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Starting with Trump, It’s Time for a White Collar Crime Crackdown

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This week, Judge Amy Berman Jackson delivered a significant victory to anticorruption advocates. The federal judge ordered the Department of Justice to hand over the March 24, 2019 memo that former Attorney General William Barr claimed to have relied on when he decided not to criminally charge then-President Donald Trump with obstructing the Mueller Investigation. In a fair, but brutal dressing down of Bill Barr, Judge Jackson confirmed our worst suspicions, that the fix had been in to clear Trump. “The fact that he would not be prosecuted was a given,” she wrote.

Now, Attorney General Merrick Garland is at an inflection point. He will either deliver this internal memo from the Barr Justice Department to the Citizens for Responsibility and Ethics in Washington (CREW), the watchdog group who brought the original Freedom of Information Act Request, or he can appeal Judge Jackson’s decision. The direction Garland takes here has huge implications, not just for this case, or for public corruption, but more broadly for addressing our current white collar crime epidemic. Here’s why.

No one is supposed to be above the law. But during Donald Trump’s presidency, we were more likely to witness a White, wealthy, and well-connected felon pardoned than perp-walked. This was, perhaps, a piece of Trump’s kinship if not admiration for these elite grifters.

By the end of just the first two years of the Trump administration, federal white collar criminal enforcement was at an all-time low. We saw at least a 26 percent decline in the number of these defendants prosecuted since the Obama era, according to the Department of Justice. Also, criminal investigations by the I.R.S. for tax evasion, money laundering, and identity theft fell by 36 percent. How big is our white collar crime problem? While the F.B.I. pegs street-level “property” crimes including burglary, larceny, and theft nationwide at around $16 billion annually, there is no equivalent F.B.I. figures published on white collar crime. Scholars have tallied the cost to be at least $800 billion.

There is no official count of the number of suspects, convicts, victims, or total dollars involved, and there is not even a uniform definition of what qualifies as “white collar crime.” Though, Edwin Sutherland, the sociologist who coined the expression in 1939 to mean “a crime committed by a person of high social status and respectability in the course of his occupation,” today we typically define it by the nature of the offense, not the status of the offender.

What makes determining the white collar crime numbers additionally challenging is that the numbers change depending on who is adding them up. When reporting data to the F.B.I., state and local law enforcement can include behavior that would not seem to fit the bill, such as the arrest of a low-income suspect for writing a bad check or committing welfare fraud as white collar crime. Tracking at the federal level is equally tough. The 93 U.S. Attorneys’ offices annually report prosecutions organized by category. What is included has changed, creating an apples-to-oranges problem for those making comparisons over time. As an illustration, back in 1992, the annual report listed within its section on white collar crime: money laundering, official corruption, procurement fraud, and environmental, health and safety offenses. Today, those are tallied under different headings.

Despite this numerical opacity, we are in the midst of a prosecution crisis or rather a nonprosecution one, according to many experts. So, what can be done? Quite a lot, actually.

First, the Justice Department must pursue the obstruction case against Donald Trump. Volume II of the Mueller Report provided detailed, persuasive arguments that Trump committed criminal obstruction on several occasions. To ignore this evidence simply due to his status as a former president would further the public’s suspicion that the most powerful are above the law. If the DOJ wins a conviction, they can deal with the problems of incarcerating a former president later. What they should not do, is simply fail to prosecute because the this is unprecedented territory.

A Trump prosecution should be thought of as under the white collar crime umbrella using both Sutherland’s 1939 status-based definition and the more modern offense-based understanding. As for status, Trump occupied the highest office in the nation, if not the world. And, as for the nature of the offense, the obstruction-of-justice statutes are often used by federal prosecutors against defendants in complex fraud investigations. It’s the lying not the underlying crime that often is prosecuted. As one example, Martha Stewart was never charged with securities fraud. Instead, she was indicted for and found guilty of obstructing an agency proceeding and making false statements to investigators looking into her suspicious stock trading.

Second, President Biden should provide clear direction that cracking down on white collar crime is a priority. Tone from the top matters. After the Savings and Loan Crisis of the 1980s, President George H.W. Bush said, “We will not rest until the cheats, the chiselers and the charlatans spend a large chunk of their lives behind bars in prison.” He backed this rhetoric with resources. An interagency group was set up to target the biggest offenders. Plus, he sought new legislation from Congress to increase funding and laws to sharpen tools to investigate bank fraud, including the use of wiretaps. By his third year in office, federal prosecutors had charged more than 1,000 and secured convictions of more than 900 individuals involved in significant S&L fraud.

Similarly, during the George W. Bush administration, between mid-2002 and early 2006, the Justice Department, secured convictions of more than 1,000 individuals involved in corporate fraud cases, including eighty-two CEOs, eighty-five corporate presidents, thirty-six chief financial officers, and fourteen chief operating officers. The posterchild of these prosecutions was Enron, the once high-flying, energy innovator with a $70 billion market capitalization that came crashing down when accounting fraud surfaced. Big talk matched with big resources, delivered big results.

There are promising signs that President Biden is similarly setting the right tone. In his joint address to Congress on the eve of his 100th day in office, he promised, “The I.R.S will crack down on millionaires and billionaires who cheat on their taxes. That’s estimated to be billions of dollars.” This month the I.R.S. commissioner testified that the annual tax gap (the difference between what the I.R.S. is owed and what it’s actually collecting) is now nearly $1 trillion a year, most of which he said is due to tax evasion by the high-earners and large corporations. Importantly, President Biden is asking Congress to put our money where his mouth is, seeking additional I.R.S. funding of $80 billion over ten years toward this priority.

Third, Attorney General Merrick Garland should make individual accountability a reality, not just words on paper.  When a large business enterprise is caught up in federal criminal activity, the trend has been to allow the enterprise to enter what’s called a deferred prosecution agreement or nonprosecution agreement to avoid the expense, embarrassment, and uncertainty of indictment or trial. The company pays some amount in penalties and fines, sometimes submits to an independent monitor, and within a few years is cleared. The vast majority of the time, no real people inside the organization face any criminal consequences.

Duke University Law School professor Brandon Garrett has calculated, individuals were charged alongside just 27 percent of the 497 of these agreements with organizations between 2001 and 2018. And high-level executives even more rarely. This must change. Similar to my recommendation in Big Dirty Money for an elite crime division, Garrett recommends an independent corporate prosecution function with Main Justice and key regional offices. This new unit should also get a handle on data reporting problem.

Garland has the right team in place to make this happen. His number two in command is Deputy Attorney General Lisa Monaco. While on the Enron Task Force, she helped convict several former executives on an assortment of wire fraud and conspiracy charges.

Of course, President Biden must stay independent of any investigation touching on the former president. However, that recusal should not make either pursuing Trump or cracking down on white collar crime any less of a priority. The ongoing criminal investigations of Trump in New York County for insurance and bank fraud, and in Fulton County, Georgia for election interference should not absolve the U.S. Department of Justice from following the facts where they lead, even if they lead them to the former occupant of the Oval Office.



Source: on 2021-05-06 05:00:00

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