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S&L Looters Do less Time than Petty Thieves

S&L Looters Do Less Time than Petty Thieves

by Paul Wright

Fraud in the Savings and Loan Industry: White Collar Crime and Government Response was written by University of California, Irvine, criminology professor Henry Pontell and associate professor Kitty Calavita. The three year study was commissioned by the Department of Justice.  The report found that not only do most Savings and Loan (S&L) thieves go unpunished but the ones who are punished typically receive shorter prison terms than car thieves and common burglars.

The Savings and Loan industry collapsed in the mid 80s after the federal government deregulated the industry. This resulted in high risk, speculative investments that led to massive losses. The U.S. taxpayers are going to pick up the tab for the S&L collapse and it will cost at least $500 billion to pay off over the next 20 years. Pontell states that at least 25 percent of their industry losses are directly attributed to fraud by their owners and mangers. This included high salaries, luxurious living amid other squandering of thrift resources in addition to outright theft.

The study found that of 580 people convicted of S&L fraud only 78 percent were sent to prison. Of that 78 percent only 4 % received sentences of 10 years or more and another 13% received sentences of more than 5 years. In 1988 the average sentence for major thrift crimes was 36.4 months. In contrast, the average sentence imposed on burglars was 55.6 months and a little less them 38 months for car thieves.

The amounts stolen by the S&L owners and operators is staggering. Thomas Spiegel, of Columbia Savings is on trial in Los Angeles for stealing millions, including his $9 million annual salary. Centrust Bank Chairman, David Paul was convicted in Miami of stealing more than $380 million.

The study apparently does not include cases where S&L operators were sentenced to more than 10 years but actually released far earlier. A typical case is that of Don Dixon and Edwin McBirney, their thrifts lost more than $3 billion dollars, to be paid by taxpayers. Both were sentenced to 15 years in prison. In exchange for cooperating with prosecutors their sentences wereshortened to five years or less. McBirney is due to be released in early 1995, after having served about 20 months, Dixon was released on November 7, 1994, after serving less than 4 years.

The study confirms what many already know, namely that the bigger the crook the less time they will do, assuming they even see the inside of a courtroom. Michael Milken made billions of dollars through fraud (in one year he made over $550 million) and was sentenced to 10 years in prison. He later got his sentence reduced and served only 20 months and he got to keep most of his money so that even after paying hundreds of millions of dollars in fines he remains one of the richest men in America. While he was convicted of fraud his other crimes were not charged because in a capitalist economy they are not even "illegal."  The "legal" ways Milken made money was to target companies whose worker pension funds were adequately financed to provide for their workers retirement, take them over, loot their pension funds, lay off workers, sell off its valuable assets then after this "downsizing" sell the company. This took place on a massive scale and resulted in tens of thousands of workers being laid off, jobs were moved to third world sweat shops and workers were deprived of the pensions they thought they had spent their lives earning. In the wake of this human devastation, which is perfectly "legal," Milken is still rich, out of prison and making money teaching business courses at UCLA. Milkens buddy Ivan Boesky did the same, after doing less than 3 years in a federal prison camp and paying hundreds of millions of dollars in fines he too remains one of the richest men in America, uncharged for his real crimes.

Former televangelist Jim Bakker was convicted of defrauding tens of thousands of citizens and investors for more than $100 million and originally sentenced to 45 years in prison. He was released after less than five. Leona Helmsley, a billionaire, was sentenced to four years in prison for tax evasion but got a sentence reduction so she could be with her ailing husband. She served less than 18 months.

The average total amount of money and property stolen in street crimes, bank robberies, etc. in the U.S. is a fraction of that stolen by people like Milken, Dixon, et al. Yet the poor who steal little are punished far more harshly than the rich who steal a lot. Illustrating that the "criminal justice" system exists to keep the poor in their place rather than to serve any abstract notions of justice. German playwright Bertolt Brecht once asked which is the greater crime, to rob a bank or to own one? The DOJ study concludes that robbing and looting your own bank is a lot more profitable and a lot less likely to be prosecuted than robbing someone elses. The average take in an armed bank robbery is only $1,500, the average sentence for a first time offender is 5-7 years. Not stated but readily apparent is that the criminal laws of this country are aimed at protecting the property and money of rich people from theft by the poor, not the other way around. How much time do you think youd have gotten for stealing $3 billion? Men in Washington state are being sentenced to life in prison, without parole, for stealing $151. In California stealing 50 cents is getting a 25 year sentence without parole.

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