In a Texas Law Review article, Professor Miriam Baer Proposes Gradation of Federal Fraud Offenses in White Collar Crime

In her recent article Sorting Out White-Collar Crime, 97 Texas Law Review 225 (2018), Professor Miriam Baer, an expert in criminal law and former Assistant U.S. Attorney in the Southern District of New York, examines the federal criminal code’s lack of gradation in its fraud offenses. According to Baer, the federal code’s failure to distinguish fraud crimes in degrees (e.g., “first degree fraud,” “second degree fraud,” and so forth) is problematic, especially at a time when critics claim the federal government simultaneously overcriminalizes and underenforces white-collar crime.

Baer contends that the ungraded statutory regime generates self-destructive expressive gaps—delivering mixed signals about what the law intends. “Graded criminal codes rely on legislatively written criminal statutes to make categorical distinctions. Ungraded codes collect a large amount of behavior under the same statutory umbrella,” she writes. This creates confusion. A minor fraud offender can be charged under the same offense as a more serious offender. As a result, society fails to learn—from the statute itself—how seriously the government views the underlying offense. At the same time, Baer argues, lack of gradation means that the legislature never hashes out—in an open and deliberative way—the factors that make some fraud crimes qualitatively worse than others.

Baer proposes ways in which the federal government might go about grading fraud—as states do homicide, robbery, and other crimes—including by making use of white-collar misdemeanors and low-level felonies.

In an online response to Baer’s paper, Lauren Ouziel, Associate Professor at Temple University Beasley School of Law, writes that, although she concurs with Baer that white-collar crime generates expressive gaps, the answer might lie instead with altering enforcement priorities: “Should we change federal penal statutes to better reflect enforcement realities by adding misdemeanor provisions or other lower degrees of culpability? Or should we endeavor to change enforcement patterns to better effectuate statutes’ aims?” she asks. Baer’s article suggests, however, that this is the problem: the fraud statutes themselves are too opaque and too broad to promote effective enforcement.

Bloomberg Opinion columnist Matt Levine has also taken notice of Baer’s proposal and agrees with her premise: “It is easy and probably correct to say that the white-collar laws reflect society’s views that all types of white-collar crime are serious and therefore deserve condemnation, but you still need a ranking,” he writes.

At the Law School, Baer is associate director of the Center for the Study of Business Law and Regulation and teaches in the areas of corporate law, white collar crime, criminal law, and criminal procedure. She has been a frequent commentator on legal issues related to the white-collar crime, including the Special Counsel’s investigation into Russia’s interference with the 2016 presidential election.

Read the paper here and the response here.

Read the Bloomberg article here.