In an opinion piece that ran in both the Washington Post and Chicago Tribune last week titled Five Myths About White Collar Crime, Sullivan & Cromwell partner Nicolas Bourtin tries to make the point that, contrary to popular myth, the federal government is in fact tough on white collar crime.

Nicolas Bourtin
Sullivan & Cromwell

And through one lens, the lens Bourtin looks through, he’s right. There is a lot of prosecution of white collar crime – crime by committed less powerful banks and corporations and their executives.

But as you move up the food chain – to the powerful corporations represented by the likes of Sullivan & Cromwell and the other elite corporate criminal defense law firms – you start to see a different picture.

Over the last thirty years or so, for example, about 3,000 companies in the United States have entered into settlements with the federal government to resolve criminal investigations.

About 2,500 of them have pled guilty. The vast majority of the companies forced to plead guilty are smaller less powerful companies.

The remaining 500 companies have been given deferred and non prosecution agreements. And those companies are the large and more powerful companies. They get to sidestep the guilty plea.

Bourtin says that it’s a myth “prosecutors fear prosecuting powerful defendants.”

Maybe it’s not fear. Maybe it’s just prosecutors know how the game is played. And if they want to keep playing it, if they want to swing through the revolving door to a big payoff on the other side, they won’t get uppity and start criminally prosecuting big banks, big corporations or their executives.

Bourtin says that one of the myths is “no one went to prison as a result of the financial crisis.”

What about Edward Woodard? Bourtin asks.

Woodard is the former chief executive of the Bank of the Commonwealth in Norfolk who was sentenced to more than two decades in prison in 2013 for charges of massive fraud related to the mortgage crisis.

Bourtin’s five myths did not sit well with reporters who have looked closely at the Justice Department’s response to corporate crime.

Jesse Eisinger, author of The Chickenshit Club: Why the Justice Department Fails to Prosecute Executives, calls Bourtin’s arguments “laughable.”

“He gives up the game entirely when he grasps for examples of financial crisis cases and has to point to the CEO of the Bank of the Commonwealth as evidence,” Eisinger said. “Yes we all remember the Bank of the Commonwealth cratering the global economy.”

“He completely ignores all the evidence. White collar cases, by the Department of Justice’s own admission, are down to about 10% of total cases from 20% to the early 1990s. White collar prosecutions of individuals are at a 20-year low. And that understated the seriousness of the problem because they aren’t going after top corporate executives at the major companies. There is simply nothing mythical about this. These are facts.”

“Sure they got Raj Rajaratnam But he was an insider trader at a small employer. Those cases are not easy but they are easier.”

“Yes they used wiretaps in those cases. But there are myriad examples of not using aggressive techniques in corporate white collar cases. Instead they have multiple meetings with defense lawyers to negotiate the terms of proffers. The Southern District of New York hardly even puts top executives in the grand jury anymore.”

“The question is why they don’t prosecute these cases, which he doesn’t address. My argument goes beyond fear. But fear of a career altering loss clearly is one reason.”

And David Dayen, author of Chain of Title: How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud, was equally harsh on Bourtin’s piece.

“This is written by a corporate lawyer for one of Washington’s biggest white-collar defense firms who is currently representing Barclays Bank,” Dayen said. “Most of the bankers cited here who were actually jailed were investigated by the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) not by the Justice Department. I think if you talked to either Neil Barofsky or Christy Romero, the actual SIGTARPs, they would agree that the law enforcement response to the financial crisis was irresponsibly weak. And highlighting the CEO of Virginia’s Bank of the Commonwealth, a community bank with a mere $1.1 billion in assets at its peak, is indicative of the strained attempt to call anyone called a ‘banker’ a major financial crisis figure. The folks in the C-suites on Wall Street are laughing at this propaganda.”