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Jun-30-2009 10:33printcomments

Crime and Punishment

Our society is pathologically distorted by money. Even the crime and punishment. Other than that, your opinion is as good as mine.

Salem-News.com
Salem-News.com

(CALGARY, Alberta) - On June 29, 2009, Bernard Madoff, convicted of the largest Ponzi scheme in history (about $65 billion) was sentenced to 150 years in prison. He’ll never wear a silk shirt again—except for the last time when he won’t feel it.

Considering that most crime is committed for money—either directly or indirectly—a little exploration might be both fun, educational—and discouraging.

The Bezzle

It was at least thirty years ago that I read John Kenneth Galbraith’s book on the Great Crash of 1929. Of all the quotes I’ve gathered over the years, this one from his book stands out. I’ve never been able to include this quote in a published story until now.

“To the economist embezzlement is the most interesting of crimes. Alone among the various forms of larceny it has a time parameter. Weeks, months or years may elapse between the commission of the crime and its discovery. (This is a period, incidentally, when the embezzler has his gain and the man who has been embezzled, oddly enough, feels no loss. There is a net increase in psychic wealth.) At any given time there exists an inventory of undiscovered embezzlement in—or more precisely not in—the country’s businesses and banks. This inventory—it should perhaps be called the bezzle—amounts at any moment to many millions of dollars. It also varies in size with the business cycle. In good times people are relaxed, trusting, and money is plentiful. But even though money is plentiful, there are always many people who need more. Under the circumstances the rate of embezzlement grows, the rate of discovery falls off, and the bezzle increases rapidly. In a depression all this is reversed. Money is watched with a narrow, suspicious eye. The man who handles it is assumed to be dishonest until he proves himself otherwise. Audits are penetrating and meticulous. Commercial morality is enormously improved. The bezzle shrinks.”

This is a simple concept and we can be quite sure that the bezzle has shrunk considerably over the last year or so.

The Movies

In the 1993 movie Grand Canyon Steve Martin is a producer and he admonishes his best friend, immigration lawyer Kevin Kline saying: “You know what your problem is? You haven’t seen enough movies. All of life’s riddles are answered in the movies.” As a “producer” this could be interpreted as a self-serving statement, but there is a serious ring of truth there. Movies are the stories we share. Other than escapist fare, like the Die Hard trilogy, most movies are about people, the situations they find themselves in, and how they extricate themselves (or not). The stories have to be somewhat true to life or they would be of no interest. They wouldn’t touch us inside.

So, enter 1987’s Wall Street, most famously remembered through Michael Douglas’s award winning role as Gordon Gekko where he says: “Greed is good.” Here three other memorable lines from the movie:

“Money is only something you need in case you don’t die tomorrow.”

“A fool and his money were lucky enough to get together in the first place.”

And, most significant:

“Money makes you do things you don’t want to do.”

Note: Apparently a sequel is in the works.

Time served

Still in the news, is the bank robbery executed last week by Joshua Nordman. The money he escaped with (and subsequently gave back) was never disclosed, but I am going to estimate that it was $500. If convicted, as he surely will, he will probably be sentenced to, say, five years in prison. How does this compare to other money crimes in the news? Here’s a little comparison that has no validity from the points of view of legality, fairness or vengeance. But it gives us some food for thought.

Madoff swindled his investors out of about $65 billion and was sentenced to 150 years. Comparing Nordman’s $500 to that, how much prison time should Joshua Nordman be sentenced to? On a comparative basis, you know, intuitively that it won’t be much. The answer: Just under a quarter of a second.

Let’s do the same comparison to some other big time crooks of recent years.

Lance K. Poulson, National Century, Financial $3 billion

30 years

Nordman: 5.3 seconds

Bernard J. Ebbers, WorldCom, $11 billion

25 years

Nordman: 1.4 seconds

Jeffrey K. Skilling, WorldCom fraud with Ebbers

24.3 years

Nordman: 1.4 seconds

Samuel Israel III, Bayou Group, $400 million

20 years

Nordman: 39.4 seconds

John J. Rigas, Adelphia, hid $2 billion

15 years

Nordman: 7.9 seconds

Walter A. Forbes, Cendant Fraud, cost shareholders $20 billion

12.6 years

Nordman: .78 seconds

Sanjay Kumar, Computer Associates, $2.2 billion fraud

12 years

Nordman: 7.2 seconds

L. Dennis Kozlowski, Tyco, misappropriating more than $400 million

8.3-15 yrs

Nordman: 39.4 seconds.

Turn things around

Looking at things that way, it’s obvious how unfair any prison sentence would be for Nordman. After the Madoff sentence was handed down, Cyril Segall, a 30-year resident of Palm Beach Florida said "The sentence should have been far longer." Bearing in mind that Madoff is going to die in prison, how much longer would be meaningful? So here’s the same comparison in reverse. For the same amounts, if Nordman gets 5 years, Madoff should have gotten: 650 million years. That’s a year for every $100.

Comparing the other corporate felons in the same way:

* Lance K. Poulson 30 million years
* Bernard J. Ebbers 110 million years
* Jeffrey K. Skilling 110 million years
* Samuel Israel III 4 million years
* John J. Rigas 20 million years

§ Walter A. Forbes 200 million years

* Sanjay Kumar 22 million years
* L. Dennis Kozlowski 4 million years

Conclusion

Our society is pathologically distorted by money. Even the crime and punishment. Other than that, your opinion is as good as mine.

For background:

Joshua Nordman: Victim or Criminal? - Daniel Johnson Salem-News.com

Yamhill Deputies Arrest Willamina Bank Robbery Suspect - Salem-News.com

=========================================================

Daniel Johnson was born near the midpoint of the twentieth century in Calgary, Alberta. In his teens he knew he was going to be a writer, which is why he was one of only a handful of boys in his high school typing class—a skill he knew was going to be necessary. He defines himself as a social reformer, not a left winger, the latter being an ideological label which, he says, is why he is not an ideologue. From 1975 to 1981 he was reporter, photographer, then editor of the weekly Airdrie Echo. For more than ten years after that he worked with Peter C. Newman, Canada’s top business writer (notably a series of books, The Canadian Establishment). Through this period Daniel also did some national radio and TV broadcasting. He gave up journalism in the early 1980s because he had no interest in being a hack writer for the mainstream media and became a software developer and programmer. He retired from computers last year and is now back to doing what he loves—writing and trying to make the world a better place




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Henry Ruark July 2, 2009 8:09 am (Pacific time)

D.J. et al:
  Definitely, goes upward... longtime historical records show almost-constantly widening gap between "haves" and have-nots", not only in America but worldwide. Classic economics studies show that split as everpresent characteristic of capitalism as, first, "bubbles" of speculation, always caused by those who "can", trap and then injure all others by their unavoidable and extremely damaging conclusion.
Corporate charter-reversion from "for public interest" to ONLY pursuit-of-profit is the major characteristic still open to our change, reversing erroneous "precedent" by the "Supremes" for overwhelming use of "corporate campaign contribution" to buy governing systems at all levels, here and worldwide.
  The "false precedent" itself was obtained by corruption.
  Lobbying industry in D.C. now surrounds each elected rep. with more than 100 lushly funded seekers for influence, often former colleagues.   We still hold "power of the people", if and when we have the will to use it.
 True "Public opinion", shaped by massive, continuing public communication with still-elected representatives, at both state and national levels, remains our best bet if we have the will to use it well and constantly. 


Vic July 2, 2009 9:15 am (Pacific time)

Great article !


Daniel Johnson June 30, 2009 4:29 pm (Pacific time)

Mike H.: I don't know where the money goes, but I strongly suspect that it goes up, not down. The Forbes 400 have assets of about $1.4 trillion.


Daniel Johnson June 30, 2009 2:32 pm (Pacific time)

New York Times: "A federal judge has revoked bond for R. Allen Stanford, the Texas billionaire accused of masterminding a $7 billion fraud, sending him back to jail to await trial."


Mike H. June 30, 2009 2:20 pm (Pacific time)

So where exactly does all that money go? Out of the States? Is that why our economy is so messed up right now?


Daniel June 30, 2009 1:10 pm (Pacific time)

Ian Whitcomb not Whittcome for those who remember him .


Daniel June 30, 2009 1:07 pm (Pacific time)

Well its the same the whole world over , ain't it all a stinking shame , while the rich have all the pleasure , its the poor that gets the blame . Ian Wittcome

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