September 24, 2005
Sympathy for the Financial Crooks
The sentences for the kings of the financial scandals (Ebbers, Olis, Rigas, Kozlowksi & Swartz) of 2002 bother some (see White Collar Crime Prof Blog). Not me. These folks cost investors billions. We all know that -- but they also created ripple effects that cost additional billions, we forget or overlook this. The legal competitors of the crooks struggled to meet the crooks rosy (and false) balance sheets. Competitors of WoldCom overpaid some employees to retain them, fired many other employees to reduce costs, changed business strategies, and were tempted to cheat themselves to meet the phony business model of WoldCom. The country's high-tech economy was trashed by these folks.
The fact that these folks are old (and an 8 year sentence if "life") is tough beans -- only the older folks can get in positions of this kind of authority to manufacture frauds of this scale.
As for "shame" as an adequate deterrent, baloney, they made millions, even billions, and at least some of the booty is stashed were no-one can get at it. Shame will one is lolling on a boat in the Caribbean (after a 6 months stay in miminum security prision) will occupy only a momentary daily thought. Moreover, many, if not most, of the bad actors are still enjoying their full liberty and spending the bounty of their misdeeds. These folks, and I have seen some up close, are pros at rationalizing away any shame. Even those convicted have no shame -- look at Martha Stewarts' response to Letterman's queston "What were you in for?" Stewart: "I don't know." Good grief.
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