Wednesday, August 05, 2009

"Want to be a corporate criminal? Move to Canada"

The title of this post is the headline of this sharp commentary from Canada's Globe and Mail paper in response to today's sentencing of two high-profile corporate fraudsters up north.  Here are excerpts from the piece:

Madam Justice Mary Lou Benotto wants to send a message to white-collar crooks like Garth Drabinsky: Our justice system will deal with you severely.  As she sentenced the former impresario to seven years in prison Wednesday, she argued that a crime like his is serious, because it “fosters cynicism [and] erodes public confidence in the financial markets.”  Sternly, she noted, “Those in business must know that this must be the response.”

In fact, those in business must know Canada is a fine place to fleece the innocent and cook the books.  Not for us the crusading prosecutors, the quick indictments, the speedy trials, and the lifetime jail sentences so popular in the United States.  Here, you can be pretty sure the law will take years to catch up to you (if it ever does). In the event you are found guilty, the penalty won't be so bad.

Thanks to our generous parole provisions, Mr. Drabinsky could get out of jail after 14 months or so.  Not that he's going to the slammer any time soon.  Not until his lawyer exhausts the appeals. “In the U.S., he probably would have been tried eight or nine years ago,” says forensic accountant Al Rosen, who thinks Canada's systematic failure to prosecute corporate fraud is a bad joke.  “And he probably would've got 20 to 40 years.”

Today, after a decade of hefty legal bills, Mr. Drabinsky is so broke he has been reduced to begging money off distant acquaintances in exchange for discounts at his Yorkville art gallery.  On the other hand, 10 years of freedom (and counting) may well be worth it.  Journalists who began covering the Livent debacle early in their careers have grey hair now. Perhaps that explains the sense of anticlimax in the courtroom yesterday.

Compared to the obscure manipulations of Conrad Black (part of whose conviction may well be overturned by the U.S. Supreme Court), the fraud scheme carried out by Mr. Drabinsky and his partner, Myron Gottlieb, was plain vanilla. It involved an old-fashioned kickback scheme and a years-long effort to dupe the shareholders by making Livent's financial picture look far brighter than it was. The most surreal moment of the trial came when lawyer Eddie Greenspan (who also acted for Lord Black) proposed that instead of doing jail time, his client could embark on an inspirational speaking tour with the goal of urging young people to pursue their dreams in the performing arts. Had he made a similar proposal for Lord Black, he'd have been laughed right out of Chicago.

Lord Black, unlike Mr. Drabinsky, will have to serve almost all of his 61/2-year sentence. Mr. Drabinsky could well get out of jail first.  Surely, Lord Black (who stood by his old friend when times got tough) must be tempted to contemplate the unfairness of it all.  After all, if Canada and not the United States had gone after him, chances are he'd still be a free man....

Back in court, the judge had more tough words. “Members of the business community must be put on notice that honesty is the currency in which they trade,” she said.  “If they stray, the punishment will be certain and severe.”  Stirring words indeed.  If only the system worked that way.

For more of the basics on the case and the sentencing, this piece from the Ottawa Citizen provides the essential details.

August 5, 2009 in White-collar sentencing | Permalink | Comments (3) | TrackBack

Tuesday, August 04, 2009

Smokin' Okun: tax scheme scammer gets 100 years in the federal slammer

The feds can now add another triple-digit notch to its white-collar sentencing belt after today's sentencing of the Miami businessman Edward Okun.  This Bloomberg report provides the basics:

Edward Okun, the Miami businessman convicted of stealing from customers of his tax-deferral firm, 1031 Tax Group LLC, was sentenced to 100 years in prison for running a $126 million fraud scheme.

U.S. District Judge Robert Payne handed down the sentence today in Richmond, Virginia, where Okun’s company was based. Prosecutors sought a sentence of 400 years, or a similar term amounting to life in prison. Jurors in March found Okun, 58, guilty of conspiracy, wire fraud, money laundering, smuggling and perjury following a three-week trial. “The sentence must deter those who have access to funds of others,” Payne said.  “If you ruin lives of others, your life stands to be ruined.”

Okun argued that a term of 10 years to 15 years would suffice.  He cited Bernard Madoff’s 150-year sentence, the maximum possible, in June for running a $65 billion Ponzi scheme, and lawyer Marc Dreier’s 20-year sentence last month for defrauding hedge funds of more than $400 million. Prosecutors sought 145 years for Dreier.

Assistant U.S. Attorney Michael Dry argued Okun’s fraud was worse than others, because his victims thought they were using a risk-free service, as opposed to investing.  The tax-deferral industry temporarily holds real-estate sale proceeds for a fee under section 1031 of the U.S. tax code, allowing customers to defer taxes when similar properties are bought within 180 days.

As this Bloomberg report of the sentencing highlights, this proceeding appears to confirm again the accuracy of my Madoff sentencing reaction-prediction here that "though the choice of the 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."

Some recent related posts:

August 4, 2009 in White-collar sentencing | Permalink | Comments (4) | TrackBack

Speculating on the next Nacchio prosecution twist and turn

As noted in this recent post, a unanimous Tenth Circuit panel late last week reversed the sentence imposed on former Qwest CEO Joe Nacchio following his conviction for insider trading.  Though a lot more could (and surely will) be said about that opinion, here I want to speculate on what comes next for a case that has already gone through a number of notable twists and turns.  Helpfully, these two recent Denver Post articles provide a basic primer on some of the coming possibilities:

The first article notes that further appellate review of the panel decision is possible: "The government has 14 days to ask the panel to reconsider or request a rehearing from the entire 10th Circuit, or both. It also can appeal the panel's decision to the Supreme Court."  The second article spotlights some possible battles when this case gets back to the district court: 

[T]he ruling from a three-judge panel of the 10th Circuit Court of Appeals may start another set of legal battles, including a renewed request to allow the imprisoned Nacchio to be free on bail while the sentence is sorted out....

If the government is not successful in challenging the panel's ruling, Nacchio's sentencing would start anew in U.S. District Court in Denver, likely meaning a fresh round of filings and hearings, said Peter Henning, a professor of law at Wayne State University.  Experts could be asked to testify about the gain.  

As white-collar crime fans may recall, Nacchio had won a reversal of his convictions in an initial Tenth Circuit panel decision that was later reversed by the full en banc Tenth Circuit.  I doubt that the full circuit will be again eager to review this latest sentencing decision (and I would not be surprised if the Government does not even seek en banc or cert review).

The potential bail battle strikes me as especially interesting given that Nacchio has already served about four months in prison, but still seems relatively unlikely to get resentenced to much less than a few years even if his new sentencing judge — recall that District Judge Marcia Krieger took over over the Nacchio case after Edward Nottingham resigned last year — is sympathetic to his situation at resentencing.  And, adding further complications to these matters, as the Denver Post notes, "Nacchio has a motion for a new trial pending before Krieger, contending that new evidence has surfaced. He also has asked the Supreme Court to review the case."

August 4, 2009 in White-collar sentencing | Permalink | Comments (1) | TrackBack

Sunday, August 02, 2009

Madoff's prison consultant speaks out

Herb Hoelter, the consultant who played a role in Bernie Madoff case (and runs the National Center on Institutions and Alternatives), has this new commentary in today's New York Daily News. Here is how it starts:

Bernie Madoff's 150-year prison sentence was an affront to the federal criminal justice system. There were a number of idiosyncrasies in his sentencing that even a seasoned expert could not have expected: the length of the sentence, the justification by the court for imposing the sentence and the evolution of a new term to describe people in my profession — "prison coaches."

I've been a professional federal sentencing consultant for more than 32 years.  I have worked with hundreds of white-collar offenders over the past 25 years — Madoff, most recently — whose punishments dramatically increased in direct proportion to the government trumpets of justice, punishment and deterrence.  Having lived through the past two decades of federal sentencing guidelines (no longer to be "presumed reasonable," ruled the Supreme Court this year), I know that the Madoff sentence was the crown jewel for the government.

In imposing sentence, however, the court ignored virtually all statutory sentencing principles and trumped the defunct federal sentencing guidelines.  The sentence was imposed, acknowledged Judge Denny Chin, for symbolic purposes, which violates the supposed blindfolds of our nation's justice system.

The sentence was, of course, within the law.  But being within the law does not always mean a sentence is appropriate.  Legal scholars will be hard-pressed to find a first-offender sentence of Madoff proportions — the maximum statutory term imposed on each count, to be served consecutively.

August 2, 2009 in White-collar sentencing | Permalink | Comments (6) | TrackBack

Friday, July 31, 2009

Tenth Circuit reverses Nacchio's sentence while thoughtfully discussing federal fraud sentencing

Though a thoughtful ruling in a major case, the Tenth Circuit today has reversed the sentence imposed on former Qwest CEO Joe Nacchio following his conviction for insider trading.  The unanimous panel opinion in US v. Nacchio, No. 07-1311 (10th Cir. July 31, 2009) (available here), is a must-read for everyone involved or interested in white-collar sentencing issues.  

The full opinion runs 59 pages and has lots of notable quotes.  Here is one of many sections (with important cites and footnotes left out) that should whet the appetite of sentencing fans:

Contrary to the district court’s net-profit approach, a disgorgement approach is entirely consonant with central principles of federal sentencing policy in that it endeavors to hold the defendant accountable for the portion of the increased value of the stock that is related to his or her criminally culpable conduct. Consequently, it militates against the creation of unwarranted sentencing disparities among similarly situated defendants.

Federal sentencing is individualized sentencing: the sentencing court seeks to craft a sentence that fully reflects a particular defendant’s criminally culpable conduct, including the harm caused by it, and the defendant’s personal circumstances....

However, if the impact of unrelated twists and turns of the market is ignored in the sentencing calculus then an insider trading defendant is likely to suffer a sentence that is detached from his or her individual criminal conduct and circumstances.  And this detachment can have a profound, detrimental impact onanother objective of federal sentencing — the elimination of unwarranted disparities between similarly situated defendants.

Therefore, from a policy perspective, it makes sense to adopt a sentencing approach that is focused on a defendant’s criminally culpable conduct and has the effect of excising — even if not completely — unrelated market forces from the sentencing calculus, thereby narrowing the zone of unpredictability in sentencing.  Such is the disgorgement approach we adopt here: it takes into consideration the fact that stocks have inherent value (quite apart from criminally fraudulent conduct) and seeks to exclude that unrelated value from the computation of a defendant’s punishment, and it sets a logical, temporal cutoff point for assessing the gain of the illegal conduct, i.e., the point when the information is disclosed and absorbed by the market.

As this excerpt spotlights, this big sentencing opinion from the Tenth Circuit in the Nacchio case covers matters of great interest and importance to both sentencing theorists and practicing corporate lawyers.  And how often do I get to say that?

July 31, 2009 in White-collar sentencing | Permalink | Comments (2) | TrackBack

Thursday, July 23, 2009

Big political corruption busts in New Jersey . . . thanks to a cooperator

The Wall Street Journal provides this extended account, which is headlined "Dozens Arrested in New Jersey Corruption Probe," of a huge political corruption story breaking today in New Jersey.  Here is how the piece starts:

Federal agents swept into New Jersey towns across several counties Thursday morning, charging 44 people, including mayors and rabbis, in a federal investigation into public corruption and a high-volume, international money-laundering conspiracy.

The arrests in the corruption probe included Peter Cammarano III, the newly elected Democratic mayor of Hoboken; Dennis Elwell, mayor of Secaucus, also a Democrat; state Assemblyman Daniel Van Pelt, a Republican; and Democrat Leona Beldini, the deputy mayor of Jersey City. Those arrested were expected to be arraigned in court Thursday afternoon.

The key to the investigation was an Orthodox Jewish real-estate developer, according to a person familiar with the matter.  Solomon Dwek was arrested on bank-fraud charges in 2006 and was forced to seek bankruptcy protection for himself and his companies, which owned about 300 residential and commercial properties. Mr. Dwek, 36 years old, a religious-school head and philanthropist from Ocean Township, was charged with defrauding PNC Bank out of $25 million. Mr. Dwek remained free on a $10 million bond.  A lawyer for Mr. Dwek couldn't be reached for comment.

To ensnare most of the defendants, the Federal Bureau of Investigation used Mr. Dwek to attempt to bribe numerous public officials in New Jersey, including Hoboken and Jersey City, according to a person familiar with the matter. The probe roped in several other real-estate developers who also wanted to bribe officials. The criminal complaints unsealed Thursday referenced an unnamed "cooperating witness" who represented himself as a real-estate developer seeking to pay bribes. A person familiar with the matter said Mr. Dwek is the witness.

This may not seem like a sentencing story yet, but it already is in various ways.  First, the threat of a long prison term that Solomon Dwek was likely facing on bank-fraud charges in 2006 surely played a role in his decision to become a "cooperating witness."  Relatedly, the "44 people, including mayors and rabbis" who were arrested today will surely be told ASAP that the best way they can reduce their sentencing exposure is to be as cooperative as Solomon Dwek.

July 23, 2009 in White-collar sentencing | Permalink | Comments (1) | TrackBack

Another big federal fraud sentencing dealing with Madoff echoes

This local story out of Virginia, which is headlined "Okun’s lawyers say life sentence not warranted," provide another example of the echo effect of Bernie Madoff's severe fraud sentence. Here are the details:

Authorities want a 400-year sentence for Edward Hugh Okun — or one that otherwise assures he spends the rest of his life in prison — as the mastermind of a $126 million fraud.

In papers filed in U.S. District Court yesterday, prosecutors said the former Miami businessman used nearly $40 million in client money as a "personal piggy bank" to fund a divorce settlement and buy a jet, a helicopter, homes and jewelry for his new wife. "Unlike other recent high-profile fraud prosecutions, Okun's victims never asked [Okun] to invest and risk their money," the U.S. attorney's office argues.  Instead, the victims entrusted their money to Okun to be held in bank and escrow accounts. "Okun's criminal acts drove many individuals to economic collapse or near collapse, and caused especially significant noneconomic, emotional damage on many of his victims," the 13-page sentencing memorandum states.

Okun's lawyers, in their own memorandum filed yesterday, said a life sentence is not warranted under federal sentencing guidelines and that a 10- to 15-year sentence would be more appropriate. Okun, 58, is to be sentenced in a two-day hearing beginning Aug. 4 before U.S. District Judge Robert E. Payne in Richmond. Accused of masterminding the fraud that victimized at least 232 people across the country, he was convicted of all 23 counts in a jury trial here in March....

Okun's lawyers yesterday presented a study of cases from 1998 to 2008 — with losses of $100 million to $400 million — that shows the average sentence was 94.6 months.  Of those cases, 14 defendants faced guideline sentences of life, but none was sentenced to life.

They noted that Bernard Madoff received a maximum 150-year sentence last month, in a much larger and longer-running Ponzi scheme that took in $65 billion and victimized thousands. They also said that while the government sought 145 years in prison for lawyer Marc Dreier, nicknamed the "Mini-Madoff," in a $700 million fraud, he was sentenced this month to 20 years by a judge who said Dreier's crimes paled in comparison with Madoff's.  "Not only is Okun no Madoff, he is no Dreier," Okun's lawyers argue. They said the maximum guideline sentence in Okun's case is 20 years, "which is essentially a life sentence."

Jayne W. Barnard, a law professor at the College of William and Mary, said it is no surprise Madoff is on the minds of Okun and his lawyers.  "Every fraud defendant right now is very uncomfortable because the 150-year sentence is out there. And every fraud defendant in the country right now is trying to distinguish what they did from what Bernie Madoff did," she said.

Some recent related posts:

July 23, 2009 in White-collar sentencing | Permalink | Comments (1) | TrackBack

Sunday, July 19, 2009

Continued buzzing about the (soft?) sentence given to Fumo

Especially in Pennsylvania's papers, there continues to be plenty of discussion of the 55-month prison sentence imposed on state lawmaker Vincent Fumo for his convictions on various corruption charges.  Here are two stories that caught my eye and provide notable perspectives on both the sentence itself and the debate surrounding it:

The second piece spotlights why there is so frequently political and public pressure for sentences always to go up rather than down: it is very rare that we ever see stories headlined "Criminal's punishment draws outrage as being too harsh."  And, of course, Fumo was given more than a slap on the wrist: the 66-year-old white-collar offender will spend nearly five of his "golden years" in prison and has to pay $2.4 million.  Nevertheless, because he was convicted of so many charges of so much corruption and still got a below-guideline sentence, perhaps it is not surprising that this particular outcome has generated so much Sturm und Drang.

Recent related posts:

July 19, 2009 in White-collar sentencing | Permalink | Comments (7) | TrackBack

Friday, July 17, 2009

"Feds seek to appeal 'unreasonable' Fumo sentence"

The title of this piece is the headline of this new article suggesting that the story concerning the a recent high-profile white-collar sentencing is not quite over:

Federal prosecutors stung by this week's 55-month sentence for a long-powerful Pennsylvania lawmaker in a sprawling corruption case will seek to appeal the ruling. Prosecutors call Vincent Fumo's term "unduly lenient and unreasonable" and plan to ask the Justice Department to sign off on an appeal.

Fumo, a Philadelphia Democrat who amassed vast power during 30 years in the state senate, was sentenced Tuesday for misappropriating millions from the coffers of the state senate and two nonprofits. "In opinion articles, letters to the editor, e-mails, blog postings, and a flood of phone calls to our office and, we believe, to this Court, thousands of citizens expressed their dismay at the unduly lenient sentence imposed on Fumo," prosecutors wrote in court papers filed Friday....

Fumo, 66, is due to report to prison on Aug. 31. He must also pay $2.4 million in restitution and fines.  Prosecutors argued that he defrauded the senate and charities of more than $4 million.  They disclosed their plans to appeal in a sentencing memo filed Friday for co-defendant Ruth Arnao, who faces sentencing Tuesday on 45 counts.

Needless to say, I am intrigued to see the Government's reference to "blog postings" in its account of the public dialogue concerning Fumo's sentence.

Recent related posts:

July 17, 2009 in White-collar sentencing | Permalink | Comments (11) | TrackBack

Tuesday, July 14, 2009

State senator Fumo gets below-guideline sentence of 55-months imprisonment on corruption charges

FumoI got this great graphic here and the breaking news concerning the federal sentencing outcomes from state senator Vince Fumo thanks to live-blogging here from folks in Philly.  After what appears to have been a full-day sentencing hearing, Fumo should now be full of thanks toward both the US District Judge Ronald Buckwalter and his defense attorney after receiving a sentence of less than five years for his crimes of fraud and corruption. 

According to press reports, the original sentencing recommendation from in his presentence report calculated a guideline sentencing range of 21 to 27 years in prison, but this range was cut in half by an initial guideline calculation ruling.   Prosecutors, in turn, argued for the imposition of an above-guideline sentence, but the district judge apparently though 55 months behind bar was "sufficient, but not greater than necessary" under these circumstances.   Though I have not followed the particulars of this case closely, I sense that it now stands as a testament to effective defense advocacy.

This early story from the Philadelphia Inquirerprovides some more the crime and punishment details, including the amusing suggestion from one sentencing witness that life in prison may be less stressful than life on the outside:

Assistant U.S. Attorneys John J. Pease and Robert A. Zauzmer had asked Buckwalter to impose a prison sentence of more than 15 years, while defense lawyers sought a sentence substantially shorter than the 11 to 14 years that could be imposed under the sentencing guidelines calculated by the judge.

They also asked the judge to fashion a sentence that would not be tantamount to death for Fumo, who they said has a shortened life expectancy because he suffers from heart problems, diabetes and other medical issues.  A lengthy prison term, they said, would in all likelihood mean that Fumo would die in prison.

Before today's sentencing, John Menenti, a Bureau of Prison's physician, challenged that assertion and suggested that prison would be a less stressful environment than the outside world of deadlines and cell phones.

You heard it here first: if you really need to book a special, get-away-from-it-all, less-stress vacation, be sure contact the travel agents at federal Bureau of Prison.  I know on good guideline authority that if one packs effectively — e.g., extra crack instead of powder, a gun along with the sunscreen — the government will try to send you to this "less stressful environment" (with all expenses paid) for quite a long time.

July 14, 2009 in White-collar sentencing | Permalink | Comments (12) | TrackBack

Monday, July 13, 2009

Dreier gets 20-year federal prison sentence

As detailed in this Bloomberg article, "Marc Dreier, the New York law firm- founder, was sentenced to 20 years in prison for defrauding hedge funds of more than $400 million and stealing money from his clients."  Here are more details from the sentencing:

U.S. District Judge Jed Rakoff in Manhattan today sentenced Dreier, 59, to a term far shorter than the 145 years sought by prosecutors. Dreier’s lawyers asked for a sentence of as few as 10 years. Dreier was also ordered to pay $387.7 million in restitution....

“Mr. Dreier’s crimes, despicable though they may be, pale in comparison to Mr. Madoff’s,” Rakoff said, referring to investment manager Bernard Madoff who pleaded guilty in March to a $65 billion Ponzi scheme. “But one must still be appalled” by his crimes, he said. “This is a huge fraud by any standards,” the judge said....

Rakoff said that Dreier, who he said had a life expectancy of 80 years, was not “beyond redemption.” The judge said he was surprised that Dreier’s letter showed an “understanding” of his crimes. Letters that victims wrote to the judge depicted Dreier as “arrogant, condescending and cruel,” Rakoff said.

UPDATE: The New York Law Journal provides additional coverage of the Dreier sentencing in this piece, headlined "Dreier Gets 20 Years for 'Betrayal of Trust'."

July 13, 2009 in White-collar sentencing | Permalink | Comments (8) | TrackBack

A week worth watching from a white-collar sentencing perspective

Late monday afternoon is the scheduled federal sentencing of lawyer Marc Dreier in New York City, who might be viewed as a kind of mini-Madoff.  As detailed in prior posts here and here, there are lots of interesting elements to the Dreier case that make it the first post-Madoff must-watch event for white-collar sentencing fans.

But the Dreier case just gets the white-collar sentencing action started this week.  As detailed in this new article from The Legal Intelligencer, which is headlined "Judge's Calculation May Reduce Fumo's Sentence," there is also a notable political corruption case due to be sentencing this week in Pennsylvania.  Here is how this article sets up the sentencing excitement in this other notable white-collar sentencing case:

A two-page order handed down on Friday was the first piece of good news in a long time for former state Sen. Vincent J. Fumo -- whose sentencing on fraud and obstruction of justice charges is set for Tuesday -- as U.S. District Judge Ronald L. Buckwalter effectively slashed Fumo's sentencing recommendation in half. But by the end of the day, prosecutors had filed a 58-page brief that said Fumo, 66, should be hit with a longer prison term than the federal guidelines recommend because his crimes rocked the public's confidence in the integrity of public officials and because of his perjury at trial and his "exceptionally egregious" cover-up scheme.

The original recommendation from a probation officer said Fumo's sentence should be in the range of 21 to 27 years in prison. But the new calculation announced by Buckwalter, once it is finalized, could reduce the recommendation to a range of nine to 12 years.

It's still impossible to guess what Fumo's ultimate sentence will be because Buckwalter has yet to decide whether to grant downward departures from the guidelines range for Fumo's "good works," although the judge has ruled out any departure based on Fumo's ailing health. And since the guidelines are now "merely advisory," Buckwalter has the freedom to decide for almost any reason to grant a "variance" and impose a term either above or below the guidelines range.

July 13, 2009 in White-collar sentencing | Permalink | Comments (1) | TrackBack

Friday, July 10, 2009

"Prosecutors Resort to Wealth Porn in Dreier Case"

The title of this post is the title of this entry at the WSJ Law Blog discussing the latest filings from the parties in the upcoming sentencing of Marc Dreier (basics here).  Here is the setting which a grand new term gets coined:

We turn back to Marc Dreier, who yesterday filed a motion asking that he be sentenced to no more than 12 ½ years for running a Ponzi scheme.  Now we return to the government’s response, also filed yesterday, in which asks New York federal judge Jed Rakoff to sentence Dreier to 145 years, in line with the federal sentencing guidelines.

The most interesting thing about the government’s filing was its inclusion of what we’ll call, for a lack of a better term, wealth porn: glossy photos of Dreier’s lavish lifestyle, including images of his yacht, beach front house in the Hamptons, and his $207,043.29 Aston Martin DB-9 convertible....

Our personal favorite is the image of the bedroom in his yacht, which features replete with wood and leather that appears mighty soft to the touch.  Obviously, the government is using the power of the image to try to claim Dreier was consumed by greed ─ a point Dreier virtually conceded in yesterday’s court filing ─ and deserving of no leniency in sentencing.

All of the filings in the Dreier case are really interesting, and I thought the arguments by Dreier's lawyers in this memorandum for a relatively "moderate" sentence (in the range of 10 to 12 years in prison) were especially thoughtful.  In light of nature and scope of  Dreier's crimes, however, I think the over/under on his sentence has to be in the range of 20 years.

July 10, 2009 in White-collar sentencing | Permalink | Comments (8) | TrackBack

Wednesday, July 08, 2009

The "Bernie benchmark" already brought to bear in Dreier case

Right after last week's sentencing of Bernie Madoff, I explained here why I thought Judge Chin's decision to impose a sentence of 150 years really mattered for the federal sentencing system.  As I explained in this post, "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."

This new article from Reuters, which is headlined "U.S. seeks 145-year sentence for NY lawyer," suggests I do not have too long to say "told ya." Here are the basics:

U.S. prosecutors on Wednesday asked a judge to sentence high-profile New York lawyer and admitted fraudster Marc Dreier to 145 years imprisonment or a term that ensures he spends the rest of his life in prison.  Dreier, 59, pleaded guilty in May to running a $400 million investment fraud involving fake promissory notes and he was released into house arrest until his sentencing on July 13.

While the size of the fraud is dwarfed by comparison with the estimated $65 billion disgraced financier Bernard Madoff admitted to swindling, prosecutors asked for a similar term of incarceration, the highest allowed by sentencing guidelines. Madoff, 71, was sentenced to 150 years in prison on June 29.

In a memorandum to U.S. District Court Judge Jed Rakoff, prosecutors wrote that Harvard and Yale educated Dreier, despite his advantages "decided to seek vast personal riches and prestige through a life of fraud and through dishonor to his profession."

The memorandum concluded that "a reasonable sentence in this case would be the guidelines' sentence of 145 years, or alternatively, a term of years that would assure that Dreier will remain in prison for life and forcefully promote general deterrence."

Dreier's lawyer Gerald Shargel suggested the judge give his client between 10 years and one month and 12 years and seven months in prison as an appropriate sentence.  Dreier is "profoundly remorseful" and has done what he can to make amends for his crimes, Shargel said in his sentencing memorandum.

Thanks to the folks at Main Justice and the New York Law Journal, which provides this additional coverage, we can all read the parties' sentencing memoranda ourselves:

July 8, 2009 in White-collar sentencing | Permalink | Comments (3) | TrackBack

Monday, July 06, 2009

A high-profile case providing a Canadian perspective on white-collar sentencing

This Bloomberg news article, headlined "Prosecutor Seeks 8-10 Years for Ex-Broadway Producers," provides an interesting comparative perspective on white-collar sentencing debates. Here are a few excerpts:

Garth Drabinsky and Myron Gottlieb, once Broadway producers with hits like “Ragtime,” should spend 8 to 10 years in prison for defrauding investors of millions of dollars, prosecutor Alex Hrybinsky said today at the start of a sentencing hearing in Toronto. 

Drabinsky, 59, and Gottlieb, 65, were charged by police in October 2002 with lying about finances at the defunct theater producer Livent Inc. for nine years as they raised about C$500 million ($431 million) to buy theaters in Toronto, Chicago and New York and paid for increasingly lavish productions, including “Fosse” and “Phantom of the Opera.” “This is an enormous fraud,” Hrybinsky said at the hearing. “A sentence of 8 to 10 years is merited.”...

Drabinsky’s lawyer Edward Greenspan urged the judge to consider his client’s contribution to Canadian theater, Toronto’s economy and to use compassion in sentencing considering Drabinsky has suffered from the effects of polio since the age of 4 that left him partially disabled and in pain. “It makes incarceration more difficult,” Greenspan said. “In a practical sense, it makes it more punitive.” Greenspan suggested that Drabinsky should be given a conditional sentence of two years, less a day, of which a year could be served under house arrest and three years probation....

Drabinsky and Gottlieb are fugitives from U.S. law, having being indicted in 1999 on similar fraud charges by a federal grand jury in New York. They have refused to appear in a U.S. court. The U.S. has an extradition request on hold, pending the outcome of the trial in Toronto. Their case has been compared with that of Conrad Black, the former chairman of newspaper publisher Hollinger International Inc. Black was sentenced to 6 1/2 years in prison following a trial in Chicago where he was convicted of defrauding company shareholders of $6.1 million and obstructing justice.

“Conrad Black’s sentence would have been somewhat more lenient if he were prosecuted in Canada,” said Alan Mark, chairman of the Toronto Litigation Group at Ogilvy Renault, who wasn’t involved in the Livent case. “There was a lot of tension between sentencing practices in Canada and the U.S. in Hollinger.”

Interesting case, eh?

July 6, 2009 in White-collar sentencing | Permalink | Comments (1) | TrackBack

Friday, July 03, 2009

"Is 150 Years Appropriate, or Just Silly?"

The question in the title of this post is the headline of this effective column in the New York Times.  The piece quotes lots of academics in an effort to help answer the question (including me), but I am even more eager to hear from readers of this blog.

Most recent Madoff sentencing posts:

UPDATE: For additional takes on this question, one can now check out this blog-friendly column at the New York Times, headlined "Weekend Opinionator: Did Madoff Get More Than He Deserved?".  The column quotes lots of Madoff-sentencing reaction around the blogosphere, and here is how the column gets started:

On Saturday America turns 233 years old, but the first chance Bernie Madoff will have to celebrate the Fourth of July as a free man will be the nation’s 383rd birthday.  Before you enjoy any schadenfreude, however, remember that you and I are no more likely to make that party than he is.  We will, however, have more room to roam in the interim.

July 3, 2009 in White-collar sentencing | Permalink | Comments (13) | TrackBack

Thursday, July 02, 2009

Interesting guideline debate in upcoming federal sentencing of Monica Conyers

This local article out of Detroit, headlined "Conyers sentence fires up debate," highlights the challenge of assessing financial figures under the federal sentencing guidelines in a high-profile public corruption case.  Here are excerpts from this effective article:

Detroit City Council President Pro Tem Monica Conyers says she chose her words carefully on her TV show this week because "I don't want to go to jail."  And although she pleaded guilty Friday to a five-year felony, the possibility exists she won't.

"I'm certainly going to make my best-case argument that she should receive a non-prison sentence," her Detroit attorney, Steve Fishman, said Wednesday.  Fishman would not disclose the arguments he will make, saying he would make his case in a memorandum he will file in federal court before Conyers' sentencing in about three months.  But there is disagreement over what federal sentencing guidelines should apply to Conyers, who announced this week she will resign Monday.

Even after that question is settled, federal judges are no longer bound by sentencing guidelines, so the sentence Conyers receives will be whatever U.S. District Judge Avern Cohn believes is appropriate.  Cohn said when he accepted Conyers' guilty plea that prosecutors believe her guidelines exceed the maximum penalty for conspiring to commit bribery.  That means that if Cohn sentences Conyers within the range calculated by prosecutors, she will get the full five years.

Fishman calculated a much lower guideline range for Conyers -- 30 to 37 months -- and can ask Cohn to sentence Conyers below that range.  One apparent area of disagreement is the value of the benefit received -- a key component in calculating the sentencing guidelines.

The numbers prosecutors used to calculate Conyers' sentencing guidelines have not been released. But calculation worksheets for Rayford W. Jackson, her co-accused, show prosecutors used a $20-million-plus "benefit value."  That large figure is based on the $1.2 billion value of the sewage sludge contract, rather than the bribe amount of $5,000 to $6,000 that Jackson admitted paying and Conyers admitted receiving....

Using the amount of the bribe in place of the amount of the contract would reduce the recommended sentence.  Still, experts were skeptical Wednesday that Fishman could keep Conyers out of prison....

Frank Perry, director of investigations and public affairs for the Foundation for Ethics in Public Service in Raleigh, N.C., said he feels the crucial nature of Conyers' vote -- having changed her position from opposing to supporting the Synagro Technologies Inc. sludge deal in 2007 to allow it to pass 5-4 -- mitigates against a lighter sentence, regardless of the size of the bribe.  "There's a growing sense of increasing the accountability of public officials by way of stiffer sentences," said Perry, a former FBI special agent who handled public corruption cases.  "I believe that's the trend."

July 2, 2009 in White-collar sentencing | Permalink | Comments (6) | TrackBack

Wednesday, July 01, 2009

Should Bernie Madoff bother to appeal his sentence?

The question in the title of this post is prompted by this new article in USA Today, which is headlined "Appeal of Madoff's 150-year sentence wouldn't matter." Here is a big part of an effective article:

Bernard Madoff has potential legal grounds to appeal his 150-year prison sentence, but the chances are slim that he could avoid dying behind bars for bilking thousands of investors in a massive Ponzi scheme, sentencing experts said Tuesday.

Federal guidelines state that criminal penalties should be "sufficient but not greater than necessary" to reflect the seriousness of the offense, promote respect for the law, ensure just punishment and provide adequate deterrence of criminal conduct.

In imposing the maximum allowed sentence Monday, U.S. District Judge Denny Chin cited the "extraordinarily evil" nature of an at least $13 billion scam that victimized investors and institutions rich and poor, exacting "a staggering human toll."  The judge also cited deterrence, saying, "The symbolism is important here because the strongest possible message must be sent to those who would engage in similar conduct ... that they will be punished to the fullest extent of the law."

Madoff defense attorney Ira Lee Sorkin called the sentence "absurd" in an NBC Today show appearance Tuesday. "There's nothing in the sentencing guidelines that talks about making symbols of people," he said.  Sorkin said in a subsequent interview he had not decided whether to appeal.

Mark Allenbaugh, a former attorney for the U.S. Sentencing Commission, said if he represented Madoff he'd argue the penalty "was unreasonable on its face" because it was disproportionate to sentences in most other major white-collar-crime cases....

But a higher court would likely uphold the sentence, because Chin "spoke to the issues" in the guidelines, said Alan Ellis, a National Association of Criminal Defense Lawyers past president in California who specializes in federal sentencing and prison issues. "The sentence was designed to send a deterrence message around the world," said Ellis. "And it has."

But, if an appeals court ruled the term unreasonable, it would send Madoff, 71, back to Chin for re-sentencing.  Pointing to his age, the experts said even reducing his sentence to the 50 years recommended by probation officials would still represent a life term.  "There's a slim chance he'd win the battle," said Allenbaugh, "but he'd lose the war."

Most recent Madoff sentencing posts:

July 1, 2009 in White-collar sentencing | Permalink | Comments (11) | TrackBack

Tuesday, June 30, 2009

Another stiff sentence for a Ponzi schemer

Perhaps this local sentencing story reflects the echo effect of Bernie Madoff getting maxed out at his federal sentencing:

It may not be as wide-ranging as the theft orchestrated by Wall Street investor Bernard Madoff, but the $6 million stolen by Glyn Richards still destroyed dozens of lives.  So for his crimes, Richards will spend 30 years in federal prison.

Richards, 45, pled guilty last year to setting up a fake freight company: All Freight Logistics, Inc. in Audubon, N.J. From that office, he ran a Ponzi scheme that bilked more than 100 investors out of $5.8 million. In exchange for a hefty buy in — ranging from $25,000 to more than $100,000 — prosecutors say Richards promised his investors quick and big returns.  He told them he was about to land a government defense contract....

Nearly a year after he pleaded guilty, dozens of victims packed the courtroom to hear Richards' sentence.  Several made impassioned pleas for the judge to issue the maximum sentence.

In a move that surprised even prosecutors, Renée Marie Bumb went beyond the federal guidelines in handing Richards 30 years. She said it was "one of the most despicable crimes imaginable."

"It doesn't take a life — like a violent crime does, but it does destroy life," Bumb said.  "I think you are a con man.  You have been and you always will be.  I think you'll be pulling a scam when you walk out the gates of prison."

June 30, 2009 in White-collar sentencing | Permalink | Comments (3) | TrackBack

Should SCOTUS or USSC resolve circuit split on who counts as a fraud victim?

The National Law Journal has this new piece noting a circuit split over who counts as a victim for a guideline enhancement in fraud cases.  The article is headlined, "Circuits split on sentencing for financial fraud —  At issue is whether people who are reimbursed for financial losses from criminal schemes should be counted as victims," and here are snippets:

The U.S. Court of Appeals for the 1st Circuit last Friday waded into a growing circuit split over how tough judges can be on defendants accused of financial fraud.  At issue is whether judges should count people who are reimbursed for financial losses from criminal schemes as victims when deciding whether to increase a defendant's sentence.

In a pair of opinions, Judge Kermit V. Lipez, writing for unanimous 1st Circuit panels, upheld 72-month sentences for defendants who were accused of stealing debit card numbers, personal identification numbers, credit card numbers, and ultimately money, from customers of Stop & Shop supermarkets in Rhode Island.  The cases are United States v. Stephanian and United States v. Ter-Esayan.

Federal sentencing guidelines allow for a sentence enhancement for financial crimes like embezzlement and fraud if there are more than 250 victims.  Regarding defendant Mikael Stephanian, Lipez concluded that "the card holders bore the first part of the total losses before the funds were restored" and were unable to access the money the defendants withdrew from their account for a period of time....

That's in line with a 2005 ruling by the 11th Circuit in United States v. Lee, which considered reimbursed persons as victims.  Lipez wrote that the court was rejecting the position of the 6th Circuit in a case, United States v. Yagar, that account holders did not suffer "actual pecuniary harm" because they got their money back.  He noted similar rulings by the 3rd, 5th, 9th and 10 circuits.

Pat Harris of Los Angeles-based Geragos & Geragos, who represented Arman Ter-Esayan in the appeal, said he and his client are disappointed because so many circuits ruled the other way. "There's a real split in the circuits," Harris said.  "I think at some time the Supreme Court is going to have to take a look at this.  When you've got this prominent of an issue, at some point there's going to have to be some clarification."

Especially since the federal sentencing guidelines are supposed to help achieve nationwide consistency in sentencing law and policy, I agree that this circuit split needs to be resolved ASAP.  But, because the split involves a guideline interpretation issue, it is not clear that the Supreme Court must or even should be primarily in charge of providing needed clarification.  As the Supreme Court noted in the (too rarely discussed) Braxton case at the outset of the guideline era, it may make more sense for the US Sentencing Commission to resolve these issues through guideline amendments than for the Supreme Court to deal with the issue via adjudication.

One of my very first articles, Sentencing Commission as Guidelines Supreme Court: Responding to Circuit Conflicts, 7 Federal Sentencing Reporter 142 (1994), talked through this issue of who should respond to these kinds of conflict.  In that piece, I highlighted some of the pros and cons of the USSC rather than SCOTUS being primarily in charge of dealing with these kinds of issues.  And I continue to be unsure whether in general or in this particular fraud setting who should take charge of these kinds of splits.

June 30, 2009 in White-collar sentencing | Permalink | Comments (1) | TrackBack

Monday, 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 in White-collar sentencing | Permalink | Comments (10) | TrackBack

Madoff gets sentenced to max of 150 years in federal prison!

Early reports from the MSM says Bernie Madoff gets the max from Judge Denny Chin, 150 years in federal prison, which was the most he could get for all the counts to which Madoff pled guilty.  Of course, with a possible 15% off for good behavior, Madoff could get out as early at 2138.

Here is early coverage from the Wall Street Journal:

Bernard Madoff was sentenced to 150 years in prison Monday, meaning he will likely spend the rest of his life behind bars after admitting in March to running one of the largest and longest financial frauds in recent memory.

At a packed hearing Monday, U.S. District Judge Denny Chin in Manhattan ordered Mr. Madoff, 71 years old, to serve the statutory maximum sentence in prison. Applause briefly broke out after the sentence was announced....

"Here the message must be sent that Mr. Madoff's crimes were extraordinary evil," Judge Chin said.

June 29, 2009 in White-collar sentencing | Permalink | Comments (11) | TrackBack

SCOTUS takes up another honest-services fraud case

Though today's SCOTUS headlines will mostly be about the completion of the '09 Term, the Justices also granted cert on a bunch of new cases this morning. This order list reveals that one of the cases, Weyhrauch v. US, the Court specified the issue to be examined in this way:

The petition for a writ of certiorari is granted limited to the following question: Whether, to convict a state official for depriving the public of its right to the defendant's honest services through the non-disclosure of material information, in violation of the mail-fraud statute (18 U.S.C. §§1341 and 1346), the government must prove that the defendant violated a disclosure duty imposed by state law.

June 29, 2009 in White-collar sentencing | Permalink | Comments (0) | TrackBack

"Everything You Need to Know About the Madoff Sentencing"

This post at the WSJ Law Blog claims to provide a primer on everything one needs to know before the Madoff mania starts at 10am Monday morning.  But, if you want to know more, you might check out new pre-sentencing pieces from CNN Money and from the Financial Times and from Reuters and from lots of other media sources.  Also, if you are already thinking about Madoff's next home, this CNN article headlined "Prison survival tips for Madoff," explains why weekends at Bernie's are going to be much different after today's sentencing. 

Of course, as highlighted below, I have chronicled lots of the Madoff pre-sentencing stories in these prior posts:

June 29, 2009 in White-collar sentencing | Permalink | Comments (0) | TrackBack

Saturday, June 27, 2009

Feds seeking the max for Bernie Madoff

As detailed in pieces in the New York Times and in the New York Law Journal, federal prosecutors "recommended on Friday that Bernard L. Madoff be sentenced to 150 years in prison for conducting his enormous worldwide Ponzi scheme."

Here is more from the NYTimes piece: That term is the maximum established for his crime under nonbinding federal sentencing guidelines. Although it would be a purely symbolic sentence even for a young prisoner — and Mr. Madoff is 71 — prosecutors said it was warranted by the “extraordinary dimensions” of his crimes.

“He engaged in wholesale fraud for more than a generation,” said Marc Litt, an assistant United States attorney, in a memo sent to Federal District Judge Denny Chin, who will sentence Mr. Madoff on Monday. Although Mr. Madoff testified in March that his Ponzi scheme began about 1991, Mr. Litt said in his brief that a confidential presentencing report shows it began at least a decade earlier.

“The sheer scale of the Madoff fraud calls for severe punishment,” Mr. Litt continued. Comparing his crime with others that have come before the federal courts in New York “only underscores the enormity of Madoff’s offenses,” he added.

Anyone interesting in reviewing the entire Government sentencing memorandum can find it at this link.

June 27, 2009 in White-collar sentencing | Permalink | Comments (2) | TrackBack

Friday, June 26, 2009

Any sentencing predictions or prognostications before Monday's Madoff mania?

Infamous ponzi schemer Bernie Madoff is scheduled to be sentenced this coming Monday, and so a slow summer friday presents a great opportunity for sentencing predictions and prognostications before the Madoff mania.  Helpfully, this Bloomberg piece, headlined "Madoff’s Failure to Name Accomplices Cripples His Leniency Bid," gets the ball rolling effectively.  Here is how the lengthy piece begins:

Bernard Madoff’s bid for a 12-year sentence will probably be stymied by his failure to tell U.S. government investigators about those who may have helped him defraud investors of as much as $65 billion.  Madoff faces as many as 150 years in jail when he comes before U.S. District Judge Denny Chin in Manhattan on June 29 for sentencing. Probation officials have recommended Madoff spend the rest of his life in prison.  Instead, Madoff asked Chin last week for a sentence that’s half that meted out to the convicted chief executives of Enron Corp. and WorldCom Inc.

Since his Dec. 11 arrest, Madoff, 71, has insisted he acted alone in the largest-ever Ponzi scheme. He took sole responsibility for the fraud when U.S. agents arrested him in December and in his March 12 guilty plea.  In a letter this week to Chin, Madoff’s attorney, Ira Sorkin, argued his client has told investigators about his assets and how he duped regulators.  Sorkin said nothing about Madoff’s accomplices.

White-collar defense lawyers such as George Jackson, a former federal prosecutor now at Bryan Cave LLP in Chicago, said the judge will be deterred by Madoff’s silence on this issue as he weighs the ex-money manager’s request.  “If he did cooperate, he would open himself up to the possibility of a sentence that would give him a ray of hope of having freedom at some point,” said Jackson, who isn’t involved in the case.  If silent, said, Jackson, “The judge could say, ‘I have not heard who you operated with, and it’s clear to me that you operated with someone.’”

I share the instincts of this commentator, and that's why I have set in my own mind 25 years in prison as the over-under for Monday's festivities.  I think Judge Chin will prefer to impose a number of years rather than a life term, but the scope of the fraud and Madoff's extreme culpability leads me to assume that the number of years selected will be quite large.

Some related Madoff sentencing posts:

UPDATE:  A review of the Government's sentencing memorandum and also the thoughtful comments below have led me to revise my over-under for Madoff's sentencing term.  I am now thinking that 40 or 50 years might be a more appropriate over-under.  (I am also now wondering if there is any actually betting on this event going on in the UK.)

June 26, 2009 in White-collar sentencing | Permalink | Comments (17) | TrackBack

Thursday, June 25, 2009

Why Bernie Madoff won't get a record white-collar sentence

In this posta few weeks ago, I put forward a "bleg from a Forbes reporter seeking to "compile a list of longest federal sentences for white-collar criminals, specifically financial criminals."  The product of the reporter's efforts now appears in this effective piece, headlined "It Could Have Been Worse For Madoff : Bernie Madoff may have committed the biggest white-collar crime, but he won't get the longest white-collar sentence."  Here is how the piece starts:

Bernard Madoff may have confessed to the largest investment fraud in history, but that doesn't mean he'll get the longest white-collar sentence when he faces a federal judge on June 29.

Madoff, 71, confessed to running a $65 billion ponzi scheme that spanned decades and affected thousands of investors. He faces a statutory maximum of 150 years for the 11 counts to which he pleaded guilty in March.  If Judge Denny Chin decides to hand down all that time, it would still be only the fourth-longest sentence handed down in recent years to a white-collar defendant, according to an analysis by Forbes.

In any case, Madoff will almost certainly die in prison.  So will Sholman Weiss, currently serving the longest federal sentence for a white-collar crime.  In 2000 a Florida judge sent him away for 845 years for the $450 million collapse of National Heritage Life Insurance.  Weiss was convicted and sentenced after he fled the U.S. for Austria.  Later apprehended and returned, he's currently housed in a federal prison outside Scranton, Pa.  The Bureau of Prisons lists his release date as Nov. 23, 2754.

June 25, 2009 in White-collar sentencing | Permalink | Comments (1) | TrackBack

Wednesday, June 24, 2009

Notable upward variance for white-collar offender

This local federal sentencing story from Massachusetts, which is headlined "Judge throws the book at Cape church swindler," highlights that judges are sometimes eager to bring down the sentencing hammer on certain white-collar criminals:

A federal judge yesterday sentenced a Harwich Port man to 15 years in prison for stealing $14 million from the Natick company where he worked and more than $600,000 from the Cape Cod church where he volunteered.  Jeffrey Windle, 42, entered the courtroom wearing brown and tan prison clothes. During the sentencing he looked down.

"While this is not literally a career offender, it has some marks of it," said U.S. District Court Judge George O'Toole in explaining his decision to sentence Windle to one year more in prison than prosecutors requested and 2½ years more than the maximum called for under sentencing guidelines. O'Toole also ordered Windle to pay back all the money he had taken.

Windle was arrested more than a year ago after officials at Cambium Learning Inc. in Natick discovered he had embezzled millions of dollars from the company's accounts. Windle had worked for the previous four years as director of budget and finance at the company, which specializes in educational materials for special-needs students.

Once the FBI began an investigation, officials at the Congregational Church of South Dennis where Windle volunteered as treasurer found money missing from church accounts. Windle took $647,0000 from the church and funneled money from Cambium to his personal bank accounts through the congregation's accounts, according to prosecutors.

He used the money to buy a $1.9 million house in Harwich Port and two million-dollar homes in Florida. He also bought luxury cars and boats. In March Windle pleaded guilty to 24 counts of mail fraud, wire fraud, money laundering and tax evasion.

Windle's family, Cambium officials and church members looked on yesterday as he was sentenced. "I took from them something that probably will affect them the rest of their lives; trust, trust in a friend," Windle told the judge. At one point during his statement Windle broke into tears, saying that he hoped the people he betrayed would someday "know how truly sorry I am."

The small Cape congregation has struggled financially and emotionally since Windle's crimes were uncovered, according to victim impact statements read in court yesterday....

In pleading for leniency Windle's Boston-based attorney, John Moscardelli, said his client had repeatedly expressed shame and embarrassment. Insecurities and low self-esteem that may stem from Windle's relationship with his father could have played a role in his actions, Moscardelli said.

Windle admitted to using the stolen money to buy cars that he had never driven, the accumulation of material goods being his client's only means of proving he was successful in his own mind, Moscardelli said....

Prosecutors painted a very different picture of the man. "He was like basically a one-man crime wave," Justice Department attorney Carmen Ortiz said. Windle stole from the church the "minute he started working there," Ortiz said. "He used that money to aggrandize his life." Windle not only failed to report taxes, he filed false returns claiming donations he never made, she said.

It is stories like this one that makes me think that Bernie Madoff's request for only a 12-year prison sentence will be an awfully hard sell.  Like Madoff, this defendant Windle pleaded guilty and apparently accepted responsibility.  But, in the face of moving victim impact statements, the judge decided a long prison term was needed.  The same is likely to be true in Madoff's case.

June 24, 2009 in White-collar sentencing | Permalink | Comments (2) | TrackBack

Tuesday, June 23, 2009

Madoff asking for a 12-year prison sentence

As detailed in this new story in the New York Law Journal, which is headlined "Madoff Lawyer Asks Judge to Ignore 'Hysteria,' Impose 12-Year Sentence," the legal team for Bernie Madoff has come up with an interesting proposed sentencing number:

If you are arguing that Bernard L. Madoff should be given a break, you work with what you have. Attempting to mitigate a maximum sentence of 150 years for a client whose name has become synonymous with greed, defense attorney Ira Lee Sorkin asked a federal judge this morning to set aside the "hysteria" generated by of the largest Ponzi scheme in history and give Mr. Madoff only 12 years in prison.

In a letter to Southern District Judge Denny Chin, Mr. Sorkin argued as a fallback that a 15-to-20 year term would accomplish the goals of the sentencing laws "without disproportionately punishing" Mr. Madoff. "We seek neither mercy nor sympathy," Mr. Sorkin said, promising that at his scheduled sentencing on Monday Mr. Madoff "will speak to the shame he has felt and to the pain he has caused."

Thanks to the folks at the NYLJ, everyone can (and should) check out the sentencing letter sent from the Madoff team to Judge Chin at this link.

Some related Madoff sentencing posts:

June 23, 2009 in White-collar sentencing | Permalink | Comments (8) | TrackBack

Monday, June 22, 2009

"Will Madoff ever leave prison alive?"

The title of this post is the headline of this new piece at CNNMoney.  Here is how the piece starts:

Convicted Ponzi scammer Bernard Madoff will probably spend the rest of his life in jail.  On June 29, Judge Denny Chin of the U.S. District Court in New York sentences the 71-year-old. The maximum sentence is 150 years in a federal prison, based on Madoff's guilty plea to 11 criminal counts, including fraud, money laundering, perjury, false filing with the Securities and Exchange Commission, and other crimes.

"[The Ponzi scheme's] effect on society was widespread," said Ken Rubinstein, asset protection lawyer with the New York firm Rubinstein & Rubinstein. "Its effect on individual victims was economically and psychologically catastrophic. I can't see how any judge would sentence him for any period that would be less than his remaining lifespan."

Victims of Madoff's scheme have appealed to Judge Chin for a sentence that would insure Madoff stands no chance of getting out. Leonard Forrest of Port St. Lucie, Fla., wrote to the judge that Madoff "deserves at best to spend the rest of his life in prison just as we will spend the rest of our lives in financial ruin and emotional and physical devastation."

Given the severity of Madoff's crimes, legal experts believe his victims will probably get their wish. Thus far, federal investigators have identified 1,341 investors in Madoff's firm, with losses exceeding $13 billion, and they're not done tallying up the damage.

In other words, the smart money is betting that the answer ot the question in this title of this post is "No."

June 22, 2009 in White-collar sentencing | Permalink | Comments (3) | TrackBack

Tuesday, June 16, 2009

New York Times complains (foolishly?) about creative writing sentence

I am intrigued and a bit troubled to see that the New York Times has this new editorial that appears to be complaining about the recent sentencing decision ordering a white-collar defendant to write a book (discussed here).  Here is most of the editorial:

We have not read the little monograph that James H. Lake, a Washington lobbyist at the time, wrote in the late-1990s.... In 1998, Mr. Lake pleaded guilty to making illegal campaign contributions.  The judge in the case, Ricardo M. Urbina of the United States District Court for the District of Columbia, ordered Mr. Lake to set down in writing his description of the criminal code that covered his crime.

Soon there will be another title in what might be called the Urbina canon.  Last week, he sentenced Dr. Andrew G. Bodnar — a former pharmaceutical executive who pleaded guilty to making a false statement to the federal government about the efforts of the company that he worked for to resolve a patent dispute — to write a book about his case as a warning to other executives.

We do see the possibility of justice in this sentence — if Dr. Bodnar hates to write.  But it feels like an invitation to insincerity.  In fact, it feels a little like asking an adolescent boy to explain, in front of his friends, why telling a lie is bad, bad, bad.

Many people in professional life believe they have a book in them.  Whether it ever gets out is usually a matter of passion, persistence and chance, not court decree.  We don’t know if there is any deterrent value in Judge Urbina’s approach (beyond deterring us from reading the product).

Given the vanity in publication, it might be better if he ordered white-collar defendants not to write books about what they did.  Now that would sting.

Though this editorial is not a robust rebuke of Judge Urbina's creative sentencing approach, it is another example of the tendency of the media and others to react too negatively to forms of punishment other than imprisonment.  The NY Times likely would not have even noticed had Dr. Bodnar been given a year in prison, and this editorial never confronts the important reality that most everyone would prefer that a parent order a boy to explain why lying is bad rather than lock that boy in a closet for days or weeks.

June 16, 2009 in Criminal Sentences Alternatives, White-collar sentencing | Permalink | Comments (8) | TrackBack

Friday, June 12, 2009

"Judge Orders Former Bristol-Myers Executive to Write Book"

The title of this post is the headline of this New York Times article discussing a creative sentencing term imposed by a federal judge on a white-collar offender.  Here are a few of the details:

On Monday, Judge Ricardo M. Urbina of the United States District Court for the District of Columbia, sentenced a former senior pharmaceutical executive to write a book. Earlier this year the executive, Dr. Andrew G. Bodnar, a former senior vice president at Bristol-Myers Squibb, had pleaded guilty to making a false statement to the federal government about the company’s efforts to resolve a patent dispute over the blood thinner Plavix.

The judge sentenced Dr. Bodnar to two years of probation during which he is to write a book about his experience connected to the case. Dr. Bodnar must also pay a $5,000 fine. Elkan Abramowitz, Dr. Bodnar’s lawyer, said he had never before heard of a case in which a judge sentenced a defendant to write a book.

But this is not the first time Judge Urbina has demanded written penance. In 1998, he sentenced a prominent Washington lobbyist to write and distribute a monograph to 2,000 lobbyists at the defendant’s own expense. The lobbyist, James H. Lake, pleaded guilty to making illegal corporate campaign contributions. Judge Urbina ordered him to pay a $150,000 fine and to write a monograph describing the criminal provisions of federal laws governing corporate campaign contributions.

In the sentencing hearing on Monday, Judge Urbina said he would like to see Dr. Bodnar write a book about the Plavix case as a cautionary tale to other executives. The case concerned accusations that Bristol-Myers had made false statements to federal investigators about the company’s attempt to resolve a patent dispute with a Canadian maker of generic drugs, Apotex.

The WSJ Law Blog has this useful follow-up post on the sentence, which is titled "Go Directly to . . . Authorship? More on Judge Urbina’s Odd Sentence" and includes an interesting Q&A with Dan Markel.

June 12, 2009 in Criminal Sentences Alternatives, Race, Class, and Gender, White-collar sentencing | Permalink | Comments (4) | TrackBack

Justice Stevens refuses to grant bail for Conrad Black

In this post at SCOTUSblog, titled "Black loses bail plea — for now," Lyle Denniston reports that "Supreme Court Justice John Paul Stevens refused on Thursday to order the release on bail of Canadian media mogul Conrad M. Black, but allowed Black’s lawyers to make a new plea for his freedom from a federal judge."  Here are more details:

Stevens’ order, containing no explanation, can be found here.  The bail issue (application 08A1063) is separate from the Supreme Court’s planned review of Black’s conviction; the Justices will hear and decide that case next Term (Black, et al., v. U.S. 08-876).

Black, if he chooses to do so, can now take the bail issue back to a federal judge who earlier had concluded that Black need not be held while his case proceeded beyond his conviction in a high-profile executive compensation case involving accusations of fraud and obstruction of justice.

That judge, District Judge Amy J. St. Eve of Chicago, denied a request by the government — while Black was awaiting sentencing — to order him detained.  He was then sentenced to a 78-month sentence, and went to prison when the Seventh Circuit Court refused further bail while he pursued an appeal to the Circuit Court.

June 12, 2009 in White-collar sentencing | Permalink | Comments (2) | TrackBack

Wednesday, June 10, 2009

Should and will Conrad Black get bail from the Supreme Court?

As detailed in posts here and here at SCOTUSblog, all the briefs are now before the Supreme Court in Conrad Black's request for bail from the Supreme Court.  Here are the basics from Lyle Denniston's most recent dispatch:

Lawyers for a Canadian newspaper magnate convicted in the U.S. in a high-profile executive compensation case made their final plea Tuesday night for his release on bail.  In a reply brief (found here) to Supreme Court Justice John Paul Stevens, attorneys for Conrad M. Black completed their arguments for his freedom so he could return to Canada.

The exchanges between Black’s counsel and the Justice Department over the bail issue have come to center primarily on the fate of his conviction on charges of obstruction of justice.  Black was also convicted on fraud counts, but the Supreme Court last month agreed to rule on the validity of that part of his conviction.

Black contends that, if the fraud counts are overturned by the Supreme Court when it rules on its case in the Term starting next October, his obstruction conviction will be undermined. The Justice Department disputed that.

In their closing filing, Black’s lawyers asked Justice Stevens to grant bail while the Supreme Court case is pending, and then refer the release issue to a federal judge to impose a bond.   Justice Stevens has the authority to act on his own, or to refer the matter to the full Court.

Black is currently in prison in Florida, having served so far 18 months of his 78-month sentence.  He is the only one reamining in prison among the former colleagues in his media empire who were convicted. Others were not given prison terms, or have been released on bail pending the Supreme Court ruling.

I think the Supreme Court should grant bail, but I fear it won't.  Anyone else have thoughts about whether the Justices should or will grant Black's request for release?

June 10, 2009 in White-collar sentencing | Permalink | Comments (5) | TrackBack

Wednesday, June 03, 2009

A "bleg" for information about crazy-long prison sentences for white-collar criminals

A Forbes reporter contacted me in her effort to "compile a list of longest federal sentences for white-collar criminals, specifically financial criminals."  I told her that I was not aware of any such list, but that I was willing to ask around via this forum. So, here is how the reporter, who can be reached via this e-link, described what she is seeking:

Looking for information/stories on long federal prison sentences given those convicted of white collar crimes, specifically financial crimes. Time frame I'm looking at is 1985 to the present. And by long, I mean way beyond normal, like 330 years for a $56 million investment scam.

June 3, 2009 in White-collar sentencing | Permalink | Comments (10) | TrackBack

Sunday, May 31, 2009

"Madoff's $lick Try"

The title of this post is the headlines of this New York Post report on Bernie Madoff's hiring of a well-known sentencing consultant.  Here are the details:

Mega-fraudster Bernard Madoff has hired a leading prison consultant to help him try to weasel out of a maximum 150-year term for his $65 billion Ponzi scheme.

"Mitigation specialist" Herbert Hoelter -- who's helped celebrity jailbirds such as Martha Stewart and Michael Vick -- got court permission to visit Madoff in the Metropolitan Correctional Center, where Bernie is awaiting sentencing on June 29.

Hoelter's Baltimore-based firm, the National Center on Institutions and Alternatives -- which has worked with Stewart and Vick -- specializes in "sentencing advocacy," including "arguments for downward departure from the sentencing guidelines."

May 31, 2009 in White-collar sentencing | Permalink | Comments (4) | TrackBack

Friday, May 29, 2009

Conrad Black appeals to Justice Stevens for bail pending SCOTUS ruling

In this post last week on right after the Supreme Court granted cert on Conrad Black's criminal appeal, I asked "Should Conrad Black (and Jeff Skilling and others) be set free pending SCOTUS action?".  My query prompted a spirited debate in the comments, and now it may prompt a spirited debate in Justice Stevens' chambers.  This new AP article explains why:

Former media executive Conrad Black is seeking his release from prison, at least until the Supreme Court decides whether to uphold his fraud conviction.

Black has served nearly 15 months of a 6 1/2-year prison term following his conviction in July 2007. In early May, the high court agreed to hear an appeal from Black and two other former executives of the Hollinger International media company who were convicted in connection with payments of $5.5 million they received from a Hollinger subsidiary.

The court probably won't hear arguments until late this year and a decision is unlikely before late winter. In the meantime, the judge who presided over the trial has said one of the men, John Boultbee, can be released on bond. 

The government did not oppose Boultbee's release, said Miguel Estrada, Black's Washington-based lawyer.  But it "steadfastly refuses to consent to bail for Mr. Black," Estrada said in a court filing he directed to Justice John Paul Stevens.  Stevens handles matters that come to the court from Illinois.

May 29, 2009 in White-collar sentencing | Permalink | Comments (2) | TrackBack

Tuesday, May 19, 2009

Should Conrad Black (and Jeff Skilling and others) be set free pending SCOTUS action?

Though the Supreme Court's cert grant yesterday in the criminal appeal of media mogul Conrad Black raises mostly white-collar substantive criminal law issues (as noted by bloggers here and here), I am wondering if and how this should impact the quasi-sentencing issue of bail pending appeal. 

As noted here, Black was denied bail pending appeal by the Seventh Circuit last year and has now served more that a year in prison.  Though the SCOTUS cert grant does not ensure Black's convictions will be reversed, it does greatly increase the chances he could be freed eventually.  However, given the standard (slow) pace of SCOTUS action, Black's case won't be argued to SCOTUS until the fall and a ruling seems unlikely before 2010.  In light of the cert grant, it seem to me that Conrad Black now has a much stronger argument that he should be able to be free rather than locked up while his (suspect?) convictions are reviewed.

Moreover, as detailed in this Houston Chronicle article, the fate of at least one other high-profile white-collar defendant also could be impacted by the now-pending Black SCOTUS case:

The U.S. Supreme Court’s decision today to hear the appeal of former media mogul Conrad Black could bode well for imprisoned former Enron CEO Jeff Skilling. “Skilling’s crossing his fingers,” said Wayne State University Law School professor Peter Henning, who is familiar with both cases. “This is Skilling’s best hope.”

Last week Skilling appealed to the high court clear up questions about a prosecution theory of guilt that backfired in other Enron-related cases, but was embraced by appellate judges in his case. The Black case ... involves the same theory, so the outcome of his appeal likely means the 5th U.S. Circuit Court of Appeals panel that affirmed Skilling’s 19 convictions will have to take another look....

“In effect, he’s in a bit of limbo now,” Henning said. “Regardless of what happens in Black, his case will get remanded for reconsideration to the 5th Circuit.” Skilling’s case still has a chance to be heard by the Supreme Court, but Henning said it’s unlikely after a case involving such similar issues has been accepted.

Daniel Petrocelli, Skilling’s lead lawyer, today called the Black case’s acceptance for review “a very significant development, and not just for Jeff Skilling’s case, but frankly for our entire justice system.”

Does Skilling likewise now have a much stronger argument for release pending appeal, especially given that it could likely be a full two years before SCOTUS decides Black and then the Fifth Circuit decides what the Black ruling might mean for Skilling's case?  And are there lots of other similarly situated white-collar defendants serving time for honest services fraud that should now be going back to lower courts citing the Black cert grant to try to get back home while appeals are on-going?

May 19, 2009 in White-collar sentencing | Permalink | Comments (13) | TrackBack

Monday, May 11, 2009

Bail and sentencing issues take center stage in Dreier case

This New York Law Journal article, headlined "Guilty Plea Expected, but Dreier Seeks to Stay Free a Little Longer," details how another high-profile white-collar prosecution is about to become a case about bail and sentencing.  Here are the details:

Disgraced attorney Marc S. Dreier will journey this afternoon from midtown Manhattan to a downtown federal courthouse, where he is expected to plead guilty to peddling fictitious notes to investors.

It is uncertain whether Dreier will be allowed to return to his penthouse apartment at 151 E. 58th St. before imposition of what will surely be a lengthy prison term.  But the principal job of defense lawyer Gerald Shargel will be to keep his client out of jail for as long as possible.

Starting with the December arrest of the former head of now-defunct, 250-attorney Dreier LLP, Shargel waged an extended battle with Assistant U.S. Attorney Jonathan Streeter to have his client released from pretrial detention, eventually prevailing when Southern District of New York Judge Jed S. Rakoff ruled Feb. 5 that Dreier could be confined to his apartment under guard pending resolution of the case. 

"We're going to have an issue about bail pending sentencing because the government is seeking to have him remanded and I'm trying to keep him out," Shargel said Friday.  The problem for Shargel, who met with his client at his apartment on Thursday to prepare for today's hearing, is that, once Dreier pleads guilty, the burden shifts to the defense on the question of remand....

At the hearing scheduled for 5 pm today before Rakoff, Dreier is expected to admit to every count in an indictment charging him with selling fictitious notes to at least 13 different funds and three individuals between 2004 and 2008: money laundering, conspiracy to commit securities and wire fraud, one substantive count of securities fraud and five substantive counts of wire fraud.

Dreier, 58, faces a sentence of 20 years in prison on each of the most serious charges against him, but Shargel's hope is for a sentence that leaves open the possibility that he will get out of prison before the end of his life.   In a recent proceeding, Shargel stressed to Judge Rakoff that his client was prepared to accept full responsibility for his actions, a fact that could be considered in his favor at sentencing.

Shargel would not comment on sentencing issues Friday. But with a client who was caught red-handed, the veteran defense attorney has indicated from the outset that the case would be resolved short of trial with a guilty plea.  "Given the facts and circumstances of the case, I thought both the public and the people involved in the matter had every right to know what our position was," Shargel said Friday.

May 11, 2009 in White-collar sentencing | Permalink | Comments (0) | TrackBack

Friday, May 01, 2009

Former GC for Gen Re gets relatively short prison sentence

This article from The National Law Journal, which is headlined "Former Assistant GC Sentenced in General Re Fraud Case," reports on a notable white-collar sentencing that took place yesterday.  Here are excerpts:

The former assistant general counsel of General Re Corp., Robert Graham, was sentenced Thursday to one year and one day in federal prison in a financial fraud case closely watched by in-house counsel nationwide.

Graham, 61, was found guilty last year of conspiracy, securities fraud, mail fraud and making false statements to the U.S. Securities and Exchange Commission. As part of his sentence, he was ordered to pay a $100,000 fine. He had faced a maximum sentence of up to 210 years in prison.

"Certainly, that kind of sentence seems more in line with a liability for a corporate failure than hundreds of years in prison," said Susan Hackett, general counsel for the Association of Corporate Counsel, of the sentence that Graham actually received.

Graham, who was senior vice president and assistant GC at Stamford, Conn.-based General Re from 1986 to 2005, will remain free on bond pending his appeal of his convictions. His lawyer, Alan Vinegrad, had sought a period of home confinement and community service....

The charges against Graham, who was senior vice president and assistant general counsel of Gen Re, were part of a 16-count indictment involving four other defendants at Gen Re and American International Group Inc.

This ABA Journal piece indicates that prosecutors were asking for a sentence of 230 years for Graham, but that does not sound quite right.  Still, I do think the prosecutors were seeking a much longer term and that Graham was the beneficiary of a significant downward variance.

May 1, 2009 in White-collar sentencing | Permalink | Comments (3) | TrackBack

Tuesday, April 28, 2009

What kind of plea deal might be in the works for Dreier?

This new article from the New York Law Journal, headlined "Dreier to Plead Guilty to All Charges, Attorney Says," reports on a high-profile white-collar prosecution that now appears headed toward a high-profile white-collar sentencing.  Here are details from the article:

Marc S. Dreier intends to plead guilty on May 11 to every count in the indictment charging him with stealing hundreds of millions of dollars from hedge funds and individuals, his attorney said Monday.

Defense attorney Gerald L. Shargel told Southern District of New York Judge Jed S. Rakoff that his client will plead to one count of conspiracy to commit securities fraud and wire fraud, one count of securities fraud, five counts of wire fraud and one count of money laundering.  Each count carries a potential sentence of 20 years in prison except for the conspiracy count, which carries a five-year term....

Dreier, the founder and sole equity partner of the now defunct 250-attorney Dreier LLP, had been widely expected to plead guilty to some or all of the charges he faces in connection with a scheme in which he peddled more than $700 million in phony real estate and pension fund notes. To keep his scheme going, he paid back approximately $300 million to people who bought the bogus notes.  He is charged with selling notes to at least 13 different funds and three individuals between 2004 and 2008, with the purchase price wired to an attorney trust fund maintained by his firm....

Dreier, who was present at Monday's hearing, is effectively asking for the mercy of the court in deciding to plead guilty.  Asked after the hearing why Dreier wanted to plead guilty instead of going to trial, Shargel said,  "He wants to end it because he accepts responsibility for what he did."  Shargel also said Dreier has accomplished much in his life, but he "simply went off the tracks ... . I'm sure no one will ever know why he did what he did."

In addition to accepting responsibility, Dreier surely would also like to avoid spending the rest of his life in federal prison and a plea deal was likely the only way to minimize his risk of never being a free man again.  The question now, however, is how good a deal has he managed to secure.  Judge Rakoff has a sentencing history that should make the defense team hopeful, but Dreier's crimes may make it hard for either prosecutors or the sentencing judge to show him too much mercy come sentencing.

April 28, 2009 in White-collar sentencing | Permalink | Comments (1) | TrackBack

Thursday, April 23, 2009

Flawed HLR note on federal white-collar sentencing

The April 2009 issue of the Harvard Law Review includes this student Note focused on federal white-collar sentencing, titled "Go Directly to Jail: White Collar Sentencing After the Sarbanes-Oxley Act."  Here is how the note's conclusion starts:

If the purpose of the WCCPA was to deter white collar crime, the statute’s harsh penalties have not achieved their goal.  Moreover, by introducing the potential for enormously disparate sentences for precisely the same crime, the WCCPA detracts from just punishment.  This Note has proposed merely one way of reforming the sentencing process, in hopes that sentencing will become more consistent and predictable across judges and jurisdictions.

Though the note does a reasonable job of documenting some of the challenges and problems with modern white-collar federal sentencing, there is a telling lack of sophistication in much of the analysis.  This lack of sophistication is most clear from a fundamental flaw in the Note's call for reform: "Congress or the United States Sentencing Commission must take steps to stabilize and rationalize the white collar sentencing system [and this] Note proposes that the best way to achieve this goal would be to tie Guidelines sentencing levels to actual loss, rather than intended loss...." 

As all informed white-collar practitioners know, the federal guidelines have always tied "sentencing levels to actual loss" though USSG 2B1.1, and "intended loss" enters the picture only if and when the intended loss is greater than actual loss.  Moreover, most modern white-collar sentencing decisions that have garnered lots of attention (e.g., Olis and Adelson and Parris) involve cases in which the the actual loss calculation produced a sentencing range that seemed much too high in light of the defendant's true culpability.

Anyone eager for a much more accurate and more sophisticated examination of federal white-collar sentencing must get the Federal Sentencing Reporter's February 2008 issue on this topic (available here, described in detail here and here).  On the precise topic of loss, the FSR issue includes these terrific articles:

The fact that the Harvard Law Review could publish a note that incorporates such a fundamental flaw provides yet another sobering reminder of the extraordinarily poor instruction at at least one elite law school concerning the basics of federal sentencing law.

April 23, 2009 in White-collar sentencing | Permalink | Comments (26) | TrackBack

Monday, April 13, 2009

Split Tenth Circuit panel denies denies Nacchio bail pending cert.

Howard Bashman has linked here the news reports and the short opinion coming from the Tenth Circuit on the issue of whether the former Qwest CEO Joseph Nacchio should get bail pending his attempt to get cert to review his white-collar conviction.  Here is the line that jumps out from the Tenth Circuit's disposition: "Mr. Nacchio has not shown that there is a reasonable chance that the Supreme Court will grant his petition." 

I suppose, as this request for bail goes up to the Justices (see AP report here and SCOTUSblog report here), the Court itself will have an opportunity to confirm or rebuff this significant cert prediction from the Tenth Circuit panel.

Some related posts:

April 13, 2009 in White-collar sentencing | Permalink | Comments (4) | TrackBack

Thursday, April 02, 2009

Good timing for a message-sending tax fraud sentence!?!

As detailed in this AP article, a federal district judge "saying he wanted to send a message to "quick-buck artists," handed down stiff sentences Wednesday to two former executives and a lawyer with accounting firm KPMG for helping rich people evade more than a billion dollars in taxes."  Here are more details:

U.S. District Judge Lewis Kaplan sentenced former KPMG executive John Larson to more than 10 years in prison; a fellow executive, Robert Pfaff, received more than eight years. 

The judge said Larson, 57, and Pfaff, 58, were "centrally involved" in the brazen tax shelter scheme "that didn't pass the smell test from Day 1." He gave lawyer Raymond Ruble, 63, a term of 6 1/2 years in prison.  The judge said he hoped the sentences "will say to quick-buck artists, 'Not so fast.'"

The men were convicted in December of multiple counts of tax evasion.  The government alleged they used tax shelters marketed by KPMG LLP to help wealthy clients make it appear they sustained large tax-deductible losses by getting loans for business ventures when they had not.

I do not know if this sentencing was consciously scheduled to come only two weeks before federal income taxes are due, but it does seem like an especially good time to send a message to would-be tax cheats.

April 2, 2009 in White-collar sentencing | Permalink | Comments (1) | TrackBack

Monday, March 23, 2009

"Disparities Seen in Federal Securities Fraud Sentences"

The title of this post is the title of this piece from last Friday's New York Law Journal by Steven Feldman discussing federal sentencing developments in a notable white-collar setting.  Here are snippets:

Greater uncertainty reigns now that the guidelines are advisory. Because anecdotal evidence indicates that district courts are now more frequently imposing sentences below the guidelines range, it falls to practitioners to look for patterns in what appears to be a fairly random imposition of below-guidelines sentences. Recognizing these patterns is critical because having a sense of a likely sentence plays an important role in the decision of whether to go to trial or plead guilty. Several trends appear in recent securities fraud cases:

• Defendants convicted after trial are more likely to receive sentences within the guidelines range.

• Defendants who plead guilty well before trial are more often receiving sentences below the guidelines range, meaning that they receive much greater "credit" for accepting responsibility than the three-level reduction provided by U.S.S.G. §3E1.1.

• The disparities between the sentences for those who go to trial and are convicted, and those who plead guilty to the same conduct, have increased.

• The X-factor is the judge. Because the assignment wheel is random, one cannot control what judge will be assigned to a case. But knowing the court and its tendencies helps in prognosticating what sentence awaits post-trial or post-plea.

March 23, 2009 in White-collar sentencing | Permalink | Comments (0) | TrackBack

Wednesday, March 11, 2009

"Where's the Bone for Bernie Madoff?"

The title of this post is the title of this query by Jeralyn at TalkLeft.  The question reflects my own reaction when I hear that Madoff will be pleading guilty without the benefit of a plea agreement.  Here is part of Jeralyn's analysis:

[Madoff's lawyers have indicated he will plead] straight up to all 11 counts against him and receives no sentencing concession, no promises about non-prosecution of family members and no agreement that the Government's continuing investigation won't affect his wife and other family members' assets.

He's 70 years old. Even if he gets a 25 year sentence with good time, he's likely to die in prison. He's not going to a minimum security camp. So why is he pleading guilty? Are there secret agreements we don't know about?...

[W]ho agrees to start a life sentence at 70, when you can have another year or two at your luxurious Park Avenue abode in the company of your spouse and family, while awaiting trial?

It's not like the Government could give him any more time if he went to trial and lost.  What was he afraid of?  That he'd be sentenced to life plus cancer?

I don't get it.  I know he has smart, expensive, white collar lawyers, but who pleads a client to life in prison without a plea agreement, without concessions to family regarding their retention of assets or an agreement not to prosecute them?

I've uploaded the documents for those who want to read them:

There's got to be a bone for Bernie in here somewhere, but right now, I'm not seeing it.

Among the comments at TalkLeft are suggestions that, had Madoff done to trial or even forced the prosecution to start going forward more formally, more details of the fraud would have emerged to show that family and others were deeply involved in his fraudulent actions.  That theory makes sense to me, though I still find the lack of any kind of formal plea agreement to be surprising and notable in this case.

Some related Madoff posts:

March 11, 2009 in White-collar sentencing | Permalink | Comments (6) | TrackBack

Tuesday, March 10, 2009

Basic Madoff plea details emerging

As now reported by all the major media outlets, the specifics of the charges and expected plea in the financial frauds committed by Bernie Madoff are coming into focus.  This Bloomberg story has many of the latest particulars:

Bernard Madoff, the New York money manager accused of leading the largest Ponzi scheme in U.S. history, will plead guilty later this week to 11 criminal charges, his lawyer told a federal judge.

Madoff, 70, will admit he directed a fraud that prosecutors alleged began in the 1980s. By last November, Madoff told 4,800 investors their accounts held $64.8 billion, according to court papers filed in Manhattan federal court. Prosecutors will seek forfeiture from Madoff of as much as $170 billion. Madoff, free on $10 million bail, faces 150 years in prison.

“There is no plea agreement,” Assistant U.S. Attorney Marc Litt said at hearing today before U.S. District Judge Denny Chin.... “The filing of these charges does not end the matter,” said Acting Manhattan U.S. Attorney Lev Dassin. “Our investigation is continuing.”...

“The charges reflect an extraordinary array of crimes committed by Bernard Madoff for over 20 years,” Dassin said in a statement. “The size and scope of Mr. Madoff’s fraud are unprecedented.”

Over at TalkLeft, Jeralyn in this post has an effective assessment of all the latest news.  Here is her summary take-away: 

My prediction: Madoff will go to jail Thursday, never to be released again.  And, no matter how much money the government forfeits, not every victim will be made whole.

March 10, 2009 in White-collar sentencing | Permalink | Comments (2) | TrackBack

Running the federal sentencing guideline numbers for Bernie Madoff

MadoffGraphic031009 The recent legal developments in the prosecution of Bernie Madoff (details here) have lots of folks buzzing about not just his expected guilty plea, but also his possible federal sentence.  Helpfully, today's Boston Herald has this new article that, as this graphic shows, runs through the basic guideline calculations for Bernie Madoff based on what we all think we know about his big-time financial fraud.  Here are excerpts from the article:

It’s the one “big score” that Bernard Madoff probably wishes he wasn’t about to make. Experts say Madoff, who’s expected to plead guilty Thursday to running a $50 billion Ponzi scheme, rates about 52 points on a scale federal judges use when setting sentences. The bad news for Madoff: Anything over 42 usually translates into life behind bars.

“This guy is going to jail for the rest of his life - the only question is whether he goes in now or goes in later,” Boston white-collar defense lawyer Tom Hoopes said.... Even if Madoff helps investigators unravel the case and go after any accomplices, Hoopes believes a judge won’t cut the man’s score by more than 25 percent. That would still leave 39 points, or enough for the 70-year-old Madoff to get at least 22 years behind bars....

Defense lawyer Willis Riccio thinks Madoff will get about 15 years, but “that’s a life sentence in the sense that Madoff might not live out his term.” However, alleged victim George Christin fears Madoff will serve as little as five years. “He probably set things up so the SEC can’t figure anything out without his input,” said the Bedford man, whose family lost $2.5 million. “Madoff will use that as leverage to get way less than life in prison.”

Besides, Christin, a 60-year-old special-education teacher who’s scrapped plans to retire at 65, doesn’t even see a life sentence as punishment enough. “There’s no way the scales will ever be balanced,” he said. “For justice to be done, they’d have to make that man live in the slums of Calcutta and eat garbage for the rest of his life.”

Some related Madoff posts:

March 10, 2009 in White-collar sentencing | Permalink | Comments (4) | TrackBack

Saturday, March 07, 2009

A victim's perspective on a possible plea deal for Bernie Madoff

This ABC News article provide an effective victim-centered perspective on the developing new that Bernie Madoff may be nearing a plea deal in his prosecution for his record-setting frauds.  The piece is headlined " Calling All Victims: Madoff Expected to Plead Guilty; Criminal Case of the $50 Billion Fraudster Nearing Conclusion," and here are some notable excerpts:

In the government's clearest statement yet that a deal in the criminal case of Bernard Madoff is close to being made, a victims' rights motion was filed Friday evening by the U.S. attorney in the case that indicates Madoff will appear next Thursday in a plea proceeding.

U.S. District Court Judge Denny Chin signed an order granting a request that the thousands of victims of the alleged Ponzi scheme will receive online notification of the court proceedings. They will have to periodically check a special web site set up for the criminal case proceedings.

Any victim who wishes to be heard in Thursday's proceeding will need to notify the government by Wednesday March 11th at 10:00 a.m. The internet address for victims to contact is:

It was reveleaed Friday that federal prosecutors have apparently reached a plea deal with the accused con man, in which he will admit to his role in the biggest financial crime in American history. The deal does not specify how much time Madoff would spend in prison, nor does it exclude the prosecution of Madoff's family or former associates, lawyers familiar with case said.

One former federal prosecutor says he doubts the deal will go easy on Madoff and that the disgraced financier will be spending a long time behind bars. "I doubt very seriously whether there would be any concession by the government as to jail time or diminished jail time for Mr. Madoff," said Sean O'Shea. "Given the sentencing guidelines in a fraud of this type, I think you're looking at a man who is 70 years old, I think you're looking at the rest of his natural life."...

Madoff's investors are not happy to hear the he may cut a deal. 92-year old Zsa Zsa Gabor is one of them. Her husband Prince Frederick Von Anhalt said the couple lost their $10 million life savings to Madoff.

"It's not enough" for Madoff to just plead guilty and go to jail, Von Anhalt told ABC News. "That's what he wants, he wants to go to jail, his life is over. He wants to protect his family, his wife, his children." Von Anhalt also wants to see Madoff's wife, Ruth, and his sons arrested and put in jail. "What nerve she has, to say that she wants to keep all that money. That's our money! Screw her!"

For more details on the possible plea deal, Mark Hamblett at the New York Law Journal has this article, headlined "Madoff Waives Indictment, Set to Plead Guilty."

March 7, 2009 in Celebrity sentencings, Victims' Rights At Sentencing, White-collar sentencing | Permalink | Comments (2) | TrackBack

Thursday, March 05, 2009

Should Joe Nacchio remain free on bail pending SCOTUS appeal?

This Denver Post article details that former Qwest CEO has been ordered to start serving his prison sentence later this month:

Former Qwest chief executive Joe Nacchio has been ordered to report to a Pennsylvania correctional facility on March 23 to begin serving a six-year prison term for illegal insider trading.

Nacchio has been assigned to a minimum-security satellite camp at Schuylkill Federal Correctional Institution in Minersville, Pa., 46 miles north of Harrisburg. Nacchio, a New Jersey resident, has to report to the warden by noon on March 23, according to an order entered today in Denver federal court by U.S. District Judge Marcia Krieger. "Travel will be at his own expense," the order states.

Last week, the 10th Circuit Court of Appeals reinstated Nacchio's conviction and revoked his bail in a 5-4 decision. A three-judge appeals panel had reversed the conviction, ruling that the trial judge wrongly excluded expert testimony from a defense witness.

Though I am not an expert on bail pending appeal issues, the fact that a Tenth Circuit panel originally reversed his conviction leads me to think Nacchio could make a solid case for remaining out while he pursues his claims in the Supreme Court.  But, since the en banc Tenth Circuit ruling seemed to demand that Nacchio get started with his prison term, it apparently is going to be up to the Justices to decide whether this notable white-collar defendant will be in prison or still on bail in a few weeks.

UPDATE:  At this post, How Appealing has coverage of, and links to, Joe Nacchio's bail application to the Tenth Circuit.

March 5, 2009 in White-collar sentencing | Permalink | Comments (4) | TrackBack