Download This PaperUnderestimating Fraud
42 Pages Posted: 12 May 2020 Last revised: 3 Jun 2022
Date Written: April 16, 2020
Abstract
Estimating the harm of a course of action is fundamental step in criminal law; courts hesitate to criminalize behavior that seems trivial or borderline. Such harm estimates are of particular importance in white collar crime, as creative people continuously find novel methods of deceiving and potentially defrauding others. In this article, I present evidence that courts systematically underestimate the harm of fraud. Since underestimation bias could limit criminal liability to the most egregious cases of fraud, this bias may be welcomed by critics of white collar overcriminalization. Because this judicial underestimation bias is even stronger in the civil context, however, it may ultimately exacerbate overcriminalization. The typical substitute for criminal sanctions is civil and regulatory liability, and the stronger civil bias cripples those sanctions’ effectiveness. With a comparatively limited scope for civil fraud enforcement, prosecutors may instead increase reliance on criminal sanctions. Moreover, this civil-criminal bias disparity will sabotage the judicial development of clarity in the white collar enforcement framework.
Keywords: Fraud, Over-criminalization
JEL Classification: K14
Suggested Citation: Suggested Citation
David Y Kwok (Contact Author)
University of Houston Law Center ( email )
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