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Comment by jhpriestley | Hacker News Reader

Michelle got actual jail time for a simple, honest accounting mistake? I don't buy it. Rich, connected people don't serve time for white collar crimes in the USA unless the criminality is severe.

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Right. The person in question plead guilty to criminal tax evasion, an exceedingly rare charge. Nobody gets charged with tax evasion for reasonable but incorrect interpretations of the tax code. In this case the evasion was intentional, flagrant, and large.

This is why this text did not land in the book.

I still think something is missing from the story. They state the scheme was designed by outside legal counsel. Lawyers are paid to know the law. Under federal law, for it to be criminal tax evasion, the conduct has to be willful. Doing something with advice of legal counsel is almost definitely not a willful violation of the law.

The reason for this apparent paradox is that all of the key statements in this blog post are false. Just go read the US Attorney's press releases or the perpetrator's guilty plea if you want facts.

You are only getting the story as presented by the CEO, so I assume I am not getting the entire picture.

It wasn't a mistake, she should have known better. That's her job. She knew it was sketchy but got signoff from some sketchy accountants. That doesn't means she's no longer liable, just that the accountants are also liable.

I'm not sure the author would have gone to jail as the title implies. He seems to think that the cops would have arrested everyone standing within 50 feet of her, but since their firm was apparently operating inside of the bounds of the law it's hard to figure out what they would charge him with. Of course he still had to fire her to keep his company's name out of the headlines, but not because he was personally liable for her actions at her previous job.

PWC is supposed to be the definition of non-sketchy accountants, and like 50% their fee goes to maintain that appearance. Not saying they didn't sabotage that prestige here, but it's not like she deliberately selected for sketchy accountants.

So the question is, after the incredible track record for fraud by Wall Street businesses like them, why do major companies and investors still trust them?

According to the Bloomberg article somebody else posted, she hid some of the details of what she was doing from the auditors, and this was revealed at trial using the auditors' notes.

Right, but then in that case her problem is (as I was trying to say above) not that she was "hiring sketchy accountants" but that she was "deceiving non-sketchy accountants".

It just seems like a lot of the discussion is trying to leave this at the feet of the auditors. Can't really blame them for your wrongdoing if you endeavored to deceive them, in my opinion.

To reiterate, I don't disagree at all, I was only objecting to the characterization of the core problem as "finding sketchy accountants". Giving accountants sketchy information? Sure. The accountants themselves being stenographers for hire? No.

Also, he writes,

> Once the SEC decided that most technology company stock option procedures were not as desired, the jail sentences were handed out arbitrarily.

The SEC does not jail people, courts do. I don't see how the SEC's motivations would lead judges to hand out arbitrary jail sentences.

So I generally sort of agree with this as a rule of thumb, but you should keep in mind that you're essentially refuting the premise of "Three Felonies A Day", a very popular book on HN. (I don't think it's an especially cogent book, but still, worth thinking about!)

Rich, connected people don't serve time for white collar crimes in the USA

Tell that to Jeffrey Skilling.

https://en.wikipedia.org/wiki/Jeffrey_Skilling

You need to finish the quote: ...unless the criminality is severe...

To be fair, they usually mean that it’s rare for rich and connected people to get jailed, not that it’s literally impossible.

The one exception to this rule is rich people who screw over other rich people. Arguably Skilling falls under this rule, as does Bernie Madoff.

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