Despite Economic Debacle, Criminal Cases are Rare and Hard to Prove
As the fallout continues from the biggest financial crisis in 80 years, there has been exactly one major related criminal conviction–for Bernard Madoff’s stupendous Ponzi scheme, reports the Wall Street Journal (sub. req.).
But other well-known figures in the debacle have, so far, escaped severe penalties for deliberate fraud, the newspaper recounts, as federal agencies such as the Securities and Exchange Commission put a spotlight on discrepancies between private knowledge and public statements of corporate banking leaders rather than clearcut crime.
Is that due to a lack of wrongdoing or an unwillingness to prosecute? The former, suggests the article, which focuses on the Justice Department’s decision in May not to pursue Joseph Cassano criminally over his work in the derivatives unit of American International Group, blamed in large part for a $182 billion bailout of the insurance company.
In meetings with Cassano’s lawyers, prosecutors found there was evidence suggesting that he had, indeed, disclosed accounting changes that resulted in drastic reduction of losses, the Journal reports. Plus, the complexity of the financial transactions at issue makes such cases difficult to prove.
“While practices may have been negligent, it may not be as easy to prove they were illegal,” says attorney Ellen Brotman of Montgomery McCracken.
Related coverage:
ABAJournal.com: “As New Panel Probes Financial Crisis, Why Is Perp Walk Seldom Seen?”
ABAJournal.com: “Ex-Bear Stearns Hedge Fund Execs Acquitted Today on All Charges”
