PICK UP

Why have things gotten so out of hand? One problem is the paucity of resources that law enforcement agencies can throw at fraudulent business practices.

Despite the fact that white-collar crime costs businesses, consumers and governments billions of dollars each year, most law enforcement efforts continue to go toward violent crime. If a case is not worth millions of dollars and not seen as a direct threat to public welfare, it is unlikely to get more than a cursory look.

“The threshold at which the (District) Attorney’s Office will seek a prosecution keeps going up,” said Parker. “Generally, the loss has to be worth a million dollars or more.”

The FBI’s white-collar unit in Los Angeles is the biggest in the nation, with 185 agents. But it can only handle a fraction of the tens of thousands of complaints that flow into the office each year.

What’s more, tracking a sophisticated scam artist takes more time and effort than investigating a more common criminal. Complex cases in securities or insurance fraud often require the coordination of a number of disparate law enforcement agencies, and can take several years to prosecute.

“While we try to get involved in all areas, we can’t throw our resources at small cases,” said Richard Wade, who heads up the FBI’s white-collar division in Los Angeles. “Most of our resources go to cases that involve over $5 million.”

The same triage strategy is employed at the Department of Corporations.

McDonald said the department’s enforcement division can only look into 5 percent or 10 percent of the complaints it receives. Of the cases that are investigated, only a handful are successfully prosecuted.

Indeed, the department registered 4,649 complaints in 1997, but it opened only 199 cases and initiated 15 criminal procedures.

“The hardest thing is prioritizing,” said McDonald. “You end up raising and raising the floor for the cases you target. We can only work priority cases that involve large amounts of money.”