges
for killing someone ranging from "driver ran over a bicyclist" up to serial
killer with punishment in proportion to level of intent and likelihood of
repeating etc.

Its not that its hard to prove or there is little evidence beyond
circumstantial, its that typical police going after a typical guy for typical
things will bust someone frankly obviously at "level 5" and the prosecutor
offers them the choice of a trial against charges of "level 4" or plea bargain
out as guilty of a "level 3".

White collar crime tends not to have a sliding scale of criminal activity.
Maybe a small dollar value is a misdemeanor vs a felony, but its very binary
either you cheated or you didn't and one or two steps below the binary "did
it" is you walk not even hit a grand jury.

This is before you get into theory about open conspiracy and control fraud. If
everyone knows the whole structure relies on no bad apples and someone is a
bad apple then what do you do, indict the entire economic system for having
intentionally created a ridiculously cross connected system?

~~~
rayiner
White-collar crimes are extremely analog, and those gradations are all inside
someone's head instead of being an external quantity that can be measured
(like grams of cocaine).

For example: pretty much whenever someone sells something, the buyer is going
to be more optimistic about the value of the thing than the seller. At what
point does that become fraud?

~~~
jrochkind1
White collar crimes can quite often be measured in dollars, just as banned
substances can be measured in grams.

------
chollida1
I have really no insight into the US legal system but to me this seems to be
almost entirely because people charged with "white collar" crimes are
relatively wealthy and can afford a very vigorous defense.

There might be other issues as well such as

\- a white collar employee being bit smarter, in terms of covering their
tracks, ie don't use email, only take via phone or face to face. This makes
these crimes much tougher to figure out.

\- working in groups that ensure that everyone is equally guilty, ala the
LIBOR fixing cabal. Having powerful friends is still a great deterrent to
being charged with a crime. Look at the British child sex scandal.

\- these crimes are much less publicized and incendiary. It's easy to get some
people worked up over drug or assault crimes as they can put a face to a
victim but with white collar crime its much tougher.

\- their crimes tend not to affect other high power people.

\- white collar crimes tend to be more sophisticated. If you believe this then
it's not a stretch to think that you need to have better law enforcement
working on these cases. This has always been the knock on the rating agencies,
Moodies, S&P and Fitch, is that they need to be as good as the wall street
quants to understand the new products but if they were that good then they
wouldn't be working for the rating agencies.

I'm not sure I buy that argument completely but I believe that there is a bit
of truth to it. I mean I know alot of quants on wall street and those that
work for the rating agencies fall into two buckets, those that want to work
9-5 and those that aren't what I'd consider to be top tier quants.

Just look at the 2008 financial crisis. White collar employee's got rich
leading up to it. and then to fix it, the US flooded the markets with money
meaning that white collar employee's made even more money when fixing the
mess.

Bernie Madoff's biggest failing was that he ripped off rich people.

~~~
caseysoftware
Well, former US Attorney General Eric Holder took back his old job at the
white collar law firm that represents these guys. Here's the money quote:

"Holder will reassume his lucrative partnership (he made $2.5 million the last
year he worked there) and take his seat in an office that reportedly – this is
no joke – was kept empty for him in his absence."

Ref: [http://www.rollingstone.com/politics/news/eric-holder-
wall-s...](http://www.rollingstone.com/politics/news/eric-holder-wall-street-
double-agent-comes-in-from-the-cold-20150708)

~~~
rcarrigan87
I'm not debating Eric Holder going back to his old gig isn't fishy, it
certainly is. And the revolving door bt Wall Street and Washington is
ridiculous.

But RollingStone has the most slanted, sensational coverage on anything Wall
Street. Their accounts aren't journalism.

~~~
shawn-furyan
By Rolling Stone, you mean Matt Taibbi. Because he's the only reason Rolling
Stone covers Wallstreet at all.

I'm not a fan of Taibbi's style, and I think that he jumps to biased
conclusions. But I've read just about everything I've come across regarding
the Financial crisis, and Taibbi has contributed substantial and important
reporting to fill out the context of what exactly went down.

To me, Taibbi is a pretty good source for facts, since he wears his biases so
openly on his sleeves, it is trivial to account for when he does reach. He
also has a completely different perspective and motivational drive than the
Financial press beat reporters who are afraid to stray too far from the self-
serving accepted wisdom that's developed in the financial industry, as well as
the broad audience reporters who are mostly afraid to dive into the minutia.
Taibbi is highly idiosyncratic, but his perspective is valuable as long as
you're taking in a spectrum of views and have an ability to bring a sense of
skepticism to reported claims.

~~~
twoodfin
I appreciate this comment, but it seems a little like saying that William
Randolph Hearst had a "completely different perspective and motivational
drive" when investigating the sinking of the USS _Maine_.

I'm not sure that kind of 'reporting' is a net positive.

------
MichaelGG
This mostly shows off the silliness of the jury system. Why on earth does
anyone think grabbing 12 randoms is gonna somehow lead to proper application
of justice? I could see it when the US Founders may have thought it'd be other
well-educated folks like themselves - it's a good check (if that's what they
indeed intended, I don't know). Why would we think untrained folks are going
to do a good job figuring out complex things and properly weighting evidence?
Courts already have an issue with not understanding Bayes; adding to it by
bringing in even less critical people isn't going to help.

The style is weird too. The juries don't seem to be able to do their own
investigation; they are passive, relying on a presentation given to them. They
should be able to ask questions, inquire about things like the base rate of an
occurrence. And things like jury instructions, telling people to disregard
info or their biases. This is simply not how human brains work. Let alone
untrained ones. We'd be far, far, better off having a panel of judges. And
proper review to identify systemic issues.

Someone said "If I'm guilty, I'd much prefer a jury; if I'm innocent I'd
prefer judges".

~~~
drdeca
Are you proposing that before having jury duty people should be taught how to
use bayes rule?

~~~
scott_s
I assume the commenter is proposing to not have jurors. There are other kinds
of trials. The Germans do it very differently:
[https://en.wikipedia.org/wiki/Judiciary_of_Germany](https://en.wikipedia.org/wiki/Judiciary_of_Germany)

In short, they don't have jurors, but a panel of judges. The judges are not
passive, as they are in the US. That is, in the US, judges are referees
between two opposing sides. In Germany, the judges are active participants,
and can inquire and guide the process.

~~~
Tomte
And in most criminal cases there are jurors, called "lay judges".

The court is set up in such a way that at least one lay judge has to concur
with a conviction (because of majority rules). So there is also a safety valve
where "the common people" can stop oppressive prosecution.

------
gethoht
I don't believe that it's impossible... while the complexity of the crime
itself might be beyond most people's understanding, there is a virtually
limitless toolbox at the hands of federal prosecutors, from RICO to conspiracy
charges, which have exceptionally lower bars to proving guilt. The fact of the
matter is that it has generally been the policy of the DOJ not to prosecute
financial crimes under the purview of Eric Holder. This policy has recently
changed but it's mostly too late to prosecute for the obvious amount of
outright fraud that triggered the financial crisis of 2008.
[http://www.nytimes.com/2015/09/12/business/dealbook/justice-...](http://www.nytimes.com/2015/09/12/business/dealbook/justice-
dept-shift-on-white-collar-crime-is-long-overdue.html)

------
Animats
One solution to this is forcibly simplifying some aspects of business to make
regulation easier. The Utility Holding Company Act[1] (enacted 1935, repealed
2005) is one such Depression-era law. It limited the complexity of the
ownership structures of utility companies to make them easier to regulate. A
number of laws like that were repealed in the 1999-2008 period, Glass-Steagall
being the best known. Glass-Steagall kept banks out of the stock market, and
stockbrokers out of banking. In 1999, the big banks convinced Congress that
with their new risk models, the systemic failure of 1929 was no longer
possible. They were wrong.

It's useful to go back to 1999 and read articles about the repeal.[3]

"Today Congress voted to update the rules that have governed financial
services since the Great Depression and replace them with a system for the
21st century,'' Treasury Secretary Lawrence H. Summers said. ''This historic
legislation will better enable American companies to compete in the new
economy."

"The world changes, and we have to change with it,'' said Senator Phil Gramm
of Texas, who wrote the law that will bear his name along with the two other
main Republican sponsors, Representative Jim Leach of Iowa and Representative
Thomas J. Bliley Jr. of Virginia. "We have a new century coming, and we have
an opportunity to dominate that century the same way we dominated this
century. Glass-Steagall, in the midst of the Great Depression, came at a time
when the thinking was that the government was the answer. In this era of
economic prosperity, we have decided that freedom is the answer."

One member of Congress got it right. "I think we will look back in 10 years'
time and say we should not have done this but we did because we forgot the
lessons of the past, and that that which is true in the 1930's is true in
2010," said Senator Byron L. Dorgan, Democrat of North Dakota.

[1]
[https://en.wikipedia.org/wiki/Public_Utility_Holding_Company...](https://en.wikipedia.org/wiki/Public_Utility_Holding_Company_Act_of_1935)
[2] [http://www.usnews.com/opinion/blogs/economic-
intelligence/20...](http://www.usnews.com/opinion/blogs/economic-
intelligence/2012/08/27/repeal-of-glass-steagall-caused-the-financial-crisis)
[3] [http://www.nytimes.com/1999/11/05/business/congress-
passes-w...](http://www.nytimes.com/1999/11/05/business/congress-passes-wide-
ranging-bill-easing-bank-laws.html)

------
DennisP
Maybe a "jury of your peers" should mean a jury of people who have a chance of
understanding what you did.

~~~
mjevans
You mean if you're trying someone of a crime related to a profession at least
SOME of the jury should be trained in that profession? (I'd go for at least a
third, or slightly less than half (half minus one) of 'closely related
fields'.)

------
dpatru
The article assumes that the defendants are guilty. It should assume that they
are innocent and ask why prosecutors are trying people they can't prove are
guilty.

------
e12e
At the same time, it was recently announced that the Icelandic bankers that
were jailed after the Kaupþing Bank collapse lost their appeal in Supreme
Court:

[http://icelandreview.com/news/2015/02/12/icelandic-
bankers-s...](http://icelandreview.com/news/2015/02/12/icelandic-bankers-
sentenced-prison)

~~~
jakeogh
26: [http://icelandmag.visir.is/article/26-bankers-already-
senten...](http://icelandmag.visir.is/article/26-bankers-already-sentenced-a-
combined-74-years-prison)

------
downandout
The "problem" here is that in many white collar cases, the defendants have the
money to be represented by competent counsel and are thus confident in going
to trial. Our system is setup so that most cases, when brought to trial with
competent defense counsel, are a difficult win for the prosecution. This is as
it should be.

Our insanely high conviction rates are the result of the extortion scheme that
is our plea bargaining system - not because prosecutors are great at their
jobs. It appears from this article that prosecutors are unhappy when
defendants have the resources to avail themselves of the rights they have
under our system of law, but I find it hard to imagine that they will find
many people that are sympathetic to their complaints.

------
ccvannorman
Maybe the solution is lawyers who know how to explain things better.

A trite solution, yes? But truthfully, if a lawyer cannot explain to the jury
why this white-collar criminal deserves death (or whatever!), perhaps they
should enlist some of the commenters on HN as translators.

------
mirimir
Maybe it has. The financial sector has attracted many people who are extremely
smart and skilled. Over the past few decades, they have designed some truly
elegant (albeit maybe too chaotic) stuff. Even if prosecutors can find
competent experts, trials devolve into expert duels. And juries just can't
cope, especially with a "beyond reasonable doubt" standard.

Imagine a future with AI-designed finance ;)

------
paulsutter
How about a jury of peers?

Perhaps juries for financial crimes need analytical skills that are on par
with the defendant's crimes.

------
datashovel
I think the evidence that people don't understand these things bankers are
selling makes it all the more obvious they're doing something criminal.

IANAL but I've got to think there are consumer protection laws against selling
things to people without them understanding what they're buying.

~~~
datashovel
I'll rephrase. Without them being able to comprehend what they're buying. It's
one thing to not understand, and an entirely different thing to not mentally
be able to comprehend the financial instruments people are buying.

------
fldjksjfdlksjl
Obligatory Chief Wiggum quote:
[http://i.imgur.com/Prf929F.png](http://i.imgur.com/Prf929F.png)

------
pvaldes
Just highly improbable

------
anonbanker
This might be the only exception to Betteridge's Law.

~~~
api
I hate lazy heuristics like Betteridge's Law. The only thing it accomplishes
is to make writers think 'hmm... if I'm going to explore this topic I should
restate my title in some form other than a question so idiots won't skip it
because it's a question.'

~~~
krapp
>The only thing it accomplishes is to make writers think 'hmm... if I'm going
to explore this topic I should restate my title in some form other than a
question so idiots won't skip it because it's a question.'

Which would result in more accurate, less biased and clickbaity headlines. I
don't see the problem.

------
nether
Betteridge's law of headlines fails in this case.

