White-collar perpetrators of fraud are a popular target of rage, with good reason. I have lost a substantial amount to fraud over the years, including some to Bernie Madoff – and I’m not even Jewish. It is therefore extremely satisfying to see such crooks enjoy the hospitality of the Department of Corrections.
The New York Times reports:
Nearly seven years after National Century Financial Enterprises collapsed in a $2.9 billion fraud, its founder, Lance K. Poulsen, was sentenced to 30 years in prison on Friday in one of the harshest white-collar punishments in history.
Poulsen targeted health-care:
Mr. Poulsen was convicted in October of leading a vast fraud as chief executive of National Century, a company based in Dublin, Ohio, that provided financing for hundreds of clinics, hospitals and other health care providers. The company’s fall in 2002 contributed to the bankruptcies of 275 health care facilities.
Mr. Poulsen is already in jail
Mr. Poulsen, 65, is already serving a 10-year sentence for trying to bribe the main witness against him in the case. His sentence will run concurrently with the sentence for witness tampering.
Judges listen to the voice of the people:
Mr. Marbley’s decision signals that federal judges could begin imposing harsher sentences for white-collar crime in response to the rise in public outrage over corporate fraud after the discovery of Bernard L. Madoff’s multibillion-dollar Ponzi scheme. The sentence for Mr. Poulsen exceeds the 25 years given to Bernard J. Ebbers, the former chief executive of WorldCom, and the 24 years given to Jeffrey K. Skilling, the former Enron chief.
Recently I chatted with Michael Timmis, the head of Prison Fellowship International. He said that poor criminal who knocks over the 7-11 for $250 gets 20 years. When this guy sees Madoff in his penthouse, he wonders whether our justice system has any justice in it. So it looks like a good idea to send the fraudsters to jail.
BUT
Jail cells are limited in number and a prisoner costs on the average $35,000 a year to maintain. The United States already has a prison population that dwarfs other advanced countries. Because of budget constraints in the current downturn, states are speeding up parole hearings and trying to keep down their jail populations.
As much as it pains me, I think that if the choice is between keeping a white-collar criminal in jail and a violent criminal in jail, I would opt for the violent criminal. The guy who knocked over the 7-11 probably used a gun; even Madoff never threatened to physically harm anyone.
White-collar crimes are treated as civil matters in Europe, which is generally laxer than the United States about crime (see the blog about Swensson below). Fraudsters should be stripped of every penny that have or might someday get, and reduced to absolute penury, but I am afraid that we may have to come up to some alternative to jail, unless we can discover some way of getting these fraudsters to put their talents to work and paying for their own keep while in prison. Perhaps they could work for Tim Geithner at the Department of the Treasury (see Springtime for Hitler).