Complexity of financial crimes makes crooks unconvictable

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Dewey & LeBoeuf case"


This is a good example of why “jury of one’s peers” is crucial. Except, how to find 12 honest financiers who understand the crime well enough but still have honor and integrity?


First you need to find some evidence that the DoJ is interested in prosecuting financial crimes. Under Holder, in the fallout from financial crisis, prosecutions were scarce in a time of what could be called a target-rich environment. Compare the response to the S&L crisis back in the 80s: Today’s DoJ has a much, much lower level of activity in this area. Compare also: Iceland, which has been locking up bankers left and right.


It surprised me to read that in today’s environment we couldn’t get a jury to convict a bankster. Who are these people?


Maybe we can learn from this. What if the rest of us had a half-dozen shell companies each? They can be created for as little as $200.


I think I may have related this story before… A few years ago a recent graduate in some form of financial studies explained to me the nature of devising financial instruments to escape regulation.

The point was to create an evolving series of modifications to the financial instrument and already captured regulatory system in such a way as to afford your customer (some corporation) taxation exemption. The instrument, if it was well made, could be designed to evolve over a number of years to escape further modifications to tax law.

His justification for this was that if the designers were smart enough, why should they be beholden to ineffectual tax law, even if that law was arbitrated in such a way as to encourage this sort of behaviour?

At the time, all I could think up in protest was that it was unjust but he basically just sneered at my ‘criticism’.

I kind of now wish I’d asked him if I was capable of killing him in such a complex fashion as to escape particular legal definitions of murder, would it be acceptable for me to do so?

Staircase wit.

Although I kind of expect he would have answered in the affirmative.
Nice guy. Psychopath.


Maybe we should have the prosecutors from Iceland over for a Show & Tell.

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“jury of peers”.

Random initial jury selection, then jury selection by the lawyers … no-one is tried by their peers. If a complex white-collar crime is committed, the jury SHOULD consist of people up to the task of understanding the crime (so an economic quant in an investment firm should have a jury comprised of economists, physicists, mathematicians, etc).

But in the US, a “jury of peers” is a jury of the lowest common denominator, adjusted by the lawyers.

A ‘Geordie Shore’ crime should be judged by Geordies: a ghetto drug possesion ctime should be judged by people from that ghetto. A financial crime should be judged by people capable of understanding the details/finances/maths behind the crime. That’s what ‘peers’ means.

I’ve worked as an expert witness in banking and there are several problems.

The first is that most corporate wrongdoing (like VW) involves many people, but the law requires that you prove that a specific person did a specific thing and knew that it was bad. It has to be that way else you’d prosecute people who genuinely weren’t to blame.

An error is not generally a criminal act.

Second, the prosecutions are driven by politics not any sort of desire to punish wrongdoers and so go for what they see as soft targets. Note how everyone who has faced prosecution is far down the food chain.

That’s because the politics of the prosecutors want ‘wins’ not justice because a failed attempt to get a big guy is not useful to their careers, but they see that bullying a low level droid into a confession is. A big banker can afford to defend against 200 charges (yes, they do try that), but that would bankrupt a small one.

Also many expert witnesses aren’t that good at explaining what they do to non-experts and has assumptions and an ethical base that is specific to their line of work. That’s not to say they are not valid, but they are different from random people like jurors. I work on IT systems aspects, my views on ‘right and wrong’ are in some cases quite different to the accountants on the case and wholly different to a retail worker who might be on the juror.

The time lag is so huge that putting together a case is really quite hard.

Also it is hard to create a narrative thread, partly because if you have the wrong sort of lawyers in charge, they just want to throw lots of dirt and hope some sticks.


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