White Collar Crime Abounds, Prosecution Lags and Priorities are Unclear

Long gone are the days when politicians could sweep their misconduct under the rug.  Regardless if that politician is a Central Valley California mayor, U.S. presidential candidate or any politician in-between. Just ask Stockton California Mayor Anthony Silva.

It’s no secret Silva has had long standing issues with the Stockton Police Department. Before his arrest late last week on charges that he supplied alcohol to summer camp counselors and videotaped a game strip poker in which at least one of the participants was reported to be 16-years old, news stories were circulating about a gun Silva reported stolen from his home being used in the murder of a 13-year old boy.

In October 2015, Mayor Silva was stopped by agents from the Federal Bureau of Investigation and U.S. Homeland Security while returning from China on a trade mission. Silva’s cell phone and laptop were seized. According to a report by ABC News, the contents of the cell phone were turned over to Amador County officials on July 26. Silva is charged with a felony violation of Penal Code section 632(a), eavesdropping as well as three misdemeanor charges relating to providing alcohol to people under 21 years of age.

Mayor Silva potentially has other legal problems to address. The mayor’s connection or lack thereof, to the death of Rayshawn Harris, is something Stockton Police would very much like to talk about with Silva. Harris was killed on Feb. 23, 2015. Silva reported the loss of the gun used in the killing Mar. 22, 2015, 27 days after the shooting, according to the Stockton Record. On Mar. 25, 2015, Silva reported to police that his home was robbed a second time, apparently on Mar. 24, 2015, and yet another gun, as well as a gun safe, were stolen from his home. Police made the connection between the mayor’s stolen gun and the weapon used to murder Harris more than a year later on June 9. Just days before Silva’s arrest in Amador County, Capitol Public Radio was reporting on Silva’s apparent refusal to speak with police about his stolen gun.

On the national platform, U.S. presidential candidate Hillary Clinton is no stranger to criminal accusations. People all over the country have been calling for her to be charged with any number of crimes in connection with her use of a personal email server when she was U.S. Secretary of State, including repeated chants of “Lock Her Up!” at the Republican National Convention and rallies for Donald Trump. Pundits and her political opponents have suggested the former secretary be charged with violations of everything from espionage, 18 USC 793 to misdemeanor violations of 18 USC 1924, which relate to the unauthorized removal and retention of classified documents and materials.

More Scrutiny, Less Prosecutions

The list of high profile defendants and people under investigation doesn’t end with Silva and Clinton. Think of former Central Intelligence Agency Director General David Petreaus who plead guilty to violating federal law earlier this year, ex-Virginia Governor Bob McDonnell whose conviction of Honest Services Fraud was overturned by the U. S. Supreme Court in June, and the six Michigan state water employees indicted in connection with the Flint water crisis.

Interestingly, perception of prosecutions of public officials might appear to be on the rise, but the statistics say otherwise. According to a report from Syracuse University, federal corruption prosecutions have hit a 20-year low. Such prosecutions are down more than 38 percent since 1995.  White collar crime prosecutions are down as well. With the exception of a slight uptick in 2008, in the wake of the financial crisis, white collar crime prosecutions have declined at roughly the same rate as political prosecutions. In the last five years white collar prosecutions have dropped 29 percent.  Even though there is a significant decrease in white collar and public corruption prosecutions, there has been a 15 percent increase in referrals to prosecutors. That’s right. The number of prosecutions continues to go down even though the crime rate appears to be going up.

While law makers don’t seem to have the political will to prosecute their own and their financial supporters, public outcry seems to be stepping in. 15 or 20 years ago, even when there were more white collar prosecutions, officials responsible for the water problems in Flint would likely not have been held accountable for their conduct. In those days before social media, Flint officials could have swept their conduct under the rug. Mainstream Americans didn’t have the access to the airwaves of today to get stories into the news and keep them in the public discourse.

Anthony Silva is a good example. His run-ins with police date back more than 10 years.  According to the Record, in 2005 police investigated claims that Silva recorded girls using the restroom and changing their clothes in his home. A 2012 police report accuses Silva of sexual battery by a 19-year-old woman. By all appearances, it was the frequent reports and tips from Stockton locals to the Stockton Police Department, as well the FBI, that finally brought about the arrest of Silva. Facebook and Twitter are both filled with comments about the mayor’s misdeeds over a number of years.

Deferred Prosecution Agreements

But, in an age where people have the power to publish and broadcast in their pockets, why are actual prosecutions going down? The increase of deferred prosecution agreements is one reason. Deferred prosecution agreements began more than 75 years ago as a way to address crime by juvenile offenders without saddling them with a permanent criminal record. Fast forward to modern times, and it’s a way for corporations and their executives to avoid criminal charges.

There are valid reasons in favor of deferred prosecution agreements. When federal prosecutors first adopted these agreements, now more than 20 years ago, the thought was that if an entire corporation was forced to pay a large fine and subject to monitoring and compliance for a period of years, it would do more to change corporate culture than the prosecution of a group of employees who broke the law.

Investigations and prosecutions of high level corporate employees are often extremely challenging from a law enforcement perspective. Unraveling which top level official ordered certain conduct can be difficult, even impossible, to pinpoint. The federal government can spend years and hundreds of thousands, even millions of dollars, and come up with nothing they can indict in these investigations. Trials are perilous for both the prosecution and the defense. Deferred prosecution agreements became a way for the government to avoid the risks and come away with something.

What deferred prosecutions have also done is allow corporations and their top executives to essentially “buy” their way out of trouble. In January 2015, U.S. Senator Elizabeth Warren’s office released a report entitled “Rigged Justice 2016 – How Weak Enforcement Lets Offenders Off Easy.” In the report, Warren details 20 cases from 2015 in which corporate offenders were largely allowed to buy their way out of trouble. The report came out shortly after Republicans in the House introduced legislation that would make it even more difficult for the government to obtain convictions in white collar prosecutions.

What does the future hold?

We won’t know the answer until November. November 8 to be precise. Hillary Clinton has made a number of campaign promises about “cleaning up” Wall Street and her plan to go beyond Dodd-Frank with new banking regulations. Her plan, released in July 2015, includes an extended statute of limitations, closing loopholes, targeting executives and prosecuting individuals instead of allowing corporations to enter into deferred prosecution agreements. While her opponent Donald Trump has claimed Clinton will be soft on white collar crime and continue Obama’s policies, he has not released any specifics about what he would or would not do to prosecute white collar or political crimes. Given the fact that Trump is who he is, it’s hard to envision him taking a tough on white collar crime approach.