There’s a rough divide among criminal defense lawyers, distinguishing those who defend so-called white-collar cases from those who defend other crimes, such as murder, rape, robbery and child abuse. White collar cases, taking their name from the pressed and starched shirts of the power suite elite who are accused of committing them, are typically financial in nature.
Lawyers walking on the wild side accuse their white collar colleagues of living in a fantasy world, a world without real consequences, where people can buy their way out of trouble with the law.
Oh, there are exceptions, of course. Bernie Madoff’s 150-year sentence for his fraudulent investment schemes made a statement of sorts, although I am not sure just how meaningful it is to send an old man to such a prison term. Do the feds plan on reviving him when he dies, to assure that he serves his sentence?
In the Grey Poupon world of white collar defendants, prison time is something other people do. F. Scott Fitzgerald got it right: “The rich are different from you and me.”
Two white collar cases recently caused a stir:
General Motors agreed to pay a $900 million fine for hiding a defect in ignition switches resulting in the death of 174 people. The sum represents one-third of the profit the automaker made last year, and is a fraction of the firm’s gross revenue for the year.
Then Volkswagen admitted selling some 11 million diesel cars with software specifically designed to scam regulators about the cars’ performance on auto emissions tests. The German auto giant has agreed to set aside some $7.3 billion — half a year’s profit — to “fix” the cars.
Not one person has been arrested for these crimes. Not one.
Let me see if I get this right. General Motors and its employees hid a defect in their product that led to the death of 174 people. Volkswagen jimmied computer software to hide from regulators that 11 million of its cars were pollution machines. And not one person is even charged with a crime?
I count among my friends lawyers who have been charged, convicted, imprisoned and are now enduring supervised release for mortgage fraud arising in the heyday of mortgage fever, when banks didn’t really care who got mortgages so long as brokers got their fees, and funky mortgages could be resold to the unwary on Wall Street. One fellow made all of $20,000 in fees, before the feds ruined his life.
But GM executives can cover up defects in products they put on the market, products that killed people, and walk away by waving a checkbook? And Volkswagen can engage in an elaborate scam resulting in more damage to the air we breathe with what amounts to a dent in its profit margin?
It is results like this that boil the blood.
Few folks understand just how easy it is to commit mail fraud or wire fraud, two of the crown jewels of the federal penal code. Drop a form in the mail, or press the send button on your computer, and you are engaged in “interstate commerce,” sending communications across state lines, a defining characteristic of many federal offenses. (Fact: Every Internet communication in Connecticut moves through interstate commerce. The Web is such that servers bounce messages, even messages between next-door neighbors, across state lines.)
If you deliberately misstate an important fact, what lawyers call a “material fact,” or a fact that matters, in such a communication, you could be guilty of fraud, of attempting to deceive another. What’s more, even if you had no intent to deceive, but you avoid making any effort to assure that what you assert is true, you could be guilty on the theory that you “consciously avoided” engaging in deceit. The federal criminal code is web designed to benefit the spider.
Harvey Silverglate, a Massachusetts lawyer and Boston newspaper columnist, once wrote a brilliant book entitled Three Felonies a Day: How the Feds Target the Innocent. His point was simple: There so many ways in which federal law can be violated that prosecutors can charge almost anyone with a crime. When everyone violates the law, the feds get to choose whom to pursue, and often for reasons other than those stated in an indictment.
Never are the choices federal prosecutors make about who goes to prison, and who remains free, more apparent than in the Volkswagen and GM cases.
Just how auto executives walk away from the death of customers or from computer crimes designed to hide the truth from regulators is something I will never understand. A lawyer fakes a loan document — bam! Prison. A carmaker kills a customer or fouls the air we breathe? Oh, well!
I’ve noticed in recent years a tendency among federal judges at sentencing hearings to talk about how important criminal sentences are as a means of promoting respect for the law. Just how are we to respect a law that says of corporate crimes: “money talks so criminals walk”?
One justification offered for the failure to seek harsher penalties against corporations is that such measures could hurt us all by hobbling the hand that feeds us. Really? Try telling a judge sometime about how much a father’s absence will define the life of the children he leaves behind as he is sent to prison. When little people and their loved ones suffer, it’s just collateral damage. But all hail the corporation!
Don’t get me wrong, I’m no fan of prisons, and think that our quick and easy reliance on them is something akin to a national delusion. But if we are going to have prisons to punish wrongdoers, then why do corporate kings and queens get a pass?
Heads should roll at GM and at Volkswagen. Executives either knew about, or turned a blind eye to, the fraud committed by their companies. It’s time to introduce the corporate class to the cellblock.
Or is it really true what we lawyers say among ourselves: White collar defendants can get away murder because they can buy their way out of trouble?