Yes, everyone wants to punish those wall street executives who bought and sold all those bad securities. Please remember, there is a line between criminal activity and bad judgment.
2
We can't get our government to defend US against illegals and sanctuary cities. Holding rich folks accountable. Ain't happening.
4
It is interesting how those who most favor death sentences and other severe punishments for corporate wrongdoing usually oppose death sentences for mass murderers and other severe punishment for individual wrongdoing--and vice versa.
1
How can I become the same kind of person as a corporation?
You can lose your contractor's license and driver's license here in California for not paying your alimony or child support and even end up in jail.
A man I know did time in prison when caught with a tiny amount of personal use drugs because he got them from a high level cartel guy.
Banks that laundered billions for the cartels and profited billions pay a million dollar fine and say they won't do it again.
Corporations that dump toxics that create birth defects are allowed to pay victims a pittance along with a gag order on the victims and the federal agencies pay for the clean up. And you can be charged for clearing the weeds from the vacant lot you own by the local town.
What would happen if everyone in America Incorporated? We could close down the courts and jails and prisons because then no one would ever be punished.
You can lose your contractor's license and driver's license here in California for not paying your alimony or child support and even end up in jail.
A man I know did time in prison when caught with a tiny amount of personal use drugs because he got them from a high level cartel guy.
Banks that laundered billions for the cartels and profited billions pay a million dollar fine and say they won't do it again.
Corporations that dump toxics that create birth defects are allowed to pay victims a pittance along with a gag order on the victims and the federal agencies pay for the clean up. And you can be charged for clearing the weeds from the vacant lot you own by the local town.
What would happen if everyone in America Incorporated? We could close down the courts and jails and prisons because then no one would ever be punished.
12
As a criminal lawyer, I know firsthand that the only consequence for criminal behavior that strikes fear in the hearts of corporate executives is the prospect of going to prison. Other "punishments", such as a bar from the industry served, exclusion from government contracts and programs and civil penalties--even forfeitures of valuable cars or real estate--pale in comparison and just don't work. After all, it's only money. To suggest that these other, lesser "penalties" really work is just not telling it like it is.
8
There is another way that Mr. Havian will never, ever discuss. The State Bar of California, for example, does not discipline attorneys who conspire with their clients to commit fraud against others; they only discipline attorneys who steal from their own clients. This is the way civil attorneys earn their living. They prepare documents and give advice to clients so that their own clients will either make free money or get sued; then they are indispensable.
The alternate solution is for victims of fraud to file disciplinary complaints with the State Bar against the attorneys who advise the corporations. The State Bars throw these complaints in the trash, but it's possible to appeal to the Supreme Court of the state where the complaint is filed. And if an attorney gets hundreds of complaints filed against him or her, something happens. Behind every illegal corporate act are attorneys, and when they are held accountable, this stuff will stop. Fast.
The alternate solution is for victims of fraud to file disciplinary complaints with the State Bar against the attorneys who advise the corporations. The State Bars throw these complaints in the trash, but it's possible to appeal to the Supreme Court of the state where the complaint is filed. And if an attorney gets hundreds of complaints filed against him or her, something happens. Behind every illegal corporate act are attorneys, and when they are held accountable, this stuff will stop. Fast.
7
Corporate fraudsters may continue their crooked way as long as there is no real exemplary punishment, and that includes jail. A slap on their hands is complicit with impunity, a terrible precedent for those just waiting for the right environment to defraud the public and government, given that the greedy bottom line remains so juicy, and the chance of being caught so distant. And we are not even talking about 'business as usual', corporate welfare.
3
Consider what U.S. President James Garfield said just a few weeks before he was assassinated in 1818:
“Whoever controls the volume of money in any country is absolute master of all industry and commerce. And when we realize that the entire system is very easily controlled, one way or another, by a few very powerful men at the top, you will not have to be told how periods of inflation and depression originate.”
And it's been that way ever since the United States government was "privatized" and turned into the Corporation of the United States (see United States Corporation Company July 7, 1925) by the same criminal organization who established the private Federal Reserve Bank in 1913 primarily for their own benefit to enrich themselves first and foremost as the stock market became a government-sanctioned Ponzi-scheme on it's own people. And with that Government of the People, by the People, for the People was turned into Government of the Criminals, by the Criminals, for the Criminals...
Welcome to the New World Order!
“Whoever controls the volume of money in any country is absolute master of all industry and commerce. And when we realize that the entire system is very easily controlled, one way or another, by a few very powerful men at the top, you will not have to be told how periods of inflation and depression originate.”
And it's been that way ever since the United States government was "privatized" and turned into the Corporation of the United States (see United States Corporation Company July 7, 1925) by the same criminal organization who established the private Federal Reserve Bank in 1913 primarily for their own benefit to enrich themselves first and foremost as the stock market became a government-sanctioned Ponzi-scheme on it's own people. And with that Government of the People, by the People, for the People was turned into Government of the Criminals, by the Criminals, for the Criminals...
Welcome to the New World Order!
3
Although I initially opposed punishing corps with fines, because innocent employees and stockholders could be unfairly hurt, in light of this article I think that might be the better approach. Whenever the gov't goes after individuals in corps, the ones who get hurt are the underlings, because their bosses have "deniability" and intentionality can rarely be proven. But adequate punishments of corporations would cause employees, stockholders, bondholders and lenders to care about the ethical standards that the corporation follows. They would be the most effective ultimate disciplinarians.
2
This is excellent advice!
As long as lying, stealing and cheating are considered minor crimes relative to inhaling pot, you are not going to change Republican psychology.
2
Here in New York, we have a law that bars contractors from doing work for the city if they pay their workers less than a living wage. Why would it be so difficult for the federal government to include in its contracts a provision that the company involved not break the law? It certainly seems odd that our government does business with corporate lawbreakers.
2
I'd like to see the government start by barring or punishing their employees for gross malfeasance and criminal negligence. Speaking of the SEC, not a single employee was fired or held accountable. At OMB, despite unimaginable negligence, a couple of top employees skipped out the door unscathed.
5
While, even as a non-lawyer, I (regrettably) understand the difficulty in proving fraud beyond a reasonable doubt, and fraud is, by far, the most pervasive and damaging corporate offense, I do think there are at least a couple of additional approaches to stanch this problem. First, Congress could pass legislation tossing out the requirement of reasonable doubt, and making it automatic that the CEO and board members of any public company found guilty of fraud face criminal prosecution, with proof that they were in the role at the time the fraud was perpetrated the only requirement for conviction. Secondly, fund a robustly financed federal whistleblower program, and VIGOROUSLY USE IT. Who better to present concrete, prosecutable evidence of fraud, naming those who were aware of and approved it, than other insiders? Of course, both these changes require political will, which is extremely unlikely with the amount of money we currently have in our political system. In fact, I strongly believe that it is the money in our political system that has primarily thwarted too many prosecutions under laws currently on the books. Get the money out and we'll solve many if not most of our problems. But getting the money out is itself a huge problem.
3
Reasonable doubt is one of the constitutional underpinnings of our whole criminal process. If we do away with it for corporate executives, we imperil ourselves. A quote attributed to Thomas Moore, "I give the devil the benefit of law for my own safety's sake" is very apt here.
1
Another excellent idea that has no chance of passing no matter which party is in power. Does anyone believe that the wealthy are going to let their politicians punish them for their crimes?
11
Guess you didn't read the article. They already can bar these people from ever being employed by or doing business with the government. Those laws have been on the books for 'ever.'
1
The most "exceptional" country in the world, cannot figure out how to interact, monitor, regulate it's financial system. More of a case of not wanting to rather than can't.
13
Sounds like a great strategy, and if used wisely and widely, should soon start having a positive effect.
2
In a word, brilliant. Thanks for the ideas. I hope your audience is reading.
9
Yet the question remains WHO HAS THE GUTS TO DO SUCH IN OUR GREED DRIVEN GOVERMENT?
13
The last people with enough "guts" in a position of power to take them on publicly were the Kennedy's and we all know how that turned out. Since then, it's been nothing but government "Of the Criminals, for the Criminals, by the Criminals!"
1
If you can't get the company to pay a significant fine, make part of t he punishment that the C-suite forfeit their entire compensation - not pay, compensation - for the period that the fraud occurred.
10
What also needs to happen is a re-write of these laws which would remove the requirement to prove INTENT. It seems that with all "white collar" crime, it is the need to prove intent that derails prosecutions and leads to not guilty verdicts. Remove the requirement to prove intent and you will see the fraudsters in prison at a much higher rate.
11
Intent is there for a reason. Any low level employee can make a mistake. Just look at the IRS.
Without intent, the courts would be filled with all kinds of nonsense. Intent is not hard to prove if it exists. But this article wasn't about that - it was about NOT having to prove intent to bar one from any kind of business or employment by the government.
Without intent, the courts would be filled with all kinds of nonsense. Intent is not hard to prove if it exists. But this article wasn't about that - it was about NOT having to prove intent to bar one from any kind of business or employment by the government.
1
It is time to hold executives liable for their corporate behavior. If we reward bad behavior by failing to hold white collar criminals accountable for their behavior, or by failing to do so by an insufficient punishment, we invite more bad behavior. Just because the perpetrator uses a pen instead of a gun is no reason to regard white collar crimes as less seriously than the perpetrator who uses a firearm to steal someone's assets.
3
I have considered this problem for some time. After careful consideration I much prefer the Chinese solution to corporate miscreants.
5
I'll give Havian the benefit of the doubt and say he is not thinking this through.
You need to have punishment for the top executives when there is bad behavior. Barring corporations won't do it -- that will just punish the rank and file. The top executives loot so much money they can afford to live lavishly in leisure for the rest of their lives. Take the lizard-like Mozilo -- even after paying some fines, his fortune is estimated at $600 million or more. The only thing he would really fear is to be locked up where he can't spend that money, while the clock is ticking on his remaining years.
You need to have punishment for the top executives when there is bad behavior. Barring corporations won't do it -- that will just punish the rank and file. The top executives loot so much money they can afford to live lavishly in leisure for the rest of their lives. Take the lizard-like Mozilo -- even after paying some fines, his fortune is estimated at $600 million or more. The only thing he would really fear is to be locked up where he can't spend that money, while the clock is ticking on his remaining years.
1
This is why personal assists need to be attacked, not just corporate ones. Who benefits from the money from fines, anyway? Those harmed should be the beneficiaries. Underwater mortgagees should have been made whole, ripped off clients should have gotten their money back. But no. Fines were added to unknown coffers to be used for who knows what.
1
Under Citizens United, corporations are now considered people (at least so they can control the political process via their contributions to Super PACs). The logical corollary is to hold the leaders of these corporations (and banks) criminally liable for their fraudulent behavior. Unless and until people start going to jail for their actions, as opposed to using their ill-gotten war chests to pay off arbitrary fines, nothing will change!
43
Sounds like a good idea to little old me.
1
The way to put a corporation in prison is to effectively nationalize it for a fixed period of time. One example is the Long Island Rail Road during the 1950s and early 1960s, when it was run by the state of New York as a redevelopment corporation. Specifically:
1) Replace top management with a blue-ribbon panel of experts - possibly bringing in top business schools and turning the company into a laboratory for good management practices.
2) Put all profits back into improvements and upgrades.
3) Bring everything up to OSHA and other regulatory standards.
4) Offer the shareholders a deal - either sell their shares at an equitable proce based on the company's valuation, or freeze their shares until the company is restored to private ownership.
5) Offer some sort of guarantee to employees.
6) Investigate the original management and prosecute where appropriate.
1) Replace top management with a blue-ribbon panel of experts - possibly bringing in top business schools and turning the company into a laboratory for good management practices.
2) Put all profits back into improvements and upgrades.
3) Bring everything up to OSHA and other regulatory standards.
4) Offer the shareholders a deal - either sell their shares at an equitable proce based on the company's valuation, or freeze their shares until the company is restored to private ownership.
5) Offer some sort of guarantee to employees.
6) Investigate the original management and prosecute where appropriate.
32
I support Mr. Havian's call for government sanctions against corporate fraudsters, but I find his approach poorly sketched and potentially naive. Hidden behind the "too big to fail" myth is the bigger lie of "to big to punish."
The federal government already has legal authority, rules, and procedures to suspend and debar corporations and individuals from receiving government contracts. But sadly, these punishments are seldom enforced on large corporations. The records show that small businesses are the ones which get barred from receiving taxpayer dollars.
As illustrated by the Contractor Misconduct Database (http://www.contractormisconduct.org/), the largest federal contractors continue to profit from public spending while harming the public interest. Worse, the feds continue to treat misconduct allegations as if they were state secrets. The latest edition of the contractor performance database (FAPIIS) is even harder to use and still excludes lawsuits and legal filings which are a matter of public record.
Adding insult to injury, federal policy calls for taxpayers to pay for the legal defense of corporate contractors when allegations involve federal work. We need to dig deeper to uproot the corruption of entangling the people's interest with contractor profits.
The federal government already has legal authority, rules, and procedures to suspend and debar corporations and individuals from receiving government contracts. But sadly, these punishments are seldom enforced on large corporations. The records show that small businesses are the ones which get barred from receiving taxpayer dollars.
As illustrated by the Contractor Misconduct Database (http://www.contractormisconduct.org/), the largest federal contractors continue to profit from public spending while harming the public interest. Worse, the feds continue to treat misconduct allegations as if they were state secrets. The latest edition of the contractor performance database (FAPIIS) is even harder to use and still excludes lawsuits and legal filings which are a matter of public record.
Adding insult to injury, federal policy calls for taxpayers to pay for the legal defense of corporate contractors when allegations involve federal work. We need to dig deeper to uproot the corruption of entangling the people's interest with contractor profits.
9
Successfully excluding companies, organizations and individuals from doing business with the government through administrative proceedings is more difficult than suggested by Mr. Havian, especially given the primacy of criminal investigations being conducted in conjunction with grand juries or that employ court authorized electronic surveillance. Parallel proceedings are difficult to manage. However, Mr. Havian is correct that regulators might better serve the public by aggressively moving to debar malefactors from government contracting than by deferring to ultimately futile criminal investigations. Exclusion of individual malefactors avoids many of the unwanted collateral consequences suffered by "innocent" stakeholders of entities excluded from government contracting. Excluding the CEO of a hospital corporation that defrauded Medicare/Medicaid might reform behavior in the C Suite of that and other similarly situated organizations without depriving the community of the hospital's services or rank and file employees of their livelihoods.
5
Put them in a prison cell with Mad Dog and confiscate all of their wealth.
5
Long term jail term plus get back every dime they profited by their illegal actives.
5
Corporations are legal constructs pieces of paper the VW crimes... Fraud Theft Conspiracy... are only the latest examples A "corporation" cannot commit crimes. PEOPLE commit crimes. Until we reject this lunacy and the people
2
Retired 25 year SEC enforcement attorney, I share with certain colleagues unwavering distress at -- in my view -- unjustifiable unethical legal preference granted executives of law violating corporations. Corporations denominated persons should not excuse persons employed from liability for violation or crime.
3
Mark,
You worked long and hard to obtain some measure of justice, through civil litigation, for investors defrauded by penny-stock king Robert E. Brennan. The civil judgment your team of SEC enforcement attorneys obtained in federal court forced Brennan to declare bankruptcy. He eventually went to federal prison for bankruptcy fraud. Civil litigation at the federal and state level prompted behavior and unearthed evidence that made successful criminal prosecution possible.
You worked long and hard to obtain some measure of justice, through civil litigation, for investors defrauded by penny-stock king Robert E. Brennan. The civil judgment your team of SEC enforcement attorneys obtained in federal court forced Brennan to declare bankruptcy. He eventually went to federal prison for bankruptcy fraud. Civil litigation at the federal and state level prompted behavior and unearthed evidence that made successful criminal prosecution possible.
1
Anything that holds corporate actors personally responsible for their corporate behavior is a step in the right direction. I wonder if it's possible to craft a law that could withstand legal scrutiny, a law that would hold corporate executives and board members criminally liable for corporate crimes? The legal theory could be based, perhaps, on malfeasance or misfeasance. The new law would say that corporate actors who did know or who should have known what was happening under their leadership are guilty of a crime that carries jail time. The impact of such laws might, if nothing else, serve to shift corporate culture away from willful ignorance on the part of execs and toward actively engaged, responsible leadership.
2
If banksters/fraudsters break the law and are found guilty they would face prison. In practice the SEC, DOJ, acting hand in glove cut deals and accept stockholder money so to trade cash for prison time. For corporate crooks this is a wonderful option. For the rest of us it is simply proof positive that justice for all is a commodity sold by the establishment.
2
Good idea. Another suggestion: enact rules or legislation requiring that, if a company is found guilty of intentionally misleading the government or consumers, certain top executives will automatically be held individually liable, either civilly or criminally. That would create an incentive for executives to ensure that the company behaves honestly, and to refrain from willfully looking the other way when lower level employees commit acts of malfeasance.
5
Yet such will never happen with the current Ones In WA DC. They Like those favors too much to act responsibly and Legally!
1
Put. Them. In Jail. It's that easy.
12
Fine editorial. Exclusion is an excellent approach to a long term societal problem. Amoral corporations, corporate executives and corporate managers need to feel the same kind of punishment they so often endorse for the poor and unempowered. It's the only thing they understand. The relevant body law should also be reviewed and amended to ensure that corporations can not reimburse corporate directors and managers for the "hardship" punishment for crime may represent.
6
In addition, how about a federal "death sentence" whereby a company's charter would be revoked unless they come to heel. Of course it would violate the interstate commerce clause and would thus require amending the Constitution, but we can dream...
3
I don't see the commerce clause violation so long as the business is in interstate or international commerce, and that bar is pretty low. The states and business community would scream bloody murder, of course. And courts can already disregard the corporate form in some cases of fraud and seek remedies from shareholders or parent corporations directly -- "piercing the corporate veil " as they say .
One thing I've never fully understood: if a corporation has been deemed a "person" with the same rights and responsibilities by the Supreme Court, then shouldn't there be a corporate equivalent to prison for corporations which break the law? Since prison is essentially the state depriving an individual's freedoms, why couldn't the government force a corporation to freeze its assets and business (i.e. its basic freedoms) during a mandated "prison" term? That Supreme Court decision was terrible enough; why can the government not at least use it in the public interest?
19
It will never happen as the regulators need jobs after they "retire" from government work. Don't want to eliminate job opportunities after all is said and done.
1
Hello White House? As you fear trying criminal action, maybe try this.
Hello DOJ? Might you work on these cases instead of, say, chasing medical marijuana cases?
Hello DOJ? Might you work on these cases instead of, say, chasing medical marijuana cases?
5
Let's not forget the current CEO of J&J, Alex Gorsky, who headed the division that pushed risperdal off-label. Children were irreparably harmed. Seniors suffered strokes. But the company netted billions in profits, even after an over $2 billion fine and hundreds of civil suits. For his criminal and immoral behavior, Gorsky was promoted to the top corporate spot and hailed by the investment community.
3
Good idea, but if anything is to change, the fraudsters have to be hit where it hurts: in the pocket book. Do this by imposing a tax of 150% of all money or other assets that they obtained through the fraudulent activity. The other thing that will bring about a swift change is this: if a corporation commits a crime, the CEO or other responsible officer goes to jail.
3
Angelo Mozilo was one of a few executives who really should have gone to jail for his actions, along with Chris Dodd and the other politicians he bribed with favorable mortgages.
2
"None of these agencies need to prove their case beyond a reasonable doubt or convince a jury that the executive knew her company was violating the law. Although executives are entitled to due process and can appeal the decisions in federal court, judges largely defer to the agencies’ expertise."
Sounds ripe for government abuse of power: vague standards with no effective oversight or appeal process.
Sounds ripe for government abuse of power: vague standards with no effective oversight or appeal process.
3
That's the most important paragraph in this editorial. We need less imperial fiat from the executive, not more.
1
Exclusion coupled with some serious asset forfeiture is bound to get someones attention. To put it another way, broke with no way to steal anymore money.
3
This story should be about why none of them get sent to jail, while instead the shareholders are punished with huge fines that go who knows where. The regulators would argue if they took away their impunity to act criminally, innovation and the source of their funding would go away, I'm quite sure.
"It could be a career death sentence..."
I have a better idea: Instead of just hoping these corrupt corporations die, how about killing them? Revoke their corporate charters and put any managers who knowingly or intentionally committed crimes in prison.
And we can start with Goldman Sachs, JPMorgan Chase, Citibank, Bank of America...
I have a better idea: Instead of just hoping these corrupt corporations die, how about killing them? Revoke their corporate charters and put any managers who knowingly or intentionally committed crimes in prison.
And we can start with Goldman Sachs, JPMorgan Chase, Citibank, Bank of America...
6
While the idea is good, most CEOs will negotiate a contract where their compensation is secure even if corporation is barred from government work. There needs to be more accountability.
2
C'mon people. You're all jumping on this like it could really happen. Any attempt to pass a 'law' to do this would be defeated by a Congress who are beholden to these guys. These guys are too big to fail, too powerful for jail. Scamming and corruption is in almost everyone's DNA, regardless of where they are in the food chain. The US is at a place where it's every man for himself; there is little or no concern for the welfare of others. This wasn't always the way, but it has been for at least 20 years or more. People appear to accept corruption as a way of life and try to get their slice of the pie. You're much better than that, as a nation. Don't blame others for this; accept responsibility and make changes, however subtle. You are Not exceptional, God does Not bless only your country. Put an end to useless wars and nation building where there is no foundation to build on. Challenge those who deny science, challenge extremists of all stripes, be temperate, be diplomats.
You can do it but only if you want to.
You can do it but only if you want to.
4
Mr. Havian is definitely on the right track. We also should consider the importance of empowering the corporation's own techniques for self-defence, namely its legal and internal auditor departments as well as the board of directors (though empowering it will require administrative actions against not just corporate officers but also board members in order to jet the message across to corporate america). If a legal department member can say to a VP "you risk losing your job and never being able to work again" a lot of corner cutting as well as fraud wil stop.
4
Thank you Mr. Havian for pointing out an administrative remedy available against corporate malefactors to bring them to heel and to punish them for their misdeeds..
Trouble is Eric Holder knew or should have known about this remedy as AG as should Ms. Lynch and Ms. Yates now. Apparently there was and is no impetus to use it.
The Justice Departments apparent single minded focus on criminal prosecutions as the sole approach to punishing corporate bad guys or a stunning lack thereof (they didn't even try) makes for an easy out as being "too difficult" to win, the same line quoted in the article by current "Justice Department lawyers."
The reason for the failure to use the administrative bar as a remedy is obvious. Holder had a cushy 7 figure corporate law firm job waiting for him upon his exit, as I'm certain do Holder and Yates. None of them want to offend their source of a financial gravy train once they are out of "public service."
Trouble is Eric Holder knew or should have known about this remedy as AG as should Ms. Lynch and Ms. Yates now. Apparently there was and is no impetus to use it.
The Justice Departments apparent single minded focus on criminal prosecutions as the sole approach to punishing corporate bad guys or a stunning lack thereof (they didn't even try) makes for an easy out as being "too difficult" to win, the same line quoted in the article by current "Justice Department lawyers."
The reason for the failure to use the administrative bar as a remedy is obvious. Holder had a cushy 7 figure corporate law firm job waiting for him upon his exit, as I'm certain do Holder and Yates. None of them want to offend their source of a financial gravy train once they are out of "public service."
4
This is a good start, but there is another way to curb corporate excesses: when a corporation is convicted of a crime, make every corporate officer and director serve the sentence and/or pay the fine jointly and severally. If those who run corporations have to pay the consequences, they will be deterred from conduct that they now pursue. Ordinary street crime may not always be deterred by criminal sanctions, but take a high-paid executive from his penthouse to the big house and see how fast things get cleaned up!
8
Good Idea which should also apply to appointees. This is something that used to be very common. One of the long term consequences for bad behavior that kept the less honorable among us in check, it is still no substitute for prison time.
I do not have the faith you do in our Judiciary when it comes to holding the wealthy class to account.
“This single-minded focus on criminal convictions is misguided-..” I disagree. Putting these folks in prison should be job #1 24/7.
It was and is a disingenuous position to say that these obvious crimes are not against the law or too difficult to prosecute when that law was altered for the specific purpose of making these crimes legal or hard to prosecute at the behest of anonymous groups (the folks who control the GOP from hiding) who write laws for dogmatic conservatives to put forth for them.
Making “The Law” whole again would help.
Prison time for these “white-collar” crooks should be in the general population of a regular prison not some minimum-security place. That is another of the discouragements to bad behavior that was removed from the consequences column.
Very often these white-collar crooks have done more harm mental, emotional, and physical to larger numbers of people than a felon in for armed robbery or assault. They are actually far more dangerous to society than someone who has to use physical force or fear on a person in front of them to be a crook.
I do not have the faith you do in our Judiciary when it comes to holding the wealthy class to account.
“This single-minded focus on criminal convictions is misguided-..” I disagree. Putting these folks in prison should be job #1 24/7.
It was and is a disingenuous position to say that these obvious crimes are not against the law or too difficult to prosecute when that law was altered for the specific purpose of making these crimes legal or hard to prosecute at the behest of anonymous groups (the folks who control the GOP from hiding) who write laws for dogmatic conservatives to put forth for them.
Making “The Law” whole again would help.
Prison time for these “white-collar” crooks should be in the general population of a regular prison not some minimum-security place. That is another of the discouragements to bad behavior that was removed from the consequences column.
Very often these white-collar crooks have done more harm mental, emotional, and physical to larger numbers of people than a felon in for armed robbery or assault. They are actually far more dangerous to society than someone who has to use physical force or fear on a person in front of them to be a crook.
4
No! Wait!
First you need to hit them where it hurts. Otherwise they'll just find another job with the help of their partners-in-crime and be on their merry way, getting to keep the proceeds of their financial shenanigans. What kind of justice is that?
The government should seize their assets and freeze their bank accounts using civil forfeiture laws. Law enforcement officers have the law behind them to take assets from persons suspected of involvement with crime or illegal activity without even charging the owners with wrongdoing.
Let these white collars go to court like the t-shirt crowd to try to prove they were not involved in criminal activity in order to regain their assets. Welcome to the real world, *uckers!
Then exclude them.
Hit them where it hurts - in their wallets. Money is the only thing they value or understand.
ich law enforcement . If the police stop someone who they suspect committed a crime, they seize assets, including cash, and you have to go to court to get it back.
First you need to hit them where it hurts. Otherwise they'll just find another job with the help of their partners-in-crime and be on their merry way, getting to keep the proceeds of their financial shenanigans. What kind of justice is that?
The government should seize their assets and freeze their bank accounts using civil forfeiture laws. Law enforcement officers have the law behind them to take assets from persons suspected of involvement with crime or illegal activity without even charging the owners with wrongdoing.
Let these white collars go to court like the t-shirt crowd to try to prove they were not involved in criminal activity in order to regain their assets. Welcome to the real world, *uckers!
Then exclude them.
Hit them where it hurts - in their wallets. Money is the only thing they value or understand.
ich law enforcement . If the police stop someone who they suspect committed a crime, they seize assets, including cash, and you have to go to court to get it back.
10
Police often call this practice 'arresting assets'--euphemism for robbery. Robbery because if one resists he can get shot. The power is so broad that the level of offense need not be great. The police can just covet some person's goods and find a shadow of an excuse to arrest them. We might as well live in some steamy, backwards faux republic.
1
This could be an important remedy/sanction, but I believe that there should be provisions in the criminal code for corporate suspensions comparable to a jail term and also a corporate death penalty for egregious violations of the criminal code.
As long as the corporation is allowed to do business eternally, mere fines and changes of personnel will not do enough to change the corporate culture.
Hit them where it hurts.
As long as the corporation is allowed to do business eternally, mere fines and changes of personnel will not do enough to change the corporate culture.
Hit them where it hurts.
13
What happened to the corporate death penalty?
My understanding is a corporate charter could be revoked and its assets liquidated.
My understanding is a corporate charter could be revoked and its assets liquidated.
4
At first glance, this might strike some as a great way to "right the wrongs," so to speak, that seemingly escaped prosecution during the 2008 Financial Crisis.
However, as Americans who live in a land guided by laws over emotions, we should view such an approach with deep skepticism.
"Killing a person's career" by administrative fiat in many ways deprives our citizens of their Constitutionally protected right to due process. Depriving a citizen of their means to earn a living, and destroying years of work in an extrajudicial setting, should send a chill through each and every one of us.
While we might be exacting revenge today against a few "obvious" targets, tomorrow it may be those who simply ran afoul of some powerful politician, somewhere in life, perhaps for a reason totally unrelated to that person's professional conduct. Imagine finding yourself barred for life from your profession because you had a land dispute with a neighbor over a piece of vacation property, or you butted heads with an ambitious parent at a PTO meeting.
While this is all tempting, my instincts tell me that our court system remains the fairest way to prosecute and adjudicate alleged crimes in this nation.
However, as Americans who live in a land guided by laws over emotions, we should view such an approach with deep skepticism.
"Killing a person's career" by administrative fiat in many ways deprives our citizens of their Constitutionally protected right to due process. Depriving a citizen of their means to earn a living, and destroying years of work in an extrajudicial setting, should send a chill through each and every one of us.
While we might be exacting revenge today against a few "obvious" targets, tomorrow it may be those who simply ran afoul of some powerful politician, somewhere in life, perhaps for a reason totally unrelated to that person's professional conduct. Imagine finding yourself barred for life from your profession because you had a land dispute with a neighbor over a piece of vacation property, or you butted heads with an ambitious parent at a PTO meeting.
While this is all tempting, my instincts tell me that our court system remains the fairest way to prosecute and adjudicate alleged crimes in this nation.
If this has the impact that you intend, then what does it say about the size and power of government? If a business can be "too big to fail", then what about our government?
2
Is the writer truly celebrating the fact that the government could, if so disposed, impose a corporate "death sentence" without proving guilt beyond a reasonable doubt? Hmmm, food for thought, huh?
Danny B, There is no doubt the deeds have been done by the people who did them. The issue with prosecution is that the GOP has hamstrung The Law by altering it in ways that allow for these crimes or make prosecuting them more difficult.
We used to have a proper common sense system of hiring the prevented anyone who had committed ethical violations or been involved in poor decision making or supervised anything that went badly. Why would anyone hire such people when there are plenty of honest folks who can do their jobs without drama or suspect mental abilities to do the work well?
Of course this all relied on rigorous application of reason and a national education system that produced people who could think and justify their position with good rational arguments.
We used to have a proper common sense system of hiring the prevented anyone who had committed ethical violations or been involved in poor decision making or supervised anything that went badly. Why would anyone hire such people when there are plenty of honest folks who can do their jobs without drama or suspect mental abilities to do the work well?
Of course this all relied on rigorous application of reason and a national education system that produced people who could think and justify their position with good rational arguments.
1
JP Morgan is the 4th largest total contributor to HRC. They gave $5mm to the Clinton Global initiative in 2014. Next question?
2
And of course that will be of no consequence to the hillary lovers, they'll gloss over that nugget. On the other hand she will be just as useful as her predecessor should she win the WH in 2016. There will be no perp walks for these guys, never. Obama and Hillary cut from the same cloth and just as transparent.
The problem is that federal, state and local prosecutors are politicians and need to run for office and aspire to higher office. So, like so many other cases of the "client agent" problem in microeconomics....they do not act on our (the client) behalf as much as they do their own (the agent) behalf. To them, its better to use a massive amount of public monies, not their own money, in assembling a case with potential big dollars settlements. Its "win or not lose" from their perspective. Your solution exposes them to claims by future political opponents that they let criminals slip away with administrative wrist slaps rather than big dollar penalties that to working joes.....sound like an amazing amount of money.
All very well and good, Mr. Havian, but the reality is the Justice Department needs to make arrests, instead of making deals.
Eric Holder recently indicated the Justice Department, on his watch, should have done more, easy to opine, now that his is back at his old job, which was held open for him, including keeping his office available until his stint as head of the Justice Department was over.
There is no doubt anymore that the financial destruction that was wrought in the last crisis,was engineered and carried out by executives, following corrupt corporate policies, policies carefully thought out and designed to fleece millions of unwitting American consumers.
There is also no doubt that Mr. Holder, rather than go after individuals, many of whom he knew, used his office to shield many corrupt individuals, through his multi-billion dollar deal making, itself a process designed to have a "Wow" effect, manage perception, and divert attention.
Our government is treading on thin ice, and an awakening populace will be less inclined to put up with the wholesale corruption currently the order of the day.
Eric Holder recently indicated the Justice Department, on his watch, should have done more, easy to opine, now that his is back at his old job, which was held open for him, including keeping his office available until his stint as head of the Justice Department was over.
There is no doubt anymore that the financial destruction that was wrought in the last crisis,was engineered and carried out by executives, following corrupt corporate policies, policies carefully thought out and designed to fleece millions of unwitting American consumers.
There is also no doubt that Mr. Holder, rather than go after individuals, many of whom he knew, used his office to shield many corrupt individuals, through his multi-billion dollar deal making, itself a process designed to have a "Wow" effect, manage perception, and divert attention.
Our government is treading on thin ice, and an awakening populace will be less inclined to put up with the wholesale corruption currently the order of the day.
3
I saw an item in the news recently, where a thief in Saudi Arabia suffered the penalty of having his hand cut off. If applied in the United States, such a penalty could result in a large contingent of one-handed bankers, brokers, insurance and healthcare executives, real estate agents and mortgage brokers, and others. Although this would probably be difficult to introduce under U.S. law, such a penalty would be an effective deterrent and corporate fraudsters would be easy to identify.
3
Great idea; imagine Blankfein, you know "We are doing God's work", minus his right hand, with a prosthetic device, in the shape of a hook, a reminder to all, of his innate way of being.
This column should be required reading for every government regulator.
4
What? Why aren't we talking about a culture of criminality that makes these CEO cheat and defraud the government? What is it in their culture that makes them have no moral responsibility for what they do? It's time that those people who raise these crooks and cheats take a look at themselves and raise their children to be good and upstanding citizens instead of lying, cheating, crooks!
4
It is not uncommon for a barred executive or officer to remain active in the company/corporation by becoming "a consultant". The consultant basically continues to run the subject company/corporation through his or her advice. Agencies seldom enforce their "exclusion" determinations.
14
This is where dusting off the rules, updating etc. would come into play. Please, Elizabeth Warren, weigh in on this.
This article on how to punish corporate fraudsters and my views of holding all top-down officers of corporations criminally accountable for crimes against humanity makes sense, but means nothing. Most of our elected officials are controlled by special interest and corporations...in turn the elected officials and corporations control government agencies who are suppose to be the gate keepers working to protect us.
It's time to throw them out, throw them all out and elect only those that will promise to clean house... and then hold them accountable. Talking about it, writing articles does change anything. We need to first change what we are doing, get off our bandwagons before we can get stop these crimes committed against us.
It's time to throw them out, throw them all out and elect only those that will promise to clean house... and then hold them accountable. Talking about it, writing articles does change anything. We need to first change what we are doing, get off our bandwagons before we can get stop these crimes committed against us.
15
It's time to put the stockholders at risk. Modern capitalist ideology says the firm is selfish in service to the selfish stockholders - including the top executives who are paid largely in stock options. When corporations engage in illegal acts, fine all stockholders some proportion of the value of the shares they hold as of a certain date. Then leave it up to them whether they wish to fire or file civil suits against the corporate officers. We stockholders own these corporations, and elect their boards. We should be responsible.
31
Interesting idea!
The stock holders are ALWAYS at risk whenver they invest their hard earned cash into the market. Your comment punishes people who are simply investing in these companies. Silly arguement. Go after the top guys who are in the wrong, why should the investor be hurt in the process, they will get hurt in the long run when the company tanks. Go after Dimon and everything he has not the small guy.
1
I don't agree, Beth. Many of the stockholders are pension funds, mutual funds investing peoples' IRAS and 401(k)s, etc. They very seldom, if ever, have any control over or say in what the executives or Board members decide the company will do. By all means bar any company from which complicit executives work from federal contracts by barring the specific executives AND Board members. Don't take it on the almost always innocent and non-controlling stockholders.
1
It is worth trying. If the powers that be block it, then we can conclude that there is no real rule of law in this country and adapt our own ethical codes accordingly.
I have just one question: what's the statute of limitation on exclusions?
Ooooo! This is scary, they would not be able to serve on the board of their favorite establishments. Welcome college presidency, company CEO post, consulting, and so on. Is this really "punishment"? If individuals were punished like this we would be living in total chaos. Let the guilty company executives serve time, pay monetary fines, just like ordinary citizens.
Remember Tyco?
Remember Tyco?
2
I suggest there is a very simple reason agencies do not avail themselves of this particular remedy -- because it will quickly become a political weapon. Partisans of all stripes will find themselves barred from making a living simply because they supported the other party (or the wrong wing of their own party!). The imprecision of it; no standards of evidence and no means of appeal; make it sound great but, in fact, make it very dangerous.
2
Criminal misbehavior by corporate entities and their officers is so common at this point that the fines paid have come to be thought of as just the cost of doing business. That the remedy proposed by this column has always been available but so little used is just another indication that those politicians we elect are in thrall to greenbacks.
It's not necessarily that we need prosecutors with courage, but governors, congressmen, senators and a president who actually possess a sense of outrage and a spine. Oh, and perhaps one or more SCOTUS justices who don't think corporations are people.
It's not necessarily that we need prosecutors with courage, but governors, congressmen, senators and a president who actually possess a sense of outrage and a spine. Oh, and perhaps one or more SCOTUS justices who don't think corporations are people.
22
Ha, ha, ha!
The Congressional fraudsters are going to punish their friends the corporate fraudsters!
It's always great to start the morning with a laugh!
The Congressional fraudsters are going to punish their friends the corporate fraudsters!
It's always great to start the morning with a laugh!
1
The punishments proposed are far too lenient. Anyone convicted of defrauding the public of $1 million or more should be executed after an expedited appeal, with the event televised to concentrate the minds of other bankers, doctors, defense executives, etc. who might be inclined to also defraud the people.
2
The government has no brass to enforce the laws that already exist. Barring the perps will not stop the abuse if there is money to be made. The corporations will do risk assessment and then decide of the risk is worth the effort. The perps will then get protected by the corporations by the fiscally and more if caught.
It seems that punishing criminals by depriving them of employment is what the dominant culture has been doing for decades to the African American community, particularly its males. How's that working out?
Why not bar the corporations from doing business with any US government: no Federal work, no state work, no municipal work, and no work with inferior state-created entities?
Yet, would that bar Citibank from doing business with government entities because one of its subsidiaries pleaded guilty to financial crimes? Probably not. The Supreme Court seems possessed by bad medieval theologians and finds many angels on the heads of many pins, and souls in corporations (but won't explain exactly how a mohel is supposed to do a brit milah on a Jewish corporation, but I digress), and would surely see corporate fractals among the many Citibanks and pin liability on only one.
Or take away the licenses that the criminal corporations need to conduct business. Everyday we take away liberty and freedom from countless people found guilty of crimes, and ruin their lives. Sure there are apparently innocent shareholders of guilty corporations. So are the spouses, children, coworkers, bosses, siblings (you get the picture) of the individual criminals. If we can punish friends/family collaterally, pity the poor criminal corporation shareholder, who can just write off the loss (or sell it to someone who can use an NOL).
Let's deputize all accountants & find more financial criminals.
Why not bar the corporations from doing business with any US government: no Federal work, no state work, no municipal work, and no work with inferior state-created entities?
Yet, would that bar Citibank from doing business with government entities because one of its subsidiaries pleaded guilty to financial crimes? Probably not. The Supreme Court seems possessed by bad medieval theologians and finds many angels on the heads of many pins, and souls in corporations (but won't explain exactly how a mohel is supposed to do a brit milah on a Jewish corporation, but I digress), and would surely see corporate fractals among the many Citibanks and pin liability on only one.
Or take away the licenses that the criminal corporations need to conduct business. Everyday we take away liberty and freedom from countless people found guilty of crimes, and ruin their lives. Sure there are apparently innocent shareholders of guilty corporations. So are the spouses, children, coworkers, bosses, siblings (you get the picture) of the individual criminals. If we can punish friends/family collaterally, pity the poor criminal corporation shareholder, who can just write off the loss (or sell it to someone who can use an NOL).
Let's deputize all accountants & find more financial criminals.
10
Edward Thurlow's observation is simply (Yet Again!!) one more clear, obvious reason why "corporations are NOT people".
What we need is to change the law so corporations are relegated back to their proper position ... a tool for managing human activity -- and nothing more.
What we need is to change the law so corporations are relegated back to their proper position ... a tool for managing human activity -- and nothing more.
24
I have an old-fashioned idea. Why not send criminals to jail?
Corporate fraud might have been brought up secondary to the Theranos story as well. I mention this because (journalism) is likewise seduced by this 10 billion dollar private, secret company that does not have a single director with expert lab medicine experience. What does that mean? Regarding Theranos pricing : (without any cost analysis of direct expenses), they divided reimbursment prices (in half-- exactly), thoughtlessly, regarding every test in the universe. They are using investor money anyway, and so what if they have no idea of what direct cost might be later. But, using whole blood to test anything is a nightmare regarding precision and accuracy notwithstanding the joke that people are being "bled-to-death" regarding lab work. Any idiot can read the Theranos patents from the earliest date to understand why they are crashing and burning. Seeming, they invented a blood dilution method to add volume to the testing sample and again, any clinical chemist might explain the problems with that insanity. Regarding the patents, I suggest that a team of expert patent attorneys and judges could not figure out the claims, nor ever adjudicate any challanges. I'll assure you that laboratory medicine mostly ignores this company and their patents as likely meaningless. No, I do not work for anyone, I'm retired. Keep-in-mind that droplets of whole blood are impossible to use in the wintertime up North because static electricity causes everything to jump around.
1
There is little chance of corporate executives being banned in today's political climate because they own OUR governments around the world at all levels right now. The real answer is to break them up and turn them into true employee-owned local companies that actually serve the common interest and societies where they do business. That will happen as soon as WE elect people to office at all levels who actually want to strengthen America and other countries, not destroy them. November 8, 2016 cannot come soon enough.
5
Re-instituting the regulation that we used to have which required corps to serve a public purpose and kept them honest would work just as well,. It is not as if we never did this before. The fact is they are pretty much more awful today than they were the first time in the late 19th & early 20th century, when government By The People found a champion who stepped up and put them in their places.
I also like this idea. And while we're at it, let's use it on corporations who misuse the H1-B visa. If you can your current employees and make them train lower wage foreign workers in a clear flouting of the visa law, then cut them off. There has to be teeth in the laws that are continuously ignored by large corporations.
30
"But we need to start kicking their bodies out of the executive suite."
Yes, by sending them to JAIL.
Firing them is NOT a sufficient deterent to crime.
Yes, by sending them to JAIL.
Firing them is NOT a sufficient deterent to crime.
20
I like this idea.
I also fear its abuse.
I think of an exceptionally effective MD, who helped a lot of people who were not getting help elsewhere in a clinic the specialized in serious physical rehab challenges. He has an amazing track record of patient success.
He got into a billing dispute with an insurance company over which were the proper billing codes to use. His clinic been doing it the same way for years. They even had a letter from the insurance company agreeing to that code, because it was ambiguous.
The insurance company changed its position from that letter, and called it "fraudulent" to use that code instead of a different one.
Use of the term "fraud" raised the stakes to professional survival. It was easy for them. The smartalec young associate lawyer assigned to get them what they wanted thought this was a really clever tactic.
It was. The definition of fraud is dangerously wide, and the defendant is vulnerable to vagaries like the judge who just does not understand medical billing and billing codes (almost everybody), or has a fixed bias favoring insurance companies (a common problem).
So from that case I see potential for abuse here. I see abuses gleefully coming out of the woodwork to exploit this.
But it is a great idea, if it is controlled to prevent misuse.
This would not be the first legal theory meant to fix one problem that created another.
I also fear its abuse.
I think of an exceptionally effective MD, who helped a lot of people who were not getting help elsewhere in a clinic the specialized in serious physical rehab challenges. He has an amazing track record of patient success.
He got into a billing dispute with an insurance company over which were the proper billing codes to use. His clinic been doing it the same way for years. They even had a letter from the insurance company agreeing to that code, because it was ambiguous.
The insurance company changed its position from that letter, and called it "fraudulent" to use that code instead of a different one.
Use of the term "fraud" raised the stakes to professional survival. It was easy for them. The smartalec young associate lawyer assigned to get them what they wanted thought this was a really clever tactic.
It was. The definition of fraud is dangerously wide, and the defendant is vulnerable to vagaries like the judge who just does not understand medical billing and billing codes (almost everybody), or has a fixed bias favoring insurance companies (a common problem).
So from that case I see potential for abuse here. I see abuses gleefully coming out of the woodwork to exploit this.
But it is a great idea, if it is controlled to prevent misuse.
This would not be the first legal theory meant to fix one problem that created another.
13
Indeed. Yes, there would be potential for abuse. And, yes, the corporate apologists would trot these out as a reason to not use the tools available. But, let us not let the perfect be the enemy of the good.
Let's tweak it, then.
Also, bar corporations from government work if they make political contributions. It creates an obvious conflict.
58
And the same with unions. Public employee unions should not be involved in any way in political campaigns. A clear conflict of interest.
1
Good idea, but of course they can make political contributions anonymously now, thanks to the corrupt Roberts SCOTUS.
This actions that JP Morgan paid a fine for were committed by Washington Mutual, which JPM subsequently acquired - at the request of the FDIC, to keep the financial system from falling apart. It does not make sense to punish JPM for the actions of WaMu prior to its acquisition.
The correct thing to do would be to go after WaMu CEO Kerry Killinger and his buddies. They made plenty of money when times were good, and still are living a very nice life.
The correct thing to do would be to go after WaMu CEO Kerry Killinger and his buddies. They made plenty of money when times were good, and still are living a very nice life.
15
Both JPMorgan (which acquired Bear Stearns in addition to WAMU) and Bank of America (which acquired Merrill Lynch and Countrywide) were punished for the actions of companies they acquired at the behest of regulators. That won't happen again. No bank will assist the government with a bailout of a failing institution without also getting and indemnification against fines levied against the predecessor institution.
2
All well and good, pocketbooks do hurt, but I still say we need prosecutors with courage.
A few dozen executives in handcuffs, off to Clinton, Elmira, Attica would keep the rest on the straight and narrow!
A few dozen executives in handcuffs, off to Clinton, Elmira, Attica would keep the rest on the straight and narrow!
18
@Smarten Up, People. I wholeheartedly agree, but is there anything that says we can't exclude while we go about the long and tedious process of securing a conviction?
Just to be picky, I think you meant "strait," meaning "narrow", rather than "straight."
1
The fact that banks (and their executives) are "too big to fail" and "too big to jail" encourages them to continue what they are doing. The fines are personally meaningless. They are just a tax write off as a business expense. Fraud makes them tons of money and there is no down side so why wouldn't they continue on their merry way?
We are in dangerous territory when industries that are economic pillars can be run by people whose behavior makes the Mafia blush. Talk about "moral hazard"! Why is that concept loudly proclaimed over assisting underwater homeowners and never even whispered about the bankers who knew full well what was going on?
Get them anyway you can. I assume there is no statute of limitations on a government rule. Jamie Dimon can be first on the list.
The Santa of national retribution for malfeasance by bankers (who run Congress and the White House) and health care companies who are where the real waste and fraud is in health care need to be punished by any means possible.
We are in dangerous territory when industries that are economic pillars can be run by people whose behavior makes the Mafia blush. Talk about "moral hazard"! Why is that concept loudly proclaimed over assisting underwater homeowners and never even whispered about the bankers who knew full well what was going on?
Get them anyway you can. I assume there is no statute of limitations on a government rule. Jamie Dimon can be first on the list.
The Santa of national retribution for malfeasance by bankers (who run Congress and the White House) and health care companies who are where the real waste and fraud is in health care need to be punished by any means possible.
30
Sorry. The problem is not for lack of tools to punish but the will to use them.
45
Excellent point
How about the reverse? If they get caught with Government fraud, they can't work for corporations. At least not as lobbyists.
5
"It’s much easier to exclude someone than to convict him of a crime. None of these agencies need to prove their case beyond a reasonable doubt or convince a jury that the executive knew her company was violating the law."
That statement is where this breaks down for me. Judge, Jury, and executioner all rolled into one government agency. Change the process so that proof is required and this would be strong and fair deterrent.
That statement is where this breaks down for me. Judge, Jury, and executioner all rolled into one government agency. Change the process so that proof is required and this would be strong and fair deterrent.
1
This is absolutely a fabulous remedy. The individuals should be find substantially as well, and those fines be required to go to R&D
6
Why not go further?
Already, corporations that go to trial against the government risk be barred from government contracts, or business with other corporations who do business with the government, federal or state. That's why these cases usually settle. Those foolish to go all the way, like Arthur Andersen, have had their spirits buoyed by recent court rulings. AA was barred by the SEC after losing from doing the books for public companies, it is a shell of itself but the executives never went to prison. No, there is a better way.
Require corporations to return money to stockholder after losing such a case as Arthur Andersen. Have it state in law, that the DOJ will hold a separate trial for any corporation who provides golden parachutes, or bonuses for that matter, to its executives during a civil or criminal trial for fraud or any form of malfeasance.
This action will have the effect of encouraging caution by executives with the bonuses held hostage to corporate behavior. At least, it will encourage speedy resolution of such differences between government and business.
Already, corporations that go to trial against the government risk be barred from government contracts, or business with other corporations who do business with the government, federal or state. That's why these cases usually settle. Those foolish to go all the way, like Arthur Andersen, have had their spirits buoyed by recent court rulings. AA was barred by the SEC after losing from doing the books for public companies, it is a shell of itself but the executives never went to prison. No, there is a better way.
Require corporations to return money to stockholder after losing such a case as Arthur Andersen. Have it state in law, that the DOJ will hold a separate trial for any corporation who provides golden parachutes, or bonuses for that matter, to its executives during a civil or criminal trial for fraud or any form of malfeasance.
This action will have the effect of encouraging caution by executives with the bonuses held hostage to corporate behavior. At least, it will encourage speedy resolution of such differences between government and business.
11
The verdict against Arthur Anderson was later overturned by the Supreme Court but the damage was already done and they had to dissolve with great harm to those employees who had nothing to do with the ENRON matter. see https://en.wikipedia.org/wiki/Arthur_Andersen
I probably wasn't as clear as possible. I am suggesting holding the board responsible. If they reward the misbehavior of an executive that has led their corporation into dangerous waters, such as an Enron, then they owe it to the stockholders to with-hold bonuses and golden parachutes from said executive. Otherwise, they are accepting responsibility and condoning his/her actions and should be liable to individual, as well as, corporate prosecution by the DOJ.
Bar them from government work?
Try prison. White-collar crooks do more damage to our society than some stupid kid who robs a 7-11. Lock them up.
Try prison. White-collar crooks do more damage to our society than some stupid kid who robs a 7-11. Lock them up.
49
The fact that corporate theives steal or bilk people out of millions and never go to jail is just obesely obscene. I have an idea that I know would be an absolute deterrent to Corporate crime.I obviously know this would never happen and some people will think it's ridiculous but I know that if this was implemented it would deter corporate crime immediately. Have the U.S. Statutes and codes mandate that anyone convicted of a financial crime must serve a minimum of 5 years in the general inmate population of Angola prison in Louisiana.No private cell.Now obviously this is never going to happen but everyone reading this knows it would work as an amazingly effective deterent. So.....I think we all know that the corporate fat cats really don't sweat fines, they would sweat Angola.
13
I just had a probation violation hearing where the standard of proof was 'more likely than not'...the same standard this article mentions.
I didn't violate, but I'll be damned if I couldn't exceed that standard with my limited means available.
How about we just start charging criminals and enforcing laws instead of resorting to pseudo-justice.
I didn't violate, but I'll be damned if I couldn't exceed that standard with my limited means available.
How about we just start charging criminals and enforcing laws instead of resorting to pseudo-justice.
5
Well if their going to start kicking people out of things I wish they'd start with Rick Scott whose company Health Corporation of America paid $1.7 billion to the government in payment for fraudulent claims. Fortunately the Tea Party (obviously never really interested in saving Social Security and Medicare) elected him governor of Florida where he now watches over the finances of an entire state.
46
What about blocking corporations that avoid paying the US corporate income tax? For example, the federal government and any state governments should block doing business with Accenture which moved from the US to Bermuda and then to Ireland to lower or avoid paying any US corporate income taxes. Accenture profits from government work but pays little if any corporate income taxes on those profits.
68
Brilliant, let's punish companies that engage in perfectly legal tax structuring because you don't like them. Now that's justice!
Those moves did not violate any laws. If you are upset about corporations being able to do this legally, you need to change the law.
1
Firstly you need to change the tax laws and loopholes and that starts with our elected leeches in Washington and they will never do anything about the current structure. Why bite the hands that feed them? They work to get re-elected then retire as millionaires and on to second jobs as lobbyists garnering even more millions. It's a neverending vicious cycle with no end. These corporations are doing things that are perfectly legal.
3
Of course, bar them from government work!
But also: Throw them in jail. When massive corporate malfeasance is punished only by corporate fines, that becomes the cost of doing business — and malfeasance becomes business as usual.
Incarceration of executives has happened only a small number of times, in the most egregious cases, which is far less often than it ought to. If corporations must be treated like people, then they should be punished like people.
But also: Throw them in jail. When massive corporate malfeasance is punished only by corporate fines, that becomes the cost of doing business — and malfeasance becomes business as usual.
Incarceration of executives has happened only a small number of times, in the most egregious cases, which is far less often than it ought to. If corporations must be treated like people, then they should be punished like people.
43
No.
The way to deter corporate misbehavior is to impose a positive duty on the directors and senior officers of a corporation to cause the corporation to comply in all material respects with applicable laws. A failure by the corporation is a failure by its directing minds, The captains go down with the ship.
Take Martin Winterkorn, for example. He was the CEO of a company which over a period of 6 years sold 11.0 million vehicles which emitted 40 times the permitted levels of NOx while advertising them as "clean diesels". A CEO in this situation should have a positive duty to determine that his products comply, and that the representations made by his company in its marketing campaigns are true in all material respects. The members of the board should have a non-delegable obligation to confirm that this duty has been complied with, and all employees should be entitled to assurances that this duty has been complied with. There should be no possible argument that Mr Winterkorn did not fail to perform his obligations in this case, no question of whether or not he did anything wrong, no possibility that he could remain as chairman of any holding company affiliated with VW or receive any golden parachute payouts, or retain bonuses paid out of profits derived from these illegal activities.
The problem here is not a lack of effective penalties, it is a lack of positive obligations.
The way to deter corporate misbehavior is to impose a positive duty on the directors and senior officers of a corporation to cause the corporation to comply in all material respects with applicable laws. A failure by the corporation is a failure by its directing minds, The captains go down with the ship.
Take Martin Winterkorn, for example. He was the CEO of a company which over a period of 6 years sold 11.0 million vehicles which emitted 40 times the permitted levels of NOx while advertising them as "clean diesels". A CEO in this situation should have a positive duty to determine that his products comply, and that the representations made by his company in its marketing campaigns are true in all material respects. The members of the board should have a non-delegable obligation to confirm that this duty has been complied with, and all employees should be entitled to assurances that this duty has been complied with. There should be no possible argument that Mr Winterkorn did not fail to perform his obligations in this case, no question of whether or not he did anything wrong, no possibility that he could remain as chairman of any holding company affiliated with VW or receive any golden parachute payouts, or retain bonuses paid out of profits derived from these illegal activities.
The problem here is not a lack of effective penalties, it is a lack of positive obligations.
24
If you impose such a duty on directors and senior officers, no one would want to serve as director or officer and expose themselves to that kind massive liability.
Take away the corps license to operate. Doctors can have their license revoked, lawyers can be disbarred and as someone who has a CDL I can lose my license to function in my field.
The directors and senior officers would not be liable for the wrongs of the company, but they would lose their positions and they would forfeit their compensation. There could be a due diligence defense, but the bar would be set very high on that.
I support any idea that will punish these crooks. They walked away free instead of doing perp walks.
9
An excellent solution, but it must be applied to the fullest extent of force or else it will merely be used as a smokescreen for scapegoats. JP Morgan Chase was mentioned, and it is a very very very big bank. To change their or anyone else's behavior, one must be willing to strike the fear of God into every executive suite in America. I suspect many of our so-called stalwarts are dirtier than they look. If it is not clear that exclusion is to become the new normal when dealing with corporate malfeasance, management and shareholders may find it preferable to continue looking the other way to keep the party going just a little bit longer.
11
Having financial services executives in top regulatory positions (DOJ, SEC, FED Reserve etc) and as economic advisors at the White House, are the reasons no top financial serviices coporation officers have seen criminal charges, despite 'slam dunk' whislteblower evidence (Alayne Flieschmann JPMOrgan, Richard Bowen Citigroup).
William Black prosectued 1,000s of top banking exectuives in the late 80's early 90's and had a 90% conviction rate (jail, penalites, felony charges). He says the evidence in the current cases (2006-09) are STRONGER than in his day.
When there is no will, there is no way to prosecute the elite and powerful banksters.
https://www.change.org/p/doj-file-criminal-charges-of-fraud-against-bank...
William Black prosectued 1,000s of top banking exectuives in the late 80's early 90's and had a 90% conviction rate (jail, penalites, felony charges). He says the evidence in the current cases (2006-09) are STRONGER than in his day.
When there is no will, there is no way to prosecute the elite and powerful banksters.
https://www.change.org/p/doj-file-criminal-charges-of-fraud-against-bank...
31
I thought the punishment was to donate to the Clinton Slush Fund...seems to have worked Wall Street....no on including Corzine went to jail and they received trillions from the DEMOCRATS
1
And if anyone thinks that Hillary will do anyting about corporate fraud or otherwise is in for disappointment. She will do as her predecessor has done............NOTHING, Obama and Holder two empty suits.
2
I was not aware of this method. Had it been used vigorously, as it should be, we could have been spared much misery.
4
In the early 90's, I worked for a small corporation in NC that earned its daily bread with contracts let by the US. EPA. The company's managers prided themselves in their business management skills, and promoted the company as being a top-shelf private business consulting firm. Individuals holding MBAs were immediately designated as being boardroom-bound, were lavished with the highest salaries, then swept into the back-slapping old boy's club. The more prestigious the biz school name that had conferred the hallowed degree, the higher the projected trajectory of its holder. Lunchroom and water cooler conversations centered around the latest "free market" ideological constructs to come bubbling out of... wherever such dreamy fantasies take form. Ronald Reagan and the GOP were worshiped; government was evil, private industry divine.
But there was one slight problem here... The enterprise was little more than a mirage; a nebulous hot air balloon with no fuel for its single, gas-burning engine save that provided by the company's sugar daddies buried deep within Uncle Sam's bureaucratic bowels. If that evil governmental body did not monthly disgorge a fat payload, these erstwhile, swashbuckling entrepreneurs did not eat. The free market, it seems, has all the nutrition to be found in a tablespoon of highly-refined white sugar.
When even Uncle Sam's evil-doers finally came to their senses, the company imploded, then disappeared. A wonderful solution to an expensive problem.
But there was one slight problem here... The enterprise was little more than a mirage; a nebulous hot air balloon with no fuel for its single, gas-burning engine save that provided by the company's sugar daddies buried deep within Uncle Sam's bureaucratic bowels. If that evil governmental body did not monthly disgorge a fat payload, these erstwhile, swashbuckling entrepreneurs did not eat. The free market, it seems, has all the nutrition to be found in a tablespoon of highly-refined white sugar.
When even Uncle Sam's evil-doers finally came to their senses, the company imploded, then disappeared. A wonderful solution to an expensive problem.
Well written, well constructed. Of course he is a lawyer so we should expect nothing less. The only problem, the regulators are captured. They want those juicy jobs when they leave "public service". You don't get them if you come down hard on your future employer, err I mean the perps. Great idea, but don't hold your breath.
20
Eric Havian does good work. One of the few AUSAs that hasn't gone over to the "darkside."
Unfortunately, there are too few like him. As a result, this country's legal system has become so corrupted, with a Congress has been bought by the malefactors that Eric writes about, that I see no change in the current rampant criminality of corporate America. Sally Yates talks a good line in front of the Congressional clowns, but it is all talk and no action.
Unfortunately, there are too few like him. As a result, this country's legal system has become so corrupted, with a Congress has been bought by the malefactors that Eric writes about, that I see no change in the current rampant criminality of corporate America. Sally Yates talks a good line in front of the Congressional clowns, but it is all talk and no action.
4
This might look good on paper, but the fact is that the revolving door spins both ways. Regulators are not likely to ban officers from government service from corporations they themselves aspire to migrate for a lucrative career. Better to just close the door, period.
9
Welcome to America where, if you can defraud enough shareholders, taxpayers, and common folk in the name of corporate profit, you'll be rewarded with riches beyond imagination. You'll be the envy of all your peers, a teflon-coated capitalist king worshiped by sycophants looking to emulate your uncanny ability to privatize enormous profit and socialize the losses.
And all it will cost your company is a few bucks, which are easily recouped with higher fees and the profits made from your next too-big-to-jail scheme that's always right around the corner.
And all it will cost your company is a few bucks, which are easily recouped with higher fees and the profits made from your next too-big-to-jail scheme that's always right around the corner.
37
You've got my vote, Mr. Havian.
27
And mine. It's the right thing to do!
5
I concur with argument of using the exclusion tool. Subjects sought in the matter of any wrong, normally would assume they would probably get a slap on the wrist personally and their company be the ones held responsible. It is to my belief if you were to apply this exclusionary more often, I am certain these officers of these companies would take notice, just for the simple fact that the threshold of being found to be liable is much more easier than found in the courts.
24
could lead to the rise of a new type of corporate employee, the fall guy
10
can we assume only republicans will be caught? Eric Holder caught NO ONE
1
True, but I doubt that would be "new". They are usually chosen from the lower ranks now.
1
I like this. I am not a lawyer, and do not know how this law (or these laws) are constructed, and while the executives are a great target, what about the corporations themselves? The NCAA can impose a "death penalty" on schools that violate its often stupid rules, and we the people cannot bar a corporation that actually cheats us? Individual doctors can be barred from Medicaid or Medicare, which is often a death sentence in our contracts, but the corporations who do our billing cannot? A ban on JP Morgan itself being in the securities industry or even a two year ban on certain activities would be a powerful disincentive! I think it would also be useful to include Board of Directors members--they are the stockholder's supposed watchdogs. If we could ban them from doing business with the government, not just in the corporation in question, but in all other corporations they are on the Board and the corporations they are executives of, and they might just pay more attention to their duties.
Next, can we extend this to the Department of Defense?
Finally, it would be interesting to see a corporation challenge this kind of thing and see what the Supreme Court does. Some on the court decry "judicial activism" and "created rights", but have extended all kinds of rights to corporations. Just one key point: the word "corporation" does not appear anywhere in the Constitution, and no rights are granted to or reserved to them.
Next, can we extend this to the Department of Defense?
Finally, it would be interesting to see a corporation challenge this kind of thing and see what the Supreme Court does. Some on the court decry "judicial activism" and "created rights", but have extended all kinds of rights to corporations. Just one key point: the word "corporation" does not appear anywhere in the Constitution, and no rights are granted to or reserved to them.
72
"Finally, it would be interesting to see a corporation challenge this kind of thing and see what the Supreme Court does."
If it's the Roberts court, I predict SCOTUS will roll over and spew lickspittle as they fawn at the feet of their corporate masters.
If it's the Roberts court, I predict SCOTUS will roll over and spew lickspittle as they fawn at the feet of their corporate masters.
Yes, some actual meaningful suggestion for dealing with the unbridled power of the rich corporate elites. Not as tough as most would like, but a good start. And why not imagine a soul, a "personhood", a life for corporations -- since they have first amendment rights -- and "imprison" them for breaking the law. House arrest where the corporation (meaning all of its officers -- the identity that has rights) can do no work except for community service for the period of its sentence.
70
Corporate charters were never intended to last indefinitely. Why not void them when a corporation is found guilty and fined?
1
Excellent start. Exclude corporate fraudsters from govt service, permanently. 1st challenge, however, is prosecuting them for fraud, a step too few govt prosecutors (read attys gen) will do, lest it keep them from multimillion-dollar partnerships in corporate law firms, counseling fraudsters. (Yes, looking at you, Eric Holder & your ilk.) Same goes for agency administrators who tremble at the thought of calling, say, a Goldman Sachs or Exxon sr. exec to task.
12
How many Obama people came or went to Wall Street? Heck Tim Geithner and Ben Berrnanke have been well rewarded for giving our money to the richest. Thanks for nothing Obama
2
Are there any corporate executives that are not fraudsters? And if you bar one there is another waiting to take their place. The idea that it takes talent to be a corporate executive is not true, all it takes is a complete lack of ethics and morality, along with psychopathic greed and in America there are plenty of people that are more than willing to fill that role.
62
MDM,
I agree completely, the incentive exists. This is similar to the illegal immigration problem: corporations set up a demand that is being filled by illegals. If the demand is cut the supply will stop as well.
To the point: take away the bonuses and golden parachutes. Make it a new case if a corporate board awards a CEO a bonus during the time when the corporation is being pursued in court. Make it fraud against the board.
As I said, take away the incentive and good behavior is promoted.
I agree completely, the incentive exists. This is similar to the illegal immigration problem: corporations set up a demand that is being filled by illegals. If the demand is cut the supply will stop as well.
To the point: take away the bonuses and golden parachutes. Make it a new case if a corporate board awards a CEO a bonus during the time when the corporation is being pursued in court. Make it fraud against the board.
As I said, take away the incentive and good behavior is promoted.
1
Even psychopaths would understand what it means to be barred from working their scams, if the punishment were swift and sure. Let's do it.
3
This seems reasonable, but I wonder how many 100k a year government officials will play David to these corporate Goliaths? And won't the Goliaths simply run to Congress and get the laws changed or the offending agencies defunded? Barring criminal CEOs from government work would be a start, but needs to be part of a larger change.
22
Wow! Bar them from working in government. That is the best you can come up with?
Here is a short list of punishments with a far nastier bite (and more deserved as well):
- Sieze their assets. Not just some of them; all of them.
- Long prison sentences. No, not merely 5 to 10 years (out in 2 after good behavior in Club Fed). I'm talking life sentences (no parole). Wrecking the lives of 1,000s to millions of people...yeah, that sounds fair to me.
- Nationalize the offending corporation. Harsh indeed, and should be reseverd for the worst misdeeds. For example, the 2008 economic collapse. Corporate charters are granted at the pleasure of the government, no? So why not? Innocent shareholders can be paid back once everything is sorted out and the company becomes public again. Only the guilty lose. Shouldn't need more than a tweek to existing bankruptcy law (ok, ok, perhaps a bit more than a tweek, but doable).
Here is a short list of punishments with a far nastier bite (and more deserved as well):
- Sieze their assets. Not just some of them; all of them.
- Long prison sentences. No, not merely 5 to 10 years (out in 2 after good behavior in Club Fed). I'm talking life sentences (no parole). Wrecking the lives of 1,000s to millions of people...yeah, that sounds fair to me.
- Nationalize the offending corporation. Harsh indeed, and should be reseverd for the worst misdeeds. For example, the 2008 economic collapse. Corporate charters are granted at the pleasure of the government, no? So why not? Innocent shareholders can be paid back once everything is sorted out and the company becomes public again. Only the guilty lose. Shouldn't need more than a tweek to existing bankruptcy law (ok, ok, perhaps a bit more than a tweek, but doable).
98
NO club Fed. Hard time for hard crimes.
1
But all those things you list require a conviction, and convictions are hard to get. The point of the article is that here is a deterrent that is easier to invoke, and it carries very serious financial and reputational consequences.
2
Why limit exclusion only to employees of criminal corporations? It is the responsibility of the boards to oversee their employees and the shareholders to oversee the board. When criminal corporations break the law, the whole enterprise needs to be sentenced to exclusion.
48
In theory, a terrific idea. Now, exactly how to sell this to the Republicans is the question at hand.
8
If the rules are already in place, Congressional action is not required. They will squeal like Joni Ernst's pigs and for the same reason, but so what?
1
Yes, until 'they' decide to override the Federal Register's rules and re-write what 'they' want to insert.
1
I think the damage has been done. The U.S. is rift with fraud and corruption from every segment of big business, from Wall Street to the big banks, to our healthcare, dwindling Social Security Benefits, and the powerful lobbyists in the halls of Congress with deep pockets. What's needed ASAP are methods to protect the middle-classes from scammers, fraudsters and corruption from corporate greed, as well as from within our own government, particularly those who hold secret meetings and pass laws that aren't in our best interests. The writer's methods to deter corporate misbehavior by a more modernized version of exclusion is obviously an situation of way too little, and way too late, and doesn't do anything to address the old habits of big government.
6
"Rift." I don't think that word means what you think it does.
1
Exactly right. What can be done now given our unfortunate reality to teach us to protect ourselves from increasingly sophisticated fraudsters, especially when one party is looking to voucherize Soc Sec and take away pensions from those lucky enough to have them, essentially gut any New Deal left and all for more cash in their big casino.
At this point we're needing survival tips.
At this point we're needing survival tips.
I'm a healthcare executive and support exclusion for people who have willfully committed fraud. I've observed many instances of senior and junior people going from one failed unscrupulous company to the next. Proving intent is a high bar and it needs to be because the regulations we follow are often vague, contradictory and frequently changing. They are also so poorly enforced that it's a major competitive disadvantage to run a compliant operation. I take this to be the result of the anti regulation movement that in the name of freedom has made our country a free-for-all for fraudsters and significantly disadvantaged the honest. In the area of precision medicine fraud has been so blatant that it has stifled innovation as outraged officials have thrown the baby out with the bathwater to the detriment of patients. So yes this needs to be cleaned up as do many business sectors and if and when it comes about let's hope not too many innocents are taken down.
128
As a physician who sees exactly what you do, I am impressed with your comments and happy to see that not all healthcare executives are drinking the Kool aid. In my 35 years in the medical field, I have watched the Corporate Culture take over and ruin medicine at the expense of the sick and the uninformed public. The ACA unfortunately has done little thus far to change it from where I sit and I have no hope that it will. There is too much money at stake for Insurance, Big Pharma, Tech, Device and Diagnostic companies, not to mention the "Management" vultures who skim off of the top of doctors' practices. And the vile doctors who cash out when they sell to these bottom dwellers are in on the scheme. The religion ME has triumphed over goodness and compassion.
9
I wholeheartedly agree. If upper level managers who are either culpable or exercising poor managerial control over their subordinates are excluded, corporate culture will change overnight. From the top down, procedures will be implemented to save their jobs. The public will be the beneficiary of these efforts. None will risk exclusion to enhance the bottom line.
15
How about we just put them in JAIL with the other CRIMINALS.
98
Tim, did you read the Op-Ed piece before writing that? The answer to your question is in there.
1
I read the piece Steve. I don't agree with the writers premise about the difficulties of prosecution and conviction. I don't believe in double standards. Prosecutors need to work a little harder even though they may be jeopardizing their future in the corporate world.
And I didn't even bring up the fact that corporations post "Hobby Lobby" can no longer have the legal protections they once enjoyed. If corporations can have religious beliefs than corporations can suffer human consequences for their illegal behavior. It's only a matter of time before this new precedent takes hold.
And I didn't even bring up the fact that corporations post "Hobby Lobby" can no longer have the legal protections they once enjoyed. If corporations can have religious beliefs than corporations can suffer human consequences for their illegal behavior. It's only a matter of time before this new precedent takes hold.
4
Why only "government work"? Business requires a license. Take away that corporation's license to do business with ANYONE.
38
Then you get the "Arthur Anderson effect" - thousands of innocent people suddenly unemployed because a few executives decided to flout the law. As you may recall, the SEC essentially barred AA from the accounting business due to it's cover-up of the Enron scandal, which killed the firm. Better that the offending executives be punished individually, rather than mass punishment for all employees, the vast majority of whom had no role in the fraudulent activity.
1
It's a little scary to propose punishing individuals where there is insufficient evidence that they are guilty of a crime. It seems like an opportunity to punish political opponents on a selective prosecution basis.
2
I have the same concerns, especially after reading that "judges largely defer to the agencies' expertise". It is too easily manipulated by political hacks.
1
DETERRENCE is one of the primary functions of the law, as it is a preventive measure against criminal actions by individual corporate officers, as they would be forbidden to conduct business with the US Government.
So I urge that Obama's next Presidential Executive Order be to prohibit government agencies from doing business with corporate officers from conducting business with the government, where there is clear evidence of corporate wrongdoing. That action would be more powerful than even Reagan's throwing lots and lots of bankers in jail for their roles in the Savings and Loan scandal.
In fact, I think that's one of the very few things he got right. But not too right.
So I urge that Obama's next Presidential Executive Order be to prohibit government agencies from doing business with corporate officers from conducting business with the government, where there is clear evidence of corporate wrongdoing. That action would be more powerful than even Reagan's throwing lots and lots of bankers in jail for their roles in the Savings and Loan scandal.
In fact, I think that's one of the very few things he got right. But not too right.
13
Have the govt seize the assets and auction them off.
This would open management to suits by shareholders.
This would open management to suits by shareholders.
12
"But instead of using these tools, most federal prosecutors focus solely on bringing criminal charges against corporate executives. And if those are unavailable, they look no further."
As a former federal prosecutor, I feel obliged to point out that we prosecutors are ethically restricted to the pursuit of criminal charges and criminal remedies. If a prosecutor were to pursue a case that lacked criminal merit for the purpose of barring an offender from government, that prosecutor would surely be prosecuted and barred from government.
As a former federal prosecutor, I feel obliged to point out that we prosecutors are ethically restricted to the pursuit of criminal charges and criminal remedies. If a prosecutor were to pursue a case that lacked criminal merit for the purpose of barring an offender from government, that prosecutor would surely be prosecuted and barred from government.
8
But can't federal prosecutors refer cases like that to federal agencies?
1
Yep. As you know, the way it works is that the agency would retain its case file and have its own attorneys initiate an administrative proceeding. The agency would not be bringing its case file to the US attorney or DOJ. Agencies generally have discretion about which path to choose, so could go either way. And on either path, the usual outcome would be a settlement.