Op-Ed: Another light sentence for Paul Manafort would be business as usual for U.S. financial crimes

For the second time in a week, Paul Manafort on Wednesday will face a judge for sentencing. Last Thursday, U.S. District Judge T.S. Ellis III decided President Trump’s former campaign manager deserved just 47 months in prison for defrauding banks and avoiding taxes, not the 19 to 25 years that federal guidelines called for. Now it’s U.S. District Judge Amy Berman Jackson’s turn, in a separate case in which Manafort pleaded guilty to conspiracy involving more bank and tax fraud and assorted similar crimes.

If Jackson hands out another comparatively light sentence, she’ll be right in line with the practices in most U.S. courtrooms. Corporate and financial criminals typically do not serve even one day in a prison cell.

For the record: An earlier version of this op ed did not make it clear that Dan Blankenship was convicted of a misdemeanor, not a felony.

Baggy pants and a barbecue in the frontyard might get you jail time if you live in a place like Ferguson, Mo.; but, if you’re a global bank such as HSBC, laundering money for a Mexican cartel implicated in thousands of murders (among other skulduggery) yields a fine that sounds high but is actually just the equivalent to four weeks of profits.

Being in the wrong place at the wrong time can get you stopped, frisked and arrested — as federal investigators said the Baltimore police did to about 250,000 mostly African American suspects from 2010 to 2015. However, engaging in systematic corporate fraud against millions of clients, as the Los Angeles Times discovered Wells Fargo did, results in corner office resignations, firing of low-level employees, and fines that were more than compensated for by the Trump administration’s tax cuts. No executive did any time.

About 2,000 people, according to the non-profit Sentencing Project, are serving life sentences in federal prison for buying or selling drugs on the street, and, if Trump has his way, we’d execute drug dealers. But if you are an executive at Purdue Pharma — the company that helped trigger the opioid crisis by misinforming doctors about the dangers of a drug that contributed to the death of about 145 people every day — you get probation and community service.

If you’ve done time for a felony, as about 5 million Americans have done, you are banned from voting in many states and you will face extraordinary obstacles in getting a job. But if you’re Don Blankenship, chief executive of Massey Energy Co., owner of a coal mine in West Virginia where an explosion killed 29 workers after the Department of Labor cited the company repeatedly for safety violations, you are convicted of a misdemeanor to violate federal mine regulations, you pay a fine and do one year in prison, and when you are released — still rich — you can and do run for the Senate.

This “double system” of justice, a term first used by W.E.B. Du Bois in 1903, is practically an American tradition.

In the 1930s and 1940s, the serious crime of embezzlement was rarely prosecuted because employers did not want bad publicity and prosecutors wanted to avoid the cost of a trial. Restitution replaced incarceration.

In the 1940s, the federal government punished antitrust violators with fines. “Most of the defendants,” said a Justice Department spokesman quoted in a 1944 sociological paper, “are not criminals in the usual sense. There is no inherent reason why antitrust enforcement requires branding them as such.”

In the 1960s, President Lyndon B. Johnson’s Crime Commission devoted only seven pages of its massive tome to corporate crime. “Where corporate defendants are involved,” explained the commission, “the only criminal sanction available is the fine.” It was business as usual a decade later when multibillion-dollar United Brands Co. was fined $15,000 for bribing the president of Honduras to reduce the export tax on Chiquita bananas.

A few powerful people have done time for economic crimes, including Michael Milken, “the junk bond king”; Martha Stewart, the television celebrity and entrepreneur; Jeff Skilling, the chief executive of Enron; and Bernie Madoff of Ponzi scheme infamy. In the 1980s, when hundreds of banks failed as a result of dubious real estate loans, the Justice Department prosecuted 800 individuals, including top bank executives; and in the 2000s, high-level corporate executives were prosecuted for financial crimes. Some went to prison; many didn’t.

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In economic cases, prosecutors tend to rely on “deferred prosecution agreements” that erase criminal charges if perpetrators apologize and pay a fine. And after 9/11, the Justice Department shifted considerable resources to investigations of terrorism, with the result that the number of prosecutions for corporate crime fell. By 2007, according to ProPublica reporter Jesse Eisinger, only 120 FBI agents were assigned to review more than 50,000 allegations of mortgage fraud.

After the 2008 recession, the worst financial crisis since the Great Depression, the federal government did not criminally prosecute a single major bank or high-level banker, although the crisis was fueled by predatory and fraudulent practices in the mortgage-lending industry. “If you do prosecute — if you do bring a criminal charge — it will have a negative impact on the national economy, perhaps even the world economy,” then-Atty. Gen. Eric H. Holder Jr. rationalized to Congress during Senate hearings in 2013.

“No one that I know of has ever contended that a big financial institution would collapse if one or more of its high-level executives were prosecuted,” wrote U.S. District Judge Jed Rakoff in the New York Review of Books. He is one of the few senior judges willing to speak out about the hypocrisy of a legal system that treats criminal corporate executives and economic wheeler-dealers as though they are minor first offenders with unblemished records.

Meanwhile, American prisons hold an estimated 2 million people doing time for relatively minor economic and drug-related crimes. Once they’ve “paid their debt to society,” they face another sentence, this time for life: As witnesses to and victims of the injustices of the double system.

Tony Platt is an affiliated scholar at the Center for the Study of Law and Society at UC Berkeley, and author of “Beyond These Walls: Rethinking Crime and Punishment in the United States.”

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