So there were 2,000 Western Union employees in on this scam? That sounds like a huge number.
Also, a $586m fine for a company that makes $14b a quarter? Is that stardard?
It could be quite fair depending on the scope of the fraud. Fines at all levels in the U.S. are roughly based on the scope of wrongful activity, not income. Two people both speeding 10 mph over the limit don't get fined different amounts based on their income.
https://polisen.se/en/Languages/Laws-and-Regulations/Fines/
*) Except DUI. That's a "more serious crime". Prison/similar and/or a fine proportional to your income.
Source: I worked at customer service at a grocery store and had to do that. There was (at the time, ~2006), no official training. The most I ever wired was about $12k to Africa for a family that was immigrating, most wires (90%) were to latin america for about ~$1-300 or emergency help to family for a few hundred as well.
Important to remember that fines should match the severity of the violation, not the wealth of the violator. The purpose of the fine is to discourage the behavior, so ideally the following holds:
(size of fine * chance of being caught) > profit from not being caught
If the above is true, rational people won't bother trying to do something illegal.
But that's precisely the problem, isn't it? How can you ensure the risk is too high for the company unless you take into account its financials?
* $x of fines for every $y of wire fraud
* $x of fines for every individual instance of wire fraud
Most of Scandinavia determines fines based on income, because they recognize that fines that constitute pocket change don't actually act as deterrent.
http://www.theatlantic.com/business/archive/2015/03/finland-...
Scaling up fines based on wealth might help reduce minor crimes like speeding. I'm not sure how effective that really is, though, since low income people still speed.
In this case the "profit" part of my equation would change based on individual circumstances.
The "profit" of speeding to your finance job where you make $500/hour is much higher than that of speeding to your minimum wage job at McDonalds.
I think that's why we punish serious crimes with time in prison, not fines.
Is this something we can really calculate so closely? What if it turns out the banks are better at such calculations than the government, and crime is profitable?
Personally, I feel there's a disparity here between punishment for the rich (make the fine slightly higher than the expected profit) and the poor (put them in a cage for years).
No he wasn't. He was arguing against scaling up fines based on a company's general profits. The formula given simply said that the fine and the chance of being caught should be greater than the profit from the illegal activity. How much greater was unspecified.
> Personally, I feel there's a disparity here between punishment for the rich (make the fine slightly higher than the expected profit) and the poor (put them in a cage for years).
I agree with that, but don't feel that scaling fines resolves the issue that poor criminals land in jail while wealthy criminals don't even pay their own fines (instead the corporation does). You don't fix this discrepancy by raising fines on the wealthy.
However great the difference between the expected profit and the fine, a purely financial penalty for crime will always encourage three things: gambling, trying outsmart the government by finding ways to make more profit or reduce the chance of being caught, and rich people ignoring the law and committing the crime for non-financial reasons (for example: thrill seeking, as a favor to someone, to enable another crime, or from pure malice) with no real penalty to them.
I think we both agree jail is a more appropriate punishment, though we're making the argument in different ways.
There are at least five classic purposes for punishment: (I'm assuming the felon is a company, not an individual for the examples)
1. Incapacitation. The company is banned or dissolved to prevent it from committing a crime again.
2. Deterrence. Other companies, seeing the punishment, will be less likely to commit a crime.
3. Restitution. The company compensates the victims.
4. Retribution. Because the company hurt society, society may now inflict harm on the company.
5. Rehabilitation. The company is required to alter its policies or practices to reduce likelihood of committing future crimes.
Pick one or more of the above. :-)
As far as the paying procedures go, the only thing I needed to check it's the recipients name. I couldn't pay a "John Doe" wire to a "Joseph Doe".
I also had a customer that sent a wire to a Cuban citizen / South American resident. The payment was rejected because of some US embargo against Cuba.
Reminds me of a story my SO told me once. For some reason I can't recall now her company was to get some money via Western Union. She was supposed to pick it up, but the sender refused because she had a polish character ("ł") in her surname and they believed that WU won't be able to handle such transfer. For that reason, the company had to send someone else to pick up the transfer.
Also, for what I remember, you can't send a wire to a company via WU. The recipient must always be a person.
The person at the local Western Union actually warned them that it was a scam. I'm not sure if all of them would actually try to stop people from wiring money. In the end it's company police to wire the money if the client wants it tho.