The Small Cheat: Crime and Punishment and “Everyone’s Doing It”

Olde England (photo by Marilyn Swanson)

By: Donald L Swanson

“Be sure your sin will find you out.” (Numbers 32:23 (KJV))

Every now and then, we get a glimpse into human nature and how people work together, for good and for ill. 

What follows is one such glimpse, into the small cheat in business activities. — from an article by Prof. Kadens. [Fn. 1]   

An Example from Olde England

Francis Newton plied a wholesale grocer’s trade in and around London, during the early 1600s. He purchased imported foodstuffs, such as spices, sugar, and dried fruits, from overseas merchants, and he purchased dry goods like starch from local manufacturers. He then resold these goods to smaller retail grocers, to regional suppliers, and sometimes directly to retail customers.

Newton was an ordinary grocer selling the same wares as other grocers in his vicinity. His trading partners were loyal. But he cheated many of them.

Newton’s opportunities for cheating centered on quality and weight: (i) manipulating quality is as easy as mixing higher- and lower-grade goods while selling at the premium price, and (ii) fudging on weight is as easy as telling customers they were getting wares of a certain weight but giving them something less.

Getting Caught and Results

Unfortunately for Newton, he got caught cheating . . . numerous times.

Getting caught resulted in a couple lawsuits, a criminal charge, and gossip about his misdeeds throughout his network.

But this did not result in Newton’s denunciation. His business may have suffered somewhat, but many of customers remained loyal.

Why/how could that be?

Credibility of the Gossip

Many of Newton’s customers and suppliers believed the gossip, while others did not.

Here are examples of those who did not believe:

  • One of Newton’s customers, when confronted with gossip about Newton’s cheating, walked away from the gossip mongers, (i) expressing his disbelief, claiming that Newton had never cheated him, and (ii) exclaiming that “hee took . . . Mr Newton to bee an honester man then to deceive him.” This customer then asked Newton about the gossip. When Newton denied any cheating, the customer was satisfied.
  • Many customers were skeptical of accusations against Newton because they did not trust the accusers’ motives. They believed the accusers were acting as competitors who wanted to disgrace and discredit Newton and steal his customers. Accusers fortified that impression by seeking the customers’ business at the same time they were gossiping about Newton.

But for those who did believe, an important factor is the identity of the accuser. For example:

  • One London grocer believed the accusations because he heard the gossip from a person who haled from the same provincial town.
  • Another grocer believed the accusations because he heard witnesses testify in front of three London aldermen charged with looking into allegations of Newton’s cheating.
  • A third believed the accusations because, (i) reports of Newton’s cheating were widespread, and (ii) he was a friend of an accuser.
  • Many grocers believed the accusations because governors of the grocers’ guild had signed a petition seeking Newton’s criminal prosecution.

Others turned against Newton, not because they believed the gossip, but because Newton’s misdeeds brought public opprobrium upon the whole company of grocers in London.

Small Cheats as Common and Acceptable

For those who did believe the gossip, many gave Newton a pass anyway. That’s because Newton only cheated in small degrees. They viewed such actions as a common fault among businesses of that day and as nothing extraordinary. For example:

  • A haberdasher testified to seeing Newton cheat a seller of goods out of four pounds by using his foot to prop up the scale, so that the scale “should not come downe as it oughte.” But the harberdasher saw nothing extraordinary about this.
  • A sugar merchant testified to being aware that grocers routinely cheated him “by leaving sugar in the Chests that they might weigh heavier and so caused this deponent to allow them more for tare then otherwise hee should have done.” Yet, this merchant did not see any “wrong or deceipt of anie value” in such action.

Small Cheats that Matter

London merchants were not ok with all small cheats. 

  • They complained, for example, about a weight-shading scam at the King’s Beam. The King’s Beam is the royal scale the grocers’ guild controlled and mandated for use in the weighing of goods. People who operated that scale were grocers who received their positions as a boon from the guild and operated the scale as sworn weighers.
  • Grocers frowned on the shading of weights by the King’s Beam weighers because of the heightened levels of responsibility and trust and benefits given to them.

But Everyone’s Doing It!

Newton viewed his own small-cheats as common and acceptable. For example:

  • When a customer testified to: “fynding faulte with the said Newton that hee would use such fraude or deceipt as aforesaid,” Newton “answeared it was not deceyte to gayne from them (meaning the Marchantes).” Newton apparently believed that stiffing merchants would be viewed as an acceptable practice among London grocers.
  • When confronted about concealing extra weight under the scale, Newton justified himself like this: “[A]nother grocer called William Dalton dyd the like & . . . therfor why shuld not he doe it”?
  • Newton claimed that, during his apprenticeship, Newton’s former master did the same things.
  • When confronted on another occasion about his cheating, Newton replied: “[W]hat, doest thou think that other men do not the like?”

Others ARE Doing It

In the course of the trials on complaints against Newton, leaders of the anti-Newton group had their own cheats revealed. For example:

  • One merchant complained of a dispute with an accuser over the weight of sugar chests. The accuser’s scale showed a certain weight. But the merchant demanded that the chest be switched to the other pan, where it weighed “as much over as it had weighed les being weighed in the other scale.” Once caught in his own scam, the accuser excused his own “mistake” as a problem with the scale.
  • Another accuser, who had already been punished once for misdeeds, was caught again cheating a merchant on the weight of a sugar chest.
  • One accuser, formerly apprenticed to Newton, bragged to a close friend that he had cheated, while in Newton’s employ, on his own initiative: not on Newton’s orders and unbeknownst to Newton.
  • Some suppliers left Newton because of the gossip about his cheats and switched to an accuser but then ended up leaving the accuser who had “abused them and also . . . use[d] them ill in his trading.”

Severe Punishment

Ultimately, Newton was found guilty of cheating and sentenced to a severe fine of £1000 (which Newton may never have paid in full).

Yet why, if Newton had done nothing particularly out of the ordinary, was he punished so severely?

Three answers are likely: one political, one cultural, and one making an example.

  1. Politically, disputes with Newton arose in the midst of a grocers’ guild fight to prevent apothecaries from separating and forming their own guild—a fight the grocers were losing. Part of the apothecaries’ complaints involved the perceived leniency of the grocers’ guild in dealing with trade abuses. The severity of the fine is explained in part by this backdrop.
  2. Culturally, Newton went too far. If everyone cheats a little, then prices and attitudes reflect that fact. But when an abuser goes beyond the cheating norm and succeeds, that’s going too far.
  3. Additionally, when lawsuits and gossip revealed Newton’s misdeeds, it also revealed the misdeeds of other grocers. The court issued the severe fine to make an example of Newton.

The End

After all that happened, Newton remained in business. His business did take a hit: one customer, for example, testified that he did less business with Newton than before. But Newton and his business survived and thrived for the rest of Newton’s life.

Editorial Questions for Bankruptcy and Mediation

  • What’s the significance of the small cheat by parties in a bankruptcy or mediation?
  • What’s the significance of a small cheat by the party on disclosures made in schedules or in response to discovery?
  • What’s the significance of a small cheat by a witness in sworn testimony or in a mediation?
  • Could a small cheat, if discovered, result in some type of sanctions for a party?
  • Can a small cheat qualify as “fraud” or lack of good faith?
  • Would it make a difference, if the small cheat is common in the business community?
  • How can a small cheat in bankruptcy or mediation be distinguished from a genuine mistake?

These are all important questions.

In my decades of practice in bankruptcy, I’ve seen seemingly-trivial “mistakes” punished harshly, and I’ve seen seemingly-gross misconduct go unpunished.  Go figure.

Footnote 1. The essay is by Emily Kadens, Professor of Law, Northwestern Pritzker School of Law, Northwestern University. The essay is titled, “Cheating Pays,” and is published at 119 Columbia Law Review 527 (2019). Unless otherwise noted, all information in my article is from this essay by Prof. Kadens. Other publications by Prof. Kadens bear such fascinating titles as, “The Last Bankrupt Hanged” and “The Pitkin Affair: A Study of Fraud in Early English Bankruptcy.”

** If you find this article of value, please feel free to share. If you’d like to discuss, let me know.

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