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March 1, 2008

Keeping track of corportate punishment (and its deferral)

Mary Flood has this interesting new piece in the Houston Chronicle, headlined "Justice's deals draw scrutiny: Research by Houston lawyers takes issue with corporate penalties."  Here are snippets, including a closing quote from yours truly:

The research of two Houston lawyers is at the center of a growing controversy over the way the Justice Department lets corporations accused of wrongdoing off the criminal hook.  Larry Finder, a former Houston U.S. Attorney in private practice, and Ryan McConnell, a federal prosecutor here, started tracking and writing about the trends a few years ago.  Now their work is oft-cited as legislators, professors and others take aim at how the Justice Department is striking a growing number of deals with companies.

Though there has been mounting concern about the increased use of agreements to help bad-acting corporations avoid business-crushing criminal trials, scrutiny heightened recently with revelations of prosecutors passing lucrative monitoring jobs to former colleagues. One such contract worth potentially $52 million went to ex-top prosecutor John Ashcroft's firm to monitor Zimmer Holdings in a case about kickbacks in the medical field.

Finder and McConnell could find no other analysis of these corporate prosecutions.  They found that there seemed to be no policy in place to create uniformity in the way federal prosecutors handle the cases.  Their work is cited by members of Congress now trying to change the way these cases are handled....

Ellen Podgor, a professor at Stetson University College of Law who has written about these corporate deals, said the idea of corporate deferred prosecution is a good one "but I see enormous problems in the way they are operating."  She said the problem is the government's role. It gets to decide whether the corporation is in breach, it gets to pick the monitor and all this without the judicial oversight in regular plea bargains or probations, she said....

Doug Berman, a professor at Moritz College of Law at Ohio State University who writes on federal sentencing, said "it's sad nobody was keeping track until some eggheads in Houston did." "We have a sentencing commission that tracks every sentence on drug cases and sex offender cases, yet when it comes to the Justice Department giving a break to corporations, nobody keeps track of this stuff," Berman said.  "The powers that be don't want too much out about whether corporations are getting too many breaks."

March 1, 2008 at 04:18 PM | Permalink


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It sounds like they're complaining not about white collar criminals being treated leniently, but actual corporate entities not being prosecuted.

The DOJ goes after the (human) officers and employees in the corporation who commit crimes by and through the corporation, but there's hardly ever any sense in actually charging the corporate entity itself with a crime in addition to the human defendants. Does anyone really think Enron should have been indicted along with Lay, Skilling, etcetera?

I know we have the legal fiction that corporations are entities capable of suing and being sued and being prosecuted, but just because they can name a corporation in an indictment doesn't mean they should. First of all, you can't put a corporation in prison. So all you can do is fine it, which usually ends up punishing innocent employees and investors, and compounding the harm done by the guilty persons who used the corporation to further a crime. Civil suits against corporations make perfect sense. But criminal indictments against corporations are usually pretty stupid and pointless and counterproductive. I suppose there may be some coporations which are set up for the sole purpose of perpetuating a crime, and naming the corporation along with the culpable human defendants is convenient for asset forfeiture purposes (and maybe licensing purposes too). But that's not the type of corporation this article seems to be talking about....

Posted by: bruce | Mar 4, 2008 6:58:24 AM

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