Senator Elizabeth Warren (D-Massachusetts) released a report titled Rigged Justice: How Weak Enforcement Lets Corporate Offenders Off Easy.
The report, the first in an annual series on enforcement, highlights 20 of the most egregious civil and criminal cases during the past year in which federal settlements failed to require meaningful accountability to deter future wrongdoing and to protect taxpayers and families.
“Much of the public and media attention on Washington focuses on enacting laws,” the report states. “And strong laws are important – prosecutors must have the statutory tools they need to hold corporate criminals accountable. But putting a law on the books is only the first step. The second, and equally important, step is enforcing that law. A law that is not enforced — or weakly enforced — may as well not even be a law at all.”
“When government regulators and prosecutors fail to pursue big corporations or their executives who violate the law, or when the government lets them off with a slap on the wrist, corporate criminals have free rein to operate outside the law. They can game the system, cheat families, rip off taxpayers, and even take actions that result in the death of innocent victims-all with no serious consequences.”
“Under the current approach to enforcement, corporate criminals routinely escape meaningful prosecution for their misconduct,” the report finds. “This is so despite the fact that the law is unambiguous: if a corporation has violated the law, individuals within the corporation must also have violated the law. If the corporation is subject to charges of wrongdoing, so are those in the corporation who planned, authorized or took the actions. But even in cases of flagrant corporate law breaking, federal law enforcement agencies – and particularly the Department of Justice – rarely seek prosecution of individuals. In fact, federal agencies rarely pursue convictions of either large corporations or their executives in a court of law. Instead, they agree to criminal and civil settlements with corporations that rarely require any admission of wrongdoing and they let the executives go free without any individual accountability.”
The report singled out the Securities and Exchange Commission (SEC) as “particularly feeble, often failing to use the full range of its enforcement toolbox.”
“Not only does the agency fail to demand accountability, the SEC frequently uses its prosecutorial discretion to grant waivers to big companies so that those companies can continue to enjoy special privileges despite often-repeated misconduct that legally disqualifies them from receiving such benefits. Lax enforcement at other agencies, such as the Occupational Health and Safety Administration (OSHA), stems primarily from a lack of important legal tools and persistent underfunding by Congress that often turn the legal rules into little more than suggestions that companies can freely ignore.”
The report found that “the contrast between the treatment of highly paid executives and everyone else couldn’t be sharper.”
“The U.S. has a larger prison population than any nation in the world. People are locked up for long stretches for crimes that involve thousands — or even hundreds — of dollars. Even the settlement process is different. For most people accused of a crime, prosecutors may be willing to plead out the cases, but they typically require admission of guilt and, if the crime involves more than a trivial amount of money, time in jail. Various three-strikes rules frequently put people away for life for non-violent crimes involving modest amounts of money. Politicians routinely get elected promising to be ‘tough on crime,’ and both federal and state governments devote immense resources to put and keep criminals in prison.”
The twenty cases highlighted in Rigged Justice illustrate problematic enforcement patterns by federal agencies across a range of areas, from financial crimes to student loan rip-offs to auto safety violations to environmental disasters.
In many of the cases described in the report, corporations reached settlements with the federal government that required no admission of guilt and held no individual executives accountable.
The cases include Standard & Poor’s, The Cartel — Citigroup, JP Morgan Chase, Barclays, UBS, and Royal Bank of Scotland, Deutsche Bank, General Motors Ignition Switch, Honda Airbag, Graco Children’s Products, Dupont Methyl Mercaptan, ExxonMobil Pegasus Pipeline Spill, Massey Energy Upper Big Branch, BP Deepwater Horizon, and Novartis false claims.