9 ms·

The penalties associated with white collar crime are not effective deterrents. If you have billions of dollars and the worst that can happen is that you pay a c

The penalties associated with white collar crime are not effective deterrents. If you have billions of dollars and the worst that can happen is that you pay a couple million in fines, then you are effectively above the law. This was evident in the subprime mortgage crisis. Vast communities were destroyed with limited consequences for the perpetrators. I would personally like to see white collar crime lead to incarceration more often as that seems like a stronger deterrent. Having said that, I am not deeply knowledgeable about the facts of this particular case.

redm 9y ago
I see what you're saying, the consequences don't outway the benefit of breaking the law; Congress can solve that through tougher penalties. That said, I feel confident the answer is not putting MORE people in Prison, especially for civil cases. The US already incarcerates far too many people. It's out of control as it is. [1] [2] [1] https://en.wikipedia.org/wiki/United_States_incarceration_rate https://en.wikipedia.org/wiki/United_States_incarceration_ra... [2] "Comparing some countries with similar percentages of immigrants, Germany has an incarceration rate of 76 per 100,000 population (as of 2014),[25] Italy is 85 per 100,000 (as of 2015),[26] and Saudi Arabia is 161 per 100,000 (as of 2013).[27] Comparing other countries with a zero tolerance policy for illegal drugs, the rate of Russia is 455 per 100,000 (as of 2015),[28] Kazakhstan is 275 per 100,000 (as of 2015),[29] Singapore is 220 per 100,000 (as of 2014),[30] and Sweden is 60 per 100,000 (as of 2014).[31]"
- busterarm 9y ago
  If we applied the same laws around not profiting off of violent crimes to white collar crime AND extended that to company stakeholders as well, investors would make executives knock off that sort of behavior real quick.
  - redm 9y ago
    Are you suggesting that invasion of privacy become a criminal offense? Effectively, that's what happened here, and even though its Uber, its individuals who did it. Your neighbor could do it to you as well. This seems like a slippery slope of criminalizing far too much. For example, maybe Nick Denton should have gone to jail for invasion of privacy against Hulk Hogan? I don't agree with that either.
    - toomuchtodo 9y ago
      Violating HIPAA and PII when your a company carries steep penalties; why not against individuals as well?
      - iagreeentirely 9y ago
        Why mention individuals? This wasn't something dudeface did for his own entertainment. It was done specifically because the rapist was an uber driver. This was a company mishandling HIPAA data in that they never should have had access to it in the first place, let alone been sharing it around the exec staff like a pulp comic. I will say this clearly and I mean it: If you use uber, or you work for uber, you are morally wrong. You are choosing to enrich people and a company who have shown you multiple times that they are terrible human beings who lack even the concept of a moral compass.
      - dragonwriter 9y ago
        HIPAA's civil and criminal penalties already apply to individuals. OTOH, Uber and it's employees are not HIPAA covered entities, nor, generally, are doctors in India. So I don't see how anyone could have violated HIPAA here.
        toomuchtodo 9y ago
        I appreciate you taking the time to point out loopholes that need fixing.
        jimmywanger 9y ago
        I don't think that HIPAA not applying outside of the United States is a loophole. Each country is a different environment, and the laws need to be tailored for the environment. There seems to be an insatiable need for Americans or Westerners to project their laws/moralities to other countries, and then refuse the accept the reverse, except for certain cultural minorities logical inconsistencies.
- model_s 9y ago
  Yeah, I'd agree that it's out of control. But fiscally dangerous might not be enough. Can help the problem by not jailing petty crime.
- leggomylibro 9y ago
  We could focus on putting DIFFERENT people in prison, though. We could prioritize crimes that treats human beings as chattel for personal gain, or by the number of people an action harmed.
- SomeStupidPoint 9y ago
  I'm confident that putting more white collar criminals in prison is a solution to both problems. The percentage of white collar criminals would still be low (ie, won't change the incarceration numbers much), and it would connect more influential families to the problems with our prison system instead of having a classist divide on who it impacts. I propose that we institute "murder" enhancements: any financial crime that causes more than $9mil in damages (the cost of a life [0]) must carry the same penalty as a murder (with the same level of intent, eg, planned versus unplanned); add multiplier for every additional $9mil in damages (ie, $9mil-17.9mil is 1x, $18-26.9mil is 2x, etc); leaders of organizations should be charged equivalently to leaders of other criminal enterprises -- if your organization committed $9bil in fraud, you should be charged as a leader of an organization which committed 1,000 murders. [0] https://en.wikipedia.org/wiki/Value_of_life#United_States https://en.wikipedia.org/wiki/Value_of_life#United_States
  - dpark 9y ago
    You can't directly equate lives and dollars. This is an arbitrary thing you're attempting to define, and the flip side of the argument is that a wealthy person should be able to pay $9MM instead of being incarcerated for murder.
- WindyCityBrew 9y ago
  I'll echo other replies and agree that we should put different people in prison, not more. I'd argue that white collar crime hurts more people than consensual and most violent crimes and it should be punished as such.
- s73ver 9y ago
  I would be more than happy to exchange many of the non-violent offenders who ended up doing not much harm on an absolute scale with these white collar criminals who end up harming many, many more people.
99_00 9y ago
If convicted a person will have a criminal record which can destroy them professionally.
- FridgeSeal 9y ago
  Good. Maybe that will make them think twice about doing something illegal just because they can afford the fine. For too long to meant companies and people in business have avoided the consequence of their actions, it's time we pulled them back into line.
accountyaccount 9y ago
I think it should be based on a percentage of your income (with a set minimum, otherwise you're also just giving the poor a free pass), apparently Finland does this with speeding tickets.
azag0 9y ago
I have much doubt that criminal penalties would change anything. People would just put much more energy in avoiding them. I think that state a priori regulation is a more effective tool than state a posteriori punishment.
- branchless 9y ago
  http://www.rollingstone.com/politics/news/why-isnt-wall-street-in-jail-20110216 http://www.rollingstone.com/politics/news/why-isnt-wall-stre... > "You put Lloyd Blankfein in pound-me-in-the-ass prison for one six-month term, and all this bullshit would stop, all over Wall Street," says a former congressional aide. "That's all it would take. Just once."
- s73ver 9y ago
  I don't see why we can't have both. But, for it to really work, you can't throw them in Country Club Resort prison. They have to go to Pound-Me-In-The-Ass prison. They need to be locked up with some really bad people. Because, let's face it, most of these white collar criminals are really bad people.
  - dragonwriter 9y ago
    Wait, so wouldn't Country Club prison work then, since that's where all the existing imprisoned white collar criminals already are (and, per your description, they are “really bad people”.)
    - s73ver 9y ago
      Not if they're all only around each other. I'm talking they need to be locked up with genpop at a medium or high security prison. With gang members and such.
      - deleted 9y ago
        [deleted]
vec 9y ago
I'd accept a minimum statuatory fine of 100% of the profits from your criminal activities. White collar crime, when discovered, should always be a net loss for the plaintiff's balance sheet. It's not perfect, but if you make ten billion dollars from fraud, I feel like first you should lose the whole ten billion dollars as a matter of course, after which we can start discussing what if any punishment is appropriate.
- pizzetta 9y ago
  What would you do about PHI leakers, computer operators at hospitals/clinics, who leak celebrity information. Sometimes it's not for profit and one can't just block access as access is necessary to process the patient, for example. These are often low paying jobs to boot.
  - vec 9y ago
    100% of $0 is $0. I'm not saying that should be the only punishment. I don't even think it should technically count as part of the punishment. I'm just saying that if the prosecution can demonstrate that you (or your employer) profited from a crime, then you should always lose those profits in addition to whatever punishment the court deems appropriate.
- redm 9y ago
  "It's not perfect, but if you make ten billion dollars from fraud," I don't see how this applies to this matter. From what I read in the article, Uber was being sued and investigating a crime that occurred through the application of their service. In other words, if they did something wrong, it wasn't in the pursuit of profit, it was in defense of another lawsuit or the ultimate private settlement thereof.
  - SolarNet 9y ago
    Yes, however they still profit from winning such lawsuits, if this was typical behavior, then theoretically they should be on the hook for any money they avoided paying by using such methods. For example if they were invading the privacy of the people in the drivers lawsuit (where they ended up paying 100 million) and used it to win instead, then that would be the amount they should be on the hook for. The point is that any illegal behavior in corporate governance means the corporation and the people who stand to benefit from it automatically loose entirely on the related matters. Which is guaranteed to be effective at stopping illegal behavior. Of course this is in the case of criminal fraud, which hasn't been brought up in this news case you are correct.
deleted 9y ago
[deleted]
pasbesoin 9y ago
Amongst other things, the "War on Terror" diverted an enormous fraction of law enforcement resources away from this. As I said in another comment, today, from my perspective, the average American faces much greater terror from being screwed over by "too big to punish (let alone fail)" corporations, than they do from actual terrorists -- manufactured fear aside. Fines mostly don't hurt corporate members, individually, and often represent a fraction of the profit they've gained by breaking laws and regulations. Pierce the corporate veil. Lock them up. Assign law enforcement resources to relevant crime that weakens our society -- not in overwhelming numbers to another "War on..." fearscape.
branchless 9y ago
Agreed. Fines in banking have become the cost of doing business, where one can read "crime" for the word "business". Stick these guys in jail!
- spacemanmatt 9y ago
  The white-collar criminal who wrote the laws made it so they can deduct fines from their taxes. So unless they're fined more than they make in a year, they never pay a penny of it.
  - branchless 9y ago
    Which is why the UK scores low on corruption indices. Silly foreigners handing brown envelopes to each other - just make it legal!
rayiner 9y ago
The problem is white collar crime is often extremely amorphous. White collar crime is largely things that are perfectly legal to do unless you do them in certain ways or have certain knowledge or intent while doing them. A great example is the HSBC money laundering case. Go actually read the DOJ statement of facts in that case. As a preliminary matter, every large bank is used for money laundering. And bank executives all know, in the abstract, that their banks are used for money laundering. That's not illegal--it'd be impossible to have a bank that wasn't used for money laundering. The gist of the case was that HSBC failed to classify Mexico as a higher risk country and implement appropriate controls despite warnings from non-binding authorities about the risk of money laundering in Mexico. Who should go to prison for that?
- spacemanmatt 9y ago
  The problem is white-collar criminals wrote the laws, not that it's hard to identify crime.
  - dpark 9y ago
    The people writing the laws don't tend to define themselves as criminals so your thesis seems rather weak.
    - spacemanmatt 9y ago
      Criminals rarely self-identify. It's everyone else's job to do that.
      - dpark 9y ago
        It's actually the law's job to do that.
- theptip 9y ago
  That is a great example. But HSBC is hardly as innocent as you're making out. http://www.rollingstone.com/politics/news/outrageous-hsbc-settlement-proves-the-drug-war-is-a-joke-20121213 http://www.rollingstone.com/politics/news/outrageous-hsbc-se... > Breuer admitted that drug dealers would sometimes come to HSBC's Mexican branches and "deposit hundreds of thousands of dollars in cash, in a single day, into a single account, using boxes designed to fit the precise dimensions of the teller windows." The gist of the case is that HSBC were so brazenly negligent, that the only logical conclusion is that they were deliberately looking the other way in order to make more profit, and they paid $1.9B to make the problem go away. That's on $670 billion in wire transfers and $9.4 billion in cash transactions from its Mexico bank operations during the period under question [1]. [1]: http://money.cnn.com/2012/12/10/news/companies/hsbc-money-laundering/ http://money.cnn.com/2012/12/10/news/companies/hsbc-money-la...
deepsun 9y ago
Problem with top execs incarceration is that it's not good for economy and country in general (sometimes, not always). It's more beneficial to fine them and let them go working/breaking law further. Yes, that's not fair, but it's logical. Having lived for some time in another country, I've seen counter-examples too: when execs were incarcerated for minor things and mere accusations, effectively destroying the companies they've built, so hundreds of employees had to look for another job. Everyone's seen that fairness doesn't play well with pragmatics, and it's better to let them go even if they are guilty.
cmurf 9y ago
It probably needs an innovation in articles of incorporation, something like the "benefit corporation" that would bind a certain criminal liability to the board and/or officers in a very explicitly way. Right now they don't see jail time except in pretty narrow cases, like say Enron, where it was violations of fiduciary duty. Enron, and its auditor, did basically get the corporate death penalty (they're gone). And the shareholders were destroyed.

redm 9y ago

I see what you're saying, the consequences don't outway the benefit of breaking the law; Congress can solve that through tougher penalties. That said, I feel confident the answer is not putting MORE people in Prison, especially for civil cases. The US already incarcerates far too many people. It's out of control as it is. [1] [2] [1] https://en.wikipedia.org/wiki/United_States_incarceration_rate https://en.wikipedia.org/wiki/United_States_incarceration_ra... [2] "Comparing some countries with similar percentages of immigrants, Germany has an incarceration rate of 76 per 100,000 population (as of 2014),[25] Italy is 85 per 100,000 (as of 2015),[26] and Saudi Arabia is 161 per 100,000 (as of 2013).[27] Comparing other countries with a zero tolerance policy for illegal drugs, the rate of Russia is 455 per 100,000 (as of 2015),[28] Kazakhstan is 275 per 100,000 (as of 2015),[29] Singapore is 220 per 100,000 (as of 2014),[30] and Sweden is 60 per 100,000 (as of 2014).[31]"

busterarm 9y ago
If we applied the same laws around not profiting off of violent crimes to white collar crime AND extended that to company stakeholders as well, investors would make executives knock off that sort of behavior real quick.
- redm 9y ago
  Are you suggesting that invasion of privacy become a criminal offense? Effectively, that's what happened here, and even though its Uber, its individuals who did it. Your neighbor could do it to you as well. This seems like a slippery slope of criminalizing far too much. For example, maybe Nick Denton should have gone to jail for invasion of privacy against Hulk Hogan? I don't agree with that either.
  - toomuchtodo 9y ago
    Violating HIPAA and PII when your a company carries steep penalties; why not against individuals as well?
    - iagreeentirely 9y ago
      Why mention individuals? This wasn't something dudeface did for his own entertainment. It was done specifically because the rapist was an uber driver. This was a company mishandling HIPAA data in that they never should have had access to it in the first place, let alone been sharing it around the exec staff like a pulp comic. I will say this clearly and I mean it: If you use uber, or you work for uber, you are morally wrong. You are choosing to enrich people and a company who have shown you multiple times that they are terrible human beings who lack even the concept of a moral compass.
    - dragonwriter 9y ago
      HIPAA's civil and criminal penalties already apply to individuals. OTOH, Uber and it's employees are not HIPAA covered entities, nor, generally, are doctors in India. So I don't see how anyone could have violated HIPAA here.
      - toomuchtodo 9y ago
        I appreciate you taking the time to point out loopholes that need fixing.
        jimmywanger 9y ago
        I don't think that HIPAA not applying outside of the United States is a loophole. Each country is a different environment, and the laws need to be tailored for the environment. There seems to be an insatiable need for Americans or Westerners to project their laws/moralities to other countries, and then refuse the accept the reverse, except for certain cultural minorities logical inconsistencies.
model_s 9y ago
Yeah, I'd agree that it's out of control. But fiscally dangerous might not be enough. Can help the problem by not jailing petty crime.
leggomylibro 9y ago
We could focus on putting DIFFERENT people in prison, though. We could prioritize crimes that treats human beings as chattel for personal gain, or by the number of people an action harmed.
SomeStupidPoint 9y ago
I'm confident that putting more white collar criminals in prison is a solution to both problems. The percentage of white collar criminals would still be low (ie, won't change the incarceration numbers much), and it would connect more influential families to the problems with our prison system instead of having a classist divide on who it impacts. I propose that we institute "murder" enhancements: any financial crime that causes more than $9mil in damages (the cost of a life [0]) must carry the same penalty as a murder (with the same level of intent, eg, planned versus unplanned); add multiplier for every additional $9mil in damages (ie, $9mil-17.9mil is 1x, $18-26.9mil is 2x, etc); leaders of organizations should be charged equivalently to leaders of other criminal enterprises -- if your organization committed $9bil in fraud, you should be charged as a leader of an organization which committed 1,000 murders. [0] https://en.wikipedia.org/wiki/Value_of_life#United_States https://en.wikipedia.org/wiki/Value_of_life#United_States
- dpark 9y ago
  You can't directly equate lives and dollars. This is an arbitrary thing you're attempting to define, and the flip side of the argument is that a wealthy person should be able to pay $9MM instead of being incarcerated for murder.
WindyCityBrew 9y ago
I'll echo other replies and agree that we should put different people in prison, not more. I'd argue that white collar crime hurts more people than consensual and most violent crimes and it should be punished as such.
s73ver 9y ago
I would be more than happy to exchange many of the non-violent offenders who ended up doing not much harm on an absolute scale with these white collar criminals who end up harming many, many more people.

99_00 9y ago

If convicted a person will have a criminal record which can destroy them professionally.

FridgeSeal 9y ago
Good. Maybe that will make them think twice about doing something illegal just because they can afford the fine. For too long to meant companies and people in business have avoided the consequence of their actions, it's time we pulled them back into line.

accountyaccount 9y ago

I think it should be based on a percentage of your income (with a set minimum, otherwise you're also just giving the poor a free pass), apparently Finland does this with speeding tickets.

azag0 9y ago

I have much doubt that criminal penalties would change anything. People would just put much more energy in avoiding them. I think that state a priori regulation is a more effective tool than state a posteriori punishment.

branchless 9y ago
http://www.rollingstone.com/politics/news/why-isnt-wall-street-in-jail-20110216 http://www.rollingstone.com/politics/news/why-isnt-wall-stre... > "You put Lloyd Blankfein in pound-me-in-the-ass prison for one six-month term, and all this bullshit would stop, all over Wall Street," says a former congressional aide. "That's all it would take. Just once."
s73ver 9y ago
I don't see why we can't have both. But, for it to really work, you can't throw them in Country Club Resort prison. They have to go to Pound-Me-In-The-Ass prison. They need to be locked up with some really bad people. Because, let's face it, most of these white collar criminals are really bad people.
- dragonwriter 9y ago
  Wait, so wouldn't Country Club prison work then, since that's where all the existing imprisoned white collar criminals already are (and, per your description, they are “really bad people”.)
  - s73ver 9y ago
    Not if they're all only around each other. I'm talking they need to be locked up with genpop at a medium or high security prison. With gang members and such.
    - deleted 9y ago
      [deleted]

vec 9y ago

I'd accept a minimum statuatory fine of 100% of the profits from your criminal activities. White collar crime, when discovered, should always be a net loss for the plaintiff's balance sheet. It's not perfect, but if you make ten billion dollars from fraud, I feel like first you should lose the whole ten billion dollars as a matter of course, after which we can start discussing what if any punishment is appropriate.

pizzetta 9y ago
What would you do about PHI leakers, computer operators at hospitals/clinics, who leak celebrity information. Sometimes it's not for profit and one can't just block access as access is necessary to process the patient, for example. These are often low paying jobs to boot.
- vec 9y ago
  100% of $0 is $0. I'm not saying that should be the only punishment. I don't even think it should technically count as part of the punishment. I'm just saying that if the prosecution can demonstrate that you (or your employer) profited from a crime, then you should always lose those profits in addition to whatever punishment the court deems appropriate.
redm 9y ago
"It's not perfect, but if you make ten billion dollars from fraud," I don't see how this applies to this matter. From what I read in the article, Uber was being sued and investigating a crime that occurred through the application of their service. In other words, if they did something wrong, it wasn't in the pursuit of profit, it was in defense of another lawsuit or the ultimate private settlement thereof.
- SolarNet 9y ago
  Yes, however they still profit from winning such lawsuits, if this was typical behavior, then theoretically they should be on the hook for any money they avoided paying by using such methods. For example if they were invading the privacy of the people in the drivers lawsuit (where they ended up paying 100 million) and used it to win instead, then that would be the amount they should be on the hook for. The point is that any illegal behavior in corporate governance means the corporation and the people who stand to benefit from it automatically loose entirely on the related matters. Which is guaranteed to be effective at stopping illegal behavior. Of course this is in the case of criminal fraud, which hasn't been brought up in this news case you are correct.

deleted 9y ago

[deleted]

pasbesoin 9y ago

Amongst other things, the "War on Terror" diverted an enormous fraction of law enforcement resources away from this. As I said in another comment, today, from my perspective, the average American faces much greater terror from being screwed over by "too big to punish (let alone fail)" corporations, than they do from actual terrorists -- manufactured fear aside. Fines mostly don't hurt corporate members, individually, and often represent a fraction of the profit they've gained by breaking laws and regulations. Pierce the corporate veil. Lock them up. Assign law enforcement resources to relevant crime that weakens our society -- not in overwhelming numbers to another "War on..." fearscape.

branchless 9y ago

Agreed. Fines in banking have become the cost of doing business, where one can read "crime" for the word "business". Stick these guys in jail!

spacemanmatt 9y ago
The white-collar criminal who wrote the laws made it so they can deduct fines from their taxes. So unless they're fined more than they make in a year, they never pay a penny of it.
- branchless 9y ago
  Which is why the UK scores low on corruption indices. Silly foreigners handing brown envelopes to each other - just make it legal!

rayiner 9y ago

The problem is white collar crime is often extremely amorphous. White collar crime is largely things that are perfectly legal to do unless you do them in certain ways or have certain knowledge or intent while doing them. A great example is the HSBC money laundering case. Go actually read the DOJ statement of facts in that case. As a preliminary matter, every large bank is used for money laundering. And bank executives all know, in the abstract, that their banks are used for money laundering. That's not illegal--it'd be impossible to have a bank that wasn't used for money laundering. The gist of the case was that HSBC failed to classify Mexico as a higher risk country and implement appropriate controls despite warnings from non-binding authorities about the risk of money laundering in Mexico. Who should go to prison for that?

spacemanmatt 9y ago
The problem is white-collar criminals wrote the laws, not that it's hard to identify crime.
- dpark 9y ago
  The people writing the laws don't tend to define themselves as criminals so your thesis seems rather weak.
  - spacemanmatt 9y ago
    Criminals rarely self-identify. It's everyone else's job to do that.
    - dpark 9y ago
      It's actually the law's job to do that.
theptip 9y ago
That is a great example. But HSBC is hardly as innocent as you're making out. http://www.rollingstone.com/politics/news/outrageous-hsbc-settlement-proves-the-drug-war-is-a-joke-20121213 http://www.rollingstone.com/politics/news/outrageous-hsbc-se... > Breuer admitted that drug dealers would sometimes come to HSBC's Mexican branches and "deposit hundreds of thousands of dollars in cash, in a single day, into a single account, using boxes designed to fit the precise dimensions of the teller windows." The gist of the case is that HSBC were so brazenly negligent, that the only logical conclusion is that they were deliberately looking the other way in order to make more profit, and they paid $1.9B to make the problem go away. That's on $670 billion in wire transfers and $9.4 billion in cash transactions from its Mexico bank operations during the period under question [1]. [1]: http://money.cnn.com/2012/12/10/news/companies/hsbc-money-laundering/ http://money.cnn.com/2012/12/10/news/companies/hsbc-money-la...

deepsun 9y ago

Problem with top execs incarceration is that it's not good for economy and country in general (sometimes, not always). It's more beneficial to fine them and let them go working/breaking law further. Yes, that's not fair, but it's logical. Having lived for some time in another country, I've seen counter-examples too: when execs were incarcerated for minor things and mere accusations, effectively destroying the companies they've built, so hundreds of employees had to look for another job. Everyone's seen that fairness doesn't play well with pragmatics, and it's better to let them go even if they are guilty.

cmurf 9y ago

It probably needs an innovation in articles of incorporation, something like the "benefit corporation" that would bind a certain criminal liability to the board and/or officers in a very explicitly way. Right now they don't see jail time except in pretty narrow cases, like say Enron, where it was violations of fiduciary duty. Enron, and its auditor, did basically get the corporate death penalty (they're gone). And the shareholders were destroyed.