CRIME AND (VERY LITTLE) PUNISHMENT

With corporate crime finally starting to register on pollsters'
seismographs, official Washington is suddenly high on corporate punishment.
The Big House is all the rage, with politicians on both sides of the aisle
dancin' to the jailhouse rock.

A day after President Bush took Wall Street to the woodshed and proposed
doubling the maximum prison term for mail fraud and wire fraud, the Senate
did him one better, voting 97-0 to adopt stiff new criminal penalties for
securities fraud, document shredding and the filing of false financial reports.

"Somebody needs to go to jail," Senate Majority Leader Tom Daschle intoned
ominously. "We're going to shackle them and take them to jail," growled
House Majority Whip Tom DeLay, sounding like he couldn't wait to slap on
the handcuffs himself.

The new consensus along that other Axis of Evil, the one connecting
Washington and Wall Street, is that very publicly hauling a few corporate
crooks off to jail would be a very good thing for the market, for the
economy - and for our political leaders' reelection prospects.

Count me in with the law-and-order crowd. The question is, how many of
corporate America's new breed of robber barons will ever actually see the
inside of a jail cell? If the past is indeed prologue, the answer is very,
very few.

In the last 10 years, the Securities and Exchange Commission - which,
despite being the government's top corporate watchdog, doesn't have the
authority to toss even the worst Wall Street cheaters in jail - turned 609
of its most offensive offenders over to the Justice Department for
potential criminal prosecution. Of those, only 187 ended up facing criminal
charges. And of those, only 87 went to jail. Eighty-seven. In 10 years. And
most white-collar criminals land in one of those ritzy country club
prisons, where inmates play tennis and make collect calls to their brokers
all day.

So despite the PR value of pumping up maximum sentences for corporate
crimes, it's not going to make much of a dent in boardroom thievery since
so few of the perpetrators will ever face criminal prosecution. For a
corrupt corporate chieftain crunching the numbers, the odds will still
justify the crime.

And just why are most prosecutors so reluctant to take on these kinds of
cases, passing up more than half of the ones the SEC sends their way? Well,
for one thing, proving fraudulent intent is tricky business - and in
criminal cases, it has to be proven beyond a reasonable doubt. For another,
with rare exceptions, most prosecutors just don't have either the passion
for making corporate criminals pay or the mindset that these kinds of
crimes are worth the hassle of pursuing them. Too busy busting prostitutes
in New Orleans, perhaps?

Compare this tip-toeing on eggshells with the ardor with which our criminal
justice system pursues even the lowest-level drug offenders. In 2000 alone,
646,042 people were arrested in America for simple possession of marijuana.
And while the Drug Enforcement Administration has a budget of $1.8 billion,
even with the extra $100 million Bush wants to toss its way, the SEC will
have to make do with $513 million.

What's more, the average sentence for even the biggest white-collar crooks
is less than 36 months; nonviolent, first-time federal drug offenders are
sent away for over 64 months. So much for letting the punishment fit the crime.

The bitter truth is that, unlike the majority of nonviolent drug cases,
corporate malfeasance is not a victimless crime. Not with tens of thousands
of laid-off workers, $630 billion lost from corporate pension plans, and
more than $4 trillion in shareholder assets wiped out in the scandal-fueled
stock market swoon.

So when it comes to rooting out corrupt corporate kingpins, will the
president's new "financial crimes SWAT team" have the stomach for the
fight? Can we expect to see undercover "narc-accountants" infiltrating
what's left of the Big Five accounting firms? Middle of the night no-knock
raids on companies that restate their earnings by billions of dollars? Will
corporate cops get to emulate their drug-fighting counterparts and be
allowed to keep a percentage of the money they confiscate?

Here's the bottom line: Our political leaders' tough talk notwithstanding,
are we really serious about declaring war on corporate crime? Or are we
merely going to toss Martha Stewart in jail and move on?