The other point on environmental destruction which should be made is that there are other societies on this planet-some of which might be called, because of our ethnocentric myopia, underdeveloped or primitive and these societies make it a much more serious crime to contaminate the community's water, for example, than to commit a so-called "street offense."

An altercation between individuals is considered far less serious than the pollution of the community's water supply and for obvious reasons. The latter threatens the survival of the community itself and the former deals with the security of a smaller number of people. The "Public Citizens Report" covers four areas of white-collar crime-stock frauds, consumer frauds, official corruption, and corporate crime. Each has a unique form, occasion, and methodology.

But underlying each type is a simple fact-the victims are honest taxpayers, decent businessmen, consumers, and the poor. Because of sophisticated duplicity and insulated predations, these victims lose their money, their health, and their trust in our political and economic institutions to criminal operators who hold positions of power in government, law, and business.

Ten major conclusions proceed from this report:

One, during the period covered by the report, the United States experienced a significant number of serious crimes which are undermining this country's basic economic institutions and which have produced severe economic consequences.

Examples include the failure of S. Arnholt Smith's U.S. National Bank, of Weis Securities, and Equity Funding Life Insurance Co. These crimes have weakened the confidence of consumers in the business and financial community.

Indeed, the U.S. Chamber of Commerce notes that in the last 20 years fraud was involved in the failure of about 100 banks in this country.

Two, it has been revealed that the political institutions of the country, be they political parties, State, local or Federal governments, have been the instruments for high level and widespread crimes. That is, we have had public financing of campaigns for many, many years, Mr. Chairman. It is the public financing that proceeds from, for example, the kickbacks of engineers and architects to government officials, pursuant to the acquiring of procurement contracts which are paid for by the taxpayer.

The Watergate scandals exemplify political corruption at the highest levels of government, but they have not been unique. Scandals have also pervaded the Congress, State governments New Jersey and Maryland and local governments-New York and Chicago.

If you talk to the district attorneys that comprise the economic crime project of the National District Attorneys Association-a leader of which is Robert Leonard, who is the prosecuting attorney in Genesee County, Mich.-you can become quite convinced that Maryland and New Jersey are not unique and that basically they are the territories of either historial accident or a particularly aggressive prosecuting attorney that have brought all this out. You can scratch in any jurisdiction in this country and these problems will be revealed. When the professional engineers became, as a national organization, concerned about the Maryland situation, there wasn't forcedSenator HART. When who become concerned?

Mr. NADER. The National Society of Professional Engineers. When they became very concerned about the involvement of professional engineers in corruption in Maryland with the payoffs. And there weren't many forceful statements saying that that was an isolated incident. All of them knew quite well that this was a national practice. It is a little more intense in some areas than others, but basically a national practice that had to be dealt with uniformly. It was not a case of a few rotten apples in the barrel.

The third conclusion, it is evident that crimes affecting our economic institutions are often closely interwoven with the corruption of government officials, such as documented by the Agnew and Queens, New York District Attorney Mackell cases and as alleged in several other cases mentioned in the report.

The fourth point, evidence exists that alleged underworld crime figures, in addition to their involvement in narcotics, gambling and other offenses, are becoming increasingly involved in overworld crimes, with the collaboration of insiders, dealing in stolen securities and stock frauds affecting economic institutions.

Another committee in the Senate has been investigating the massive scope of stolen securities and it is quite clear that this is now a many multibillion dollar situation on an annual scale.

Five, the conclusions of earlier white-collar crime studies notably that of sociologist Edwin Sutherland, that white-collar criminals exhibit a high rate of recidivism, are supported by the report.

Moreover, the 18-month period covered by the report shows that this recidivism is true not only, for individuals but also for major corporations, such as Diamond International which pleaded guilty to an illegal campaign contribution and was indicted for price fixing paper labels as well.

Six, in a number of cases, the penalty imposed on white-collar criminals in proportion to the gravity of their offense, as opposed to the penalty imposed on street criminals in proportion to the gravity of their offense, is very lenient. Such leniency is due in part of statuory limits, and in part of judicial preferences for powerful, respectable white-collar defendants.

One again notes Attorney General Saxbe's speech before the National Association of District Attorneys a few weeks ago, where he made this point about the comparative leniency of those, as he said it, who would steal our freedoms, compared to the much harsher sentences to those who steal property.

Seven, the business community. has shown itself either incapable or unwilling to police its own ranks or to aid law enforcement agencies in the detection and prosecution of white-collar crime. This is evident in the report's description of various stolen stock cases and the Weis Securities case.

I used the word unwillingly, Mr. Chairman, because for example it is quite easy to track down stolen securities and to stop this practice. Not only for traditional reasons of investigative competence but also for recent computerized systems that can track these stolen securities and expose their presence. But apparently many businesses don't want this to occur, because it is much easier to avoid the burden of knowledge when these securities are used for collateral or for other business reasons.

Eight, law enforcement agencies devote meager resources to the investigation and prosecution of white-collar crimes in relation to that expended on street crime. The Department of Justice's legal activities budget for fiscal year 1974 showed that the tax, antitrust, and consumer protection activities constituted less than 15 percent of the total legal activities, manpower and budget.

What is remarkable about the visible scope of business crime, Mr. Chairman, is that there is extraordinarily little resource devoted by law enforcement agencies and legislative agencies to detecting and analyzing and exposing and prosecuting the presence of such business crime. And yet, despite that, so powerful is the pressure on the society of this business crime that it overflows almost from its own momentum into public visibility.

As your Subcommittee on Antitrust and Monopolies showed, the presence of antitrust crime is really not sporadic at all, but can be considered epidemic at the local, State and Federal levels, whether it is plumbers, price fixing or giant corporations' price fixing. And I use the old-fashioned plumbers, before that word got a new significance.

Nine, increased manpower and greater budgets for law enforcement agencies to investigate and prosecute white-collar crime would be a productive investment in our economic and political institutions. It would reduce the increasing public resentment at two standards of justice, one for the powerful and one for the powerless, and reduce the spirit of lawlessness pervading the ranks of the wealthy and powerful.

As the National Advisory Commission on Standards and Goals for Criminal Justice has stated:

the *** robber * * * burglar and the murderer know that their crimes are pale in comparison with the larger criminalty 'within the system.' * * * As long as official corruption exists, the war against crime will be perceived by many as a war of the powerful against the powerless; law and order will be just a hypocritical rallying cry, and 'equal justice' will be an empty phrase.

Finally, the lack of information and understanding of white-collar crime constitutes a great obstacle to its eventual prosecution and elimination.

Even though the Federal Government, including the Law Enforcement Assistance Administration, spent over $70 million in 1973 for crime research and statistics, there has yet to be an official analysis of the corporate crimes, consumer frauds and official corruption that are devastating the country's economy and bringing its political institutions to the brink of ruin.

One can say, for example, that the political institution in Newark, N.J., has been brought to the brink of ruin and many other governmental processes are approaching that brink.

Our survey of U.S. Attorneys and State Attorneys-General verified that only a few of these officials maintain any useful data on whitecollar crime.

For submission to the record, I would like to offer this letter dated July 13, 1974, by Robert Leonard, who is the Prosecuting Attorney in Michigan and a member of the Economic Crime Project of the National District Attorneys Association, which was written to a number of citizens. This is addressed to Senator Ribicoff and goes over some of the scope of business crime that they have uncovered and the problems of prosecuting such crime that they have delineated. That is basically what it is.

Senator HART. Without objection, it will be received.

[The letter from Robert F. Leonard, dated July 13, 1974, follows:]

Hon. ABRAHAM A. RIBICOFF,

ROBERT F. LEONARD,

Prosecuting Attorney,
Genesee County, Mich., July 13,

U.S. Senator, Russell Senate Office Building,
Washington, D.C.

1974.

DEAR SENATOR RIBICOFF: As Chairman of the Economic Crime Committee of the National District Attorneys Association, I am writing this letter to you and to every other member of the United States Senate in regard to your current consideration of the proposed Consumer Protection Agency Act, which is designated as S. 707. This letter is being sent to you in behalf of all the members of the National District Attorneys' Association's Economic Crime Task Force as well as in behalf of other participating officers of the N.D.A.A., all of whom acknowledge and concur in my writing to you the following statement of support for S. 707. The names of these several officers of the N.D.A.A. appear beneath my signature, infra. As representatives of the N.D.A.A., we believe it is incumbent upon us to express to you our position in regard to this important piece of proposed legislation which would establish, on the national level, an agency which we believe would be of tremendous benefit to every consumer throughout the United States.

We, as prosecutors, are all too familiar with the onslaught of economicallybased crime which is directed toward the consumer. In our opinion, it is indeed unfortunate that the Congress of the United States has failed in the past to create such a Federal agency to protect consumers. We urge that the present opportunity to act favorably upon S. 707 should not be ignored.

As Chairman of this Economic Crime Task Force my colleagues and myself have within the last several months been actively engaged in the investigation of many forms of "white-collar" crime which have been perpetrated against the American consumer. For example, we have actively looked into the current practices and procedures of the oil industry in this country, among other things, in an effort to discover whether these actions have involved the violation of our state anti-trust and fraud laws. Our basic purpose has been to ferret out much conduct which is so difficult to observe and which has such a pervasive effect on the welfare of the American consumer. The unconscionable rise in the price of fuel and gasoline has had devastating impact on the economic welfare of many of our citizens. As a result, our organization and Task Force have pursued their obligations to the public to investigate this situation with vigor and immediacy. I would like to here relate to you several of our experiences in this context which, I believe, point out with specificity the reasons why a national agency to protect the American consumer is necessary. In this regard, I would like to discuss some of the experiences that our Task Force has faced in the recent past as well as some of the pertinent experiences which I have experienced as Prosecuting Attorney in our consumer protection efforts on behalf of our citizens.

Let me first speak to some of the difficulties which the Economic Crime Task Force has faced in attempting to pursue its investigation of the oil industry and to gain cooperation from the supposedly concerned federal agencies. During the week of March 15, 1974, in preparing for a meeting with the oil company officials in April the member offices of the Energy Crisis Committee of the Economic Crime Task Force of the N.D.A.A. sent staff people to Washington, D.C., to attempt to collect data and to conduct interviews with legislative committees, administrative agencies and trade associations.

The Committee staff people received a generally unsatisfactory reception at the U.S. Department of Justice, the F.T.C., and at most of the legislative_committees currently involved in similar investigations of the oil industry. These staff members had considerable difficulty in obtaining information from any of the legislative committees which concern the current investigations of the various aspects of the petroleum industry, and which information had not already been publicly disseminated. Two predominant attitudes of these legislative committees became apparent, in our opinion, both of which operated to impede any meaningful cooperation with our staff members.

First, the legislative committees involved here perceived the investigative efforts of the Energy Crisis staff as being merely local, narrow in scope, and therefore not "truly serious" and deserving of their full and co-equal cooperation.

Second, these committees displayed a patently "jealous" posture in relation to the data and information which they had collected. In effect, each committee seemed desirous of guarding its own information and of isolating the same for its own particular investigative purposes, notwithstanding that such information obviously would have been helpful to our common objective of investigating the petroleum industry.

This kind of a "balkanized" attitude on the part of these several legislative bodies was shared by the several, federal administrative agencies, which are also now involved in the investigation of the oil business. Thus, the U.S. Justice Department, the Federal Trade Commission, and the Federal Energy Office all took much the same "noncooperative" attitude in regard to our requests for information as the legislative committees had.

As a result of this lack of cooperation, the N.D.A.A.'s investigation of the oil industry has been denied the extremely valuable benefits of access to the vast amount of relevant information and evidence which has already been garnered on the national level.

Of course, we are well aware that these committees and agencies may have quite valid reasons for not disclosing to us at this time the content of certain information. We recognize that some of this information may be of a confidential nature. But this very fact confirms the basic need for a central, federal consumer agency which, as a part of the federal government itself, could have access to such information without violating any well-founded need for preserving this confidentiality. Such a federal agency would at least be granted initial "insider" access to this material which is apparently being denied to the various, "outside" state and local investigative units. The federal consumer agency would conversely present to all other other federal agencies and bodies a picture of permanence, stability, and peerage-all of which characteristics would promote intra-federal, inter-state and inter-local cooperation in investigative efforts.

Another example of the need for a CPA-type of law is my poor experience with the efforts and aid provided by the F.D.A. in our investigation of dangerous toys in our community. I would like now to bring to your attention our experience in this regard in relation to the area of dangerous toys.

The Consumer Protection Division of the Genesee County Prosecutor's Office has been involved in toy safety pursuits, investigations, and projects since before the Christmas toy season of 1971. In 1971 and 1972, toy safety regulation on the federal level was in the hands of the Food Drug Administration (F.D.A.). Our experience, in general, with the F.D.A. in this field was distressing and unrewarding. Although the F.D.A. had published a so-called "banned toy" list for public dissemination, its list was not only incomplete, but was moreover misleading, inaccurate, and was the result itself of highly questionable “safetytesting" procedures.

The F.D.A., in fact, appeared to us to wish to discourage action on our part to effect compliance by local retail toy outlets with the federal agency's own standards, as weak and incomplete as they were. Furthermore, the "safety-testing" standards of the F.D.A. were themselves specious, illusory, arbitrary, and wholly unscientific, and allowed toy manufacturers to easily make minimal and meaningless "alterations" or "revisions" to "banned" toys to technically bring them outside of the limited purview of the "banned toy" list with F.D.A. acquiescence and approval. F.D.Â. regulation then, in our experience, was regulation in form only without substance and without true protection for children-consumers, the most helpless consumers of all.

In 1973, federal regulation of the toy industry passed from the F.D.A. to the newly created Consumer Products Safety Commission (C.P.S.C.). Although the C.P.S.C. appears to be more favorable to citizen and local agency input in regard to hazardous toys than was the F.D.A., the results of the C.P.S.C. have been no more substantial in ultimately protecting our children from dangerous toys than under former F.D.A. "leadership". The present "banned toy" list is still incomplete and inadequate. Although the C.P.S.C. appears to more actively encourage local attempts to effect compliance with its standards, it nevertheless appears just as recalcitrant to initiate prosecutions against the toy manufacturers for noncompliance, as was the F.D.A.

Thus, although the Genesee County Consumer Protection Division has identified hundreds of per se "banned toys" and other dangerous toys not technically on the "banned toy" list, and has further informed both the former F.D.A. and the present C.P.S.C. of these findings over the last some three years, not a single federal prosecution has been commenced in Genesee County, Michigan. It can safely be assumed that such lack of federal agency action on the local level has been repeated across the United States.