Law Commons^™

The Problem With Predators, June Carbone, William K. Black

Faculty Works

Both corporate theory and sex discrimination law start with presumptions that CEOs seek to advance legitimate ends and design the internal organization of business enterprises to achieve such ends. Yet, a growing literature questions why CEOs and boards of directors nonetheless select for Machiavellianism, narcissism, psychopathy, and toxic masculinity, despite the downsides associated with these traits. Three scholarly literatures—economics, criminology, and gender theory—draw on advances in psychology to shed new light on the construction of seemingly dysfunctional corporate cultures. They start by questioning the assumption that CEOs—even CEOs of seemingly mainstream businesses—necessarily seek to advance “legitimate” ends. Instead, they suggest …

Testimony Before The Financial Crisis Inquiry Commission, Miami, Florida September 21, 2010, William K. Black

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"Control frauds" are seemingly legitimate entities controlled by persons that use them as a fraud "weapon." (The person that controls the firm is typically the CEO, so that term is used in this testimony.) A single control fraud can cause greater losses than all other forms of property crime combined. Neo-classical economic theory, methodology, and praxis combine to optimize criminogenic environments that hyper-inflate financial bubbles and produce recurrent, intensifying financial crises. A criminogenic environment is one that creates such perverse incentives that it leads to widespread crime. Financial control frauds’ "weapon of choice" is accounting. Neoclassical theory, which dominates law …

Wall St. Fraud And Fiduciary Responsibilities: Can Jail Time Serve As An Adequate Deterrent For Willful Violations?, William K. Black

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The answer to the question posed by the title of this hearing is: only prison sentences can deter the violations that caused the debacle. We should, however, never rely solely on prosecutions to constrain crimes. The criminal justice system needs to work with regulation not only to make regulation more effective, but also to prevent “private market discipline” from becoming a “criminogenic” oxymoron. To understand the vital role that the criminal justice system must play if we are to avoid the recurrent, intensifying financial crises that have beset this and many other nations for nearly three decades we must begin …

Echo Epidemics: Control Frauds Generate White-Collar Street Crime Waves, William K. Black

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“Control fraud” drove the crisis. Control fraud occurs when those that control a seemingly legitimate entity use it as a “weapon” to defraud. In finance, accounting is the “weapon of choice.” Regulators, criminologists, and criminologists have documented the pervasive role of control fraud in causing the second phase of the S&L debacle. That crisis was followed by the accounting control frauds of Enron and its ilk.

Top economists, criminologists, and the S&L regulators agreed that lenders engaged in accounting control fraud optimize through a four-part recipe that is a “sure thing” – it produces guaranteed, record (fictional) near-term profits and …

Throwing The Baby Out With The Bathwater: A Call To Reinstate The Public Housing Drug Elimination Program, Wendy Tolson Ross

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In fiscal year 2002, the federal government, upon recommendation by the Office of Management and Budget, eliminated funding to the Public Housing Drug Elimination Program (PHDEP), a grant program designed to assist public housing authorities in fighting drugs and crime. In explaining its decision, the government cited (1) the program’s ineffectiveness, (2) its duplication of activities, and (3) the availability of other enforcement tools (e.g., evictions) to control crime and drugs in public housing. On the surface, the budgetary concerns appear to be sound. However, today, seven years later, crime and drug violence are still causing problems in public housing …