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Posts Tagged ‘crime’

Joe Nocera has a must-read story in the New York Times about how the legal fallout from the financial crisis. His basic theme is that the government let all the bigwigs get away with their crimes, but then has a fascinating discussion about how the government targeted an inconsequential mortgage borrower.

I’m not sure I accept the first part of his premise. There were lots of sleazy people taking advantage of the perverse system created by bad government policy, but I would like to see some clear evidence of actual crimes before hopping on that bandwagon. Selling mortgage-backed securities filled with crummy home loans to Fannie Mae and Freddie Mac may have been immoral, for instance (at least from a libertarian perspective), but I’m not aware that it is against the law to make choices that hurt the economy – particularly when government policy is designed to reward such stupidity.

That being said, I do wonder why there haven’t been any bribery prosecutions of the politicians who got sweetheart loans as part of the “Friends of Angelo” scheme. Actually, I don’t wonder why politicians such as Chris Dodd and Kent Conrad got a free ride. Politicians operate by the principle that law are only for the little people. Nonetheless, these are examples of real laws being violated.

But I’m digressing. The purpose of this post is to show how the government decided to go through great effort and expense to nail someone who, at most, was willing to go along with the government-subsidized and government-created housing scam.

Here are the sordid details.

A few weeks ago, when the Justice Department decided not to prosecuteAngelo Mozilo, the former chief executive of Countrywide, I wrote a column lamenting the fact that none of the big fish were likely to go to prison for their roles in the financial crisis.

…There was, in fact, someone behind bars for what he’d supposedly done during the subprime bubble.

…Mr. Engle’s is a tale worth telling for a number of reasons, not the least of which is its punch line. Was Mr. Engle convicted of running a crooked subprime company? Was he a mortgage broker who trafficked in predatory loans? A Wall Street huckster who sold toxic assets?

No. Charlie Engle wasn’t a seller of bad mortgages. He was a borrower. And the “mortgage fraud” for which he was prosecuted was something that literally millions of Americans did during the subprime bubble. Supposedly, he lied on two liar loans.

…It’s not just that Mr. Engle is the smallest of small fry that is bothersome about his prosecution. It is also the way the government went about building its case.

…Even the jurors seemed confused about how to think about Mr. Engle’s supposed crime. When it came time to pronounce a verdict, the jury found him not guilty of providing false information to the bank, which would seem to be the only fraud he could possibly have committed. Yet it still found him guilty of mortgage fraud. “I think the prosecution convinced the jury that I was guilty of something but they weren’t sure what,” Mr. Engle wrote in an e-mail.

…Even when he emerges from prison, though, his ordeal will not be over. As part of his sentence, Mr. Engle was ordered to pay $262,500 in restitution to the owner of his mortgages. And what institution might that be? You guessed it: Countrywide, now owned by Bank of America. Angelo Mozilo ought to get a good chuckle out of that one.

Later today, by the way, I’ll post about the IRS’s disgusting role in this story.

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I confess to mixed feelings on this type of issue. If taxpayers are financing sidewalks, does that mean anybody has a right to use them for any purpose, at any time?

Here’s a blurb from the People’s Republic of San Francisco.

San Francisco police officers have started enforcing the city’s new ban on sitting and lying on the sidewalk. In November, voters approved the sit/lie law, which makes it illegal to hang out on San Francisco sidewalks between 7 am and 11 pm. “The cops said that the first time, we get admonished. And then after that, they’ll start filling out tickets,” he said. “They only have a select few that they’re going to choose to do that with.” Those tickets will start at $50 and could escalate to $500 or even jail time.

One thing I do know, however, is that giving bums tickets is not going to be very effective.

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Alex Tabarrok has a fascinating article in the Wilson Quarterly about the history of bail bondsmen and their role in this privatized segment of the criminal justice system. Let’s start by excerpting some history of the system.

Bail began in medieval England as a progressive measure to help defendants get out of jail while they waited, sometimes for many months, for a roving judge to show up to conduct a trial. If the local sheriff knew the accused, he might release him on the defendant’s promise to return for the hearing. More often, however, the sheriff would release the accused to the custody of a surety, usually a brother or friend, who guaranteed that the defendant would present himself when the time came. So, in the common law, custody of the accused was never relinquished but instead was transferred to the surety—the brother became the keeper—which explains the origin of the strong rights bail bondsmen have to pursue and capture escaped defendants. Initially, the surety’s guarantee to the sheriff was simple: If the accused failed to show, the surety would take his place and be judged as if he were the offender.

The English system provided lots of incentives for sureties to make certain that the accused showed up for trial, but not a lot of incentive to be a surety. The risk to sureties was lessened when courts began to accept pledges of cash rather than of one’s person, but the system was not perfected until personal surety was slowly replaced by a commercial surety system in the United States. That system put incentives on both sides of the equation. Bondsmen had an incentive both to bail defendants out of jail and to chase them down should they flee. By the end of the 19th century, commercial sureties were the norm in the United States. (The Philippines is the only other country with a similar system.)

In recent decades, however, some states have begun to restrict or ban the use of private bail bondsmen. Not surprisingly, this hasn’t been good news. The cost to taxpayers rises and the effectiveness of the criminal justice system falls. Here’s another excerpt.

Every state now has some kind of pretrial services program, and four (Illinois, Kentucky, Oregon, and Wisconsin) have outlawed commercial bail altogether.

…Today, when a defendant fails to appear, an arrest warrant is issued. But if the defendant was released on his own recognizance or on government bail, very little else happens. In many states and cities, the police are overwhelmed with outstanding arrest warrants. In California, about two million warrants have gone unserved. Many are for minor offenses, but hundreds of thousands are for felonies, including thousands of homicides.

In Philadelphia, where commercial bail has been regulated out of existence, The Philadelphia Inquirer recently found that “fugitives jump bail . . . with virtual impunity.” At the end of 2009, the City of Brotherly Love had more than 47,000 unserved arrest warrants. About the only time the city’s bail jumpers are recaptured is when they are arrested for some other crime.

…Unserved warrants tend not to pile up in jurisdictions with commercial bondsmen. In those places, the bail bond agent is on the hook for the bond and thus has a strong incentive to bring those who jump bail to justice. My interest in commercial bail and bounty hunting began when economist Eric Helland and I used data on 36,231 felony defendants released between 1988 and 1996 to investigate the differences between the public and private systems of bail and fugitive recovery. Our study, published in The Journal of Law and Economics in 2004, is the largest and most comprehensive ever written on the bail system.

Our research backs up what I found on the street: Bail bondsmen and bounty hunters get their charges to show up for trial, and they recapture them quickly when they do flee. Nationally, the failure-to-appear rate for defendants released on commercial bail is 28 percent lower than the rate for defendants released on their own recognizance, and 18 percent lower than the rate for those released on government bond.

Even more important, when a defendant does skip town, the bounty hunters are the ones who pursue justice with the greatest determination and energy. Defendants sought by bounty hunters are a whopping 50 percent less likely to be on the loose after one year than other bail jumpers.

In addition to being effective, bail bondsmen and bounty hunters work at no cost to the taxpayers. The public reaps a double benefit, because when a bounty hunter fails to find his man, the bond is forfeit to the government.

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Nullification occurs when jurors refuse to find a defendant guilty because the underlying law is unjust (visit the Fully Informed Jury Association if you want more details). And if I ever wind up on a jury and the government was trying to throw someone in jail for a victimless crime, I certainly hope I would do the right thing and refuse to declare the person guilty.

The good people of western Montana certainly have the right attitude about victimless crimes. A jury pool in Missoula County basically told a court that they would not be willing to convict a defendant for possessing a tiny amount of marijuana.

Wouldn’t it be wonderful if this happened all over the country and politicians were forced to stop the war on drugs? That would be a Christmas present for the entire nation.

While we’re waiting for that to happen, let’s celebrate what happened in Montana. Here’s an excerpt from the Billings Gazette.

A funny thing happened on the way to a trial in Missoula County District Court last week. Jurors – well, potential jurors – staged a revolt. They took the law into their own hands, as it were, and made it clear they weren’t about to convict anybody for having a couple of buds of marijuana. Never mind that the defendant in question also faced a felony charge of criminal distribution of dangerous drugs. The tiny amount of marijuana police found while searching Touray Cornell’s home on April 23 became a huge issue for some members of the jury panel. No, they said, one after the other. No way would they convict somebody for having a 16th of an ounce. In fact, one juror wondered why the county was wasting time and money prosecuting the case at all, said a flummoxed Deputy Missoula County Attorney Andrew Paul. …“Public opinion, as revealed by the reaction of a substantial portion of the members of the jury called to try the charges on Dec. 16, 2010, is not supportive of the state’s marijuana law and appeared to prevent any conviction from being obtained simply because an unbiased jury did not appear available under any circumstances,” according to the plea memorandum filed by his attorney.

(h/t Jason Kuznicki)

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We all know that alcohol prohibition was great news for organized crime in the 1920s, and we also know that drug prohibition is causing widespread societal destruction today, but taxation also can facilitate criminal behavior. Specifically, there is considerable evidence that punitive taxes on cigarettes promote criminal activity. Here’s a video from Michigan’s Mackinac Center.

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The Washington Post has an interesting report about the huge amount of money that Fairfax County spends to go after gambling. The story cites critics who ask “why law enforcement spends valuable time and money on combating sports gambling. The answer is obvious – and explicit in the story: “…police in Virginia are allowed to keep 100 percent of the assets they seize in state gambling cases.” In other words, harassing the gambling business is a profit-making endeavor for police. And it also can be deadly since cops killed an optometrist during a SWAT arrest. The Institute for Justice has a powerful video on the dangers of “policing for profit,” and Fairfax County is just one bad example of how this lures cops into misallocating resources to fight behaviors that shouldn’t even be illegal.

It’s football season, and for millions of Americans that means betting season.

…It’s a crime that Fairfax County police take seriously. So seriously that in one recent gambling investigation, they spent — and lost — more than $300,000 in cash to take down a Las Vegas-based online bookie and his group of Fairfax-based associates.

…Police critics have long wondered why law enforcement spends valuable time and money on combating sports gambling. In Fairfax, the police rarely publicize their arrests, and the details of their investigations are little known outside the small corps of detectives in the money laundering unit. Unlike drug cases, police in Virginia are allowed to keep 100 percent of the assets they seize in state gambling cases, so other agencies or divisions receive no benefit. And the vast majority of those arrested are placed on probation.

“What a waste,” said Nicholas Beltrante, founder of the Virginia Citizens Coalition for Police Accountability, a group formed earlier this year in part to combat unnecessary police spending. “The police should be utilizing their resources for more serious crimes.”

Fairfax’s most notorious gambling investigation ended in disaster. In 2006, an undercover detective lost more than $5,000 while betting on NFL games with optometrist Salvatore J. Culosi — and when the detective called in a SWAT team to make the arrest, an officer shot Culosi once in the heart and killed him.

…Since 2004, the squad has seized about $1 million in cash and assets annually, but some of those cases landed in federal court, where money is divided among various agencies, Schaible said.

…One case from 2006, that of admitted bookmaker Kyle Peters, resulted in police seizing and keeping $566,940 from his bank accounts. Schaible said such funds are recycled “back into investigating cases. It’s helping us resolve these and fight further crime.”

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In addition to noting that gun control tends to increase crime by reducing the cost of being a criminal (i.e., thugs are less likely to meet armed resistance), Tom Sowell also explains that people who don’t like the Constitution should amend the document rather than appointing ideologically-motivated Justices who ignore what it says. 

…there is no obvious reason why issues like gun control should be ideological issues in the first place. It is ultimately an empirical question whether allowing ordinary citizens to have firearms will increase or decrease the amount of violence. Many people who are opposed to gun laws which place severe restrictions on ordinary citizens owning firearms have based themselves on the Second Amendment to the Constitution. But, while the Supreme Court must make the Second Amendment the basis of its rulings on gun control laws, there is no reason why the Second Amendment should be the last word for the voting public. If the end of gun control leads to a bloodbath of runaway shootings, then the Second Amendment can be repealed, just as other Constitutional Amendments have been repealed. Laws exist for people, not people for laws. There is no point arguing, as many people do, that it is difficult to amend the Constitution. The fact that it doesn’t happen very often doesn’t mean that it is difficult. The people may not want it to happen, even if the intelligentsia are itching to change it. …As for the merits or demerits of gun control laws themselves, a vast amount of evidence, both from the United States and from other countries, shows that keeping guns out of the hands of law-abiding citizens does not keep guns out of the hands of criminals. It is not uncommon for a tightening of gun control laws to be followed by an increase– not a decrease– in gun crimes, including murder. Conversely, there have been places and times where an increase in gun ownership has been followed by a reduction in crimes in general and murder in particular. Unfortunately, the media intelligentsia tend to favor gun control laws, so a lot of hard facts about the futility, or the counterproductive consequences of such laws, never reach the public through the media. We hear a lot about countries with stronger gun control laws than the United States that have lower murder rates. But we very seldom hear about countries with stronger gun control laws than the United States that have higher murder rates, such as Russia and Brazil.
http://townhall.com/columnists/ThomasSowell/2010/06/29/gun_control_laws 

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