July 30th, 2012
(HigginsBlog) – Iran sentences 4 of 39 criminal bankers to death as America’s economy continues to be devastated by official US policy not to prosecute Wall Street fraud.
Ever since the Enron scandal the United State’s has made it official policy not to prosecute Wall Street criminals for various run of the mill financial fraud schemes.
Of course there are exceptions to the non-prosecute policy – such as in the case of Madoff where their entire scam is fraudulent – but for the run of the mill ‘legitimate’ Wall Street firm official policy is not to prosecute in order to limit the economic damage from the public revelations about the fraud.
In Iran, things are different – the do prosecute financial criminals and just announced that 4 of the biggest scammers have been sentenced to death.
Here in America, our economy continues to suffer as the public and investors from around the world now know that the game is rigged and if you get caught scamming people there are no real consequences – only fines for the corporations involved which only amount to the small percentage of the profits made by the fraud in the first place.
While some people are calling to ‘hang the criminal bankers’ perhaps lynchings and the death penalty go a little too far.
However one thing is certain – our economy will never recover until the criminals are prosecuted. The Great Depression and other crashes prior to the Great Depression (which the media likes to pretend never happened) was really due to the failure to prosecute financial fraud.
Today is no different and as long as the government continues to ‘massage economic statistics’ (a fraud within itself) our economy simply will not recover.
Perhaps we can learn something from the Iranians here….
Press TV reports:
Iran sentences 4 people involved in biggest bank scam to deathIran’s Judiciary spokesman says a Tehran court has sentenced to death four people convicted in the biggest embezzlement case in the country’s banking history.
“Of 39 defendants, whose charges were heard, the court’s judge has sentenced four to death and two others to life imprisonment. The remaining defendants received prison terms of 25 years, 20 years, 10 years, and less,” Gholam-Hossein Mohseni-Ejei was quoted by IRNA as saying on Monday.
The first court session in Iran’s biggest bank fraud case was held on February 18.
The defendants were charged with misappropriating a total of USD 2.6 billion of funds by using forged documents to obtain credit from banks to purchase state-owned companies.
According to the indictment, the owners of the Aria Investment Development Company, which is at the center of the controversy, had bribed bank managers to get loans and letters of credit. The company has more than 35 affiliates which are active in diverse business activities.
Seven state-owned and private Iranian banks are said to be involved in the fraud case.
Former CEO of Iran’s Melli Bank Mohammad Reza Khavari, who is one of the main suspects in the case, escaped justice after the scam was revealed.
Source: Press TV
Only in America:
Fraud caused the Great Depression and it has caused the current financial crisis. But fraud is not being prosecuted, and so it will occur again and again, and prevent a sustainable economic recovery.
Nobel prize winning economist George Akerlof has demonstrated that failure to punish white collar criminals – and instead bailing them out- creates incentives for more economic crimes and further destruction of the economy in the future. Indeed, William Black notes that we’ve known of this dynamic for “hundreds of years”.
Now mainstream journalists are starting to catch on.
Market Watch senior columnist Brett Arends writes:
No one has been punished. Executives like Dick Fuld at Lehman Brothers and Angelo Mozilo at Countrywide, along with many others, cashed out hundreds of millions of dollars before the ship crashed into the rocks. Predatory lenders and crooked mortgage lenders walked away with millions in ill-gotten gains. But they aren’t in jail. They aren’t even under criminal prosecution. They got away scot-free. As a general rule, the worse you behaved from 2000 to 2008, the better you’ve been treated. And so the next crowd will do it again. Guaranteed.
Gretchen Morgenson and Louise Story point outin the New York Times that:
As the financial storm brewed in the summer of 2008 … Federal prosecutors officially adopted new guidelines about charging corporations with crimes — a softer approach that, longtime white-collar lawyers and former federal prosecutors say, helps explain the dearth of criminal cases despite a raft of inquiries into the financial crisis.
Though little noticed outside legal circles, the guidelines were welcomed by firms representing banks. The Justice Department’s directive, involving a process known as deferred prosecutions, signaled “an important step away from the more aggressive prosecutorial practices seen in some cases under their predecessors,” Sullivan & Cromwell, a prominent Wall Street law firm, told clients in a memo that September.
“If you do not punish crimes, there’s really no reason they won’t happen again,” said Mary Ramirez, a professor at Washburn University School of Law and a former assistant United States attorney. “I worry and so do a lot of economists that we have created no disincentives for committing fraud or white-collar crime, in particular in the financial space.”
(This appears to be true on both sides of the Atlantic.)
And Frank Rich reports in a much-discussed piece in the New Yorker:
Source: Higgins Blog