Corporate Crime

“The irony is that the nation I live in, once a beacon of democracy for my parents, is now dominated by corporations that value profit over people, safety and well-being,” Marta Tellado, CEO of Consumer Reports. Her parents fled Cuba in 1961.

Crime was a major issue in the recent election. According to the Republicans “crime is  skyrocketing” and honest citizens are living in fear of widespread violent crime. “Criminals are “wreaking havoc on American cities” said Rep. Tom Tiffany despite his mostly rural northern Wisconsin congressional district having very low rates of crime.

Of course the Republicans grossly exaggerate the issue. Overall crime rates have been decreasing for years. In 2021 people were 80% less likely to be a victim or crime than in 1993. Recently murder and gun violence is up but property crimes are down. Crime is local and these types of crime mostly occur in inner city and large city locations. The truth is the vast majority of us live in safe communities and have little chance of being a victim of violent “street” crimes (murder, assault or robbery).

This doesn’t mean crime is not a problem. But the crime problems are different from, and much broader, than Republicans pontificate about. There are other types of crime which do impact large numbers of people. This is corporate crime. Businesses of all types and sizes frequently violate a wide spectrum of laws. Corporate crime is much larger and more costly to society than typical “street” crimes. But Republicans (and corporate Democrats) chose to ignore this and actively oppose enforcement of these laws.

Recent news reports reflect the scope of this business criminality.

  • A McDonald’s franchise in Pittsburgh was violating child labor laws regarding hours of work and prohibited duties for 101 minors working in 27 locations. Between 2017 and 2021 The Department of Labor processed over 4,000 cases involving 13,000 minors in a variety of businesses.
  • Last month the largest sanitation subcontractor for the meat packing industry was charged with employing minors 13 to 17 years old in violation of labor laws. Minors were working night shifts cleaning dangerous equipment with caustic chemicals. The company has contracts with 400 processing plants nationwide.
  • This week’s New Yorker magazine has a lengthy article on the hospice industry and Medicare fraud (“Endgame” by Ava Kofman). The $22 billion dollar industry (70% for profit) aggressively recruits patients with questionable eligibility while overcharging and under-delivering services.
  • In July the Department of Justice charged 36 companies across the country with $1.2 billion in fraudulent billing of Medicare. Medicare fraud is conservatively estimate to cost $68 billion a year.
  • Total COVID relief fraud from all the programs is estimated to be around $580 billion.  An estimated 10% of Paycheck Protection Program payments were fraudulent claims by companies of all sizes.
  • Experts say wage theft (employers not paying employees properly) costs five times more than losses from shoplifting.
  • This week a Manhattan jury convicted two Trump Organization companies on 17 counts of criminal tax fraud and falsifying business records over a15 years period.
  • Every year the amount of unpaid taxes is roughly three-quarters of the federal deficit. This gap between taxes owed and taxes paid is typically around $450-500 billion a year. There is a reason Republicans (and the 1% from both parties) oppose hiring more IRS auditors!

The financial meltdown of 2008 is the biggest example of corporate malfeasance. The massive fraud in marketing sub-prime mortgages and derivatives had a worldwide impact. Everyone with any savings in the stock market lost around 40% of their savings. Rather than prosecuting or outlawing the crime, governments all over the world spent trillions to bailout the “too-big-to-fail” corporations who caused the crash.

Everyday financial fraud, theft, and illegal manipulation impacts everyone even if you are not in the “markets.” Investment fraud in America is estimated to cost $10-40 billion annually. An estimated 10% of investors will be victimized at some time.

Hucksters are endemic to our greed-is-good economic system. This is just a sampling of the illegal practices. We don’t know the real numbers or impact because of poor data. The Department of Justice issues an annual report on property and violent crimes but has not done a report on corporate crime since 1979. Public Citizen says this lack of data shows our priorities “concentrate disproportionate resources toward arresting low-level offenders while turning a blind eye to the crimes of the powerful.”

Public Citizen is a non-profit consumer advocacy group. Concerning corporate crime they say, “Corporate lawbreaking harms millions upon millions of Americans every year. Every year corporations rip off consumers, exploit workers, injure patients, pollute the environment, cheat the government, and unfairly undermine their law-abiding business competitors…Health and  safety violations sicken, injure, and kill countless Americans, while data security violations place individuals’ finances and personal safety at risk. Investors and shareholders, meanwhile, are lured into fraudulent schemes.”

“Corporate crime inflicts upwards of 20 times more economic damage each year than all street crime” says Iowa Law Professor Mihailis Diamantis and Will Thomas of the Michigan Ross Business School. In a 2021 research paper they concluded, “By any measure, the economic impact of corporate crime is at least an order of magnitude greater than all other criminal offenses combined…..Brand-name corporations find themselves on the wrong side of the law for everything from accounting fraud to homicide to narcotics dealing. Yet many people…don’t even know that corporate criminal law exists” (see “But We Haven’t Got Corporate Criminal Law!”).

The FBI estimates that burglary and robbery costs $3.8 billion a year but corporate and white collar crime steals unknown hundreds of billions each year. There are 19,000 murders every year but 56,000 die every year on the job and from occupational diseases. Unknown tens of thousands more are sickened or injured by pollution, contaminated foods, hazardous consumer products, and medical malpractice.

Republicans do not talk about crime to inform the public or to lead on addressing the problems. Their purpose is to use half-truths and misleading statistics to create fear. They only want a divisive, emotional campaign issue and to blame Democrats for being “soft on crime.” Given the average American voter is easily manipulated, this tactic works quite often.

How do you know a politician is lying? His, or her, lips are moving. People should remember this old adage when they hear a politician yapping about crime.