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WHITE COLLAR CRIME IN CONTEMPORARY SOCIETY 4TH ED.

CHAPTER 11

PROSECUTING, DEFENDING,

AND ADJUDICATING WHITE COLLAR CRIME

Trusted Criminals

Designed by: Jordan Land, M.S.

Local Prosecutors

  • The prosecutor has formidable discretionary power over which criminal cases will be prosecuted and which charges will be pursued

  • Local prosecutors have traditionally directed most of their time and attention to the broad range of conventional crime cases

  • The voters are especially concerned with seeing conventional criminal offenders convicted and behind bars

Local Prosecutors

  • White collar crime is not regarded as a serious crime to local prosecutors
  • Cases involving direct violence and illicit drugs take priority
  • Corporate and finance crime cases in particular require large expenditures of time and special investigative skills
  • It also involves greater difficulties in establishing criminal intent
  • Poses a problem in obtaining appropriate witness or victim cooperation

Local Prosecutors

  • A decision to prosecute a corporation requires a major commitment of finite resources
  • Prosecutors can rationalize their failure to take the responsibility of various state or federal agencies
  • To the extent that these agencies are pursuing a case, local prosecutors are far less likely to get involved
  • When prosecutors pursue white collar crime cases they generally are cases of:
  • Consumer fraud, insurance fraud, false claims, environmental offenses, securities fraud and tax fraud, and illegal payments cases

Local Prosecutors

  • Prosecutors tend to have some autonomy in choosing cases to pursue

  • Prosecution is most likely in cases involving individual defendants and organizational victims

  • It is easier to prosecute individuals than organizations

State Attorney Generals

  • Even though state attorney generals have greater resources to pursue significant white collar crime cases than do local and county prosecutors, their resources have remained limited
  • Fraudulent transactions were the most common white collar crimes handled
  • Less than half of the white collar crime cases were disposed of by a criminal prosecution
  • The remainder were dropped or handled by civil or administrative procedures

State Attorney Generals

  • State prosecutors have begun to pursue corporations for violations of state laws more often

  • These attorneys identified several key factors in the decision to prosecute:
  • Amount of money involved
  • Number of victims
  • Their belief in the guilt of the accused
  • Prosecutorial success rate

Federal Prosecution

  • Federal prosecutors have assumed the primary responsibility for pursuing major white collar crime cases

  • The 94 U.S. attorneys are appointed by the president and are in charge of major federal prosecutions

  • Since the Watergate affair, federal prosecutors are finding it increasing appealing to pursue white collar crime

Federal Prosecution

  • Reagan’s and Bush’s first administration showed little commitment to prosecuting white collar crime
  • The application of the RICO to white collar crime and emerging federal sentencing guidelines are among the arsenal of potent prosecutorial weapons
  • The Clinton administration was somewhat more ideologically attuned to white collar crime
  • Under the new Obama administration, federal prosecutors are moving much more aggressively to take on financial fraud cases

The Prosecution of Antitrust Cases

  • Violations of antitrust law are one form of white collar crime that exemplify the need for federal prosecution

  • The prosecution of antitrust cases has been highly selective and especially influenced by the political ideology of the incumbent administration

  • Corporate antitrust cases tend to be large and complicated, stretching across various jurisdictions and lasting for an extended period of time

The Prosecution of Antitrust Cases

  • After an initial investigation of a substantive complaint and the circulation of evidentiary memos, the determination to prosecute is based on the quality of the evidence, amount of interstate commerce, size of the parties involved and likely impact of such prosecution on the department’s reputation

The Prosecution of Environmental Crime

  • The Rivers and Harbors Act of 1899 considered the first congressional expression of intent to criminalize polluting activity

  • The Act did not lead to any serious, measurable prosecutorial activity against environmental criminals for the first seven decades of the 20th century

The Prosecution of Environmental Crime

  • Despite some modest increases in prosecutions, fines and prison sentences for individual corporate executives, there has been a systematic reluctance to imprison environmental offenders or to fine corporate environmental offenders more than a fraction of the statutory maximum for these offenses

Special Prosecutors

  • Cases of governmental crime or political white collar crime are inherently problematic for prosecutors

  • Special prosecutors, or independent counsels, have sometimes been appointed in politically sensitive cases to act free from direct supervision by the administration in power

  • The creation of the special prosecutor’s office was in response to the Watergate affair and its investigation

Special Prosecutors

  • The intention of this office was to address the obvious, inherent potential for a conflict of interest when the Justice Department is faced with prosecuting criminal allegations against powerful people in that branch

  • Inherent conflicts of interest exist when high-level government officials are investigated by a Department of Justice with close political ties to those officials

The Role of the Grand Jury
in White Collar Crime Cases

  • The grand jury is more important in white collar crime cases than in conventional cases because a grand jury indictment is constitutionally required in the federal system
  • A grand jury acts as a check on politically motivated prosecution
  • It may also be more appropriate for a grand jury of anonymous citizens to return indictments in sensitive cases involving the powerful than for a politically vulnerable prosecutor to seek an indictment in such cases

Defending White Collar Criminals

  • It is assumed that one of the main differences between defendants in conventional crime cases and white collar crime defendants is that the latter can afford private lawyers and accordingly get a much better defense
  • Defendants with private counsel usually have an advantage
  • An indigent defendant who is represented by a highly experienced public defender could get a better defense than a white collar crime defendant with modest means who hires a lawyer with relatively little experience in such cases

Defending White Collar Criminals

  • A high-priced legal defense does not guarantee a favorable result

  • Lawyers who defend clients accused of white collar crime complain that many existing prosecutorial rules and practices impose substantial burdens on defense attorneys

  • In many white collar crime cases, defense attorneys hire private investigators to gather information helpful to them

Defending White Collar Criminals

  • Defense lawyers may seek to head off an indictment in exchange for the client’s cooperation with prosecutors
  • If the client is indicted anyway, defense lawyers are likely to explore the best possible deal in return for a guilty plea
  • Corporate lawyers use their clout to try get hostile judges off particular cases
  • If the case does go to trial, white collar defense lawyers attempt to exploit their superior financial resources to challenge the prosecution’s case at every possible step

Defending White Collar Criminals

  • Since white collar defendants often have relatively good reputations, defense lawyers may stress their “good character” and argue that a person with such good character would be highly unlikely to engage in illegal or unethical conduct

  • Defense lawyers must also avoid alienating jurors with overly technical cases or an elitist image

Adjudicating White Collar Crime:
Plea Bargaining and Trial

  • The great majority of conventional criminal cases in most jurisdictions are resolved by plea bargaining

  • When a defense’s arguments against charging fail, a strong incentive exists to plead guilt because of the low likelihood of winning cases for which such arguments have failed

  • Defendants in these cases who plead guilty typically become cooperating witnesses

Adjudicating White Collar Crime: Plea Bargaining and Trial

  • White collar crime defendants are especially likely to be intimidated by the prospect of a prison sentence and may resist pleading guilty if such a sentence is involved
  • From a strategic point of view, the white collar crime defense may believe that in court it can exploit ambiguities in the law
  • The percentage of all white collar crime cases that advance to trial is small
  • White collar crime defendants are more likely to plead not guilty and go to trial than conventional defendants

The Role of the Trial Jury

  • Controversy concerning trial juries centers their representativeness and competence

  • White collar crime defendants are more likely to face a jury of their peers

  • Some evidence suggests that in criminal cases, jurors are more likely to hold corporations more blameworthy than individual executives for wrongdoing

The Role of the Trial Jury

  • A body of research strongly suggests that jurors are more likely to be sympathetic toward people like themselves

  • Studies have found that juries are able to follow the instructions of a judge, when explained
  • They are neither overwhelmed by nor dismissive of expert testimony
  • Their deliberations impact on their punitive award assessments

The Role of the Trial Jury

  • Overall, evidence does not suggest that juries are either significantly more or less likely than judges to acquit white collar crime defendants or to impose tougher penalties

  • In rare cases, judges override a jury finding of guilty if they conclude the jury has misunderstood the evidence

Judges and the Sentencing
of White Collar Criminals

  • The judge is the principle officer of the court
  • In conventional cases, the judge deals with defendants who are different from themselves and have committed offenses removed from their own patterns of behavior
  • Judges in white collar cases are often confronted with special challenges
  • The trial is likely to take longer, and the testimony and evidence will be more dry and tedious

Sentencing

  • Two beliefs about the judicial sentencing of white collar offenders have been adopted over the years

White collar offenders are treated more leniently at sentencing than are conventional offenders

Sentencing is idiosyncratic and haphazard

  • Traditionally, judges have been reluctant to impose tough sentences on businesspeople
  • Judges may believe that the shame of criminal prosecution is punishment enough for many such offenders
  • They often allow businesspeople to remain in the community where they can resume productive activity and can generate income and make restitution to victims

Sentencing

  • Judges are also more likely to experience some sense of empathy with defendants in white collar crime cases than in cases involving conventional criminals
  • White collar crime offenders are more likely to be fined or put on probation than are conventional offenders
  • Much evidence from government reports supports the contention that white collar criminals are considerably less likely to go to prison than are conventional offenders and that the prison sentences they receive are of shorter duration

Explaining Disparities in Sentences
for White Collar Offenders

  • Some types of white collar offenses elicit harsher sentences than others
  • Considerable variation also exists among white collar offenses in the likelihood of receiving probation or fines
  • Most fines are modest and reflect the offender’s perceived ability to pay
  • The likelihood of a prison sentence depends significantly on the type of white collar crime involved

Sentencing Organizational Offenders

  • Organizational offenders represent only a small proportion of criminal defendants
  • The seriousness of a fine as a criminal sanction is meaningful only in relation to the harm caused and the resources of the organization fined
  • The average fine imposed on organizations totaled only 76% of the harm caused
  • In many cases, corporations evade payment of their fines

Sentencing Guidelines
and White Collar Offenders

  • The Sentencing Reform Act of 1984 marked the formal adoption of federal sentencing guidelines

  • The U.S. Sentencing Commission was created to oversee the production, implementation and revision of the guidelines

  • The U.S. Supreme Court upheld the constitutionality of the guidelines and the Sentencing Commission in Mistretta v. United States

Sentencing Guidelines
and White Collar Offenders

  • The sentencing guidelines originally constrained judicial discretion in sentencing and increased the average amount of time spent in prison without clearly reducing disparity among sentences imposed on comparable offenders

  • The adoption of federal sentencing guidelines increased the fines and jail sentences for white collar crime offenders

Sentencing Guidelines
and White Collar Offenders

  • Judges generally believe they should have greater flexibility in tailoring sentences to fit specific offenders and circumstances
  • The sentencing guidelines were formulated principally with individual violators of the federal criminal code in mind
  • These guidelines provide incentives for organizations to put into place truly effective compliance programs with the major objective of promoting good corporate citizenship

White Collar Criminals
in the Correctional System

  • Individual white collar crime offenders are not typically sent to prison

  • Occasionally, convicted offenders who are sentenced to prison disappear prior to the start of their prison term, but this happens less often than one might expect

  • Since these offenders are not a direct physical threat to members of the community, they are seen as especially suitable candidates for probation

White Collar Criminals
in the Correctional System

  • Some very high profile offenders have received prison terms, but these are rather rare outcomes

  • When these offenders are incarcerated they are almost always sent to a minimum security prison or prison camps

  • These offenders experience significant humiliation and dramatically changed conditions in their daily lives when they are incarcerated

Civil Suits

  • Most recent responses to white collar crimes have taken the form of a civil lawsuit
  • Such suits continue to be a principal mechanism for attempting to control and punish white collar crime
  • Civil lawsuits seeking millions of dollars have become more common
  • These suits may occur in conjunction with criminal prosecution

Civil Suits

  • Civil cases can take years to solve

  • Civil lawsuits most directly relevant to white collar crime are tort cases, and are sought in response to some injury, damage or loss

  • Despite recent legislative and jurisprudential reforms that aided plaintiffs in tort cases, wealthy corporate defendants still have a considerable advantage in such lawsuits

Citizen Suits and Class Action Suits

  • Citizen suits - civil lawsuits in which private citizens seek enforcement of a statute by petitioning the court, who may order the people or organizations violating the statute to halt their activities and, in some cases, assess fines

  • Class action lawsuits - lawsuits in which a group of directly injured parties seek compensation and, in some cases, punitive damages from an organization

Collateral Civil Suits

  • The federal government often finds it more practical to pursue corporate wrongdoings and some classes of white collar criminals though collateral civil suits either in conjunction with or in place of criminal prosecution

  • The government and its agents have traditionally been legally shielded from many kinds of civil lawsuits