Tuesday, October 04, 2005

A Day in the Life of Corporate Criminals

Business As Usual-a day in the life of white collar crime...the only crime that pays

The Canadian brokerage arm of Toronto-Dominion Bank will pay $375,000 in fines and investigative costs after the firm failed to disclose commissions to clients. TD Waterhouse Canada will pay $250,000 to settle the allegations, the Ontario Securities Commission said yesterday in a statement. It will pay $125,000 for the cost of the probe. TD (TSX) fell 18 cents to $57.32. Bloomberg

Regulator calls for liquidation of Norbourg
MONTREAL -- There is $130-million unaccounted for at Norbourg Asset Management Inc. -- almost double the initial estimate -- and Quebec's financial regulator yesterday called for the liquidation of the asset management company. The watchdog's chief executive officer, Jean St-Gelais, announced that he is launching a form of class-action lawsuit on behalf of Norbourg's 9,200 unitholders.The Autorité des marchés financiers (AMF) said it's calling for the liquidation of Montreal-based Norbourg following the filing of a preliminary report from Ernst & Young, the company administrator since it was shut down in August. Norbourg's founder and controlling shareholder, Vincent Lacroix, was removed from his duties in August and his licence to act as an investment counsellor suspended amid allegations of fraud and embezzlement at the company. So far, Ernst & Young has uncovered $85-million of "irregular" transactions at Norbourg, of which $58-million have been traced to such items as acquisitions, withdrawals of funds and loans to company individuals, said
AMF executive vice-president Pierre Bernier.

Ravelston pleads not guilty to fraud chargesConrad Black's holding company Ravelston Corp. Ltd. has decided to end its legal wrangle with the U.S. Department of Justice by agreeing to enter a plea of not guilty to fraud charges in a Chicago court. Toronto-based Ravelston was put into receivership last April and in August the company was charged with seven counts of fraud in the United States, along with former Hollinger International Inc. executives David Radler and Mark Kipnis. The charges related to allegations the group orchestrated a $32-million (U.S.) fraud at Chicago-based Hollinger. Mr. Kipnis has pleaded not guilty. The charges against the company raised a myriad of legal issues for Ravelston's receiver, RSM Richter Inc., because the company has no operations in the U.S. and is operating under court protection in Ontario. The U.S. Attorney put pressure on the receiver to submit to the charges saying Ravelston would be a "fugitive of justice" if it failed to appear in court. Ravelston's move could be a boost to the U.S. Attorney's Office, which is still investigating Mr. Black and others at Hollinger. The company could now be forced to hand over hundreds of documents as part of the criminal court process. And, the receiver said, U.S. officials may also put pressure on Ravelston to settle the charges quickly. Mr. Radler, 63, pleaded guilty on Sept. 20 to one count of fraud under an agreement that calls for him to receive a reduced sentence. In return, he has agreed to co-operate fully with the criminal probe.
Conrad Black: The rise and fall of a media mogul

Crime does pay Crime does pay. At least it seems to pay as long as you steal from the federal government, or more specifically-- the taxpayers of Canada. Just ask Paul Coffin, the ad executive who pleaded guilty last week to 15 counts of fraud totalling $1.5 million of taxpayers money.

Former broker sentenced to 12 years CARLSBAD — Former stockbroker R. Gene Hornbeck was sentenced in district court Friday to 12 years in prison, to be followed by 12 years supervised probation. Hornbeck was convicted July 29 on counts of embezzlement more than $20,000, fraud more than $20,000, securities fraud and sale of unregistered securities

Questions over jail time for white-collar crimeRecent lengthy sentences for white-collar crimes have been seen, by some, as desperately needed deterrents after a deluge of corporate scandals. But the sentencing of Kozlowski, 58, comes at a time when a number of lawyers, including former prosecutors, are questioning whether such sentences are justified. Bernard Ebbers, the former chairman of WorldCom who was convicted of masterminding an $11 billion accounting fraud that bankrupted the company, was sentenced to 25 years in prison. Because Ebbers is 63, some have contended that the sentence amounts to a life term. Shortly before, John Rigas, the 80-year-old founder of Adelphia Communications, was sentenced to 15 years in prison for his role in looting and hiding debt, in a scandal that bankrupted the cable-television company. "You have to ask yourself whether the proof in these cases warrants such a sentence," said Otto Obermaier, a former U.S. prosecutor who worked on white-collar crimes from 1989 to 1993.

Does punishment fit the crime? Some say no

You bet it does. Especially in a country that has three strike law and the death penalty for the poor. And while a few high profile cases have made the news the majority don't get prosecuted, unlike the prosecutions of drug dealers, petty thieves, etc.

Report: White-Collar Prosecutions Slide The report found that while the information from the U.S. Attorneys showed the totals for white collar prosecutions had remained essentially unchanged from 2000 to 2003, the number of prosecutions declined about ten percent from 2003 to 2004. The report found that in 2003, the number of weapons prosecutions surpassed the number of white collar crime prosecutions.

White Collar Crime is not Victimless
Since the 1990s, tremendous growth of and involvement in the securities and commodities markets at the institutional, corporate, and private investor levels have led to great numbers of individuals involved in intentional corporate fraud and misconduct, particularly senior corporate executives. For example, the FBI is currently investigating over 189 major corporate frauds, 18 of which have losses over $1 billion. The erosion of public confidence in the management of public companies will, if left unchecked, have a negative impact on the stock markets and capital raising, which will in turn have a negative impact throughout the US economy.

Abort Every White Baby!Consider the fact that whites commit three times as many violent crimes as blacks every year, just in raw numbers. This is just for ordinary "street crimes" such as assault. The numbers become skewed out of this world when you consider "white-collar" crimes (typically, the collar isn't the only thing that's white). For instance, job-related accidents and illnesses claimed the lives of 70,000 Americans in 1992, a significant portion of which can be chalked up to white employers neglecting to comply with occupational health and safety laws. According to studies, up to 64,000 die every year due to pollution and other environmental hazards produced by industry. Another 21,700 die due to consumer product deaths, costing the nation $200 billion a year. Another $200 billion is lost annually due to white-collar embezzlement. These two statistics alone add up to over 26 times the amount of all the robberies and petty thefts committed every year combined! We should also not forget the ravages of the white-owned health care system and insurance industry. Around 18,000 adults are killed every year as a result of a lack of medical coverage. Over 25 thousand die as a result of unnecessary prescriptions and surgeries performed by mostly white doctors. All in all, corporate criminals take about ten times as many lives as street criminals. And I haven't even mentioned the white men who control the apparatus of state, which through war, sanctions, and other means kills hundreds of thousands, if not millions more. Over 100,000 civilians have died in Iraq alone, for example.

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