Wash-out: A critique of follow-the-money methods in crime control policy

Over the last 15 years there has been a quiet revolution in law enforcement. Instead of simply closing rackets that generate illegal income, the central objective has become to attack criminal profits after they have been earned. The underlying theory is that this will eliminate both the motive and the capital for further crimes. The principal legal instruments take the form of tougher regulations to hamper the infiltration of criminal money into the legitimate economy, and of sweeping asset-seizure laws to help take away from criminals the profits of their crimes. This paper examines the origins of the policy, finding its roots in myth and misunderstanding about the nature and operation of the criminal marketplace. It critically scrutinizes the rationalizations by which the policy is justified. It raises questions about how illicit profits can be measured, and how their presumed damage to the legitimate economy can actually be assessed. It dissects the methods through which a follow-the-money policy is implemented, attempting to determine criteria by which success of such a policy could possibly be judged. It looks at the incidental costs of the proceeds-of-crime approach, for example the skewing of law enforcement priorities, egregious violations of civil rights and potentially serious damage to the integrity of the tax system. Finally it suggests an alternative approach, well grounded in history and proven in experience, that would achieve the fundamental objective of taking away from criminals the profits of crime without the dangers attendant on the current follow-the-money fad. This revised version was published online in July 2006 with corrections to the Cover Date.     

The underworld of gemstones

In recent decades prices of high-end “colored gemstones” (trade jargon for precious stones other than diamonds), like almost all “collectibles,” have risen dramatically. Demand has been spreading to economic classes formerly excluded at the same time the supply of high-quality material from natural sources falls, leading to constant searches for as yet undiscovered sites, which may take on the character of gold-rushes. While no doubt criminogenic factors have always existed within the gemstone business, periods of rapid price rise mean stronger temptation for illegal activities. The potential list of economic offenses, civil, regulatory and criminal, associated with the gemstones business includes: illegal mining, environmental offenses, bribery, gun-running, smuggling, “terrorist”(i.e. insurgent) financing, commercial fraud, mining-share swindles, money laundering and, not least, simple theft along with recycling stolen goods. This paper represents an attempt to understand the criminogenic factors in light of the history and current structures of the business. It fits the gemstone trade into a commercial, geo-strategic and sociological matrix, the three often interacting in mutually reinforcing ways. It asks whether, given the incentives and opportunities for illicit activity, relying primarily on industry self-regulation makes sense. But it questions whether the international regulatory regime now in place for diamonds can be applied to the far more diffuse supply-side of the colored gemstone market. The paper is divided into three parts. The first, “Under the Rainbow,” examined the shady side of gemstone mining in a geo-political context. The current one, the second in the series, entitled “In the Eye of the Beholder,” looks at fraud in cutting and polishing of rough gemstones into finished gems. The third “Hot Rocks, Cold Cash” will focus on illicit activity in the retail jewelry trade.     

Ghosts of terror wars past?

In the wake of 9/11 and the invasion of Afghanistan, then of Iraq, with all the talk of a renewed Clash of Civilizations, came a revival of interest in the lessons from what seemed to be the direct antecedent, namely the Barbary Wars of the late 18th and early 19th centuries. At that time, too, America had seemed to be forced to defend itself economically and militarily against a fanatical foe which rationalized crimes in the name of religion to wage terror against innocents. There are indeed close analogies between the two; but they are almost exactly the opposite of what much popular (and some official) belief holds true. If today it has become clear that most justifications for the current Terror War were fabrications intended to cloak other agendas at home and abroad, when the Barbary Wars are subjected to serious scrutiny, much the same forces advancing much the same agendas appear at work. Nor are the “politics of fear” new in American history. During the Barbary Wars, carefully cultivated fears of a rising Islamintern served to: divert public attention from domestic political problems; suppress political dissent; provide cover for regressive fiscal changes; cloak offensive militarism in defensive guise; and ride roughshod over both conventions of international diplomacy and normal standards of criminal justice, all rationalized by a sense of Christian mission.     

Community Context,Weapon Use,and Victim Injury: A Multi-Level Study of Offense Severity in the Sexual Victimization of Women

American Journal of Criminal Justice - Prior studies of the sexual assault of women suggest the importance of weapon use, victim/offender familiarity, and offender intoxication as factors that...     

Issues surrounding a reduction in the use of internal autopsy in the coronial system

In 2003 it was estimated that 2,700 full internal coronial autopsies were performed in Queensland at a cost of approximately A$5.3 million. This large number of internal coronial autopsies (almost 95% of all matters referred to the coroner) is of concern not only due to the economic cost but also because of the public heath risks, availability of specialist staff and significant religious and cultural sensitivities surrounding internal autopsies. In 2005 the authors began research funded by the Australian Research Council (ARC) to determine if unnecessary internal autopsies are being performed in Queensland and to establish guidelines for when an internal autopsy is required. This article highlights areas of potential concern when the issue of autopsy is reviewed within the coronial system through an examination of international literature on the issue of autopsy diagnosis and error rates more generally, and through preliminary discussion of the data obtained. The article considers the role and purpose of the autopsy generally as well as within the coronial system specifically; compares diagnostic error rates in hospital autopsies with those in the coronial system; the current situation internationally with regard to internal autopsies; and finally the specific circumstances existing in Queensland.     

The underworld of gold

This paper dissects the global business of gold, from the ground, through the refining and marketing process and on into the hands of the final consumer, while examining the main forms of criminal activity associated with each stage. In one fundamental respect the black market for gold is quite different from that for other contraband goods. With opiates, for example, although there are occasional interrelations, it is reasonable to differentiate between legal and illegal sectors. The legal one uses raw material from designated producing areas, transforming it into a pharmaceutical product to supply a controlled medical demand. The illegal one uses illicitly obtained raw materials to make recreational drugs in order to service a demand that in most countries is defined as criminal by its very nature. By contrast, with gold, legally and illegally produced raw materials flow through the same channels to the same set of legitimate firms for refining and casting; and the product of these respectable refineries then is redivided into separate streams serving the overt and the covert portions of the market. Even then the cross-links do not stop. Legally sold gold can be diverted into illicit uses, while illegally obtained gold can end up in the hands of otherwise legitimate manufacturers or consumers. *** DIRECT SUPPORT *** AW502007 00002     

The alchemy of fraud: Investment scams in the precious-metals mining business

Particularly since the emergence of modern stock markets, investment frauds based on hyped or completely phony claims have been sufficient to cause concern. However those involving precious metals seem in a category by themselves. Partly no doubt that is because such schemes routinely promise fantastic returns; partly, too, it is because precious metals have a special lure based on myth, magic or even atavistic religious appeal which con artists exploit. However it is often difficult with precious metal mines to know precisely where over-enthusiasm by promoters ends and outright fraud against investors begins. Unlike with base metals, it is commercially feasible to mine precious ones at very low concentrations; while the speculative nature of most new mining ventures makes failure for legitimate reasons a frequent occurrence, helping to disguise or at least fudge the distinction between a business venture that went sour and an outright scam. Moreover the geology of sites can be tricky even for experts to read; assay results are far from conclusive in many instances; and the technologies employed are often changing with the result that what might have seemed an impossibility one day becomes at least arguable the next. All this combines with short memories and the lure of potentially very high returns to make investment in the precious metals sector as much today as in the past treacherous not just for novices but even for experienced investors. This paper examines the nature of such investment frauds in light of history, technology and geological uncertainty, and suggests reasons to expect no significant change in the foreseeable future.

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The underworld of gemstones

In recent decades prices of high-end “colored gemstones” (trade jargon for precious stones other than diamonds), like almost all “collectibles,” have risen dramatically. Demand has been spreading to economic classes formerly excluded at the same time the supply of high-quality material from natural sources falls, leading to constant searches for as yet undiscovered sites, which may take on the character of gold-rushes. While no doubt criminogenic factors have always existed within the gemstone business, periods of rapid price rise mean stronger temptation for illegal activities. The potential list of economic offenses, civil, regulatory and criminal, associated with the gemstones business includes: illegal mining, environmental offenses, bribery, gun-running, smuggling, “terrorist” (i.e. insurgent) financing, commercial fraud, mining-share swindles, money laundering and, not least, simple theft along with recycling stolen goods. This paper represents an attempt to understand the criminogenic factors in light of the history and current structures of the business. It fits the gemstone trade into a commercial, geo-strategic and sociological matrix, the three often interacting in mutually reinforcing ways. It asks whether, given the incentives and opportunities for illicit activity, relying primarily on industry self-regulation makes sense. But it questions whether the international regulatory regime now in place for diamonds can be applied to the far more diffuse supply-side of the colored gemstone market. The paper is divided into three parts. The first, “Under the Rainbow,” examined the shady side of gemstone mining in a geo-political context. The second “In the Eye of the Beholder” looked at fraud in cutting and polishing of rough gemstones into finished gems. The third, the current one, entitled “Hot Rocks, Cold Cash,” focuses on illicit activity in the retail jewelry trade.     

The underworld of gemstones

In recent decades prices of high-end “colored gemstones” (trade jargon for precious stones other than diamonds), like almost all “collectibles,” have risen dramatically. Demand has been spreading to economic classes formerly excluded at the same time the supply of high-quality material from natural sources falls, leading to constant searches (that may take on the character of gold-rushes) for as yet undiscovered sites. While no doubt criminogenic factors have always existed within the gemstone business, periods of rapid price rise mean stronger temptation for illegal activities. The potential list of economic offenses, civil, regulatory and criminal, associated with the gemstones business includes: illegal mining, environmental offenses, bribery, gun-running, smuggling, “terrorist”(i.e. insurgent) financing, commercial fraud, mining-share swindles, money laundering and, not least, simple theft along with recycling stolen goods. This paper represents an attempt to understand the criminogenic factors in light of the history and current structures of the business. It fits the gemstone trade into a commercial, geo-strategic and sociological matrix, the three often interacting in mutually reinforcing ways. It asks whether, given the incentives and opportunities for illicit activity, relying primarily on industry self-regulation makes sense. But it also questions whether the international regulatory regime now in place for diamonds can be applied to the far more diffuse supply-side conditions of the colored gemstone market. Methodologically, the paper is a research essay in the political economy of clandestine international economic activity, with particular focus on its historical, geo-strategic and sociological context rather than a more narrow, traditional criminological study. The second may work well enough when the activity under investigation is a crime per se, as with studies of illegal drugs. However when the activity is inherently legal, but conducted illegally, it is essential to understand thoroughly the nature and operation of the legal business to make sense of the illegal. The illegal is buried in and works concurrently with the legal, not in the narrow sense of having the legal as cover, but in a more profound sense of the legal and the illegal sharing attitudes and supporting institutions. The paper is divided into three parts. The first, “Under the Rainbow,”examines the shady side of gemstone mining in a geo-political context. The second, “In the Eye of the Beholder,” looks at fraud in cutting and polishing of rough gemstones into finished gems. The third, “Hot Rocks, Cold Cash,” focuses on illicit activity in the retail jewelry trade.