The Justice Department has just launched a crackdown on deadbeats who abuse the bankruptcy laws to pocket millions while welshing on their debts, according to commentary posted by MarketWatch today. But Donald Trump, Wall Street bankers and the CEOs of defaulting companies aren’t affected. The Justice Department has announced the prosecution of eight individuals accused of hiding “over $3 million” in assets while filing for bankruptcy. Based on the allegations, these are hardly sympathetic cases. One allegedly sought to hide a $1.8 million tax refund. Others are accused of hiding over $30,000 in furs and jewelry, a condo in the Bahamas, a 34-foot boat, a brand-new Jaguar and a used Jeep Wrangler. These people are going bust and are getting into trouble with the law. Yet corporate executives and Wall Street bankers routinely use the bankruptcy laws to shelter millions when their own companies do the same. Harvard Prof. Lucian Bebchuk calculated that just the top few people at Bear Stearns and Lehman Brothers pocketed nearly $1 billion in the years before those banks collapsed. Trump put companies through bankruptcy four times and stuck it to creditors and stockholders alike. Yet no one is going after his fortune; it’s “OK” because it’s legal. But as journalist Michael Kinsley observed, the real scandal about the powerful isn’t that what they do is illegal. It’s what’s legal.
