Bank Robberies and Business Crime

I was looking at the FBI’s bank robbery statistics for 2009, interesting stuff. And it got me curious – what would business crime look like in terms of profitability by comparison?

 

Violations by Type of Institution

	Robberies	Burglaries	Larcenies
Commercial Banks	4,495	44	10
Mutual Savings Banks	16	0	0
Savings and Loan Associations	105	3	0
Credit Unions	398	13	1
Armored Carrier Companies	0	0	1
Totals	5,014	60	12

This table is copied with sincere thanks to the FBI from http://www.fbi.gov/stats-services/publications/bank-crime-statistics-2011/bank-crime-statistics-2011

That’s 5,014 bank robberies. A little further down you find that the total take on all these robberies was $38,343,501.96. This comes out to an average of $7467.29. To get a middle class income you are going to have a rob several banks.*

Now, let’s have a look at a fairly typical business crime. Here’s a little quote from the SEC –

In a complaint unsealed yesterday afternoon in federal court in Denver, the SEC alleges that Kristine L. Johnson of Aurora, Colo., and Troy A. Barnes of Riverview, Mich., have raised more than $3.8 million since April 2014 from investors they enticed into buying positions in their company Work With Troy Barnes Inc., which is doing business as “The Achieve Community.”  In Internet videos and other web promotions, investors were pitched “you and anyone you know can make as much money as you want” by purchasing positions that cost $50 each, and as they progress through the matrix they would receive a $400 payout on each position within three to six months.  Barnes claimed to have hired a seasoned programmer to perfect the triple algorithm investment formula supposedly generating the extraordinary returns.

Unlike a bank robbery where deposits are insured by the federal government, there is little change of recovery under these circumstances. The federal government (SEC) alleges that the funds were used to pay returns for the earlier investors. If true, this would be a classic Ponzi-scheme.

294 Bank Robbed!

I ask you to compare the profits. By any standards, the alleged Ponzi is a much better use of time and probably far safer than bank robbery. If we assume a profit of 50%, that is 1.9 million dollars. A bank robber would have to rob on the average 294 banks to get the same return. If our bank robber hits one bank a day, he’s working more days than a legitimate job at considerable hazard and his work doesn’t have medical insurance or sick leave.

If you do the business crime instead, you get to wear nice clothes, choose your hours and if you figure your profits (1.9 million) by a forty hour week at 52 weeks, that is $918.46 an hour. Now, should you point out there were two of them, you would be right and therefore each would only be getting $409.23 an hour. I would kindly suggest that they didn’t work that many hours.

So, what’s my point? There is business ethics and there is criminal justice. Criminal justice curbs crime and crime pays poorly. Business ethics is also concerned with crime and on a scale undreamed of by the common criminal. Now, of course, the criminal justice is also concerned with business crime. After all the SEC is acting in this case.

But not all business crime is prosecuted and when it is, there are often only fines. Are you aware of the Holder doctrine? Here’s William D. Cohan’s take on it:

That Mr. Holder prefers large settlements to prosecutions is no surprise to anyone familiar with the so-called Holder Doctrine, which stems from his now-famous June 1999 memorandum — when he was deputy attorney general — that included the thought that big financial settlements may be preferable to criminal convictions because a criminal conviction often carries severe unintended consequences, like loss of jobs and the inability to continue as a going concern.

So, if a typical American citizen commits a crime he can expect to go to prison while a bank executive’s whose conviction might have “unintended consequences” will pay a fine. This is where the accused in the SEC case (referred to above) erred – they didn’t run a larger organization where there could be unintended consequences of prosecution.

So, in conclusion, business crime pays hundreds of times better than regular crime, and if done on a large enough scale, prosecution will be waived and fines imposed instead.

It makes it difficult to understand why anyone would want to do something so mundane as rob a bank.

James Pilant

* I have decided to call the amount of money made in an average bank robbery in 2009 – a Pilant Unit. That is, an average of $7467.29 so that the scale of business crime might be better described. In future articles I will refer to business crime in terms of these units. jp