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June 29, 2009

A new white-collar benchmark: the main reason the number 150 matters in Madoff

As many people recognized in anticipation of Bernie Madoff's sentencing, any prison term of 20 years or more was a functional life sentence for the 71-year-old super Ponzi schemer.  And, notably, the presentence report for Madoff apparently recommended a term of 50 years, perhaps to give him a kind of break due to his decision to plead guilty and also because this was double the 25 years given to Bernie Ebbers for what was previously thought to be the biggest corporate fraud sentenced in New York federal courts.

But the government argued for a maximum permissible statutory sentencing term of 150 years in prison, and Judge Denny Chin apparently decided that only this term was "sufficient, but not greater than necessary" to achieve the purposes of punishment than Congress set out in 3553(a)(2).  And though the choice of this magic sentencing number of 150 years — as opposed to 30 years or 50 years or 100 years — really means very little to Bernie Madoff, it could end up meaning a lot to the government and to some future defendants as a new white-collar sentencing benchmark.

Before Madoff, defendants like Ebbers and Jeff Skilling and others prominent white-collar defendants who were sentenced to around 25 years often served as the functional benchmark for sentencing debates for corporate fraudsters.  In more than a few prominent white-collar cases, both the feds and defense attorneys would often compare and contrast the defendant to be sentenced to Ebbers and Skilling and the sentences they were given.  Now, the most prominent benchmark will be Madoff and the number 150.

Because there will be few other Madoffs (we all hope), I suspect that few other defendants will also get the magic number 150.  But if the original Madoff got only about 15 or 20 years in this case, lots of lesser fraudsters likely would be claiming that they deserved only a few years because Madoff caused so much more harm.  But now that Madoff got 150, only the prosecutors are likely to be talking about the sentencing benchmark that his case has now set.

UPDATE Ellen Podgor has lots of effective early commentary here at White Collar Crime Prof Blog.

June 29, 2009 at 12:33 PM | Permalink

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You raise some interesting points. Madoff's sentence is an example of the one-way ratchet in action. The public gets used to the idea that 25 years is about right for guys like Skilling and Ebbers, and heck, even Jamie Olis (later overturned). For Madoff, suddenly 25 years looks like leniency, even though it's the functional equivalent of life.

Now, if Skilling and Ebbers had gotten the 5-year sentences they deserved (assuming arguendo that both were guilty, which they denied), then 25 years for Madoff would look harsh. As I recall, Michael Milken (who admitted guilt) only served about 5 to 7, right?

Posted by: Marc Shepherd | Jun 29, 2009 12:55:53 PM

While Bernie Madoff's 150 year sentence comes in the highest profile white collar case ever, the longest white collar sentence in American history still belongs to Sholam Weiss, who received 745 years in 2001 from Judge Patricia Fawcett in the Middle District of Florida,after a 9 month long trial. See,"bop.gov", National Inmate Locator.
Like Madoff, Weiss received the statutory maximum sentence, although the damage caused by Mr. Weiss was much less than that caused by Mr. Madoff ($745 million vs. $65 billion). Mr. Weiss is more than 15 years younger than Mr. Madoff's 71 years, so he will probably serve far longer in prison before dying than will Mr. Madoff. Ironically, Mr. Weiss and Mr. Madoff are both New York Jews, who know one another from Wall Street. They may eventually end up in the same prison. Mr. Madoff will be designated to a prison by the B.O.P. and moved from the M.C.C. to that prison within 30 days or less. Given the length of Mr. Madoff's sentence, he will probably start off in the Bureau of Prisons in a maximum security pentitentiary, which houses many violent inmates, including gang members. In pentientiaries, 2/3 of all inmates have life sentnces, and 85% are serving 30 years to life. Given Madoff's age, with good behavior, he will probably eventually (within 2-3 years) be transferred to a somewhat safer medium security prison, where sentences average about 25 years. Even after spedning a few months in the Metropolitan Correctional Center in Manhatten, Madoff has little idea what is waiting for him in a pentit- entiary. In Federal prison, all inmates, regardless of age, except those medically incapable of it, are required to hold jobs and work. The minimum maintenance pay is $5.25 per month. Madoff's life, as he has known it, is over and the rest of his biological life will be spent in a kind of living hell, although physical torture is not expressly permitted in U.S. prisons. His existence will be grim.

Posted by: Jim Gormley | Jun 29, 2009 1:12:08 PM

Marc: My memory of Michael Milken's case is somewhat different. For the detaills, refer to the book about Milken, "The Predators' Ball" (which was the unofficial name of his firm, Drexel Burnham Lambert's annual Christmas party in Beverly Hills, where employees' annual bonuses were announced). Milken originally received a 10 year paroleable sentence (pre-Guidelines, which came into effect in November 1987) for insider trading, not fraud. That sentence was reversed and remanded on appeal, and Milken was released from prison after serving only 2-3 years.
The Bureau of Prisons was pretty hard on Mr. Milken. They had him scrubbing floors in the dining hall for several months, before they let him become a G.E.D. tutor, teaching other inamtes who were seeking to earn their high school equivalancy diploma in prison.
To determine Milken's sentence, Judge Kearse (a black woman) had to make a factual finding the amount of financial harm caused by his crime. She determined that amount to be a paltry $360,000 or so. In addition to his prison time, Milken paid a $500 million dollar fine, but still had more than $500 million of net worth remaining. Today, Milken is a billionaire and a major philanthropist for research into on prostate cancer, from which he suffered and was treated following his release from prison. Milken's Application for a Presidential Parson made to President George W. Bush in 2008 was not granted, so Mr. Milken remains a convicted felon.

Posted by: Jim Gormley | Jun 29, 2009 1:30:57 PM

This still does nothing to explain why the line shouldn't be 50 rather than 150 say, and still stinks of absurdity. No one alive today is older than 113.

One argument on appeal ought to be that under 3553, any sentence that is not expressly a life sentence, that puts you in prison until longer than age 113 is unnecessary.

The benchmarking purpose described is relevant to a point, but not to the point where one gets into zombie in prison sentences.

Posted by: ohwilleke | Jun 29, 2009 4:03:03 PM

A sentence of 150 years flatly ignores the parsimony provision of the Sentencing Reform Act. Naturally, it will be entitled to a presumption of reasonableness since it is within the guideline range of life (assuming that circuit affords a presumption of reasonableness to within guideline sentences). It is difficult to surmise, however, just how a 50 year sentence or some other random number that will ensure Madoff never leaves prison would not be sufficient to satisfy the purposes of sentencing.

Posted by: Gogigantes | Jun 29, 2009 4:37:29 PM

I am an ex-felon. While a sentence of 150 years for this man seems like a lot, it is paltry in comparison to the harm that he committed. I have already served 22 years on a 20 year sentence for a $10,000 Mail Fraud, in which the court declared that I pay no restitution because the government failed to demonstrate I stole any money. He will spend the rest of his life in prison at age 71, I spent the prime of my life (28-50) in prison.
The paralells to Ebbers, Skilling, Miliken are non-existent and only serves to demonstrate the inequity in our criminal justice system.

Posted by: mark schmanke | Jun 29, 2009 6:13:33 PM

To me it is clear--150 manipulates the BOP classification system to keep Bernie from occupying a relatively more comfortable berth, at least during the first few years of his sentence. No Martha-Stewart-ish accommodations for The Bern. The breathtaking scale of his offense does not make a life sentence seem in violation of the parsimony principle (actually it is extremely hard to gauge--nothing to compare it with. Well, gauge it with the experience of Mr. Schmanke--not outrageous for Bernie at all, though Mr. Schmanke's sentence strikes me as ridiculously harsh). So 25 years for a 71 year old is a life sentence. I am not particularly upset with the 150 because the parsimony principle for Bernie is a nullity after he dies in, lets say, 25 years.

Posted by: t | Jun 30, 2009 11:44:06 AM

I was in a rural courtroom in Southern Illinois 30+ years ago where a judge sentenced an elderly male defendant to 15 years in prison. The defendant upon hearing the pronouncement of sentence said: Judge "I cant do fifteen years!" To which the Judge replied: "Well do as many as you can."

I suppose that if this particular NY judge comes up for nomination to a seat on the court of appeals he will sail through his confirmation hearing.

Yeah, Madoff stole a lot of money. But he did not expose the identity of a CIA agent to the world and thus seriously endanger the lives of every person who had lunch, dinner, casual conversations, or passing acquaintance with that agent in the third world dictatorships where she had operated in. If Madoff's handle was Scooter instead of Bernie he would have gotten less time.

Posted by: mpb | Jun 30, 2009 1:15:44 PM

AHA--additional fallout from the 150 year sentence: the court ruled that Sir Stanford's bond is revoked because it now regards him as a flight risk. Although not articulated, could it be because a judge might think that Sir Stanford, seeing the whacking long sentence given to The Bern, might vote with his feet and what is left in his off-shore accounts, and flee to a hidden but free rest-of-his-life somewhere beyond the reach of the law?

Posted by: t | Jun 30, 2009 5:52:32 PM

Yo Gormley -- "Judge Kearse (a black woman)"? WTF?

Posted by: anonymous | Jul 9, 2009 5:43:10 PM

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