Earlier this week we showed you senior reporter Michael Hobbes’ piece for HuffPost Highline, “The Golden Age Of White Collar Crime.” Michael spoke with MustReads to talk more about the country’s rampant elite crime, and why the system seems unable to meaningfully prosecute it.
Some people may remember headline-grabbing cases like Enron, Bernie Madoff, or Martin Shkreli and think our country does an OK job prosecuting white-collar crime. Is that true?
It’s a perfectly understandable impression! But in fact, what I learned when I started reporting this story is that law enforcement agencies go out of their way to prosecute famous people and other high-profile crooks (the Fyre Festival guy springs to mind) because it makes elite-level prosecutions seem routine, like they’re happening all the time.
In reality, America carries out fewer white-collar prosecutions than it has since researchers started tracking them in the late 1990s. Agencies like the DOJ, FBI and IRS have had their budgets and enforcement divisions slashed nearly into oblivion. Criminal penalties against companies are down, as are tax audits of millionaires. Any way you measure it, we go after a lot less elite-level crime than we used to.
You had a great observation in the piece: Surveys show most people think white-collar crime is more harmful than street crime — so why doesn't the criminal justice system reflect that?
Two of the most persistent myths of white-collar crimes are that they’re difficult to understand and that Americans aren’t pissed off about them. The minute you start reading up on these infamously “complex” high-level crimes, though, you realize that they’re all versions of lying and stealing. They might involve some opaque acronyms (CDO, GAAP, etc.), but at their core they’re the kinds of actions you could easily explain to your kids.
And that’s exactly why Americans are mad about them. Tax evasion siphons 10,000 times more money out of the U.S. economy every year than bank robberies. CEOs who cause the deaths of their workers can’t be charged with any crime more serious than a misdemeanor. No one watches “Erin Brockovich” and comes away rooting for the corporation. It’s easy to get us angry about this stuff — and we are.
What’s happened over the last 30 years, though, is that the criminal justice system has lost its ability to funnel this anger into meaningful consequences for the wealthy. Part of the reason for that is that government regulators have never been given the resources to do their jobs and part of it is the gradual corruption of the legal system.
Tell us about some of the most egregious cases of unpunished white-collar crime you came across in reporting this story.
The most haunting case for me actually wasn’t a business person, but a figure in the Catholic Church. Monsignor William Lynn was the only high-level official convicted in the Catholic sex abuse scandal. For years he kept a running list of all the priests under his care who were accused of molesting children. He drew a check mark next to the ones he thought were guilty. Eventually, the list grew to 35 names.
He was found guilty in 2012, but he managed to get his conviction overturned by convincing an appellate court that when prosecutors told the jury about the Catholic church’s history of covering up abuse, they had prejudiced jurors against him, thus depriving him of a fair trial.
It’s the perfect encapsulation of the way powerful people use the legal system: Appeal everything. Never stop. Test every knob until a door opens.
When you look at the aftermath of nearly any large-scale corporate scandal, you find that the people at the center of it managed to cut down their sentences significantly simply due to filing dozens of appeals. We’re seeing this right now with Theranos and it’s never going to change until the legal community starts to see it as a problem. | 
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