What About Three-Strikes-and-You're-Out for Corporate Criminals?
by Lee Drutman
March 11, 2003
Say what you will about California's three-strikes law, but one thing's for sure: Many Californians voted for it in 1994 because they were sick and tired of recidivist criminals breaking the law over and over. They wanted to get tough and put a real deterrent on criminal behavior. "Our goal in California is to have no more victims," said former California Secretary of State Bill Jones, the chief author of state's three-strikes law.
On March 5, the Supreme Court affirmed the constitutionality of the law by a 5-to-4 vote. It was a close vote because a life sentence for a third crime that's relatively minor borders on cruel and unusual punishment. In practice, it means that Gary Albert Ewing, an AIDS patient, will get 25 years in prison for stealing $1,200 worth of golf clubs from a pro shop and Leandro Andrade will get 50 years for shoplifting $153 worth of children's videos from K-Mart.
Meanwhile, a theft millions of times as large as either Ewing's or Andrade's remains unpunished and largely undeterred. Just a few days prior to the Supreme Court ruling, California officials sent federal regulators 1,000 pages of evidence that they felt proved once and for all that more than a dozen power companies had conspired to manipulate energy prices in 2000 and 2001, gouging California ratepayers by $9 billion. Nine billion dollars. Kind of makes $1,200 worth of golf clubs or $153 worth of kid's videos seem like small potatoes. In fact, that's more than twice the $3.8 billion that the FBI estimates street crime costs its victims each year across the entire country.
California officials want the energy companies, including Reliant Resources Inc., Williams Cos., Dynegy Inc., Mirant and Duke, to pay back the $9 billion they stole from Californians by overcharging. That's all. Just pay back what you stole. Never mind that you lied and stole from millions of Californians again and again and again for two years. Just pay back what you stole and it will all be fine.
Now, imagine if California had used this same logic with Ewing and Andrade: Just pay back what you stole. $1,200 worth for the golf clubs. $153 for the videos. Just imagine if this were the policy of the state attorney general's office: to let shoplifters pay back the value of what they've stolen - if they got caught. Californians would be up in arms; they'd say that law and order had vanished, that the state was headed for chaos and anarchy.
So, what's the difference between the energy companies and these shoplifters, save the fact that the energy companies stole about ten million times more money from ten million times more people?
The main difference, of course, is that the energy companies engaged in white-collar crime. And in America, white-collar crime is treated differently. Corporations break the law over and over again, knowing that they don't have to worry about winding up in jail (after all, how can you put a corporation in jail?). They might get fined, but many corporations view fines as merely the cost of doing business, finding it more profitable to ignore health, safety, and other regulations and risk paying a fine. Just as street criminals will break the law over and over if they are not presented with an adequate deterrent, corporate criminals will do the same.
While the FBI doesn't track white-collar crime, American University Professor Jeffrey Reiman, using conservative estimates from the Chamber of Commerce, estimated that white-collar crime cost $338 billion in 1997 - almost 100 times the FBI's $3.8 billion estimate for street crime costs. Of course, most people are more frightened of getting mugged outside the grocery store than paying too much inside the grocery store because of illegal price-fixing. But odds are you'll lose more money to illegal price-fixing and other white-collar predatory schemes.
California State Senator Gloria Romero recently introduced a bill that would hold California's law-breaking corporations to the same standard to which the state holds its law-breaking citizens. Three strikes and you're out. If a corporation commits three major violations that result in a fine of at least $1 million or a death, the California Attorney General will revoke the corporation's charter. For companies incorporated in other states, three strikes means that they will lose their right to transact business in California.
Passing the Corporate Three Strikes law would demonstrate that California is willing to get tough on crime in the suites, not just crime in the streets. It would create a climate where law-abiding companies thrive and give the public a means of cracking down on recidivist corporate criminals for marketing defective products, exposing their employees to life-threatening occupational hazards, ripping off utility customers, or dumping toxic waste down the drain after midnight. If California's elected officials are truly serious about helping the victims of crime, and applying a consistent standard of justice to recidivist criminals, they will pass the Corporate Three Strikes law.
Lee Drutman is the Communications Director for Citizen Works, a Washington, DC-based nonprofit (www.citizenworks.org). He can contacted at: