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It is ludicrous that Theranos' punishment for all their fraud was merely paying a fine. We need to resume prosecuting the individuals who commit white collar

by mhneu 8y ago

It is ludicrous that Theranos' punishment for all their fraud was merely paying a fine. We need to resume prosecuting the individuals who commit white collar crimes. Otherwise, getting caught committing crime just gets budgeted into the business plan. The book The Chickenshit Club does a good job highlighting this (fairly recent) problem with US justice. https://www.nytimes.com/2017/07/05/books/review/the-chickenshit-club-jesse-eisinger-.html https://www.nytimes.com/2017/07/05/books/review/the-chickens... "America’s Top Prosecutors Used to Go After Top Executives. What Changed?"

danso 8y ago
They are still under federal criminal investigation. From the end of the article: > Meanwhile, the U.S. attorney’s office in San Francisco is conducting a criminal investigation that could result in indictments of both Holmes and Balwani.
- jgalt212 8y ago
  That's true, but it's usually the case that the SEC and DOJ coordinate their investigations and announces charges simultaneously, or by just one of them. I'm not saying criminal charges aren't forthcoming, but it would not fit the pattern of DOJ/SEC coordination in the past.
TelAvivHacker 8y ago
She got away with it because she's a woman.
jacobolus 8y ago
“Conservative” (i.e. pro-corporate) justices have had a majority on the US supreme court for four and half decades now. There are now decades of precedent firmly on the side of corporate executives vs. customers, employees, or the general public. More generally, corporations have coopted or subverted most other institutions in the society, including the DOJ and the legislature. (Hooray for unlimited anonymous campaign finance.)
- deleted 8y ago
  [deleted]
- cepth 8y ago
  Ideologically, I’m inclined to agree with you. However, last year I read the book mentioned in the parent comment, The Chickenshit Club. One of the central arguments laid out in that book is that ultimately it is a “gentleman’s code” in the legal world that leads to fewer prosecutions of corporations and individuals executives. The author of that book obtained DOJ memos and conducted interviews with several career prosecutors. The general takeaway is that US federal prosecutors are inclined to “see the humanity” in corporate executives, and ascribe potential criminal behavior to negligence instead. After all, high powered lawyers and C-suite executives went to the same handful of elite schools, and are likely to run in similar social circles. This is complicated by the fact that the US Department of Justice has two tracks: career civil servants, and political appointees who are often part of a revolving door from whiteshoe criminal defense law firms to government. The political appointees oversee and have ultimate discretion on what cases to pursue and against whom. The incentives for prosecutors to take cases to trial, as opposed to settling, are also not there. Federal prosecutors cherish their “win rates”, and extracting a settlement from a corporation counts as a win, which in turn helps career advancement. Take a case to court, and if 1/12 of the jurors are unpersuaded, you’ve lost. In all fairness to George W. Bush’s presidency, his DOJ was given political cover and the necessary resources to prosecute Enron, Worldcom, Tyco, and Arthur Andersen. Both corporation and individual executives were held accountable with financial penalties and heavy jail sentences. The Obama presidency on the other hand, featured former criminal defense and corporate law firm lawyers leading the DOJ. Many had no previous experience of working as prosecutors, and it showed painfully in several botched prosecutions. The problem of “chickenshit” prosecution in this country has long predated Citizens United, and several conservative presidents have done a better job than their liberal counterparts of holding corporations accountable, and vice versa. Corporate money may well add fuel to the fire, but it was by no means the catalyst that got us to where we are today w.r.t. unpunished corporate wrongdoing. The book is really worth a read, and goes into far greater detail.
  - jacobolus 8y ago
deleted 8y ago
[deleted]
snarf21 8y ago
I agree, especially when we incarcerate kids for having an ounce of pot for years. It really feels like a war on the poor sometimes. Other countries have laws with much bigger teeth than here and it is sad. I think the solution is a much bigger whistle blower program where people are encouraged and financially rewarded for stepping forward and preventing systemic corruption and fraud in our companies. This also helps to give direct evidence of who ordered what and then prosecution becomes a lot easier.
- Kalium 8y ago
  > I agree, especially when we incarcerate kids for having an ounce of pot for years. It really feels like a war on the poor sometimes. Other countries have laws with much bigger teeth than here and it is sad. You're absolutely, completely, 100% correct! This crap is abominable. It destroys lives and whole communites for no reason at all other than that they're the wrong color. This case, though? It might be a little different and maybe not an example of the pattern you're looking at. To be clear, the SEC doesn't bring criminal charges. It's quite literally not an option for them. They shouldn't be derided for doing what they're capable of - levying fines.
asr 8y ago
I don't quite get what you are talking about -- Elizabeth Holmes was charged with fraud: https://www.wsj.com/articles/sec-charges-theranos-and-founder-elizabeth-holmes-with-fraud-1521045648 https://www.wsj.com/articles/sec-charges-theranos-and-founde... Others may be charged in the future, I assume. Is your complaint that she didn't go to jail?
devy 8y ago
I agree. In China, the legal representative (not necessarily the CEO though) of any business entity is directly responsible for any business wrongdoings and will be criminally charged [1]. [1]: http://www.mondaq.com/unitedstates/x/180532/Directors+Officers+Executives+Shareholders/Risks+and+Liabilities+for+Legal+Representatives+in+China http://www.mondaq.com/unitedstates/x/180532/Directors+Office...

by mhneu 8y ago

danso 8y ago

They are still under federal criminal investigation. From the end of the article: > Meanwhile, the U.S. attorney’s office in San Francisco is conducting a criminal investigation that could result in indictments of both Holmes and Balwani.

jgalt212 8y ago
That's true, but it's usually the case that the SEC and DOJ coordinate their investigations and announces charges simultaneously, or by just one of them. I'm not saying criminal charges aren't forthcoming, but it would not fit the pattern of DOJ/SEC coordination in the past.

TelAvivHacker 8y ago

She got away with it because she's a woman.

jacobolus 8y ago

“Conservative” (i.e. pro-corporate) justices have had a majority on the US supreme court for four and half decades now. There are now decades of precedent firmly on the side of corporate executives vs. customers, employees, or the general public. More generally, corporations have coopted or subverted most other institutions in the society, including the DOJ and the legislature. (Hooray for unlimited anonymous campaign finance.)

deleted 8y ago
[deleted]
cepth 8y ago
Ideologically, I’m inclined to agree with you. However, last year I read the book mentioned in the parent comment, The Chickenshit Club. One of the central arguments laid out in that book is that ultimately it is a “gentleman’s code” in the legal world that leads to fewer prosecutions of corporations and individuals executives. The author of that book obtained DOJ memos and conducted interviews with several career prosecutors. The general takeaway is that US federal prosecutors are inclined to “see the humanity” in corporate executives, and ascribe potential criminal behavior to negligence instead. After all, high powered lawyers and C-suite executives went to the same handful of elite schools, and are likely to run in similar social circles. This is complicated by the fact that the US Department of Justice has two tracks: career civil servants, and political appointees who are often part of a revolving door from whiteshoe criminal defense law firms to government. The political appointees oversee and have ultimate discretion on what cases to pursue and against whom. The incentives for prosecutors to take cases to trial, as opposed to settling, are also not there. Federal prosecutors cherish their “win rates”, and extracting a settlement from a corporation counts as a win, which in turn helps career advancement. Take a case to court, and if 1/12 of the jurors are unpersuaded, you’ve lost. In all fairness to George W. Bush’s presidency, his DOJ was given political cover and the necessary resources to prosecute Enron, Worldcom, Tyco, and Arthur Andersen. Both corporation and individual executives were held accountable with financial penalties and heavy jail sentences. The Obama presidency on the other hand, featured former criminal defense and corporate law firm lawyers leading the DOJ. Many had no previous experience of working as prosecutors, and it showed painfully in several botched prosecutions. The problem of “chickenshit” prosecution in this country has long predated Citizens United, and several conservative presidents have done a better job than their liberal counterparts of holding corporations accountable, and vice versa. Corporate money may well add fuel to the fire, but it was by no means the catalyst that got us to where we are today w.r.t. unpunished corporate wrongdoing. The book is really worth a read, and goes into far greater detail.
- jacobolus 8y ago

deleted 8y ago

[deleted]

snarf21 8y ago

I agree, especially when we incarcerate kids for having an ounce of pot for years. It really feels like a war on the poor sometimes. Other countries have laws with much bigger teeth than here and it is sad. I think the solution is a much bigger whistle blower program where people are encouraged and financially rewarded for stepping forward and preventing systemic corruption and fraud in our companies. This also helps to give direct evidence of who ordered what and then prosecution becomes a lot easier.

Kalium 8y ago
> I agree, especially when we incarcerate kids for having an ounce of pot for years. It really feels like a war on the poor sometimes. Other countries have laws with much bigger teeth than here and it is sad. You're absolutely, completely, 100% correct! This crap is abominable. It destroys lives and whole communites for no reason at all other than that they're the wrong color. This case, though? It might be a little different and maybe not an example of the pattern you're looking at. To be clear, the SEC doesn't bring criminal charges. It's quite literally not an option for them. They shouldn't be derided for doing what they're capable of - levying fines.

asr 8y ago

I don't quite get what you are talking about -- Elizabeth Holmes was charged with fraud: https://www.wsj.com/articles/sec-charges-theranos-and-founder-elizabeth-holmes-with-fraud-1521045648 https://www.wsj.com/articles/sec-charges-theranos-and-founde... Others may be charged in the future, I assume. Is your complaint that she didn't go to jail?

devy 8y ago

I agree. In China, the legal representative (not necessarily the CEO though) of any business entity is directly responsible for any business wrongdoings and will be criminally charged [1]. [1]: http://www.mondaq.com/unitedstates/x/180532/Directors+Officers+Executives+Shareholders/Risks+and+Liabilities+for+Legal+Representatives+in+China http://www.mondaq.com/unitedstates/x/180532/Directors+Office...