Wednesday, September 19, 2012
"Optronics Sentencing Could Break All Sorts of Antitrust Records"The title of this post is the headline of this new Wall Street Journal article, which gets started this way:
A San Francisco federal courtroom on Thursday could be home to a watershed moment in the history of U.S. antitrust law.
U.S. District Judge Susan Illston is scheduled to sentence Taiwan’s AU Optronics Corp. on its March conviction for participating in a scheme to fix prices on liquid-crystal-display panels. The Justice Department is asking her to impose a $1 billion fine. Yes, that’s billion, with a B.
“This sentencing is one of the most important antitrust events in recent history,” says Allen & Overy partner John Terzaken, a former director of criminal enforcement in the department’s Antitrust Division.
The sentencing hearing is a rare event for several reasons and not all have to do with the financial stakes. But let’s start with the money. The fine sought by the government is twice the size of the largest single fine it has ever collected in an antitrust case — $500 million against F. Hoffmann-La Roche Ltd in 1999, which pleaded guilty to leading a price-fixing cartel on vitamins.
The $1 billion request also is nearly double the amount the Justice Department obtained in total criminal antitrust fines — in all cases — during the last fiscal year. It’s also more than the $890 million in combined criminal fines that seven Asian companies have agreed to pay in the LCD investigation, which dates back to 2008.
Of course, those seven companies, including LG Display Co. and Sharp Corp., agreed to plead guilty. AU Optronics chose to fight the charges at trial, a decision companies rarely make because the potential criminal fines imposed after a conviction can be very high. The AU Optronics jury found the LCD conspiracy resulted in ill-gotten gains of more than $500 million, a finding that allowed the Justice Department to seek the $1 billion fine.
Also of note in Thursday’s hearing, the department is seeking stiff sentences for two convicted company executives, asking Judge Illston to impose 10-year prison terms. That’s far beyond the longest jail sentence the department ever has obtained for a Sherman Act violation: four years.
Lawyers for the two executives say there’s no justification for the lengthy sentences the department is seeking, especially because LCD executives who pleaded guilty have received sentences of 14 months or less.
This sentencing matter could bring new meaning (and a notable price-tag) to the term "trial penalty" for both the company and its executives.
UPDATE: This AP story reports on the sentencing outcome handed down by the sentencing judge on Sept. 20: "A Taiwanese company has been fined $500 million and two of its former top executives sentenced to three years in prison for their leading roles in a global LCD screen price-fixing conspiracy."
Monday, August 20, 2012
Another notable insider trading prosecution now moves to sentencing
White-collar sentencing fans now have another notable case to follow in the wake of the news this morning reported in this New York Times article, which is headlined "Hedge Fund Manager Found Guilty of Insider Trading." Here are the basics:
After less than a day of deliberations, a federal jury found Doug Whitman of Whitman Capital in Menlo Park, Calif., guilty of earning about $1 million in illegal profits trading technology stocks, including Google and Polycom. Mr. Whitman faces a maximum possible sentence of 25 years in prison. His sentencing is set for Dec. 20....
Of the nearly 70 Wall Street traders and corporate executives charged with insider trading by federal prosecutors in Manhattan over the last three years, virtually all have either pleaded guilty or been found guilty. Juries in Federal District Court in Manhattan have convicted all eight defendants who have taken their cases to trial.
Mr. Whitman, 54, fought the charges, arguing that all of his trades were made in good faith and grounded in legitimate stock research. The defense was similar to the one used by Raj Rajaratnam, the former hedge fund billionaire convicted by a jury last year. Mr. Rajaratnam was at the center of an vast insider trading web that ensnared Mr. Whitman.
Prosecutors in Mr. Whitman’s case relied on the testimony of several main cooperating witnesses, including Roomy Khan, a former trader who was also at the center of Mr. Rajaratnam’s trial. Jurors also heard secretly recorded telephone conversations that prosecutors said showed Mr. Whitman trafficking in confidential information.
In a rare tactic for an insider trading defendant, Mr. Whitman took the stand in his own defense. He testified that he never thought his sources possessed any secret information about the stocks that he traded.
Especially because all the recent insider trading convictions appear to be coming out of the same federal district (SDNY), I think an enterprising sentencing researcher could discover a lot of interesting stories by analyzing in depth the ultimate sentences imposed on the "nearly 70 Wall Street traders and corporate executives charged with insider trading by federal prosecutors in Manhattan over the last three years [who] have either pleaded guilty or been found guilty." I would be especially interested to see what recommended guideline ranges and ultimate sentences were imposed for all the different defendants (and whether and how different offense or offender factors may explain any apparent sentencing disparities).
Friday, August 03, 2012
"Former Gov. Don Siegelman sentenced to 78 months in prison"
The title of this post is the headline of this local article reporting on a former Alabama Governor's resentencing outcome this afternoon in federal district court. Here are the basics:
A federal judge sentenced former Gov. Don Siegelman to 78 months in prison. U.S. District Judge Mark Fuller handed down the sentence -- 10 months less than what he originally gave Siegelman -- after hearing emotional statements by Siegelman in Montgomery federal court.
Before sentence was passed, Siegelman, his voice cracking, told Fuller that he was sorry for his actions and the embarrassment and disappointment he has caused. "I do have deep regrets and remorse for my actions," Siegelman said at his sentencing hearing this afternoon.
Siegelman, said he wanted to apologize to the judge, his family and to the people of Alabama. "I'd like to apologize to the people of Alabama for the embarrassment my actions have caused," Siegelman said. Siegelman, 66, stood before the same federal judge that sentenced him to more than seven years in prison in 2007, and pleaded for mercy....
A federal jury in 2006 convicted Siegelman of federal funds bribery on allegations that he sold a seat on a hospital regulatory board to former HealthSouth CEO Richard Scrushy in exchange for $500,000 in donations to Siegelman's 1999 referendum campaign to establish a state lottery.
Siegelman served nine months of an 88-month sentence before being released in March 2008 on an appeal bond. A federal appeals court tossed out two of the charges against him, which prompted today's resentencing. Siegelman's lawyers had asked for time served plus community service or a lengthy probation. Prosecutors asked that Siegelman be given 88 months again.
Fuller said he acknowledged Siegelman had good things for the state, but he simply could not give a person who solicited a bribe less prison time than the person who paid it. Scrushy was sentenced to almost seven years in prison although Fuller later cut that by a year.
Fuller said he had no animosity toward Siegelman but noted that today was the first time he heard Siegelman say he respected the system. "Governor Siegelman it has been a long seven years, good luck to you, sir," Fuller said.
Tuesday, July 31, 2012
High-profile Cleveland corruption case culminates with 28-year prison term for Jimmy Dimora
As reported in this local article, headlined "Jimmy Dimora sentenced to 28 years in prison, defense attorney calls it a 'death sentence'," a very high-profile federal criminal corruption case involving Cleveland politicians concluded with a very long sentence handed down this afternoon. Here is how the local article begins:
U.S. District Judge Sara Lioi handed down a 28-year sentence to former county Commissioner Jimmy Dimora, who was convicted in March of racketeering and 32 other bribery- and corruption-related crimes.
Afterward, Stephen D. Anthony, Special Agent in Charge of the Cleveland FBI said: "There are lots of reasons to be positive and optimistic going forward. It is our hope this case will give pause to any individual who considers violating the public trust."
Dimora, 57, gave an emotional brief statement in court today, denying any wrongdoing or that he bilked Cuyahoga County taxpayers. Wiping tears from his face, Dimora also asked Judge Sara Lioi to not separate him from his family because of his health.
His attorney, William Whitaker, said Dimora's statement to the court was true and accurate -- that he never traded his votes for anything. He said his defense has raised a number of issues, including Dimora's ability to get a fair trial. They will appeal those issues, as well as the 28-year sentence, which he called "grossly unfair." Whitaker called Lioi's ruling a "death sentence."
Dimora would be 85 years old if he were to complete the 28-year prison sentence. His attorneys requested he be sentenced to prison in Buckner, N.C., because of its health facilities for prisoners. Lioi said she would recommend it.
While using his walker as he was escorted from the courtroom, Dimora said to prosecutors, "I hope you guys are happy."
Before she handed down the sentence, Lioi said Dimora abused his power as a politician. “The reach of his corruption was far and wide,” Lioi said. "The destruction left in its wake is incalculable."
The conduct was part of daily workings in Cuyahoga County, a pervasive pattern of corruption, she said. "In the world of Cuyahoga County corruption, they had somewhat of a symbiotic relationship," she said.
Lioi said that while Dimora did good things as mayor of Bedford Heights, his behavior become less about helping others and more about helping Jimmy Dimora. "Somewhere along the way he began using his power and authority for his own benefit."
This just-before-final-sentencing local article about the Dimora case reveals how guideline calculations and lawyer advocacy might have played a role in this sentencing judgment:
U.S. District Judge Sara Lioi said [based on her] federal sentencing guideline [calculations] that Dimora could be looking at between 292 to 365 months in prison....
Federal prosecutors have asked Lioi to put Dimora behind bars for at least 22 years for racketeering and 31 other corruption-related charges. Federal probation department officials recommended Dimora be sentenced to life in prison, while defense lawyers had asked for a much lighter, although unspecified, sentence....
Dimora's attorneys argu[ed] he should get less time due to physical condition and age. Andrea Whitaker, one of Dimora’s attorney, asked for the court to consider less of a prison sentence due to what she described as his “ailing health” conditions.
“Prison is a more severe experience for people with health conditions,” Whitaker said. "Mr. Dimora's health issues are real, they aren't imagined." Whitaker said mass behind his lungs and also suffered from an aneurysm. She also said he had other health related conditions.
Assistant U.S. Attorney Antoinette Bacon, however, said Dimora had the same health issues when he committed the crimes. “He’s only 57 years old,” Bacon said. “He is a relatively young man who has a long life ahead of him.”
Dimora is going to need to have a long life ahead of him if he will even be free again (unless he can get some kind of relief on appeal). Even if he gets full credit for good behavior, the lengthy prison term given to Dimora today means he cannot be free until at least 2036 and is in his 80s.
As an interesting point of reference, I think it is notable that Dimora's sentence is fully twice as long as the sentence given to former Illinois Governor Rod Blagojevich (basic here). Indeed, I cannot recall and am unaware of any sentence for political corruption longer than even 20 years, and thus Dimora may well have today received the longest sentence for political corruption in modern history.
Monday, July 30, 2012
Huge Iranian fraud results in death sentences
As reported in this New York Times piece, which is headlined "Iran Sentences Four to Death Over $2.6 Billion Bank Fraud," Iran has imposed a notable set of sentences in a notable fraud case. Here are the details:
In the first sentences to be handed down in a $2.6 billion embezzlement case, an Iranian court ordered the death penalty for four people in the fraud that was uncovered in a network of Iranian banks last year, Iranian state media reported on Monday.
The four, who were not named in the report by the Fars news agency, were among 39 suspects who were convicted in what the Iranian authorities have described as the biggest financial swindle in the country’s history. The top prosecutor, Gholam Hossein Mohseni-Ejei, told reporters that two of the defendants had been given life sentences, while the others were given sentences of up to 25 years....
The other suspects were not named, but have been said to include managers of bank branches, and a number of clerks who were accused of accepting bribes. Fars quoted Mr. Mohseni-Ejei as saying that the other sentences that were handed down included prison terms of 10 and 20 years, as well as lighter sentences.
Saturday, July 28, 2012
George Will assails "abuse of criminal law for capricious bullying" in whale of federal tale
George Will has this notable new commentary in the Washington Post , headlined "Blowing the whistle on the federal Leviathan," about one extreme federal prosecution. Here are excerpts:
The huge humpback whale whose friendliness precipitated a surreal seven-year — so far — federal hunt for criminality surely did not feel put upon. Nevertheless, our unhinged government, with an obsession like that of Melville’s Ahab, has crippled Nancy Black’s scientific career, cost her more than $100,000 in legal fees — so far — and might sentence her to 20 years in prison. This Kafkaesque burlesque of law enforcement began when someone whistled.
Black, 50, a marine biologist who also captains a whale-watching ship, was with some watchers in Monterey Bay in 2005 when a member of her crew whistled at the humpback that had approached her boat, hoping to entice the whale to linger. Back on land, another of her employees called the National Oceanic and Atmospheric Administration (NOAA) to ask if the whistling constituted “harassment” of a marine mammal, which is an “environmental crime.” NOAA requested a video of the episode, which Black sent after editing it slightly to highlight the whistling. NOAA found no harassment — but got her indicted for editing the tape, calling this a “material false statement” to federal investigators, which is a felony under the 1863 False Claims Act, intended to punish suppliers defrauding the government during the Civil War.
A year after this bizarre charge — that she lied about the interaction with the humpback that produced no charges — more than a dozen federal agents, led by one from NOAA, raided her home. They removed her scientific photos, business files and computers. Call this a fishing expedition. She has also been charged with the crime of feeding killer whales when she and two aides were in a dinghy observing them feeding on strips of blubber torn from their prey — a gray whale....
Never mind. This pursuit of Black seems to have become a matter of institutional momentum, an agent-driven case. Perhaps NOAA, or the Justice Department’s Environmental Crimes Section, has its version of Victor Hugo’s obsessed Inspector Javert. In any event, some of the federal government’s crime-busters seem to know little about whales — hence the “whistle-as-harassment” nonsense.
Six years ago, NOAA agents, who evidently consider the First Amendment a dispensable nuisance, told Black’s scientific colleagues not to talk to her and to inform them if they were contacted by her or her lawyers. Since then she has not spoken with one of her best friends. To finance her defense she has cashed out her life’s savings, which otherwise might have purchased a bigger boat. The government probably has spent millions. It delivered an administrative subpoena to her accountant, although no charge against her has anything to do with finances.
In 1980, federal statutes specified 3,000 criminal offenses; by 2007, 4,450. They continue to multiply. Often, as in Black’s case, they are untethered from the common-law tradition of mens rea, which holds that a crime must involve a criminal intent — a guilty mind. Legions of government lawyers inundate targets like Black with discovery demands, producing financial burdens that compel the innocent to surrender in order to survive.
The protracted and pointless tormenting of Black illustrates the thesis of Harvey Silverglate’s invaluable 2009 book, “Three Felonies a Day: How the Feds Target the Innocent.” Silverglate, a civil liberties lawyer in Boston, chillingly demonstrates how the mad proliferation of federal criminal laws — which often are too vague to give fair notice of what behavior is proscribed or prescribed — means that “our normal daily activities expose us to potential prosecution at the whim of a government official.” Such laws, which enable government zealots to accuse almost anyone of committing three felonies in a day, do not just enable government misconduct, they incite prosecutors to intimidate decent people who never had culpable intentions. And to inflict punishments without crimes.
By showing that Kafka was a realist, Black’s misfortune may improve the nation: The more Americans learn about their government’s abuse of criminal law for capricious bullying, the more likely they are to recoil in a libertarian direction and put Leviathan on a short leash.
Friday, July 20, 2012
"Insider Traders Face Longer Sentences as Judges Get Tough" (except for cooperators)
The title of this post is drawn from the headline of this Bloomberg article, which my editorial addition in parenthesis. Here are excerpts:
Inside traders have more to fear when they stand before Manhattan federal judges for sentencing. Since Jan. 1, 2011, the judges have sent the average violator to prison for more than 22 months, according to an analysis of sentencing data by Bloomberg News. That was a 20 percent increase from the average term of 18.4 months during the previous eight years.
The harsher sentences come three years into a federal crackdown on insider trading on Wall Street. Since August 2009, federal prosecutors in Manhattan have charged 71 people with insider trading and won 65 convictions, with six cases still pending. Some of those convicted, including former Goldman Sachs Group Inc. director Rajat Gupta, are awaiting sentencing.
“There are different insider-trading cases now,” Ellen Podgor, a professor at Stetson University College of Law in Gulfport, Florida, said. “You look at the individuals they’re going after now -- it’s a higher level.”
Judges in Manhattan federal court are also slightly more likely to send offenders to prison. Twenty-one of 36 defendants sentenced for insider trading since the start of 2011 -- or 58 percent -- were jailed. By comparison, 24 of the 43 defendants sentenced from 2003 through 2010, or 56 percent, lost their freedom. Of late, most of those who avoided prison cooperated with the government.
The longer terms for insider trading are consistent with lengthier terms nationally for all forms of fraud. According to U.S. Sentencing Commission statistics, the average sentence in fraud cases in fiscal 2011 rose to 23 months from 14.4 months eight years earlier, a 60 percent increase. “White-collar sentences all across the U.S. are going up,” Podgor said in a phone interview....
Cooperating with the government has kept some of those convicted out of jail. Since the start of 2011, judges have sentenced 12 defendants who admitted their guilt and agreed to provide evidence for prosecutors. Cooperators have secretly recorded their friends and colleagues, interpreted documents and worked in other ways with federal agents. Eleven of the cooperators avoided prison altogether, according to the data. One got six months.
“It’s important that cooperating witnesses do get lower sentences,” said Christopher Garcia, former chief of the securities fraud unit in the U.S. Attorney’s Office in Manhattan. “The hope of reduced sentences is a powerful tool for prosecutors in persuading and encouraging people to make cases against others.”
Anil Kumar, a former McKinsey & Co. director who testified against both Rajaratnam and Gupta, was sentenced yesterday to probation. U.S. Circuit Judge Denny Chin cited Kumar’s “extraordinary cooperation” and his effort to “make amends for what he did.”
Judges in most insider cases imposed terms less than those recommended by the Sentencing Commission’s guidelines, according to court records. Rajaratnam, facing from 19 years to 24 1/2 years under the guidelines, got 11 years behind bars. Holwell explained at sentencing that Rajaratnam was sick and had a history of doing charitable works. In another case, James Fleishman, a Primary Global executive convicted of leaking tips, got 30 months when the guidelines called for a term of 87 to 108 months. U.S. District Judge Jed Rakoff, who has been critical of the sentencing guidelines, handed down the sentence.
James Felman, a lawyer in Tampa, Florida, who serves as the American Bar Association’s liaison to the Sentencing Commission, said many judges are willing to undercut the harsh terms urged by the guidelines in white-collar cases. The U.S. Supreme Court ruled in 2005 that the guidelines were no longer mandatory. “All guideline sentences have been increasing,” Felman said in a phone interview. Of the recommended white-collar sentences, he said that “even the government is aware they’re frequently too high.”
Still, a conviction for insider trading almost always means prison time for non-cooperating defendants. Of 24 non-cooperators who pleaded guilty or were convicted at a trial during the period measured here, 20 were ordered imprisoned for an average of 33 months. The four spared played minor roles in the schemes, judges said.
Thursday, July 19, 2012
Effective review of Southern Union's impact and potential import
For various understandable reasons, the Supreme Court significant Sixth Amendment ruling in Southern Union has not gotten all that much attention. But this effective Indiana Lawyer article, headlined "US Supreme Court: Criminal fines require jury finding," provides a nice reminder of the significance of the ruling. Here are excerpts from this piece:
An end-of-term U.S. Supreme Court decision did far more than reduce a penalty in a federal criminal environmental judgment from $18 million to $50,000. It created a new reality for how the government will have to pursue such prosecutions in the future, experts say.
A rare coalition of conservative and liberal justices ruled 6-3 in Southern Union Co. v. United States, 11–94, that the Sixth Amendment right to a jury trial requires a jury to determine facts to support a sentence imposed after a guilty verdict....
“This is definitely a win for the defendants,” [Indiana University law professor Ryan] Scott told the Indiana Lawyer. “That said, the history of Apprendi is one of the Supreme Court recognizing more and more expansive jury rights and the government responding with great resilience.”
In essence, experts said, juries will have to determine factors such as lengths of violations for sentences involving fines on a “per day/per violation” basis, or losses and potential penalties in federal fraud cases. A simple guilty verdict such as that in Southern Union no longer is sufficient to allow a judge to use his or her discretion in levying criminal fines....
Southern Union seems to suggest that Apprendi may apply to any penalties inflicted by the government for the commission of offenses.... Also left for future consideration: “When does an offense rise beyond the level of ‘non-petty’ and become substantial enough to invoke the Apprendi rule?”
Scott also sees more Apprendi questions arising. The jury trial right could be a matter for the courts to decide in cases involving restitution determinations and in matters where asset forfeiture is ordered, he said.
Wednesday, July 18, 2012
Rajat Gupta hoping to get by (federal sentencing) with a little help from his friends
This new sentencing story from Fox Business, which is headlined "Gupta Seeks Help From Friends for Lenient Sentence," has me in a Beatles mood today. (This mood may also be the product of my being at Oxford in the UK and thinking about making a sojourn to Liverpool. Folks reading this post in the US can think about Joe Cocker (and check out this classic live performance) for an American version of the same musical spirit.) The story concerns a request made by a very high-profile white-collar defendant in preparation for his federal sentencing scheduled for this fall. Here are the details:
Rajat Gupta, the former Goldman Sachs board member recently convicted for providing illegal trading tips to former Galleon chief Raj Rajaratnam, has made an unusual request to former business associates and prominent acquaintances urging them to write letters of support to the judge in the case so he can receive the most lenient sentence for his crimes, the FOX Business Network has learned.
A copy of the request, obtained by FBN, even goes so far as to suggest that U.S. District Judge Jed Rakoff “would like to receive letters of support from friends and family” so the judge can “understand me as a person. This gives the judge a full idea of who I am and significantly influences the decision.”...
“I look forward to hearing from you with a positive response,” Gupta added in the request sent earlier in the month, “and thank you very much in advance.”
Gupta is scheduled to be sentenced on Oct. 18, and faces as many as 20 years in jail for securities fraud. So-called support letters of this kind have been known to prod judges to hand out more lenient sentences, though Gupta may have overplayed his hand in suggesting that Rakoff is personally requesting the letters.
The Fox Business Network has learned that Gupta sent the request to numerous people without his attorney reviewing the content. A press official for Rakoff said there has been “no active solicitation of letters” from the judge. FBN has also learned that after being alerted to the language in the request, Gupta’s attorney Gary Neftalis, reissued the correspondence removing the line implying the judge’s advocacy for the letters and simply pointing out that such letters of support delivered to the sentencing judge are “customary.”...
Columbia University law professor John Coffee said Rakoff is known to take letters of support seriously in doling out sentences, though he said Gupta’s aggressive pitch to friends and colleagues “is not going to help” in gaining leniency.
The aggressive tone of the letter underscores the difficult spot that Gupta finds himself in following the guilty verdict. The former Goldman board member, and head of the giant McKinsey & Co., was cleared of two counts during his trial last month. Yet he was convicted of several more, and is widely regarded as the most prominent business executive snared in the government crackdown on insider trading. Among the most sensation counts Gupta was convicted on involved leaking to Rajaratnam details of a Goldman Sachs board meeting involving Warren Buffett’s infusion of cash into the firm at the height of the financial crisis.
Prosecutors showed phone records in which Gupta called Rajaratnam shortly after the board meeting and Rajaratnam purchased shares of Goldman before Buffett’s move was made public. Rajaratnam himself was convicted of multiple counts of securities fraud and insider trading violations and is serving an 11-year sentence. Most legal experts don’t expect Gupta to receive as lengthy of a jail term as Rajaratnam; prosecutors are likely to ask for a decade of jail time based on sentencing guidelines, but Gupta himself never traded on the inside information. The best prosecutors could do was portray Gupta as using his inside knowledge and tips to curry favor and do business with Rajaratnam, once a billionaire fund manager and one of Wall Street top traders.
In Gupta’s favor is Rakoff’s reputation for handing less jail time than what prosecutors often recommend, which is why Gupta’s request for letters from prominent people -- many of them in fields outside of Wall Street -- is so important. Friends of Gupta say both he and his family were hit hard by the guilty verdict, and the likelihood of jail time and the letter suggests as much....
One additional reason for the aggressive pitch may be that Gupta believes Rakoff will be less likely to cut such a prominent person a break on sentencing. A former prosecutor who has argued cases before Rakoff says the judge is known to come down hard on white collar defendants who “should have known better.” Rakoff sentenced attorney Marc Drier to 20 years in prison for stealing $400 million from his clients.
“Let’s face it, Gupta is a board member of Goldman and the former head of McKinsey,” the former prosecutor said. “He knows that he’s isn’t supposed to be telling people about what goes on during board meetings, and that may force Rakoff to come down harder on him than he would otherwise.”
Fox Business has made available at this link the letter referenced in its article. I do not view the tone or wording of this letter as such a big deal; but the way in which Fox Business covers this seemingly minor pre-sentencing development confirms my sense that Gupta's sentencing will be one of the highest profile and most interesting federal sentencing cases of 2012.
Related posts on upcoming Gupta sentencing:
- Any early federal sentencing predictions after quick conviction in Gupta insider trading case?
- Interesting commentary on upcoming Gupta sentencing for insider trading
Monday, July 16, 2012
First Circuit affirms (way-)below-guideline sentence for Big Dig white-collar offenders
Because I am on the road throughout July, I fear I may miss some notable circuit sentencing opinions. Thus, I am especially grateful that a helpful reader alerted me to the especially noteworthy opinion handed down by the First Circuit late last week in US v. Prosperi, No. 10-1739 (1st Cir. July 13, 2012) (available here). Here is how the lengthy Prosperi opinion starts:
The United States challenges the sentences imposed on appellees Robert Prosperi and Gregory Stevenson after their conviction of mail fraud, highway project fraud, and conspiracy to defraud the government. Both appellees were employees of Aggregate Industries NE, Inc. ("Aggregate"), a subcontractor that provided concrete for Boston's Central Artery/Tunnel project, popularly known as the "Big Dig." The government charged that over the course of nine years Aggregate knowingly provided concrete that failed to meet project specifications and concealed that failure by creating false documentation purporting to show that the concrete provided complied with the relevant specifications. Several employees of Aggregate, including Prosperi and Stevenson, were convicted of criminal offenses for their roles in the scheme.
At sentencing, the district court calculated the guidelines sentencing range ("GSR") for Prosperi and Stevenson as 87- to 108-months incarceration. Then, explaining fully its rationale for a below-guidelines sentence, the court sentenced Prosperi and Stevenson to six months of home monitoring, three years of probation, and 1,000 hours of community service. The government now appeals, arguing that under Gall v. United States, 552 U.S. 38 (2007), the sentences imposed by the district court were substantively unreasonable and that the appellees' crimes warrant incarceration.
We affirm. Although the degree to which the sentences vary from the GSR gives us pause, the district court's explanation ultimately supports the reasonableness of the sentences imposed. The district court emphasized that its finding on the loss amount caused by the crimes, the most significant factor in determining the GSR, was imprecise and did not fairly reflect the defendants' culpability. Hence it would not permit the loss estimate to unduly drive its sentencing decision. Relatedly, it found that there was insufficient evidence to conclude that the defendants' conduct made the Big Dig unsafe in any way or that the defendants profited from the offenses. The court then supplemented these critical findings with consideration of the individual circumstances of the defendants and concluded that probationary sentences were appropriate. We cannot say that it abused its discretion in doing so.
As this introduction suggests, the (unanimous) Prosperi opinion discusses lots of loss issues and ultimately affirms the district court's desire and decision to give little weight to what it saw as an inflated loss calculation. For this reason and others, Prosperi is a must-read not just for white-collar federal sentencing practitioners, but for all those still unsure about the scope of sentencing discretion in the post-Booker world.
July 16, 2012 in Booker in district courts, Booker in the Circuits, Federal Sentencing Guidelines, Offender Characteristics, Offense Characteristics, White-collar sentencing, Who Sentences? | Permalink | Comments (0) | TrackBack
Tuesday, July 10, 2012
Another corrupt former governor gets another light federal sentence
The title of this post is meant to be (harmfully?) sensational, because the local story here about the former Missouri Gov. Roger Wilson being sentenced to probation in federal court reveals that he was not really very corrupt, that his misdeed was committed after he left office, and and he did not really get an unduly lenient sentence given that he was convicted only of a misdemeanor and his probation term was a within-guideline sentence. Here are the white-collar crime and punishment specifics in this case:
U.S. Magistrate Judge Mary Ann Medler's sentence was expected. Wilson faced probation to six months in prison under federal sentencing guidelines. His lawyer, Robert Haar, had asked for probation, citing his long public service record.
After a lengthy investigation, Wilson was indicted in April on a misdemeanor insurance charge for laundering a total $8,000 in campaign contributions from Missouri Employers Mutual Co., a state-created workers' compensation company based in Columbia, to the Missouri Democratic Party through a St. Louis law firm, Herzog Crebs. Former Herzog Crebs partner Ed Griesedieck III was also indicted. Wilson was president and CEO of MEM at the time.
Medler sentenced Wilson to two years of probation and ordered him to pay a $5,000 fine and $5,000 in restitution. He will also complete 100 hours of community service. Griesedieck received one year of probation. The other aspects of his sentence were the same.
In court Wilson read a short statement in which he thanked his family and friends. He apologized and said he looks forward to a future in community service. "There are no excuses," he said. "I made a mistake." He read a similar statement outside the courthouse. He also said that he had already paid the fine and half of the restitution. Griesedieck presumably has or will pay the rest....
Wilson served two terms as lieutenant governor and nearly 14 years in the state senate. He also formerly chaired the Missouri Tourism Commission and the Missouri Rural Economic Development Council. Wilson was sworn in as Missouri's 52nd governor following the death of Gov. Mel Carnahan in 2000 in a plane crash. After leaving office, Wilson worked for a money management firm and served as the Missouri Democratic Party's chairman from 2004 to 2007.
Monday, July 02, 2012
Record big criminal fine for big drug company involved in big fraud
This new AP article, headlined "GlaxoSmithKline to pay largest health care fraud fine in U.S. history," reports on a notable financial punishment for a corporate criminal. Here are the details:
GlaxoSmithKline will pay $3 billion and plead guilty to promoting two popular drugs for unapproved uses and to failing to disclose important safety information on a third in the largest health care fraud settlement in U.S. history, the Justice Department said Monday.
The $3 billion fine also will be the largest penalty ever paid by a drug company, Deputy Attorney General James M. Cole said. The corporation also agreed to be monitored by government officials for five years to attempt to ensure the company's compliance, Cole said....
"For far too long, we have heard that the pharmaceutical industry views these settlements merely as the cost of doing business," Acting Assistant Attorney General Stuart F. Delery, head of Justice's civil division, said at the news conference. "That is why this administration is committed to using every available tool to defeat health care fraud."...
Prosecutors said GlaxoSmithKline illegally promoted the drug Paxil for treating depression in children from April 1998 to August 2003, even though the FDA never approved it for anyone under age 18. The corporation also promoted the drug Wellbutrin from January 1999 to December 2003 for weight loss, the treatment of sexual dysfunction, substance addictions and attention deficit hyperactivity disorder, although it was only approved for treatment of major depressive disorder.
Justice Department officials also said that between 2001 and 2007 GlaxoSmithKline failed to report to the FDA on safety data from certain post-marketing studies and from two studies of the cardiovascular safety of the diabetes drug Avandia. Since 2007, the FDA has added warnings to the Avandia label to alert doctors about potential increased risk of congestive heart failure and heart attack.
The drug corporation also agreed to resolve civil liability for promoting the drugs Paxil, Wellbutrin, Advair, Lamictal and Zofran for off-label, non-covered uses. The company also resolved accusations that it paid kickbacks to doctors to prescribe those drugs as well as the drugs Imitrex, Lotronex, Flovent and Valtrex....
Of the penalties, $1 billion covers criminal fines and forfeitures and $2 billion is for civil settlements with the federal government and the state governments of Massachusetts and Colorado.
Saturday, June 30, 2012
Did (white-collar?) arsonist poison himself in courtroom right after hearing verdict and sentence?
The main question in thie title of this post present the interesting mystery in reported in this Huffington Post piece, which is headlined "Michael Marin, Ex-Wall Street Trader, Dies In Courtroom After Conviction." Here are the details:
An ex-Wall Street trader collapsed and died in a Phoenix-area courtroom Thursday, shortly after being found guilty of setting his mansion on fire in a ploy to escape his mortgage debt.
Police are now investigating whether the man, Michael Marin, purposefully killed himself. Shortly after the jury read its verdict and sentenced him to 16 years in prison, Marin appeared to place something in his mouth several times and drink from a bottle he brought with him into the courtroom. Minutes later, he suffered from a seizure and died. Police can't yet confirm whether Marin’s death was a suicide.
Marin’s mansion in a ritzy Phoenix neighborhood caught fire in 2009, the Arizona Republic reports. Marin claimed he had to escape from the house wearing a scuba tank and mask to protect himself from the smoke, but investigators found evidence that he set the fire himself. Though he had grown accustomed to a lifestyle that reportedly included owning Picasso sketches and $800 climbing boots, Marin’s financial situation grew dire the year before the fire. His bank account balance fell to only $50 from $900,000 even while he had a monthly mortgage payment of more than $17,000, according to the Arizona Republic.
In addition to the interesting possibility that the defendant here decided to sentence himself to death rather than go to state prison, I have also flagged this story because I wonder just how we ought to characterized Marin's crime of arson. Is this crime properly called vioent or non-violent? Is it a white-collar offense? A property offense or a fraud offense? One of the many challenges of studying crime and sentencing data is trying to fully understand what gets placed into which data catergories, and this kind of case reinforces my persistent concern than many crimes defy easy categorization.
Thursday, June 28, 2012
Second Circuit panel now affirms Lynne Stewart's (way below guideline) 10-year prison sentence
One of many noteworthy legal developments today sure to be overshadowed by the Supreme Court's health care ruling is today's Second Circuit panel opinion upholding the 10-year prison sentence of (in)famous defense lawyer Lynne Stewart. The lengthy unanimous opinion in US v. Stewart, No. 10-3185 (2d Cir. June 28, 2012) (available here), covers a lot of interesting sentencing ground, though the most extensive discussion concerns Stewart's claim that enhancement of her sentence due to her initial post-sentencing public comments violated the First Amendment. Here are a few paragraphs from the start and end of the panel ruling:
Appellant Lynne Stewart appeals from a judgment of the United States District Court for the Southern District of New York (John G. Koeltl, Judge) sentencing her principally to 120 months' imprisonment following our vacatur on grounds of procedural error of her previous sentence of 28 months and remand of the district court's previous judgment insofar as it imposed that sentence. The details of this case were recounted at length in our prior opinion, United States v. Stewart, 590 F.3d 93, 100-08 (2d Cir. 2009) ("Stewart I"). We repeat them here only insofar as we think it necessary to explain our judgment [of affirmance]....
Finally, Stewart argues that her sentence is substantively unreasonable, principally because of the more than fourfold increase from her original sentence of 28 months' incarceration to the currently imposed sentence of 120 months. She asserts that aside from her public statements, "no change in circumstances or information available to the sentencing court . . . supported increasing Ms. Stewart's sentence by this magnitude." Def.'s Br. at 101. She also contends that the district court was not permitted to increase the sentence in response to suggestions that it do so in the dissent from our panel opinion, and in the dissents accompanying the denial of rehearing en banc. Def.'s Br. at 103. And she urges that in light of her personal characteristics, the sentence imposed on her was so "shockingly high" as to render it substantively unreasonable....
It is the "rare case" in which we will find a sentence substantively unreasonable, and we place "great trust" in a sentencing court. Rigas, 583 F.3d at 123. In Stewart I, we expressly recognized and were "impressed by the factors that figured in Stewart's modest sentence -- particularly her admirable history of providing, at no little personal cost to herself, proficient legal services in difficult cases to those who could not otherwise afford them." Stewart I, 590 F.3d at 147-48. But, nonetheless, she engaged in severe criminal conduct in aid of a terrorism conspiracy, and she did so by abusing the trust that the government had placed in her as a member of the bar. When confronted with these transgressions, she lied repeatedly under oath.
From the moment she committed the first act for which she was convicted, through her trial, sentencing, and appeals, Stewart has persisted in exhibiting what seems to be a stark inability to understand the seriousness of her crimes, the breadth and depth of the danger in which they placed the lives and safety of unknown innocents, and the extent to which they constituted an abuse of her trust and privilege as a member of the bar. We cannot agree with her that the sentence imposed on her was "shockingly high" so as to warrant a finding of substantive unreasonableness.
June 28, 2012 in Booker in the Circuits, Celebrity sentencings, Offender Characteristics, Offense Characteristics, Procedure and Proof at Sentencing, Sentences Reconsidered, White-collar sentencing | Permalink | Comments (6) | TrackBack
Wednesday, June 27, 2012
"Madoff's Brother to Plead Guilty to Criminal Charges"
The title of this post is the headline of this breaking Wall Street Journal story, which gets started this way:
The brother of convicted Ponzi scheme operator Bernard Madoff will plead guilty to criminal charges Friday, marking the first time a family member has admitted guilt aside from Mr. Madoff himself since the fraud came to light 3½ years ago.
Peter Madoff, who worked as the Madoff firm's chief compliance officer and senior managing director, is expected to plead guilty to two charges at a hearing Friday, including falsifying the records of an investment adviser and conspiracy to commit securities fraud and other crimes.
As part of an agreement with prosecutors, Peter Madoff has agreed to a sentence of 10 years in prison, prosecutors said in a letter to U.S. District Judge Laura Taylor Swain, which was filed on Wednesday. He also has agreed to forfeit about $143.1 billion, prosecutors said.
I trust I will not be the only one who wonders about and sees the irony in a mega-fraudster like Peter Madoff, thanks to the exercise of prosecutorial charging/sentencing discretion, is now apparently going be serving just 10 years in federal prison (actually, probably less than 9 years given good-time credits) while many low-level federal crack offenders are still serving their second or third decade of federal prison time because a federal judge lacked any sentencing discretion to impose a lower sentence deacdes ago under then-applicable mandatory minimums and/or then-binding mandatory guidelines.
Wednesday, June 20, 2012
Interesting commentary on upcoming Gupta sentencing for insider trading
Writing at Forbes, Richard Levick has this interesting new commentary headlined "The Sentencing of Rajat Gupta: Why It Matters." Here is how it begins:
Here’s a quaint news item from 1987 about how a certain Ivan F. Boesky, one of the world’s most powerful speculators and symbol de jour of Wall Street greed, was sentenced to three years in prison for insider trading-related violations. It was one of the longest jail terms ever imposed in such a case and, apparently, a source of satisfaction to then-U.S. Attorney Rudolph Giuliani.
Twenty-five years later, we have hedge fund bigwig Raj Rajaratnam setting a new record as he serves an 11-year sentence for similar misdeeds. Maybe the lesson is that you’re better off getting caught committing financial crimes in prosperous times. Maybe it’s that persistent violations over decades wear down public patience, accelerating demand for ever more severe punishments that, it’s fancied, will better deter future wrongdoers.
In any event, last week’s conviction of Rajat Gupta for leaking insider information to Rajaratnam has naturally generated much discussion about how the retired head of McKinsey & Company and former Goldman Sachs board member will fare when Judge Jed Rakoff of the Federal District Court in Manhattan passes sentence in October. (Gupta was convicted on one count of conspiracy and three counts of securities fraud.)
Yet the discussion is more than just an odds-maker’s game. Gupta’s ultimate fate raises substantive issues that speak to public perception as well as the narrower considerations that drive judges, influence the future actions of enforcement officials, and impact markets.
Sunday, June 17, 2012
"Valuable" cooperation gets con man's sentence recommendation reduced from LWOP to 5+ years
Federal sentencing practioners know that defendants involved in very serious federal crimes, even those with very long and very serious criminal histories, can escape very long prison terms by making nice with the government and helping the feds go after others. The latest notable example of this reality is reported in this new Chicago Tribune article, which is headlined "Prosecutors: Levine among 'most valuable' witnesses in 3 decades." Here are the details:
Prosecutors called their key witness against former Gov. Rod Blagojevich and two top advisers "one of the most valuable cooperators" in three decades of public-corruption prosecutions in a late-Friday filing arguing for a light sentence.
Stuart Levine could have faced life in prison under federal sentencing guidelines but prosecutors agreed to recommend a sentence of 5 years and 7 months in exchange for Levine's cooperation. Friday's filing comes after U.S. District Judge Amy St. Eve, during a hearing in April, asked for a "lengthy recitation of Levine's cooperation."...
"The government not only used information provided initially by Levine in the case against Blagojevich, it was Levine's decision to cooperate that set in motion the series of events that led directly to the government obtaining the evidence and witnesses it needed to prosecute Blagojevich," prosecutors wrote.Friday's filing, in advance of Levine's June 28 sentencing, recognizes both Levine's cooperation and his extensive criminal history.
More background on the man getting this (justified?) sentencing break from federal prosecutors comes from this local article from a few month ago headlined "How Stuart Levine — a thief and con man — became star witness." Here is a snippet from that article:
On a recent day in federal court, a quiet settled over the courtroom as Stuart Levine answered questions about his past. It wasn’t just the drug-binge parties and snorting 10 lines of animal tranquilizer mixed with crystal meth at the Purple Hotel that stunned the courtroom. It was an interminable list of scams that one man was able to pull off for decades.
Did he steal $6 million from one charity, keep half and never pay it back? “Yes,” he said plainly. Levine, wearing an ill-fitting suit and glasses, was asked if he rewarded a dying friend who entrusted him with his estate by stealing $2 million from the dead man’s children. “Yes,” he said.
He’d answer “yes” to handing out bribes to politicians, to school board members, to a postal union worker and to using his position on state boards to work kickback deals amounting to millions of dollars. Levine even admitted that once the FBI caught him and he swore to tell the truth, he initially lied about Vrdolyak. Was that because, even while under FBI scrutiny, he still wanted to secretly take part in a $1.5 million kickback scheme with Vrdolyak? Levine answered predictably: “Yes.”
June 17, 2012 in Federal Sentencing Guidelines, Offender Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (8) | TrackBack
Saturday, June 16, 2012
Any early federal sentencing predictions after quick conviction in Gupta insider trading case?
As reported here by CNN, "Rajat Gupta, the consummate corporate insider and former director at Goldman Sachs, was found guilty of insider trading on Friday," and it took the "federal jury in New York ... just over a day of deliberation [to find] Gupta guilty of four of six criminal counts." In this New York Times piece, Professor Peter Henning provides a great preview of some sentencing basics now facing Gupta:
The jury convicted Mr. Gupta on tips he made to Mr. Rajaratnam in September and October 2008, about developments at Goldman. Prosecutors had wiretaps of Mr. Rajaratnam describing his source on Goldman’s board, which pointed a finger directly at Mr. Gupta. With sentencing scheduled for Oct. 16, the focus of the case will now shift to his punishment as well as the potential issues his defense lawyers may introduce on appeal.
In recommending prison terms for insider trading, the federal sentencing guidelines for insiders focus primarily on the financial gains made by a defendant. Mr. Gupta did not personally trade in Goldman Sachs or Procter & Gamble shares based on the inside information he received. But by tipping off Mr. Rajaratnam, he is responsible for the transactions conducted through Galleon Group based on the information he provided.
By convicting Mr. Gupta of conspiracy, prosecutors will most likely argue that he is responsible for all trading cited in the indictment — which was estimated at trial to have generated for Galleon over $16 million in gains or in losses avoided. Prosecutors will also seek to add on to the sentence by arguing that Mr. Gupta “abused a position of trust” by leaking information while serving as a director of Goldman and P&G. Based on these two issues, the sentencing guidelines recommend a sentence of 8 to 10 years.
Mr. Gupta will argue for a much lower sentence, claiming that the acquittal on two counts should mean that any trading gains from transactions related to those charges should be excluded from the sentencing calculation. He is also likely to argue that Mr. Rajaratnam himself made the decision on how much to invest, and so the amount of the gain overstates the harm from the insider tips.
But even based solely on the 2008 Goldman trades in which he was convicted of tipping Mr. Rajaratnam, the sentencing guidelines range would still dictate 6 to 8 years in prison. Mr. Gupta is likely to claim that other factors should be taken into consideration — his strong reputation in the business world and extensive charitable efforts — to argue for a much lower sentence, perhaps even home confinement.
Judge Jed S. Rakoff of the Federal District Court in Manhattan will determine the sentence, and he has shown some hostility toward the sentencing guidelines in a previous securities fraud case. So he may be persuaded to impose a lower prison term than the government wants.
In United States v. Adelson, an accounting fraud case, the guidelines calculation called for a life sentence for a company’s former president who had helped cover up an accounting fraud. But Judge Rakoff rejected such a severe punishment, describing “the utter travesty of justice that sometimes results from the guidelines’ fetish with abstract arithmetic, as well as the harm that guideline calculations can visit on human beings if not cabined by common sense.”
You can be sure that Mr. Gupta’s defense team will include the Adelson opinion prominently in its sentencing arguments. And prosecutors naturally will do their best to explain why insider trading is different.
In 2009, Judge Rakoff sentenced the lawyer Marc Dreier to 20 years in prison for leading a scheme that defrauded investors of nearly $700 million, rejecting the government’s recommendation of a 145-year prison sentence. At the sentencing, Judge Rakoff said that “Mr. Dreier is not going to get much sympathy from this court, but he is not Mr. Madoff from any analysis, and that’s why I can’t understand why the government is asking for 145 years.” As a result, prosecutors are likely to temper their sentencing recommendation, and will have to defend their interpretation if they want the court to impose a stiff sentence.
Based on Henning's guideline calculations and my expectation that Gupta's lawyers will put together a strong set of sentencing materials, I would place the over/under betting line for Gupta's sentencing at around 5 years' imprisonment.
My instinct is that Rajaratnam's 11-year prison term providing a functional ceiling on Gupta's sentencing exposure, and that Judge Rakoff is going to be strongly inclined to impose some term of imprisonment. Splitting the difference within those basic parameters, and given Judge Rakoff's historic inclination to resist rigid application of the fraud guidelines, Gupta can reasonably hope for a sentence of only a few years imprisonment. But, especially in this political climate and in the wake of a jury conviction, I am sure prosecutors will be advocating forcefully for a prison term closer to a decade.
UPDATE: This new Bloomberg piece provides lots of background on Judge Rakoff's recent sentencing history in white-collar cases. It notes, inter alia, that last year Judge Rakoff "entenced Winifred Jiau, a Stanford University-educated consultant convicted of corrupting friends and selling confidential information, to four years in prison, less than half of the maximum 10 years sought by federal prosecutors." That datum makes me inclined to move the over/under betting line for Gupta's sentencing down to 4 years' imprisonment.
June 16, 2012 in Federal Sentencing Guidelines, Offender Characteristics, Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (0) | TrackBack
Thursday, June 14, 2012
Will feds seek to (cross)appeal Stanford's sentence of "only" 110 years in prison?
The question in the title of this post is my tongue-in-cheek response to this news (via this article) that " R. Allen Stanford, the Texas financier convicted of fleecing 30,000 investors from 113 countries in a $7 billion Ponzi scheme, was sentenced on Thursday to 110 years in jail." Here is more on the sentencing:
A defiant Mr. Stanford, in a rambling statement to the court before the sentencing, intermittently fought back tears and shuffled papers, and said, “I’m not up here to ask for sympathy or forgiveness. I’m up here to tell you from my heart I didn’t run a Ponzi scheme.” He blamed the government for the collapse of his businesses and asserted that “we could have paid off every depositor and still have substantial assets remaining.”
In response, federal prosecutor, William J. Stellmach, called Mr. Stanford’s version of events “obscene.”
“This is a man utterly without remorse,” Mr. Stellmach said. “From beginning to end, he treated all of his victims as roadkill. He went after the middle class, including people who didn’t have money to lose. People have lost their homes. They have come out of retirement.”
A federal jury in March convicted Mr. Stanford of 13 out of 14 counts of fraud in connection with a worldwide scheme over more than two decades in which he offered fraudulent high-interest certificates of deposit at the Stanford International Bank, which was based on the Caribbean island of Antigua.
Prosecutors argued that Mr. Stanford had consistently lied to investors, promoting safe investments for money that he channeled into a luxurious lifestyle, a Swiss bank account and various business deals that almost never succeeded.
Mr. Stanford’s defense lawyers pleaded for a sentence effectively of time served because of the three years he spent in prison waiting for his trial. Prosecutors recommended 230 years....
As regularreaders know, the feds are not usually too pleased when a district judges imposes a sentence less than half of what prosecutors have sought. In this case, though, I predict confidently that only Mr. Stanford will be appealing. I also predict the Fifth Circuit is unlikely to be moved by any sentencing appeal.
June 14, 2012 in Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, Scope of Imprisonment, White-collar sentencing, Who Sentences? | Permalink | Comments (9) | TrackBack
You be the sentencing judge: what should "putrescent" Ponzi scheme R. Allen Stanford get?
The latest greatest notorious Ponzi schemer, R. Allen Stanford, is due to be sentenced in federal court in Houston today. Here are the basics and some sentencing predictions from this Bloomberg piece:
R. Allen Stanford, found guilty of leading a $7 billion international fraud scheme by a U.S. jury, will spend the rest of his life in prison if a federal judge grants prosecutors’ request.
Stanford, 62, will be sentenced today by U.S. District Judge David Hittner in Houston. Jurors in March convicted the Stanford Financial Group principal of 13 charges, including five counts of mail fraud and four of wire fraud, each punishable by as long as 20 years in prison.
Prosecutors asked for a 230-year term, the maximum under federal sentencing guidelines. Ali Fazel, one of Stanford’s lawyers, said the defense asked for a sentence of 31 to 44 months, based on a different, much-lower calculation of investors’ losses. Prosecutors contended that such a sentence was tantamount to “time served” for Stanford, who has been in custody since June 2009.
A sentence of about 30 years is more likely, according to Douglas Burns, a New York criminal defense lawyer. “This isn’t the Madoff case,” Burns said, referring to Bernard Madoff, the New York financier who received a 150-year term for a Ponzi scheme that bilked investors of more than twice as much money as Stanford’s victims. “This doesn’t seem to be at the same level.”
Stanford’s jury found he lied to buyers of certificates of deposit issued by his Antigua-based Stanford International Bank Ltd. and sold in the U.S. by his Houston-based securities firm, Stanford Group Co.... “Robert Allen Stanford is a ruthless predator responsible for one of the most egregious frauds in history,” the Justice Department said in its 34-page filing on June 6....
Barry Pollack, Washington criminal defense lawyer, said the government’s recommendation is inappropriate for a symbolic sentence. Stanford would be 77 if he served 15 years and would be unlikely to commit crimes after being released, Pollack said. “It’s hard to take a request for a 230-year sentence seriously,” Pollack said yesterday in a telephone interview.
Burns, a former federal prosecutor, agreed. “The government, I think, is not looking for this 230-year sentence,” he said. Given Stanford’s age, “a life sentence approximates 25 years.”
U.S. District Judge Denny Chin was under “unbelievable pressure” when he sentenced Madoff in 2009, Burns said, adding he doubted Hittner would mete out a comparable punishment. “I don’t think he’s going to give him a Bernie Madoff-like sentence because I don’t think the case is viewed like the Madoff case,” he said. A 12 1/2-year sentence would fairly and severely punish the financier, he said.
Thomas Petters, 54, a Minnesota businessman found guilty of orchestrating a $3.5 billion fraud in Dec. 2009, received a 50- year prison term. Galleon Group LLC co-founder Raj Rajaratnam last year was sentenced to 11 years for insider trading. He will be 55 tomorrow. Enron Corp. Chief Executive Officer Jeffrey Skilling, found guilty of both fraud and insider trading at the world’s biggest energy trading company, got a 24-year term in 2006. He is now 58....
More than 300 victims’ letters have been received by the court. Two fraud victims will address the judge before the financier is punished, according to court papers. “Madoff may go down in history for operating the world’s biggest Ponzi scheme, but I hope Judge David Hittner gives Allen Stanford the ‘bragging rights’ he deserves for operating the world’s most criminal Ponzi scheme,” victims advocate Angela Shaw said in an e-mailed statement. “His actions have ruined thousands of lives, for which he has shown no remorse.”
The evocative adjective "putrescent" comes from a line in the Government's quite compelling sentencing memo (available here), which does quite a nice job painting a picture of Stanford as even worse that Bernie Madoff. That memo, as well as the fact that Stanford went to trial and seems to have lived even more lavishly than Madoff with his ill-gotten gains, leads me to think Stanford may ultimately get a sentence closer to the 230 years recommended by the feds than the merely 30+ months sought by the defense (which seems almost as kooky and silly as the prosecutors' recommendation).
If I were the judge, I would probably would be going into today sentencing hearing with an eye toward a prison term set somewhere between 50 and 100 years. There is no magic in that recommendation, but I do think a fraudster of Stanford's status has earned himself a sentence that leaves him with no prospect of ever leaving prison alive.
June 14, 2012 in Federal Sentencing Guidelines, Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, Scope of Imprisonment, White-collar sentencing, Who Sentences? | Permalink | Comments (10) | TrackBack