Thursday, January 31, 2013

Iowa CEO -- aka "Madoff of the Midwest" -- gets 50 years for major embezzlement and bank fraud

As reported in this New York Times piece, headlined "Ex-Peregrine Chief Sentenced to 50 Years in Prison," another white-collar scoundrel got another functional life sentence in federal court today. Here are the basics:

A prominent futures-industry executive was sentenced to 50 years in prison on Thursday for embezzling from his clients and defrauding banks over nearly two decades.

Russell Wasendorf Sr., the chief executive of the now-defunct brokerage firm the Peregrine Financial Group, stole more than $215 million from his customers in a remarkably crude fraud that involved doctored documents that went undetected for years.

Shackled and dressed in orange prison garb, Mr. Wasendorf sat expressionless as Judge Linda Reade of the United States District Court in Cedar Rapids, Iowa, handed down the maximum sentence recommended by the government....

“The lengthy prison sentence imposed today is just punishment for a con man who built a business on smoke and mirrors,” said Sean Berry, acting United States attorney in Cedar Rapids.

Mr. Wasendorf’s penalty is the latest in a string of stiff sentences handed down by judges for financial crimes.  Bernard L. Madoff received 150 years for perpetrating the largest Ponzi scheme ever uncovered.  Allen Stanford is serving a 110-year term after being convicted of swindling investors of nearly a $7 billion.  Thomas J. Petters got a 50-year sentence for defrauding investors of nearly $4 billion.

Given the extremely lengthy sentences and advanced age of some of the defendants, many of these terms are largely symbolic, intended to reflect the gravity of the crimes and the need for retribution.

The fraud carried out by Mr. Wasendorf, 64, did not involve any opaque financial instruments and took place more than 1,000 miles from Wall Street, in Cedar Falls, Iowa. Federal regulators discovered the crime last summer after local police found Mr. Wasendorf unconscious in his car in Peregrine’s parking lot, a hose running from the exhaust pipe into the passenger compartment.  He left a detailed suicide note explaining his crimes.

Mr. Wasendorf stole millions of dollars from his customers at Peregrine, which also did business as PFGBest, by using laser printers and software like Photoshop and Excel to make near-perfect replicas of account statements from US Bank.  He duped auditors by supplying them with a false address to sending forms to the bank, which he would then intercept and send back on forged US Bank letterhead....

Peregrine’s clients — and Mr. Wasendorf’s 13,000 victims — including speculators betting on the price of orange juice and farmers who use such contracts to protect themselves from large price fluctuations....

Judge Reade rejected any leniency for Mr. Wasendorf because of his contributions to the community. “It is easy to be generous with other people’s money,” she said.

Iowa newspapers nicknamed Mr. Wasendorf “the Madoff of the Midwest.” Though Mr. Wasendorf’s criminal proceeds were a tiny fraction of Mr. Madoff’s, the two men suggested similar reasons for why they turned to a life of crime.

Mr. Madoff has said in interviews that he began his fraud after his investment performance soured and he couldn’t admit defeat.  Similarly, Mr. Wasendorf, in his confession, said he began to steal from his clients when his business slumped and he began to run out of money.  “I guess my ego was too big to admit failure,” wrote Mr. Wasendorf. “So I cheated.”

On Thursday, Mr. Wasendorf, gaunt and diminished, expressed deep remorse.  “I feel I fully deserve whatever sentence I’m given,” he said.  “The punishment I’ve caused myself is worse than anything you can impose.”

January 31, 2013 in Offense Characteristics, White-collar sentencing | Permalink | Comments (4) | TrackBack

Tuesday, January 29, 2013

Should status as sitting state justice be an aggravating sentencing factor under 3553(a)?

The question in the title of this post is prompted by this local report on a federal plea deal put together in a high-profile federal prosecution in Michigan. The article is headlined "Former Michigan Supreme Court Justice Diane Hathaway pleads guilty to felony bank fraud," and here is the backstory:

Retired Michigan Supreme Court Justice Diane Hathaway pleaded guilty to felony bank fraud today and is expected to be sentenced on May 28. Hathaway stood quietly at a podium in U.S District Court in Ann Arbor this morning, acknowledging she intentionally defrauded a federally insured financial institution with the short sale of her Grosse Pointe Park home.

According to an agreement negotiated with the U.S. Attorney’s Office, her punishment is limited to up to 18 months behind bars or could be as little as 4-10 months if a pre-sentence report determines there was no actual financial loss. Hathaway also could receive a sentece of 3-5 years of supervised release, be fined up to $30,000 and pay restitution of up to $90,000, according to the agreement. She waived her right to appeal the case after sentencing....

Hathaway’s only “no” response came when O’Meara asked her about using her position as a Michigan Supreme Court judge as part of the scheme. “Did you use your status as a public employee in your attempt to defraud?” O’Meara asked her. “No,” she responded.

Hathaway was charged Jan. 18 with one count of bank fraud after investigators said she moved ownership of property in Florida to relatives so she could qualify for the short sale. Hathaway allegedly told financial institution ING Direct she could no longer afford the house payments on the Michigan home. In a civil filing in November, the U.S. Justice Department accused Hathaway and her husband, attorney Michael Kingsley, of fraudulently concealing their net worth.

The short sale in Michigan allowed the couple to erase nearly $600,000 in mortgage debt on the $1.5-million Grosse Pointe Park home on Lakeview Court, which eventually sold for $850,000. The debt-free Windermere, Fla., home then went back into their names. Hathaway’s attorney, Steve Fishman, said outside the courthouse that ING Direct is claiming they lost far less than the mortgage debt erased by the short sale.

"It's important for people to know that now we're down to the actual loss as calculated by ING ... and they're saying it's between $40,000 and $90,000," Fishman said, pointing out Hathaway could have just walked away from the home altogether. "I say the loss is nothing ... because the bank netted probably in the vicinity of $150,000 more from the fact that there was a short sale than if it had been a foreclosure and a sheriff's sale. And that will be part of the discussion when we come back for sentencing."

Hathaway left the bench after announcing the decision to retire Jan. 7 after the Judicial Tenure Commission filed a complaint and sought her immediate suspension. The commission alleged she committed "blatant and brazen" misconduct violations in connection with private real estate transactions.

As federal sentencing practitioners know well, the key federal sentencing statute requires a sentencing judge to consider "the nature and circumstances of the offense and the history and characteristics of the defendant." Though it appears there may be some dispute over the details of the offense here, there is no dispute that the defendant was a sitting Michigan Supreme Court Justice at the time of her offense.

If the defendant here had used her official position to facilitate the offense, there is little doubt that her status would be an aggravating factor (and the guidelines themselves include an upward adjustment on this basis). But the question prompted by this story and the title of this post is whether her status ought to be considered an aggravating sentencing factor even though it apparently played no role in her crime.

January 29, 2013 in Federal Sentencing Guidelines, Offender Characteristics, Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing | Permalink | Comments (19) | TrackBack

Friday, January 11, 2013

Lots of new and notable for criminal justice fans in latest SCOTUS cert grants

This time of year, working late on a Friday can sometimes get rewarded with Supreme Court news after its usual Friday conferences: this week brings a Friday afternoon SCOTUS order list with six new cert grants. And, as Lyle Denniston detailed in this new post at SCOTUSblog, half of the grants include cases with notable criminal justice concerns:

The Supreme Court agreed on Friday to decide a major case on the right to remain silent — a case testing whether that right exists for an individual who has not been arrested but is interviewed by police, and was not given Miranda warnings, when that silence was used to help prove guilt at a trial.  That case — Salinas v. Texas (docket 12-246) — was one of six new cases accepted for review.  (The order list is here.)...

Here, in brief, are the other new cases and the issues at stake [from the criminal justice part of the SCOTUS world]:...

** Sekhar v. United States (12-357) — whether the federal anti-extortion act applies to a private individual’s use of a threat in order to get a government authority to withdraw a recommendation that would be adverse to that private individual’s interest in a pension fund.  The issue is whether such a recommendation qualifies as “property” under the Hobbs Act, which makes it a crime to obtain property by threats.

** United States v. Kebodeaux (12-418) — Congress’s authority in 2006 to make it a federal crime for an individual convicted years before of a sex crime to fail to register, after the individual had long since completed a sentence.

Based on this helpful summary, it looks like the new sex offender case, US v. Kebodeaux, should be of greatest interest to sentencing fans. But all criminal cases on the SCOTUS docket, of course, can end up having a sentencing spin or impact.

January 11, 2013 in Criminal Sentences Alternatives, Sentences Reconsidered, Sex Offender Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (0) | TrackBack

Friday, December 21, 2012

As scripted in plea deal, Peter Madoff gets 10 years for his role in Ponzi scheme

As reported in this Bloomberg News article, headlined "Peter Madoff Gets 10 Years for His Role in Brother’s Ponzi Fraud," another participant in perhaps the biggest-ever white-collar crime was sentenced yesterday.  But, as the article details, the sentencing included limited drama because the outcome had already been essentially pre-arranged by the parties via a plea deal:

Peter Madoff, who pleaded guilty to aiding Bernard Madoff’s fraud while claiming he didn’t know his older brother was running a vast, decades-long Ponzi scheme, was sentenced to 10 years in prison.

U.S. District Judge Laura Taylor Swain yesterday sentenced Peter Madoff after considering pleas from victims of the fraud that she not show him any mercy. As part of an agreement with prosecutors, Madoff agreed not to seek less than the maximum 10- year prison term allowed by law.

In a 55-minute hearing in Manhattan, Swain said the notion that Peter Madoff didn’t know about the wide-ranging fraud at firm is “frankly, not believable.”  She urged him to cooperate with investigators who are trying to unravel the Ponzi scheme at his former firm.  “I challenge you to be honest about all that you have done and all that you have seen,” Swain told Madoff before pronouncing sentence.

Peter Madoff, 67, becomes the second person sentenced in the fraud at Bernard L. Madoff Investment Securities LLC, which was exposed in December 2008.  Bernard Madoff, who admitted masterminding the scheme, is serving a 150-year sentence in a North Carolina federal prison....

Swain also sentenced Madoff to one year probation when he’s released and she approved a forfeiture order that Madoff agreed to under which he must surrender all his assets, including Social Security proceeds, up to $143.1 billion. Swain approved the arrangement, which she called “draconian,” saying it “seals Peter Madoff’s financial ruination.”...

Two victims of the Madoff fraud, Michael T. DeVita and Amy Luria Nissenbaum, addressed the court.  “I ask that you show the same degree of compassion for Peter Madoff that he showed for us -- none,” DeVita said, urging Swain to set aside Madoff’s plea agreement and sentence him to more than 10 years.  “He benefited from this scam for over 30 years and he should be in prison for the same amount of time,” Nissenbaum told Swain....

Anthony Sabino, who teaches law at St. John’s University in New York, said many victims of the Madoff fraud are unlikely to be satisfied with Peter Madoff’s sentence, particularly in comparison with the 150 years his brother received.  “Ten years -- it just seems to be on the low end of the scale,” Sabino said.

In papers filed with the court, Peter Madoff’s lawyer, John R. Wing, said his client was “a victim of his brother’s Ponzi scheme.”  Peter Madoff’s “world was shattered” when his brother disclosed the fraud to him, Wing said in the letter, which was made public this week.

Peter Madoff’s guilty plea to two criminal charges came three years to the day after his brother was sentenced to 150 years in prison.  During his plea hearing, Peter Madoff told the court he had no knowledge of Bernard Madoff’s scheme until Dec. 9, 2008, the night his brother confessed to him that the investment business was a sham.  Bernard Madoff was arrested and confessed to authorities two days later, on Dec. 11.

Peter Madoff pleaded guilty to one count of conspiracy and one count of falsifying records of an investment adviser.  Both offenses carry maximum sentences of five years in prison. Peter Madoff admitted to improperly avoiding taxes by having the firm pay many of his expenses, which he didn’t report as income.  He also said he filed false reports with regulators that helped conceal the fraud.  After learning of the Ponzi scheme, Peter Madoff said he helped his brother parcel out $300 million remaining in the firm to select friends and family members.

Peter Madoff repeatedly lied and violated the trust investors had in the firm, prosecutors said. His crimes began in about 1996 and continued until December 2008 when the firm collapsed, according to the government.  Had regulators and clients known the truth about the compliance program overseen by Peter Madoff, “it is possible that the fraud would have been detected years earlier and losses to the many victims would have been avoided,” prosecutors said in court papers Dec. 14....

Federal prosecutors have obtained guilty pleas from Madoff’s former chief financial officer, Frank DiPascali, his former accountant, David Friehling, and former employees Craig Kugel, David Kugel, Enrica Cotellessa-Pitz, Irwin Lipkin and Eric Lipkin.  They haven’t yet been sentenced.  Also facing charges are former employees Daniel Bonventre, Annette Bongiorno, Joann Crupi, Jerome O’Hara and George Perez. They have pleaded not guilty.

December 21, 2012 in Offense Characteristics, White-collar sentencing | Permalink | Comments (0) | TrackBack

Friday, November 30, 2012

Fraud sentencing of National Lampoon CEO no laughing matter (though recommended sentence are funny)

A notable white-collar sentencing took place in federal court in Indiana today, as reported in this AP piece headlined "Ex-National Lampoon CEO sentenced to 50 years in jail."  Here are the details:

A financier and former chief executive of humor magazine National Lampoon convicted of swindling investors out of about $200 million was sentenced Friday to 50 years in prison.

U.S. District Judge Jane Magnus-Stinson said the case against Timothy Durham was characterized by "deceit, greed and arrogance" and that Durham had violated the trust of thousands of small investors from the American Heartland.  "We drive Chevys and Buicks and Ford, not Ducatis. That's how most of us roll," Magnus-Stinson said. "When they're defrauded, it is the most serious offense because it undermines the fabric of this country."...

Prosecutors have said [Durham and his codefendants] stripped Akron, Ohio-based Fair Finance of its assets and used the money to buy mansions, classic cars and other luxury items and to keep another of Durham's company afloat. The men were convicted of operating an elaborate Ponzi scheme to hide the company's depleted condition from regulators and investors, many of whom were elderly.

Durham's attorney, John Tompkins, argued at trial that Durham and the others were caught off-guard by the economic crisis of 2008 and bewildered when regulators placed them under more strict scrutiny and investors made a run on the company. Attorneys for all three men had asked the judge for lighter sentences than those recommended. Tompkins sought a total of five years for Durham — three years in prison and two years of home detention.

Prosecutors had wanted 225 years for Durham. Magnus-Stinson said she couldn't sentence him to that much because that number would be as "puffed up" as statements that he held $280 million in assets. But she clearly showed her displeasure with Durham, telling him he had been "raised better" and noting that though he testified that he "felt terribly" for the victims, he had shown no sincere remorse.

Barbara Lukacik, 74, an Ohio nun who said she lost $125,000 in the Fair Finance collapse, said she had forgiven Durham and the others but testified before the sentencing that a lengthy sentence was warranted. "If you receive a short sentence — a slap on the wrist, so to say — I do not think it will be enough time for your heart and your conscience to realize your sin and your greed," she said.

There is nothing funny about lives ruined by a massive fraud and by a decision to impose a 50-year prison sentence on a white-collar scoundral. But this story struck me as especially blogworthy and somewhat laughable on a Friday afternoon because of the seemingly crazy (though arguably not foolish) sentencing recommendations coming from the parties.  I know I would never in good conscious be able to seriously advocate for a sentence of 225 years in prison for anyone, and I probably also could not urge only 3 years in prison for a massive Ponzi schemer.  At both extremes, the recommendations coming from the parties here seem more fitting for the National Lampoon's pages than federal court filings.

November 30, 2012 in Federal Sentencing Guidelines, Offense Characteristics, Purposes of Punishment and Sentencing, White-collar sentencing | Permalink | Comments (8) | TrackBack

Friday, October 26, 2012

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

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

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

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

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

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

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

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

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

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

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

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

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

Related prior posts on Gupta sentencing:

October 26, 2012 in Booker in district courts, Celebrity sentencings, Federal Sentencing Guidelines, Offender Characteristics, Offense Characteristics, Purposes of Punishment and Sentencing, White-collar sentencing | Permalink | Comments (10) | TrackBack

Wednesday, October 24, 2012

Rajat Gupta gets 24-month prison term, $5 million fine at sentencing for insider trading

The early news reports from US District Court in downtown NYC indicate that former Goldman Sachs director Rajat Gupta was sentenced to two years in prison and a $5 million fine for his insider trading, and that he is scheduled to report to prison on January 8, 2013.

This sentence is between the extremes of th 8-10 years sought by prosecutors and the "rigorous community service" sought by the defense. And it should come as no surprise to regular readers based on my comment in this post after seeing the sentencing submissions: "I will (boldly?) predict that Judge Rakoff will impose a sentence somewhere between these recommendations. I will even set my current betting-line over/under at two years in prison." Though I have no actual experience as a bookie, I think the fact that my betting line hit the actual outcome on the number means that the house keeps all bets. Maybe I should look into the (federal sentencing)bookie business.

UPDATE:  This new Wall Street Journal account of the sentencing includes these excerpts and quotes of note:

"I think the record, which the government really doesn't dispute, bears out that he is a good man," said Judge Rakoff during the hearing. "But the history of this country and the history of the world, I'm afraid, is full of examples of good men who do bad things."...

Mr. Gupta, who was accompanied to court by his wife and four daughters, apologized to his friends, family and the charitable institutions that he helped to found. "The last 18 months have been the most challenging period of my life since I lost my parents as a teenager," he told the judge before sentencing. "I lost my reputation that I built over a lifetime. Much of the first year seemed surreal to me. However, since the trial I've come to accept the reality of my life going forward," he said....

Prosecutors had argued that Mr. Gupta should receive up to 10 years in prison under the federal sentencing guidelines, which in insider-trading cases are largely based on profits, or losses avoided, because of the illegal tips. But the guidelines are advisory and Judge Rakoff often sentences below them....

Manhattan U.S. Attorney Preet Bharara said in an emailed statement: "With today's sentence, Rajat Gupta now must face the grave consequences of his crime — a term of imprisonment.  His conduct has forever tarnished a once-sterling reputation that took years to cultivate.  We hope that others who might consider breaking the securities laws will take heed from this sad occasion and choose not to follow in Mr. Gupta's footsteps."

October 24, 2012 in Celebrity sentencings, White-collar sentencing | Permalink | Comments (11) | TrackBack

Tuesday, October 23, 2012

New Slate commentary on upcoming Gupta sentencing

Harlan Protass has this new commentary at Slate headlined "Rajat Gupta Could Go to Prison for 10 Years for Insider Trading: Even though he wasn’t a major player — is that fair?". Here are excerpts:

On Wednesday Rajat Gupta will appear in Manhattan federal court to be sentenced for passing secrets he learned, while serving on the board of directors of Goldman Sachs, to Raj Rajaratnam, the former chief of hedge fund giant Galleon Group. Rajaratnam himself was convicted in May 2011 of being the center of the biggest insider trading ring in decades. He’s serving 11 years for his crimes, one of the longest sentences ever for insider trading.

Like Rajaratnam, Gupta, the former head of McKinsey & Company, deserves punishment. He was convicted of a type of securities fraud, and fraud is a form of theft. He wrongly used his position of power and influence for personal advancement, corroding Main Street’s trust and confidence in Wall Street.

Still, Gupta is no Rajaratnam. Gupta tipped inside information about one company to Rajaratnam, while Rajaratnam traded on confidential information collected from many sources. So you’d expect that Gupta would be treated differently when he appears for sentencing. Federal sentencing guidelines, however, suggest a prison term for him that’s similar in length to the 11 years Rajaratnam is serving. And prosecutors want a sentence within those guidelines, just as they want for the hundreds of defendants sentenced in federal courts nationwide every day. Because what Gupta and Rajaratnam did is so different, though, sentencing Gupta to anything like the time Rajaratnam is serving undermines the whole purpose of the sentencing scheme that prosecutors say they want to uphold....

Gupta and Rajaratnam are like the kingpin and corner street dealer who do roughly the same amount of time for drug dealing, as happens to a disturbing degree in narcotics cases (which accounted for almost 30 percent of the 80,000-plus cases resolved in federal court in 2011). Because drug sentences are fixed by drug type and quantity, not role, defendants in distribution rings face the same potential penalty, whatever their actual position and conduct. That’s what happened to Jamel Dossie, a small-time, street-level drug dealer’s assistant who was an addict. In New York in March, he received a five-year mandatory minimum sentence for his role as a go-between in four hand-to-hand crack sales for a total gain to himself of $140.

Luckily for Rajat Gupta, his sentencing judge is Jed S. Rakoff, who has said that where the federal guidelines “provide reasonable guidance,” they “are of considerable help to any judge in fashioning a sentence that is fair, just and reasonable,” but also argued that when the guidelines “have run so amok that they are patently absurd on their face,” courts should rely more on general sentencing principles. Judge Rakoff faced this dilemma in the case of Richard Adelson, who was convicted of participating in a conspiracy to overstate the financial results of Impath Inc. (a laboratory services company) and artificially inflate its stock price. The guidelines recommended life imprisonment for him, even though other people had concocted and operated the scheme for years before Adelson joined it. Judge Rakoff gave him 42 months, describing the life sentence recommended by the guidelines as “patently unreasonable.”

It’s because of Judge Rakoff that Gupta is widely expected to receive a sentence considerably less than what federal guidelines recommend, no matter what the government’s lawyers say. (Gupta’s own counsel have asked for probation.) But the approach of this judge is the exception. The reality of federal sentencing means that it should be closer to the rule.

Related posts on upcoming Gupta sentencing:

October 23, 2012 in Celebrity sentencings, Federal Sentencing Guidelines, Offense Characteristics, White-collar sentencing | Permalink | Comments (0) | TrackBack

Friday, October 19, 2012

"Can the CEO Learn from the Condemned? The Application of Capital Mitigation Strategies to White Collar Cases"

The title of this post is the title of this interesting-looking new piece up on SSRN authored by Todd Haugh. I would be eager to read this article based solely on the first sentencing of the abstract, which is "Ted Kaczynski and Bernie Madoff share much in common." But especially with the sentencing of Rajat Gupta scheduled for next week (basics here), I now think this piece should be a weekend must-read for lots of folks. Here is the full abstract:

Ted Kaczynski and Bernie Madoff share much in common. Both are well-educated, extremely intelligent, charismatic figures. Both rose to the height of their chosen professions — mathematics and finance. And both will die in federal prison, Kaczynski for committing a twenty-year mail-bombing spree that killed three people and seriously injured dozens more, and Madoff for committing the largest Ponzi scheme in history, bilking thousands of people out of almost $65 billion. But that last similarity — Kaczynski’s and Madoff’s plight at sentencing — may not have had to be. While Kaczynski’s attorneys tirelessly investigated and argued every aspect of their client’s personal history, mental state, motivations, and sentencing options, Madoff’s attorneys offered almost nothing to mitigate his conduct, simply accepting his fate at sentencing. In the end, Kaczynski’s attorneys were able to convince the government, the court, and their client that a life sentence was appropriate despite that he committed one of the most heinous and well-publicized death penalty-eligible crimes in recent history. Madoff, on the other hand, with almost unlimited resources at his disposal, received effectively the same sentence — 150 years in prison — for a nonviolent economic offense. Why were these two ultimately given the same sentence? And what can Madoff, the financier with unimaginable wealth, learn from Kaczynski, the reclusive and remorseless killer, when it comes to federal sentencing?

The answer lies in how attorneys use sentencing mitigation strategies. This Article contends that federal white collar defendants have failed to effectively use mitigation strategies to lessen their sentences, resulting in unnecessarily long prison terms for nonviolent offenders committing financial crimes. The white collar defense bar has inexplicably ignored the mitigation techniques perfected by capital defense attorneys, and in the process has failed to effectively represent its clients. After discussing the development of the mitigation function in capital cases and paralleling it with the evolution of white collar sentencing jurisprudence, particularly post-Booker, this article will present seven key mitigation strategies currently used by capital defense teams and discuss how these strategies might be employed in federal white collar cases. The goal throughout this Article will be to highlight new strategies and techniques available in defending white collar clients and to enhance sentencing advocacy in federal criminal cases.

October 19, 2012 in Federal Sentencing Guidelines, Offender Characteristics, Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, Scope of Imprisonment, White-collar sentencing, Who Sentences? | Permalink | Comments (9) | TrackBack

Wednesday, October 17, 2012

Gupta sentencing memos: feds seeking 97 to 121 months in prison, defense requesting probation and "rigorous community service"

This new Wall Street Journal article, headlined "Prosecutors Seek as Much as Decade in Prison for Gupta," reports on the sentencing advocacy appearing in the sentencing memoranda filed today for next week's scheduled sentencing of Rajat Gupta.  Here are the particulars:

Rajat Gupta, once part of the upper echelons of American business and a former Goldman Sachs Group Inc. director, should spend as much as the next decade of his life behind bars after he was convicted of insider trading earlier this year, prosecutors said.

However, lawyers for Mr. Gupta, the most prominent figure caught up in the government's broad crackdown on insider trading, said the 63-year-old should instead receive no time in jail and "rigorous community service." More than 70 people have been convicted or pleaded guilty in the government's probe.

A former director at Goldman and Procter & Gamble Co., Mr. Gupta was convicted of three counts of securities fraud and one count of conspiracy for allegedly passing along corporate secrets he learned in the boardroom about Goldman to hedge-fund manager Raj Rajaratnam, whose fund made millions of dollars trading on his tips. He was acquitted of two fraud charges....

"Gupta's crimes are shocking," said Assistant U.S. Attorney Richard Tarlowe in a court filing Wednesday. "Gupta had achieved extraordinary personal and professional success and was at the pinnacle of a profession built on protecting client confidences."... The government asked for a sentence between eight years and 1 month to 10 years and one month in prison....

Gary Naftalis, a lawyer for Mr. Gupta, argued in a court filing that he should face a less onerous sentence, saying the alleged conduct was an aberration and his client has been a upstanding member of the community, contributing to causes ranging from education to treating infectious diseases in the developing world....

"The convictions in this case represent an utter aberration in the life of the man before the Court — a man whose 'personal history and characteristics' are dramatically different from those routinely presented to sentencing courts in white collar cases," Mr. Naftalis said in a court filing....

Mr. Naftalis suggested the Mr. Gupta receive a sentence of probation and be ordered to engage in a full-time program of community service, ranging from working with a U.S. agency that provides emergency shelters and other services for the homeless and at-risk youth to working with Rwanda's government and an international public-health organization to help improve that country's delivery of health care.

Federal sentencing law requires judges to consider and balance a variety of factors, including guidelines for the length of prison terms, the size of the crime, the character and history of the defendant and the need to deter him or her and the public in general from crime in the future.

In Mr. Gupta's case, the judge is likely to consider the defense's arguments that Mr. Gupta has been a model member of society, participating in philanthropic endeavors around the world for years and a dedicated family-man despite his demanding career.

If/when I can find these filings available on-line, I will post them (and maybe even add a few comments). Even before giving them a read, I will (boldly?) predict that Judge Rakoff will impose a sentence somewhere between these recommendations. I will even set my current betting-line over/under at two years in prison, though that might change based on the forces of the sentencing memos.

Related posts on upcoming Gupta sentencing:

 

UPDATE:  A wonderful reader sent me this link where both sentencing memos in US v. Gupta can be found. 

October 17, 2012 in Federal Sentencing Guidelines, Offender Characteristics, Offense Characteristics, Purposes of Punishment and Sentencing, White-collar sentencing | Permalink | Comments (2) | TrackBack

"Rajat Gupta Should Walk Free Wednesday"

The title of this post is the headline of this notable commentary by Walter Pavlo in Forbes with a notable sentencing recommendation for a high-profile federal white-collar sentencing scheduled for next week. Here are excerpts:

On October 24, former McKinsey director, former Goldman Sachs director, former Proctor & Gamble director, former American Airlines director, former Bill & Melinda Gates Foundation director, Rajat Gupta will stand before Judge Rakoff to be sentenced on criminal counts that he was part of an insider trading scheme. The operative word in describing Gupta these days is Mr. “Former” of everything. His life as a professional is over, but that doesn’t mean it should end with a prison sentence.

Gupta no longer sits as an esteemed member on various boards, nor is he sought after by universities to address students ... he is a convicted felon and now we await the crescendo of this criminal prosecution when the prison sentence is announced on Wednesday. Oh and what a spectacle it will be. There will be so much excitement as court artists will capture the moment in chalk, journalists will make a bolt for the courtroom door to fill in the blank (Prison Years) they have in the stories they wrote on Tuesday, and photographers will grab a photo of Gupta entering and leaving the courthouse. If one photographer is lucky he/she will get one of Gupta and his family crying and hugging outside the courtroom. CNBC, FOX and Bloomberg will recruit some former federal inmate to recount his prison experience so that we, the interested public, understand what the Harvard MBA Gupta will expect upon showing up at some prison. The truth is, Gupta shouldn’t be going to prison at all.

Judge Rakoff has an opportunity to give Mr. Gupta a year or two of probation. Ample punishment has already been doled out to Gupta and prison is just a poor excuse as a way to hold him up as an example to the rest of us. Gupta should be treated fairly and fairness would be sending him home to his family and not to some prison camp that would offer no benefit to society.

Such a sentence will put people on notice that there is justice and fairness in our courts. A justice that takes into account a person’s value to society and the detriment of taking that person away. Prison, in the case of Gupta, would not be a remedy, it would simply add to the misconception that prison is the panacea for all criminal cases. My hope is that Judge Rakoff uses this case and this man to make that statement.

Related posts on upcoming Gupta sentencing:

October 17, 2012 in Purposes of Punishment and Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (8) | TrackBack

Saturday, October 13, 2012

Might it hurt Rajat Gupta to get sentencing support letters from the 1%?

The question in the title of this post is prompted by this notable new article in the Wall Street Journal headlined "Dear Judge, Gupta Is a Good Man: Bill Gates, Kofi Annan Among Those Writing in Support of Inside Tipster Ahead of His Sentencing." Here are the story basics:

Rajat Gupta, the former Goldman Sachs Group Inc. director convicted of insider trading, has lost his powerful spots on corporate boards, his reputation and likely his freedom when a judge sentences him later this month. But Mr. Gupta, 63 years old, still has plenty of powerful backers, including Bill Gates and Kofi Annan, and they are lining up to support him with letters to the judge.

Mr. Gates, co-founder of Microsoft Corp., and Mr. Annan, former secretary-general of the United Nations, are among those who have written letters to U.S. District Judge Jed Rakoff on Mr. Gupta's behalf. More than 200 letters have been sent to the judge through Mr. Gupta's lawyers ahead of the Oct. 24 sentencing, according to the submissions, which were examined by The Wall Street Journal....

Mr. Gupta was convicted in June of giving hedge-fund manager Raj Rajaratnam, his friend and business associate, inside information about Goldman's financial results and an investment by Berkshire Hathaway Inc.'s Warren Buffett during the financial crisis. Prosecutors said Mr. Rajaratnam's hedge fund made millions based on Mr. Gupta's tips, while Mr. Gupta, also a former director at Procter & Gamble Co., benefited from the leaks because of their friendship and mutual business interests.

Prosecutors are likely to argue that federal sentencing guidelines dictate a term for Mr. Gupta that could exceed 10 years, based on the illicit trading gains by Mr. Rajaratnam's fund. But the guidelines are advisory, and Judge Rakoff usually hands down less than they suggest....

Mr. Gupta, the former head of McKinsey & Co., the global corporate consulting firm, was active in the philanthropic and charitable communities in the U.S., in his native India and other countries. Letters from his supporters include those from leaders of companies, academics and Wall Street figures. His family also wrote to the judge, including his wife, four daughters and an 84-year-old aunt in India....

It is common for defendants to ask friends, family and prominent figures they may have encountered in their lives to write letters on their behalf to the court ahead of sentencing. Defense lawyers routinely cite such letters at sentencing in hopes of providing a fuller picture of a defendant beyond the crime they've been convicted of committing, particularly when it comes to a defendant's charitable works....

Mr. Gupta's submissions include letters from a class of luminaries not often seen at sentencing, but reflective of those he associated with as a top executive at McKinsey and through the philanthropic causes he supported.

In prior posts and comments, there has been an interesting and robust discussion about whether and how character letters from family, friends, and colleagues can play a role in post-Booker federal sentencing decision-making.  In this case, as the question in the title to this post suggests, I cannot help but wonder if the very high-profile nature of the folks writing on Gupta's behalf could, directly or indirectly, risk creating the impression that Gupta's extraordinary prominence and connections provide a special reason not to give him any kind of special break at his federal sentencing.

Related posts on upcoming Gupta sentencing:

October 13, 2012 in Offender Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing | Permalink | Comments (3) | TrackBack

Tuesday, October 09, 2012

Gearing up for high-profile sentencing of high-profile insider trading defendant

MI-BR721_GUPTA_NS_20121009182408The Wall Street Journal has this notable new article, headlined "In Gupta Sentencing, a Judgment Call," about a high-profile federal sentencing of a high-profile white-collar defendant slated for later this month. Here is how the piece gets started:

Former Goldman Sachs Group Inc. director Rajat Gupta is the highest-profile of more than 70 defendants convicted of insider trading in New York federal court in the past three years.

But this month he will likely receive a more lenient sentence than the 11-year-prison term given to Raj Rajaratnam, to whom Mr. Gupta provided his illegal leaks, legal experts say.

The sentence may have reverberations beyond the 63-year-old Mr. Gupta, a former chief of consulting giant McKinsey & Co. It will be widely watched in executive suites nationwide because it will be among the first handed down to a major corporate figure in the recent insider-trading crackdown. Previous sentences have largely involved traders, lawyers, lower-rung corporate employees and others.

Mr. Gupta, who was convicted in June of three counts of securities fraud relating to tips about Goldman and one count of conspiracy, didn't trade or profit directly from his illegal tips. Before the conviction, he had a long and stellar career in corporate America and philanthropy.

All this will be balanced against the nature of the crimes and the need to discourage others from similar offenses when U.S. District Judge Jed Rakoff hands down his sentence, scheduled for Oct. 24. Judge Rakoff often imposes sentences further below federal sentencing guidelines than some other judges do, according to a Wall Street Journal analysis.

"It's tough for a judge, because on the one hand, you know you are supposed to deter others to make a statement," said Peter Zeidenberg, a former prosecutor and now a white-collar defense attorney in Washington. "On the other hand, you should be looking at individuals as individuals and not as a poster board."

Federal guidelines could dictate a sentencing range for Mr. Gupta of up to 10 years, if Judge Rakoff agrees that the tips produced an amount approaching what prosecutors said in trial exhibits were at least $10 million in illicit profits earned and losses avoided by the Galleon Group, Mr. Rajaratnam's hedge fund. That would include extra time if Judge Rakoff found Mr. Gupta abused a position of trust as a corporate board member.

The range also could be less if the judge determines the illegal gains were less than $7 million, or based on other factors the defense might put forward. Judges must calculate and consider the guidelines at sentencing but needn't impose them. Judge Rakoff in the past has criticized them as "a mirage of something that can be measured."

Since 2010, Judge Rakoff has imposed an average sentence of 21 months on insider-trading defendants who didn't cooperate with prosecutors—about 38% below the guideline minimum, according to the Journal analysis.

By comparison, U.S. District Judge Richard Sullivan issued seven sentences in that period averaging 6.3% below the guideline minimum. U.S. District Judge Paul Crotty issued three sentences at 20.3% less than the minimum.

And former U.S. District Judge Richard Holwell issued three at 39% under the minimum. Mr. Holwell's 11-year sentence for Mr. Rajaratnam was 100 months below the minimum; he gave 30 months to Danielle Chiesi, Mr. Rajaratnam's co-conspirator, seven months under her range.

October 9, 2012 in Booker in district courts, Federal Sentencing Guidelines, Offender Characteristics, Offense Characteristics, White-collar sentencing | Permalink | Comments (1) | TrackBack

Saturday, October 06, 2012

Has the First Circuit blessed disregarding loss in some white-collar sentencings?

The question in the title of this post is prompted by this lengthy new piece in the New York Law Journal by attorney Laura Grossfield Birger, which is headlined "The Impact of First Circuit's 'Prosperi' Decision: Does appellate review constrain district courts to follow Sentencing Guidelines?". Here are a few excerpts from the piece:

The recent decision by the U.S. Court of Appeals for the First Circuit in United States v. Prosperi, 686 F.3d 32 (1st Cir. 2012), affords great discretion to sentencing courts to deviate from the Sentencing Guidelines, despite expressing palpable discomfort with the extent of deviation at issue in this particular case.  For this reason, the opinion is likely to be cited often in the First Circuit and elsewhere, and its analysis and approach warrants examination....

[I]n reviewing the substantive reasonableness of the sentences, the First Circuit initially focused on whether the district court had offered a plausible explanation for minimizing the impact of the loss amount.  The court reviewed the reasons articulated by the district court in detail ... [and] found that the[] findings and conclusions constituted "plausible" explanations for the district court's refusal to give significant weight to the loss amount it calculated pursuant to the Sentencing Guidelines.

The relaxed review applied by the First Circuit to this aspect of the district court's rationale is significant.  As the court recognized, the strength of the justification required to support a variance from a Sentencing Guidelines range fluctuates with the degree of that variance; the greater the deviance from the applicable Sentencing Guidelines range, the more significant the justification required to support it.  Here, the government's principal complaint boiled down to the huge extent of the variance — from a more than seven-year sentence to probation.  By accepting the district court's decision not to give the loss amount much weight, the First Circuit essentially approved a reduction in the spread; once the loss amount is removed as the pivotal factor driving the sentence, the government's argument that the breadth of the variance between zero and 87 months is unjustifiable loses traction.

The balance of the First Circuit's analysis of the district court's rationale reflects its acceptance of its key tenet — the disregard of the loss amount as the determinative factor.  The court reviewed the government's other objections to the district court's proffered justification ... and swiftly rejected them....

Like most sentencing decisions, Prosperi is highly dependent on its facts, yet the opinion is likely to reverberate in white-collar sentencing jurisprudence.  The willingness of the district court not just to mitigate the impact of the loss amount on the sentence, but essentially to disregard its effect entirely, will be an attractive precedent to defendants facing staggering sentences driven largely by loss amounts.  And while the government will surely strive to limit Prosperi to its facts, it will not be difficult for defense lawyers to analogize other fraud cases to at least some of the factors present in Prosperi. Fundamentally, the Prosperi opinion also signals to district courts that, at least in the First Circuit, there are few restraints on their discretion to impose sentences far below the applicable Guidelines range in fraud cases; as long as they explain why they did so, citing lawful considerations, the sentences will not be disturbed on appeal even when the Court of Appeals plainly disagrees with the result.  If embraced by district courts, this may galvanize a trend away from the uniformity that the Guidelines seek to impose, particularly in white-collar cases, and toward a return to the flexibility and discrepancy in sentencing often associated with the pre-Guidelines era.

Related prior post:

October 6, 2012 in Booker in the Circuits, Federal Sentencing Guidelines, Sentences Reconsidered, White-collar sentencing, Who Sentences? | Permalink | Comments (0) | TrackBack

Tuesday, September 25, 2012

Not much for sentencing fans (or Rubashkin supporters) in latest SCOTUS cert grants

As reported here by SCOTUSblog, the "Supreme Court, preparing to open a new Term next Monday, on Tuesday granted review of six new cases." Disappointingly, though the Court did take up a Fourth Amendment blood testing issue concerning drunk drivers in Missouri v. McNeely, none of the other cases I noted in this recent post are on the grant list.  There is also an notable IFP grant in Millbrook v. US concerning the federal government's immunity in lawsuit by a federal prisonder subject to sexual assault by three guards.

A long list of cases in which cert was denied will not be released until next Monday. In all likelihood, the Rubashkin case will be on that list. If so, any and everyone aggrieved by the prosecution and sentencing in Rubashkin will need to turn their attention and energies toward a 2255 petition (or, I suppose, a clemency application).

Related posts on the Rubashkin case:

September 25, 2012 in Offense Characteristics, Procedure and Proof at Sentencing, Sentences Reconsidered, White-collar sentencing | Permalink | Comments (1) | TrackBack

Thursday, September 20, 2012

Can a documentary impact odds of a cert grant in the (in)famous Rubashkin case?

In this post from a few months ago, I wondered about the odds as to whether SCOTUS grants cert in the (in)famous Rubashkin case.  As detailed in an amicus brief on sentencing issues I authored to support Rubashkin's cert petition (discussed here), I am hoping SCOTUS will take up this case.  But the odds of a grant in any case are always long, no matter how much attention a case receives.

That said, as detailed in this Des Moines Register piece, the Rubashkin case is getting a whole new level of attention just days before the cert conference in which the Justices are scheduled to consider the case.  The piece is headlined "Documentary highlights Rubashkin’s fraud conviction, Supreme Court appeal," and here are excerpts:

A documentary short released today that examines the power U.S. federal prosecutors wield in the U.S. criminal justice system features former Agriprocessors executive Sholom Rubashkin.

The 10-minute film, “Unjustified,” includes interviews with a variety of legal experts, among them former Solicitor General Paul Clement, the lead lawyer on Rubashkin’s appeal that asks the U.S. Supreme Court to shorten a 27-year sentence or order a new trial. The high court will decide this fall whether to hear the case....

Rubashkin argues U.S. District Judge Linda Reade, who presided over his trial, could not be impartial because he said evidence shows she met repeatedly with investigators planning the raid. He also argues his prison term was too long for a first-time, nonviolent offender.

The documentary is directed by Emmy-nominated producer Nicholas McKinney, known for his work on Comedy Central’s “The Daily Show” and Michael Moore’s Bravo TV series “The Awful Truth.”

The 10-minute video, titled “Unjustified: The Unchecked Power of America's Justice System," is available via YouTube at this link.

Related posts on the Rubashkin case:

September 20, 2012 in White-collar sentencing, Who Sentences? | Permalink | Comments (1) | TrackBack

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."

September 19, 2012 in Criminal Sentences Alternatives, Procedure and Proof at Sentencing, White-collar sentencing | Permalink | Comments (0) | TrackBack

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).

August 20, 2012 in Federal Sentencing Guidelines, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing | Permalink | Comments (2) | TrackBack

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.

August 3, 2012 in White-collar sentencing, Who Sentences? | Permalink | Comments (14) | TrackBack

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.

July 31, 2012 in Scope of Imprisonment, White-collar sentencing | Permalink | Comments (2) | TrackBack