Prosecutions drop for US white-collar crime
By Alexandra Marks | Staff writer of The Christian Science Monitor

NEW YORK – It's the kind of announcement that should put white-collar criminals on notice. The Securities and Exchange Commission (SEC) is now investigating more than 80 companies in the growing stock-option scandal. The government has charged officials at two companies for backdating options - a practice that funneled guaranteed profits to executives. More indictments are expected.

But far from ratcheting up the fight against financial wrongdoing, the federal government is actually shifting resources away from it. The number of white-collar crime prosecutions is down 28 percent from five years ago, according to an analysis of federal data by the Transactional Records Access Clearinghouse at Syracuse University.

The reason? The government's focus on homeland security, experts say. In the same period white-collar crime prosecutions fell, for instance, immigration prosecutions more than doubled.

"There's been a shift of priorities since Sept. 11 at the [Federal Bureau of Investigation], in the sense that they've moved bodies from fraud and white-collar crime units to terrorism units," says James Sanders, a partner at McDermott Will & Emery in Los Angeles and a former federal prosecutor. "At the same time, the [white-collar crime] cases have gotten bigger and more complex."

The Justice Department also defends its success in fighting corporate crime, noting that it's cyclical in nature. "We had an extremely high number of convictions from 2001 to 2004, which rose from years prior to 2001 and is typical of these kinds of investigations and prosecutions because they are cyclical," says Brian Roehrkasse, a Department of Justice spokesman. "Since July of 2002, we've had 1,063 corporate fraud convictions, which is a significant amount of work in a four-year period."

White-collar crime experts don't fault the Justice Department for lack of zeal in its work, but do worry about the shrinking resources devoted to keeping corporate America on its ethical toes.

"People can steal a much greater amount of money with a pen than they can with a gun," says Mr. Page. "If we don't take a stand to say, 'Look, this is wrong' ... then we turn our head, and it results in a lot of people thinking it's OK."