Federal Crimes and the Destruction of Law: Prosecutors' Abuse of the RICO and Fraud Statutes Is Threatening the Nation's Economy

By Anderson, William L. | Regulation, Winter 2009 | Go to article overview

Federal Crimes and the Destruction of Law: Prosecutors' Abuse of the RICO and Fraud Statutes Is Threatening the Nation's Economy


Anderson, William L., Regulation


In April of 1940, new U.S. Attorney General Robert H. Jackson delivered an address to the Second Annual Conference of United States Attorneys in which he warned that federal prosecutors were losing perspective on the limits of their powers. Federal law, he said, was so expansive and vague that prosecutors could pursue anyone they considered unsavory, regardless of whether there was a clear violation of law. The danger, he said, was that prosecutors would first target individuals for prosecution and then look for a crime to prosecute, and that was where "the greatest danger of abuse of prosecuting power lies." The speech was so significant that it would later be republished, with some revisions, as "The Federal Prosecutor" in the Journal of Criminal Law and Criminology and the Journal of the American Judicature Society.

Almost 50 years after Jackson's speech, federal prosecutors in New York, led by then--U.S. Attorney Rudolph Giuliani, decided to target a number of people on Wall Street, including billionaire investment banker Michael Milken, and then went shopping for crimes for which they could charge them. Giuliani ultimately settled on the Racketeer Influenced and Corrupt Organizations Act, better known as RICO, and went to work. By the time Giuliani was done, Milken was in prison and hundreds of billions of dollars of financial wreckage were left behind.

It was somewhat unusual in 1989 for federal prosecutors to use the criminal RICO statutes to prosecute people in business and finance. Today, use of RICO is commonplace. In fact, U.S. attorneys have thousands of statutes and many more thousands of regulations, not to mention the air of invincibility that comes with the fact that federal prosecutors pretty much are the law these days. Harvey Silverglate writes in his new book, Three Felonies a Day, that the average professional person most likely commits a number of federal crimes each day, for which an enterprising U.S. attorney could find a way to prosecute. That most people are not indicted reflects the simple fact that there are too many people and too few prosecutors to accomplish such a questionable feat; it also reflects the sad fact that federal prosecutors prefer to go after bigger targets because high-profile prosecutions and convictions grease the system and establish a successful prosecutorial and political career.

Silverglate recently told Reason that businesspeople increasingly will be targeted in the current economic climate:

   White collar prosecution issues will be front-and-center
   because the trend within the Criminal Division of
   the Justice Department in the last quarter century has
   been the increasingly unfair application of vague criminal
   statutes to innocent members of a wide range of
   occupational groups for conduct not intuitively criminal.
   This prosecutorial trend will become exacerbated
   with the flood of indictments just around the corner,
   seeking scapegoats for an economic collapse for which
   the federal government is not going to want to take its
   fair (and rather large) share of the credit (or blame, as
   the case may be).

In the process of expanding federal criminal law, prosecutors, accommodating judges (many of whom are former federal prosecutors), members of Congress, and compliant juries have managed to eliminate almost all of the protections that old English common law and the legal traditions that once existed in this country had established for people accused of crimes. Federal law in almost no way represents the system we inherited from Great Britain; if anything, it is reminiscent of the former Soviet Union's "crimes of analogy," in which a "crime" could be fashioned from nearly any activity as long as a prosecutor could find a law criminalizing "similar" conduct.

RICO, ASSET FORFEITURE, AND THEIR ORIGINS

The numbers tell a harsh story. In 1980, there were about 1,500 federal prosecutors and approximately 20,000 federal prisoners. …

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