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March 10, 2017

More interesting new Quick Facts on fraud sentencing from the US Sentencing Commission

I noted in this post earlier this week that the US Sentencing Commission had released the first of a new series of Quick Facts covering federal fraud sentencing with a focus on health care fraud cases. (As the USSC explains, "Quick Facts" are publications that "give readers basic facts about a single area of federal crime in an easy-to-read, two-page format.")  I have now just noticed that the USSC released a number of other fraud-focused Quick Facts this week, and here are links to them:

Hard-core federal sentencing fans might make a parlor game of trying to guess which type of fraud has the most and which has the least sentences imposed within the calculated guideline ranges.

March 10, 2017 at 09:03 PM | Permalink


I played the game and I admit that I was partially wrong. Here is the data for those who care...

Government Benefit Fraud. Average length 15 mo. Median loss $64K
CC Fraud. 30 Months and $62K
Mortgage Fraud. 27 months and $1.2 million
Securities Fraud. 57 months and $3.4 million

Two interesting notes. (1) Government benefit fraud was the only fraud that had significant minority participation. All the rest are white (racial) crimes. (2) Mortgage fraud is a real outlier in that on average a mortgage fraudster only serves twice the sentence length of benefit fraud despite on average stealing 20X as much. This is very cost-benefit favorable for the criminal. The inverse is true for CC fraud where the fraudster is also serving twice that of benefit fraud while yet actually stealing sightly less on average.

Overall this data confirms my suspicions that when it comes to fraud there are diminishing returns..each additional dollar stolen is punished less harshly on a proportional basis.

Posted by: Daniel | Mar 11, 2017 1:12:06 PM

So I made a small spreadsheet to determine earnings per day in jail...

Benefit fraud: $142 or based upon an eight hour work day $18/hour.
CC $69 or $9/hour
Mortgage $1481 or $185/ hour
Securities $1988 or $249/hour

(I am assuming that all losses were earned by the fraduster which may not always be the case).

It is surprising given minimum wage laws in states just how poorly CC fraud pays. On the other hand it is perhaps more understandable why poor people commit benefit fraud...not many of them are likely to earn more the $18 an hour.

For course this is the imputed wage for people who get caught. Presumably not everyone gets caught. So there would need to be a risk calculation involved. But never let it be said that crime doesn't pay--it most certainly does. Whether it pays /well/ is a different question.

Posted by: Daniel | Mar 11, 2017 1:37:41 PM

CC fraud sentences are likely inflated by the 2-year mandatory minimum for aggravated ID theft. Also, I strongly suspect (but obviously it's hard to prove) that credit card fraud has a lower apprehension rate than the others, so it makes some sense that the punishment, if caught, is harsher.

Posted by: Jay | Mar 11, 2017 7:47:31 PM

Also I don't think your racial analysis is quite right. CC fraud has an even higher % of black defendants than benefits fraud. And the mortgage fraud population also seems disproportionately black, although not as much so.

Posted by: Jay | Mar 11, 2017 7:50:26 PM

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