White-Collar Crime

Schadenfreude is Bad Public Policy

If prison is a bad option for so many people, why is there a call for throwing more executives in prison.

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Individual criminal liability for corporate executives is all the rage these days.

There’s the Yates Memo telling prosecutors to go mount individual executives’ heads on pikes outside the main justice building; it’s all over the coverage of the GM deferred prosecution agreement; just this week Stuart Parnell, the CEO of a peanut company, was sentenced to 28 years in prison for a salmonella outbreak; and there’s heavy speculation that individual Volkswagen executives will be prosecuted for their role in the company’s emissions test software. (And, to be fair, I’m talking about this stuff a lot too. I’ve been on TV on the GM agreement and the VW investigation and in the NLJ on the Yates memo)

In much of this coverage, you see a familiar litany of quotes — folks celebrate when prison time is doled out and complain when executives avoid (the Department of) Justice. Take, for example, this quote in an article on the GM story where no executives were prosecuted:

It’s the same old story. If you have enough power and money you can always buy your way out of truly being held accountable for your misdeeds.

Preet Bharara — well known for sucking up to those with money and power — explained that there were no prosecutions of individuals at GM because the government has to prove there was an intent to commit a crime and they didn’t think they could.

So, to summarize, the peanut CEO went to prison and the people at GM apparently aren’t being prosecuted (though Bharara is hedging his bets, saying they’re still looking).

As a matter of law, there’s a big difference between peanut executives and auto executives. There are more statutes designed to imprison individual executives who put contaminated food into the hands of the public than there are laws meant to put auto executives who make dangerous cars. Part of the reason — or, more accurately, explanation — for that difference is that the auto industry has spent a decent amount of money on lobbyists to not have individual liability for car executives. Can there really be equal justice when the kind of criminal enforcement you’re subject to depends on the quality of lobbyist you can afford?

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Regardless of the law, the public sentiment is the same — executives at companies should go to prison when their company does something wrong. This comes at a time where public sentiment on mass incarceration is changing and when many people are starting to recognize that the drug war was a colossal waste of time, money, and human freedom.

Why are we starting to sour on prison in general, and for drug crimes in particular, while, at the same time, we seem to be clamoring for more and more prison for executives?

Put another way, if prison is bad, why isn’t it bad for everyone?

I live in an aggressively progressive suburb of DC. When I was an assistant federal public defender, representing drug dealers, gun owners, and folks who had committed violent crimes that really probably — as a category — may be appropriate for criminal prosecution, I was never hassled at a dinner party for my work. But lately, doing more work representing executives and business people, I get asked how I can live with myself doing the work I do. (Thankfully I represent a good number of federal employees, who every good progressive likes — especially in DC.)

And there is a counterpoint: a certain set of lawyers tend to look down on the work I used to do, thinking it less interesting or prestigious than white-collar stuff, or thinking those clients more morally blameworthy.

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I think both are wrong. All else being equal, I’d happily represent someone accused of either kind of charge. Prison is a singular evil and the way we do it in America makes it only more so. Incarcerating anyone is a failure of all of us as members of this society. Sometimes it has to happen, but it should be really really rare. That said, I am weak and I like nice things, so I’d rather represent someone who can pay than someone who can’t. Which tends to suggest a white-collar practice.

Some folks think that without prison time for executives there will be no meaningful regulation of corporate conduct. I’ve got a lot of sympathy for this view but think it’s ultimately wrong. The argument is that if you think robust and effective regulation — especially around safety issues — is important, as just about everyone should, then, if we can’t do it through normal administrative channels because our federal government is basically broken, we should do it through our criminal justice system.

From a purely utilitarian viewpoint, this would make sense if we actually thought putting a handful of people in prison every year would be enough to deter the kind of conduct we want to. But does it? Even for things that are clearly crimes, being prosecuted is a lottery. Many many more crimes are committed than are prosecuted. A rational actor would probably not be deterred by a minuscule threat of prosecution (though, of course, it gets odd to talk about what’s rational when the worst case scenario is so bad).

Though, more fundamentally, based on having talked to lots and lots of people who have been prosecuted, I doubt that most of the people who come within the government’s sights actually think they’re committing a crime.

Maybe people are lying to themselves. Or maybe what counts as a crime is so complicated and our laws are so vague and baroque that nonlawyers in the thick of a situation simply don’t know when they’re on the wrong side.

If that’s right, then white-collar prosecutions are uniquely pointless, except as an act of collective schadenfreude.

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