To many, it may seem that fraud and other such crimes run rampant in corporations today. Many blame the current economic downturn on all of the illegal activities that went on at so many firms, which ultimately helped lead to their collapses. Politicians and other government leaders want to increase the punishment for white collar crime such as corporate theft in order to deter others from doing it. However, there may be limits to the effectiveness of making the penalties for the crime stiffer.
Leaders Asking for Harsher Penalties
Many in Washington are calling for increased penalties for those who commit white collar crime. Chairman of the Securities and Exchange Commission Mary Shapiro sent a letter to Sen. Jack Reed, chairman of the Senate banking Subcommittee on Securities, Insurance and Investment, outlining a proposal to give the SEC the authority to increase the civil penalties that the SEC can levy on those who commit securities violations.
Shapiro would increase the current $150,000 per violation maximum penalty for individuals to $1 million and the $725,000 per violation maximum for organizations to $10 million. Shapiro also suggested allowing the SEC to seek treble damages for repeat offenders and institute penalties based on financial losses of investors rather than the current system of basing penalties on the actual financial gain to the defendant.
Finally, Shapiro wants to change the way that the SEC brings actions against repeat offenders. Rather than having to go to federal court and ask a judge to find the defendant in contempt for violating a court order, Shapiro wants to be able to bring administrative charges against those who violate injunctions or SEC orders.
President Obama also addressed the issue of punishment for white collar crime in a speech in Kansas in December 2011. He pledged to seek legislation that would increase the criminal penalties for white collar crime. Congress has also begun to push for longer prison sentences for those convicted of white collar crime through Section 1079A of the Dodd-Frank Act.
Limits on Effectiveness
Experts suggest that increasing the civil and criminal penalties for white collar crime may not be the most effective means for preventing such crime. The government often has a difficult time proving that defendants intentionally violated the law - which the government must do before it can levy any fines. In a criminal case, the government needs to prove the intent to violate the law beyond a reasonable doubt, and with the layers of corporate decision-making, it is often difficult to show that one individual acted with intent to defraud.
Once a defendant is convicted of white collar crime, judges seem reluctant to impose the highest sentences possible. Defendants often have no prior criminal record and extensive histories of service to the community, and they usually present little evidence of the threat of reoffending.
While those in Washington may be calling for more penalties for white collar crime, those facing charges for such offenses as corporate fraud or securities violations already risk substantial civil and criminal fines and the possibility of jail. If you are facing white collar crime charges, contact an experienced criminal defense attorney who can help protect your rights.
