America's Other Unseen Epidemic
We all know about the epidemic of gun violence in this country. The Brady Center to Prevent Gun Violence has a new campaign, “End Family Fire” that highlights the fact that eight children are killed or injured every day by guns kept in the home. And, despite the intense focus on it during the 2016 campaign, the corporate-inspired opioid crisis continues largely unabated. But the Trump administration has bizarrely exposed the apparent widespread epidemic of white-collar crime, especially brazen tax evasion among the wealthy in this country.
The trial of Paul Manafort is just one of the many items that appeared this week that forces on white-collar crime. In that trial, documents indicate that Paul Manafort evaded paying taxes on the nearly $60 million that he made from working in Ukraine. In addition, he also lied on his taxes about the foreign accounts he held in Cyprus, accounts from which he paid for his lavish lifestyle. In addition, Rick Gates admitted embezzling hundreds of thousands from Manafort, money he presumably did not pay taxes on either, as well as abetting Manafort in the tax avoidance scheme. In addition, they both conspired to falsify documents in order to obtain millions of dollars in bank loans.
In addition to Manafort and Gates, whose actions dominated the news, we also learned that Michael Cohen is now being investigated for tax fraud. Cohen reportedly under-reported hundreds of thousands of dollars he made from his taxi medallion business. Investigators were also looking into whether he also falsified documents in order to obtain other bank loans.
Yesterday, Republican Representative Chris Collins was arrested and charged with insider trading and lying to the FBI. Collins and his son tipped off owners of a pharmaceutical stock whose promising drug had just failed a crucial trial, allowing them to sell the shares before the stock collapsed. Collins was brazen about what he was doing, making one of the calls while on the White House lawn. In addition, Collins had flogged the stock to five other Republican members of the House. Two of those, Representatives Long and Mullin, along with Collins, were on the Health Subcommittee of the Energy and Commerce Committee that oversees the FDA. A third, the now disgraced Tom Price, was confirmed to the Cabinet position of head of the Health and Human Services agency. Together, those four were in a position to shape government policy that would effect the drug that the pharmaceutical company was developing. Unfortunately, everything went south when the drug failed its clinical trial and the stock plunged by 92%.
However, this week’s piece-de-resistance has to be the story in Forbes about Commerce Secretary Wilbur Ross’ lifelong grift. According to the article, Ross may have stolen up to $120 million over the course of his supposedly illustrious career on Wall Street. In 2016, the SEC, noted for its almost total lack of enforcement these days, fined Ross’ firm $2.3 million for skimming nearly $12 million from investors. In fact, Ross was such a scam artist that he was still charging fees on the original value of a fund that had become virtually worthless under his management.
Ross’ grift didn’t end when he joined the administration. He signed a sworn document that he had divested all his assets when he had not. One of the stocks he held on to increased in value by over $1 million dollars before he was forced to divest it. The European Parliament is investigating Ross for insider trader over the timing of the sale of his Bank of Ireland stock. Ross also keeps on popping up in the Mueller investigation with his connections to Russia. He failed to disclose his interest in shipping company owned by Putin’s son-in-law and he had a prominent role at the Bank of Cyprus, a notorious bank for Russian money-laundering and the place where Paul Manafort kept those offshore accounts in his own tax evasion scheme.
The remarkable thing about all the people mentioned above is that this is just the news from one week. More remarkable is that they all managed to fall into Trump’s orbit. But what is even more remarkable is the fact that their crimes would probably not have received such scrutiny if they had avoided the Trump campaign altogether. At best, many of them would have gotten away with tax or bank fraud entirely. Others would have probably just ended up paying slap-on-the-wrist fines and moving on.
But what is most remarkable is to think about all the other white collar crime that continues to go on simply because it happens outside the Trump orbit. It must be massive. In the decade after Enron and the collapse of Arthur Andersen, prosecutions of white collar crime dropped by nearly a third. In the interim, changes to the law have made it even harder to convict white collar crime, constantly focusing on intent, which is easy to conceal, at the expense of the result. Accordingly, prosecutors have shied away from such cases, become part of the so-called “chickenshit club” that won’t risk losing a case. And the collapse of Arthur Andersen has made regulators even more fearful about charging corporations with criminal conduct. Put it all together and you have an epidemic of white collar crime.
