Twenty Things You Should Know about Corporate Crime
21 Corporate Crime Reporter 25, June 12, 2007
http://www.corporatecrimereporter.com/twenty061207.htm
Twenty years ago, Corporate Crime Reporter, a weekly
print newsletter, was launched.
>From the beginning, the most popular feature of
Corporate Crime Reporter has been a question/answer
format interview.
Over the years, weve interviewed hundreds of
prosecutors, defense attorneys, law school professors,
reporters, and activists. Our first interview, which
appeared in Volume One, Number One on April 13, 1987
was with the premier corporate crime prosecutor of his
day.
That was Rudolph Giuliani, then U.S. Attorney in the
Southern District of New York.
At the time, he was prosecuting the likes of Michael
Milken, Ivan Boesky and Marc Rich.
President Clinton later pardoned Marc Rich.
Apparently Marc Richs wife was dumping big cash into
the Clinton library.
Rudy is now solidly in the hands of the corporate
crime lobby. He prosecuted corporate crime as a way to
achieve higher office. Then he learned one of the key
lessons of corporate crime prosecution.
You can achieve higher office by prosecuting corporate
crime. But as you move up the ladder, you have to make
nice with the corporate powers that be. And so you
turn your attention and rhetoric to various forms of
street crime.
Now, Rudy is ready to be President.
So, corporate crime lesson number one prosecute
corporate crime to achieve higher office, then
prosecute street crime to protect your political
position.
Or to simplify it, corporate crime is all about power
politics.
And the corporate crime game is a bi-partisan affair
it is played the same by Democrats and Republicans
alike.
Eliot Spitzer, the former Attorney General of New
York, prosecuted corporate crime to achieve higher
office.
And now as Governor of New York, Spitzer is making
nice with Wall Street.
To celebrate the 20th anniversary of Corporate Crime
Reporter, I present to you the Top 20 Things You
Should Know About Corporate Crime.
With a tip of the hat to David Letterman, let us
proceed.
Number 20
Corporate crime inflicts far more damage on society
than all street crime combined.
Whether in bodies or injuries or dollars lost,
corporate crime and violence wins by a landslide.
The FBI estimates, for example, that burglary and
robbery street crimes costs the nation $3.8
billion a year.
The losses from a handful of major corporate frauds
Tyco, Adelphia, Worldcom, Enron swamp the losses
from all street robberies and burglaries combined.
Health care fraud alone costs Americans $100 billion
to $400 billion a year.
The savings and loan fraud which former Attorney
General Dick Thornburgh called "the biggest white
collar swindle in history" cost us anywhere from
$300 billion to $500 billion.
And then you have your lesser frauds: auto repair
fraud, $40 billion a year, securities fraud, $15
billion a year and on down the list.
Number 19
Corporate crime is often violent crime.
Recite this list of corporate frauds and people will
immediately say to you: but you can't compare street
crime and corporate crime corporate crime is not
violent crime.
Not true.
Corporate crime is often violent crime.
The FBI estimates that, 16,000 Americans are murdered
every year.
Compare this to the 56,000 Americans who die every
year on the job or from occupational diseases such as
black lung and asbestosis and the tens of thousands of
other Americans who fall victim to the silent violence
of pollution, contaminated foods, hazardous consumer
products, and hospital malpractice.
These deaths are often the result of criminal
recklessness. Yet, they are rarely prosecuted as
homicides or as criminal violations of federal laws.
Number 18
Corporate criminals are the only criminal class in the
United States that have the power to define the laws
under which they live.
The mafia, no.
The gangstas, no.
The street thugs, no.
But the corporate criminal lobby, yes. They have
marinated Washington from the White House to the
Congress to K Street with their largesse. And out
the other end come the laws they can live with. They
still violate their own rules with impunity. But they
make sure the laws are kept within reasonable bounds.
Exhibit A the automobile industry.
Over the past 30 years, the industry has worked its
will on Congress to block legislation that would
impose criminal sanctions on knowing and willful
violations of the federal auto safety laws. Today,
with very narrow exceptions, if an auto company is
caught violating the law, only a civil fine is
imposed.
Number 17
Corporate crime is underprosecuted by a factor of say
100. And the flip side of that corporate crime
prosecutors are underfunded by a factor of say 100.
Big companies that are criminally prosecuted represent
only the tip of a very large iceberg of corporate
wrongdoing.
For every company convicted of health care fraud,
there are hundreds of others who get away with ripping
off Medicare and Medicaid, or face only mild
slap-on-the- wrist fines and civil penalties when
caught.
For every company convicted of polluting the nation's
waterways, there are many others who are not
prosecuted because their corporate defense lawyers are
able to offer up a low-level employee to go to jail in
exchange for a promise from prosecutors not to touch
the company or high-level executives.
For every corporation convicted of bribery or of
giving money directly to a public official in
violation of federal law, there are thousands who give
money legally through political action committees to
candidates and political parties. They profit from a
system that effectively has legalized bribery.
For every corporation convicted of selling illegal
pesticides, there are hundreds more who are not
prosecuted because their lobbyists have worked their
way in Washington to ensure that dangerous pesticides
remain legal.
For every corporation convicted of reckless homicide
in the death of a worker, there are hundreds of others
that don't even get investigated for reckless homicide
when a worker is killed on the job. Only a few
district attorneys across the country have
historically investigated workplace deaths as
homicides.
Corporate crime prosecutors are underfunded by a
factor of say 100.
White collar crime defense attorneys regularly admit
that if more prosecutors had more resources, the
number of corporate crime prosecutions would increase
dramatically. A large number of serious corporate and
white collar crime cases are now left on the table for
lack of resources.
Number 16
Beware of consumer groups or other public interest
groups who make nice with corporations.
There are now probably more fake public interest
groups than actual ones in America today. And many
formerly legitimate public interest groups have been
taken over or compromised by big corporations. Our
favorite example is the National Consumer League. Its
the oldest consumer group in the country. It was
created to eradicate child labor.
But in the last ten years or so, it has been taken
over by large corporations. It now gets the majority
of its budget from big corporations such as Pfizer,
Bank of America, Pharmacia & Upjohn, Kaiser
Permanente, Wyeth-Ayerst, and Verizon.
Number 15
It used to be when a corporation committed a crime,
they pled guilty to a crime.
So, for example, so many large corporations were
pleading guilty to crimes in the 1990s, that in 2000,
we put out a report titled The Top 100 Corporate
Criminals of the 1990s. We went back through all of
the Corporate Crime Reporters for that decade, pulled
out all of the big corporations that had been
convicted, ranked the corporate criminals by the
amount of their criminal fines, and cut it off at 100.
So, you have your Fortune 500, your Forbes 400, and
your Corporate Crime Reporter 100.
Number 14
Now, corporate criminals dont have to worry about
pleading guilty to crimes.
Three new loopholes have developed over the past five
years the deferred prosecution agreement, the non
prosecution agreement, and pleading guilty a closet
entity or a defunct entity that has nothing to lose.
Number 13
Corporations love deferred prosecution agreements.
In the 1990s, if prosecutors had evidence of a crime,
they would bring a criminal charge against the
corporation and sometimes against the individual
executives. And the company would end up pleading
guilty.
Then, about three years ago, the Justice Department
said hey, there is this thing called a deferred
prosecution agreement.
We can bring a criminal charge against the company.
And we will tell the company if you are a good
company and do not violate the law for the next two
years, we will drop the charges. No harm, no foul.
This is called a deferred prosecution agreement.
And most major corporate crime prosecutions are
brought this way now. The company pays a fine. The
company is charged with a crime. But there is no
conviction. And after two or three years, depending on
the term of the agreement, the charges are dropped.
Number 12
Corporations love non prosecution agreements even
more.
One Friday evening last July, I was sitting my office
in the National Press Building. And into my e-mail box
came a press release from the Justice Department.
The press release announced that Boeing will pay a $50
million criminal penalty and $615 million in civil
penalties to resolve federal claims relating to the
company's hiring of the former Air Force acquisitions
chief Darleen A. Druyun, by its then CFO, Michael
Sears and stealing sensitive procurement
information.
So, the company pays a criminal penalty. And I figure,
okay if they paid a criminal penalty, they must have
pled guilty.
No, they did not plead guilty.
Okay, they must have been charged with a crime and had
the prosecution deferred.
No, they were not charged with a crime and did not
have the prosecution deferred.
About a week later, after pounding the Justice
Department for an answer as to what happened to
Boeing, they sent over something called a non
prosecution agreement.
That is where the Justice Department says were
going to fine you criminally, but hey, we dont want
to cost you any government business, so sign this
agreement. It says we wont prosecute you if you pay
the fine and change your ways.
Corporate criminals love non prosecution agreements.
No criminal charge. No criminal record. No guilty
plea. Just pay the fine and leave.
Number 11
In health fraud cases, find an empty closet or defunct
entity to plead guilty.
The government has a mandatory exclusion rule for
health care corporations that are convicted of ripping
off Medicare.
Such an exclusion is the equivalent of the death
penalty. If a major drug company cant do business
with Medicare, it loses a big chunk of its business.
There have been many criminal prosecutions of major
health care corporations for ripping off Medicare. And
many of these companies have pled guilty. But not one
major health care company has been excluded from
Medicare.
Why not?
Because when you read in the newspaper that a major
health care company pled guilty, its not the parent
company that pleads guilty. The prosecutor will allow
a unit of the corporation that has no assets or even
a defunct entity to plead guilty. And therefore that
unit will be excluded from Medicare which doesnt
bother the parent corporation, because the unit had no
business with Medicare to begin with.
Earlier, Dr. Sidney Wolfe was here and talked about
the criminal prosecution of Purdue Pharma, the
Stamford, Connecticut- based maker of OxyContin.
Dr. Wolfe said that the company pled guilty to pushing
OxyContin by making claims that it is less addictive
and less subject to abuse than other pain medications
and that it continued to do so despite warnings to the
contrary from doctors, the media, and members of its
own sales force.
Well, Purdue Pharma the company that makes and
markets the drug didnt plead guilty. A different
company Purdue Frederick pled guilty. Purdue Pharma
actually got a non-prosecution agreement. Purdue
Frederick had nothing to lose, so it pled guilty.
Number 10
Corporate criminals dont like to be put on probation.
Very rarely, a corporation convicted of a crime will
be placed on probation. Many years ago, Consolidated
Edison in New York was convicted of an environmental
crime. A probation official was assigned. Employees
would call him with wrongdoing. He would write reports
for the judge. The company changed its ways. There was
actual change within the corporation.
Corporations hate this. They hate being under the
supervision of some public official, like a judge.
We need more corporate probation.
Number 9
Corporate criminals dont like to be charged with
homicide.
Street murders occur every day in America. And they
are prosecuted every day in America. Corporate
homicides occur every day in America. But they are
rarely prosecuted.
The last homicide prosecution brought against a major
American corporation was in 1980, when a Republican
Indiana prosecutor charged Ford Motor Co. with
homicide for the deaths of three teenaged girls who
died when their Ford Pinto caught on fire after being
rear-ended in northern Indiana.
The prosecutor alleged that Ford knew that it was
marketing a defective product, with a gas tank that
crushed when rear ended, spilling fuel.
In the Indiana case, the girls were incinerated to
death.
But Ford brought in a hot shot criminal defense lawyer
who in turn hired the best friend of the judge as
local counsel, and who, as a result, secured a not
guilty verdict after persuading the judge to keep key
evidence out of the jury room.
Its time to crank up the corporate homicide
prosecutions.
Number 8
There are very few career prosecutors of corporate
crime.
Patrick Fitzgerald is one that comes to mind. Hes the
U.S. Attorney in Chicago. He put away Scooter Libby.
And hes now prosecuting the Canadian media baron
Conrad Black.
Number 7
Most corporate crime prosecutors see their jobs as a
stepping stone to greater things.
Spitzer and Giuliani prosecuted corporate crime as a
way to move up the political ladder. But most young
prosecutors prosecute corporate crime to move into the
lucrative corporate crime defense bar.
Number 6
Most corporate criminals turn themselves into the
authorities.
The vast majority of corporate criminal prosecutions
are now driven by the corporations themselves. If they
find something wrong, they know they can trust the
prosecutor to do the right thing. They will be forced
to pay a fine, maybe agree to make some internal
changes.
But in this day and age, in all likelihood, they will
not be forced to plead guilty.
So, better to be up front with the prosecutor and put
the matter behind them. To save the hide of the
corporation, they will cooperate with federal
prosecutors against individual executives within the
company. Individuals will be charged, the corporation
will not.
Number 5
The market doesnt take most modern corporate criminal
prosecutions seriously.
Almost universally, when a corporate crime case is
settled, the stock of the company involved goes up.
Why? Because a cloud has been cleared and there is no
serious consequence to the company. No structural
changes in how the company does business. No monitor.
No probation. Preserving corporate reputation is the
name of the game.
Number 4
The Justice Department needs to start publishing an
annual Corporate Crime in the United States report.
Every year, the Justice Department puts out an annual
report titled "Crime in the United States."
But by "Crime in the United States," the Justice
Department means "street crime in the United States."
In the "Crime in the United States" annual report, you
can read about burglary, robbery and theft.
There is little or nothing about price-fixing,
corporate fraud, pollution, or public corruption.
A yearly Justice Department report on Corporate Crime
in the United States is long overdue.
Number 3
We must start asking which side are you on with
the corporate criminals or against?
Most professionals in Washington work for, are paid
by, or are under the control of the corporate crime
lobby. Young lawyers come to town, fresh out of law
school, 25 years old, and their starting salary is
$160,000 a year. And theyre working for the corporate
criminals.
Young lawyers graduating from the top law schools have
all kinds of excuses for working for the corporate
criminals huge debt, just going to stay a couple of
years for the experience.
But the reality is, they are working for the corporate
criminals.
What kind of respect should we give them? Especially
since they have many options other than working for
the corporate criminals.
Time to dust off that age-old question which side
are you on? (For young lawyers out there considering
other options, check out Alan Morrisons new book
Beyond the Big Firm: Profiles of Lawyers Who Want
Something More.)
Number 2
We need a 911 number for the American people to dial
to report corporate crime and violence.
If you want to report street crime and violence, call
911.
But what number do you call if you want to report
corporate crime and violence?
We propose 611.
Call 611 to report corporate crime and violence.
We need a national number where people can pick up the
phone and report the corporate criminals in our midst.
What triggered this thought?
We attended the press conference at the Justice
Department the other day announcing the indictment of
Congressman William Jefferson (D-Louisiana) .
Jefferson was the first U.S. official charged with
violating the Foreign Corrupt Practices Act.
Federal officials alleged that Jefferson was both on
the giving and receiving ends of bribe payments.
On the receiving end, he took $100,000 in cash
$90,000 of it was stuffed into his freezer in
Washington, D.C.
The $90,000 was separated in $10,000 increments,
wrapped in aluminum foil, and concealed inside various
frozen food containers.
At the press conference announcing the indictment,
after various federal officials made their case before
the cameras, up to the mike came Joe Persichini,
assistant director of the Washington field office of
the FBI.
To the American people, I ask you, take time,
Persichini said. Read this charging document line by
line, scheme by scheme, count by count. This case is
about greed, power and arrogance.
Everyone is entitled to honest and ethical public
service, Persichini continued. We as leaders
standing here today cannot do it alone. We need the
public's help. The amount of corruption is dependent
on what the public with allow.
Again, the amount of corruption is dependent on what
the public will allow.
If you have knowledge of, if you've been confronted
with or you are participating, I ask that you contact
your local FBI office or you call the Washington Field
Office of the FBI at 202.278.2000. Thank you very
much.
Shorten the number make it 611.
Number one.
And the number one thing you should know about
corporate crime?
Everyone is deserving of justice. So, question,
debate, strategize, yes.
But if God-forbid you too are victimized by a
corporate criminal, you too will demand justice.
We need a more beefed up, more effective justice
system to deal with the corporate criminals in our
midst.
Thank you.
(This is the text of a speech delivered by Russell
Mokhiber, editor of Corporate Crime Reporter to the
Taming the Giant Corporation conference in Washington,
D.C., June 9, 2007.)
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