Why does Norway have a 21-year maximum prison sentence?
There are essentially five goals of sentencing: retribution, incapacitation, deterrence, restoration, and rehabilitation. The last of these, rehabilitation, is probably one of the most controversial. In the U.S., for example, rehabilitation is considered a secondary goal, after retribution. Americans want their prisoners punished first and rehabilitated second.
This appeals to a societal sense of justice and fair play that has considerable cultural inertia in our country. Any talk of prioritizing rehabilitation ahead of retribution very typically generates complaints about how doing so will endanger public safety, ignore the needs of crime victims, and—most damning of all—coddle criminals.Never mind that certain forms of rehabilitation have been shown through research to reduce the risk of future offending, we want our pound of flesh first and foremost.
The same is not true the world over, though. Norway, by contrast, has a very progressive approach to sentencing that prioritizes rehabilitation as a primary strategy for reducing future criminal behavior. That doesn’t mean they don’t use prisons, it just means that the conditions of confinement are geared toward reducing the risk that an offender will return to a life of crime after release
As the author well notes, not everyone shares American’s passion for punishment. As I often tell my students, one of the reasons we should become familiar with other cultures is that any system that has functioned successfully over a long period of time has to have some good ideas, and every culture needs thought renewal and the occasional shake up to develop. This is one of those ideas that deserves examination.
(I honored to have the Ethics Sage, Steven Mintz, write a post for my blog. Please visit his blog at Ethics Sage.)
KPMG Insider Trading Scandal Damages the Reputation of the Accounting Profession
What possesses an audit partner to trade on inside information and violate the accounting profession’s most sacred ethical standard of audit independence from one’s client? Is it carelessness, greed, or ethical blindness? In the case of Scott London, the former partner in charge of the KPMG’s Southern California’s regional audit practice, it was some of each that motivated him to violate ethical standards and, in the course of doing so, causing the audit opinions signed by London on Skechers and Herbalife to be withdrawn by the accounting firm.
This case has a local twist as pointed out by Stephen Nellis in his column “Deckers, PCBC were victims of auditor leaks” in the April 19-25 Pacific Coast Business Times. Nellis notes that two companies affected are Goleta-based Deckers and Pacific Capital Bancorp, the former parent of Santa Barbara Bank & Trust now part of Union Bank.
Overall, Shaw is charged with leaking confidential information to his friend, Brian Shaw, about Deckers, Pacific Capital Bancorp, Manhattan Beach-based Skechers, and Los Angeles-based Herbalife. The leak of information about quarterly earnings information led to Shaw’s unjust enrichment of $1.27 million. Shaw, a jewelry store owner and country club friend of London repaid London with $50,000 in cash and a Rolex watch, according to legal filings.
The leaking of financial information about a company to anyone prior to its public release affects the level playing field that should exist with respect to personal and business contacts of the leaker and the general public. It violates the fairness doctrine in treating equals, equally, and it violates basic integrity standards. The KPMG scandal concerns me because a pattern of such improprieties may be developing.
In 2010, Deloitte and Touche was investigated by the SEC for repeated insider trading by Thomas P. Flanagan, a former management advisory partner and a Vice Chairman at Deloitte. Flanagan traded in the securities of multiple Deloitte clients on the basis of inside information that he learned through his duties at the firm. The inside information concerned market moving events such as earnings results, revisions to earnings guidance, sales figures and cost cutting, and an acquisition. Flanagan’s illegal trading resulted in profits of more than $430,000. In the SEC action, Flanagan was sentenced to 21 months in prison after he pleaded guilty to securities fraud. Flanagan also tipped his son, Patrick, to certain of this material non-public information. Patrick then traded based on that information. His illegal trading resulted in profits of more than $57,000.
The KPMG case is a particularly egregious one because it involves insider trading by an auditor of client stock. This incident jogged my memory and I came up with a characterization of London’s actions as “stupid is as stupid does.” Scott London, the partner in charge of audits of Herbalife Ltd. and Skechers USA Inc., traded on inside information for personal gain. KPMG resigned as the auditor of both companies after learning that London provided non-public information about the companies to a third party, who then used the information in stock trades. The firm fired London.
In resigning the two audit accounts, KPMG said it was withdrawing its blessing on the financial statements of Herbalife for the past three years and of Skechers for the past two. KPMG stressed, however, that it had no reason to believe there were any errors in the companies’ books. Both companies said they are moving to find new auditors.
In a statement that should raise red flags for all CPA firms that audit public companies, KPMG stated it had concluded it was not independent because of alleged insider trading. Independence is the foundation of the accounting profession and the cornerstone of an audit conducted in accordance with generally accepted auditing standards. The public (i.e., shareholders and creditors) relies on auditors’ independence, objectivity, and integrity to ensure that the audit has been conducted in accordance with such standards and that the financial statements are free of material misstatements.
I’m having a hard time understanding the stupidity and moral blindness of London in this case. Surely he knew of his ethical obligations. All audit firms supposedly have been carefully assessing independence in the aftermath of financial frauds in the late 1990s and early 2000s (i.e., Enron and WorldCom). Firms generally have quality controls in place to prevent compromises to audit independence.
Trading on insider information for cash and gifts is bad enough, and when done by an audit partner it is unforgiveable. Even more baffling to me is that the quid pro quo for passing along stock tips about clients to a friend for London was to receive cash and gifts in return. According to London, he received a discount on a watch, and the friend bought him dinners from time to time and on a couple of occasions gave him $1,000 to $2,000 in cash. A cynic might say he sold himself cheap.
So, what happens next? Both Herbalife and Skechers will need to have their financial statements re-audited, not an inexpensive proposition. Even though the companies were not at fault, the public may misunderstand and think the companies were complicit in the matter.
For KPMG, the insider trading investigation is a setback. The accounting firm has worked hard to rehabilitate its reputation after coming under scrutiny last decade in a wave of corporate accounting scandals and the firm’s role in the marketing of fraudulent tax shelters. KPMG paid large nine-figure settlements to resolve lawsuits related to accounting scandals at the drugstore chain Rite-Aid and Oxford Health Plans. In 2005, the firm paid a $456 million penalty to the government related to tax fraud.
I have to wonder whether insider trading by partners at Deloitte and KPMG portends a larger scandal on the horizon. It seems every ten years or so the accounting profession finds itself in a “pickle” and hauled before Congress to explain its actions. It is about that time following financial frauds at Enron, WorldCom and a host of other companies. I don’t know how to get the message across to those in the profession that every time such incidents occur, and now insider trading, the public loses patience with the profession and doubts begin to surface about whether the profession truly acts to protect the public interest.
Blog Posted by Steven Mintz, aka Ethics Sage, on April 12, 2013
Low-Wage Workers Feel Worse Off Now Than During Recession: Survey
The survey revealed that many people at the lowest rung in the workplace view their jobs as a dead end. Half were “not too” or “not at all” confident that their jobs would help them achieve long-term career goals. And only 41 percent of workers at the same place for more than a decade reported ever receiving a promotion.
Yet 44 percent of employers surveyed said it’s hard to recruit people with appropriate skills or experiences to do lower-wage jobs, particularly in manufacturing (54 percent). While 88 percent of employers said they were investing in training and education for employee advancement, awareness and use of such programs among the lower-wage workers was only modest.
Although President Barack Obama made it a national goal to “equip our citizens with the skills and training” to compete for good jobs, the survey shows a U.S. workforce that has grown increasingly polarized, with workers and their bosses seeing many things differently.
Seventy-two percent of employers at big companies and 58 percent at small ones say there is a “great deal” or “some” opportunity for worker advancement. But, asked the same question, 67 percent of all low-wage workers said they saw “a little” or “no opportunity” at their jobs for advancement.
Freddie Mac Unaware Of Homeowner Complaints, Inspector General Concludes
For more than five years, many homeowners who complained about mortgage industry foreclosure abuses have wondered whether anyone with a financial stake in keeping them in their home was paying attention. On Thursday, with the release of a new report from a federal watchdog, they got their answer: No.
The report, by the inspector general of the Federal Housing Finance Agency, says banks and other companies that manage more than 10 million home loans for Freddie Mac “largely failed” to alert the mortgage giant to the most serious category of homeowner complaints, despite a requirement they do so. These “escalated complaints” often include the most serious allegations of misconduct, including improper fees, misapplied mortgage payments and a frustrating cycle of lost paperwork and unreturned calls. In some instances, the mismanagement has led to a wrongful foreclosure.
“The results are shocking on a number of different levels,” said Steve Linick, the FHFA inspector general, in an interview with The Huffington Post. “It is surprising that servicers were not reporting in such large numbers, that Freddie was not on top of this, and that [the FHFA] did not catch it in its exam.”
Four of the largest bank servicers — Bank of America, Wells Fargo, Citigroup and Provident — reported no escalated cases to Freddie Mac, despite handling more than 20,000 over a 14-month period, according to the report. Freddie Mac examiners did not notice that the mortgage companies were failing to disclose the complaints, nor did the FHFA, which relied on “incomplete” Fannie Mae examinations, the report concludes. The FHFA oversees the bailed out lenders Freddie Mac and Fannie Mae.
Officers Say NYPD Sets Quotas For Stop-And-Frisks And Arrests | ThinkProgress
New York police officers testifiedthis week that their office set quotas for both the number of police stops and arrests. Officers Adhyl Polanco and Pedro Serrano are two of the more than 100 witnesses to testify during a trial in a class action challenge to the New York Police Department’s rampant use of “stop and frisks,” a practice with constitutional implications in which an officer stops someone suspected of a crime, and may subsequently frisk that individual if they have justification for doing so.
The Department has conducted more than 5 million stops since Mayor Bloomberg took office in 2002, more than 85 percent of which targeted blacks or Latinos and only 12 percent of which resulted in criminal charges. Both Serrano and Polanco testified that supervisors required at least 20 summonses and one arrest each month, and that they were pressured to stop individuals — regardless of the grounds for doing so — under threat of punishment. Polanco also said police later added a stop-and-frisk quota of five per month. During the trial, Polanco played an exchange he recorded in 2009. The New York Daily News reports:
In the tapes, one of Polanco’s supervisors is heard demanding that cops make their “20 and 1” quota and lambasting those who came up short.
“If you want to be a zero, I’ll treat you like a zero,” patrol Sgt. Marvin Bennett fumed on tape.
Polanco also recorded his patrol commander, Lt. Andrew Valenzano, telling officers to meet their quotas by ticketing bicyclists.
“If you see people over there on bikes, carrying the bags, you know, good stops,” Valenzano says on tape. “That’s what we need.”
Officer Angel Herran, a union delegate, was taped telling officers the quota was agreed to “in this last contract.”
“They’re telling you to ‘go make money,’ ” Herran is heard saying.
NYPD Spent 1 Million Hours Over Last Decade On Marijuana Arrests, Analysis Finds | ThinkProgress
New York Police Department officers have spent 1 million hours making 440,000 marijuana arrests between 2002 and 2012, according to a new report from the Drug Policy Alliance. DPA put together the data in response to a request from New York City and New York State, as they consider measures to decriminalize marijuana. Each of these arrests can cost $1,000 to $2,000, according to a 2011 DPA estimate, costing New York City $75 million in just a single year (2010). The report explains:
In our ongoing research about marijuana possession arrests in New York, we have found that a basic misdemeanor arrest for marijuana possession in New York City varied from a minimum of two or three hours for one officer, to four or five hours or even longer for multiple officers. […]
Public defender system struggles under huge caseloads | McClatchy
Anyone who’s ever been arrested or watched a television cop show knows the fundamental right Gideon helped win for every American:
“If you cannot afford to hire a lawyer, one will be appointed to represent you.”
But this month, the 50th anniversary of that landmark Supreme Court ruling, here in Gideon’s home state and elsewhere around the country, the criminal justice system continues to struggle to live up to the promise demanded by the Supreme Court in 1963.
“The truth is we clearly haven’t,” said Abe Krash, a Washington, D.C., lawyer who helped represent Gideon in his Supreme Court case. “In public defender offices, there are many extremely conscientious attorneys, but they are tremendously underfunded and overburdened.”
A 2011 report by the Justice Policy Institute found that most of the country’s public defender offices and systems lacked enough attorneys to meet nationally established caseload guidelines. Also, the report found that most defender offices did not have sufficient support staff, such as investigators and paralegals.
“When defenders do not have access to sufficient resources, they may be unable to interview key witnesses, collect or test physical evidence, or generally prepare and provide quality defense for their client, resulting in poorer outcomes for the client,” according to the institute’s report.
BP edited its own environmental record on Wikipedia – Salon.com
Wikipedia editors have accused BP of editing its own page entry to whitewash its environmental impact in the public record. As CNET reported Thursday, “angry Wikipedia editors estimate that BP has rewritten 44 percent of the page about itself, especially about its environmental performance.”
(Originally put up on May 24, 2012 – now reissued!)
It is my privilege to present my colleague, William Denton. Some days ago he showed me this article and I was very impressed. He has very kindly offered to share it with my readers. It is my pleasure to present the work of our guest columnist, William Denton.
James Pilant
The United States and The imprisonment Rate
By: William Denton
America is known throughout the world as a place of freedom, where anyone has the chance to do and become whatever their heart desires also referred to as “The American Dream.” America is considered home to approximately 5 percent of the world’s population, although America is known for its many attributes and liberties it holds 23 percent of the world’s prison population making the United States the highest prison populated country in the world, (“Wikipedia, 2012). Our prison rate along with our continuous dilemma of overcrowding prisons can be attributed to our enacted draconian laws that make any chance of success to reduce our prison rate and subsequently alleviating our over-crowded prisons impossible. In a 2009 statistical study 754 per 100,000 American Citizens are incarcerated. In the previous year, “a report released in February 2008, indicates that more than 1 in 100 adults in the United States are in prison,” (“Wikipedia, 2012).
Each U.S. state is responsible for the United States ranking 1st in the world for its high incarceration rate. However, when examined individually each state incarceration rate can vary from 854 per 100,000 to 151 per 100,000 citizens, (“Wikipedia,” 2012). The infamous three strike laws and the mandatory minimum sentencing have caused the explosive increase in the incarceration rate nationwide, leaving each to implement methods if any, to alleviate the growing issue of their overcrowded prisons. Some will argue that a state with a higher incarceration rate compared to a state with a lower incarceration rate is due to the state that has the highest and lowest crime rate. Although that can be an arguable point it still doesn’t explain why for example Louisiana incarceration rate is 854 per 100,000 citizens and other states have incarceration rates anywhere from 151-300 per 100,000 citizens, (“Wikipedia,” 2012). Another aspect that is irrelevant into claiming why one state has a higher incarceration rate than another is because of the state’s population which is going to subsequently have a higher crime rate. We know that Louisiana has the highest incarceration rate, but ranks 25th for population, while New York ranks 3rd for highest population and is ranked 37th for incarceration rate at 307 per 100,000 citizens, (“Wikipedia,” 2012). The population of a state and crime can be determining factors of a states incarceration rate, however, other factors that have remarkable results in having low incarceration rates are the states who have sufficient “parole and probation programs; diversion programs, increasing good-time programs for people incarcerated, and sentencing reforms for non-violent offenders,” (Morris, 2009). Without any implementations to reduce the incarceration rate states will continue to have these unnecessary draconian numbers.
The United States compared to Russia who holds 2nd place for incarceration rates, followed by South Africa ranked 3rd and Europe who ranked 4th is still substantially higher than the runners up. Russia who has a 611 per 100,000 people incarceration rate compared to the United States is a 134 per 100,000 differences. That difference alone is substantially higher than that of many other nations worldwide. The state of Louisiana who again has an 854 per 100,000 incarceration rate is higher than our nation’s current imprisonment rate and every other nation worldwide, (“Wikipedia, 2012). Although there are multifarious reasons along with speculations of why America has the highest incarceration rate, two factors are true today. Reason one being that American citizens are “being locked up from writing bad checks to using drugs that would rarely produce prison sentences in other countries,” (Liptak, 2008). The second reason being the American Citizen is “kept incarcerated far longer than prisoners of other nations,” (Liptak, 2008).
In my opinion only, I think American Law has gotten to the point of everything being political correct and that anyone who commits a crime has to be punished no matter what the crime is. These draconian drugs laws are really the culprits that are responsible for the major increase in our prison population and overcrowding. The majority of inmates incarcerated today are for non-violent drug offenses that initially when these laws were enacted during the “War on Drugs” campaign where to mainly target the producers and distributors of the drug trade not the additive customers that are being sentenced today. As a result of these laws still in effect, although the violent crime rate is decreasing in the country, prison population is still increasing. I think that is how we stand above all other nations in the incarceration rate because of our drug laws, mandatory minimum sentencing, and three-strike laws. As I mentioned above, writing bad checks to drug offenses are rarely imprisonment punishments in other countries, and our country has longer prison sentences that contribute overcrowded prisons. We are punishing for offenses that probably could be resolved through other forms of punishment that does not have to do with imprisonment just like other countries.
I am completely against our statics involving our imprisonment rate and the number of incarcerated inmates we currently have. There are a couple states that have a higher imprisonment rate than actual countries throughout the world. These statics need to be pounded into someone’s head and take a hint of what reformalities we need to reduce these harsh rates. These enacted three-strike rules and mandatory minimum sentences, and all other harshly related drug laws need to change. They are ruining lives, in lieu of helping people and destroying families for what? Nothing. Drugs are an addictive substance that people need help to reform, so putting these non-violent offenders in overcrowded prisons is not going to rectify the problem, but going to make it worse. I feel like we are wasting our money for no positive gains when it comes to incarcerating offenders for drug offenses and other minor crimes that can be solved in another form of punishment. Are American laws are in desperate need for reform.
REFERENCES
Liptak, A. (2008). U.S. prison population dwarfs that of other nations. Retrieved March 18, 2012, from
Harvard researchers have found that over-consumption of sodas and sugary drinks may be linked to 180,000 worldwide deaths a year. The report, released Tuesday, also notes the studied beverages contribute to about 25,000 American deaths a year, placing the country third overall.
The report, unveiled during an American Heart Association meeting, links sugar-sweetened beverages to “133,000 diabetes deaths, 44,000 deaths from cardiovascular diseases and 6,000 cancer deaths” a year. The study’s co-author, Gitanjali Singh, also recommended regulations to curb the intake of sugary drinks, specifying that “taxing sugary drinks in the same way as cigarettes, or limiting advertising or access, may help reduce usage.”
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