White-Collar Crime Punishment

Too Much or Not Enough?

By Frank S. Perri, J.D., CFE, CPA


JanFeb-white-collar-crimeWhat factors should be considered in determining the length and terms of a sentence? Should a crime’s violent or non-violent classification carry the most weight? Frank S. Perri offers that focusing too much on a crime’s violent or non-violent nature can lead to a punishment too severe – or not severe enough – for the crime committed.

“I certainly knew it was nefarious, a little wormy, unethical, make no mistake about that … but criminal? Fraud?” - Jay Jones, convicted white-collar criminal,  as quoted in The New York Times Magazine 

Jay Jones lived the good life; unfortunately, he bought it fraudulently. As a result of his behavior, he left at least 4,000 people jobless when the debt collection business he helped co-found went bankrupt, according to a June 6, 2004, article in The New York Times Magazine.1 He pleaded guilty to conspiracy to defraud investors and was sentenced to five years in prison. He also owes about $1 billion in restitution to the victims of his fraud, according to the article. Was his sentence too light?

Consider the case of real estate attorney Chalana McFarland, who committed a myriad of fraudulent acts, including identity theft, illegal use of Social Security numbers, money laundering, and a mortgage scam that devastated lending institutions and families who bought homes, according to a U.S. Department of Justice press release.2 She was sentenced to 30 years in prison, even though she could have been sentenced to a life term and ordered to pay $12 million in restitution for the scheme that she controlled with the assistance of her co-conspirators, the press release said. Was her sentence too high?Although it’s reasonable to have a debate on what constitutes a proportionate and fair punishment to a fraud-based crime, anti-fraud professionals must be aware that the manner in which the debate on appropriate punishment is being framed can be misleading. One of the common arguments made by opponents advocating lenient sentences for convicted white-collar criminals is that their crimes are non-violent property crimes, and many are first-time offenders who don’t fit the typical image of a street criminal. In this article, we’ll address:

•The inherent dangers of imposing punishment based on the premise that fraud is a non-violent property crime

• Misperceptions surrounding the first-time offender argument in determining an appropriate punishment

• Why white-collar crime sentencing might have increased over the years


“I had no desire to live, no prospect of earning a living, no way to pay the bills.” – Retiree and Madoff fraud victim, as quoted in the Journal of the American Academy of Psychiatry and Law.

This quote exemplifies the voice of thousands recounting the personal and financial losses suffered when a trusted business advisor, professional, employee, business owner or other individual defrauds them. Psychiatrists Drs. Marilyn Price and Donna Norris wrote in their article in The Journal of the American Academy of Psychiatry and Law, “white-collar criminals commit crimes that have victims whose lives are significantly affected and, at times, destroyed by these acts.”3 However, there are academicians in law who downplay fraud’s underlying harm by removing the human element and labeling it a non-violent property crime. They have written extensively on the topic, advocating that white-collar criminals should receive more lenient sentences because of the crime’s non-violent distinction, according to law professor Ellen Podgor of Stetson University.4  

Yet, what’s misleading about their argument is the assumption that only violent criminals inflict harm that’s worthy of extensive punishment. In part, the harm that fraud victims incur is downplayed because the majority of the research on victimology has focused on conventional non-white-collar crimes.5  

Thus the degree of perceived harm suffered by victims of white-collar crimes is compared to the harms suffered by victims of non-white-collar crimes because they’re the largely accepted conventional construction of crimes in the public conscience.6 

White-collar crime is considered a special breed in the criminal justice system because there’s a long history of perceived leniency for these criminals; many erroneously believe that white-collar crimes have no victims.7 

Also, fraud offenses aren’t consistently included in crime victim surveys because criminologist might perceive that there are no visible victims, or the social harm is diluted among a number of people.8 Thus, fraud victims whose harm hasn’t been captured by surveys would naturally appear to be victimless when compared to victims of non-white-collar crimes.






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