In federal justice eye, corporations outrank people
Wake up and good morning. Quick quiz: When it comes to facing the prosecutorial wrath of the feds, which would you rather be -- a person or a corporation? The answer is clearly a corporation. Just ask Bernie Madoff (now in jail with a 150-year sentence) versus firms like Beazer Homes or Tampa's Wellcare Health Plans (rapped on the knuckles but not prosecuted for wrongdoing). (AP photo: A bystander holds a sign outside Madoff’s New York residence before Madoff was found guilty.)
Much has changed at the U.S. Justice Department since the Obama administration took charge this year. But one controversial tactic in corporate-crime cases has not: the use of settlements that allow corporations to avoid prosecution for wrongdoing. A report by the law firm Gibson, Dunn & Crutcher finds the Justice Department has entered into 10 of these agreements at the mid-point of 2009, a pace slightly ahead of 2008, when the department entered into 18 agreements over the whole year. Read the details at this Dow Jones wire story.
The story says these so-called "deferred" or "non-prosecution" agreements allow a corporation typically to pay a fine and agree to take a number of steps to remedy its wrongdoing. In exchange, the government promise not to prosecute. There are some notable agreements this year:
* Swiss banking/investment frim UBS AG admitted to helping wealthy Americans evade taxes. Read more from AP here.
* Homebuilder Beazer Homes USA Inc. admitted to mortgage fraud and securities fraud violations, the first deferred prosecution agreement tied to the mortgage meltdown. New York Times business columnist Floyd Norris in a recent piece is critical of the Justice Department’s lenient treatment of Beazer. While Beazer paid a $15 million penalty and made concessions in order to avoid criminal prosecution, the company's CEO, COO and members of the board were allowed to keep their jobs. That sends the wrong message, writes Norris:
“If a boss can preserve his deniability about crimes committed by his company — perhaps by showing little curiosity about just how the profits are being earned when he is taking in millions from cashing in stock options — then he can escape being held accountable if the crimes are eventually uncovered.”
* Tampa's own Wellcare is a final example. A Justice Department settlement required the company to post copies of the deferred prosecution agreement and the federal charges prominently on Wellcare's Web site until the agreement expires. The deal, announced in May, resolved charges that the company defrauded Florida's Medicaid and Healthy Kids programs. Here's the copy of the deferred prosecution agreement on Wellcare's Web site, as well as an accompanying consent agreement resolving an SEC investigation.
Hey, at this rate, if Bernie Madoff had been a corporation, he may very well have remained in business.
-- Robert Trigaux, Times Business Columnist