I confess. I was the one. In The Ponzi Scheme Blog DECEMBER POLL, I cast the sole vote that prison sentences for Ponzi scheme perpetrators are too long.
After spending two years co-writing The Ponzi Book with Kathy Phelps, I certainly understand the social, emotional, and financial devastation that Ponzi schemes cause, as well as the outrage that victims so justifiably feel. As Kathy has well-chronicled in this blog, the numbers are staggering – the numbers of newly-exposed schemes, the numbers of defrauded victims, and the numbers of dollars lost.
Still, longer sentences are not the answer. They accomplish nothing and are very expensive. Worse, they are unjust.
Let’s consider the expense first. Our country has 5% of the world's population and 25% of the world’s prison population. We have 2,240,000 people behind bars.
Here are the yearly costs per inmate for some sample states:
- California - $47,000
- Florida - $28,000
- Illinois - $38,000
- Michigan - $28,000
- New Jersey - $55,000
- New York - $60,000
- Wisconsin - $38,000
We spend an astounding $63,000,000,000 per year to incarcerate prisoners. That’s a lot of money that isn’t going to teachers, police or reducing the national debt.
And what do we get when we spend this tax money on the extraordinary sentences that we give to Ponzi scheme perps? Ponder these sentences:
- Bernie Madoff - 150 years
- Marc Drier - 20 years
- Alan Stanford - 110 years
- Tom Petters - 50 years
- Scott Rothstein - 50 years
- Sam Israel - 20 years
- Lou Pearlman - 25 years
- Peter Lombardi - 20 years
- Nicholas Cosmo - 50 years
A much better way to deter Ponzi scheme perps is to educate our students and indeed ourselves on how to avoid them. For this, I certainly do commend Kathy’s wonderful new book, Ponzi-Proof Your Investments: An Investor’s Guide to Avoiding Ponzi Schemes and Other Fraudulent Scams. How many could be educated with the money saved from giving shorter prison sentences to Ponzi scheme perps?
In any event, nothing suggests that the present sentences have any deterrent effect. Kathy’s monthly roundup blogs summarize the news reports of the ongoing onslaught of Ponzi schemes.
Punishing Ponzi scheme perps is therefore the more important function of incarceration. In our system, the length of incarceration reflects the severity of the crime. This is the doctrine of proportionality. To demonstrate the disproportionality of Ponzi scheme perps’ sentences, these are the average sentences in 2011 for these violent crimes, according to the U.S. Department of Justice, Bureau of Justice Statistics:
- Murder - 24 years
- Kidnapping - 9 years
- Rape - 14 years
- Robbery - 8 years
- Assault - 5 years
The sentences given to the Ponzi scheme perps listed above - 20 to 150 years - are simply not proportionate to these sentences for violent crimes that involve physical injury or death. And that’s so even considering the amounts of money those perps have stolen, the numbers of their victims, and the devastation they have caused.
What if, instead, Ponzi scheme perps like Madoff and the others listed above receive shorter sentences (but still forfeit their assets) and have extended parole supervision in their home communities, where they would have to start their lives over with nothing and make their ways in society among their victims? Would that result in injustice? I don’t think so.
Great argument for reducing sentences which also applies even more so to non-violent drug offenses which actually make up the bulk of the prison population we have too much of thanks to the prison-industrial complex which thrives on prisoners.
ReplyDeleteThe more the better as far as prison officials are concerned who get all this taxpayer money - that $47,000 cost is their profit!
Ponzi schemers are sociopaths who destroy people's lives no different than any other violent psychopath who might physically attack someone so should be treated the same - lock them up and through away the key!
Let all the marijuana users out and you'll have plenty of money left over to keep Ponzi schemers on ice for life.