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June 3, 2006

Reflection on a (record?) variance

I am home from the terrific Miami FSG conference (kudos to everyone involved), and on the way I was thinking about Judge Rakoff's decision this past week to give an enormous variance — the largest I have seen — to a corporate president who apparently faced a life sentence under the guidelines after a fraud conviction that resulted in $260 million in losses (basics here).

More details about the case and the sentencing can be found in this AP article:

The president of a health care company that once was a Wall Street darling was sentenced Tuesday to three and a half years in prison by a judge who rejected arguments that he deserved a much lengthier term.  Richard P. Adelson, 40, faced as much as life in prison for his conviction earlier this year on conspiracy and securities fraud charges for joining a plot to hide financial problems at Impath Inc., a provider of cancer information services....

Defense lawyer Mark S. Arisohn argued for leniency, saying jurors seemed sympathetic to his client and believed he would face months rather than years in prison.  Assistant U.S. Attorney Alex Southwell said Adelson did not deserve much sympathy after causing financial, emotional and physical devastation to so many people.  He said the fraud, which led to the company's collapse, caused more than $100 million in losses to nearly 10,000 investors.  Southwell said it was "among the worst of corporate fraud offenses of recent years."

Southwell said the government was not seeking a life sentence but one that was "just and appropriate" and consistent with federal sentencing guidelines. When the judge told the prosecutor that the guidelines called for a life sentence, Southwell noted that the lives of some victims have been "decimated by the defendant's conduct."

In addition to wondering, as I did before, whether this (record?) variance will be appealed, I wonder whether and how this sentence might impact other up-coming high-profile corporate sentencings. 

In particular, Jamie Olis is due to be resentenced (after now having served more than two full years in prison without having yet been lawfully sentenced).  Olis was a mid-level employee at Dynegy, not a corporate president, and his personal circumstances seem comparable to those of Adelson.  (A lot more background on the Olis can be found here.) 

If we really care about avoiding national sentencing disparity, I would have a hard time understanding why Olis should have to serve any more time than Adelson (who is still free pending appeal) is now facing.

June 3, 2006 at 07:38 AM | Permalink


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Absolutely agree with your comments however I seriously doubt that the judge in Mr. Olis' case will consider anything but his own previously held assumptions. This judge granted the prosecution an unprecedented additional 5 months and counting to find expert support for their claims of losses in the $100m range. I suppose that, the Honorable Sim Lake, as a committee chair for the US Sentencing Commission,is allowing his personal allegience to the claimed "reasonableness" of the Sentencing guidelines and his personal interest in supporting his own previous ruling of "loss" in this case is getting in the way of his duty to be a judge (rather than the head of the prosecution team in this specific matter). And he certainly would never admit that the Guideline definition of loss when applied to share price fluctuations simply makes no sense in the real world. This judge is essentially assisting the prosecution to get their evidence up to a standard required to support the minimum sentence he has already decided to give Mr. Olis and I doubt that it is anywhere in the 3 or 4 year range. That would be too humane.

This judge has stated post-Booker that every case must begin with a guideline sentence and 3553 factors are already considered in the sentencing guidelines. How that is possible, I don't know-- but unfortunately, it appears that Mr. Olis has a lot of people wanting to see him punished severely for the sins of many others and this judge is certainly not the least of the lot. I hope I am wrong but I believe that Olis still has quite a way to go before he will see any real justice.

Posted by: FJO | Jun 4, 2006 8:25:51 AM

FJO may well be right about this judge's bias. In addition, as Doug has so well documented, Federal District Judges since Booker have tended to treat the Guideline sentence as reasonable per se, and Courts of Appeals have been far more likely to affirm upward departures than downward departures.

I doubt that an isolated downward departure in New York, not yet tested on appeal, is going to have much relevance for a sentencing judge in Texas.

Posted by: Marc Shepherd | Jun 5, 2006 9:24:27 AM

You have reminded us about the reality of the law -- it is so often unfair... and it makes me wonder what first step would be involved to make it more fair for more people...? What do you think, based on this case...?

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