Sunday, March 14, 2010

The Utilitarian vs Kantian Methods of White Collar Crime Punishment

Guest Blogger - Brooklyn White

It’s becoming more rampant now than it ever was, largely because of the advances being made in technology and communications. White collar crime is now the main tool for those who want take the easy road to riches and wealth – yes, there is hard work involved, but it is all directed to the immoral and unethical practices of fraud, forgery, embezzlement and trickery. We’re all aware that white collar criminals are punished differently from those who commit blue collar crimes like murder, rape, arson, burglary and assault, and there is considerable debate on why this discrimination exists. With federal sentencing guidelines for these crimes being advisory rather than mandatory, it is up to the presiding judge to use their discretion in deciding how to punish the criminal.

In general, white collar crimes are punished by a large monetary fine and/or some time in prison. Some criminals may even be let off after being set to perform social service while others may be confined to their home as punishment. No matter how you look at it, white collar crime seems to be higher up on the ladder than the blue collar variety. The criminals are mostly rich enough to be able to fork out the fines (without it affecting their financial standing significantly) and/or bribe people to get their sentences reduced.

There are two schools of thought on imposing punishment for white collar crime:

The Kantian Method: takes a stand that white collar crime is as bad as the blue collar kind and so, must be punished on similar levels. According to the Kantian perspective, white collar criminals must be punished to the full letter of the law. By Kant’s argument, the people who perpetrate the crime are acting rationally, and this means that they should suffer the consequences of their actions.

The Utilitarian Method: follows the idea that if the crime is for the "greater good", then it is not punishable or punishable by lenient methods. Those who believe in this perspective tend to take the view that it is acceptable to accept plea bargains if some criminals turn state’s witnesses and turn their partners in crime in. Here, punishment is doled out according to the final utility value created.

Both perspectives have their pros and cons – with the Kantian method, we can justify that every white collar criminal knows what they are doing and are completely rational in their thoughts and actions. Also, they fail to consider the effect that their actions have on the people they defraud or cheat – lives are ruined and some victims are even driven to commit suicide. Also, if burglary is a blue collar felony, then why are large scale frauds and embezzlements treated under the more fanciful umbrella of white collar crime?

The Utilitarian method begs the question – who decides what the greater good is? What’s good for you may not be as good for me, so under what conditions is the overall utility value of the crime judged?

Punishment in white collar crimes must be severe enough to prevent the perpetrator from repeating their ways and also a definite deterrent to others who want to tread the same path. And with most white collar criminals being rich with deep pockets, the only thing they’re probably afraid of is time in a maximum security prison.

(bw) Forensic Science Technician Schools

March 14, 2010 in Scholarship, Sentencing | Permalink | Comments (1) | TrackBack (0)

Wednesday, February 17, 2010

Scholarship - Sentencing

A  Note by Duke law student Derick R. Vollrath presents an important view on white collar sentencing. The Note titled, Losing the Loss Calculation: Toward a More Just Sentencing Regime in White-Collar Criminal Cases, states in the abstract that "[m]oreover, the loss calculation fails to adequately approximate a defendant’s culpability, dwarfing traditionally relevant considerations such as the manner in which the defendant committed the crime and the defendant’s motive for doing so."

(esp)

February 17, 2010 in Scholarship, Sentencing | Permalink | Comments (0) | TrackBack (0)

Tuesday, February 16, 2010

University of Texas Symposium - White Collar Crime

The University of Texas, The Review of Litigation's Symposium this year was devoted to white collar crime.  Titled,  White Collar Crime and the Changing Corporate Environment, Chief Symposium Editor Heather Mahurin and staff did an incredible job of bringing together top practitioners and a judge to examine the evolution of white collar crime and factors affecting this area. The event was sponsored by the law firm of Vinson & Elkins.  I had the pleasure of being the first speaker and providing an evolution of white collar crime.

The first panel of Tim McCormick (Thompson & Knight) and Carl Wessel (DLA Piper) looked at internal investigations and when one should seek outside counsel. It was not surprising to hear them mention the recent FCPA investigations, noting that the pharmaceutical area seems to also be part of the recent DOJ focus. Tim McCormick also talked about the concerns that get raised with Upjohn warnings.

A second panel looked at white collar crime prosecutions and it was appreciated that the Hon. Jennifer Coffman, Chief Judge of the Eastern District - Kentucky offered a judicial perspective.  Along with Kent Schaffer (Bires and Schaffer), there was a good bit provided on how emails were affecting the landscape of white collar cases. Mr. Shaffer noted how "people put things in emails that are shocking."  Telling "the story" to the jury is important, as is humanizing one's client. The participants on this panel also provided wonderful information on dealing with experts in white collar cases. The expert needs to be "not too academic" and "clear."

A final panel was focusing on  parallel proceedings and included top individuals like Solomon Wisenberg (Barnes & Thornburg).   It will be good to see the published works from this important symposium.  

(esp)

February 16, 2010 in Investigations, Scholarship | Permalink | Comments (0) | TrackBack (0)

Saturday, January 2, 2010

Recent Scholarship

Thursday, December 24, 2009

Recent Articles

Tuesday, December 15, 2009

Jenia Turner - New Book on Plea Bargaining

Jenia Turner, Southern Methodist University Dedman Law School, has a new book titled, Plea Bargaining Across the Borders.  It provides a "comparative, transnational, and global analysis" on plea bargaining.

(esp)

December 15, 2009 in Books, Scholarship | Permalink | Comments (0) | TrackBack (0)

Sunday, December 13, 2009

SEALS - CALL FOR PAPERS

SEALS Call for Papers

Law Professors -  The Southeastern Association of Law Schools (SEALS) has a call for papers -

CALL FOR PAPERS

A roundtable discussion will be held at SEALS 2010 on "Re-evaluating Corporate Criminal Liability."

Among the questions that deserve focus in this area are the following:

  • Should we discard corporate criminal liability?
  • Should we expand corporate criminal liability?
  • Should we modify the ALI standard for corporate criminal liability?
  • Can tort actions properly accommodate corporate misconduct?
  • Is corporate regulation sufficient to handle corporate misconduct?

Participants will prepare a paper of approximately ten pages related to this topic, and the papers will be distributed prior to SEALS 2010. At SEALS, each of the participants will be given a few minutes to summarize their paper, which will be followed by a moderated discussion on the topic.

Two of the participants in this roundtable will be selected from a Call for Papers that will be reviewed by Professor Joan Heminway (Tennessee), Professor Andrew Taslitz (Howard), and Professor Ellen S. Podgor (Stetson).

Papers must be received by January 1st to be considered for this Roundtable. You are welcome to submit an abstract by this deadline, but papers are more likely to be given stronger consideration. Submit all papers to Ellen S. Podgor at epodgor@law.stetson.edu

(esp)

December 13, 2009 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Saturday, October 24, 2009

The Recession Discussion - University of Chicago Legal Forum

The University of Chicago's Legal Forum - 2009 Symposium  on Crime, Criminal Law and the Recession -began with opening remarks from Anton Valukas(Jenner & Block), who many remember as the former United States Attorney from the Northern District of Illinois in the days of Greylord. Now appointed the Examiner in Lehman Brothers Holdings bankruptcy, he was speaking as the opening  keynote on recession and crime. He reminded us of the history of downturns in the economy and how individuals "get caught" when the economy goes soar. He spoke also about the role of lawyers, accountants, and other gatekeepers.

The first panel was Brian Walsh from the Heritage Foundation and myself.  Brian Walsh, in a well received talk, stressed how the tools to fight the criminality have been there and adding more to the federal criminal code is not the answer. My talk looked at accountability (the lack of it at the time), who people are blaming (not necessarily accurately), and what transparency will provide us with in the future.  A concern, which will be a focus of my paper, is with the diminishing media and its potential impact on investigative reporting that brings to light criminality, oftentimes government corruption.

The second day proves to be a promising discussion with Stuart Green (Rutgers-Newark), John Pfaff (Fordham), Carol Streiker (Harvard), and Jordan Streiker (Texas) talking about the economics of punishment. Roger Fairfax (George Washington), Alex Kreit (Thomas Jefferson),  Justin McCrary (Boalt), and Robert Mikos (Vanderbilt) will be speaking about state and local budgets - changes in police and prosecution.  The final panel is Richard McAdams (Chicago) and Jonathan Simon(Boalt) speaking about social inequality and crime.

(esp)(written in Chicago) 

October 24, 2009 in Conferences, Media, Scholarship | Permalink | Comments (1) | TrackBack (0)

Sunday, September 27, 2009

Simpson - Corporate Criminal Intent

William A. Simpson, Corporate Criminal Intent - SSRN Abstract -

This paper is about the corporation as criminal defendant. In common-law legal systems a fully constituted criminal offence normally requires proof of both the proscribed action (actus reus) and criminal intent (mens rea). However, it appears highly artificial to describe corporate mens rea with ordinary language terms such as “knowledge,” “belief,” “desire,” or “intention.” After a review of common-law and philosophical approaches to imputing criminal intent to the corporate defendant, this paper proposes a behavioral approach to attributing mens rea to corporations and concludes with a review of the (UK) Corporate Manslaughter and Homicide Act 2007 which, it is submitted, adopts just such an approach.

(esp)

September 27, 2009 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Schipani - Attorney-Client Privilege in Corporate Criminal Investigations

Cindy A. Schipani, The Future of the Attorney-Client Privilege in Corporate Criminal Investigations - SSRN Abstract -

This manuscript discusses how the Department of Justice (DOJ) has viewed waiver of the attorney-client privilege as an important factor evidencing cooperation when determining whether to enter non-prosecution or deferred prosecution agreements with firms allegedly involved in criminal activities. It further discusses recent changes to the DOJ's guidelines, purporting to take waiver out of the equation in deciding whether to prosecute. Questions remain as to whether the corporate attorney-client privilege is a relic of the past or whether the new guidelines, issued in August, 2008, have indeed restored the privilege to firms under federal investigation.

(esp)

September 27, 2009 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Monday, September 14, 2009

New Scholarship - Should the SEC Spin Off the Enforcment Division

Professor Peter Henning (Wayne State, visiting at Indiana U- Indianapolis) posted a new piece on SSRN titled, Should the SEC Spin Off the Enforcement Division -

The abstract describes it as:

The current environment is highly supportive of increased government regulation, particularly in the financial field. One of the beneficiaries of this push for greater oversight of the markets appears to be the Securities & Exchange Commission, despite some recent high profile enforcement failures, most particularly the massive Ponzi scheme undertaken by Bernie Madoff. In this essay, I raise the question whether the SEC should retain its enforcement authority over fraud cases, or whether it would be better served if that function were shifted to the Department of Justice. The SEC’s recent push to take on a more prosecutorial air gives the clear impression that an adversarial approach to enforcement of the securities laws is in order. However, the Commission must continue to solicit the views of Wall Street to fulfill its regulatory function, much like Madoff was included in the SEC’s deliberations on rules related to the stock market. At some point in the future, the push for greater regulation is likely to pass from the scene as the pendulum swings back toward a less intrusive approach to oversight. Whether the Commission can resist renewed entreaties to go easier on enforcing the law to free the capital markets from strict regulation is an open question. To allow the SEC to regulate Wall Street properly, splitting off at least a portion of the enforcement function to an agency with expertise in prosecutions - the United States Department of Justice - is at least worthy of consideration as the government looks to increase regulation.

(esp)

September 14, 2009 in Scholarship, SEC | Permalink | Comments (0) | TrackBack (0)

Wednesday, September 2, 2009

Commentary on Pfizer Settlement - "Educating Compliance"

Associate AG Perrelli states at the Pfizer Settlement Press Conference:

"today’s settlement reflects the Department of Justice working hard to protect American taxpayer dollars. This case is a great example of the Department’s commitment to fiscal accountability, combating fraud, and returning much-needed dollars back to the U.S. Treasury and state treasuries."

It is good to know that in these days of fiscal downturn, money is being obtained from a company that engaged in conduct disapproved by DOJ. (see here for background)  But wouldn't it have been better if the wrongdoing had not occurred in the first place.  I have to wonder what the government is doing pro-actively as opposed to re-actively to assure corporate compliance. Perhaps more dollars need to to be spent on "Educating Compliance"  My forthcoming article, "Educating Compliance" to be published in Georgetown's American Criminal Law Review can be found here.

(esp)

September 2, 2009 in Deferred Prosecution Agreements, Fraud, Scholarship | Permalink | Comments (0) | TrackBack (0)

Tuesday, June 9, 2009

Check These Out -

Dan Hurson, United States: A New Approach For The SEC—Criminal Enforcement And Mandatory Disclosure Of Violations By Public Companies

The United States Securities and Exchange Commission ("SEC") is hard at work remaking and re-energizing both its image and law enforcement role. It is also trying to ensure its survival as the premier agency overseeing the financial markets. It has assembled a new team at the helm, including a former federal prosecutor as head of the Enforcement Division and a new SEC Chairman, Mary Schapiro, who has committed herself to revitalizing the agency and has the Washington regulatory background to succeed. . .

Lisa Crosby, Sidley Austin LLP - Powerpoints from Compliance Week Conference - Compliance, Export Controls and Intermediaries - Download Compliance_Week

(esp)

June 9, 2009 in Conferences, Scholarship | Permalink | Comments (0) | TrackBack (0)

Sunday, May 31, 2009

New Articles & Books

Alan Ellis & James H. Feldman, Jr., "Intended Loss" Redefined in Fraud Cases," 24 Criminal Justice (2009)    

Pew Center on the States, Arming the Courts with Research - Evidence Based Sentencing Brief

(esp)

May 31, 2009 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Saturday, March 21, 2009

New Books

Hank J. Brightman has a book titled Today's White Collar Crime: Legal, Investigative, and Theoretical Perspectives.  It is a text for undergrad courses.  For information see here.

Patricia E. Salkin has a book titled Ethical Standards in the Public Sector, Second Edition, a book published by the ABA.

(esp)

March 21, 2009 in Books, Scholarship | Permalink | Comments (0) | TrackBack (0)

Monday, March 9, 2009

New Sentencing Article

Andrew George, Alexandra Walsh, and Bridget Moore, attorneys with Baker Botts LLP, authored a new article in 9 Criminal Litigation (2009) titled "Kimbrough, White Collar Sentencing, and the New Primacy of the Sentencing Commission."  One point made in this article is that "in this new era of commission primacy, defendants may not make much headway focusing on sentencing factors available only to the wealthy, white collar offenders.  Rather, they are probably better served by highlighting factors available to all - factors like age, health, lack of criminal history, commitment to family, or community service."

It is posted here -  Download aba_crim_lit_article_cropped.pdf with permission and a thank you.

(esp)

March 9, 2009 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Sunday, November 2, 2008

New Scholarship

Professor Miriam Baer of Brooklyn Law School has a new piece on SSRN that will be published in the Virginia Law Review. Titled, Linkage and the Deterrence of Corporate Fraud, she says that the Article "focuses on the difficulties of deterring perpetrators of fraud who are in the midst of their crimes, as opposd to potential perpetrators who are merely considering committing such crimes."  She argues "that when law enforcement policies change (ie, harsher sanctions or promises of more stringent monitoring), mid-fraud perpetrators behave differently from potential perpetrators and, perversely, may perpetrate greater harm in response to traditional increases in sanctions and monitoring resources."  She suggests policy changes.  The Article can be found here.

(esp)

November 2, 2008 in Scholarship | Permalink | Comments (0) | TrackBack (1)

Tuesday, October 28, 2008

New Articles

(esp)

October 28, 2008 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Sunday, October 12, 2008

New Scholarly Articles

Wendy Gerwick Couture, White Collar Crime's Gray Area: The Anomaly of Criminalizing Conduct Not Civilly Actionable, available at SSRN here

Adam J. Kolber, The Comparative Nature of Punishment, available at SSRN here

Geraldine Szott Moohr, Another Limitation on Honest Services Fraud?, available at SSRN here
(esp)

October 12, 2008 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Saturday, September 13, 2008

Professor Frank Bowman Responds

Guest Blogger - Professor Frank Bowman - University of Missouri School of Law:

I enjoyed reading Ms. Martz's response to my American Lawyer/Legal Times article.  It's always a relief to find that somebody reads one's stuff, and a real pleasure when it draws an intelligent response.  A couple of thoughts on that response:

First, Ms. Martz opines that, "As a philosophical matter, I do not think that open-ended criminal statutes are ever a good idea."  I find it hard to believe that she really thinks this, at least in the absolute terms she uses.  Virtually all criminal statutes are open-ended to some degree, in the sense that their reach will be unclear at the margins.  That's one reason we have appellate courts -- to settle inevitable questions about the reach of statutory language.  More importantly to the present discussion, Anglo-American criminal law long ago gave up the struggle to define in advance the precise types of financial skullduggery it would deem criminal.  The history of the development of the old common law of larceny, and the later statutory offenses of embezzlement, false pretenses, and fraud is a centuries-long movement away from the particular to the open-ended in recognition of the law's inability to anticipate the forms criminal ingenuity might take.  So, unless Ms. Martz is advocating rolling back American law to about 1799 (when the first English embezzlement statute was enacted), what we are talking about is matters of degree.  And I agree that some modern federal statutes are too vague and would benefit from careful re-thinking.  But the suggestion that the entire body of federal criminal statutes regarding fraud and corruption can or should be changed so that it is no longer "open-ended" is not a serious proposition.

Second, Ms. Martz suggests, in common with many other critics of more aggressive federal white collar crime prosecution, that federal criminal prosecutions using open-ended statutes violate standards of notice and due process.  In plain English, she is saying that people are routinely being prosecuted for conduct they are shocked, shocked to find was illegal.  Now I won't say that such an event has never happened or that better-drafted federal statutes couldn't reduce the risk of such an event.  But it is surpassingly rare.  Federal law, as badly drafted as some parts of it are, basically says, "Don't lie, cheat, or steal in connection with certain business or government activities."   Ms. Martz's argument, at bottom, is that it is unfair to punish businessmen and government officials for lying, cheating, and stealing unless a statute tells them, with precision, in advance, exactly which forms and methods of lying, cheating, and stealing are prohibited.  She and I simply disagree.  I think the general prohibition is sufficient to provide notice.  In nearly thirty years of practicing and teaching criminal law, I have rarely if ever  encountered  a white-collar defendant who did the conduct with which he was charged but did not recognize (even if only privately) its intrinsic wrongfulness - even if he vigorously denied its criminality.

And if the uncertain boundaries of federal criminal prohibitions against dishonest business or government behavior cause some to hesitate before engaging in doubtful conduct, so much the better.   An economist might argue that this uncertainty may well discourage morally ambiguous, but economically beneficial or socially desirable, behavior.  Which will sometimes be true, but that is where public and private regulation of business behavior enters the picture, drawing the nuanced lines that the criminal law cannot and modifying behavior with sanctions less terrible than those of the criminal law.

Ms. Martz seems to miss my point about regulators when she remarks, "Professor Bowman makes no case, however, for why prosecutors are any better at sussing out complicated and often highly technical misconduct than the expert regulators."  First, my main point was not that prosecutors understand particular businesses or industries better than the "expert regulators" in the field, but that, for years past, regulators have been actively discouraged from either making regulations or enforcing them.  It is precisely because the "experts" have been handcuffed that the criminal law generalists have moved in.  Give some real power back to the experts and the heavy hand of the criminal law can relent.  Second, if by "sussing out" she means investigating and discovering facts, then she badly misread my article.  As I argued there, even in a world with a more active set of public and private regulators, there are some situations and institutions that only the Justice Department can confront.  Dismiss the point as merely "pragmatic" if you will, but when big, rich, politically well-connected corporations or industries go seriously astray or corruption becomes entrenched in state or local government, the Justice Department will often be the only institution with the power and incentive to find the facts and make common sense judgments about whether the facts amount to a crime.

Ms. Martz concludes:  "In the absence of civil enforcement, criminal enforcement will undoubtedly, unequivocally step into the breach. It's a zero-sum game for American business."  I could not disagree more with her characterization of the situation as a zero-sum game for business.    It is precisely this attitude - that both active prosecution of business crime AND reasonable civil regulation of business behavior are bad - that has put us where we are today.  A sensibly reinvigorated regulatory environment would not only diminish the need for criminal intervention in business affairs, but would improve both the political and economic health of the country.

(fb)

September 13, 2008 in Scholarship | Permalink | Comments (1) | TrackBack (0)