I’ve always wondered where the money goes after the government wins a case against a company and the company is fined. In today’s Sun-times, 3/29, it was stated that Toyota paid a $1.2 billion fine. Where does all that money go? The only money I remember receiving, years ago, was due to the big tobacco companies being fined and the money being distributed to residents of Illinois and other states. Thank you.
Terry Says: That all depends on the terms of the legal settlement. Sometimes the money is put into a fund for consumers who were injured by the actions of the company. Sometimes the company agrees to make a direct refund, or give a credit as the result of a lawsuit. (I recently received a credit in my Amazon.com Kindle account as a result of a lawsuit they settled with publishers over the prices of books purchased.) In the case of the tobacco companies, the money was distributed to the states, many of which sold bonds to raise money in anticipation of paying the interest out of the tobacco settlement proceeds that would arrive in future years. When the SEC collects fines in civil cases, the money is typically returned to investors or shareholders who have been harmed. And in some cases, typically regulatory cases, the government collects penalties and fines and puts the money back into its own general account.
To specifically answer your question, the Toyota $1.2 billion is a “settlement” of a criminal case going back four years, over the company’s failure to disclose problems with acceleration. My understanding is that the settlement goes directly to government coffers!