Legal News

White-Collar Crime: Have Feds Focused, or Lost Their Focus?

By Dan Slater

We’ll admit it: sometimes we have a hard time making heads or tails of tricky statistical arguments (we think the problem is compounded late on a Friday afternoon).

In any event, a study released yesterday has us scratching our heads. The study indicates that, even while investigative resources are on the rise, several federal law-enforcement agencies — such as the FBI and the IRS — are actually reducing the number of cases they refer for prosecution. (Here’s the WSJ article on the study.)

The study attributes much of the 2.4% drop in referrals, calculated from 1986 to the present, to four agencies: the FBI, Secret Service, IRS and the Postal Inspection Service. Incidentally, those are the four most responsible for white-collar investigations. The report said other agencies, as well as state and local authorities, are now generating a greater proportion of referrals.

So what does all this mean? Here’s some commentary from the pros:

• Leaving it to the states: “In our case, and I’m sure with the other agencies, we take our cases to state and local prosecutors as well as federal ones,” said a spokesman for the Postal Inspection Service. “If in fact the data are correct, that doesn’t mean there are fewer cases being investigated.”
• Complex cases mean fewer referrals: The threshold for taking cases to federal prosecutors has risen over the years, says a spokeman for the Secret Service. In addition, investigations are more sophisticated, complex and in some cases, international — all things that can lead to fewer referrals.
• Terrorism, and going after bigger fish: “Equating the agencies’ productivity with prosecution referrals is continued fundamental misunderstanding of how the FBI works in the post 9-11 world,” said a spokesman for the FBI. He said the agency’s focus is counterterrorism and intelligence, efforts that are less driven by prosecutions. On the corporate side, he added, “We’re doing fewer $5,000 and $10,000 Ponzi schemes. The cases we are doing” — like HealthSouth and Qwest — “require many more agents and resources. We’ve recovered not millions but billions of dollars in these white-collar fraud cases.”

Hey, LB’ers: we know this: when you take into account population growth in the last 20 years, the percentage drop in referrals is actually quite a bit more than 2.4%. What’s your take on why? And in any event, are federal authorities doing enough to combat corporate criminality? Is the fight against terrorism taking up too many resources?

Full post as published by Law Blog - WSJ.com on March 07, 2008 (boomark / email).