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> Financial crimes deserve a financial penalty. Nah. Financial crimes cause real harm. And financial penalties frequently aren't sufficient disincentive. Imag

> Financial crimes deserve a financial penalty. Nah. Financial crimes cause real harm. And financial penalties frequently aren't sufficient disincentive. Imagine that I have no assets but am a good talker. So I go out an launch an "investment fund" that is just a Ponzi scheme. Let's suppose I take in $50m, pocket $10m, and spend the rest on "investment returns" and appearing to run a real business. I live high on the hog for 5 years before it all falls apart, at which point many too-trusting people have lost their lifes' savings. What is the correct penalty? There's no way a financial penalty can be correct here because all of my money was stolen. If the government just sets me back the zero I started at, what punishment is that? Where's my disincentive to do it all again? If anything, I'd argue financial crimes are more likely to deserve jail time. People who steal food may be doing it out of necessity. But nobody stealing millions through financial crimes can claim desperation. I don't think people who use suits to rob instead of ski masks are any less thieves.

chrischen 4y ago
I’d imagine the penalty at least involves returning any stolen money, but a garnishment on future income and additional IRS scrutiny should do it. I actually think jail time isn’t enough a disincentive without the financial penalty because otherwise it can just be a cost of doing business. For example there was a chronic thief in SF that stole peoples’ laptops from cafes. She was jailed multiple times but because the police had no way of knowing where she hid the stolen goods they were still never recovered and presumably she kept her earnings even after jail time.
- wpietri 4y ago
  Oh, yeah, I totally agree that there should be financial penalties larger than the ill-gotten gains. I'm just saying that isn't enough.
  - candiodari 4y ago
    There's a legal expression (it's in French originally) that says "You can't get blood from a stone" This effectively means financial crimes can never be repaid in full, and frequently only small percentages get repaid. It also means the government can never hope to actually do anything to help other than punishment. Going after financial crimes to protect victims ... just doesn't work. Somehow this is enormously at odds with people's expectation of justice, and people either just can't or refuse to believe that's really how it works.
codedokode 4y ago
> at which point many too-trusting people have lost their lifes' savings People should be a little smarter and not fall for Ponzi schemes. Furthermore, many people who invest in such schemes, understand how they work but hope to get profit before it collapses.
- mbreese 4y ago
  So you’re going with victim blaming as your defense here?
- kergonath 4y ago
  > People should be a little smarter and not fall for Ponzi schemes Blaming the victims is not a solution. This logic can be applied to justify stopping punishing any crime (“well, they should have stayed at home if they did not want to get mugged”, “they should know better than leave their house for the week if they did not want to get burglarised”, etc).
  - Dracophoenix 4y ago
    The victim-perpetrator binary is a false dilemma. Courts recognize contributory negligence in car accidents, why shouldn't they recognize them for self-inflicted financial harms in which one was aware or should have been aware of the risks?
- martyvis 4y ago
  I'm assuming you are actually a troll, or maybe you haven't actually looked beyond the headline. Many "schemes" are very legitimate looking, offering modest returns. At the moment with very low bank deposit even a 10% investment fund is attractive. Also vulnerable often cannot distinguish good will from good acting by purveyors. Just recently it has come to light that a crooked funeral fund here in Australia has been preying on indigenous people for years with no prospect on their deposits being returned
- wpietri 4y ago
  I don't think you understand how scams work. They're engineered so that somebody will fall for them. If we made everybody 10% smarter, scammers would just make their scams 10% cleverer. I also think a linear "smartness" model misses it. Both intelligence and knowledge are multidimensional. Everybody has strengths and weaknesses, and well-run scams target particular weaknesses.
vorpalhex 4y ago
Being raped, assaulted or having a family member murdered is worse than losing money. Money can be repaid. You can't be unraped.
- sadhorse 4y ago
  What about death as a result of money stolen from public health?
- wpietri 4y ago
  You write that in a tone of contradiction, but I don't see what in my comment contradicts that.
- themitigating 4y ago
  Rape and murder are extreme crimes and of course no financial loss is equal to them but there are other violent crimes that have less of an impact compared to losing money. You might be thinking about someone stealing a person's TV but what about their life savings. What about a corporation that goes bankrupt because of financial misdeeds and people lose their jobs? My dad lost his job in the mid 90s and the effects on my family involved massive stress for years. Financial concerns/economy seems to be the most important issue to voters in almost every election ever. It's the 5th highest reason for divorce at 36% (https://www.insider.com/why-people-get-divorced-2019-1 https://www.insider.com/why-people-get-divorced-2019-1) It can also can result in physical issues. Maybe you can't afford healthy food, maybe you can't afford health care due to financial loss. I couldn't find statistics but I can't imagine that in cases of theft being repaid 100% or even 50% of your loss occurs that frequency (but no source so..) In other words some financial crimes are worse than violent crimes.
  - wpietri 4y ago
    I agree with your conclusion. Google News has correctly decided I'm interested in Ponzi schemes, so it shows me articles at least weekly about newly discovered large ones. A very common element is people retired or on their way who have lost everything. I'd much rather get a punch in the snoot than to spend years slowly dying of stress, poor nutrition, and patchy medical care.

chrischen 4y ago

I’d imagine the penalty at least involves returning any stolen money, but a garnishment on future income and additional IRS scrutiny should do it. I actually think jail time isn’t enough a disincentive without the financial penalty because otherwise it can just be a cost of doing business. For example there was a chronic thief in SF that stole peoples’ laptops from cafes. She was jailed multiple times but because the police had no way of knowing where she hid the stolen goods they were still never recovered and presumably she kept her earnings even after jail time.

wpietri 4y ago
Oh, yeah, I totally agree that there should be financial penalties larger than the ill-gotten gains. I'm just saying that isn't enough.
- candiodari 4y ago
  There's a legal expression (it's in French originally) that says "You can't get blood from a stone" This effectively means financial crimes can never be repaid in full, and frequently only small percentages get repaid. It also means the government can never hope to actually do anything to help other than punishment. Going after financial crimes to protect victims ... just doesn't work. Somehow this is enormously at odds with people's expectation of justice, and people either just can't or refuse to believe that's really how it works.

codedokode 4y ago

> at which point many too-trusting people have lost their lifes' savings People should be a little smarter and not fall for Ponzi schemes. Furthermore, many people who invest in such schemes, understand how they work but hope to get profit before it collapses.

mbreese 4y ago
So you’re going with victim blaming as your defense here?
kergonath 4y ago
> People should be a little smarter and not fall for Ponzi schemes Blaming the victims is not a solution. This logic can be applied to justify stopping punishing any crime (“well, they should have stayed at home if they did not want to get mugged”, “they should know better than leave their house for the week if they did not want to get burglarised”, etc).
- Dracophoenix 4y ago
  The victim-perpetrator binary is a false dilemma. Courts recognize contributory negligence in car accidents, why shouldn't they recognize them for self-inflicted financial harms in which one was aware or should have been aware of the risks?
martyvis 4y ago
I'm assuming you are actually a troll, or maybe you haven't actually looked beyond the headline. Many "schemes" are very legitimate looking, offering modest returns. At the moment with very low bank deposit even a 10% investment fund is attractive. Also vulnerable often cannot distinguish good will from good acting by purveyors. Just recently it has come to light that a crooked funeral fund here in Australia has been preying on indigenous people for years with no prospect on their deposits being returned
wpietri 4y ago
I don't think you understand how scams work. They're engineered so that somebody will fall for them. If we made everybody 10% smarter, scammers would just make their scams 10% cleverer. I also think a linear "smartness" model misses it. Both intelligence and knowledge are multidimensional. Everybody has strengths and weaknesses, and well-run scams target particular weaknesses.

vorpalhex 4y ago

Being raped, assaulted or having a family member murdered is worse than losing money. Money can be repaid. You can't be unraped.

sadhorse 4y ago
What about death as a result of money stolen from public health?
wpietri 4y ago
You write that in a tone of contradiction, but I don't see what in my comment contradicts that.
themitigating 4y ago
Rape and murder are extreme crimes and of course no financial loss is equal to them but there are other violent crimes that have less of an impact compared to losing money. You might be thinking about someone stealing a person's TV but what about their life savings. What about a corporation that goes bankrupt because of financial misdeeds and people lose their jobs? My dad lost his job in the mid 90s and the effects on my family involved massive stress for years. Financial concerns/economy seems to be the most important issue to voters in almost every election ever. It's the 5th highest reason for divorce at 36% (https://www.insider.com/why-people-get-divorced-2019-1 https://www.insider.com/why-people-get-divorced-2019-1) It can also can result in physical issues. Maybe you can't afford healthy food, maybe you can't afford health care due to financial loss. I couldn't find statistics but I can't imagine that in cases of theft being repaid 100% or even 50% of your loss occurs that frequency (but no source so..) In other words some financial crimes are worse than violent crimes.
- wpietri 4y ago
  I agree with your conclusion. Google News has correctly decided I'm interested in Ponzi schemes, so it shows me articles at least weekly about newly discovered large ones. A very common element is people retired or on their way who have lost everything. I'd much rather get a punch in the snoot than to spend years slowly dying of stress, poor nutrition, and patchy medical care.