Imagine this: You’re driving along, say, five miles an hour above the posted speed, when you see flashing blue lights in your rearview mirror. You stop, and as you hand your license and registration to the police officer, you notice a bank robbery occurring across the street.
You dutifully try to call the crime to the attention of the officer, only to have him tell you to shut up. “Nice try, kid, but that robbery was over minutes ago.”
Far-fetched, right? Well, what if the officer were the U.S. attorney general, the speeding offense a low-level Internet scam, and the bank robbery a high-level brinks job with bags of cash being whisked away?
In that case, you’d have last week’s press conference at which Attorney General John Ashcroft flexed his muscles to show how tough the feds are going to be on Internet scammers. The heists, meanwhile, are old news. I mean, who really wants to deal with the stock swindles of the dot-com era, let alone Enron? Who even remembers Enron anymore?
Nickel and Dime
No doubt the persistent nature of the scams Ashcroft and his G-men are targeting is a threat to living happily ever after on the Web. No doubt they’re far more than just a nuisance, and if I happened to be one of the people who sent my bank account number to a third-party site Id never heard of before, I too might stand and cheer the efforts.
But the fact remains that this is feel-good law enforcement — the equivalent of rounding up street-level drug dealers while the Colombian cartel kingpin adds a 10,000-square-foot addition to his mountainside retreat.
Not that these scammers and the real crooks the feds should be worried about — the Enrons and Merrill Lynches of the world — are connected in any way. Or are they?
The bottom line is that in all cases there is deception, at a minimum. Sometimes it drifts into outright fraud, but not always. The difference is scale.
The brokerage houses, it can be argued, cost millions of investors billions of dollars during the boom era. Meanwhile, Ashcroft says the scammers the feds have rounded up so far are responsible for some US$176 million worth of fraud. Some perspective: That amount is about one-eighth of the $1.4 billion settlement 10 major brokerage houses agreed to pay to get state and federal regulators to call off the dogs.
The larger problem is that the proportion ends there. Ashcroft says dozens of arrests have been made in the Internet fraud sting. What percentage of those who floated bogus stock ratings and forecasts have had to wear iron bracelets?
No, the fraud problem shouldn’t be ignored. But neither should it be made to seem like a great law enforcement coup. The feds could sit at their desks and open their e-mail all day and find enough criminals to fill the nation’s jail cells.
The hard work is the stuff they’re trying to get us to forget about. The $1.4 billion settlement with Merrill and others means something. But the shareholders who got taken won’t see a penny of that money, and in the grand scheme of things, it is no more than a drop in the bucket for those who must pay it.
Take a Penny…
Now MCI — why does that name sound so familiar? — is lining up to pay its $500 million speeding ticket. That’s a record, you know, and if that’s not proof that regulators are getting tough with white-collar criminals, what is?
Meanwhile, when last anyone paid any attention, the Enron investigation was going hot and heavy. And then what? These things take time, we’re told. Sure they do.
Americans demand action, so we get it. Unfortunately, the action we need and the action we get aren’t always the same. Ashcroft and Co. can save you from spending $20 on fake Viagra over the Internet. Just don’t ask them to hunt down the $20,000 you lost on those eToys shares.
Note: The opinions expressed by our columnists are their own and do not necessarily reflect the views of the E-Commerce Times or its management.