White-collar crimes have a long history in the American criminal justice system. Big cases have been tried and prosecuted, some of which have made history. One of the most popular white-collar criminals in American history is Bernie Madoff, who masterminded the biggest investment fraud in the United States. The proceedings of his crimes topped $65 billion, which saw him sentenced to 150 years in prison after pleading guilty in 2009 (Steinberg & Cohn, 2021). Madoff has defrauded over 40000 people in 125 countries in over 40 years, starting in the 1970s. Madoff was arrested on December 11, 2008, after he was reported by his two sons (Steinberg & Cohn, 2021). The severity of the sentence given to Madoff reflects how the American courts viewed his crimes and the seriousness with which white-collar crimes are approached. However, this essay argued that Madoff’s case is not representative of all white-collar crimes considering that there are massive disparities between the occurrence of the crime and their reporting and prosecution.
To support the argument that most white-collar crimes go undetected and/or unreported, the case of Bernie Madoff can be used. In other words, Madoff’s crimes spanned four decades until his sons reported him. The question that arises is what would have happened if he had not let his children know about his crimes and if the sons decided not to report him. In such a scenario, it can be argued that Madoff would have continued with his scheme for many more years, probably until his death in 2021. Alternatively, the financial crisis in 2008 could have brought about his downfall, especially since many observers believe that his corruption and fraud led to the financial meltdown of 2008 (Bilyeau, 2017). Even though this is only speculation, the fact that Madoff committed crimes undetected or unreported for about forty years is evidence that there is a possibility of more similar crimes taking place undetected and unreported.
The disparities in reporting and prosecution of white-collar crimes have become a topic of interest among scholars. The best term that can describe the scenario is “tip of the iceberg” as used by Gottschalk and Gunnesdal (2018). These scholars argue that more white-collar crimes in the shadow economy never get reported, investigated, or prosecuted compared to social security fraud. Therefore, the phrase “tip of the iceberg” used seems fair and valid. In this case, Bernie Madoff is only one of the few known white-collar criminals who have been convicted. The size of their schemes of perhaps the most interesting aspect of their cases. However, many schemes are often smaller in scale, which might be a reason for non-detection. It is important to acknowledge that disparities are a global phenomenon. According to Gottschalk and Gunnesdal (2018), Norway recorded an average of 58 white-collar prosecutions between 2009 and 2015. These figures are considered smaller figures compared to the actual size of white-collar crimes committed in the country, similar to what happens in the United States.
Statistics can also be essential in supporting the argument that the rate of crimes is way higher than the rate of prosecutions. Some studies have revealed that the detection rate of white-collar crimes is less than 1 of every 12 offenders in such countries as Norway (Gottschalk, 2021). In the United States, statistics indicate that the federal Bureau of Investigations (FBI) investigates an estimated 42% of all reported cases of white-collar crimes. Other authorities involved in the investigation and reporting include the IRS, Postal Service, and SecServ, which combined investigate and prosecute 10% of the reported cases (Kentic, 2021). Overall, it can be argued that the success rate of the FBI and the rest of the authorities is inadequate for them to become an effective deterrent to white-collar crimes. The rationale is that most white-collar crimes are committed by high-ranking officials and wealthy businesspeople, who are rarely investigated unless major scandals hit the national news headlines. Some corporate departments are difficult to investigate, especially accounting, where grey areas in rules can be exploited to facilitate fraud and theft.
Several reasons why white-collar crimes are hardly investigated have been suggested, and the main one is that they are harder to detect. In many cases, white-collar criminals are older and better-educated individuals, whereas white males record a higher percentage than the federal prison population (Volkov, 2018). Bernie Madoff’s crimes were committed over four decades, which further illustrates how difficult it is to detect. Additionally, the reputation and respect that Madoff garnered as one of the most influential American investors meant that everyone believed and trusted him. In this case, hardly any authority could feel the need to investigate him, especially when there is no probable cause for doing so. The thousands of investors that lost their money to Madoff’s scheme were all attracted by his profile. Detecting crimes means that the responsible law enforcers must receive reports or observe other signs of crimes being committed. Without these incentives, a white-collar criminal who has masterfully disguised his or her operations will remain undetected for decades.
Another rationalization for the low detection, reporting, and prosecution rates is that the systems often protect white-collar criminals. White-collar and elite criminals tend to benefit from institutionalized non-enforcement practices, legal representation, and regulatory policies that are often not available to street criminals (Bonn, 2017). As mentioned earlier, high-ranking members of society often occupy the status of power, respect, and trust, which means that no regulatory authority often bothers monitoring their practices. Additionally, the rules in place and the fact that the elite can afford legal representation make it hard to achieve the desired outcomes in investigation and prosecution. Arguably, the FBI’s 42% investigation and prosecution rate results from the system barriers that make it impossible for the agency to gather the necessary evidence on certain individuals (Bonn, 2017). The result is that the FBI has to drop most of the cases since the alternatives available include costly prolonged investigations and such unconstitutional means as surveillance.
Other aspects of white-collar crimes worth exploring include the recidivism rates and procedural difficulties in investigations and prosecution. According to Bilyeau (2017), the high rates of recidivism could understate the actual rates of white crimes. The rationale is that when sentenced criminals are free and go back to the crimes, their new schemes could be perceived either as new cases or continuations of the previous. Additionally, the high rates of recidivism are evidence of the high incentives for white-collar crimes. The smaller-scale crimes do not often carry the same sentencing severity as that of Madoff, which means that only a few years are served in jail. Most of these cases do not often make headlines, which means that most of them go unnoticed. Regardless, the gains in white-collar crimes and the low rates of prosecution make it difficult for the government to handle white-collar crimes.
The procedural difficulties may arise from the nature of white-collar crimes. Bilyeau (2017) explains that detecting most crimes involves conducting a financial analysis of records and other regulatory schemes. Therefore, it becomes apparent that fraud could occur in a company without the stakeholders’ knowledge until financial records are analyzed or audited to reveal anomalies that hint at possible crimes. Bernie Madoff’s schemes involved using funds from new investors to pay older investors. In this case, it can be assumed that no one analyzed financial records to reveal the nature of the crimes, which could explain why they went undetected for four decades. Additionally, the individuals involved in the analysis or audit could also be part of the scheme, which means that a fraudulent company can operate for years with bogus financial records that misrepresent the company’s financial health, legality, and prospects. Analysis of financial records requires skills and experts not possessed by ordinary citizens. Therefore, many stakeholders are likely to believe the well-presented documents and make their decisions based on them.
Even with the disparities, it is important to acknowledge that the American justice system has made considerable efforts in the fight against white-collar crimes. Between the 1980s and 1990s, significant changes in criminal sentencing were made to reduce sentencing disparities (Galvin & Simpson, 2020). The changes were mostly in the form of guidelines for federal criminal sentencing, which made it possible to increase the severity of sentences for certain crimes, especially white-collar crimes. This can be used as evidence that the United States acknowledges the extent of damage to people’s lives that can be caused by these crimes. The sentence given to Madoff is an example of how severe sentences can be. According to Volkov (2018), the judge who sentenced Madoff could have offered a lesser sentence without changing the fact that Madoff would die in incarceration. However, the judge cited the need to send a message to other criminals. Therefore, it can be argued that the only barrier remaining is the detection of these crimes, considering that the courts are willing to play their part in the fight against white-collar crimes.
In conclusion, it has been expressed that white-collar crimes are a major problem in the country, mostly since only a few of the cases are investigated and prosecuted. Additionally, the case of Bernie Madoff has been used to illustrate the extent to which crimes can go without detection. The rate of reporting is extremely low, and the case of Madoff does not accurately represent the commitment of the American justice system to handling white-collar crimes. However, this criticism also appreciates the efforts made and the desire of the courts to help in the fight against white-collar crimes using the guidelines developed in the last two decades of the 20th century. If all the law enforcement agencies can display the same dedication as the courts, the fight against white-collar crimes in the United States could be won and Madoff’s sentencing could become an effective deterrent.
References
Bilyeau, N. (2017). The real lessons of Bernie Madoff’s crimes. The Crime Report. Web.
Bonn, S. (2017). Why elite white-collar criminals are rarely punished.Psychology Today. Web.
Galvin, M., & Simpson, S. (2020). Prosecuting and sentencing white-collar crime in US Federal Courts: Revising the Yale findings. In M. Rorie, The Handbook of White-Collar Crime (pp. 381-397). John Wiley & Sons.
Gottschalk, P. (2021). Filling the gap in white-collar crime detection between government and governance: The role of investigative journalists and fraud examiners. Journal of White Collar and Corporate Crime, 2(1), 36-46. Web.
Gottschalk, P., & Gunnesdal, L. (2018). White-collar crime in the shadow economy: Lack of detection, investigation, and conviction compared to social security fraud. Palgrave MacMillan.
Kentic, J. (2021). 18 white-collar crime statistics you should know about. Modern gentlemen. Web.
Steinberg, M., & Cohn, S. (2021). Bernie Madoff, mastermind of the nation’s biggest investment fraud, dies at 82. CNBC. Web.
Volkov, M. (2018). White collar criminals and sending a message to deter misconduct. JD Supra. Web.