High-Profile Enforcement Efficiently Deters White-Collar Crime: Paul Manafort’s Prosecution Under the Foreign Agents Registration Act

Abstract

We present enforcement against high-profile white-collar criminals as an understudied, resource efficient strategy for enhancing white-collar rule of law. These actions demonstrate enforcement agencies’ willingness to pursue criminals with even the most resources to evade punishment, which generates widespread fear of prosecution among the broader population of potential white-collar criminals and a consequent far-reaching increase in rule of law. We examine this “Big Fish” hypothesis in the context of high-profile enforcement against Paul Manafort in 2017 for violating the U.S. Foreign Agents Registration Act (FARA). Comparing compliance under FARA to compliance under the Lobbying Disclosure Act, we demonstrate that enforcement against Manafort caused a widespread, sustained, and economically significant increase in FARA compliance. We present evidence that this effect was driven by a Beckerian cost-benefit mechanism wherein lobbying entities came to disclose reputationally hazardous relationships they would have otherwise kept concealed.

Keywords: Compliance, enforcement, white-collar crime, foreign lobbying

JEL Classification: K42, P48, K23, K14, L20, L84, L14