Thursday, August 23, 2018
While states often enact the same model legislation, each state's public enforcement resources also shape the legal and business environment. Most academic writing about law seems focused more on the substantive side without as much devoted to considering necessary resources for state and federal institutions to give actual meaning to legislation. This focus is understandable. Writing about the need for more forensic accountants and sophisticated database systems may appear tedious and dull and few academics with the freedom to pick their projects might be drawn to these issues.
Yet thinking about the "how" for business law and financial regulation seems just as important as discussions about what the law should be. For example, Public enforcement resources directly affect the white collar crime environment. In recent decades, federal institutions shifted massive resources toward counter terrorism and other priorities. As resources flow toward those enforcement priorities, other concerns, such as white collar crime, get less attention.
The metrics measuring public enforcement effectiveness may tilt resource allocation. If prosecutors pride themselves on cases closed and guilty please secured, white collar criminal prosecutions may not be pursued. After all, it may take a forensic accountant, significant time, and expert witnesses to secure convictions. Consider the Manafort prosecution. There were 27 witnesses presented alongside 388 documents.
But there are also other, less readily measurable factors to consider. Prosecutors alleged Manafort dodged over $10 million in taxes. Even if the prosecution cannot recover $10 million from Manafort, the deterrent effect might stop the next two or three Manaforts from cheating the public out of its tax dollars. If that happens, the return on investment from white collar prosecution would certainly justify more enforcement.