(Swans - November 15, 2010) On October l6th, The New York Times reported that Angelo R. Mozilo, the former chief executive and founder of Countrywide Financial, agreed to pay $67.5 million to settle the civil fraud case brought by the Securities and Exchange Commission. The deal was made just four days before a jury trial was scheduled to begin in Los Angeles. "As part of the settlement," wrote the Times, "Mr. Mozilo, 71, also agreed to be permanently banned from serving as an officer or a director of any public company." This still leaves him free to involve himself in private companies, which, over time, could be as lucrative as his "take" from the Countrywide sweep.
The blatant twisting of the law proved, as if we didn't already know it, that it is possible for well-heeled executives to "pay their way" out of harm's way and deftly avoid criminal prosecution. You may think that Mr. Mozilo's expenditure was a high price to pay for freedom, but it should be noted that Mozilo "generated $140 million in gains on stock that he sold from November 2006 through October 2007," so although $67.5 million sounds like a fortune, it is something like a drop in the bucket if you relate it to his overall worth.
The SEC proceeded with this "arrangement" as if it were yet another typical business transaction that they do every day. Crime was ruled out of the equation. No one even mentioned criminality. This was just another instance in which a multi-millionaire could avoid a legal process that might well have put him under lock and key -- had it gone to trial. The custom in America is to pay your way out of personal liability, enabling both the criminal and the government to benefit in the process.
The divide between Wall Street felonies and criminal punishment is as vast as the Mississippi. If after your financial crimes have been committed you are still flush enough to "buy yourself out of jeopardy" you can conventionally elude the sting of the law.
We know there are two Americas -- neatly divided between the haves and have-nots. But why do we still believe that there is evenhanded justice when we know that villainy among the rich is simply a negotiable tool that taints the entire apparatus of American justice? The attorneys benefit from these transactions, so does the criminal and, cynically, the government does as well.
The commingling of governmental agencies with matters that should be executed by the Department of Justice is only one, and more blatant, feature of the way in which money rules the nation. If you can buy yourself out of punishment for financial malfeasance why not create a procedure by which murderers can be released from imprisonment by simply paying a fixed amount of money?
Since graft works for politicians who pocket funds from special interests, why shouldn't rapists, embezzlers, arsonists, and murderers have recourse to the same kind of leniency? I am surprised that Bernard Madoff, immediately after confessing to his massive Ponzi scheme, didn't suggest a modus operandi by means of which he would return a portion of his ill-gotten gains in return for freedom. He could certainly have offered a sizeable bail-out and the SEC would have been the appropriate party for just such a transaction -- especially since they were themselves guilty of having ignored the cries of the whistleblowers.
Why not create a branch of the Justice Department that would arrange "negotiations" in which convicted criminals buy their way to freedom and thereby enrich the coffers of the government, since there is no crime so horrific that the right amount of money could not purchase its withdrawal? Call it the Bureau of Decriminalization. In registering its customers, and increasing its fiscal booty, we could also help reduce the national deficit. What we in America like to call a win-win situation.
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