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White-collar charges and institution size: too big to jail?

As Americans, we're taught that administration of the law should be impartial. It should not depend on how much money you have or how big of a company you work for.

But does this hold true when it comes to mortgage fraud and other white-collar crime charges? In New Jersey and across the nation, it seems as if smaller financial institutions are more likely to face criminal charges than larger institutions are.

Critics have said this reflects a prosecution policy of "too big to jail." In the financial crisis of a few years ago, large institutions were often deemed "too big to fail" and given taxpayer bailouts. The criminal law counterpart to this is "too big to jail."

U.S. Attorney General Eric Holder has as much as admitted to such a policy. In testimony before the Senate Judiciary Committee last month, Holder said that prosecuting large financial institutions would be a concern if prosecution were to adversely affect the economy.

If prosecutors are relevant to pursue large players, however, it is hardly fair for them to turn around and selectively prosecute smaller players instead. Yet that is sometimes happens.

In one case in the Southeastern U.S., three officers and one customer of a community bank were accused of fraud in connection with a risky scheme to save the over-extended bank. The bank had become over-extended after many of its real estate loans went bad. All four people charged ended up pleading guilty to criminal charges.

In another case, this one in Wisconsin, a customer of a small community bank whose loans were not properly recorded ended up facing criminal charges when the bank failed. The man was convicted of contributing to the failure of a financial institution and sentenced to nearly twelve years in prison.

Source: "'Just Right To Jail' - Small Bankers Do Go To Prison," Forbes, Walter Pavlo, 4-15-13

Please visit our page on white-collar crime defense.

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