As a fraud fighter in real life, I only wish it was this easy. Commit fraud... go to prison... others see the example that's been made of you... fraud goes down.
It's not nearly this easy. Fraud is a crime that doesn't result in as many prison sentences as violent crimes, because our society has decided that violent crimes should be the law enforcement priority. If you look at crimes in terms of how many people are impacted negatively, you'd probably see that the effects of fraud are far more wide-reaching than violent crime.
But fraud isn't as shocking as violent crimes, so fraud takes a back seat. Usually only the most egregious crimes are prosecuted, and prison terms aren't terribly long unless the fraud was huge. Victims of smaller frauds can be hurt just as badly, but they can't really rely on our criminal justice system to lock up the bad guys.
But this bad guy is going away to Camp Fed for a while. Phillip Bennett was the CEO of Refco, a company that filed bankruptcy just a few weeks after going public in 2005. Executives had covered up a $430 million debt owed by the company, and Refco's collapse due to this fraud caused losses totaling $1.5 billion.
Bennett said he didn't mean to hurt anyone, but it sure looks like he meant to help himself. He admitted to 20 crimes and was sentenced to 16 years in prison. He's currently age 59, so he'll be into his retirement years when he finally gets out.
In my experience, executives who commit fraud usually don't think they will be caught. They have an arrogance that makes them believe no one will be able to prove they did anything wrong. I do think that prison sentences like this are an important part of the criminal justice system, although I wonder if they really deter other executives from committing fraud. After all, they usually believe they'll never get caught like Bennett did.
Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
Commit fraud, go to prison (sometimes)