Imagine robbing enough homes to get a million dollars net profit. Let's make them upper middle class and you're really good at getting portable but valuable items. $10,000 per home sound good? I'd say that's a pretty good haul. Break into 100 homes. Imagine the sentence you'd get for being found guilty of breaking into 100 homes. Moving on...
A three-judge panel of the 10th Circuit Court of Appeals agreed with Nacchio's lawyers that the $52 million figure was too high. Instead, the figure used should have been Nacchio's net profit resulting from illegal insider trading.
This is absurd. Break into those 100 homes and do you get a discount on your punishment for the side costs you had to pay? Do you get a reduced sentence because you had to bribe a cop to look the other way? Do you get a reduced sentence because you can't resell a $200 purse for the full $200? No, you don't get to write all that off. You stole the million, even if you didn't get a million in profit.
Nacchio was ordered to forfeit $52 million, but the court said that amount should be adjusted to reflect brokerage, commission fees and other direct costs of trading. The appellate court ruled that the lower court misapplied the law in order Nacchio to forfeit the gross proceeds of the trades.
Using the higher figure to calculate a sentence for Nacchio, the court wrote, "ignored the myriad of factors unrelated to his criminal fraud" that could've affected the value of the securities.
Just because crime can be expensive doesn't mean the courts should subsidize it. We're not talking about something with social value here.
Fraud and theft of this sort aren't just about the profits. They aren't just the money taken from others. They're also the damage they do to the system. They increase the cost of the system and that cost gets passed along eventually to consumers in higher prices, lower salaries especially at the high end where a huge portion of compensation comes from stocks and other non-cash assets, and lower profits for the companies, meaning less for investment. It all cycles around and around and hurts far more people to a greater extent than more direct theft.
I'll have more on this later, an older post I wrote about the efficiency of crime.