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October 19, 2006

"Enron: The Tale of Two Sentencings"

The Wall Street Journal today has this interesting commentary entitled, "Enron: The Tale of Two Sentencings —  If Skilling Gets 20 Years in Prison, It'll Show It Hurts Not to Sing to Prosecutors."  Here are some portions:

The surprisingly lenient prison sentence given recently to Enron Corp. former Chief Financial Officer Andrew Fastow highlights the benefits of cooperating with federal criminal authorities. The coming sentencing of former Enron President Jeffrey Skilling is likely to demonstrate the dangers of fighting them....

The likely discrepancy in prison terms for Messrs. Fastow and Skilling, widely considered to be two of the central figures of the Enron scandal, illustrates that there has never been a better time in the white-collar-crime world to rat on your colleagues.

Over the past half-decade, prison terms for financial crimes have ratcheted up. Where a convicted corporate executive could once expect probation or a few years in prison, a first-time offender now faces as long as life behind bars.  The surest way to avoid such a fate is to admit wrongdoing, cut a deal with prosecutors and help them nab others. The sentencing system "has developed a huge gulf between those who go to trial and those who cooperate," says Kirby Behre, a former federal prosecutor and co-author of a treatise on federal sentencing practices.  While Mr. Skilling faces "an astronomical sentence," cooperators such as Mr. Fastow "are still getting sweet deals," says Mr. Behre, a partner in the Washington law office of Paul, Hastings, Janofsky & Walker.

October 19, 2006 at 07:15 AM | Permalink


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What's interesting is that the article refers to Fastow's plea as a "sweet deal." It wasn't so long ago that six years in prison for a white collar crime was considered hard time --- to say nothing of the ten years he originally agreed to, plus a year for his wife.

Of course, by current standards, with even entry-level white collar crimes carrying multi-year sentences, Fastow DID get a sweet deal, but that's only because sentences are so far out of whatck. As a matter of policy, I can't imagine the white collar crime that merits more than a ten-year sentence for a first offender.

That would make the "correct" sentence for people like Skilling and Ebbers more like 10 years, and the correct sentence for Fastow more like 2 years.

Posted by: Marc Shepherd | Oct 19, 2006 7:47:10 AM

And this is NEWS because ... ?

Posted by: ycl | Oct 19, 2006 9:14:45 AM

"As a matter of policy, I can't imagine the white collar crime that merits more than a ten-year sentence for a first offender."

Seriously? My imagination begs to differ.

Posted by: SPD | Oct 19, 2006 9:47:51 AM

Yes, seriously. If you look at the typical objectives of sentencing (incapacitation, rehabilitation, retribution, general and specific deterrence), a 10-year sentence is certainly ample for virtually any first-offense white collar crime, and indeed is probably too harsh for most of them.

Of course, I do realize we're living in a world where 10-year sentences are handed out like candy, but I haven't seen any reasoned explanation for it. For most white-collar offenders, the shame and collateral consequences of even a year in prison are horrifying, and ten years is (for them) close to forever. Beyond that, it's just a waste of government resources for no further penal benefit.

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