Is Wall Street a gang? Part I
By now just about everyone has become aware of the social movement known as Occupy Wall Street . It has occurred to me that one of the justifications for this movement is the massive amount of fraud committed by various corporations that constitute what is known as "Wall Street" in addition to crimes linked to specific individuals rather than corporations. I am in the middle of updating my book on gangs and in the process have included a discussion of what exactly is a "gang" and it occurred to me that one of the common definitions of a "gang" provided by the National Gang Center describes, in part, to Wall Street. In their most recent survey they noted that there is a general consensus that the various definitions provided by law enforcement and academics have the following in common:
~ The group has three or more members, generally aged 12--24
~ Members share an identity, typically linked to a name, and often other symbols.
~ Members view themselves as a gang, and they are recognized by others as a gang.
~ The group has some permanence and a degree of organization.
~ The group is involved in an elevated level of criminal activity.
Several of these components can be used to describe the general organization and behavior of those who can be identified as part of what is generally labeled as "Wall Street." There are certainly three or more members, although their ages are considerably older than "youth gangs." They certainly have a common identity as "financiers," "brokers," "hedge fund operators," "bankers," etc. The name "Wall Street" is a common denominator. While they may not consider themselves as a "gang" in the usual sense of the word, they do have some "permanence and a degree of organization." Finally, without a doubt this "gang" has consistently been involved in a persistent and high rate of criminality that, from a purely financial standpoint, makes ordinary street gangs look like petty amateur thieves.
The amount of money involved in the most recent Wall Street scandals is enough to classify the largest firms as criminogenic. The author did an estimate, based upon several sources, that the costs of corporate and white collar crime amount to at least $1.5 trillion per year. The recent financial meltdown that led to the current recession is estimated to involve several trillion dollars in outright fraud. A report by The Economist listed the top ten examples of "insider trading" cases between 2000 and 2010 (based upon the amount stolen). The total estimated amount of money involved in these fraudulent cases amounted to just over $400 million. The leading offender in this group was the former CEO of Countrywide Financial Angelo Mozilo was accused in 2009 by the Securities Exchange Commission of selling $140 million of Countrywide stock based upon information not available to the public. Kenneth Lay came in second with $90 back in 2004. Ranked third was the recent case of Raj Rajaratnam, former chief of the Galleon Group, accused of a $52 million fraud. Bernie Madoff was the worst of the bunch, having bilked investors out of about $50 billion.
Russell Mokhiber, a leading expert on corporate crime, notes that according to FBI estimates burglary and robbery costs the nation just under $4 billion a year. By comparison health care fraud alone costs the public between $100-400 billion per year. The Savings and Loan fraud case of a few years ago costs us around $300 billion to $500 billion.
The FBI recently issued its 2009 Financial Crimes Report. It was revealing, to say the least. It reported that corporate fraud cases alone went from 423 in FY 2005 to 692 in FY 2009. The amount of money involved came to an estimated $1 billion. Among the specific offenses included the following: (1) Falsification of financial information (including false accounting entries, bogus trades designed to inflate profit or hide losses, and false transactions designed to evade regulatory oversight); (2) Self-dealing by corporate insiders (including insider trading, kickbacks, backdating of executive stock options, misuse of corporate property for personal gain and individual tax violations related to self-dealing; (3) Obstruction of justice designed to conceal any of the above-noted types of criminal conduct, particularly when the obstruction impedes the inquiries of the SEC, other regulatory agencies, and/or law enforcement agencies.
The above is just a small sampling of FBI cases involving corporate and white collar offenders. The rest of the report focuses on the following kinds of cases: (1) Securities and Commodities Fraud (including the Bernie Madoff case); (2) Health Care Fraud (one scheme alone was estimated to cost Medicare $1 billion in 2009); (3) Mortgage Fraud (the number of cases filed went from 6,936 in FY 2003 to 67,190 in FY 2009, with an estimated loss of $6.5 billion); (4) Mortgage Debt Elimination Schemes; (5) Predatory Lending Schemes; (6) Insurance Fraud (estimated to be as high as $80 billion each year); (7) Mass Marketing Fraud; (8) Asset Forfeiture/Money Laundering.
The above examples are merely a small sampling of the many different kinds of corporate and white collar crime. There are many cases involving the death of citizens, such as the estimated 100,000 deaths from unsafe working conditions and 1.8 million disabling injuries each year. I will have more to say about this in another blog.
Posted in Blog, Political Landscape
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