Martha Stewart’s stock-case conviction is the latest in a series of messages to corporate America from prosecutors and juries about white-collar crime, says the New York Times. It started with the prosecution of the accounting firm Arthur Andersen, which resulted in its conviction and demise in 2002. Since then, dozens of executives at Enron, Tyco International, and other big companies have been charged with fraud, obstruction of justice, and other crimes. The prosecutions may have reached a critical mass that will make executives think twice before lying to shareholders and federal officials.
The Times says that corporate executives may back away from the aggressive accounting practices and tax shelters that became common, as well as some of their more egregious perks. “The pressures on executives to cut corners and shade the truth is very strong, and there’s a lot of rationalization that goes on,” said Donald C. Langevoort, a professor at the Georgetown University Law Center, and a former lawyer for the Securities and Exchange Commission. Kirby D. Behre, a former federal prosecutor who is a white-collar defense lawyer, said senior executives had already become warier of pushing legal boundaries. “I think the effect is already incredibly profound,” Behre said. “The wake-up call was sent and received in a huge way.”
Prosecutors are reflecting public anger toward executive misdeeds and helping to stoke that anger. Corporate fraud is like drunken driving and domestic violence, once rarely prosecuted or viewed as a serious crime. Today, both can lead to long prison sentences.