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December 15, 2007

Fascinating review of recent white-collar sentencing realities

I just noticed this Bloomberg news story detailing some of the sentencing realities of the modern assault on corporate crime.  The story is headlined "Bush Fraud Probes Jail Corporate Criminals Less Than Two Years," and here some lengthy excerpts from a very interesting piece:

Sixty-one percent of defendants sentenced in the Bush administration's crackdown on corporate fraud spent no more than two years in jail, escaping the stiff penalties given WorldCom Inc. and Enron Corp. executives. In the past five years, 28 percent of those sentenced got no prison time and 6 percent received 10 years or more, according to a review of 1,236 white-collar convictions....

A wave of corporate corruption marked by Enron's collapse in 2001 and an accounting scandal at WorldCom led Congress to enact harsher penalties. President George W. Bush signed the Sarbanes-Oxley Act to reform governance and named a Corporate Fraud Task Force to push "significant" prosecutions....

Defendants got reduced jail time when they helped prosecutors investigate frauds, served as low- or mid-level executives, or committed crimes that were less sophisticated than complex accounting conspiracies, the review by Bloomberg News found....Of the 1,236 convictions from 2002 to 2007 in the review, 1,133 defendants were sentenced. Forty-seven percent of those got a year or less in prison....

The Justice Department claimed credit for 1,236 convictions in the crackdown on corruption. The department says it doesn't have a comprehensive list.  Bloomberg assembled a comparable list based on more than 350 cases from task force annual reports, lists of executives, and press releases on the department's Web site....

Joan Meyer, who oversees the task force as senior counsel to the deputy attorney general, argues that any prison sentence can serve as a deterrent. "Every case can't be an Enron,'' Meyer says. "The question is, do we give a pass to white-collar defendants because their crimes are non-violent and result in lesser sentences? That would be an abdication of our responsibilities.''...

At least 129 defendants cooperated with prosecutors, court records show.  The number may be higher, lawyers say, because public files don't always reflect whether a judge credited a defendant for helping the government.....  Judges weigh a crime's nature, the amount of financial loss and a defendant's circumstances in sentencing. Offenders who plead guilty tend to get less time than those who go to trial. 

Defendants are penalized for not accepting responsibility for their crime, while those convicted at trial may be held accountable for the full loss in a fraud.  Of 193 defendants convicted at trial, 38 got 10 years or more....  "The idea that somebody who goes to trial and gets hammered while people who plead guilty get far less time smacks of the Inquisition,'' says defense attorney John Keker of Keker & Van Nest in San Francisco. "I think it's a disgrace.  The going-to-trial penalty should be an embarrassment to judges everywhere.''...

December 15, 2007 at 08:41 AM | Permalink


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As a white-collar felon who spent 2 years in prison, I am amazed at the number of people who equate punishment of a white-collar felon with time spent in prison. This singular view of punishment does nothing to show the entire picture of what a prison sentence, no matter the length, does to a person who was once a respectable member of the professional world.

Beyond the impacts to the family, the financial burden of mounting a legal defense can be overwhelming. Considering that this legal defense is going on while the accused is most likely not working, it can have the effect of draining a lot of accumulated wealth. Combine this with the complexity of these cases that are drawn out over a few years, and you have a "negative cash flow" situation.

Even after a few years of putting up a defense, a person may realize that their financial resources cannot continue to mount a defense and cannot support the family should he/she leave for an extended prison sentence. Therefore, beyond acceptance of responsibility, comes the reality that there is a financial burden for continuing the fight to defend oneself. It doesn't help to also know that the government has an extraordinarily high percentage rate of winning cases either. As such, plea agreements are struck on a regular basis to not only cut prison time but to cut costs.

Then there's not working for a period of 2 years, what many consider a short sentence, while in prison. I challenge anyone to take two years off from working, no matter your current income or savings, and tell me that it did not significantly change your financial position.

After prison there is the reality of finding a new job. I don't know of a long line of recruiters standing outside the prison gates waiting for a white-collar criminal to resume their career. Most companies would not hire someone with a background in white-collar crime. If they do, it most certainly would not be in a role that had the same compensation levels.

Then there's restitution, bad credit (hard to make those payments from prison), and divorce....all realities for those who have gone to prison.

I don't write this to gain any sympathy for those who have been convicted of a white-collar crime. In fact, I try to tell people that there are huge consequences for acting illegally in the corporate world. It is just unfortunate that the sole measure of punishment, years in prison, has become the determining factor to judge whether a person received a just punishment.

Was prison difficult? Yes, it was one of the most difficult things that I have done in my life. Separation from my wife and kids, lake of income, incarceration, restrictive lifestyle, etc. Yet, I found it to be the least of my punishments as a white-collar felon. Employment, restoring my integrity, finding a job, regaining some financial stability have all been challenges for me and others I know who have gone through the experience.

To equate punishment with years in prison, particularly on white-collar crime, is to miss the ultimate punishment that awaits those who cross legal lines inside of corporate America. Let the politicians come up with a matrix of guidelines measured in years, but for those who are a bit smarter than that know that prison is but a small part of the punishment...no matter how many years are given out by the judge!

Walt Pavlo

Posted by: Walt Pavlo | Dec 17, 2007 9:50:07 AM

Welcome back to reality, there are some of us who shared your pain. Hang in there.

Posted by: | Dec 17, 2007 1:51:26 PM

Similarly, look at this article about people getting OVER-sentenced..

Posted by: | Dec 18, 2007 7:59:48 PM

i can certainly agree with your story. Ten years ago i was incarcerated and disbarred as an attorney for lying to a prosecutor in representing a drug dealer turned government informant. i did a year and ever since it has been a struggle to support my family, get a decent job etc. i was in the mortgage business until a year ago when it collapsed and at 66 years old it is quite a struggle to earn a living.

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