Writer
Matt Zbrog
Follow the Money: Why Financial Crimes Often Go Unpunished
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Each year, Financial crimes cost the U.S. economy hundreds of billions of dollars, however, very few offenders are held fully accountable. According to the FBI, white-collar crimes such as fraud, embezzlement, and money laundering can destroy a company, wipe out a person’s life savings, cost investors billions of dollars, and erode the public’s trust in institutions. Despite the massive economic impact, penalties for financial misconduct often involve fines without prison time, allowing many offenders to avoid serious consequences. Despite this enormous impact, penalties for financial misconduct often involve only fines and no prison time, allowing offenders to avoid serious consequences.
A recent scandal of FTX founder Sam Bankman-Fried in 2022 has further shown the challenges faced in prosecuting complex financial crimes. The U.S. Department of Justice filed charges against the former CEO in 2023, but the case illustrated how lengthy legal processes and vast financial resources can delay or weaken accountability.
While street crimes often lead to swift arrests and prosecutions, financial crimes are less aggressively pursued. The FBI’s 2023 crime statistics indicate a decrease in violent crimes, yet white-collar crimes continue to cause financial harm.
This raises critical questions about the fairness and effectiveness of the U.S. justice system in addressing financial misconduct.
This article explores the reasons why financial crimes go unpunished, how forensic investigators can help, and several programs that students can take to tackle financial crime.
Seven Reasons Financial Crimes Often Go Unpunished
Case Complexity
Crimes committed in the financial world often require an intricate understanding of financial markets. Simply put, one must understand the game’s mechanics and rules before understanding how they can be broken.
But the nuances of international financial markets aren’t easy to explain to a jury. As such, prosecutors increasingly seek to skip a trial altogether, and simply negotiate a plea bargain that involves fines and perfunctory promises to correct corporate behavior, but little in the way of meaningful punishment to either the company or its executives.
Limited Liability
The modern corporation is designed to limit individual liability, which naturally limits the ability to effectively prosecute those at fault. And while corporations have many of the same rights as people, they can’t be physically jailed. So prosecutors often seek fines—fines which aren’t paid by the perpetrators, but by the company, and therefore ultimately by the stockholders.
Collateral Consequences
Collateral consequences, such as in the cases of Arthur Anderson and Enron, can mean tens of thousands of innocent employees lose their jobs due to vigorous prosecution. Furthermore, decades of deregulation have left the economy heavily intertwined, where aggressively punishing large banks can hurt the wider economy.
To avoid these collateral consequences, the US government has undergone a period of deferred protection agreements, whereby an offending company would simply acknowledge what it did was wrong, pay a fine, and promise to improve its behavior. From 2002 to 2016, the government arranged more than 400 such agreements. There’s little to show that these deter further misbehavior.
Questionable Intent
Samuel W. Buell, a law professor at Duke University who served as lead prosecutor in the Enron case, notes in his book, Capital Offenses, that the standard defense in a fraud case isn’t that fraud didn’t happen; it’s that the perpetrator didn’t know they were breaking the law.
Intent is remarkably difficult to prove in these instances. What if their accountants, lawyers, or superiors told them it was okay? What if this crime was considered an innovative business practice spread out across multiple employees? A leader may need more insight into the day-to-day operations of a company, while a rank-and-file worker may claim (s)he was only doing his job. The difference between corporate crime and shrewd business practice can sometimes come down to subtleties and context.
Prosecutorial Pragmatism
According to Buell, the government tends to only pursue prosecution in cases it thinks it can win, which explains why some crimes go unpunished. This approach has been somewhat successful: from 1996 to 2011, the average sentence given in cases of fraud nearly doubled, while, over the same period, sentencing dropped for federal crimes overall.
And, unlike street crime, where victims are often singular and vocal, financial crime has less obvious victims—a crime’s impact is often spread out thinly across shareholders, colleagues, and, even more broadly, the entire market.
Warped Incentives
The natural incentive of a corporation is to increase profit. The natural incentive of a worker is to stay on their boss’s good side. Meanwhile, the incentives for corporate whistleblowers are dismally low. Why report a crime that might never be discovered and might not even be a crime in the first place? Why ask if something is a crime when it’s working and you retain your deniability by maintaining ignorance? This structure of misplaced incentives leads to fewer financial crimes being reported, and therefore fewer financial crimes being punished.
Implicit Bias & Privilege
A vast majority of corporate criminals are men from privileged demographics. Their wealth can afford high-powered legal counsel, and their education can see them navigate the legal system more adeptly than the average person.
Furthermore, prosecutors face a dilemma in crimes where the damage is purely financial: will this perpetrator be better able to pay restitution if they are in jail or if they’re working a high-paying job? What best serves justice?
Bias also exists within the context of the commission of the crime itself: a culture of confirming leadership decisions without scrutiny only enables possible instances of fraud. Finally, and perhaps most worryingly, the regulations that define financial crimes are often unfairly influenced by the campaign contributions of the very companies who may be committing them—which is hardly the case for the average person.
How Forensic Investigators Can Help Fight Financial Crime
Before prosecution, there’s detection—and that’s where forensic investigators make their impact. From an internal perspective, forensic accountants can push for greater transparency in financial practices and a wider culture of ethics. From an external perspective, investigators can focus on building a concrete chain of evidence that builds a case against the specific perpetrators of a crime. In both spheres, emerging tech should play an increasing role. With a growing amount of data to draw upon, AI and machine learning can streamline compliance processes and uncover previously hidden patterns of financial crime.
While prosecutors may run into many of the same old constraining factors surrounding financial crime, investigators will remain on the front line of the fight, and today’s forensic accounting programs are preparing them for it.
Standout Programs Tackling Financial Crime
John Jay College of Criminal Justice
John Jay College of Criminal Justice offers a bachelor of science program in fraud examination and financial forensics at its Manhattan campus. Students will learn how to evaluate symptoms of fraud, conduct fraud risk assessments, utilize data-driven tech, and communicate their findings across numerous channels.
Courses cover ethical theory; forensic accounting; digital forensics for the fraud examiner; and corporate and white-collar crime. The program consists of 120 credits.
- Location: New York, NY
- Accreditation: Middle States Commission on Higher Education (MSCHE)
- Format: On-campus
- Expected Time to Completion: Four years
The University of New Haven offers a fully online master of science program in investigations. This program offers several concentrations, allowing students to focus their studies on one particular area. These include criminal investigations, financial crimes investigations, and digital forensics investigations. Students enrolled in the financial crimes investigations concentration who have no previous accounting education should be familiar with the basic understanding of the accounting concepts and the basics of the accounting process.
This concentration includes courses such as contemporary topics in money laundering; contemporary topics in corporate investigations; contemporary topics in investigations; investigating financial crimes; identity fraud investigations; foundations of digital forensics investigations; white collar crime analytics; and contemporary fraud schemes. The program comprises 30 credits.
- Location: New Haven, CT
- Accreditation: New England Commission of Higher Education (NECHE)
- Format: Online
- Expected Time to Completion: One to two years
Utica University’s bachelor of science program in cybersecurity with the cybercrime and fraud investigation specialization allows graduates to gain experience securing personal and proprietary data, developing techniques to detect malicious entry, and protecting networks and cloud infrastructure. Students will learn to leverage the latest technologies for conducting fraud and cybercrime investigations and bringing cybercriminals to justice.
This 120-credit program’s core curriculum includes courses such as introduction into cybersecurity; computer hardware and peripherals; programming for cybersecurity; software foundations for cybersecurity; information security; and information system threats, attacks, and defenses. The cybercrime and fraud investigation specialization includes courses such as economic crime theory; fraud prevention and detection technologies; payment systems and fraud; and digital forensics.
Graduates completing this specialization will have the skills needed to combat and prevent white-collar crime and conduct investigations.
- Location: Utica, NY
- Accreditation: Middle States Commission on Higher Education (MSCHE)
- Format: Online
- Expected Time to Completion: Four years
Marywood University offers a bachelor of business administration program in financial crime investigation providing a strong foundation for students interested in criminal justice and accounting.
The program’s curriculum includes courses such as introduction to criminal justice; white collar crimes; criminology; criminal law and procedure; intermediate accounting; cost accounting; federal taxation; auditing principles and procedures; and taxation of business entities.
Graduates of this program are qualified to pursue several career paths in fraud examination, private investigation, and financial examination within a variety of industries, including finance, insurance, and the federal and state government.
- Location: Scranton, PA
- Accreditation: Middle States Commission on Higher Education (MSHE); Accreditation Council for Business Schools and Programs (ACBSP)
- Format: On-campus
- Expected Time to Completion: Four years
Tiffin University offers an online master of business administration (MBA) program in forensics and fraud examination that helps students develop the skills required for identifying suspects, conducting investigations, and reporting crimes. This program will help prepare graduates for certification as a Certified Fraud Examiner (CFE).
This 36-credit program includes courses such as managerial finance; marketing management; innovative decision-making; legal and ethical issues in management; strategic management; fraud prevention and deterrence; fraud investigation; fraud legal environment; and financial transactions and fraud schemes.
- Location: Tiffin, OH
- Accreditation: Higher Learning Commission (HLC); Accreditation Council for Business Schools and Programs (ACBSP)
- Format: Online
- Expected Time to Completion: Two years
Keiser University offers a bachelor of arts program in financial crime investigation providing students with competencies in the areas of criminal justice, accounting, and computer information analysis. Moreover, this program provides them with the necessary knowledge and skills to investigate financial criminal activity through the proper documentation and collection of information, interpretation of the evidentiary value of the information gathered, and analysis of financial records.
This 120-credit program includes courses such as advanced managerial accounting; fraud examination; organized crime; white-collar and economic crime; network forensics; computer system forensic analysis; criminal evidence and procedures; cyber crimes; criminal investigations; and financial management.
- Location: Fort Lauderdale, FL
- Accreditation: Southern Association of Colleges and Schools Commission on Colleges (SACSCOC)
- Expected Time to Completion: Four years
Matt Zbrog is a writer and researcher from Southern California. Since 2018, he’s written extensively about the increasing digitization of investigations, the growing importance of forensic science, and emerging areas of investigative practice like open source intelligence (OSINT) and blockchain forensics. His writing and research are focused on learning from those who know the subject best, including leaders and subject matter specialists from the Association of Certified Fraud Examiners (ACFE) and the American Academy of Forensic Science (AAFS). As part of the Big Employers in Forensics series, Matt has conducted detailed interviews with forensic experts at the ATF, DEA, FBI, and NCIS.