Money and Resources needed for Public Safety

If we don't prosecute white collar economic crimes, our economy will suffer. Billions are lost, by business and consumers. One reason is the significant under-funding of America's law enforcement system.

The Rule of Law

The American economic miracle is based in large part on property rights and the rule of law. We take risks because we believe the law will protect us if someone else tries to take away something we worked to create. An example is intellectual property rights.

The rule of law doesn't have a precise definition. Its meaning is based on context, and can vary between different nations and situations. Basically, it's a legal-political regime under which the law restrains the government by promoting certain liberties and creating order and predictability regarding how a country functions. In the most basic sense, the rule of law is a system that attempts to protect the rights of citizens from arbitrary and abusive use of government power.

This same set of rules enforces a degree of predictability in the commercial marketplace, which facilitates commerce. Reliance on the law is an essential pillar of our society, and certainly our economy. Our society is based on trust.

We give our credit card information to others before they ship the merchandize, knowing we have recourse if we are cheated. We close deals in escrow, and trust attorneys, banks, judges, and others based on the knowledge that to some degree we have recourse if they don't honor their word.

This is why it's so important to attempt to protect victims of economic crimes, to prosecute where appropriate, and to seek redress. Trust in the system is the only way it works.

Why Aren't the Laws Being Better Enforced?

Victims complain about the apparent disinterest on the part of prosecutors, and the long delay in cases coming to trial. The reason is simple, lack of money. The solution is almost as simple, more money.

We need more judges, more prosecutors, and more investigators. We need these resources focused on white collar crime, including the small stuff like 3rd and 4th degree crimes that are the on the job training for bigger crimes.

Our criminal justice system is over-worked. Violent and other non-civil crimes are prioritized, which consumes a significant portion of our law and public safety resources. So white collar crimes are either not pursued, or they take so long that victims become totally disillusioned by our system, and don't even bother to report crimes.

Minor white collar crimes that are handled at the municipal level result in essentially just a warning. Crimes serious enough to warrant prosecution at the county level under state laws are the ones that do the most damage to our society and economy.

Prosecutors want to prosecute, but they need solid cases. Even when an economic crime is successfully identified, investigated, and indicted, it can take years to come to trial, due to lack of judges and prosecutors. The prosecutors are under pressure to make deals, and the courts are under pressure to approve them, to reduce their case loads.

In New Jersey, if you bring an open-and-shut case of fraud to a county prosecutor, with all the evidence in a nice neat package, they will probably decline to investigate unless the loss is well into six figures, and the matter is easy to understand, and the evidence is readily apparent.

Many bad actors understand this. They purposely complicate their activities, creating reasonable doubt, and making a prosecution appear more complex and time consuming. It's designed to discourage prosecutions, or to encourage lenient plea deals.

As a result, too often the only white collar crimes that are prosecuted are the very major cases, or those that receive media coverage.

Notwithstanding the larger debate regarding family values, and the decline of ethics and morals in America, a part of the problem that we CAN do something about is MONEY. We simply must commit ourselves to spend more money for more police, prosecutors and judges.

Pay Competitive Salaries

In addition to needing more prosecutors and judges, we have to incent experienced prosecutors and judges to make careers in law enforcement. As much as these dedicated men and women want to do good work, they have financial responsibilities to their families, and the normal human desire for recognition, career growth, and personal fulfillment.

Making them work long hours for low pay is not the way to retain experienced jurors. We must pay them salaries that are competitive with the private sector. Otherwise the most experienced prosecutors will go to the private sector, where they often earn many times their former public sector salary.

This brain drain reduces the effectiveness of our law enforcement infrastructure, as well as creates an ongoing cycle of bringing new people in and getting them up to speed. The most experienced prosecutors focus out of necessity on the most egregious, or the most publicized cases. Others are left to well intentioned but less experienced junior prosecutors, or worse, are left to languish for months and even years awaiting prosecutorial resources.

A prosecutor is like any other attorney. He or she must spend many hours preparing a case. They need resources, including trained investigators. All the while they get calls from victims, police, government officials, judges, etc.

The inability of police and prosecutors to work on more economic crimes prosecutions is not from lack of interest. It's simply lack of time and resources.

So prosecutors must prioritize, like everyone else. In many instances their agendas are set by politicians or their superiors. They respond to media reports the same as everyone else. Private practice attorneys are paid by the hour, so the more they work, the more they earn. Civil service prosecutors are almost always paid a flat salary. When they work nights, as many do, their only compensation is the satisfaction of doing a good job, and the knowledge that they're doing the best they can.

Middle Market Economic Crimes

At the high end of financial crimes are well-publicized scandals like BCCI, Enron, WorldCom, and HealthSouth.

The credit and subprime mortgage meltdown from 2007 onward will probably come to be known as another systemic scandal that will lead to many new laws and regulations, after the fact, sadly.

At the low end is identity theft and online fraud. The consumer economic crimes including bad checks, is more of a social moral problem that more money would not cure.

But the prosecution of the great middle of economic crimes is being frustrated by lack of resources, to the detriment of our economy and our society. We arbitrarily define this Middle Market as white collar crimes resulting in losses of $75,000 to $750,000, based on our experience when we make referrals to county, state and federal law enforcement agencies.

Money laundering, forgery, counterfeiting, bank and securities fraud, embezzlement, computer hacking and other crimes, as well as the many variants of business fraud, are all under-prosecuted. Many of these financial crimes fund terrorist activities, some are simply for greed.

Banks devote considerable effort to combat check fraud and other crimes that directly affect them, because they suffer the loss. Some corporations have internal safeguards to detect fraud, against them, or by rogue employees. But it's a drop in the bucket.

The US Treasury Department combats domestic and international money laundering by promoting interagency and global cooperation through information collection, analysis and sharing, and technological assistance. Their Financial Crimes Enforcement Network is an effort to fight terrorism by attacking its source of funds. It's a good start.

Some of the agencies associated with fraud awareness and prevention can be seen at Crimes of Persuasion.com. These include the FBI, FTC, Dept. of Justice, SEC, and the US Postal Inspection Service.

Cherokee is especially sensitive to this topic, because we combat economic crimes virtually every day. We enjoy ongoing working relationships with white collar law enforcement at the county, state and federal levels. We are focused on the mid market white collar fraud, because it's what we encounter and combat so often, either directed at us, or associated with properties or loans that we become interested in.

When Cherokee encounters fraud, we make a formal referral to the appropriate law enforcement agency. We do not benefit directly if the referral is picked up, but it is important for everyone to be part of the solution, not part of the problem. We encourage everyone to do the same.

Local Land Use & Code Enforcement

As a real estate investor, Cherokee is sensitive to the equitable, predictable, timely protection of property rights, both in terms of development, and in terms of subsequent supervision.

During prosperous times, local land use board (usually called planning and zoning boards) become backlogged with applications for new development. We have long advocated for an overflow system whereby administrative and clerical functions are outsourced to retired or other qualified disinterested professionals, paid voluntarily by the applicant.

Just as with judges, the majority of the women and men working in our local governments are decent, hard-working people. But their compensation is not always commensurate with what they could earn in the private sector, and they are not compensated fairly for overtime. We believe these inequities are the root cause of sometimes frustrating and harmless application delays. Once again a part of the solution is simply money.

Finally, if we are to improve the state of our neighborhoods, everyone must be held accountable for their own properties. This not only protects the occupants of these properties, but it provides an incentive for others to make improvements.

When building inspections are delayed, it wastes a lot of money. This is one of the easiest problems to solve, because hiring more inspectors and code enforcement officials, whether they are full time, part time, or contractors, is fairly straight forward. These professionals need to be respected for the important work they do, paid fairly, and not be so overworked that they either can't do their jobs properly, or their clients have to wait unreasonable times for approvals to proceed with jobs.

Nobody likes to pay more taxes or fees. But when market participants can reasonably depend on the certainty and equity of the law, and when you at least have an option to pay for expedited service, our economic circumstances will be improved, and our economy will continue to be the most dynamic in the world, and the place where others invest when looking for safe havens.

The Solution is Clear

Let's hire more police, prosecutors and judges. Let's pay them a competitive salary, and provide other opportunities that make these attractive careers. When we prosecute more economic crimes, we will deter future economic crimes. This is yet another way we can facilitate a more seamless business climate, which in turn supports consumer wealth and social stability.