Is Wall Street a Gang? Part III
As the “Occupy Wall Street” movement continues all across the country it seems to me to be increasingly important to bring to the forefront the horrific crimes perpetrated by corporations and their representatives. The extent of their criminality was partly documented in the first two parts of this series. I say “partly” for a good reason: there are more examples and the examples go back more than a hundred years.
The extent of corporate crime was noted in a now classic study by Edwin Sutherland, which was published in 1949 under the title “White Collar Crime.” A relatively recent “uncut” version was published in 1985. The title is misleading for in this study, Sutherland actually focused on law violations by 70 corporations, rather than individual “white collar” individuals. What was truly significant was that he found a total of 980 specific violations, about one-third of which were restraint of trade. This list include virtually virtually every major American corporation.
About 30 years later Marshall Clinard and Peter Yeager published an updated version called “Corporate Crime,” which has recently been reprinted by Transaction Books. In this book Clinard and Yeager found that over a two year period more than 60 percent of the 582 largest corporations had at least one violation. Automobile, oil refining and drug companies accounted for about one-half of all violations. At about the same time a very detailed case-study appropriately titled Everything in Its Path: Destruction of Community in the Buffalo Creek Flood, focused on a mining company discovered that for several years it had used a nearby stream to dump waste material, which eventually piled up to produce a large dam with a lake behind it. The dam eventually collapsed during a rainstorm, resulting in the deaths of 125 people and, almost literally, wiping out an entire community. Most of the people who died had worked for the company.
Since this time more studies have been completed – enough to fill a couple of rows of a bookshelf! For instance, one of the best is Trusted Criminals by David Friedrichs, now in its fourth edition. There is also a collection of case studies edited by John and Leonard Minkes called Corporate and White Collar Crime. Then there is a book by Rosoff, Pontell and Tillman called Profit Without Honor: White Collar Crime and the Looting of America, now in its fourth edition. For a glance at both historical and contemporary examples there is White-Collar Crime: Classic and Contemporary Views edited by Gil Geis, Robert Meier and Lawrence M. Salinger.
These are merely a few samples of the research that has been done over the past half century which document cases that go back more than 100 years. One infamous example dating back to 1911 is the Triangle Shirt Factory fire which killed more than 100 workers, almost all women and young girls. Isaac Harris and Max Blanck, co-owners of the Triangle Shirtwaist Company, were indicted for manslaughter. The investigation revealed that the doors of the floor where the fire broke out was blocked by a locked door. The two owners were found not guilty. A subsequent lawsuit was settled for $75 for each life lost. For a complete account read this web site.
Then there was Enron and World.com, the BP Oil spill, the Exxon oil spill, plus all the mining disasters in the state of West Virginia (among other states), such as the one owned by Massey Energy. The 2010 disaster in the Upper Big Branch West Virginia – also owned by Massey Energy had been given 1,342 safety violations since 2005.
Who can forget the famous Keating Five case concerning the failed Lincoln Savings and Loan Company (Keating was Chairman of the company). More than 23,000 bondholders were defrauded and many elderly investors lost their life savings. The ultimate cost of the crisis is estimated to have totaled around $500 billion. The criminal case involved the so-called “Keating Five” that included Alan Cranston (D-California), Dennis DeConcini (D-Arizona), John Glenn (D-Ohio), John McCain (R-Arizona), and Donald W. Riegle, Jr. (D-Michigan). They were accused of improperly intervening in 1987 on behalf of Keating. His company was the target of a regulatory investigation by the Federal Home Loan Bank Board (FHLBB). The FHLBB subsequently backed off taking action against Lincoln. It turned out that Keating had contributed $1.3 million to the senate campaigns of the five senators. Keating was convicted in both federal and state courts of several counts of fraud, racketeering, and conspiracy. He served four and a half years in prison before the convictions were overturned in 1996. Finally, in 1999, he pleaded guilty to wire fraud and bankruptcy fraud and was sentenced to the time he had already served. (For more information on this case see Trust Me: Charles Keating and the Missing Billions by Michael Binstein and Charles Bowden).
Edwin Sutherland noted that most of the corporations he included in his study were “recidivists” in that they had been involved in criminal acts more than once. He also noted that if they were found guilty they merely suffered small fines – equivalent to parking tickets to the average citizen. They also were often able to avoid even admitting guilt. Fast-forward to 2011 and we have the case of Citigroup being accused of defrauding investors over toxic mortgage securities. According to a story in the Los Angeles Times “Jed Rakoff, a federal judge in Manhattan, issued a sharply worded order Monday rejecting a proposed $285-million settlement between the Securities and Exchange Commission and Citigroup Inc.” The judge called this settlement "pocket change” that would encourage banks like Citigroup to keep doing it again.
Nothing much has changed.
Despite the frequency of fraud and other criminal acts committed by corporations, nothing much has changed as far as the distribution of wealth, income and power is concerned. One of the latest reports is provided by G. William Domhoff, author of Who Rules America? among other books. On his web site it is noted that “In the United States, wealth is highly concentrated in a relatively few hands. As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers).”
What this wealth and power can buy is almost complete immunity from legal actions against their criminality.