A common refrain was heard throughout the fraud-fighting community when the coalition was formed 15 years ago: Few courts take fraud seriously, and fewer hand out strong-enough punishment.
But a sea change in attitudes has occurred since then. Many more prosecutors try fraud cases, and more judges hand out appropriate sentences. In Florida, you must serve at least two years for staging a car accident.
Increasingly, judges say they’re tired of seeing the same swindlers back in their courtrooms. These judges are handing out tougher sentences to send a strong signal that insurance fraud is a serious crime with serious consequences.
The coalition has tracked 600 criminal convictions over the last three years to gauge sentencing trends. A cursory look says courts are meting out more and longer jail time. When judges do impose probation, the terms appear to be tougher and the length of probation longer. Restitution also is automatic in many states.
Still, many cases leave us shaking our heads. We’ve seen people steal more than $1 million and never set foot inside a jail, while others receive two years for lying on an auto application.
We will get a firmer handle on sentencing trends when a formal research project is completed later this year or next. But in the meantime, there’s one trend the fraud-fighting community must grapple with. That’s the growing reluctance of many states and jurisdictions to house, feed and care for non-violent criminals.
The number of people supervised by the U.S. criminal justice system surpassed seven million in 2006, the highest ever. States spend tens of billions of dollars to house offenders, and monitor them when they leave. With many states facing severe revenue shortfalls, there’s pressure to avoid passing new felony laws that send people to prison.
In California, it’s a felony for a business to under-report payroll to reduce worker compensation premiums, but it’s only a misdemeanor to fail to buy any state-required comp coverage at all. Everybody agrees failure to buy should be a felony, but no one is pushing a bill because the legislature has no appetite (or budget) for jailing more non-violent felons.
The fraud-fighting community needs to get ahead of this developing trend and start brainstorming about creative sentencing that not only will be appropriate punishment but serve as a deterrent as well. The threat of prison should always hang over anyone convicted of fraud. Deferred prison sentences can be that threat.
But with real prison time less of an option in the future, more focus will be on restitution, probation and community service.
Doctors and lawyers could perform extensive pro-bono services ⎯ and in a very public way that warns other would-be crooks. Convicted swindlers also could speak out against fraud to civic, church and other citizen groups.
Community service also should include the anti-fraud community. Fraudsters should be required to fully divulge their tactics so fraud fighters can hone their skills.
Creativity also can go a long way. A college student accidentally dropped his laptop then lied that someone had stolen it. The student seemed remorseful, so the insurer didn’t pursue charges but did require him to write an apology to the company president. Nice touch.
This probably was appropriate, but I also would’ve required the student to publish the letter in his college newspaper. That would’ve alerted others that attempting to commit fraud is a lousy idea.