June 12, 2012
Effective commentary on upcoming sentencing of Ponzi schemer Allen Stanford
As reported in this post last week, federal prosecutors have submitted a sentencing memo seeking a 230-year prison term for R. Allen Stanford. Today, via this posting on the DealBook section of the New York Times, Professor Peter Henning provides has some astute thoughts on the upcoming sentencing. The piece is headlined "Viewing Financial Crimes as Economic Homicide," and here are excerpts:
R. Allen Stanford, who was found guilty of operating a multibillion-dollar Ponzi scheme, is likely to receive a sentence later this week that will require him to spend the rest of his life behind bars. If that happens, it will continue a pattern in which white-collar defendants convicted of committing large-scale fraud have received long prison terms, far longer than what has been meted out in the past.
In March, Mr. Stanford, a Texas tycoon, was convicted on 13 counts of fraud and money laundering related to the collapse of Stanford International Bank, based in Antigua. Investors lost billions of dollars in what were billed as high-yield certificates of deposit but turned out to be largely worthless. Thousands of victims throughout the United States and the Caribbean were affected.
In a sentencing recommendation filed in the Federal District Court in Houston, prosecutors asked Judge David Hittner for 230 years in prison, the maximum permitted by federal law for the convictions. Not surprising, Mr. Stanford is seeking a much lower punishment that would effectively result in a sentence of time served since he was jailed after being charged in 2009.
I’m not really going out on a limb by predicting that the actual sentence will be somewhere in between those two recommendations. But how high is the sentence likely to be? ...
One reason prosecutors have asked for such a startlingly high amount for Mr. Stanford is that a court can only sentence a defendant to the maximum permitted under the statute. Thus, prosecutors have asked the judge to impose separate sentences for each violation, totaling 230 years in prison.
If Judge Hittner follows the government’s recommendation, the sentence would exceed the 150-year sentence imposed on Bernard L. Madoff for perpetrating the greatest Ponzi scheme in history. Such a long sentence could never be completely served, so it would be largely symbolic, intended to reflect the impact of Mr. Stanford’s crimes.
While it is unlikely that Judge Hitter will impose the statutory maximum term the government is seeking, it would not be surprising to see a sentence of at least 30 years -- and perhaps as much as 100 years. That would fit in the pattern in recent financial fraud cases in which federal prosecutors sought long prison terms and judges have agreed to punishments that put white-collar defendants in jail for the rest of their lives.
Other defendants found guilty of financial frauds have received stiff sentences. Edward Okun, who was convicted of defrauding customers of $126 million through his tax-deferral service, received a 100-year prison term in August 2009 after prosecutors recommended a sentence of 400 years. Thomas J. Petters received a 50-year prison sentence in April 2010 for defrauding investors of approximately $3.7 billion after prosecutors recommended he receive the maximum term of 335 years. Lee B. Farkas was sentenced to 30 years in June 2011 for his role as an executive at the mortgage lender Taylor, Bean & Whitaker after prosecutors urged a sentence of 385 years for a fraud that resulted in the collapse of Colonial Bank.
Mr. Stanford faces two significant hurdles in seeking a shorter sentence . First, he has not exhibited any contrition or remorse that can sway a judge. He has maintained his innocence at trial, and he plans to appeal the convictions.
A second, greater problem is the attitude of many judges after the financial crisis. Many have come to view financial frauds as crimes worthy of the type of sentences that was once reserved for violent offenders. White-collar defendants are no longer given light sentences because they were not viewed as threats to society.
Prosecutors often speak of the deterrent value that a long sentence will have on other financial executives who will be chastened to avoid defrauding investors and clients. As I discussed last year in a piece on Mr. Farkas’s sentencing, that is a message likely to be lost on other corporate executives because they do not view themselves as engaging in the type of misconduct that can lead to convictions, or life sentences.
Sentencing a white-collar defendant to a substantial prison term is really more about expressing society’s outrage at a misconduct that took advantage of investors and destroyed their financial well-being. These types of fraud are akin to economic homicide, and courts are treating them more and more as such.
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June 12, 2012 at 04:43 PM | Permalink
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Typical govt showboating! Sorry any sentence that extends Beyond "The rest of your natural Life" is just retarded showboating at a minimum and criminal waste of govt resources at worst!
I'd like to know just how much of my tax money this prosecutor wasted figuring up this 230 year sentence and writing up the motion to impose it!
Posted by: rodsmith | Jun 13, 2012 2:09:54 PM
Right....and how is it that the entire robo signing scandal that was the root cause of the mortgage crisis and the subsequent loss of 40% of middle-class America's net worth NOT economic homicide. Where are the long prison terms there. Why isn't the entire management of Citibank from that time not sentenced to life in prison.
I think Grits in another post got it right. It's about looking tough when it's easy to look tough and looking away when the going gets tough.
Posted by: Daniel | Jun 13, 2012 2:49:18 PM