Per the electronic NYT of June 24, 2016:

“The (NYC Comptroller) audit also found that records had been altered to indicate, incorrectly, that satisfactory water test results were logged for the 70 centers that had not been tested.”

However,

““We want to be clear: our kids are not at risk,” a health department spokesman… said in a statement.”

Reports are based on records. Records are based on employee / agent inputs into a computerized recordkeeping system. Without routine application of independent and impartial computer forensics, the validity of an audit may be poignantly questioned. Also, the relationship between a control deficiency (e.g., allowing inaccurate data to be entered into the computer-based records) and a real-life problem (e.g., the risk of drinking contaminated water) is ordinarily the key takeaway from an audit – financial or performance. Whether the public reads this article as a summary of audit findings without profound relevance (akin to a failure to dot the i and cross the t) or an obfuscation of the risk of a serious health hazard (i.e., bad water) is not clear. Many things are accomplished with ambiguity.

Per the electronic NYT of June 23, 2016:

“When it comes to potential criminal charges, there is disagreement among the agencies involved. The inspector general’s office concluded that a “number” of prison employees had committed crimes and, according to the report, forwarded their cases to the Clinton County district attorney’s office for prosecution.”

Having been an assistant prosecutor (Essex County, NJ), I can attest to the potentially inflammatory and subjective art of furthering the interests of justice independently, impartially, and expeditiously, especially where there are widely publicized and active voices loudly demanding the harshest of official responses. Mercy is not ubiquitous. Many want others subjected to the severest of punishments (though this rule rarely applies where one is assessing one’s own flawed conduct).

The public interest generally and public service specifically demand a peculiar sort of hybrid of being – from acting like a follower and obeying the most powerful of voices to acting like a leader and obeying one’s conscience even where it contradicts these potent external voices – the right thing to do is not invariably transparent. Even a good thing to do may present too many conflicts for the imaginative individual.

Notwithstanding standards for the exercise of the prosecutorial function (e.g., see the ABA), reasonable and expert minds may differ. Unsurprisingly, some prosecutors do the right thing for the wrong reasons, and some do the wrong thing for the right reasons. Justice is a topic of longstanding public discussion. But how do we timely know whether favors have been exercised (cf. Madoff)? While binary and algorithmic thinking (e.g., processing the individual against a set of rules exercised by a computer program) may be normal in so many contexts, such an exercise may be worse than prosecutorial discretion because it would be impersonal and static – nothing like real life with dynamic changes and expectations. Hume advised that expecting the future to resemble the past was an important assumption underlying decision-making and perspective, but it may not be justifiable. Appearing to follow established protocol may not be adequate; in some cases, it may be a waste of time:

“… the prison was in “full compliance” with the security measures she inspected, including the accuracy of logbooks as well as tool and contraband control. According to investigators, when they asked (her) whether such visits were useful for detecting security lapses, she replied, “Not really.””

Per the electronic NYT dated June 15, 2016:

“An employee of the law firm at the center of the leaks of the Panama Papers, which have revealed offshore wealth held in secretive accounts worldwide, has been arrested here on charges of data theft…”

The Panama Papers illustrate the power of social imagination and collaborative problem-solving (until the whistle was blown and the cover lifted). The issue: What to do with assets and income (especially financial funds in U.S. dollars) that controlling persons (i.e., beneficial owners) want concealed from various legal processes (e.g., U.S. DoJ, U.S. Treasury). This is an extension of the specific practice of making assets bankruptcy remote to making assets remote entirely from official (i.e., legal) seizure. The venue of the controlling person is made irrelevant: It does not matter whether the individual initiating the concealment process resides in the U.S., Russia, etc., so long as the service providers (e.g., law firms, banks, brokers) have the network to transfer jurisdiction over the assets (e.g., an account, a shell company) to a sovereignty (e.g., Panama) that allows its registered agents (e.g., Mossack Fonseca) to value their clients’ protection and confidentiality above the laws and regulations of foreign jurisdictions.

The process deployed by initiating individuals is similar to the process of fraudsters generally; i.e., conceal the fruits of the profitable venture so as to convert to private use without giving a cut to Caesar. Whether the first prong of the fraudsters’ imperative (i.e., to commit theft by deception) has been met in some cases will await the further unfolding of the facts (or not). Some have raised the issue of not only the sources of funds but the entire disclosure to the public (e.g., from illicit and/or clandestine schemes?)

For context and proportion an analogous scandal – the LuxLeaks – ought to be reviewed. It has faded into comparative obscurity, however the attributes of concealment and potential tax evasion / avoidance are shared, as well as the necessary flight from transparency of the public domain to official but not public data vaults that lack the connections to economic reality (e.g., the paths to the economic enterprise for which the subservient legal entities and shells are created and used) to establish the actual business purpose of such official registrations and rulings.

Back to the NYT article – the alleged crime may be data theft, though it seems more like illicit data sharing. After all, the data are still possessed by their original custodian. Assuming these data are akin to the intellectual property of the custodian (really, is my social security number mine or does it belong to the Social Security Administration?), one may readily conceive that these data as intangible property cannot be owned legally by a custodian that uses such for an illegal purpose. The data could be seized by a law enforcement agency with jurisdiction. Based on the global nature of the concealment schemes depicted by the Panama Papers, there are many possibilities, especially when assessing whether such schemes and practices serve the public interest, and if they do not, who is providing the inspection and oversight to assure the public that these schemes and practices do not impair the public interest for the benefit of a few private interests? Presently, I suppose it’s none of my business.

Per the electronic NYT on June 17, 2016:

“With few leads on a legal position, (she) has set her sights on a so-called J.D.-advantaged job, such as vetting and negotiating a corporation’s contracts with suppliers.”

Assessment of the value of a J.D. degree includes expected financial return on investment, but this would not be the only measure of assessment. Academic institutions generally and program directors specifically are not experts at predicting economic prospects of degree-holders. Likely, an overwhelming majority of us (myself included) do not possess such expertise. However, there are factors that prospective buyers should consider (by way of illustration and not exhaustion):

1. Personal goals (e.g., motivation – is it to make oodles of money and/or something else?)
2. Political environment (e.g., trends such as deregulation can adversely impact opportunities for attorneys).
3. Economic environment (e.g., trends such as widening income inequality can detrimentally affect the affordability of legal services).
4. Legal environment (e.g., trends such as making more difficult class action lawsuits, reducing personal rights to privacy, restrictions on personal debts subject to bankruptcy discharge, etc. can render some legal actions more a domain for historians than lawyers).

As one that has personally and professionally benefited from the availability of J.D.-advantaged jobs, I can attest to the satisfactions inherent in both the financial and the non-financial values of obtaining a law school education (mine at Seton Hall University in Newark, NJ) and work in related fields (e.g., public and private sector investigations, enhanced due diligence inquiries, research and writing, etc.) In brief, law school is not for everyone. Though it provides a wonderful and broad introduction to the output of convergent thinking (e.g., laws, regulations, rules, and norms agreed upon by those with influence over public policy deliberation), prospective buyers with limited financial resources (i.e., an overwhelming majority of us) should consider the attractiveness of divergent thinking: If you seek a prefabricated path, then you should perhaps study something else (e.g., financial analysis), but if you are open to thinking for yourself and unafraid to adjust to changing attendant circumstances, then a law degree would prove to be an intangible asset.

Per the (electronic) NYT of June 6, 2016:

“At the start of overnight shifts, guards would falsify records to make it appear as if they were conducting rounds when they were in fact not; instead, officers acknowledged to investigators that they would read books or play crossword puzzles, the report said.”

It seems that an inadequate period of time has elapsed since Bentham’s development of the idea of the panopticon to oversee prisoners in correctional institutions. Self-evidently, the problem is not the defective creation of protocols and rules that thwart sound inspection and oversight; instead, it is the human tendency not to adhere to these imperatives. Calls to automate further the instruments of control in maximum security prisons like Clinton will reverberate favorably, no doubt.

The full NY State Office of the Inspector General report is available. Besides its timeliness (the escape occurred on June 5, 2015, and it was discovered on June 6, 2015), the report identifies the commonly applied methodology in investigations (and similar inquiries):

• Interview individuals (often, more than once);
• Inspect the premises / scenes of the alleged crimes;
• Analyze the documentation (however falsified);
• Consult with experts / specialists / scholars (e.g., Michael P. Jacobson from CUNY, see pp. 10-11 of the report);
• Communicate the report to and cooperate with the relevant standards-setting body for its assessment (in this case – the independent sector organization named the American Correctional Association, see p. 2 in the report).

The report has much to offer experts and neophytes in the field of security and management failure RE: Inspection and oversight, including numerous details of the “culture of carelessness” that characterized the relevant operations. However, the money quote, IMHO, is the following: The OIG finding the (see p. 11):

“… misstatements and purported lapses of memory reprehensible.”

Per the NYT of June 5, 2016:

““Simply by constructing all this in such a complex way, they make it extremely hard for enforcement officials to ever have resources to reconstruct what taxes should have been paid,” he said. “What this is all about is obscuring the trail.””

The I.R.S. has many tools to reconstruct taxable income. The difficulty is less intellectual than political: It needs expert forensic investigators under supportive public policy. The underappreciated advantage provided to tax administrations worldwide, if they were so inclined to pursue these cases, is the intentionally complicated structure prepared by legal and financial services consultants. (N.B. Keeping a straight-face does not make a hand a full house.) In brief, this is redolent of consciousness of guilt. It is the antithesis of cold economics and brutal efficiency whereby inputs and processes are pared down, eliminating any unnecessary labor and others’ profitability for the sake of the prized output: Alpha return on investment. It is the apparent throwing to the wind highly versatile currencies (e.g., U.S. dollars) and feigning to hold those of lesser utility in schemes of paper losses and transactions reversible through secret side-agreements involving straw men and islands where little is actually produced (cf. Manhattan). It is the shifting of assets, revenues, liabilities, expenses, etc. around balance sheets and income statements controlled by Mr./Mrs. Big, but all you see are Muppet, Inc. and Puppet, LLC. It is the stuff of which both accounting and English literature majors dream; the stuff of lawyers and management consultants convinced of the primacy of the word in the document over the thing in the community – a universe of make believe for grown-ups with too much money and time who can outrun inexperienced, understaffed, short-termed revenue agents not motivated to participate in the marathon.

“With this legal structure in place… any money placed in these accounts would essentially go into a black hole.”   

Wishful thinking – again, confusing the preparation of misleading and inadequate documentation and their ten-dollar words and too many-columned spreadsheets with the hard reality of buildings, parcels of land, private jets, luxury cars, etc. Money – not even that placed under mattresses – does not go into black holes, though you can burn it up by setting it afire. That these acts suggestive of massive tax evasions / avoidances (depending on whether you sit near or away from the jury) are alleged to create black holes is mere intimidation. The beauty of these schemes is that they can be discovered and articulated with reasonable precision. I’ve done it. Since the overarching goal is to keep the money and all it represents, it is never really set free and liberated. It remains attached to the beneficial owner, who usually lacking the grit of Russian mobsters (one of whom once confided – ‘we don’t need contracts because we don’t enforce these deals in courts of law’), can’t help but hold onto the string, however gossamer.

Per the NYT of June 3, 2016: ““If a hacker can easily find 30 or 40 percent of people’s names from delisted articles, what is the point?”” Assuming that the personal identifying data were indeed discovered through hacking, whatever this word means in this case, and not merely using data compiled under different countries’ domains (e.g., the U.K. and the U.S.), the reasoning is suspect: Why have stop signs, if drivers will run them; why outlaw murder, if some will, etc.

The problem extends beyond the breached right to privacy and the persistence and spread of digital footprints – this is about asymmetry of information. Some manage to live rather private lives notwithstanding their influence on public policy; some manage to lead lives way too public for their respective contributions; some want to be famous / infamous. Most just want to climb out of the trough of insecurity, and using the media, especially the powerful mainstream sort, is necessary to gain exposure. Those without the pre-existing robust network of influential connections need not concern themselves about gaining such public exposure. However, someone that seeks to move from rags to riches (starting without money and getting some means taking it from others) needs to be out there; to be seen and heard, and I suppose to be forever remembered due to hackers, apparently.

(N.B. The coincidence of short attention spans with long-lived digital preservation is startling!)

This is also a matter of justice and proportionality. Have you ever heard a convicted individual speak at a sentencing hearing? Whatever the crime, it was a statistical aberration; that is, the individual’s bad acts were so few and his/her not so bad acts way more in frequency (even Enron had an abundance of legitimate transactions; even John Gotti allegedly distributed free fireworks to his neighbors on July 4th). Some may conclude that anonymity is the best pathway – perhaps – to avoid being tagged with one act.

All of which reminds me of a less than desirable alternative: Having participated in court authorized wiretaps on prior occasions, I found the lame attempts to use coded language to conceal the most unlawful of activities amateurish and pathetic.

What if it at some not too distant point in time (now?!), no one cares about the lack of privacy? Cf. caged animals in zoos….

Per the NYT of May 30, 2016: “… she would be eligible for a “guaranteed” return of 12 percent.” This was alleged to have occurred near April 2008 – another apparent instance of alpha fraud wherein the victim is enticed to part with her/his funds in exchange for an out-sized return on investment. Not to blame the victim (because fraudsters can be a charming lot), but strangers and other individuals do not return to you 12% on the funds that you give them, especially in April 2008, during which the financial crisis was afoot. The belief that strangers have a secret sauce from which to create steroid-induced returns, and that such strangers would share the recipe with you for a comparatively minuscule fee are two patently incredible statements. Out-sized returns on investment require out-sized profits, which in turn require many persons paying way too much for what they got. Guess who paid way too much in this case?

From the same article: ““‘Too big to manage’ is really the next frontier of regulatory challenges in the financial industry,” said Robert J. Jackson Jr., a professor of law at Columbia University. “Even the best senior managers will tell you that running an organization of this size and scope well, and keeping an eye on all of his employees, is an enormous challenge that we’re not yet prepared for.”” Though this generalization has some validity (n.b. there is a significant difference between regulatory oversight by a public / independent sector entity and direct supervision by an employee’s employer), the digital tools available to conduct surveillance on employees can be readily tested: Try sending a pornographic link to a colleague through your employer’s email server, and you will rapidly discover that someone (or something) is watching (just a thought experiment – please do not do so!)

However, effective inspection and oversight is not merely empowering technology with keyword signals under algorithms. Competent and interested overseers should read, take account of context, understand implications, etc. – laborious, time-consuming activities that are not cheap if done right. The promise of a 12% return communicated perhaps through an employer server during those times was not pornography, but it smells like fraud – fraud that is not especially easily detectable from the same tunnel-vision means and methods used to detect dissemination of kiddie porn. Sometimes, you get what you look for.

Per an NYT article of May 29, 2016: “…the I.R.S. told the group seeking tax-exempt status, “You are not established pursuant to a statute, managed by government officials or funded by government grants,” and “there is no government oversight of your activities similar to that of an A.C.O.” in Medicare.” A.C.O. stands for an accountable care organization. For this and other reasons the I.R.S. denied the group’s application for tax exempt status.

An intriguing question: whether public sector organizations provide inspection and oversight superior to private sector organizations’ delivery of such services. There are a host of commercial (e.g., rating agencies, public accounting firms) and not-for-profit (e.g., PCAOB, which itself is overseen by the public sector regulator / civil law enforcement body – the U.S. SEC, the Federal Reserve Bank of N.Y., which itself is overseen by the quasi-public sector body – the Federal Reserve Board) organizations that more or less provide inspection and oversight. However, discovering an adequate sample of randomized controlled trials in which public and private sector inspection and oversight units are compared and analyzed under rigorous quantitative methodologies is a Herculean task.

In the U.S., where private sector ordering is paramount (cf. capitalism), the rebuttable presumption that the private sector can do just about everything as well, if not better and less costly, than the public sector is less difficult to discover. Other jurisdictions deploy more centralized controls (e.g., China). As a former practitioner, the qualitative difference between good and bad inspection and oversight more often depends on budgetary allowance and schedule of performance than on any one individual’s professional competence: Few perform well under austere budgets subjected to (artificially) compressed reporting deadlines.

Perhaps, the issue turns on the presence and effect of clientelism. Where the concern is cultivation of future revenue streams from specific clients (e.g., Enron and Arthur Andersen, a prominent but hardly unique exemplar), inspection and oversight is readily compromised. This type of risk may underlie concerns about the quality of private sector inspection and oversight. Have you ever wondered who gives a more accurate, complete, and timely expert opinion on their respective domains – the I.R.S. taxable income examiner or the Big 4 financial income auditor?

As automated tools become less expensive and more commonplace, both public and private sector inspection and oversight may become more effective and timely, so long as the respective IO entity has access to the full library of relevant information (cf. Panama Papers). If anyone wonders, a reason why I frequently reference the Panama Papers is not due to any overriding concern with tax evasion and/or avoidance; instead, these Papers illustrate the power of the covert – the undisclosed and secret – in the globalized financial and legal domains. Transparency of the library is only as useful as the extent of its collection of relevant materials.

Per an NYT May 27, 2016 (electronic) article describing and complaining about the time-consuming ordeal resulting from T.S.A. security lines for those seeking to board commercial flights in the U.S.: “Fundamentally, the problem isn’t about politics. It’s economics.”

The idea that economics can be cleanly separated from politics seems a modern and erroneous phenomenon (e.g. philosophy of economics). This is one of the reasons why the study and practice of accounting and law, especially the forensic sub-disciplines that challenge, where appropriate, accepted conventional wisdom, is helpful to wade through the purposeful / inadvertent mucks of obfuscation: Without a broad understanding of the concepts of costs (e.g., who pays and who does not as a result of a more or less rationally determined public policy), benefits (e.g., who prospers and who does not prosper from a more or less rationally determined public policy), rights and obligations (e.g., who receives economic and financial assets and who is burdened with economic and financial liabilities imposed under the rule of law resulting from a more or less rationally determined public policy), etc. the concepts of economics may be useful and thought-provoking (e.g., opportunity cost, externalities) in some contexts but not directly on point in other contexts.

From the same article: “But T.S.A. ledgers don’t capture the cost of wasted time.” Indeed, the T.S.A. does not (like other reporting entities in the public, private, and independent sectors in the U.S., if not across the world) record and report costs borne by other persons (e.g., externalities) until and unless these result in a probable and measurable obligation to the reporting person(s). Many ideas that bore (and bear) prosperity for some persons from public policies enforceable through courts of law may be analyzed as economic in nature, but this would not comprise a materially complete and accurate assessment of the eruption of the problem (e.g., idle / stressful time-consumption endured by the ordinary air traveler). Policy is neither etched in stone (cf. geology) nor a product of accidental thinking (cf. astrology).

Analogously, are the issues occurring at CUNY (and other public universities across the U.S., if not across the world) economic and not political in origin and solution? Are politics and budgets imposed through the operation of natural law (as bears swipe fish from a stream and the earth orbits the sun); or are they dependent on the operation of artificially created rules and laws? As I probably too often remind my students: one person’s expense is another person’s revenue. Qui bono?