Whistleblowers as the Emerging, but Inadequate Key to Elite White-Collar Crime Sanctions

• In Event: Contemporary Trends in White-Collar and Corporate Crime Control Practices

Abstract

The author is one of the original co-founders of Bank Whistleblowers United (BWU), a pro bono effort to restore the rule of law to Wall Street. In the Savings and Loan debacle, we (the federal regulators and prosecutors) never had elite whistleblowers with high level access to senior decision-makers to aid our prosecutions. In the current crisis, however, there are senior whistleblowers at several of the largest originators and sellers of fraudulent mortgage products. The paper describes this change and explains its significance for evaluating a number of issues including the refusal to prosecute elite financial defendants even when exceptionally credible whistleblowers have come forward and detailed their crimes for the FBI, Department of Justice (DOJ), and the Securities Exchange Commission (SEC). I conclude that while the development of widespread whistleblowing at the leading originators, purchasers, and sellers of fraudulent mortgage product has been exceptionally valuable it has been spurned by the FBI, DOJ, and the SEC. I also explain why even if their aid had not been spurned the DOJ would likely have suffered an overall strategic failure in its prosecution of the three most destructive epidemics of financial fraud in history because of the destruction of the criminal referral process at the financial regulatory agencies.

Author

• William Black, University of Missouri - Kansas City