So where are the criminal indictments of Wall Street CEOs after the largest economic crime spree is U.S. history?

The release of the Lehman Brothers bankruptcy report last week and its scathing assessment of former CEO Richard Fuld and other senior executives at Lehman Brothers raises serious questions as to whether conduct engaged in at Lehman Brothers may have been criminal in nature.

Yet, despite the destruction of Lehman through massive sums of leverage in highly risky derivatives and the reverse engineering of the firm’s net leverage ratio, it appears as though Fuld and other senior executives are going to walk away scot free.

After the 2000 market crash, we witnessed the indictments and convictions of Kenneth Lay and Jeffrey Skilling at Enron, Dennis Kozlowski at Tyco

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[TYC  Loading...      ()   ] and Bernie Ebbers at Worldcom. Absent government intervention with hundreds of billions in taxpayer money in 2008 and 2009, the worldwide economy would have all but certainly melted down because of the actions of major U.S. brokerage firms and insurance companies.

Now, after equally big implosions at Lehman Brothers, Bear Stearns, AIG

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[AIG  Loading...      ()   ], Merrill Lynch

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[BAC  Loading...      ()   ] and Citigroup

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[C  Loading...      ()   ], we see nothing from federal prosecutors in terms of indictments or arrests of senior Wall Street executives.

There is no greater deterrent than criminal indictments in preventing future financial implosions. A 10-by-12 foot jail cell is the only language senior Wall Street executives understand. Unlike street criminals, white collar crooks tend to be rational and calculating and are deterred by the real threat of prison. The failure to indict senior Wall Street executives is inexcusable given the impact their actions have had on the national and worldwide economy.

The primary method for avoiding future violations of state and federal securities laws is vigorous criminal prosecutions of those responsible for the violations. If it becomes clear to Wall Street and insurance executives who take massive risks with shareholder capital (all the while being backed by taxpayer funds should the trades be unsuccessful) that the punishment is a probable prison sentence, this will severely curtail future criminal and fraudulent activity from occurring. The credible threat of prison time will send shock waves through Wall Street and do more than any legislation could hope to ever accomplish.

With minimal penalties if they are caught and massive financial windfalls if successful, it is not surprising that so many Wall Street executives are willing to place their financial interests ahead of those of their investors and the country. Only the realistic threat of prison sentences for rational, highly educated, successful corporate executives will prevent these types of abuses from occurring in the future.

Unfortunately, it appears as though federal prosecutors have become gun-shy since the Bear Stearns hedge fund managers were acquitted. Clearly, these are always tough cases but there appears to be compelling evidence of potential criminal conduct in what can only be described as the largest financial crime in U.S. history costing U.S. taxpayers billions.

And yet, no criminal indictments appear to be forthcoming. The seeds for the next “unforeseeable” Wall Street criminal wave have been planted.

• Flashback: Fuld Testifies Before Congress, October 2008
• Slideshow: Financial Crisis Faces, Where Are They Now?
  

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Andrew Stoltmann is a Chicago investment fraud attorney and the author of "Investor Rights for the 21st Century." He can be reached at www.investmentfraud.pro