Does a point come where a financial fraud is of such a scope that the death penalty should be considered?
Thousands of people had their life savings invested with the likes of Bernard Madoff and Arthur Nadel. For most of them, this was the fruit of decades of getting up in the morning, going to work, and sacrificing free time and pleasure in order to save money. It was their life blood. It represented a hope of a better future for their children and other loved ones.
Is the threat of serving a few years in a country club prison sufficient deterrence to the potential Madoffs that are out there? This is a man who has lived like royalty to the age of 70 and has enriched his family with money that will probably never be recovered by creditors. Even if he serves a decade in prison, how many young sociopaths on Wall Street would, on balance, still see his as a life worth emulating?
Assigning a monetary value to human life is something that is performed as a regular matter of business in society. In the early 1970's Ford Motor Company made an economic decision not to add eleven dollars to the cost of a Pinto for an improvement that would have prevented the gas tank from exploding in rear end collisions. It used a valuation of $200,000 per human life in its analysis, a figure that it derived from the government agency that was responsible for auto safety. Life insurance is a contact that assigns a monetary value to a human life. Juries are commonly asked to value human life in terms of dollars in wrongful death suits. A review of federal agency regulations by Gillette and Hopkins in 1988 concluded that the range was $1,000,000 to $2,000,000 per statistical life saved.
Using the high end of that valuation, an argument could be made that Madoff's alleged $50 billion dollar swindle caused an equivalent in social damage to 25,000 deaths. That's over eight times as many deaths that occurred on September 11, 2001. It is far more lives than were lost in the Bhopal disaster. So is it really unthinkable that there should be some level of financial crime that qualifies for the death penalty?
On a pragmatic level, prosecutors already have a difficult time securing convictions against Wall Street fraudsters because such individuals have the resources to mount an exhaustive defense with the best possible legal representation. This makes it difficult to gain cooperation from offenders and have them turn state's evidence against higher level conspirators. Institution of the death penalty would give prosecutors a tool valuable tool to gain such cooperation.
In order to achieve adequate justice for the enormous financial crimes that have been committed over the past several years, a constitutional amendment would first need to be passed that would enable the death penalty for financial crimes in excess of a threshold value, perhaps $20 million. State or federal laws would need to be passed to enable the application of the death penalty to such crimes. The same constitutional amendment would have to permit the criminal statute to be applicable retroactively, or ex post facto, so that the threat of the death penalty could be applied to acts that have been committed within the past ten years.
For the financial system to work properly, individuals that are privileged to manage hundreds of millions of dollars of other peoples' money must be held to a level of accountability that is proportionate to the magnitude of their fiduciary responsibilities. If an adequate balance of responsibility and accountability is not introduced into the system, it will remain broken and the public trust will not be restored.