[GA - discarded] Repeal: “Concerning Financial Fraud”

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Repeal: Concerning Financial Fraud
Category: Repeal | GA #177
Proposed by: Simone Republic | Onsite Topic
Replacement: None​
General Assembly Resolution #177 “Concerning Financial Fraud” (Category: Free Trade; Strength: Significant) shall be struck out and rendered null and void.

The World Assembly (WA),

Acknowledging the noble intent of GA177 to prevent financial fraud against members of the public and state institutions;

Concerned that the key operative clause of GA177 (bullet 4) states that WA members shall ensure that “all victims of fraud shall receive compensation for their loss equal to or greater than the value of the loss and that this compensation shall be derived from the fiscal and/or material assets of the perpetrator of the act of financial fraud which resulted in the loss,”

Flummoxed that, in the opinion of the WA:
  1. The said provision indirectly (and rather extremely perversely) incentivises fraudsters to retain no material assets before they are caught (or convicted) and spend it all, merely as examples, on yachts, fast cars, expensive international artwork, and other extravagant indulgences;
  2. The said provision leaves no discretion for individual WA states to reasonably tailor to the circumstances of the case, overriding, for example, any spousal or child support payments demanded from the convicted fraudster;
Further noting, since the passage of this resolution:
  1. Protection for savers and investors have been enhanced through GARs 625 and 723;
  2. Tort law reforms have been in place through GARs 447 and 515;
Believing that, in many cases, a reasonable judicial process can determine compensation for victims and the sources of such funds properly (such as from the assets of the perpetrator(s), as well as any co-conspirators), and without additional guidance from the WA, and that the WA should carefully consider if a replacement is necessary;

Hereby repeals the target resolution, 'Concerning Financial Fraud'.
Click to expand...
Note: Only votes from TNP WA nations, NPA personnel, and those on NPA deployments will be counted. If you do not meet these requirements, please add (non-WA) or something of that effect to your vote. If you are on an NPA deployment without being formally registered as an NPA member, name your deployed nation in your vote.
Voting Instructions:
  • Vote For if you want the Delegate to vote For the resolution.
  • Vote Against if you want the Delegate to vote Against the resolution.
  • Vote Abstain if you want the Delegate to abstain from voting on this resolution.
  • Vote Present if you are personally abstaining from this vote.
Detailed opinions with your vote are appreciated and encouraged!
ForAgainstAbstainPresent
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Overview
This proposal seeks to repeal GA Resolution #177 "Concerning Financial Fraud." The original resolution was intended to combat financial fraud against public and state institutions by ensuring that victims receive compensation equal to or greater than their loss, derived from the assets of the perpetrator. It also mandated member states to introduce legislation to prevent financial fraud and share information on convicted fraudsters.

Recommendation
This proposal effectively highlights critical issues with GA #177, specifically the unintentional practice of encouraging perpetrators to spend or hide their assets before getting convicted. It further acknowledges the inflexibility of the original resolution in addressing unique circumstances, such as spousal or child support obligations, which may be adversely affected by the mandated compensation plan. Moreover, the repeal is justified by the fact that subsequent WA resolutions have already strengthened protections for savers and investors and reformed tort laws, reducing the need for GA #177. By advocating for a fair, nuanced and case-specific approach to financial fraud compensation, this proposal aligns with the principles of justice and fairness.

For the above reasons, the Ministry of World Assembly Affairs recommends a vote FOR the General Assembly proposal at vote, "Repeal: Concerning Financial Fraud."

This IFV Recommendation was written by Brisdon in collaboration with the Ministry of World Assembly Affairs.
 
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For as author (not as you Delegate, I keep the two separate)

The main operating clause of the target:

“4. Member-state shall ensure that all victims of fraud shall receive compensation for their loss equal to or greater than the value of the loss and that this compensation shall be derived from the fiscal and/or material assets of the perpetrator of the act of financial fraud which resulted in the loss,”

There is a major issue with this: What happens if the fraudster doesn’t have any money left? In fact this actually incentivizes the fraudster to leave no money behind and spend it all first. It also means that the convicted fraudster's other funds, such as say money for child support, will be of a lower priority.

I believe this is an issue best returned to individual states to decide. In addition, several resolutions passed since this resolution set out matters such as due process of the law, making this resolution redundant and unncessary.

Edit:

As an example, and I am grossly oversimplifying here:

en.wikipedia.org

New York business fraud lawsuit against the Trump Organization - Wikipedia

en.wikipedia.org en.wikipedia.org

According to Wikipedia, convicted felon Donald J. Trump has an outstanding summary judgment for business fraud against New York State. Say he ultimately loses the case. That means that the Trump Organization and Donald J. Trump has to pay $354 million plus interest, which could go to say $464 million or more. ($464 million was the amount assessed for the bond, the bond was reduced to $175 million). If Donald J. Trump had assets of less than $464 million*, fines all his 34 felonies (if upheld), plus civil lawsuits (E. Jean Carroll v. Donald J. Trump for example), spousal support (for Melania Trump), and all other payments will be behind the queue and left unpaid.

* Hypothetically. The hypothetical example is plausible only if shares in Trump Media and real estate values decline substantially from here and the cases drag on for several years.
 
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To add further (this is cross posted from NS forumside, in turn partly from a WALL answer):

The second step comes from the issue of which claims on the assets of the convicted fraudster (if all avenues of appeal have been exhausted) has priority. Under the existing resolution, the victims of the convicted fraudster has priority, and that's absolute, since subsequent resolutions cannot modify a priori. That means that if someone has been convicted of fraud, anything in terms what he owes in child/spousal support payments, or tax dollars, or civil judgments, the fraud victims get all the assets first, and the spousal support, the tax dollars, or civil judgments gets nada, nothing.

Most large-scale criminal fraud trials usually have accomplices that can be sued. Madoff was actually more of an exception in the victims getting about 87% back since they sued virtually everyone else who helped perpetuate the fraud, even if those who helped perpetuate the fraud may not be aware of the fraudulent nature.

Unfortunately fraud victims are rarely made whole in real life due to the size of the fraud and the very large losses, relative to the wealth of the fraudster. From Enron (still one of the biggest cases ever, even though it was back in 2000) to Theranos, the fraudsters (Andrew Fastow, Jeffrey Skilling, Elizabeth Holmes) went to jail but did not really pay significant compensation as they simply did not have the wealth to do so.
 
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