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Should White Collar Criminals be sent to Jail?

November 1, 2012

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This morning I was reading an article at about a manager at ANZ, Michael Phan, 29, who stole more than $5 million from his employer over four years.

In his four-year spree, Phan stole $5,142,000 from the bank in eight transactions of between $132,000 and $1.5 million.

Phan was authorised to approve loans of up to $1.5 million and established a number of false accounts between 2006 and 2010, and during this time approved loans for his own use.

He also used colleagues’ personal details and forged signatures on bank cheques to approve the loans.

He has been sentenced to six years in jail, and will be eligible for parole after serving four years.

After reading this article, I felt more pity for Michael Phan and his future prospects.

At just 29 years of age and earning an annual salary of $130,000, his career is now behind him, his reputation and self-esteem destroyed.

I’m not excusing his behaviour, far from it. However I can understand how someone relatively young and naive may be tempted into this sort of conduct.

But is a four to six year jail term really the right response?

I really can’t imagine that Phan is going to experience any sort of “rehabilitation” while serving jail time. In fact it’s likely to have a negative effect.

To my mind, jail should be reserved for those individuals who pose a threat to society; perpetrators of violent crime against people, property and commercial drug smugglers and manufacturers.

I really can’t recall a time when I’ve felt “threatened” by a bank manager, and I really can’t see the point, in this particular instance of sentencing Phan to 4+ years in prison.

According to The Age, between 1985 and 2009, the Australian prison population rose from 10,844 to 29,317.

Per head of population, that was an increase of 64 per cent.

Net recurrent and capital expenditure on prisons in Australia is now $2.9 billion a year. This is money that could be spent on hospitals, schools and roads.   Community corrections programs on the other hand are considerably less-expensive at $400 million over the same period.

According to the Productivity Commission, the cost of imprisoning a single prisoner is about $269 a day in an Australian detention facility or about $98,185 per inmate each year.

It is estimated that 50-80% of prisoners have a drug or alcohol dependence, 70-80% are suffering from a psychiatric disorder, and 43% have personality disorders. About 80% of imprisoned women in Victoria are mothers and sole parents so the hardship of imprisonment impacts on family life to a greater degree in their case.

In some prisons, the practice of putting mentally-ill inmates causing trouble into solitary confinement for 23 hours a day simply increases the distress and anxiety, so that they are being punished for behaviour that is part of their mental illness.

The recent past of many who go to jail shows that they were likely to have been:

  • alienated from society,
  • unemployed,
  • abusing drugs or alcohol,
  • committing welfare fraud,
  • suffering mental illness,
  • gambling to extreme,
  • stealing goods and cars,
  • driving under the influence of alcohol,
  • defaulting on fines,
  • violating a parole order,
  • abusing family members, and/or
  • defying control orders.

Many ex-prisoners claim that there is little or no rehabilitation in prisons. They feel that, while being deprived of their liberty, they should not be deprived of their dignity. This occurs, they say, because they are sometimes controlled by mean-spirited, usually poorly-educated and -trained prison officers.

In Victoria, the high-profile criminal lawyer, Andrew Fraser, had a thriving practice over 30 years but was then sentenced to seven years jail in December 2001 for importing a commercial quantity of cocaine. In his book, Court in the Middle, he details insights he gained while being confined in two maximum-security prisons in Victoria.

At the Melbourne Assessment Prison, he was shocked by the language of the jail governor and most of the “screws”, with every second word being, “f…”. He was given no instructions as to jail procedures and regulations, stating: “No doubt it`s because you are easier to control if you are kept in the dark!”

Describing the prison cells, Fraser wrote that there were camp stretchers, army-type blankets and two putrid pillows without pillow slips.

“There is the prevailing stench of stale urine. My cell had been inhabited by people who had lost all self-esteem and human waste had permeated the floor and walls.Tension is very high, everyone is edgy and anxious, blow-ups occur easily, fights break out. There is danger of stabbing in the food queue.”

A key factor in this circle of violence is the gratuitous violence by screws (prison warders) on prisoners, he wrote, such as smashing a prisoner`s head against the wall and punching him in the face for back-chatting. “Prisoners won`t complain as nothing will be done, and they will suffer in return.”

Serving four years and ten months at Port Phillip and the extra-tough Barwon prison, Fraser witnessed the rapes of young prisoners. He describes the experience of one young man who, after constantly resisting the sexual advances of another prisoner, was taken to the toilet, then had his anus slit with a razor blade. He passed out: when he regained consciousness he found himself bent over the toilet being raped from behind. He has now lost his reason and his drug use has gone through the roof.

Strip searches were a regular part of prison life and personal items were continually confiscated on the pretext that they had not been officially approved. There was no avenue for raising a complaint or a request.

‘Lock-downs’, with prisoners confined to their cells for 16 hours are constant and the author states that he endured 132 days of lock-downs during his three years at Port Phillip prison, run by a private company.

Referring to the mentally ill in prison, Fraser writes:

“ I was dumfounded by the number of mentally ill people in the prison system…in fact they should be in proper facilities for the mentally infirm.When I was at Port Phillip a young Aboriginal prisoner came into the unit and he was clearly not well mentally. He was screaming and shouting and started smashing up his cell.Then a six-member riot squad appeared wearing helmets with visors and holding shields and long batons. After being severely beaten the young Aborigine was dragged out, covered in blood and barely conscious.He was then thrown down the steel steps to the ground floor. He was removed and not seen again.”

Fraser maintains there is no rehabilitation in jail. “The screws don’t care. Sentence Management doesn’t care. The entire existence of a prison officer is dedicated to counting crooks four times a day, watching television, being fed by crooks, smoking cigarettes, drinking coffee – generally doing as little as is humanly possible.”

Of the 3,800 people in custody in Victoria, 50% of the male prisoners and 38% of female prisoners have been in prison before and 44% of prisoners return to corrective services within two years of release. The main reason for re-offending is that the complex problems which led to their first imprisonment are not being addressed while they are incarcerated.

A precise figure for the rate of recidivism is hard to state as much crime goes unreported or there is lack of evidence on which to prosecute. However it is estimated that around 60% of those in custody Australia-wide have previously been imprisoned.

In a Corrections Research Paper, issued by the Victorian Department of Justice in June 2007 and entitled:‘Who returns to prison’, it says that prisoners return to prison more quickly in the early months after release, with almost 40% doing so within 6 months and close to 70% within 12 months.

While detailing patterns of recidivism, the research paper does not examine why prisoners return to prison and indicates that future research should investigate a wider range of influences on re-offending, such as unemployment, drug and alcohol use, family relationships, housing – both pre-imprisonment and post-release – to examine the causal question of why prisoners return.

Many people argue that white collar crime is not a victimless crime, and in cases such as the collapse of Storm Financial where mum and dad investors lost their entire life savings I wholeheartedly agree, however in the case of Michael Phan it appears that the only victim was the ANZ, and it took them four years to even notice that anything was amiss.

Try as I might, not very hard admittedly, I find it difficult to muster any sympathy for the ANZ.

If we are going to start jailing the likes of Michael Phan, a young bank manager who made a foolish mistake, when are we going to start jailing the likes of the Fat Cat Wall Street Bankers who walked away unscathed from bringing about the entire demise of the global financial system?

Is jail even an appropriate response….?

Published with extracts from:  Civil Liberties Australia




28 Comments leave one →
  1. November 1, 2012 11:36 am

    Reblogged this on The Prison Enquirer.

  2. November 1, 2012 11:48 am

    Thanks for the reblog prisonenquirer….

  3. TB Queensland permalink
    November 1, 2012 12:04 pm

    And the alternative would be?

    (BTW I agree with the thrust of your argument) … I have to go out for a couple of hours … but … I’ll be back …

  4. el gordo permalink
    November 1, 2012 12:07 pm

    ‘They feel that, while being deprived of their liberty, they should not be deprived of their dignity. ‘

    Definitely agree, unless they are really bad eggs.

  5. November 1, 2012 12:14 pm

    “And the alternative would be?”

    Community Service.

    Research by the Australian Institute of Criminology has indicated that community sentencing has a much higher likelihood of rehabilitating criminal offenders, because it punishes them through restrictions on their time and liberty, as well as encouraging them to reform their behaviour. Community Service Orders have also proven to be cost-effective for the authorities, as they are relatively cheap to administer in contrast to imprisonment, while simultaneously enabling offenders to make reparations for harm committed in the local community.

    Although I note from the same link above that:

    ….clause 22 of the Crimes (Sentencing Procedure) Regulation 2005 (NSW) lists the maximum hours that may be imposed in a Community Service Order, according to the maximum term of imprisonment applicable to the offender.

    A Community Service Order cannot be more than:

    100 hours, where the maximum term of imprisonment does not exceed six months.

    200 hours, where the maximum term of imprisonment is more than six months but less than twelve months.

    500 hours, where the maximum term of imprisonment exceeds twelve months

    Furthermore, offenders are restricted from performing more than eight hours of community service work in one day or participating in a development program for more than five hours in one day, unless previously agreed to by the offender and the assigned officer.

  6. November 1, 2012 1:01 pm

    Great blog. I spent 10 years in some of the worst California prisons on drug charges. I was a runaway who sold weight and became addicted to the cat and mouse and the underground culture. While incarcerated I read the paper daily and realized the real criminals are the white collar frauds, politicians with unions and special interest etc etc. I turned it into best selling drug war and prison books.

  7. el gordo permalink
    November 1, 2012 1:02 pm

    Community Service is clearly better for rehab and cheaper…I get to meet these unfortunate characters on a regular basis and the police know where they are.

  8. el gordo permalink
    November 1, 2012 1:03 pm

    Welcome Lockdown.

  9. TB Queensland permalink
    November 1, 2012 3:24 pm

    Maybe not Community Service as such … (after reading its limitations) … and I have been privy to discussions where CS is cleverly “avoided” by both parties …

    … the ANZ manager (mentioned in the thread header) would obviously have skills useful to either business, security or even law enforcement bodies … if a way could be found to untilise the skills, knowledge and experience of the “whit collar crims”, it could be win – for the crim, win – for the system, – win for the community.

    Maybe a Community Corporate Service (so that the conditions were more stringent – it still has to have some element of deterrent) … where professional help out people in the community in their area of expertise … eg our “example” could assist socio/economic limited peoplle with banking issues (loans, taxes etc) … once again you have issues with supervision (makes you wonder what happened to the ANZ bloke’s supervisors in all this!)

  10. November 1, 2012 6:28 pm

    I have a very close friend who was imprisoned in the last half decade. He was involved in a car accident in which he was crippled, placed in a n induced coma & ultimately sentenced. One of his mates was killed & another one blamed him for the accident; there has never been conclusive proof of who was driving. Blood toxicology condemned him…

    Anyway. They locked him up with such luminaries as Von Einem (notorious Family Murders convict), two of three of the Snowtown Serial Killers & David Hicks (of all people 😯 ) . Hardly commensurate companions. Worst of all, he was celled up with (now) notorious SA bikie figures (I don’t want to mention names here, but anyone who’s watched the news here in the last 24 months would be familiar with their legacy & their notoriety)…to the point that he is now on a first name basis with these people.
    I love my mate, but he absolutely came out of jail with a much harder edge. More of a corruption than a rehabilitation, imo.

    Dunno what his alternative penalty should have been. Certainly something; but his conviction had plenty of blurry lines.

    The law is an ass.

  11. TB Queensland permalink
    November 1, 2012 7:33 pm

    Certainly something; but his conviction had plenty of blurry lines.

    Seems to me we just throw ’em all into the grinder … without thinking of the “type” of crime (associated with a particular “type” of person) … what we need is incarceration {if we have to go that way} relative to crime) …

    … like the ANZ bloke and white collar …

    … Ser Bee’s mate … car accident death (could happen to a majority of drivers!)

    … out of control teens …

    … tea-leaves and con men …

    … recidivists …

    … murder/manslaughter – hard … (eg bikies who don’t give a shit where they fk up!)

    … murder/manslaughter soft … (eg domestic but not a general threat to the public)

    etc … etc …

    (one of my uni lecturers chastised me for using etc … and she was right to do … she said, ” if you use etc. its lazy … you expect me to guess what you are referring to” …)

    In the context above … I think others can get the gist of my post … and may have a better suggestion …

  12. November 2, 2012 12:43 am

    It is hard to work out with a system that is as fcked up in so many ways as ours. The `pinkos` demanded the removal of the death penalty so, now we have Knight, Bryant and Milat in permanent `cold-storage` at around 100K$ per head, per year to appease the pinkos. Great use of tax-payer cash keeping these thrill-killers around.
    Then the asylum`s have been closed and sold off under the various government`s `privatization-fever`, so of course the insane will fill the jails, no surprise here.
    The `white-collar` criminal has always got off light, in comparison with the rest of us, as most white collars can afford the QC`s and have the connections with those in power. Look at Bond, who feigned dementia and got about 14 months jail for such a large fraud and those he cheated only got about 3-cents in the dollar back.
    The system has no justice.

  13. armchair opinionator permalink
    November 2, 2012 1:54 pm

    This is a very thought provoking post reb, I have found it difficult.

    I agree with 730 that:

    The `white-collar` criminal has always got off light, in comparison with the rest of us, as most white collars can afford the QC`s and have the connections with those in power.

    Most of them never face the courts and are allowed to make deals which ensure they don’t get jailed [steve vizard, awb criminals, asic and the de-registering of directors for a very short time and the lousy ineffectual fines etc].

    I think that if we are going to send non-violent offenders to jail at all [non payment of fines, drug addicts, social security fraud etc] then we should ensure that money is put into the legal system to ensure equal representation for all, being poor should not mean less justice. Social security fraudsters are dealt with harshly when what they steal is a pittance compared to the white collar criminals who largely get away with their crimes. Stealing is stealing and there should be no difference seen because of the social standing of the perpetrator.

    However, if society wrongly believes that white collar crime is a lesser crime than other crimes [because the criminal is somehow seen as a better person] than no-one should be jailed, everyone should get community service. IMO, the highly educated, wealthy, socially respected and well supported [by family, friends & workplace] white collar criminal doesn’t even have the defence of “not knowing any better or poorly brought up” as other people might offer as a mitigating circumstance in their lives. Perhaps it is the more unfortunate who best deserve a chance at rehabilitation.

    Everyone should be equal before the law and in society.

  14. rabbit permalink
    November 2, 2012 7:28 pm

    This guy stole 5 mill and only 0.5 mil recovered. He was either extremely greedy ($200,000 Merc?) or he had some form of addiction. I would suspect the latter, probably gambling.

    And how can he repay the debt at $100/week while in goal? Four year times $5,200 is sweet FA.

    If he was being greedy well maybe the sentence suits. If it was through a pathological addiction, maybe not.

    In my 40 working years, I have neither earned or spent 5 million. (But I’m working on it :D)

  15. James of North Melbourne permalink
    November 2, 2012 9:13 pm

    I don’t think white collar crims do any less gaol time as a rule than other crims. It takes a fair bit to get a prison sentence these days.

  16. November 2, 2012 10:09 pm

    AO .. ” Most of them never face the courts and are allowed to make deals which ensure they don’t get jailed .. ”
    Also true of the Skase gang, once in court the idiot judge gave Skase his PASSPORT back to Skase. His wife Pixie, her kids and her parents were also involved in the Looting of high value art, that should have been used to repay debtors. They all took part in the `theft` in some way or other, nothing was recovered. When Skase finally died Pixie came back to Australia `broke`, Pixie, her parents, her kids, did they get jail time.?

  17. James of North Melbourne permalink
    November 2, 2012 10:41 pm

    730 Roberta Williams only did time for her own specific drug charge. Not defending any Skases by any stretch, but partners rarely cop it.

  18. November 2, 2012 11:03 pm

    I don`t know enough about Roberta, or , if she was involved in Carl`s crimes. Pixie, her parents, and her kids, definitely were involved in the Art Looting They packed and shipped it out of Australia while Skase was already in spain.

  19. armchair opinionator permalink
    November 4, 2012 5:02 pm

    I don’t think white collar crims do any less gaol time as a rule than other crims. It takes a fair bit to get a prison sentence these days.

    I think that white collar crime is under investigated, resourced and prosecuted compared to street crime. I see it as a case of the justice system still steeped in a historical prejudice where the law is seen more as a means of protecting the powerful influential and wealthy landowners from crimes committed by the great unwashed/poor.

    Not sure if this US paper is relevent to australia.

    Public perceptions of white-collar crime and punishment:

    Click to access holtfreder-perceptions.pdf

    Although financial losses from white-collar crime continue to exceed those of street crime, the criminal justice system has traditionally focused on the latter…

    …Put differently, those with higher incomes and those with college degrees believed that the criminal justice system falls short in apprehending and sanctioning white-collar offenders…

    … As a significant body of sentencing research shows, white-collar offenders are not punished as harshly as violent street offenders or even nonviolent street offenders (e.g., see Kerley & Copes, 2004)…

  20. November 4, 2012 5:19 pm

    “I think that white collar crime is under investigated, resourced and prosecuted compared to street crime”

    Interesting point KL….

    The graph at the top of this post shows that white collar crime is rife in Australia…

    Perhaps that’s why the judge wanted to “send a message in the Phan case?” (just speculating)…

    I agree that white collar criminals ought to be “punished” for their crimes (for want of a better word), but “jail time” just doesn’t seem “right”…

    These people are usually “financial operators” who saw an opportunity…

    They’re hardly a threat “physically” to ordinary people on the street…

  21. armchair opinionator permalink
    November 4, 2012 5:28 pm

    They’re hardly a threat “physically” to ordinary people on the street…

    But why should they escape punishment in the same way as any other criminal?

    if they shouldn’t be jailed, no non-violent offender should.

  22. TB Queensland permalink
    November 4, 2012 5:39 pm

    I have had an idea for a sci-fi story for a number of years now and apart from the bleedin’ hearts I reckon it would work in white collar situations realy well …

    Each “type” of crime has a colour … say that “corporate thieves” are identified by yellow … the guilty person is injected with a yellow dye that will last as long as the sentence … and allowed into the community …

  23. Russell Bankier permalink
    November 6, 2012 11:16 pm

    Gday mate I done a $50000 landscaping job for michael phan at 36-38 darlington ave wheelers hill and he only paid me half. I’m a small business and it screwed me so yes I think he got what he deserves and if you were in my position you proberly would to.

  24. Waldorf Salad permalink
    November 6, 2012 11:42 pm

    Sorry to hear that Russell

    At least Standard and Poor are getting shafted in Australia.

    How can a ratings agency be a private enterprise ?

    Who came up with that idea ?

    When will the Cancer Council and the Heart Foundation get listed ?

    McDonald’s and British Tobacco would like to know

  25. November 7, 2012 7:46 am

    Sorry to hear about that Russell…

  26. el gordo permalink
    November 7, 2012 8:21 am

    Very small business gets screwed far too often by white collar types….who agree on a price and when the work is almost complete they say the job is not up to scratch and they will only pay half.

    It becomes a civil matter….

  27. Amanda permalink
    March 10, 2013 10:15 am

    No offense, I think this is a quite ridicoulous notion. People go to jail for years for something as trivial as cannibus, and someone who steals 5 million shouldn’t go to jail? Why should they escape punishment when they committed a crime that probably did more damage than thousands of crimes combined.


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