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September 27, 2011

Sensible sentencing alternatives for high-profile defendant involved low-level fraud

I want to praise the district judge involved in this notable federal sentencing story, headlined "Former UCA president avoids prison time for fraud," for saving taxpayer money on wasteful prison costs.   Here are the details:

Former University of Central Arkansas president Lu Hardin said Monday that he was hooked on the slots the first time he played them more than a decade ago, and that his gambling compulsion and mounting debts led him to lie to school trustees to tap into bonus money he had been promised.

U.S. District Judge James Moody sentenced the one-time rising political star to five years of probation and 1,000 hours of community service, but no prison time.  Hardin, 60, pleaded guilty earlier this year to falsifying a document that persuaded trustees to give him early access to a $300,000 bonus so he could pay off gambling debts.

Moody said he was convinced Hardin was "genuinely remorseful and humiliated" by his own actions.  Federal sentencing guidelines suggested a sentence of nine to 12 months in prison, but Moody was not bound by that recommendation.

A major factor in Hardin's reduced sentence was his cooperation on a separate federal investigation. Hardin has spoken to the FBI and agreed to testify if the investigation, which a prosecutor would not detail, leads to any charges.  An FBI spokesman also declined to comment.

After a career as an Arkansas state senator and the state's higher education director, Hardin became president of the Conway university in 2002.  During a six-year tenure, he oversaw dramatic growth in the university's enrollment, endowment and prestige.  Trustees approved the $300,000 bonus in full public view....

Only his wife knew about the thousands of dollars of gambling debts he racked up, Hardin said. To pay them off, he made what he called a "horrendous mistake" by forging letters to persuade trustees that he could draw early on the bonus, which was supposed to have been paid to him over five years, according to federal court documents....

Hardin's attorney, Chuck Banks, said his client is a "model person" who paid back the almost $200,000 he collected from the scheme on his own.  He argued that Hardin's history of public service and his past medical problems, including a melanoma that left him blind in his right eye, merited leniency.

Moody sided with Banks.  Although Hardin's actions were criminal, he had a history of good behavior and he didn't believe Hardin would commit another crime, Moody said.  As part of his community service, Hardin will be required to continue attending Gamblers Anonymous meetings and to teach classes about fraud.

Hardin was president of UCA for six years before he resigned in 2008 after the scandal broke.  He received a much-criticized $670,000 contract buyout, and became president of Palm Beach Atlantic University in June 2009, but resigned from that job a week before pleading guilty in March....  After pleading guilty, he surrendered his law license and lost his right to vote. 

This is a great example of a low-level white-collar offense in which the direct and collateral consequences of the federal prosecution and conviction are themselves likely sufficient punishment in light of the nature of the crime and history of the offender.  I often believe a very big fine and lots of community service would be both adequate and effective punishment for low-level white-collar frauds, and I wonder if any readers have any problems with a non-prison, below-guidelines sentence in a case like this.

September 27, 2011 at 08:53 AM | Permalink

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Comments

I agree that there are instances where a big fine and a well structured program of community service can serve as a substitute for incarceration but...

where is the "big fine" in this case and community service should involve serving the less fortunate- not teaching classes about fraud or attending GA meetings which is ordinarily a condition of supervision.

Posted by: mjs | Sep 27, 2011 9:25:17 AM

I agree with mjs, but would add that I have doubts about "community service" at all. It's mostly a fraud when given to these high flyer defendants -- generally an "assignment" to go to some conference and talk about how wonderful they are.

Instead of community service, I would have required that he pay off both the additional $100,000 he owes, and return the $670,000 buyout, which was almost certainly obtained by concealment. I would also require him to agree to attach a copy of a transcript of the sentencing proceeding to the front of any future employment application for a job in academia; the school should some have idea of what it's getting into.

Does anyone here think he told Palm Beach Atlantic University, at the time it was considering hiring him, that he'd swindled his former employer by forging letters? Right. Since he's shown that he'll be dishonest in order to get money, from now on he should be required to tell prospective employers what, in a sane world, they have every right (and need) to know. Indeed, NOT telling them would be yet another dishonest act.

Posted by: Bill Otis | Sep 27, 2011 9:43:36 AM

Treatment for compulsive gambling should have been included as a condition of the plea. The sentence seems excessive, since he only misled people to get his bonus early. It was his money he stole. Putting him in prison would have also punished the taxpayer in the form of expensive melanoma treatment.

I see no difference between his misleading letters to get early payment and the rigged airtight system under which all lawyers plunder the productive male and attack all successful businesses. He should not have lost his law license, before the pro-lawyer rent seeking judge did. Biggest crook in that that room was the no work, lazy government worker on the bench.

Posted by: Supremacy Claus | Sep 27, 2011 9:45:37 AM

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