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October 26, 2012

Are criticisms of Rajat Gupta's two-year prison sentence sound or suspect?

The question in the title of this post is prompted by this AP piece headlined "Ex-Goldman Exec's 2-Year Sentence Draws Scrutiny."  Here are excerpts, which also includes some highlights from Judge Jed Rakoff's comments about the federal sentencing guidelines:

A two-year prison sentence for insider trading at the height of the 2008 economic crisis, by a man who was once one of the nation's most respected business executives, is a fifth of the 10 years requested by the government and well below sentencing guidelines.  Now, some experts are questioning whether it's a fair punishment.

Judge Jed Rakoff described the sentence and $5 million fine given to former Goldman Sachs and Procter & Gamble Co. board member Rajat Gupta, 63, on Wednesday as sufficient to deter others and properly punish the Westport, Conn., resident.  "At the same time, no one really knows how much jail time is necessary to materially deter insider trading; but common sense suggests that most business executives fear even a modest prison term to a degree that more hardened types might not.  Thus, a relatively modest prison term should be 'sufficient, but not more than necessary,' for this purpose," Rakoff said.

Some legal observers did not agree.  Chicago attorney Andrew Stoltmann said the sentence should have been closer to the 10 years prosecutors had recommended because Gupta's crimes were more serious than those committed by Raj Rajaratnam, the billionaire hedge fund founder he tipped off. Rajaratnam is serving 11 years in prison.

"Gupta intentionally betrayed his duties to Goldman Sachs as a director of the company, refused to take responsibility for his actions and put the government through a long and exhaustive trial costing taxpayers millions," Stoltmann said. "Judge Rakoff should have thrown the proverbial book at Gupta and sentenced him to the higher range of the 97 to 121 months prosecutors were requesting."...

Rakoff criticized sentencing guidelines that he said called for Gupta to serve at least 6½ years behind bars.  Citing information he received under seal, Rakoff said Gupta's crimes may have occurred because Gupta may have "longed to escape the straightjacket of overwhelming responsibility, and had begun to loosen his self-restraint in ways that clouded his judgment."...

Rejecting defense arguments that a community service sentence would be sufficient, Rakoff said a prison sentence was necessary to send a message to insider traders that "when you get caught, you will go to jail."

"While no defendant should be made a martyr to public passion, meaningful punishment is still necessary to reaffirm society's deep-seated need to see justice triumphant," the judge said. "No sentence of probation, or anything close to it, could serve this purpose."...

Rakoff said he could not spare Gupta from prison and only order him to perform community service.  "It's not a punishment. It's what he finds satisfaction doing," the judge said.... In his attack on federal sentencing guidelines that are meant to be advisory, Rakoff said "mechanical adding-up of a small set of numbers artificially assigned to a few arbitrarily-selected variables wars with common sense."

He added: "Whereas apples and oranges may have but a few salient qualities, human beings in their interactions with society are too complicated to be treated like commodities, and the attempt to do so can only lead to bizarre results."

Notably, long-time federal prosecutor and frequent commentator Bill Otis stated in the first comment to a prior Gutpa post that he has "a hard time seeing what interest would be served by giving [Gupta] a sentence longer than he got." In addition to appreciating Bill's candor, his comment spotlight the import and distorting impact of the guidelines even in a post-Booker world.  Though Bill Otis sees Gupta's two-year prison term to be "sufficient" in light of the commands of 3553(a), federal prosecutors in this case argued that a guideline sentence at least four times longer (more than eight years) was necessary to serve congressional sentencing goals. And even post-game criticism of Gupta's sentence reflected in the above-quoted article is quick to assert that the guideline range was a better benchmark for a proper sentence.

For social and psychological reasons, I continue to understand why guideline provisions and ranges has such a huge anchoring effect on federal sentencing decision-making even now eight years after the Booker ruling. But for normative and humanitarian reasons, I continue to be saddened that a big book of sentencing suggestions still dominates analysis of federal sentencing decision-making even now eight years after the Booker ruling.

Related prior posts on Gupta sentencing:

October 26, 2012 at 09:40 AM | Permalink

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Comments

It could be said that just about every criminal did "loosen his self-restraint in ways that clouded his judgment"

Posted by: Dear judge | Oct 26, 2012 10:21:46 AM

One amusing thing about the article is that it shows how ready any given defense lawyer is to throw the book at SOMEONE ELSE'S client.

My own view of sentencing, for about the last 25 years or so, is that judges should follow the guidelines except when there is a clearly singular defendant, a person who's life before his crime was exemplary, and who has zero chance of recidivism. Those two things apply to very, very few federal felony defendants, many of whom are druggies or in some other way have been skating the edge of the law for a very long time. But I look at cases one at a time, and I thought Gupta (like Scooter Libby) was the rare exception.

For this I have been called a racist on a different thread. I don't care. People who actually know me have a good idea how much of a "racist" I am. I will continue to call the cases one at a time. Usually that has turned out to mean I favor stern sentences, but a person who doesn't make exceptions in exceptional circumstances just isn't thinking.

Posted by: Bill Otis | Oct 26, 2012 10:45:40 AM

"At the same time, no one really knows how much jail time is necessary to materially deter insider trading; but common sense suggests that most business executives fear even a modest prison term to a degree that more hardened types might not. Thus, a relatively modest prison term should be 'sufficient, but not more than necessary,' for this purpose," Rakoff said.

If a business executive always fears prison more than a more hardened type, then a business executive should always receive a milder sentence -- regardless of the offense -- right? That seems to be the logic, at any rate.

Posted by: anonymous | Oct 26, 2012 12:26:20 PM

"If a business executive always fears prison more than a more hardened type, then a business executive should always receive a milder sentence -- regardless of the offense -- right?"

And that is the problem with "always."

Posted by: Bill Otis | Oct 26, 2012 12:42:10 PM

Anonymous- you hit the nail on the head. The idea that a plutocrat from Manhattan feels more "pain" from a two-year sentence than a, say, a black guy from the Bronx, is one of those more pernicious ideas I have seen written by a federal judge. It is shameful. It is deeply and fundamentally racist and classist.

"All men are created equal." Rajat Gupta's life is worth no more or less than anyone else's, and his pain at being locked up is no more or less severe than anyone else's. The damage to his wife and children is no more or less than the damage to any other defendant's wife and children.

Bill Otis- While I appreciate your candor and am the one who noted that there was an incredible racism and sense of class privilege implicit in your remarks defending the extremely light sentence of Gupta, to learn that the one other "exception" that you have come across to your "lock 'em up" beliefs is Scooter Libby... well, I rest my case. Hilarious.:-)

Posted by: James | Oct 26, 2012 6:06:40 PM

James --

As I said, one amusing thing about this thread, and your remark in particular, is how vividly it shows that any given defense lawyer is happy to throw the book at SOMEONE ELSE'S client.

Downward departures are designed for truly exceptional cases. If you think Libby and Gupta are not truly exceptional, have at it. And have at your anonymous (why is that?) version of hilarity as well.

Racism! Racism! has become the all-purpose, if shopworn, wail of the anti-American Left. When you cry wolf this often, well, I think we know how that winds up.

Have a good one.

Posted by: Bill Otis | Oct 26, 2012 9:42:49 PM

Bill,

I for one am certainly willing to make the argument that neither Libby or Gupta are exceptional. It takes someone like Gall (who willingly walked away from highly profitable criminal activity _before_ the government came looking for him) to reach the sort of mitigating circumstances that I believe warrant setting aside execution as the correct response to felonious behavior.

Posted by: Soronel Haetir | Oct 27, 2012 4:23:17 PM

The judge talked about "hardened" people. Why does James immediately assume the judge meant a black person. No one else instinctively equate "hardened" with "black." and yet it is James who cries racism.

Posted by: Scott | Oct 27, 2012 5:14:26 PM

Bill Otis: "Racism! Racism! has become the all-purpose, if shopworn, wail of the anti-American Left. When you cry wolf this often, well, I think we know how that winds up."

Real conservatives are also starting to say the bat shit crazies that have become your GOP are racist. Look in the mirror when you point your arthritic finger.

Posted by: Huh? | Oct 27, 2012 9:28:33 PM

Interesting discussion. It is amazing to see all the different perceptions. Regardless of race, 'white collar' crimes aren't considered 'life threatening' in most cases. They also don't classify the defendant as a danger to society.

Posted by: Naegle Law Firm | Apr 4, 2013 7:38:36 PM

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