Manafort case shows severe lack of prosecuting white-collar crime

One possible lesson of the many brazen, conspicuous scandals related to President Trump and others in his orbit: The U.S. government has been massively underinvesting in enforcement and prosecution of white-collar crime.

Trumpkins argue that the pileup of charges against onetime Trump campaign chairman Paul Manafort is a sign that special counsel Robert S. Mueller III has gone rogue. After all, many of the allegations against Manafort — laundering $30 million in income, submitting false tax returns, lying to banks, failing to register as a foreign agent, obstructing justice — stem from his work in and for Ukraine before 2016. They’re not directly related to his time on the Trump campaign.

Some of Manafort’s alleged crimes, as Trump loves to point out, are more than a decade old!

But the right question isn’t why Mueller is going after Manafort now. It is, why didn’t someone go after Manafort before? After all, there were just So. Many. Red. Flags.

Not just the wire transfers to buy jackets made from exotic animals but also the decades of work for international thugs and kleptocrats, such as former Philippine President Ferdinand Marcos or former Ukrainian President Viktor Yanukovych.

Manafort is also hardly the only person associated with Trump who has engaged in conspicuously suspicious financial and political activities.

There was the apparent treatment of the Trump Foundation as a personal checkbook, from which Trump used other people’s charitable donations to settle his for-profit businesses’ legal disputes and to purchase gigantic portraits of himself. The operation of Eric Trump’s personal foundation has raised similar questions of selfdealing, according to Forbes.

Or there’s the fishy stock trades by Trump cronies, including Carl Icahn and even the current commerce secretary, Wilbur Ross. Ross shorted the stock of a Kremlin-linked company days after he learned journalists were reporting a potentially negative story about the firm. (Both Icahn and Ross have denied engaging in insider trading.)

Or former national security adviser Michael Flynn’s failure to register as a foreign agent working on behalf of Turkey.

There’s a clear reason so many Trump-related figures likely felt free to engage in dodgy behavior in broad daylight: They didn’t expect anyone to care. And absent the scrutiny that came with Trump’s political success, such activities probably would have gone ignored.

Federal prosecutions of white-collar crime — a category that includes tax, corporate, health care or securities fraud, among other crimes — are on track this year to reach their lowest level on record. That’s according to data compiled by Syracuse University’s Transactional Records Access Clearinghouse, or TRAC, whose data go back to 1986. Prosecutions of crimes related to public corruption are also on pace to set a record low.

Yet we have little reason to believe actual levels of such crimes have decreased. So why has enforcement plummeted? That’s subject to some debate.

The Trump administration has openly prioritized prosecution of other crimes, particularly those related to immigration. But the downward trend in white-collar and official-corruption prosecutions predates the Trump presidency. The Barack Obama administration, you may recall, was often criticized for failing to hold corporations and executives accountable after the financial crisis.

Some argue that big corporations and the wealthy have become too politically influential. Jesse Eisinger, in his excellent book “The Chickenshit Club: Why the Justice Department Fails to Prosecute Executives,” blames a culture of risk aversion in the ranks of the Justice Department. Eric H. Holder Jr., an attorney general under Obama, once suggested that corporate consolidation left some firms too big to jail.

But undoubtedly part of the issue is resources. After 9/11, for instance, terrorism investigations became more of a priority, crowding out available dollars and personnel for white-collar investigations.

Congress’ draconian budget cuts for the Internal Revenue Service, likewise, caused audit rates to plummet. According to TRAC data, criminal prosecutions referred by the IRS to the Justice Department are about half their level from just five years ago and are poised to dip to a new low this year.

Astonishingly, this decline in enforcement is now being cited as evidence of innocence. Manafort’s lawyer, in his opening statement last week, shamelessly suggested that his client must not be guilty of tax fraud because he’d never been audited.

Likewise, on Fox News, Trump surrogate and former federal prosecutor Joseph diGenova objected to Mueller’s criminal prosecution of Manafort in part because Manafort “has no criminal record.”

Which is, you know, a thing that’s true for all defendants, until they get prosecuted.

In any case, contra such objections, Manafort’s prosecution today is less a sign of Mueller’s overreach and more a sign of the rest of our federal government’s decades of underperformance.