Pretty obviously because a pot charge is typically simple to adjudicate (you were arrested, you had pot, that's illegal) and white-collar investor and product fraud cases are not. The criminal case against Balwani and Holmes is complicated, and it will take time to resolve.
(Relatively few people are at this point in jail for smoking pot, for whatever that's worth to you).
It's not. It might seem to be the case to you, me, and others with some understanding of the legal system in the United States, but when we consider the background knowledge of the legal system required to understand how cases are adjudicated, this is objectively quite generally not obvious.
(Relatively few people are at this point in jail for smoking pot, for whatever that's worth to you).
Compared to what? If Virginia is any indication of trends among non-decriminalized or non-legalized states, it's relatively high. (I'm nitpicking, of course: there's a substantial difference between jail and prison; I'm assuming your definition—innocently, mind you—does not distinguish between the two.) https://ww.google.com/amp/s/www.washingtonpost.com/amphtml/n...
Virginia should jail fewer weed users. I mean, it's going to legalize recreational marijuana within the next 10 years like everyone else; the ship has sailed. What are we arguing about?
What's obvious is that a complicated white-collar fraud case is harder to prosecute than a trivial drug possession case. You don't need to know anything about the criminal justice system to grasp that.
I don’t know how I feel about this. At some point this just seems like BS, a rigged system where the crimes of the rich and white are “too complicated to prosecute” while the crimes of the poor and the minorities are so simple and easy.
Please. One day this system will collapse on itself.
No, you've made up a false debate. This case isn't "too complicated to prosecute"; it's just taking a long time to prosecute. Complex cases always will, because they're complex.
Or just rich. Notice 1 of the 2 main defendants in the case isn't white.
As has been pointed out the more complex the crime the more time and money it takes to prove. Generally wealthier people can commit financial crimes that the poor can not.
The rich can afford expensive lawyers who require an airtight case to prosecute successfully. They also violate the law in much more convoluted schemes that require a lot of work to be able to piece together a case that a jury will understand and believe.
The poor have a shitty public defender who advises them to plead guilty even if they aren't, and if they committed a crime it's likely something simple and straightforward to explain and prove.
It's worse than that. I'm currently waiting for my former landlord to return the security deposit. The law insists that it be returned within a certain time with an accounting, otherwise there are punitive damages; the punitive damages serve to encourage the landlord to be honest in his dealings.
The clock has run out, but my lawyer advises against against asking for damages. Looking at the law, it should be a slam-dunk deal, but apparently the district judge is sufficiently corrupt not to be trusted.
It's not my job to school the landlord to be honest, and since there are no consequences for bad behaviour they will be dishonest and will continue to cheat students and other out-of-towners out of what is rightfully theirs. That, friends, is the reality in the US: groups of the population have good reason to believe that the legal system is not working for them.
Recently, a political TV program commented on the Brazilian election - on one side is a fascist, on the other a representative of party so corrupt that it's unelectable. The situation is approaching a civil war. In the US it's not quite as bad as in Brazil, but it's getting there.
I think your lawyer is not good at their job. It's likely if you took your landlord to court, it'd take 12-18 months (during which you'd do nothing and incur minimal expenses waiting on the court calendar), and then, before you got to trial, your landlord would offer to settle for 50%.
The case itself, hit or miss, but 50% > 0%.
My big lesson from taking landlords to court is that the security deposit is a negotiation.
No, the law is not good at its job. This is in a small college town, it's a large property administration company that looks after ~ 100 investment properties. From what I hear, they habitually do not return the deposit. This shouldn't happen.
How much are you willing to bet? The demand letter is in the mail, if the money doesn't show up next Friday the matter will end up at the qadi's.
All landlords habitually don't return deposits. I have rented cheap apartments and expensive apartments and houses and vacation rentals, in college towns (Ann Arbor) and all over Chicago and San Francisco --- all places with good tenants unions. In SF, I paid up front my whole year's rent. I have never, ever had a landlord return a security deposit. Not once.
Landlords expect you to come at them for the deposit. If you don't, it's a 13th month rent. The serious renters just treat the deposit as their 12th month rent, but if you didn't do that, or care about your reference, you sue for it.
IANAL let alone your L, but at this point, in my 42nd year of life, if I don't get my security deposit back, I drop a buck fifty and put a suit in process, fully expecting the landlord to whine at me and then start the actual negotiation.
I've rented in 5 cities across the US. I have never once had to even ask for my security deposit to be returned. It's just assumed that I would get it back, and I do.
In the cities where I've lived, I've never heard of anyone not getting their security deposit back. I honestly had no idea we were so lucky!
Really. I have busted my apartment complex having "pre-written" the move out report, complete with thousands of dollars of cleaning "required", before we had the inspection. They just made the mistake of leaving it on the PM's desk in sight of me.
It is really a thing. You've been super lucky. After my first apartment, we started hiring cleaning services to do a pre-move-out clean, which, in retrospect, was pretty stupid, because the condition of the apartment's got nothing to do with anything.
It is in most of the UK rental agreements I've had. If they have to hire a cleaning service to clean it up, they recover the cost from your deposit. You're supposed to leave it in the good condition it was when you moved in.
As somebody who is a landlord, albeit far from the bay area, I've never seen any tenant that expected the security deposit back. Usually, they break the lease before the lease terms are up, and want to have the security deposit applied as last month's rent. I've had nondestructive tenants and am a generally over-nice guy, so I usually go with it...
I rented a house for a week in Michigan this summer --- the whole rent was paid up front --- and the landlord illegally retained a substantial portion of the security deposit. They have the money. Why would they ever give it back if they didn't have to?
I'm sure there are scummy ones that do that. The other shoe is that landlords have to deal with the shifty end of people a lot of the time. When I bought my current rental, the previous owner went to great lengths to educate me on what could be done with non-paying tenants and eviction procedures; it seemed that knowledge was hard earned.
This got so prevalent in England, that the law was changed UK-wide to require all deposits to go into a third-party deposit scheme so that the landlords didn't have possession of it themselves. Any repairs need to be justified and it can be contested. It is a drastic step to take, but when a significant minority of landlords were abusing their privilege, it was I think a reasonable solution.
The strong majority of all prisoners are in for violent crime and property crime. Public order offenses (which includes eg weapons and DUIs) are nearly as large as all drug offenses.
There are about 60% as many people in state prisons for just burglary, as all drug offenses.
In 2015, only 3.4% of people in state prisons were in for drug possesion of any type. Marijuana would be a small subset of that figure.
While you aren't wrong, I think the original commenter was trying to say "it shouldn't be this way".
Pre-trial detention is a thing too, of course. They can afford bail, but many innocent people who literally did not do the crime they're accused of still sit in jail for months/years waiting for a trial.
Relatively few people are in prison for pot at all, was I guess my point. But I'm not looking to litigate weed law, which is something that virtually everyone on HN directionally agrees about anyways.
They were arrested and out on a $500k bail. The same happens for those now in jail for smoking pot or dealing or whatever. The trial is now going on and the prosecution thinks it has a potentially far bigger case that can net more on charges.
Holmes settled the civil case with the SEC I believe so she’s cleared there. She absolutely could be jailed for a long time, but the wheels of justice turn slowly.
Incarceration is supposed to protect the upcoming trial, from the accused fleeing, tampering with evidence or witnesses.
It is not a punitive measure. Innocent until proven guilty, etc.
So while it's fair to criticise the disparate abilities to post bail, changing the system to incarcerate more rich accused would just be compounding injustice.
On the other hand, in the UK: "Under s. 4 of the Bail Act 1976, on each occasion that a person is brought before a court accused of an offence, or remanded after conviction for enquiries or a report, he must be granted bail without condition, if none of the exceptions to bail apply."
After seeing how few senior financial industry people went to prison for their work that directly caused the 2007-2009 economic crisis, I'm highly skeptical that justice will actually be served.
I'd love to hear which specific person did which specific thing that you believe "directly caused the 2007-2009 economic crisis."
Identifying a "direct cause" of the 2007-2009 financial crisis, with certainty exceeding 90-95% (the "reasonable doubt" threshold) would be worthy of a Nobel Memorial Prize, in my estimation.
a) the people who paid off the bond rating agencies to rate mortgage-backed securities full of junk mortgages as AAA.
b) the senior executives at institutions like bear stearns who signed off on creating the mortgage backed securities and their known composition of shit mortgages.
c) the senior executives at the rating agencies who knowingly rated shit bonds as AAA.
d) senior executives at institutions like Countrywide which pumped the shit mortgages into the market.
no, at a more fundamental level before the ratings agencies ever saw them, the composition of the mortgage-backed securities and their tranches. The number of no-documentation/no-income mortgages that were rolled together into securitized products by the clients of the ratings agencies.
For all of those you would need definitive proof that those decisions were made with criminal intent to commit fraud. That is a very high evidentiary standard to clear, which is why these cases are so hard to prosecute.
Even the Enron case, which was a pretty clear case of fraud, took the government 5 years to build a case and win in court.
So, while all of those things you mention do indeed sound bad, they are incredibly difficult to prove in a criminal trial.
While I don't disagree with your points, it boils down to a defense by the persons accused of "We, titans of industry of finance, were so clueless, inept and incompetent that this unexpected thing happened. We definitely weren't intentionally trying to defraud anyone!". Doesn't exactly sound like a ringing endorsement for people whose yearly salaries are >$500,000.
Making profits unethically doesn't necessarily mean it's fraud. The two things are very different.
I can knowingly sell you a crappy car, and if you sign an agreement that you bought and accepted the good in its current state, that's that. Yes, I acted unethically, but I didn't defraud you.
First, that's not the defense. The defense is that the 2007-2009 recession was a "black swan" event resulting from a confluence of factors that nobody expected. To date, I'm not aware of any economic work that points, with 95%+ certainty, to a specific cause of the recession.
Second, a successful prosecution requires proof beyond a reasonable doubt that a specific person performed each element of specific crimes. Defendants do not need to even present a defense--and in fact sometimes do not, relying entirely on poking holes in the government's case.
Both b and d are most definitely not illegal -- deceptive yes, but not illegal.
If I sell you a crappy asset (imagine a company almost going bankrupt) for $10m and you don't do proper due diligence on said asset, then you have no right of complaining afterwards. No one is going to do your homework.
If I am your client, you have fiduciary responsibility to warn me - I am paying you commission to do due diligence.
If you know it is a crappy product, and don;t warn me, it is at the very least a SEC violation, punishable. Could also be viewed as fraud, and pursued as a crime.
Supposedly, that's why they paid "largest penalty ever assessed against a financial services firm in the history of the S.E.C." ($550 million). Unfortunately, I find it hard to believe that's anywhere near enough to dissuade them from doing the same next time.
Nobody "paid off the rating agencies". Or, more accurately: everyone did. It was standard practice for the rating agencies to be paid by those being rated.
Now that's obviously not a terribly smart idea. But there's simply no way to blame any single individual when none of them had the power to the system by themselves. I mean: quite obviously the companies being rated would have loved for others to bear the costs for it.
There are organizations, financial institutions, executives, investors, businesses, etc. that did not deserve jail, but did deserve to lose financially.
Instead, some lost their sort and others were shielded with $100,000,000,000s of taxpayer money.
The kinds of people that supported this flagrant graft are despicable. Probably not jailable (I mean most politicians and even the president supported bailing out asset holders), but more despicable than Zuckerberg or most of the scapegoats you see in the news.
Of everyone involved, I would love to see the rating agencies and their corporate officers get charged with fraud for rating the bundles of crappy mortgages AAA.
It's a rough estimate to help you grok the concept, and is widely taught in law school. It is best viewed in comparison to another standard like "preponderance of the evidence" or "more likely than not" (51%)
Are you advocating that the US government should just charge people with crimes that haven't been investigated and they have perhaps no evidence for, just to see if a jury will convict them?
That can be easily refuted by saying “do you really think that all big bank executives didn’t know what was going on and decided to ride the money wave”?
Knowing that one or more people of a group have done something doesn't necessarily lead to knowing which ones, or having proof of them doing that thing. (much less proof of knowing, which is what you are saying).
“Where there is smoke there is fire” is not a doctrine of criminal law. Also, by that token, who should we have prosecuted for the 2000 tech-related crash?
the dotcom 1.0 crash had a lot of irrational exuberance, where VC money was raised and pissed away for ideas that wouldn't work at the time (beenz, flooz, pets.com, webvan, etc). Then there was the outright fraud like Enron and Worldcom.
Eric Holder, the attorney general at the time, did not prosecute bankers for the 2008 recession. The attorney general did prosecute people responsible for the issues in the dot com crash.
How is that comparable? Holder even stated, "I am concerned that the size of some of these institutions becomes so large that it does become difficult to prosecute them" because it might damage the economy. That is not an aspect the AG should be considering. They should be upholding the rule of law which did not occur after the 2008 crisis
Grassley: Do you believe that the investment bankers that were repackaging bad mortgages that were AAA-rated are guilty of fraud or is it a case of just not being aggressive or effective enough to prove that they did something fraudulent and criminal?
Holder: We looked at those kinds of cases. I think we have been appropriately aggressive, these are not always easy cases to make. When you look at these cases, you see that things were done ‘wrong’ then the question is whether or not they were illegal. And I think the people in our criminal division… I think have been as aggressive as they could be, brought cases where we think we could have brought them. I know that in some instances that has not been a satisfying answer to people, but we have been as aggressive as we could have been.
He also says:
Holder: You are right, senator. The greatest deterrent effect is not to prosecute a corporation — although that’s important — the greatest deterrent effect is to prosecute the individuals in the corporations that are responsible for those decisions.
He's saying the opposite of what you're claiming he said: that he tried to prosecute the "bankers" as aggressively as he could, but the cases were "not easy to make."
More granularly than decisions made by Holder, one could also look at the number of prosecutions (vs lack of prosecutions) from the US Southern District of New York which has jurisdiction in the area.
Madoff and Alan Stanford went to jail. although unrelated to the 2008 financial crisis, is evidence white collar criminals can in fact get very punitive sentences. In the case of the 2008 crisis, the link between the actions of any one individual and the crisis itself is more tenuous. The problem was no so much maleficence, but underestimating risk. The risk management models these banks were using could not have foreseen such a large and sudden catastrophic failure. You cannot put people in jail for failing to account for tail risk. Second, the crisis was possibly also caused by poor government policy, such as programs creating incentives for low-income homeowners who may have not have had good credit.
there is fairly strong evidence that repeal of the glass-steagall act was a contributing factor to the environment that allowed investment/securities firms to get out of control in the 2001-2008 time period:
Well, what do you expect? Of the last four secretaries of the treasury, not counting the acting ones who had the job briefly, three were from Goldman Sachs. The other one was from Citicorp.
I'm pretty sure it's not possible to find congress guilty of breaking the law by using the power vested in them by the Constitution. I think the closest you could come would be laws being ratified that the Supreme court then determined (from a case being brought) that infringed on constitutional rights, in which case that portion of the law is struck, but IANAL.
Virtually nobody went to jail because the govt was complicit in the whole scheme to a) boost the economy through debt creation and b) push loans for sub-prime borrowers (specifically targeting minorities) to get buy-in for the "American Dream" of home ownership for "disadvantaged" groups.
Moreover (and probably more important) is that the parties involved except the govt all had plausible deniability in that they could point to the other parties to deflect blame. I say "except the govt" because they were the ones who were pushing the banks to lower loan standards for minorities, backing the GSE's with explicit loan guarantees and encouraging home ownership as the essence of the American dream to minorities. The mechanics or mistakes of how it was done, with CDO's or inflated credit ratings or even fraud, were a consequence of the govt pressure applied. Also, this was not an explicit policy written into regs & etc. but an implicit policy imposed by threats or hints by agencies that had a lot of power over the banking, mortgage and credit markets they regulate.
In medical the standards are a little higher so they may be found as having violated medical regulations.
What I am curious about is whether Holmes will in the end have made any money with Theranos. She should lose everything and then some more but I suspect she will still end up with a few million in the bank or in houses.
They used central lab with conventional test equipment to consolidate and process patient samples (not their magic lab on the bench device) and issue the results. The problem was that their central lab(s) was run poorly (multiple violations) so the results were questioned. (Similar to lets say a bread factory making bread, then the inspector comes in and finds out that certain fridges used for yeast storage were out of spec by 5 degrees, no batch log files etc. and shuts down the factory. The bread that was produced at such factory was definitely not "fake").
I believe its a case of completely incompetent leadership that ultimately snowballed into MUCH bigger issues (what else to expect from a 19 year old girl with no experience running a company in one of the hardest/most complicated and most heavily regulated industries?)!
I am not a lawyer but can't/shouldn't the defense request a dismissal at this point if the prosecutor just admitted it is an on-going investigation? It seems a bit unfair to continue with the case while using the fact that it is an open investigation as a cover to collect more evidence against them. It is unfair because the lawyers for the defense are trying to defend against a moving target.
NB: Not defending Holmes or Balwani but curious about the legal status of the case.
That's not how a superseding indictment works! A superseding indictment charges more (or different) crimes than the original indictment. The process for obtaining the indictments in the first place is the same.
That’s kind of the point of the grand jury. It’s an investigative body. Grand juries are typically convened when investigations reach critical mass, and are then used to issue subpoenas for additional information, leading to an indictment, which then leaves to arrest and trial.
Grand juries are often used for a single charge, but can also be used to supervise a lengthy investigation with multiple charges and multiple defendants (like the ones used by Robert Mueller in his investigations of Russian election interference).
I'm curious about this as well. I've certainly googled and found cases where additional charges were later added, but I'd love to read a discussion the legality of using the grand jury process to discover evidence for charging people not named in the first indictment.
Comments
Why aren't Holmes and the other guy in jail. I mean there are people in jail for smoking pot and these guys did massive fraud and they are free.
I hope they don't just give them some fine. Makes the judicial system look bad.
Pretty obviously because a pot charge is typically simple to adjudicate (you were arrested, you had pot, that's illegal) and white-collar investor and product fraud cases are not. The criminal case against Balwani and Holmes is complicated, and it will take time to resolve.
(Relatively few people are at this point in jail for smoking pot, for whatever that's worth to you).
It's not. It might seem to be the case to you, me, and others with some understanding of the legal system in the United States, but when we consider the background knowledge of the legal system required to understand how cases are adjudicated, this is objectively quite generally not obvious.
Compared to what? If Virginia is any indication of trends among non-decriminalized or non-legalized states, it's relatively high. (I'm nitpicking, of course: there's a substantial difference between jail and prison; I'm assuming your definition—innocently, mind you—does not distinguish between the two.) https://ww.google.com/amp/s/www.washingtonpost.com/amphtml/n...
Virginia should jail fewer weed users. I mean, it's going to legalize recreational marijuana within the next 10 years like everyone else; the ship has sailed. What are we arguing about?
What's obvious is that a complicated white-collar fraud case is harder to prosecute than a trivial drug possession case. You don't need to know anything about the criminal justice system to grasp that.
I don’t know how I feel about this. At some point this just seems like BS, a rigged system where the crimes of the rich and white are “too complicated to prosecute” while the crimes of the poor and the minorities are so simple and easy.
Please. One day this system will collapse on itself.
No, you've made up a false debate. This case isn't "too complicated to prosecute"; it's just taking a long time to prosecute. Complex cases always will, because they're complex.
Or just rich. Notice 1 of the 2 main defendants in the case isn't white.
As has been pointed out the more complex the crime the more time and money it takes to prove. Generally wealthier people can commit financial crimes that the poor can not.
The rich can afford expensive lawyers who require an airtight case to prosecute successfully. They also violate the law in much more convoluted schemes that require a lot of work to be able to piece together a case that a jury will understand and believe.
The poor have a shitty public defender who advises them to plead guilty even if they aren't, and if they committed a crime it's likely something simple and straightforward to explain and prove.
It's worse than that. I'm currently waiting for my former landlord to return the security deposit. The law insists that it be returned within a certain time with an accounting, otherwise there are punitive damages; the punitive damages serve to encourage the landlord to be honest in his dealings.
The clock has run out, but my lawyer advises against against asking for damages. Looking at the law, it should be a slam-dunk deal, but apparently the district judge is sufficiently corrupt not to be trusted.
It's not my job to school the landlord to be honest, and since there are no consequences for bad behaviour they will be dishonest and will continue to cheat students and other out-of-towners out of what is rightfully theirs. That, friends, is the reality in the US: groups of the population have good reason to believe that the legal system is not working for them.
Recently, a political TV program commented on the Brazilian election - on one side is a fascist, on the other a representative of party so corrupt that it's unelectable. The situation is approaching a civil war. In the US it's not quite as bad as in Brazil, but it's getting there.
I think your lawyer is not good at their job. It's likely if you took your landlord to court, it'd take 12-18 months (during which you'd do nothing and incur minimal expenses waiting on the court calendar), and then, before you got to trial, your landlord would offer to settle for 50%.
The case itself, hit or miss, but 50% > 0%.
My big lesson from taking landlords to court is that the security deposit is a negotiation.
No, the law is not good at its job. This is in a small college town, it's a large property administration company that looks after ~ 100 investment properties. From what I hear, they habitually do not return the deposit. This shouldn't happen.
How much are you willing to bet? The demand letter is in the mail, if the money doesn't show up next Friday the matter will end up at the qadi's.
All landlords habitually don't return deposits. I have rented cheap apartments and expensive apartments and houses and vacation rentals, in college towns (Ann Arbor) and all over Chicago and San Francisco --- all places with good tenants unions. In SF, I paid up front my whole year's rent. I have never, ever had a landlord return a security deposit. Not once.
Landlords expect you to come at them for the deposit. If you don't, it's a 13th month rent. The serious renters just treat the deposit as their 12th month rent, but if you didn't do that, or care about your reference, you sue for it.
IANAL let alone your L, but at this point, in my 42nd year of life, if I don't get my security deposit back, I drop a buck fifty and put a suit in process, fully expecting the landlord to whine at me and then start the actual negotiation.
Wait is this really a thing?
I've rented in 5 cities across the US. I have never once had to even ask for my security deposit to be returned. It's just assumed that I would get it back, and I do.
In the cities where I've lived, I've never heard of anyone not getting their security deposit back. I honestly had no idea we were so lucky!
Really. I have busted my apartment complex having "pre-written" the move out report, complete with thousands of dollars of cleaning "required", before we had the inspection. They just made the mistake of leaving it on the PM's desk in sight of me.
It is really a thing. You've been super lucky. After my first apartment, we started hiring cleaning services to do a pre-move-out clean, which, in retrospect, was pretty stupid, because the condition of the apartment's got nothing to do with anything.
It is in most of the UK rental agreements I've had. If they have to hire a cleaning service to clean it up, they recover the cost from your deposit. You're supposed to leave it in the good condition it was when you moved in.
Sorry, I can't speak to the UK, just the US.
As somebody who is a landlord, albeit far from the bay area, I've never seen any tenant that expected the security deposit back. Usually, they break the lease before the lease terms are up, and want to have the security deposit applied as last month's rent. I've had nondestructive tenants and am a generally over-nice guy, so I usually go with it...
I rented a house for a week in Michigan this summer --- the whole rent was paid up front --- and the landlord illegally retained a substantial portion of the security deposit. They have the money. Why would they ever give it back if they didn't have to?
I'm sure there are scummy ones that do that. The other shoe is that landlords have to deal with the shifty end of people a lot of the time. When I bought my current rental, the previous owner went to great lengths to educate me on what could be done with non-paying tenants and eviction procedures; it seemed that knowledge was hard earned.
This got so prevalent in England, that the law was changed UK-wide to require all deposits to go into a third-party deposit scheme so that the landlords didn't have possession of it themselves. Any repairs need to be justified and it can be contested. It is a drastic step to take, but when a significant minority of landlords were abusing their privilege, it was I think a reasonable solution.
Is small court claim not an option in US?
It is, if your security deposit is below the limit. It's usually 1-1.5x rent.
For anyone curious about the numbers around what tptacek is saying (given the popularity of the myth that the US mass incarcerates pot smokers):
https://i.imgur.com/whWAVs3.jpg
The strong majority of all prisoners are in for violent crime and property crime. Public order offenses (which includes eg weapons and DUIs) are nearly as large as all drug offenses.
There are about 60% as many people in state prisons for just burglary, as all drug offenses.
In 2015, only 3.4% of people in state prisons were in for drug possesion of any type. Marijuana would be a small subset of that figure.
Well played. Now, what percentage of people were in local jails for drug possession? Pre- and post-conviction?
And what you will find by reading Thomas’s HN or twitter feed is that he’s often opinionated yet rarely wrong.
While you aren't wrong, I think the original commenter was trying to say "it shouldn't be this way".
Pre-trial detention is a thing too, of course. They can afford bail, but many innocent people who literally did not do the crime they're accused of still sit in jail for months/years waiting for a trial.
I'm not sure what "should" has to do with it! Complicated cases are complicated. Simple cases aren't.
I think directionally most people on HN already agree with you about cash bail. I certainly believe it should be done away with.
Yeah, it's very difficult to win cases when you only use tools like raids or wiretaps against people unlikely to mount any sort of legal challenge.
Yeah just for possessing it, such a major difference.
Relatively few people are in prison for pot at all, was I guess my point. But I'm not looking to litigate weed law, which is something that virtually everyone on HN directionally agrees about anyways.
Even still, relative to other prisoners, weed is pretty minor. You're talking like ~1% of the prison population.
Arrest rates are way higher though.
They were arrested and out on a $500k bail. The same happens for those now in jail for smoking pot or dealing or whatever. The trial is now going on and the prosecution thinks it has a potentially far bigger case that can net more on charges.
Holmes settled the civil case with the SEC I believe so she’s cleared there. She absolutely could be jailed for a long time, but the wheels of justice turn slowly.
It's too easy to get rich by fraud and use it to pay for you bail out.
The wheels of justice turns slow if you have money.
Incarceration is supposed to protect the upcoming trial, from the accused fleeing, tampering with evidence or witnesses.
It is not a punitive measure. Innocent until proven guilty, etc.
So while it's fair to criticise the disparate abilities to post bail, changing the system to incarcerate more rich accused would just be compounding injustice.
On the other hand, in the UK: "Under s. 4 of the Bail Act 1976, on each occasion that a person is brought before a court accused of an offence, or remanded after conviction for enquiries or a report, he must be granted bail without condition, if none of the exceptions to bail apply."
https://www.cps.gov.uk/legal-guidance/bail
Charging an arm and a leg to receive bail doesn't seem like it's serving any useful purpose?
Now you're getting some of the logic of civil asset forfeiture. (I don't support or not support it).
Maybe because they haven't been convicted yet.
After seeing how few senior financial industry people went to prison for their work that directly caused the 2007-2009 economic crisis, I'm highly skeptical that justice will actually be served.
I'd love to hear which specific person did which specific thing that you believe "directly caused the 2007-2009 economic crisis."
Identifying a "direct cause" of the 2007-2009 financial crisis, with certainty exceeding 90-95% (the "reasonable doubt" threshold) would be worthy of a Nobel Memorial Prize, in my estimation.
a) the people who paid off the bond rating agencies to rate mortgage-backed securities full of junk mortgages as AAA.
b) the senior executives at institutions like bear stearns who signed off on creating the mortgage backed securities and their known composition of shit mortgages.
c) the senior executives at the rating agencies who knowingly rated shit bonds as AAA.
d) senior executives at institutions like Countrywide which pumped the shit mortgages into the market.
And you’re 95% certain that bond ratings are what caused the financial crisis?
no, at a more fundamental level before the ratings agencies ever saw them, the composition of the mortgage-backed securities and their tranches. The number of no-documentation/no-income mortgages that were rolled together into securitized products by the clients of the ratings agencies.
So tell us then what it was? Good people doing solid work until they were hit by a random black swan event? That’s the official story and it’s absurd.
I think the implication is that there were multiple causes from multiple sides, all to varying degrees of culpability.
In other words, bond ratings may not be the cause, but still be a cause.
For all of those you would need definitive proof that those decisions were made with criminal intent to commit fraud. That is a very high evidentiary standard to clear, which is why these cases are so hard to prosecute.
Even the Enron case, which was a pretty clear case of fraud, took the government 5 years to build a case and win in court.
So, while all of those things you mention do indeed sound bad, they are incredibly difficult to prove in a criminal trial.
While I don't disagree with your points, it boils down to a defense by the persons accused of "We, titans of industry of finance, were so clueless, inept and incompetent that this unexpected thing happened. We definitely weren't intentionally trying to defraud anyone!". Doesn't exactly sound like a ringing endorsement for people whose yearly salaries are >$500,000.
Making profits unethically doesn't necessarily mean it's fraud. The two things are very different.
I can knowingly sell you a crappy car, and if you sign an agreement that you bought and accepted the good in its current state, that's that. Yes, I acted unethically, but I didn't defraud you.
The rich have the ability to make their unethical actions legal, whereas the poor have no such sway in politics.
It has nothing to do with politics, but it may have something to do with the cost of legal representation.
First, that's not the defense. The defense is that the 2007-2009 recession was a "black swan" event resulting from a confluence of factors that nobody expected. To date, I'm not aware of any economic work that points, with 95%+ certainty, to a specific cause of the recession.
Second, a successful prosecution requires proof beyond a reasonable doubt that a specific person performed each element of specific crimes. Defendants do not need to even present a defense--and in fact sometimes do not, relying entirely on poking holes in the government's case.
That is how our system of criminal law works, though. We would prefer 100 criminals go free to prevent 1 innocent person from being convicted.
Both b and d are most definitely not illegal -- deceptive yes, but not illegal.
If I sell you a crappy asset (imagine a company almost going bankrupt) for $10m and you don't do proper due diligence on said asset, then you have no right of complaining afterwards. No one is going to do your homework.
If I am your client, you have fiduciary responsibility to warn me - I am paying you commission to do due diligence.
If you know it is a crappy product, and don;t warn me, it is at the very least a SEC violation, punishable. Could also be viewed as fraud, and pursued as a crime.
Actually, in the USA, very few financial advisors have a fiduciary duty to their clients.
All bigger institutions certainly do. I have worked for quite a few.
And never mind those situations where GS etc were playing both sides, advising one side to buy, others to sell.
They knew through sheer logic that one of these positions was by deduction not tenable.
But they went for it anyway, collecting commissions on both sides.
Supposedly, that's why they paid "largest penalty ever assessed against a financial services firm in the history of the S.E.C." ($550 million). Unfortunately, I find it hard to believe that's anywhere near enough to dissuade them from doing the same next time.
Nobody "paid off the rating agencies". Or, more accurately: everyone did. It was standard practice for the rating agencies to be paid by those being rated.
Now that's obviously not a terribly smart idea. But there's simply no way to blame any single individual when none of them had the power to the system by themselves. I mean: quite obviously the companies being rated would have loved for others to bear the costs for it.
There are not specific people responsible.
There are organizations, financial institutions, executives, investors, businesses, etc. that did not deserve jail, but did deserve to lose financially.
Instead, some lost their sort and others were shielded with $100,000,000,000s of taxpayer money.
The kinds of people that supported this flagrant graft are despicable. Probably not jailable (I mean most politicians and even the president supported bailing out asset holders), but more despicable than Zuckerberg or most of the scapegoats you see in the news.
Of everyone involved, I would love to see the rating agencies and their corporate officers get charged with fraud for rating the bundles of crappy mortgages AAA.
How do you figure? Smells like a p value taken from a science class, not anything related to a legal definition of reasonable doubt.
It's a rough estimate to help you grok the concept, and is widely taught in law school. It is best viewed in comparison to another standard like "preponderance of the evidence" or "more likely than not" (51%)
It would have been nice to see them throw some charges and see what sticks.
Are you advocating that the US government should just charge people with crimes that haven't been investigated and they have perhaps no evidence for, just to see if a jury will convict them?
No, not even close. But it seems there was not much of an Investigation to see if any laws were broken
It sounds like a great idea, when they’re targeting people you don’t like.
That can be easily refuted by saying “do you really think that all big bank executives didn’t know what was going on and decided to ride the money wave”?
Knowing that one or more people of a group have done something doesn't necessarily lead to knowing which ones, or having proof of them doing that thing. (much less proof of knowing, which is what you are saying).
“Where there is smoke there is fire” is not a doctrine of criminal law. Also, by that token, who should we have prosecuted for the 2000 tech-related crash?
a number of people were prosecuted:
https://www.google.com/search?client=ubuntu&channel=fs&q=wor...
the dotcom 1.0 crash had a lot of irrational exuberance, where VC money was raised and pissed away for ideas that wouldn't work at the time (beenz, flooz, pets.com, webvan, etc). Then there was the outright fraud like Enron and Worldcom.
The criminal justice response to dot-com and to the 2008 crash seem comparable.
Eric Holder, the attorney general at the time, did not prosecute bankers for the 2008 recession. The attorney general did prosecute people responsible for the issues in the dot com crash.
How is that comparable? Holder even stated, "I am concerned that the size of some of these institutions becomes so large that it does become difficult to prosecute them" because it might damage the economy. That is not an aspect the AG should be considering. They should be upholding the rule of law which did not occur after the 2008 crisis
You're taking that quite a bit out of context. Here is the full transcript: http://stopforeclosurefraud.com/2013/03/06/ag-holder-i-am-co....
Right after that, the questioning continues:
He also says:
He's saying the opposite of what you're claiming he said: that he tried to prosecute the "bankers" as aggressively as he could, but the cases were "not easy to make."
More granularly than decisions made by Holder, one could also look at the number of prosecutions (vs lack of prosecutions) from the US Southern District of New York which has jurisdiction in the area.
https://en.wikipedia.org/wiki/Preet_Bharara
Madoff and Alan Stanford went to jail. although unrelated to the 2008 financial crisis, is evidence white collar criminals can in fact get very punitive sentences. In the case of the 2008 crisis, the link between the actions of any one individual and the crisis itself is more tenuous. The problem was no so much maleficence, but underestimating risk. The risk management models these banks were using could not have foreseen such a large and sudden catastrophic failure. You cannot put people in jail for failing to account for tail risk. Second, the crisis was possibly also caused by poor government policy, such as programs creating incentives for low-income homeowners who may have not have had good credit.
there is fairly strong evidence that repeal of the glass-steagall act was a contributing factor to the environment that allowed investment/securities firms to get out of control in the 2001-2008 time period:
https://en.wikipedia.org/wiki/Aftermath_of_the_repeal_of_the...
Well, what do you expect? Of the last four secretaries of the treasury, not counting the acting ones who had the job briefly, three were from Goldman Sachs. The other one was from Citicorp.
So then do we jail our Congess for (un)making laws?
I'm pretty sure it's not possible to find congress guilty of breaking the law by using the power vested in them by the Constitution. I think the closest you could come would be laws being ratified that the Supreme court then determined (from a case being brought) that infringed on constitutional rights, in which case that portion of the law is struck, but IANAL.
Although, maybe you were joking?
I might have used the incorrect sarcasm markup.
Virtually nobody went to jail because the govt was complicit in the whole scheme to a) boost the economy through debt creation and b) push loans for sub-prime borrowers (specifically targeting minorities) to get buy-in for the "American Dream" of home ownership for "disadvantaged" groups.
Moreover (and probably more important) is that the parties involved except the govt all had plausible deniability in that they could point to the other parties to deflect blame. I say "except the govt" because they were the ones who were pushing the banks to lower loan standards for minorities, backing the GSE's with explicit loan guarantees and encouraging home ownership as the essence of the American dream to minorities. The mechanics or mistakes of how it was done, with CDO's or inflated credit ratings or even fraud, were a consequence of the govt pressure applied. Also, this was not an explicit policy written into regs & etc. but an implicit policy imposed by threats or hints by agencies that had a lot of power over the banking, mortgage and credit markets they regulate.
Rich government officials were the victims this time. I feel confident.
I’m a little shocked at the expectation that the US should be the type of banana republic that imprisons people as scapegoats for recessions.
In medical the standards are a little higher so they may be found as having violated medical regulations.
What I am curious about is whether Holmes will in the end have made any money with Theranos. She should lose everything and then some more but I suspect she will still end up with a few million in the bank or in houses.
How many startup CEOs with "fake it until you make it" philosophy are sweating a bit more these days??
How many of them sold fake blood tests to real patients? I think fraud is one thing, putting up a successful facade is not quite fraud.
FYI: these were not "fake blood tests"!
They used central lab with conventional test equipment to consolidate and process patient samples (not their magic lab on the bench device) and issue the results. The problem was that their central lab(s) was run poorly (multiple violations) so the results were questioned. (Similar to lets say a bread factory making bread, then the inspector comes in and finds out that certain fridges used for yeast storage were out of spec by 5 degrees, no batch log files etc. and shuts down the factory. The bread that was produced at such factory was definitely not "fake").
I believe its a case of completely incompetent leadership that ultimately snowballed into MUCH bigger issues (what else to expect from a 19 year old girl with no experience running a company in one of the hardest/most complicated and most heavily regulated industries?)!
This Silicon Valley morality tale still has life! It's time for the WSJ to get John Carreyrou back on the story.
What IP are they protecting? I think the problem is there was no IP. Ever.
I am not a lawyer but can't/shouldn't the defense request a dismissal at this point if the prosecutor just admitted it is an on-going investigation? It seems a bit unfair to continue with the case while using the fact that it is an open investigation as a cover to collect more evidence against them. It is unfair because the lawyers for the defense are trying to defend against a moving target.
NB: Not defending Holmes or Balwani but curious about the legal status of the case.
Don't superseding indictments happen all the time in criminal cases?
I don't know, not a lawyer. It maybe normal procedure but seems a bit unfair.
Why would that be unfair?
I believe you are guilty, but I don’t have any sufficient evidence(s) yet.
That's not how a superseding indictment works! A superseding indictment charges more (or different) crimes than the original indictment. The process for obtaining the indictments in the first place is the same.
That’s kind of the point of the grand jury. It’s an investigative body. Grand juries are typically convened when investigations reach critical mass, and are then used to issue subpoenas for additional information, leading to an indictment, which then leaves to arrest and trial.
Grand juries are often used for a single charge, but can also be used to supervise a lengthy investigation with multiple charges and multiple defendants (like the ones used by Robert Mueller in his investigations of Russian election interference).
I'm curious about this as well. I've certainly googled and found cases where additional charges were later added, but I'd love to read a discussion the legality of using the grand jury process to discover evidence for charging people not named in the first indictment.
(https://www.justice.gov/opa/pr/superseding-indictment-boyd-m...)