Confiscating the Proceeds of White-Collar Crime Arie Freiberg 1 Professor of Criminology University of Melbourne 1 This research has been sponsored by the Attorney-General's Department of Victoria and partly by the Australian Research Council. Some portions of this paper are drawn from Freiberg, A. (Forthcoming), 'Crime, profit and Liberty', ANZ Journal of Criminology. The recent downturn in the economic cycle has left a trail of financial devastation. The difficulties created by the spate of corporate collapses are neither new nor confined to Australia. In the United States, the cost of banking, savings and loans, and insurance failures is measured in hundreds of billions of dollars and continues to rise (Calavita and Pontell 1990). These collapses have been accompanied by allegations of fraud and mismanagement by company directors, of improper movement of funds between associated companies and entities and of financially disadvantageous transactions outside the contemplation of shareholders (Watson 1990). Corporate failures leave in their wake competing monetary claims both between creditors and between creditors and shareholders. Where criminal charges are proved, the state also becomes a claimant if pecuniary penalties are imposed. Beyond the financial cost, however, these failures affect confidence in social institutions and may undermine the strength of the economy, the financial system and ultimately governments. In relation to losses occasioned by major frauds, it is apparent that a substantial portion of assets will never be recovered. Many assets are irrecoverable. Others are of less worth, or even worthless, having been bought at grossly inflated prices. In many cases litigation against miscreant directors, companies or third parties proves fruitless, their wealth being intimately bound up with the fortunes of the company. Legal proceedings in such cases require an expenditure of time and resources far beyond that of the average investor. Not all claims, however, are pointless. In the United States, risk arbitrageur Ivan Boesky paid the United States government US$100m as part of a negotiated settlement to charges of insider trading, $50m of which represented the disgorgement of profits obtained from insider trading and $50m of which were civil penalties. Boesky also pleaded guilty to a felony and was sentenced to imprisonment. The stockbroking firm of Drexel Burnham Lambert Inc. agreed to plead guilty to six counts of mail, wire and securities fraud and to pay US$650m in fines and penalties. $300m was allocated to criminal fines and civil penalties and $350m was allocated to an