Economic and Organized Crime: Challenges for Criminal Justice

6. The Alternatives (cont'd)

6. The Alternatives (cont'd)

6.4 The Role of the Civil Courts

All of these alternatives - the regulatory system to raise operating standards, the private financial system to generate information, and the tax system to engage in search and destroy missions against the profits of crime - seem to have a role, albeit a highly qualified one, to play in enforcing criminal justice. But not only is that not their primary job, it also begs the question of whether or not many of the things against which they are to be deployed should even be considered crimes. It may be time to consider seriously decriminalization of a whole range of actions, and to therefore throw back onto the civil court system the job of dealing with any damage these actions might have done. The most obvious are securities cases where what is at issue is a quarrel between sets of investors over distribution of profit. But there are many more. Today, for example, not only have most anti-trust procedures abandoned the criminal route, but courts are hearing more and more cases of civil torts for damages in anti­trust cases.

Indeed, the history of anti-trust is instructive. In the US the first anti-trust legislation, the Sherman Act, introduced a legal innovation, the implications of which are perhaps still not fully appreciated. It permitted the government to choose to proceed against corporations that engaged in conspiracies to fix prices on either civil or criminal grounds. It also permitted “victim” firms to attempt private law enforcement through civil suits. Indeed, it strongly encouraged them to do so by introducing the concept of “triple damages” that a plaintiff could obtain.[38]

This not only muddied the distinction between civil and criminal proceedings, not only subcontracted law enforcement to private actors, but made the implicit judgement that bounty hunting was a stronger motive than civic responsibility in motivating people to assist in maintaining the law. The result over the next century was a series of court cases in which contests between economic competitors were transferred from the marketplace (where, in theory, they would be conducive to increasing efficiency) to the courts (where, in practice, the main objective was not to rectify a wrong but to see what they could grab at the other party's expense).

Thus, there is a right and a wrong path to returning functions to the civil courts. In the US, use of civil procedures has too often become simply a backdoor way of reducing the burden of proof in criminal cases. Apart from the litany of outrages under civil asset forfeiture, there is also the misuse of things like RICO. The very name - Racketeer Influenced and Corrupt Organizations Act - means that defendants are labelled criminals, while in the event of civil RICO cases, their prosecutors (mislabelled plaintiffs) are required to meet only a civil standard of proof. The civil-criminal distinction is further muddied by the device, uncritically picked up from anti-trust procedures, of “triple damages”. Indeed, the very term is absurd. There are either damages, used for compensation in civil suits, or there are fines, used as punishment for criminal conduct. What happens in RICO cases, as in anti-trust, is that punishment takes the form of fines disguised as damages which are then paid to the plaintiff rather than the government, unless, as so often is the case, it is the government itself that is bringing a civil suit against the plaintiffs in response to their allegedly criminal conduct![39]

This confusion of civil and criminal actions is particularly problematic, and especially dangerous. In strict theory, civil actions are supposed to involve:

  1. actions by one private citizen against another;
  2. seeking damages that correspond to actual acts; and
  3. procedures that require only a slim margin of proof (balance of
    probabilities).

On the other hand, in strict theory, criminal actions are supposed to involve:

  1. actions by the state or its agencies against a private citizen;
  2. seeking punishment that can involve loss of life and liberty; and
  3. procedures that, because of the gross imbalance of resources between the two parties and the heavy consequences, require a high standard of proof (beyond reasonable doubt).

Therefore, there is something fundamentally at variance with notions of natural justice when the state or its agencies, with the overwhelming preponderance of resources, proceed against a private citizen in actions that have punitive effects, while being required to meet only a civil standard of proof. This is particularly the case when it is realized that criminal laws are mainly legislative acts, while civil is largely judge-made. Granted, these instances are mostly in the regulatory field where punishment usually takes the form of monetary losses. But they nonetheless are punishment, not compensation. On the other hand, it could be argued that it makes little sense to proceed with a criminal process if the potential result is not loss of life and liberty, but merely money. That is precisely why, for decades, there have been calls for the definition of a type of offence, mid-way between that which gives rise to a civil damage suit and that which can bring about a criminal prosecution with punitive consequences.[40]

6.5 Between Civil Compensation and Criminal Prosecution

Two factors seem to make such a middle-ground approach desirable. One is the need to restore clarity and meaning to the distinction between civil and criminal procedures. The second is the inappropriateness of the criminal sanction in dealing with many profit-driven offences that fall into the market-based or commercial category.

Traditionally, the criminal sanction worked because it targeted a special subset of actions which the public at large regarded as particularly odious. Not only was the harm clear, but the acts themselves were readily comprehensible. Hence, labelling someone a criminal was by itself the most important part of the sanction - fines or imprisonment were secondary, as much atonement as punishment. But the more the criminal sanction is used to regulate personal moral choices, the more it loses its bite. The public at large may cease to view the “criminal” act with opprobrium.[41] Therefore, to maintain any capacity to deter, the secondary part of the sanction must be escalated, perhaps out of all proportion to the public's perception of the severity of the actual offence. As US experience shows, sentences lengthen, the proportion of the population incarcerated grows, and prisons become less places of penance than training schools in criminal skills for a disgruntled population, disproportionately from ethnic and social minorities.[42]

If a middle ground between civil compensation and criminal prosecution is to be found in which, as in a criminal case, the state or its regulatory agencies proceed against a citizen, it requires rethinking the standard of proof. Since the state or its agencies are seeking something beyond compensation and restitution typical in a normal civil case, it should require a higher than civil standard of proof. Since the action carries no threat of loss of life or liberty, and carries less of a stigma than a criminal process, it should not require a criminal standard of proof.[43] Fortunately, here, US experience provides a guide.

Recently in the US there has been considerable debate about the consequences of civil asset forfeiture - the fact that it involves criminal accusation and criminal punishment without criminal trial. It has often been suggested (indeed it was originally written into, though later dropped from, the recent asset-forfeiture reform bill) that a procedure in which a citizen could face heavy losses of property to the government on the ground that his or her property was the proceeds of crime, even though the actual property owner was not subject to criminal prosecution, demanded something better than the standard of proof used in civil suits. The suggested alternative was called “clear and convincing” proof. Thus, if the civil standard was about a 51% probability, the criminal perhaps 90%, clear and convincing proof stood at somewhere between two-thirds and three-quarters.[44]

Furthermore, there actually are precedents. In the US, it requires something that falls between civil and criminal standards, for example, to put people in a mental institution against their will.[45] This is precisely the kind of legal middle ground that would make sense in dealing with profit-driven offences that involve either citizens exercising moral choices of which the majority of other citizens disapprove, with no obvious damage to anyone but the person exercising the choice, or which involve complex economic relations that are beyond simply regulatory matters but are not clearly criminal. It is a standard of law, incidentally, that could be applied either to individuals or to corporations. And it would therefore also sidestep the legal and moral morass [46] produced by the unwieldy, almost indefinable concept of “corporate crime”.

By creating this category a government intent on dealing with profit-motivated offences actually gains a great deal of flexibility. It has a choice of three legal instruments - civil, financially punitive and criminal - depending on the seriousness of the offence and the quality of available proof. In all three cases, there is the potential of monetary awards, which are the most logical response to profit-driven crime. In a civil procedure, they will be limited to genuine damages; in a financially punitive one, they will take the form of fines; and in a criminal one, they could include fines in addition to jail terms.

Furthermore, in dealing with offences that result from the actions of corporate bodies, the state would have the option of a civil damage suit if the actions are accidental, a financial punishment procedure if they are due to negligence, or criminal prosecution if malicious intent by identifiable corporate officers can be demonstrated.


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