Prosecutions drop for US white-collar crime

Prosecutions drop for US white-collar crime
They're down 28 percent from five years ago, as homeland security cases rise in priority.


By Alexandra Marks | Staff writer of The Christian Science Monitor
NEW YORK – It's the kind of announcement that should put white-collar criminals on notice. The Securities and Exchange Commission (SEC) is now investigating more than 80 companies in the growing stock-option scandal.
The government has charged officials at two companies for backdating options - a practice that funneled guaranteed profits to executives. More indictments are expected. But far from ratcheting up the fight against financial wrongdoing, the federal government is actually shifting resources away from it. The number of white-collar crime prosecutions is down 28 percent from five years ago, according to an analysis of federal data by the Transactional Records Access Clearinghouse at Syracuse University. The reason? The government's focus on homeland security, experts say. In the same period white-collar crime prosecutions fell, for instance, immigration prosecutions more than doubled.

"There's been a shift of priorities since Sept. 11 at the , in the sense that they've moved bodies from fraud and white-collar crime units to terrorism units," says James Sanders, a partner at McDermott Will & Emery in Los Angeles and a former federal prosecutor. "At the same time, the cases have gotten bigger and more complex." During the 1980s and 1990s, many of the white-collar crime cases involved things like bank fraud, insider trading, and stock manipulation, many of which were not document-intensive. Trials could take as little as four or five days, says Mr. Sanders. But cases like Enron and WorldCom involved complex financial manipulations at high levels. Prosecutors had millions of documents to wade through, which in some cases took years to do. "Those are very, very complex, document-intensive cases," says J. Boyd Page, senior partner at Page Perry LLC in Atlanta, which was involved in some civil litigation connected to the WorldCom case. "The documents that were made available for our review were something like 1,250 boxes packed one end to the other."

The Enron and WorldCom convictions, as well as the passage of the Sarbanes-Oxley Act in 2002, which holds CEOs directly accountable for their public financial statements, may have had a deterrent effect on some wrongdoers in corporate America, say experts. But they doubt that the drop in white-collar prosecutions reflects an equivalent drop in financial wrongdoing. Instead, they say, the drop is a reflection of changed priorities. One key factor: The staff available to investigate such cases has shrunk. According to the Justice Department's Office of the Inspector General, the FBI had 2,385 agents engaged in fighting financial crimes in 2000. By 2004, that number had dropped to 1,882. "There's always been a serious limitation of resources that has caused the government to focus on only the most egregious, large-scale fraudulent schemes," says Christopher Bebel, former federal prosecutor and specialist in securities fraud. "This continuing diversion of resources toward perceived immigration and terrorism threats greatly heightens the dilemma associated with that problem."

That's become particularly apparent in the current stock-option scandal, say experts, because of the scandal's extensiveness. Corporate lawyers say the SEC is relying on companies themselves to do independent investigations, to act as screeners of a kind, and then share with government lawyers if any egregious behavior turns up. "The US Attorneys offices don't have the prosecutorial resources to truly investigate each one of these cases separately themselves," says Sanders. "They're basically saying to law firms like mine, 'We want you to be independent and come back to us and tell us if there's been an offense here.' " If an offense is found, Sanders says, the government will do its own investigation.

more:
http://www.csmonitor.com/2006/0831/p03s02-usju.html

Just more evidence on how the GWOT has made us a criminal nation.....

Ponder, ponder, ponder.

Just like if I were president, marijuanna related crime would take a serious nosedive.

So the CEO is supposed to say, "my bookkeeping department noted some discrepancies in my accounts, so I told them to dig deeper and find out what I did with the money."

:rofl: :rofl: :rofl:

I'm gonna bookmark this post. I was just talking to my sister last night who is in college to be an accountant. She has a paper to write about current events that involve or affect accounting. She had already written down some topics like Enron or Martha Stewart and as we talked more about it we decided she should focus on white-collar crimes in general so she can focus on several accounting scandals instead of just one. I hope she focuses on the true cost of white collar crime for American citizens.