White Collar Crime: A Double Standard

As you know, the blog is currently on hiatus until early February, but sometimes I do feel the urge to write a few thoughts on a particular topic. Here goes.

Recently, Pamela Hoernschemeyer of St. Peters, MO was sentenced to 37 months in prison for using fraudulent refunds to steal over $100,000 from SSM Health Care. She was also ordered to repay $135,727.95, though it is unclear whether she actually possesses the funds to repay this amount.

While spending any time in prison must be awful and 37 months is no joke, I can’t help but feel that she got off easy. In Missouri, theft of over $25,000 is a Class B felony, punishable by up to 15 years prison (and no less than 5). Ms. Hoernschemeyer’s sentence comes out to just over 3 years. Since the threshold for a Class B felony is $25,000, surely she was eligible for much more than the 5 year minimum? Why is her sentence so short in comparison?

While it seems her sentence may have been knocked down somewhat for pleading guilty (it’s actually unclear from the article whether she pleaded guilty to these charges or other charges), I firmly believe that if Ms. Hoernschemeyer had instead walked into a bank and demanded $100,000 in cash (ignoring for a moment the implausibility of her actually getting that sum), prosecutors would have been much more aggressive in trying to put her away for a long time.

To me, this is symptomatic of the different ways we treat “white collar” vs. “blue collar” crime. Now, to be clear, I’m not a conspiracy theorist, so you won’t hear me talking about the legal system trying to “keep the poor man down.” But the truth is that the system as currently devised does carry certain imbalances. Corruption, especially among the rich and powerful, is accepted as a necessary fact of life, and I believe the legal consequences of such behavior reflect that tacit acquiescence.

Those who were intimately involved with the speculation that ultimately led to the current United States financial crisis should be serving life sentences, as the losses they are responsible for have crushed countless families’ plans A, B, and C. And yet, aside from a few exceptions, they have avoided serious penalties. Even those who lost their jobs tended to do so with sizable golden parachutes.

The problem (there’s always a catch) is that much of what the financial sector did wasn’t explicitly illegal, making it hard to prosecute anyone. This only serves to further my point. We’ve made sure to have laws that cover any type of petty crime, yet taking wild risks with other people’s money (all while putting the blinders over their eyes about how out of whack things really were) is just part of the game.

Now I’ll be the first to admit there’s a lot more to discuss here, but as I already pointed out at the top, I simply can’t start to go through all the possible angles here. Some things worth considering include the following:

  • The impact of harsh criminal penalties on smart risk-taking
  • How to effectively draw the line between “making a bad call” and “swindling people out of their money”
  • How to stay ahead of the curve and close the loopholes that are keeping those to blame free from repercussions

And then of course, there’s the question whether focusing on punishment is really the right approach at all. Wouldn’t it be better to prevent white collar crime in the first place?

  • http://twitter.com/SchemaByte SchemaByte

    Laws that the poor are more likely to break have more severe penalties; your classic crack-versus-cocaine penalty fiasco driven by political pandering.

    • http://thesoapboxblog.com/ Neel Joshi

      Excellent point. Some may argue that crack has a higher association with violent crime, but to me you should be prosecuting the crime that *was* committed, not the one that *might* have been.