Owner, operator or hourly labor: When people die or get ripped off at a business, are those who are charged, and sometimes convicted, really the most responsible?
Pennsylvania Attorney General Josh Shapiro in May charged an hourly worker — a licensed practical nurse, a mom working night shift — with involuntary manslaughter, neglect and tampering with records in the death of the father of former National Security Adviser H.R. McMaster at a Philadelphia nursing home. "We held criminally liable the person who had direct responsibility and failed in that responsibility," Shapiro said.
But what about the owners and operators of the nursing home, which, as my colleague Harold Brubaker found, had an increase in "deficiency" findings in its licensing inspections in recent years? The state Department of Health said it would investigate, and the attorney general says he'd wait for its findings, before maybe going after bosses or owners.
Tragedy calls to tragedy. Remember the 2013 Salvation Army thrift store collapse, which killed seven and led to the suicide of a city building inspector. The district attorney's office won a criminal conviction and 15- to 30-year sentence for demolition contractor Griffin Campbell, and a plea deal for his bulldozer driver — "but not the general contractor, architect or owners," as my colleague Inga Saffron noted.
City prosecutors did go after the operators of the nightclub that fell into the Delaware River in 2000, killing three women. They were convicted of lesser charges and avoided prison (their insurers paid millions in a civil settlement). Lower-level workers in that case were not charged: One testified he had warned the club operators their pier was doomed.
In 2001, state prosecutors went after Motiva, which operated the oil refinery at Delaware City, after a worker fell off a poorly maintained catwalk into a tank of acid, leaving just his wedding ring. Investigators swarmed the company. They found that managers had individually cut corners and ignored safety procedures. But they didn't believe that they had enough to charge them individually with conspiracy. The company pleaded guilty to "criminal negligent homicide," and paid $24 million to settle state charges, plus many millions more after Philadelphia plaintiff lawyers were done with them in civil court. Motiva sold the refinery, which was later updated with millions in public funds.
A business crime against the public doesn't have to be fatal to lead to serious charges and prison time. Charles M. Hallinan, the "godfather of payday lending," got 14 years in federal court July 6 for racketeering and fraud (and his lawyer, a former prosecutor, was also sentenced to prison) after prosecutors proved they engaged in a pattern of ripoffs and legal evasions to extract high payments from desperate borrowers. In a rare 2012 federal prosecution, also in Philadelphia, the owners of Remington Funding Corp. were sent to prison for ripping off small-business borrowers.
Prosecutors aren't judging what's right, but what the law calls for. Companies sometimes go further: In 2005, after L. Dennis Kozlowski, the CEO of one of the biggest companies in America, Princeton-based Tyco International, went to prison for 10 years for stealing $100 million, his successor, Ed Breen, fired 300 senior managers who weren't accused of crimes but who Breen felt were compromised by working under his corrupt predecessor. (Bribery persisted at Tyco even under Breen, the Justice Department later said. He is now CEO of DowDuPont Corp.)
The U.S. Department of Justice is supposed to have grown wary of charging corporations with criminal behavior after forcing accounting giant Arthur Andersen out of business in 2002 as part of the Enron scandal. Since then, particularly in the endless banking scandals, the government seemed to be content to squeeze billions out of rich companies — leaving their bosses in charge — instead of shutting them down and putting lying bosses in prison.
A return toward the idea that individuals are responsible for bad acts at big companies was reinforced by deputy U.S. Attorney General Sally Yates' 2015 memo, questioning the pattern (under President Barack Obama and Attorney General Eric Holder) of big companies getting off with fines while financial-crimes prosecutors put small-fry fraudsters away for years.
I spoke with veteran prosecutors who have wrestled with who to blame, some of whom won't go on the record because they're now in the business of defending companies for criminal charges. With street crime, they say, it's obvious who you're going after. But it's tough to convict a corporation, or its bosses. You have to prove they were reckless enough to rob or kill someone. And, before tearing staff away from prosecuting street crimes, you have to weigh whether the company is such a danger that imprisoning its leaders, and maybe forcing it out of business and destroying people's jobs, is less bad than the risk it will hurt or kill people again.
They insist the system, roughly, works. "Nothing here is random," says Michael M. Mustokoff, a city prosecutor under then-Philadelphia district attorney (later U.S. Sen.) Arlen Specter in the 1970s, and since 1980 a defense lawyer at Duane Morris. "Every time, it's a question of two things: evidence and intent."
"There's been an emphasis on prosecution of individuals since the Yates memo, a recognition that corporate pleas don't necessarily get to the heart of the crime," Mustokoff said.
Prosecutors tend not to charge people for accidents. But "there's a line between deliberately reckless behavior and foreseeable crime," says Mustokoff.
If a hazardous-waste disposal driver dumps dangerous chemicals in a park creek so he can go visit his girlfriend while still on his boss' time clock, the responsibility is probably on the driver. But many truckers complain their schedules aren't reasonable. Whose fault is it if the boss gives his drivers too long a route, in too short a time, and docks or fires drivers who don't make schedule — when someone eventually gets hurt?
That's when cases become "very fact intensive," Mustokoff told me. Often that means prosecutors going after low-ranking people, then working their way up toward the person directing the crime.
Earlier this summer U.S. Attorney David Weiss in Wilmington won a rare criminal fraud conviction for four senior executives of Wilmington Trust Corp. for covering up massive loan losses so they could raise hundreds of millions of dollars from the government and private investors to keep the bank from failing due to losses they didn't disclose.
It wasn't quite a sweep. The bank's chief executive and chairman, their boss and colleague, was not charged. Weiss told me the prosecutors looked at the bank case the same way they do drug gang cases: You can't get everyone. And sometimes you just don't think you have enough to nail the top guy.