“Who Says Crime Doesn’t Pay?”: The Bottom Line Is Crime Can Actually Pay — If It’s Big Enough
Hey, can we all just stop complaining that our government coddles Wall Street’s big money-grubbing banks?
Sure, they went belly-up and crashed our economy with their frauds, rigged casino games, and raw greed. And, yes, the Bush and Obama regimes rushed to bail them out with trillions of dollars in our public funds, while ignoring the plight of workaday people who lost jobs, homes, businesses, wealth, and hope. But come on, Buckos, have you not noticed that the feds are now socking the bankers with huuuuuge penalties for their wrongdoings?
Wall Street powerhouse Goldman Sachs, for example, was recently punched in its corporate gut with a jaw-dropping $5 billion for its illegal schemes.
Wow, $5 billion! That’s a stunning amount that Goldman Sachs has agreed to pay to settle federal criminal charges over its shameful financial scams that helped wreck America’s economy in 2008. That’s a lot of gold, even for Goldman Sachs. It’s hard to comprehend that much money, so think of it like this: If you paid out $100,000 a day, every day for 28 years, you’d pay off just one billion dollars. So, wow, imagine having to pull Five Big B’s out of your wallet! That’s enough to make even the most arrogant and avaricious high-finance flim-flammer think twice before risking such scams, right? Thus, these negotiated settlements between the Justice Department and the big banks will effectively deter repeats of the 2008 Wall Street debacle… right?
Actually, no.
The chieftains of the Wall Street powerhouse say they are “pleased” to swallow this sour slug of medicine. It’s not because they’re contrite and eager to make amends. Wall Street bankers don’t do contrite. They are pleased (even thrilled) because this little insider secret: Thanks to Goldman’s backroom dealing with prosecutors, the settlement is riddled with special loopholes that could eliminate nearly $2 billion from the publicized “punishment.”
For example, the deal calls for the felonious bank to put a quarter-billion dollars into affordable housing, but generous federal negotiators put incentives and credits in the fine print that will let Goldman escape with paying out less than a third of that. Also, about $2.5 billion of the settlement is to be paid to consumers hurt by the financial crisis. But the deal lets the bank deduct almost a billion of this payout from its corporate taxes — meaning you and I will subsidize Goldman’s payment. As a bank reform advocate puts it, the problem with these settlements “is that they are carefully crafted more to conceal than to reveal to the American public what really happened here.”
Also, notice that the $5 billion punishment is applied to Goldman Sachs, not the “Goldman Sackers.” The bank’s shareholders have to cough up the penalty, rather than the executives who did the bad deeds. Goldman Sachs’ CEO, Lloyd Blankfein, just awarded himself a $23 million paycheck for his work last year. That work essentially amounted to negotiating the deal with the government that makes shareholders pay for the bankers’ wrongdoings — while he and other top executives keep their jobs and pocket millions. Remember, banks don’t commit crimes — bankers do.
One more reason Wall Street bankers privately wink and grin at these seemingly huge punishments is that even paying the full $5 billion would only be relatively painful. To you and me, that sounds like a crushing number — but Goldman Sachs raked in $33 billion in revenue last year, so it’s a reasonable cost of doing business. After all, Goldman sold tens of billions of dollars in the fraudulent investment packages leading to the settlement, so the bottom line is that crime can actually pay — if it’s big enough.
By: Jim Hightower, Featured Post, The National Memo, May 4, 2016
“Deferred Prosecution Agreements”: Criminals Should Get Same Leniency As Corporations, Judge Says
For years, when corporations paid big fines to escape prosecution for their misdeeds, critics fumed. Why, they asked, shouldn’t big companies be treated like common criminals?
A federal judge turned that question on its head this week as he lamented being asked to approve yet another corporate settlement. Perhaps, he said, common criminals ought to be treated more like big companies.
Judge Emmet G. Sullivan, of the United States District Court for the District of Columbia, took aim at a favorite tool of the Obama administration for addressing corporate wrongdoing: a form of probation known as a deferred prosecution agreement. If companies behave for the length of the agreement, the matter is closed without any criminal record.
The judge said individual defendants should enjoy the same opportunities. While it is not uncommon for judges to criticize outcomes that they see as unjust, it is highly unusual for them to so explicitly advocate — and at such great length — a change in approach.
Judge Sullivan’s 84-page opinion — in what could have been a short, straightforward decision — is the latest influential voice to join a growing chorus of both liberals and conservatives who see the American criminal justice system as fundamentally unfair.
The ruling comes amid a rapidly changing environment: The White House is approving clemency applications at historically high rates; support is coalescing on Capitol Hill to ease sentencing laws; and law enforcement leaders around the country have declared that too many Americans are in prison for too long. Though the federal prison population has declined for the first time in decades, America remains the world’s largest jailer by far; its prison population nearly equals China’s and Russia’s combined.
Justice Department officials agree in principle with Judge Sullivan’s critique and have encouraged Congress to ease tough sentencing laws that were passed at the height of the crack epidemic. Emily Pierce, a department spokeswoman, noted that under an initiative begun in 2013, prosecutors were already ordered to prioritize more serious crimes, while looking for alternatives to prison for low-level offenders. Fewer low-level criminals being charged means fewer people eligible for deferred prosecution. The department has also strongly supported drug courts, which essentially offer the same second chance that companies are given.
At the same time, the Justice Department recently promised to get tough on corporate executives after years of criticism in the aftermath of the financial crisis that bankers, in particular, escaped punishment because their companies agreed to pay big fines. It was that promise, followed days later by a deferred-prosecution agreement with General Motors, that ignited Judge Sullivan’s fury.
Judge Sullivan was appointed to the federal bench by President Bill Clinton. He previously served as a municipal judge and a local appellate judge in Washington, having been appointed by Presidents Ronald Reagan and George Bush.
He called G.M.’s $900 million settlement “a shocking example of potentially culpable individuals not being criminally charged.” G.M. admitted that it misled the public about auto defects, but neither the company nor its executives were prosecuted, “despite the fact that the reprehensible conduct of its employees resulted in the deaths of many people.”
“The court is disappointed that deferred-prosecution agreements or other similar tools are not being used to provide the same opportunity to individual defendants to demonstrate their rehabilitation without triggering the devastating collateral consequences of a criminal conviction,” Judge Sullivan wrote.
Justice Department figures show deferred-prosecution agreements are rare for both individuals and companies. But the number of cases against organizations and companies is so tiny — 150 or so each year, compared with 160,000 or more individual prosecutions — that these deals occur at a much higher rate in corporate cases, which also tend to be higher profile.
Deferred-prosecution deals are attractive because they spare companies the consequence of criminal convictions, such as stock collapse and a loss of contracts. For people, the effects can be even more severe. The American Bar Association has identified tens of thousands of consequences of criminal conviction, which demonstrates how a single arrest can cost people their jobs and homes.
President Obama has indicated that he will make a criminal justice overhaul one of the most important issues of his remaining time in office. He became the first sitting president to visit a federal prison. On Thursday, he defended the Black Lives Matter movement, which has been criticized by police unions in particular as being anti-police. Mr. Obama plans to speak about changing the criminal justice system next week at the annual meeting of the International Association of Chiefs of Police in Chicago.
Much of the public debate has focused on reducing the prison population by cutting sentences for those serving long sentences for nonviolent crimes. Lost in the debate, Judge Sullivan said, has been the importance of keeping people out of jail in the first place. “This oversight is lamentable, to say the least!” he wrote.
He said criminal justice reform should offer people “the chance to demonstrate their true character and avoid the catastrophic consequences of felony convictions.”
While Judge Sullivan cannot make policy from the bench, the opinion shows the momentum behind efforts to improve the system, said Norman L. Reimer, the executive director of the National Association of Criminal Defense Lawyers.
“It has finally seeped into the public consciousness that there is something wrong,” he said. “All of a sudden, a nation wakes up and realizes we’ve created this unbelievable cadre of second-class citizens.”
By: Matt Apuzzo, The New York Times, October 23, 2015
“Crime-For-Profit Syndicates”: Why Are We Taxpayers Subsidizing Corporate Crime?
“Do the crime, do the time,” the old saying goes. Unless, of course, the criminals are corporate executives. In those cases, the culprits are practically always given a “Get out of jail free” card.
Even the corporate crimes that produce horrible injuries, illnesses, death, massive pollution, consumer ripoffs, etc. are routinely settled by fines and payoffs from the corporate treasury, with no punishment of the honchos who oversee what amount to crime-for-profit syndicates. The only bit of justice in these money settlements is that some of them have become quite large, with multibillion-dollar “punitive damages” meant to deter the perpetrators from doing it again. Yet the same bad corporate actors seem to keep at it.
What’s going on here is a game of winkin’ ‘n’ noddin’, in which corporate criminals know that those headline-grabbing assessments for damages they’ve caused have a secret escape hatch built into them. Congress has generously written the law so corporations can deduct much of their punitive payments from their income taxes! As Senator Pat Leahy points out, “This tax loophole allows corporations to wreak havoc and then write it off as a cost of doing business.”
For example, oil giant BP certainly wreaked havoc with its careless oil rig explosion in 2010, killing 11 workers, deeply contaminating the Gulf of Mexico and devastating the livelihoods of millions of people along the Gulf coast. So, BP was socked with a punishing payout topping $42 billion. But — shhhh — 80 percent of that was eligible for a tax deduction, a little fact that’s been effectively covered up by the bosses and politicians.
This crazy quirk in America’s laws to deter corporate crime forces victims to help subsidize criminals. Follow the bouncing ball here: First, a court orders a corporation to pay punitive damages to a victim of its criminal acts; second, the corporate offender pays up, and then merrily subtracts a big chunk of that payment from its income tax, effectively taking money out of our public treasury; third, while the criminal is counting its tax break, the victim is notified that the punitive damage money he or she received from the corporation will be taxed as “regular income;” fourth, that means a big chunk of the victim’s payment goes into the treasury to replenish the public money the corporate villain subtracted.
This is nothing but shameful pandering by government officials to rich and powerful criminals. It’s bad enough that corporate-financed lawmakers legalize such encouragement of criminality, but corporate-coddling judges are playing the same disgraceful game — drastically reducing the amounts that juries order corporations to pay. In a Montana case, for example, a jury awarded $240 million in punitive damages to the families of three people, including two teenagers, killed in a car crash. The deaths were blamed on a steering defect that South Korean automaker Hyundai was found to have known about and “recklessly” ignored for more than a decade. But a district judge has since supplanted the jury’s ruling with her own. While declaring that Hyundai’s “reprehensibility” certainly warrants a sizeable punishment, she cut the corporation’s punitive payment down to $73 million.
Hello — that’s not punishment to a $79-billion-a-year car giant, it’s pocket change. Why would Hyundai executives quit putting corporate profits over people’s lives if that’s their “punishment”?
Plus, we taxpayers and the victims’ families are still lined up to subsidize whatever “punishment” Hyundai ultimately pays. With subsidies and wrist-slaps, the corporate criminal whirligig will continue to spin, making a mockery of justice. Fortunately, Senator Leahy has had the good sense to introduce legislation to lock down this escape hatch for thieves, killers and other executive-suite villains. For more information on the moral outrage of ordinary taxpayers being forced to subsidize corporate criminals, contact U.S. PIRG at http://www.uspirg.org.
By: Jim Hightower, The National Memo, March 11, 2015
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