Everywhere you look in America, crime is out of control. Whether it’s Elon Musk—the world’s richest man—cutting regulatory corners in public, professional son-in-law Jared Kushner getting a $2 billion payoff from the Saudis, hackers draining hundreds of millions of dollars out of a crypto game, or the meatpacking industry boosting profits through price gouging, the economy’s winners color outside the lines with increasing chutzpah. There’s a lot of evidence that the country is in the middle of an alarming white-collar crime wave, but, unlike street crime, the phenomenon doesn’t show up much in our political discourse. It’s time to change that.
Though most elected officials aren’t treating white-collar malfeasance as a matter of urgent public concern, the public seems to be experiencing it as one. Excitement around crypto currency has spurred the growth of a whole new fraud category, propelling investment scam losses to a record high, including over $50 million reported lost to crypto scams in Q1 of 2021. But you can’t blame tech: Phone scams took just under $30 billion off Americans in the pandemic’s first year, a roughly 300 percent increase since 2015 and by far the highest ever estimated. (Though the voice on the phone is probably just some schmuck overseas, rogue Internet Service Providers and marketing database companies in the US are cashing in on their work.) People are getting taken at work, too: In a survey of service workers, 34 percent reported an increase in violations of rights, such as wage theft, by their employers during the pandemic. A commentator could pull up these figures all day, and so could a prosecutor.
Perhaps the thieves feel safe because the number of corporate and white-collar prosecutions has been on a declining trend for 10 or 20 years now, depending on how you measure. At the beginning of the pandemic, federal enforcers told reporters to expect a flood of cases at the end of 2020, but the year closed with cases at their lowest recorded levels. The Biden administration got to work and managed to make 2021’s numbers the second-lowest ever. That’s no surprise when you remember most of the enforcement drop happened under Biden’s boss Barack Obama, not Donald Trump or George W. Bush. Taking it easy on financial crime has bipartisan consensus, and a shocking number of people are paying the price. A Harris poll suggests almost 60 million Americans lost money to phone scams between March 2020 and 2021, making you roughly 1,786 times more likely to be robbed with a phone than with a gun.
Isn’t there a federal bureau to investigate this kind of thing? Why isn’t the FBI gobbling up phone scammers and crypto rug-pullers like a whale swallowing a swarm of krill? Though it’s the main agency responsible for referring white-collar criminals for prosecution, it refocused on terrorism after 9/11. Business administration professor Trung Nguyen wondered whether this change in enforcement priorities was encouraging bad behavior and she devised a clever methodology to test it: Because, in the wake of the attacks, FBI offices counted local Muslims and mosques to set informal terrorism case quotas, Nguyen could use the same data to measure the diversion of resources. She found that, following 9/11, Muslim population density correlated with multiple indicators of white-collar crime—instances of wire fraud, suspicious activity reports from financial institutions, and probable insider trades—as well as a decline in enforcement. Meanwhile, the FBI became the country’s biggest terror financier by ginning up plots to investigate, an entrapment strategy to which juries seem increasingly wise.
Less white-collar enforcement leads to more crime, which also doesn’t get prosecuted. One result has been the normalization of, if not theft per se, then economic trickery. The broader legalization of gambling gave casinos their best year ever in 2021, and mobile sports betting has gone from zero to billions in wagers in a couple of years. Retail stock trading, crypto currencies, and NFT pyramid schemes now occupy a disturbing amount of advertising space and consumer mind-share. If some of these are scammier or less fair than others, well, what could you expect? The idea that public authorities are responsible for protecting people from frauds who offer nothing for something has fallen out of favor. “Caveat emptor” is now “Do Your Own Research,” and that’s more or less what regulators are willing to offer.
Though things seem bad now, they could get a lot worse. As a result of the casual enforcement environment, larger, more established piles of capital are creeping into the rip-off-prone spaces, planning their own “digital goods” and looking for ways to involve themselves in the new growth sector. Some seem intent on turning reality itself into a scam: Facebook rebranded the whole company around this “metaverse” con and plans to issue “Zuck Bucks.” If we’re not careful, we’ll become even more inured to white-collar crime than we already are, and it will dissolve fully into the way things are done.
How can everyday people convince politicians to take white-collar malfeasance seriously as a public concern? The situation calls for some strategic panic. The corporate crime wave is a serious daily concern for Americans, but federal prosecutions of business entities have fallen from an average of over 100 a year under George W. Bush to under 80 for Obama and around 60 for Trump. I don’t think we’ll get anywhere until we start talking about this crime wave as a crime wave. No politician should be allowed to take questions without facing one about their plan to address white-collar offenses. TV news should be blaring 24/7 about “the latest in a series of attacks…” It’s not crying wolf if the wolf, like phone scammers, ate nearly one in five Americans last year. Under the circumstances, we are obligated to yell: White-collar crime wave!
• Some people go for Wall Street, some for Wolf of Wall Street, but my favorite white-collar criminal movie is Boiler Room from 2000, starring Giovanni Ribisi as a screwup who finds direction working the phones moving penny stocks. You’ll never answer a scam call the same way. Borrow from Hoopla with a library card.
• Most white-collar crime is boring, but not so for the world of art heists. At consultant Paul Hendry’s refreshingly old-school blog Art Hostage, he shares gossip, speculation, and news from the high-class underworld.