Justice is supposed to be blind, but it is not deaf — and money still talks in U.S. courtrooms.
Perpetrators of large financial crimes often fare far better in relative terms than those who have committed more minor property crimes. And defendants with deep pockets, whether accused of crimes of violence or those involving property, often fare much better than poorer people.
Disproportionately favorable outcomes for the wealthy are not, however, evidence of a fundamentally corrupt judicial system. They rather reflect the inevitable (at least from economists’ points of view) tradeoffs that limited resources impose on a judicial system. We may not like the outcomes in notorious cases, but as a society and taxpayers, we are not willing to spend the money needed to overcome the edge that rich defendants have in U.S. courtrooms.
Last week Bernie Madoff’s CFO, Frank DiPascali, and DiPascali’s attorney were shocked, shocked when a judge sent him to jail pending final sentencing after he pleaded guilty to knowingly abetting one of the largest frauds in history for nearly two decades.
The arguments made are pretty standard, but they reveal a great deal. DiPascali had not physically harmed anyone. Yes, he had helped steal tens of billions of dollars from thousands of people, but he had not shot, stabbed or raped anyone. He was not a flight risk. He had cooperated extensively with police and others investigating the Madoff crimes. He was unlikely to re-offend.
These are important considerations. It costs a lot of money to keep someone in prison. Even though we incarcerate a higher proportion of our population than most other industrialized countries, we are perennially short of jail space at all levels of government. A scarce resource has to be allocated somehow, and factors of physical danger to the community, likelihood of flight and probability of re-offending are relevant criteria to use available jail space to the greatest benefit to society.
Cooperation in ongoing investigations of broader crimes also is an important consideration. Many of Madoff’s victims objected to his chief henchman walking free pending sentencing. But DiPascali has been helping investigators, and his cooperation may help convict other accomplices.
Ideally, the police and FBI would have the resources to thoroughly get to the bottom of all crimes, without having to depend on some perpetrator ratting out his or her confederates. But in the real world, resources for criminal investigation are, if anything, scarcer than for incarceration. Getting participants in crime to provide evidence saves extremely scarce investigative capabilities.
Such assistance is best motivated by plea bargains that trade light punishment for cooperation. We may be offended by the outcomes, but the usual tradeoffs often are optimal for society, given tight government budgets and taxpayer unwillingness to spend more on the justice system.
Pressure to reach plea bargains in financial crimes is further driven by the extensive cost of prosecuting rich perpetrators. Our legal system, from the U.S. Constitution itself down to rules of evidence, affords extensive protection to the accused. There are extensive and time-consuming opportunities for appeal. Officials know that in many cases, wealthy defendants can outgun prosecutors and, at the very least, run the clock for years. The old adage that “justice delayed is justice denied” seems to merit little consideration.
However, the upshot of these rational resource-allocation decisions, taken together, is both the perception and reality of rich criminals getting off easier than poor ones and perpetrators of large financial crimes doing relatively better than smaller fry.
Does this reduce the deterrence factor for financial crimes? If people contemplating committing frauds think their chances of doing hard time are low and bet that in even the worst case they can hide some ill-gotten assets effectively, are they more likely to go ahead?
An English judge once explained to a horse thief he was sending to the gallows that his execution was “not for stealing a horse, but that horses not be stolen.” In other words, the function of the death penalty was not to punish a specific act, but to protect society by deterring the same crime by others. That element may well be lacking in our system.
An even broader consideration, which is impossible to quantify, is the broad social perception that justice is administered evenhandedly. Despite Bernie Madoff’s long sentence, his CFO’s jail time and the sentencing of a few high-profile individuals in the Enron affair and 1990s stock manipulation scams, light sentences that make sense in terms of the efficient use of government resources may do harm in this broader context.
© 2009 Edward Lotterman
Chanarambie Consulting, Inc.