Forfeiture of illegal gain: An economic perspective

Oxford Journal of Legal Studies

Volumn 25, Issue 2, 2005, Pages 275-295

  Bowles, Roger ^a   Faure, Michael ^b   Garoupa, Nuno ^c,d  

^a UNIVERSITY OF YORK   (United Kingdom)

^b MAASTRICHT UNIVERSITY   (Netherlands)

^c UNIVERSIDADE NOVA DE LISBOA   (Portugal)

^d CEPR   (United Kingdom)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 27744568959     PISSN: 01436503     EISSN: None     Source Type: Journal    
DOI: 10.1093/ojls/gqi014     Document Type: Review

References (72)

1. S. Shavell 'Criminal Law and the Optimal Use of Non-Monetary Sanctions as a Deterrent', Columbia Law Review 1232-62 (1985).
2. See R. Posner 'Optimal Sentences for White Collar Criminals', American Criminal Law Review 400-418 (1980)
3. and critically J. C. Coffee 'Corporate Crime and Punishment. A Non-Chicago View of the Economics of Criminal Sanctions', American Criminal Law Review 418-76 (1980).
4. We hereby build onto earlier joint work on this subject, see R. Bowles, M. Faure and N. Garoupa 'Economic Analysis of the Removal of Illegal Gains', International Review of Law and Economics (2000) vol. 20, 537-49.
5. G. S. Becker 'Crime and Punishment: An Economic Approach', Journal of Political Economy, vol. 76, 169-217 (1968)
6. and G. S. Becker 'Irrational Behaviour and Economic Theory', Journal of Political Economy 1-13 (1962).
7. N. Garoupa, 'The Theory of Optimal Law Enforcement', Journal of Economic Surveys (1997) vol. 11, 267-95.
8. See the seminal paper of G. Stigler 'The Optimum Enforcement of Laws', Journal of Political Economy 526-36 (1970).
9. A 'maximal' penalty involves, basically, a fine that exhausts all an offender's wealth: It is the highest possible monetary sum they can afford without going bankrupt.
10. A strong case in favour of fines especially in case of economic crimes has been made by R. Posner 'Optimal Sentences for White Collar Criminals', American Criminal Law Review 400-18 (1980).
11. See S. Shavell 'Criminal Law and the Optimal Use of Non-Monetary Sanctions as a Deterrent', Columbia Law Review 1232-62 (1985);
12. also J. C. Coffee 'Corporate Crime and Punishment: A Non-Chicago View of the Economics of Criminal Sanctions', American Criminal Law Review 419-76 (1980) has advocated strongly against the sole use of fines.
13. For a good comparative overview see M. Kilchling (ed.), Die Praxis der Gewinnabschöpfung in Europa (Freiburg im Breisgau: Max Planck Institute for foreign and international criminal law, 2002).
14. For commentary see E. Rees and A. Hall, Blackstone's Guide to the Proceeds of Crime Act 2002 (Oxford: Oxford University Press, 2003)
15. and T. Millington and W. Sutherland, The Proceeds of Crime. The Law and Practice of Restraint, Confiscation and Forfeiture (2002).
16. Moniteur Belge, 15 August 1990.
17. It can now be found in article 42, 3° of the Belgian penal code.
18. See J. Meyer, A. Dessecker and J. Smettan (eds), Gewinnabschöpfung bei Beteubungsmitteldelikten (Wiesbaden: Bundeskriminalamt, 1989).
19. For a comparative analysis see M. Faure, 'Rechtsvergelijkende conclusies' in M. Faure and Th. De Roos (eds), De berekening van her wederrechtelijk verkregen voordeel uit milieudelicten (Den Haag: Sdu, 1998) 197-215.
20. See section 5.
21. For an overview see S. Ardizzone, 'Criminal association in Italy: legislative significance and structural characteristics' in V. Militello and B. Huber (eds), Towards a European Criminal Law against Organised Crime, proposals and summaries of the joint European project to counter organised crime (Freiburg im Breisgau: Max Planck Institute for foreign and international criminal law, 2001) 43-46.
22. For an overview of the legislative evolution in this respect in Italy see L. Paoli, 'Italien' in M. Kilchling (ed.), Die Praxis der Gewinnabschöpfung in Europa (Freiburg im Breisgau: Max Planck Institute for foreign and international criminal law, 2002) 239-95
23. and S. Hein and C. Visconti, 'Combating illegal proceeds in Italy' in V. Militello and B. Huber (eds), Towards a European Criminal Law against Organised Crime, proposals and summaries of the joint European project to counter organised crime (Freiburg im Breisgau: Max Planck Institute for Foreign and International Criminal Law, 2001) 89-97.
24. See on this notion of victimless crime A. J. Ashworth, Principles of Criminal Law (Oxford: Oxford University Press, 4th edn, 2003) 52-54.
25. See A. Kletzlen and T. Godefroy 'Confiscation and Anti-Money Laundering Regulations under French Law', European Journal of Crime, Criminal Law and Criminal Justice (1997) vol. 5, 273-80.
26. Austin v United States, 509 US 602, 113 S.ct. 2801.
27. For a comment see J. M. Scheb and J. M. Scheb II, Criminal Law and Procedure (Belmont: Wadsworth, 4th edn) 552-53.
28. M. Kilchling 'Comparative Perspectives on Forfeiture Legislation in Europe and the United States', European Journal of Crime, Criminal Law and Criminal Justice (1997) vol. 5, 342-61.
29. For more on which see M. Faure, 'Criminal Law, Economics of Crime and Law Enforcement' in B. Bouckaert and G. De Geest (eds), Bibliography of Law and Economics (Dordrecht: Kluwer, 1982) 504-26
30. R. Bowles, Law and the Economy (Oxford: Martin Robertson; 1982) 54-105
31. N. Garoupa 'The Theory of Optimal Law Enforcement', Journal of Economic Surveys (1997) vol. 11, 267-95
32. and M. Polinsky and S. Shavell 'The Economic Theory of the Public Enforcement of Law', Journal of Economic Literature (2001) vol. 38, 45-76.
33. For a recent development that applies the economics of signalling to explain crime, see D. Gambetta, Crimes and Signs: Cracking the Codes of the Underworld (Princeton, NJ: Princeton University Press, 2004).
34. Thus, the economic model of crime is considered as a so-called deterrence model of crime. The criminological literature of course recognizes other models as well. For an overview see A. Dessecker, Gewinnabschöpfung im Strafrecht and in der Strafrechtpraxis (Freiburg im Breisgau: Max Planck Institut für ausländisches und internationales Straftecht, 1992) 82-90.
35. See again A. Dessecker, Gewinnabschöpfung im Strafrecht und in der Strafrechtpraxis (Freiburg im Breisgau: Max Planck Institut für ausländisches und internationales Strafrecht, 1992) 89.
36. See further L. Haasen and R. MacAdams 'The Surprisingly Complex Case against Theft', International Review of Law and Economics 367-78 (1997).
37. See M. Polinsky and S. Shavell 'Should Liability be Based on the Harm to the Victim or the Gain to the Injurer', Journal of Law, Economics, and Organization (1993) vol. 10, 427-37.
38. See S. Bakker, D. Van der Landen and Th. De Roos, 'Kader voor de beantwoording van de algemene vragen en jurisprudentie-analyse' in M. Faure and Th. De Roos (eds), De Berekening van het Wederrechtelijk Verkregen Voordeel uit Milieudelicten (Den Haag, Sdu Uitgevers, 1998) 36.
39. See the interesting study by J. R. Smettan, Kriminelle Bereicherung in Abhängigkeit von Gewinnen, Risiken, Strafen und Moral (Freiburg im Breisgau: Max-Planck- Institut für internationales Strafrecht, 1992) see especially pages 184-210
40. see also W. Perron 'Vermögensstrafe und Erweiterter Verfall', Juristenzeitung (1993) 919-20.
41. See S. Bakker, D. Van der Landen and Th. en de Roos, 38-40.
42. So also G. Stessens, De Nationale en Internationale Bestrijding van het Witwassen, Onderzoek naar een meer effectieve Bestrijding van Profijtgerichte Criminaliteit (Antwerpen: Intersentia, 1997).
43. See the discussion above in section 2.
44. Here we follow the analysis by M. Polinsky and S. Shavell 'The Optimal Use of Fines and Imprisonment', Journal of Public Economics (1984) vol. 24, 89-99.
45. Here we refer to other costs than the costs to find out the amount of legal wealth versus the illegal gain, the issue we just discussed.
46. We are obviously assuming that selling drugs is a criminal activity, which is not the case any longer in all countries.
47. See also A. S. Malik 'Avoidance, Screening and Optimal Enforcement', Rand Journal of Economics (1990) vol. 21, 341-53.
48. L. Kaplow and S. Shavell 'Accuracy in the Determination of Liability' (1994) Journal of Legal Studies, vol. 37, 1-15.
49. This is in the legislation referred to as the right to 'follow' the illegal gain.
50. See inter alia R. Cooter and T. Ulen, Law and Economics (Addison-Wesley, 3rd edn, 2000) 446
51. and F. Easterbrook 'Criminal Procedure as a Market System' (1983) Journal of Legal Studies 294.
52. The classic example is that if breaking into a house and murder were both punished with an imprisonment term of 20 years, those who break into a house and are discovered would have an incentive to kill the victim. The murder would reduce the likelihood of their being caught and convicted, but would not lead to any additional punishment if they were caught; hence there would be no marginal deterrence.
53. Here one recognizes again that the type and amount of the sanction traditionally corresponded with the harm caused by the offence instead of with the gain obtained by the criminal.
54. On the economic design of enforcement polices to tackle illegal cartels and organized crime, see N. Garoupa 'The Economics of Organized Crime and Optimal Law Enforcement', Economic Inquiry, 38, 278-88 (2000);
55. R. Cooter and N. Garoupa, 'The Virtuous Circle of Distrust: A Mechanism to Deter Bribes and Other Cooperative Crimes' (November 7, 2000), Berkeley Ohlin Program in Law & Economics, Working Paper 32 http://repositories.cdlib.org/blewp/32
56. and more generally D. Gambetta, Crimes and Signs: Cracking the Codes of the Underworld (Princeton, NJ: Princeton University Press, 2004).
57. This has been defended among others by F. A. Epstein, 'A Theory of Strict Liability' (1973) Journal of Legal Studies 151-204
58. and C. G. Veljanovski, 'The Economic Theory of Tort Liability - Towards a Corrective Justice Approach' in The Economic Approach to Law, P. Burrows and C. G. Veljanovski (eds) (London: Butterworths, 1981) 125-50 and has been seriously criticized by Posner (R. Posner, 'The Concept of Corrective Justice in Recent Theories of Tort Law' (1981) Journal of Legal Studies 187-206).
59. See on this topic also G. Schwartz, 'The Ethics and the Economics of Tort Liability Insurance', Cornell Law Review 313-65 (1990).
60. See for a more general discussion L. Kaplow and S. Shavell, Fairness versus Welfare (Cambridge, MA, Harvard University Press, 2002) (also Harvard Law Review, 2001, vol. 114/4, 961-1388.
61. And see A. M. Polinsky and S. Shavell 'The Fairness of Sanctions: Some Implications for Optimal Enforcement Policy', American Law and Economics Review (2000) vol. 2, 223-37.
62. G. Stessens, 60-61.
63. The notions of corrective justice and wrongful gain have also been discussed in the context of tort law. In that respect a distinction is made between on the one hand liability in tort and on the other hand recovery of wrongful gains based on unjust enrichment. See on the controversies concerning these issues J. Coleman 'Corrective Justice and Wrongful Gain' (1982) Journal of Legal Studies vol. 11, 421-40.
64. See S. Shavell 'The Optimal Level of Corporate Liability given the Limited Liability of Corporations to Penalise their Employees', International Review of Law and Economics (1997), vol. 17, 203-13.
65. Section 18 of the Criminal Justice Act 1993.
66. Section 240 of the Proceeds of Crime Act 2002
67. See E. Rees and A. Hall, The Proceeds of Crime Act 2002, 117-19
68. and T. Millington and M. Sutherland Williams, The Proceeds of Restraint, Confiscation and Forfeiture (Oxford: Oxford University Press, 2003) 341-52
69. S. Shavell 'The Optimal Structure of Law Enforcement', Journal of Law and Economics (1993) vol. 36, 255-87.
70. See inter alia S. Ardizzone, 'Criminal association in Italy: Legislative significance and structural characteristics' in V. Militello and B. Huber (eds), Towards a European Criminal Law against Organised Crime, proposals and summaries of the joint European project to counter organised crime (Freiburg im Breisgau: Max Planck Institute for foreign and international criminal law, 2001) 43-52
71. and A. Ingroia, 'Criminal association and organised crime: The Italian experience' in V. Militello and B. Huber (eds), Towards a European Criminal Law against Organised Crime, proposals and summaries of the joint European project to counter organised crime (Freiburg im Breisgau: Max Planck Institute for foreign and international criminal law, 2001) 53-55.
72. See G. Fiandaca and C. Visconti, 'Theoretical and criminal policy foundations for a model 'extended' confiscation in the ambit of organised crime' in V. Militello and B. Huber (eds), Towards a European Criminal Law against Organised Crime, proposals and summaries of the joint European project to counter organised crime (Freiburg im Breisgau: Max Planck Institute for foreign and international criminal law, 2001) 79.