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April 21, 2005

More news on the Enron Nigerian Barge sentencing

From talking to a reporter this afternoon, I got the impression that former Merrill Lynch executive Daniel Bayly's below-guidelines sentence of 30-months imprisonment for his role in the Enron Nigerian barge fiasco (basics here) was the result of a four-level departure for "aberrent behavior" and that the District Judge Werlein's guideline calculations led him to reject a number of the findings made by the "sentencing jury" in the case (details here).  The word is that Bayly plans to appeal his conviction; I wonder if the government might be inclined to appeal his sentence.

Meanwhile, this afternoon according to this Bloomberg News story, Judge Werlein gave a 46 month sentence James A. Brown. The longer sentence for Brown (the hardest working man in snow business?) can be explained, in part, because he was also found guilty of perjury and obstruction of justice. Nevertheless, compared to the 33-year sentence urged by the government, the sentence of less than 4 years for Brown again raises questions spotlighted here about whether we are seeing a pattern of leniency in white-collar cases post-Booker.

Peter Henning over at the White Collar Crime Prof Blog has a thoughtful discussion of these sentences and related issues in this post.

April 21, 2005 at 06:13 PM | Permalink


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While I think the judge tried to be fair, apparently the $1.4 million loss was based on Enron and Merrill Lynch profits from the deal.. So… the victims of this particular fraud were their own companies? The very same companies that made them responsible for working on this transaction in the first place, knowing full well the purpose of the transaction and that eagerly booked the profit “illusion”, benefited from it and in fact profited again later from the sale? No, Enron’s collapse had nothing to do with this transaction and most people would recognize that the shareholder loss directly related to this “fraud” is zero but as much as I respect Judge Werlein for not just towing the government line, it seems he could not find zero because no judge wants to agree there is no related loss in these types of cases and basing a sentence on gain is a no-no unless it seems, there actually is a gain.

Using the preponderance of the evidence standard and an overly broad definition of what constitutes a loss- to include a loss of profit by your own company that charged you with the task of completing the job in the first place- is a violation of these defendants’ rights and just makes no sense. What are we trying to accomplish here? The need for someone to “pay” and the related prosecutorial rampage is damaging many good people and many good families and too many Americans are pleased to witness their destruction since it isn’t them or their families who are paying with their lives. The perjury and obstruction of justice charges are just another kick from the prosecution when they win a case. The jury didn’t believe you, so that means you lied. Prosecutors are spending millions of tax dollars and working for years on a few cases against businessmen, many times mid-level businessmen, and working hard to take away the rest of their lives as happened in the Jamie Olis case- who also did not put money in his own pocket. Prosecutors in these highly public white collar cases have lost all sense of what their role was supposed to be in the first place- it is not to use their government granted power and our tax dollars to promote themselves, be the big stick of public revenge and build their own resumes on the backs of businessmen who had the misfortune of working for one of the many now-vilified companies and believing the many experts who are involved in these transactions who claimed to know the rules, but apparently really, really didn’t.

Let’s get back to paying the DOJ to protect the public and work for justice rather than to allow individual prosecutors to build their own careers by bringing down people who lived respectable lives but who had the unforgivable sin of earning a big paycheck and yet (gasp!) claim to be innocent. By the way, for those who are cheering; the satisfaction of seeing successful businessmen go to jail and seeing their children fatherless is costing taxpayers another $30k for every 12 months of their sentences aside from the millions in the federal prosecutions. If the “greater good” here is to emphasize deterrence, okay everybody gets it now- if the rule is unclear or unstated, don’t ask your accountants or your attorneys for an opinion – just ask the DOJ –disregard their pre-law, poli-sci, or English lit undergrad degrees-they are today’s new accounting law experts and have minors in Foretelling the Future and Reading Between the Lines. They will let you know if your company was covertly assigning you to a criminal conspiracy- whew!- Easy as that! Or better yet- get out of the public company business all together- too many bosses with too many different agendas that are much too happy to see you fry.

Posted by: A.S. | Apr 21, 2005 6:59:01 PM

How wonderful to read your insightful comments on the NBT sentencings, in particular, and the frightening implications of the DOJ's abuse/misuse of power in general. What suprises me -- and what you also touch upon -- is the readiness of the press and the public to cheer these actions on. Were this drama not entitled, "Enron," and the cast of characters not corporate types of means, I am quite sure the plot would be unravelling much differently. As it is, the press seems incapable of drawing back the curtain to unmask the real villians.

Posted by: Forrest Mason | May 20, 2005 5:30:04 PM

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