What Eric Garner and MrBeast teach us about punishing white-collar crime
Donald Trump and Eric Garner don’t seem to have much in common, but in the eyes of New York law enforcement, they are both the same class of felon.
The two, however, were treated vastly differently by the criminal justice system.
Trump fudged $420,000 worth of business records, but that alone does not make him a felon in New York. To be as culpable as the man accused (falsely, no less) of selling 50 cartons worth of untaxed cigarettes, Trump had to use those lies to cover up another crime, cheating in an election.
It defies any notion of fairness that the two sets of actions should trigger the same potential penalties, but the example illustrates how existing laws treat white-collar criminals much more leniently than those involved in street crimes.
To be fair, the different nature of each transgression makes it difficult to compare the two. But consider that Garner could have been sent to prison for four years for not paying taxes on those cigarettes, while a person who cheats by the same degree on their federal tax returns faces six months. But it is not just about the penalties that the laws call for; it’s about how prosecutors and judges apply those laws.
In 2022, U.S. federal attorneys prosecuted 7 out of every 10 criminal referrals they received; but for white-collar crimes, that rate was less than 4. Judges are allowed to set prison terms below the federal sentencing guidelines, and in white-collar cases, they do so about twice as often as they do for simple burglary/trespassing cases. When judges do stick to the guidelines, the white-collar criminal is twice as likely to receive only the minimum sentence.
Looking at these figures, judges seem to think the law treats white-collar crimes too harshly, and they appear to make a stark distinction between the person who steals using a fountain pen and the one who uses his hands.
Long-proffered arguments justifying this kind of discrepancy include the notion, widely held by federal judges, that prison terms are unnecessary because white-collar criminals suffer enough by “loss of job, professional licenses, and status in the community,” and that a shorter prison sentence for, say, the college-educated embezzler feels just as punitive as a longer term for the car thief. One respected law professor even points to Michael Milken to argue that white collar criminals should be released sooner so that they can go on to launder their reputations through charitable giving – a favored tactic for oligarchs, dope pushers, and worse. (She does not explain why Milken needed to be out of prison to donate the money.)
These arguments are morally dubious – essentially making poverty an aggravating factor, if not an outright crime – and based on incorrect facts. They oddly ignore the plain fact that poor people, too, suffer from the loss of community standing and job prospects (and to a greater degree); and while the notion that manicured executives are especially ill-suited for prison life may make for mediocre comedy, it is probably incorrect.
Moreover, the arguments narrowly consider immediate economic loss, while ignoring the downstream costs of white-collar crime. As scholars of corruption already understand, these types of crimes open a path to deadly consequences, and inflict untold collateral damage. Although the extent of such harm is difficult to quantify, we do have snippets of insight. For instance, let’s say a local health department cuts funding by $10 per capita – whether because of tax evasion, fraud, or other reasons. That drop correlates to a 7.4 percent increase in infectious disease deaths. Similarly, researchers have found strong evidence that corruption increases child mortality rates, perhaps contributing to the deaths of 140,000 young children every year. In the U.S., being poor can cost you 10 years of life expectancy – for victims of financial crime, years of life may be at risk.
Of the many explanations for why white-collar crimes are punished less severely than so-called “street” crimes, the most compelling may be that they lack the threat of immediate physical harm. Indirect consequences aside, the sentencing discrepancy is not explained by this factor alone. If you beat someone up and take their wallet, you might see a prison term of 72 months – the median sentence for robbery. Yet if you bilked him in a business deal and later attacked him in a road rage incident, you might see 45 months behind bars – the combined median sentences for assault and fraud/theft/embezzlement.
A prominent University of Chicago Law professor, who went on to become a highly influential federal judge, made a straight-faced argument that white-collar criminals should be able to buy their way out of prison terms. As problematic as this notion is, whatever “price” it is that white-collar criminals are currently paying for their misdeeds, it is far less than what other criminals face.
Sam Bankman-Fried, who was convicted of stealing $8 billion, received a 25-year sentence for fraud – one day behind bars for every $875,000 or so pilfered. Given that the wildly popular YouTube star MrBeast received more than 200 million views of a clip purporting to offer a colleague $10,000 for each day he spends in a (simulated) prison, Bankman-Fried’s hypothetical return on investment seems quite hefty. Even Bernie Madoff, whose 150-year sentence was touted as “strong signal” to would-be wrongdoers, stole about $310,000 for each day he was to be locked up.
The message here is that white-collar crime can be quite lucrative, and criminals seem to have caught on. While the scale of white-collar crime is difficult to calculate, in part because the federal government simply does not track the data, it appears to vastly exceed the scale of loss from street crime.
And what if Eric Garner had not been killed, but given the maximum sentence for the crime he did not commit? The daily “yield” for his prison time would have been less than two dollars.
FCPA Compliance Consultant, TRACE
Note: Data from the U.S. Sentencing Commission was used to calculate figures relating to prison sentences. Unless otherwise noted, the figures reflect activity between 2021 and 2023, filtered for the lowest tier of prior criminal history (given the perceived higher rate of recidivism in street crime convictions). That Mr. Garner was targeted under a tax law, and the discrepancies that this highlights, was a point raised earlier by Jennifer Taub in Big Dirty Money.
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