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November 22, 2009

"Do Defendants Get Enough Warning About a Guilty Plea's Consequences?"

The title of this post is the headline of this effective new article by Tony Mauro from The National Law Journal.  Here is the start of an effective piece that connects the Ballon Boy story to a pending Supreme Court case on this topic:

The attention-seeking parents of the Colorado "balloon boy" must not have had their thinking caps on last month when they told police their son was aboard a runaway hot air balloon.  But when their misadventure got them hauled into court, they suddenly smartened up.

On the advice of counsel, Richard and Mayumi Heene worked out a plea agreement that on Nov. 13 had them confess to different crimes.  The father is now a felon, but the mother pleaded guilty to a misdemeanor charge of false reporting.  Why?  Because she is a Japanese citizen, and if she had pleaded guilty to a felony, a collateral consequence would have been deportation.

The Heenes were lucky, but Jose Padilla, whose case went before the U.S. Supreme Court exactly one month earlier, was not. Padilla, a legal U.S. resident born in Honduras, pleaded guilty to an aggravated felony drug charge in Kentucky.  His lawyer told him the plea would not get him deported, because he had lived in the United States for decades.  The advice was flat wrong, Padilla faces deportation, and now he wants his plea set aside because of the bad advice he got.

Both cases, as different as they are, are casting new light on a legal issue that has been simmering for years: when, whether and how defendants should be informed about the collateral consequences of pleading or being found guilty.

November 22, 2009 at 11:15 AM | Permalink


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Consequences of a Guilty Plea: Adam Schlossman posts in SCOTUSblog's Monday Round-up a link to Tony Mauro's National Law Journal article "Do Defendant's Get Enough Warning About a Guilty Plea's Consequences?" In the article, Mauro comments on the the s... [Read More]

Tracked on Nov 23, 2009 5:35:08 PM


"Do Defendants Get Enough Warning About a Guilty Plea's Consequences?"

The question ought to be: Do defendants get enough warning about the consequences of a conviction? A guilty plea standing alone has no consequences. It has to result in a conviction.

And a conviction, via plea or trial, is not principally a result of lawyering, good or bad. A conviction is principally a result of the defendant's behavior as demonstrated by the evidence.

Of course there is the school of thought, seen frequently here, that the defendant's behavior has nothing to do with it, and that the system consists of running innocent people selected at random (but maybe with a bias toward selecting poor minorities from the orphanage, etc.) into court to face concocted charges.

For those who believe this sort of thing, there is nothing to say. The system will continue to be a cauldron of racist corruption because that is what they want to see, the better to be able to condemn the United States.

For those who know that a criminal conviction is a consequence of the defendant's criminal behavior, the fact that it has adverse consequences is not discomfiting. When, for example, you get convicted for stealing from your employer, your next potential employer has every right and reason to know about that, and to weigh it in the decision whether you should be hired. That is not something a lawyer can or ought to be able to change, but is a far more frequent collateral consequence than deportation.

The problem is not with ignorance of the possible consequences of getting convicted. The problem is with the behavior that brings about the conviction. It's amazing how much smoother your life can be if you refrain from lying, stealing, mugging people or pushing drugs.

Maybe Mr. and Mrs. Balloon Boy should have thought about that before their recent stunt. And maybe Mr. Padilla should have as well before participating in the aggravated drug felony that has brought him to this point.

Posted by: Bill Otis | Nov 22, 2009 11:53:51 AM

Bill is right. Plea bargaining should be abolished and the prosecution should have to prove every charge beyond a reasonable doubt. Then there would be no need to advise the defendant of anything.

Posted by: George | Nov 22, 2009 12:14:24 PM

George --

I seriously doubt you think that, at a trial, "there would be no need to advise the defendant of anything."

Just for the record, I have my doubts about plea bargaining, since inexperienced ADA's tend to get undressed by wily old defense counsel, but I would hardly want to ban the practice. It was your fellow defense lawyers who wanted to do that, Santobello v. New York, 404 U.S. 257 (1971).

Posted by: Bill Otis | Nov 22, 2009 1:07:06 PM

Tough call.

1) The victim of lawyer carelessness need to be made whole by a legal malpractice action.

2) The victim of lawyer carelessness should not profit from a crime with a civil settlement.

Perhaps, the lawyer should be made to pay into a crime victim fund for his carelessness, and the criminal client should get nothing.

Posted by: Supremacy Claus | Nov 22, 2009 2:12:24 PM


I agree with you. Most clients prefer to avoid even being charged with crimes.

That is why it is better to provide them with lawyers before they are charged or arrested, that can convince prosecutors or police not to bring such charges. A real American has a lawyer with an ongoing relationship with the local authorities. I really have no time for people without lawyers on retainer.

Smart people (i.e. real Americans) consult with lawyers in order to find ways to do what they want BEFORE they do it. So, for example, if you like the idea of killing people, you figure out how to do it within the confines of the law (such as by advocating for executions or war). If you like stealing, you advocate for a restrictive reading of the 4th and 5th amendments that will allow government agents to take property.

I also agree with you that plea bargaining can never really be abolished. It is the only way the people of this world that hate America so much that they can’t be bailed out will ever get out of jail.

Posted by: S.cotus | Nov 22, 2009 6:15:46 PM

To think that the parties have a responsibility to fathom every possible collateral consequence from a plea of guilty is simply grist for another attorney to enter the proceedings, declare his predecessor ineffective/incompetent, and belly up to the public trough for his share of tax dollars.

Posted by: mjs | Nov 22, 2009 7:01:06 PM

S.cotus --

"...if you like the idea of killing people, you figure out how to do it within the confines of the law (such as by advocating for executions or war)."

My father, who distinctly did NOT like the idea of killing people, nonetheless advocated that we enter WWII to fight the Axis. We did so, and in the process killed thousands.

Fortunately, I now have you to tell me what a dope (or is it "barbarian"?) my father was for supporting this legalized massacre. For sure, we should have let the Nazis take over.

Why didn't he think of that?

"If you like stealing, you advocate for a restrictive reading of the 4th and 5th amendments that will allow government agents to take property."

Or, if you like stealing, you can just knock over the 7-11 or the gas station or what have you, and save yourself the trouble of applying for a warrant!!! Kinda like your clients, right?

Oh, and if in the process of emptying out the cash drawer, your client feels like he needs to blow the clerk's head off -- hey, look, boys will be boys! After all, S.cotus, some killings (like offing the clerk) are better than others (like offing the Nazis).

Thanks for your post. It opens a window, that's for sure.

Posted by: Bill Otis | Nov 22, 2009 8:06:21 PM

I liked S.cotus candor about the legal profession. It is a rent seeking land piracy operation, and he makes no pretenses about its true aims, money and power.

He is mistaken that criminals should hire lawyers before committing crimes. Yes, that is quite self-serving solicitation of business, but unnecessary.

The criminal lover lawyer has nearly totally immunized crime. There is a 1 in 100 chance that a criminal will suffer any consequence for his crimes, nor even any inconvenience.

If he is a productive entity, there is a 100 in 100 chance he will be sued to plunder all assets.

Posted by: Supremacy Claus | Nov 22, 2009 9:23:33 PM

Bill.. Bill.. Bill... that post is seriously silly.

We all know that there are arguably valid reasons for war. Perhaps your grandpa had them. In fact, I will concede that for the purposes of this argument, he did. But there are also INVALID reasons for war. One of them is just because you like killing people. In short, just because someone that favors a war has a valid reason does not mean that everyone that favors war has a valid reason. This is not only invalid logic, but some of the craziest rhetoric I have seen in years.

Secondly, My clients have never been convicted of larceny or theft. Nor has any of them been convicted of anything to do with a 7-11. However, a true American would make damn sure that however immoral his goals are, he has found a legal way to do it in advance of actually doing it. Actually being arrested and facing charges is for poor people, and real Americans are not poor.

Posted by: S.cotus | Nov 22, 2009 11:02:26 PM

S.cotus --

"We all know that there are arguably valid reasons for war..."

Glad to hear you think so. Your initial post said nothing to that effect, instead directly implying that war (with no qualifications as to the reasons for it) was simply a mechanism to satisfy people who like killing. This is how you put it: " So, for example, if you like the idea of killing people, you figure out how to do it within the confines of the law (such as by advocating for executions or war)."

"Perhaps your grandpa had [valid reasons]. In fact, I will concede that for the purposes of this argument, he did. But there are also INVALID reasons for war. One of them is just because you like killing people."

Again, this is a distinction nowhere to be found in your original formulation. Nor is there any formulaic method for determining what is a "valid" versus an "invalid" reason. Millions opposed our country's entry into WWII. Maybe they thought the decision to do so was merely and expression of FDR's "liking to kill people." If so, they weren't high-minded, although they took themselves to be. They were just crazy.

"My clients have never been convicted of larceny or theft. Nor has any of them been convicted of anything to do with a 7-11."

OK, maybe it was robbery rather than larceny or theft; robbery was more like what I had in mind anyway. And maybe it was some local convenience store rather than a 7-11. Or perhaps it wasn't any of that. You've never said what your clientele is, exactly. Maybe it's Bernie Madoff; I don't know.

"However, a true American would make damn sure that however immoral his goals are, he has found a legal way to do it in advance of actually doing it."

I suppose you have some idea of what you mean by "true American," but I sure don't.

"Actually being arrested and facing charges is for poor people, and real Americans are not poor."

To harken back to my first response: My father was a "real American" in the sense of being an American citizen, and a guy who paid his taxes, followed the rules and was grateful to live here. But he was poor growing up. As a child he lived in a rowhouse in a less than desirable part of Philadelphia. He had to take a job when he was 15 (although he stayed in school and eventually went to Penn on an athletic scholarship).

When he died at 90 he was anything but poor. This was not because he had figured out some legal way to steal. It was because he worked his tail off and took the risks of starting his own business.

People today can do the same thing. If they prefer instead to sell drugs to ninth graders, that's their choice, but this hardly makes them sympathetic characters in the minds of normal people.

I gather what you're really trying to do here is paint the poor as the oppressed class, who can't figure out a way to steal legally, and therefore wind up getting busted by the cops.

This is so much baloney. Being poor is neither a reason nor an excuse for crime. This country has more social and economic mobility than any in history. As my father proved in a time far less prosperous than this (specifically, the Great Depression), you can escape poverty without becoming a criminal. He was hardly unique in this; millions of people have succeeded by working, just as he did. What's really going on is, to put it as you might, that that those who commit crime do it because they LIKE doing it.

Fine. But I don't want to hear later on that they JUST HAD TO, a la' Jean Valjean, or that they're being picked on because they're poor.

The answer now is the same as it was in my father's day: Stay in school, get a job, work at it, save your money and don't have kids you can't afford or won't take care of. And doing all of this is far easier now than it was when my father was growing up.

Posted by: Bill Otis | Nov 23, 2009 11:29:40 AM

Having a lawyer doesn't always help.

I recently interviewed a mortgage broker convicted of fraud for omitting source of down payment on numerous sub-A ("no-asset") loan apps, just as he'd been instructed to do at seminars sponsored by Freddie and Fannie and by loan officers for the major lending company with whom he'd completed more than 150 loans.

The lender and the seminar speakers urged brokers to omit from loan apps anything that might raise red flags in automated underwriting systems. If the lender needed more info it could always simply request it, they said.

All the lender cared about was credit scores and debt-asset ratios. All Freddie and Fannie wanted, apparently, was to keep the assembly line moving.

The broker's business attorney had examined each of the loan apps before they were signed and sent to the lender. Asked by the broker if leaving lines blank might be a problem, the attorney said it was a gray area but if the loans became troublesome at worst the lender might cut off the broker from future dealings.

The mortgage broker and eight others in an informal network of rehabbers, appraisers, title company officials and an attorney were accused in media releases of mortgage fraud. Prosecutors billed it as a multi-million dollar organized crime scam and noted the broker and the others each faced prison terms of up to 30 years.

Subsequently the broker was offered a plea deal with one count each of wire fraud (sending loan apps with material omissions via phone fax) and money laundering (depositing his commission checks in his bank account).

The broker initially refused to sign unless the agreement noted he'd been advised by counsel in the suspect dealings. The prosecutor said sign or the number of counts will be increased to 150. (as most readers of this blog understand, "having counsel" can put a mens rea wrinkle in plea-agreement negotiations)

The broker's criminal lawyer explained that holding out would prompt prosecutors to offer better deals to co-defendants in exchange for incriminating testimony against the broker.

He also noted that a trial defense would cost upwards of $225,000, that vague sweeping fraud statutes typically make such trials a turkey shoot for prosecutors and that losing at trial might indeed result in a lengthy prison sentence.

The broker and two other "small fish" signed plea agreements and were later sentenced to three months home detention and 3 years probation. None of the "big fish," including the broker's business attorney, was subsequently prosecuted.

The irony: the lender who'd coached the broker on loan-app preparation was portrayed in the case as the victim.

Yet in the same year the mortgage broker was convicted, that same lender settled with the government after admitting its employees had routinely forged underwriters' signatures to thousands of loan apps in at least four states. None of the lender's employees was prosecuted.

Another fact omitted from the broker's plea agreement was that the lender (unbeknownst to the broker) had routinely been upgrading the broker's sub-A loans to A loans to make them more marketable. The broker advised agents and prosecutors about the sneaky loan upgrades, but they weren't interested. The broker told me the agents didn't seem to understand or seem particularly curious about the difference.

Bill Otis doesn't understand why I'm so miffed about a system that operates this way. This case is one reason why. I have collected numerous similar stories in which truth and justice takes a back seat to adversarial imperatives.

The mortgage broker was a star high-school and college athlete and successful businessman who'd never been in trouble with the law. Now he's a felon living in his parents' basement, working menial jobs when he can find them.

There's your justice system, Bill.

Posted by: John K | Nov 23, 2009 12:16:43 PM

John K --

Just a couple of points. First and most obvious, you tell only one side of the story. So far as I can see, your information comes exclusively from the mortgage broker who got convicted. Naturally he portrays himself as the victim. But just as he left out material info on the loan applications, has it occurred to you that he might have left out important parts of this story? And/or shaded others?

As a former newsman, you probably did not print stories with only one source, and still less with only one source who had a stake in painting the story favorably to himself. The same caution applies, or should apply, here.

Second, even your source all but admits that he knew he was being dishonest by omitting material information. (It would be helpful to know exactly what that information was, but that is not provided). As usual with sleazy businessmen, he wants to blame it on somebody else: the seminar teachers, his boss, his business lawyer, and so forth.

The truth is that he knew what he was doing was both wrong and illegal, as he was finally forced to acknowledge in his plea agreement. He did it anyway because, in the corrupt and lying culture that comprised the housing market not so long ago, "everybody else was doing it" -- and making a pile for as long as the music played. He wanted to make a pile too, and was happy to do so. (You conspicuously omit to tell us how much he made off this scam). The fact that, at some point, his dishonesty would wind up costing the creditors (and their stockholders and employees) dearly is not something that concerned him. Thinking about the consequences of one's dishonesty is, after all, only for suckers.

When the chickens came home to roost, he still got a deal: Not one day in jail, a small period of home confinement, and three years' probation. He was also allowed to plead to two counts, when, had the prosecutor been the heartless thug you imply, he could have been stuck with 150.

You say that this was a "gray area." Not really. Mortgage applications are designed SPECIFICALLY to assess whether the applicant can keep up the payments. It is absolutely central to that goal to understand what assets and liabilities the applicant has. When the application states: "List below all current debts and liabilies," and you leave that space blank -- knowing full well that there is a BOATLOAD of debts and liabilies -- that is not a gray area. That is outright fraud. In other words, it's exactly what he was accused of.

The fact that other crooks in this shady business were not prosecuted, or not prosecuted as fully as the law allows, does not in any way reduce this mortgage broker's legal or moral culpability.

The bottom line is that he knew what he was doing, made a handsome living doing it, was caught, had no defense, still got no jailtime and (so far as you reveal) no fine, and now, having had to admit his dishonesty, is finding life considerably more difficult than in the salad days. Yes, it's true that employers are not all that keen on hiring those who have previously played fast and loose with the truth. But that is not the prosecutor's doing.

This is less a story about the supposed horrors of the system than it is about what we get for tolerating a culture of lies. The housing meltdown, and the related banking meltdown, cost thousands of people their life savings and thousands more their security in retirement. This mortgage broker, and many other greedy people just like him, was at the heart of the crisis.

The problem is not that the system was too harsh with these folks. It's that it wasn't harsh enough, soon enough. If it had been, a great deal of misery would have been averted.

Posted by: Bill Otis | Nov 23, 2009 3:20:51 PM

John K --

Or to put it more succinctly: When the poster boy for the biggest financial catastrophe since the Great Depression -- all brought about by exactly his sort of behavior -- gets three months home confinement, three years probabtion, no jail time, no fine, and not even community service, this does not present a compelling case that the system is a punitive monstrosity.

Posted by: Bill Otis | Nov 23, 2009 5:56:17 PM

I agree completely with Bill Otis here. You only complain that others were not targeted rather than your guy not actually being guilty. While I would prefer that everyone who undertook criminal activity would be pursued such is not in fact a legal requirement.

As for the business lawyer, I've seen numerous examples where lawyers are not prosecuted for giving their clients potentially illegal advice. That in fact seems to be one of the issues surrounding possible prosecution of John Yoo for his OLC memos.

The client is always left on the hook for following bad advice. There are a huge number of personal sovereignty/UCC nutcases who have learned (or not) that lesson the hard way.

Posted by: Soronel Haetir | Nov 23, 2009 7:13:43 PM


Federal agents ignored or rejected exculpatory evidence out of hand.

Prosecutors threatened to stack charges against a suspect in an apparent attempt to suppress the fact he’d had legal counsel as well as to discourage him from exercising his trial rights. They ignored clear evidence of the purported victim’s culpability in any wrongdoing.

Prosecutors made a media splash of the case then walked away from it a third of the way in. Proffers they obtained from three low-level suspects browbeaten into plea deals were never used against the five remaining suspects, none of whom were subsequently indicted or prosecuted.

A source close to the case said prosecutors apparently just gave up after the other five suspects rejected a series of progressively more lenient plea offers...supporting my suspicion any number of white collar cases are little more than strong-armed bluffs based on the understandable expectation the cases will never actually be tested before a jury.

The “victim” lending company coached your "poster boy" broker on how to prepare loan docs, and that broker was convicted for following its instructions.

The "victim" lending company admitted forging thousands of underwriting documents to fast-track loans for packaging and securitization.

The FBI’s investigation report included references to interviews with lending company employees who admitted coaching my broker (and presumably other brokers it was dealing with) on ways to skirt the lender’s own seasoning policies.

Yet Bill clings to the absurd fiction commission-earning brokers brought down the economy.

Prosecutors plausibly threatened the broker with 30 years in prison in order to leverage a plea deal resulting in home-detention and probation. That’s a breathtakingly powerful lever the government wields by any honest reckoning.

Yet to Bill, this all is nonetheless a story of sleaze-ball mortgage brokers, aggrieved lending companies and heroic authorities riding to the rescue … not raw, reckless, unbridled government power being misused to demonize and destroy ordinary citizens.

Posted by: John K | Nov 23, 2009 7:28:37 PM

Soronel --

Thank you.

Posted by: Bill Otis | Nov 23, 2009 9:01:09 PM

John K --

Two things stand out in your response. First, you do not dispute a single specific statement of fact I made. Second, you continue to rely exclusively on unnamed sources who are either the defendant or someone allied with him. At no point do you claim even to have talked to anyone on the other side. If you did, you don't breathe a word of their version of events.

I can't believe that you would dispute this fundamental proposition: the defendant's punishment should depend principally on the defendant's behavior. But, as Soronel points out, your ONLY focus is on the agents, the prosecutors, the defendant's company, the institutions that dealt with the defendant's company, and various "coaches."

In the story of the defendant's crime and punishment, the only thing we don't hear about is the defendant.

Does this strike you as a little odd?

It's normally my practice to take posts line-by-line, but that would drag things out too much for this one story. I will, however, address a few of your comments:

"The 'victim' lending company coached your 'poster boy' broker on how to prepare loan docs, and that broker was convicted for following its instructions."

My poster boy (actually, your poster boy -- I want nothing to do with him) was not a ten year-old on his Little League team who had to do what the coach said. He was a well-educated adult in a sophisticated and lucrative business. He was happy to keep the probably substantial income his dishonesty generated (which you continue to decline to divulge). But somehow, while tooling around town in the Mercedes (or whatever) he got by running this scam, he really didn't have a thing to do with it!

"The 'victim' lending company admitted forging thousands of underwriting documents to fast-track loans for packaging and securitization."

So your poster boy, having chosen to work closely with a firm he knew was even more dishonest than he was, thereby obtains absolution! Amazing!

"Yet Bill clings to the absurd fiction commission-earning brokers brought down the economy."

I "cling" to the fact, which I suspect everyone here except you knows, that exactly the sort of crookedness your broker friend practiced was at the heart of the housing and financial crisis. He was basically passing along risky mortgages (taking his fat slice as they moved along his desk), knowing, and fraudulently failing to disclose, that the applicants were unlikely to be able to make the payments.

He thought he would walk away and that someone else, or a few million someone else's, would be left holding the bag. For the most part he was correct, but, thank goodness, at least SOMEONE in the government thought to bring him to book.

"Prosecutors plausibly threatened the broker with 30 years in prison..."

Question: Why was it plausible? Answer: Because the broker did these fraudulent mortgage applications AGAIN AND AGAIN AND AGAIN, enriching himself every single time.

"...in order to leverage a plea deal resulting in home-detention and probation."

The thousands of investors, employees, retirees, and pensioners who lost their life savings as a result of your broker's conduct, and the conduct of others just like him, would be overjoyed to get home detention and probation. But that is not their lot. Their lot is to be 70 years old and to go back to work flippin' burgers at McDonalds, all because your broker friend "needed" some extra dough for his country club dues.

"That’s a breathtakingly powerful lever the government wields by any honest reckoning."

For breathtaking dishonesty of the scope that produced the banking crisis, one would HOPE the government has a powerful lever. But that's not the main point. The main point is that it is the broker WHO CREATED THE WEAPON BY HIS OWN CHRONIC CHEATING. So if you have a problem with the weapon, take it up with him.

Have you?

Posted by: Bill Otis | Nov 23, 2009 10:34:28 PM

Soronel (and Bill)--

I'll assume you actually read the initial post and that I just did a poor job of stating my case.

That said, it does appear Bill's prejudices kicked into overdrive with the realization a mortgage broker was involved. And that's by no means surprising given the time, energy and resources his Justice Department devoted to demonizing lowly mortgage brokers as the scourge of the economy.

Anyway, my point wasn't that the broker shouldn't have been prosecuted because other co-defendants weren't. Happily, a story on 1A in today's Times clearly states more clearly the point I'd intended to make. Paraphrased from the article, it is this:

There's a growing consensus among conservative, libertarian and business groups that "the criminal justice system is an aspect of big government that must be contained."

It marks "a sharp break with tough-on-crime policies associated with the Republican Party since the Nixon administration."

"Edwin Meese III, who was known as a fervent supporter of law and order as attorney general in the Reagan administration, now spends much of his time criticizing what he calls the astounding number and vagueness of federal criminal laws."

Meese described it as "an out of control justice system" and added, "Our tradition has always been to construe criminal laws narrowly to protect people from the power of the state."

The Heritage Foundation notes "there are more than 4,400 criminal offenses in the federal code, many of them lacking a requirement that prosecutors prove traditional kinds of criminal intent."

"It's a violation of federal law to give a false weather report," Meese said. "People get put in jail for importing lobsters."

The U.S. Chamber of Commerce wrote a brief noting the federal law often used to prosecute corporate execs and politicians is "both unintelligible and used to target a staggeringly broad swath of behavior."

The article mentioned Silverglate's book, "Three Felonies a Day; How the Feds Target the Innocent," which argues federal law is so comprehensive and vague that all Americans violate it every day, "meaning prosecutors can indict anyone at all."

In this context, Bill and Soronel, I'd ask you to re-read my initial post. Because this is exactly what I was trying to say.

But for the vague, sweeping, unintelligible RICO laws (purportedly concocted to neutralize dream-team lawyers representing wealthy mob bosses and drug kingpins), the broker in my story would have been safe from an overreaching government crusade like the one that ruined his life.

Bill obviously sees things differently. But in my world, struggling business people "cut corners" and "work gray areas" everyday primarily in order to simply remain in business. The ones who request and follow their attorney's advice ought to be left alone absent clear evidence of criminal intent; the authorities should focus their hulking, scatter-gun resources on those who don't.

Posted by: John K | Nov 24, 2009 11:01:51 AM

John K,

While I would agree that there are plenty of areas where the feds have over-criminalized daily life I do not see this as such an area. It wouldn't even surprise me if the forms the broker filled out informed him that material non-disclosure is in fact a crime.

I also do not necessarily agree that we have too many people in prison. As I have said before the U.S. is both more tolerant in many ways of the behavior that will be accepted as well as far more punitive when those boundaries are crossed. Crime control, preention and punishment is one of the few areas that I believe government action is legitimate.

I would personally have no problem with your mortgage broker facing execution rather than a few months home confinement and a few years probation. Unfortunately the courts have removed that possibility.

You also fail to state what your point actually is if it is not that the broker should not have been prosecuted because his compatriots were let off.

Posted by: Soronel Haetir | Nov 24, 2009 12:43:16 PM

John K,

I missed your comment about business owners. I am one, I own a retail liquor store and do not cut any corners or allow my employees to do so. It is quite easy to accomplish, you just have to go into business with a non-cheating outlook. If you try to cheat you deserve having government crawl down your throat.

Posted by: Soronel Haetir | Nov 24, 2009 12:46:53 PM


Execution for a regulatory infraction such as leaving a blank line on a loan app? That's harsh.

A final question (because it's obvious we apparently aren't going to agree on how eager the government should be to jump down citizens' throats), since it was the lending company that directed the independent broker to leave lines blank, exactly whom did the broker "cheat"?

You'd have a stronger argument (for a fine or misdemeanor charge, not execution) if there was anything to suggest the lending company had been victimized in any way (other than the government's dubious assertion, of course).

As it is, you have the broker on death row for complying with the victim's wishes.

Posted by: John K | Nov 24, 2009 1:47:06 PM

John K --

Just one short word for now. While it is true, as you say, that some conservatives and libertarians have come to have serious doubts about modern over-criminalization and strict liability regulatory offenses, your mortgage broker's crime is absolutely classic, heartland stuff. It would have been, and was, a crime 100 years ago. Indeed, I strongly suspect it was a crime since lending began.

Lenders have to know how they're going to get paid back. They therefore have to know the borrower's pre-existing debts and liabilities. When the mortgage broker knowingly and intentionally fails to disclose these things, that is flat-out fraud, and would have been at any time in our country's history.

P.S. I fully agree with Soronel that being a success in business does NOT require cheating or cutting corners. I saw my father rise high on the economic ladder, not by cutting corners, but by working day and night.

Posted by: Bill Otis | Nov 24, 2009 6:21:31 PM


Your vivid imagination in conjuring up the version of the story you accused me of omitting is downright scary.

I haven't seen a such a convulsive eruption at the mention of trigger words ("mortgage broker") since the old "Niagara Falls" (a.k.a. "Slooowly I Turned") routine made famous by Abbott and Costello.

I'm hoping you were merely too busy or distracted to carefully read the original post before tearing into it. Because the sobering alternative would be a sort of oblivious, impervious rejection of unfriendly facts that would be terrifying in a person who once had the power to railroad citizens into prison.

Posted by: John K | Nov 25, 2009 12:37:00 PM

John K --

OK, let's go for specific facts, remembering that the basic question you posed is whether the system was too harsh with your broker friend in light of (what you say was) his relatively minor role in these fraudulent mortgages.

1. What was the broker's income during the relevant period?

2. Was he, as part of his sentence, required to forfeit any of that? If so, how much?

3. How much did he make from each mortgage he passed along while knowingly omitting the required information about the borrower's liabilities?

4. Was there a REQUIREMENT that he take the "coach's" advice that his concealment was acceptable, or could he have decided to be more honest and forthcoming?

5. If there were such a requirement, would it supersede the statutory requirement that he list the borrower's liabilities?

6. Have you talked to, or in any other way made a serious effort to obtain, the other side's version of events? Or are your (still anonymous) sources all on one side?

If you think I'm imagining things, here's your chance to set the record straight.

P.S. I do not disagree with you that the ostensible victims here -- the banks with which your man was dealing -- were also crooked, perhaps even more crooked than he. But the ostensible victims were not the real victims. The real victims were the stockholders of these banks (who saw the value of their portfolios shredded), the employees (thousands of whom got laid off with the ensuing bank failures, now numbering more than 100), and retirees whose previous income security simply vanished.

Why should those people suffer because your guy wanted to, and did, make it hand over fist by sending along in the pipeline mortgages whose risks he knowingly concealed?

Posted by: Bill Otis | Nov 25, 2009 2:19:40 PM

Two-level utilitarianism states that one should normally use 'intuitive' moral thinking, in the form of rule utilitarianism, because it usually maximizes happiness. However there are some times when we must ascend to a higher 'critical' level of reflection in order to decide what to do, and must think as an act utilitarian would. Richard Hare supported this theory with his concept of the Archangel, which holds that if we were all 'archangels' we could be act utilitarians all the time as we would be able to perfectly predict consequences. However we are closer to 'proles' in that we are frequently biased and unable to foresee all possible consequence of our actions, and thus we require moral guidelines. When these principles clash we must attempt to think like an archangel in order to choose the right course of action.

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