Chapter 6: Conclusions and recommendations
In 2002, after a series of corporate scandals and financial frauds shocked the securities market, caused huge losses to investors, and outraged the public, Congress passed into law the Sarbanes-Oxley Act. Parts of Sarbanes-Oxley added new criminal penalties for various white-collar criminal offenses and increased the severity of penalties for, among others, securities fraud, mail and wire fraud, and conspiracy to commit securities fraud. At that time, the thinking of legislators, securities regulators, and law enforcement authorities was that 'enhanced' prison sentences, penalties, and fines would deter others from following in the footsteps of the likes of Bernie Ebbers (WorldCom's CEO), Jeff Skilling (Enron's COO), John Rigas (Adelphia's CEO), and Walter Forbes (Cendant's CEO). Yet, only seven years later, instead of the corporate securities frauds of Messrs. Ebbers, Skilling, Rigas, and Forbes, we now have Messrs. Bernie Madoff, Scott Rothstein, and Allen Stanford and their multi-billion dollar 'Ponzi' schemes; instead of the corporate financial scandals of the early 2000s, now at the end of the decade we have mortgage-lending fraud and related financial crimes. It is déjà vu all over again. Although we will never be able to stop white collar crime entirely, it is possible for us to alter the systemic and environmental factors that lead 'opportunists' and members of the 'go along' crowd to engage in deleterious behavior. Increased resources should be dedicated to investigating and prosecuting white collar crime in good economic times as well as bad.
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