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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Monday, February 13, 2012

Goldman Sachs and "Criminal Affirmance"

What happens after the Department of Justice and the President decide that no bank executives will be prosecuted or held responsible for their contribution to the financial crisis of 2008?

Mary K. Ramirez has written an unpublished paper called Criminal Affirmance: Going Beyond the Deterrence Paradigm to Examine the Social Meaning Expressed by Exercising Discretion to Decline Prosecution of Elite Crime. Below is an excerpt:

Criminal Affirmance: Going Beyond the Deterrence Paradigm to Examine the Social Meaning Expressed by Exercising Discretion to Decline Prosecution of Elite Crime

by Professor Mary Kreiner Ramirez - Washburn University School of Law

Recent financial scandals and the relative paucity of criminal prosecutions in response suggest a new reality in the criminal law system: some wrongful actors appear above the law and immune from criminal prosecution. As such, the criminal prosecutorial system affirms much of the wrongdoing giving rise to the crisis. This leaves the same elites undisturbed at the apex of the financial sector, and creates perverse incentives for any successors. Further, this undermines the legitimacy of the rule of law and encourages even more lawlessness among the entire population. These considerations transcend deterrence as well as retribution as a traditional basis for criminal punishment. Affirmance is far more costly and dangerous with respect to the crimes of powerful elites that control large organizations than can be accounted for under traditional nations of deterrence. Few limits are placed on a prosecutor’s discretionary decision about whom to prosecute, and many factors against prosecution are available, especially in resource intensive white collar crime prosecutions. This article asserts that prosecutors should not exercise that discretion without considering its potential affirmance of crime. (Page 3)

. . . .

from the Conclusion

Social meaning in law has evolved so certain individuals, and white collar fraudsters in particular, understand they face little risk of criminal punishment for acts that fall into the definition of criminality. When the criminal actors can move the question of exercising prosecutorial discretion to charge by highlighting the costs to society of punishing corporations or their leaders, or by characterizing the pursuit of justice as a political act of retribution rather than a reasoned decision to deter future conduct, the impact of such influence upon prosecutorial discretion can be obfuscated by the traditional factors deemed appropriate for consideration in exercising discretion. Allowing money or politics to influence discretionary charging decisions, whether real or perceived, conveys social meaning that undermines effective government, models bad behavior, and reinforces rewards creating a moral hazard for future wrongdoing.

Before prosecutors refrain from charging, they need to factor in the idea of “affirmance” in exercising prosecutorial discretion so that an offensive approach to such criminality is constructed and conveys a new social understanding for those in politically or financially powerful positions.265 Prosecutorial discretion is broad, but there is a need to compel the government to impose criminal punishment upon these law-breakers so that they are constrained by the law to the benefit of society because these laws and the enforcement of them have meaning. Moreover, failure to enforce some laws can undermine the confidence in all laws.266 Prosecutors must recognize the social compact formed by law abiding citizens who obey and respect the laws and expect nothing less of the rest of society.267

Affirmance of the crimes of the powerful means they retain the power to impose massive costs into the future through their continued control of massive firms, and the incentives facing others holding such power. A petty thief may steal again when not prosecuted, but only a bank CEO can engage in fraud that can crash the global financial system. Similarly, a petty thief that evades prosecution has zero impact on the rule of law, but a CEO that evades prosecution could tempt millions into skirting the law. Today, America flirts with financial and corporate elites that behave as if they are above the law,and a public that holds the legal system in contempt. As such, affirmance may lead to future economic lawlessness and catastrophes.268 (Pages 79-81)

Read the entire paper here


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