Unpunished corporate crimes foments more corporate fraud

Since 2008 when the banks committed mortgage fraud which caused the financial crises we are still clawing out of, over 4,000 individuals have been charged with mortgage fraud. However, these people are lower level employees. None of the top executives in the financial institutions were criminally prosecuted. There were a couple of exceptions but the top people got off scot-free, so far.

In addition, even when the corporations have been charged by the Department of Justice, they avoided guilty pleas by paying fines and agreeing to some oversight programs. What’s just as bad is even when a company admits to wrongdoing the documents that end up on the public record contain very little descriptions of wrongdoing. It should be DOJ policy to release a Complaint including a detailed description of what the company did and who did it.

A clear example is Pfizer, the pharma giant which has settled a significant number of False Claims Act cases. In one case, it plead guilty and paid $2.3 billion including a criminal fine for paying kickbacks to doctors to prescribe an off label painkiller and antipsychotic drug. Despite this and the many cases against it, no senior exec has been charged or convicted.

Some argue that the settlements are a result of a lack of resources at the Department of Justice, or they say the practical difficulties in obtaining a conviction are too great. The resources issue may be a matter for Congress to consider. The difficulty in obtaining a conviction may be a cost of our nation doing business. The fact that a case is taken to jury has resounding effects in changing behavior whether the bell is rung or not. It takes will and gumption.

Jeffrey Newman represents whistleblowers