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June 6, 2012

Federal prosecutors urging 230-year sentence (!?!) for Ponzi schemer Allen Stanford

As reported in this new Bloomberg piece, headlined "Stanford Should Get 230-Year Term in Ponzi Scheme, U.S. Says," apparently federal prosecutors believe that only a sentence 10 times the remaining life expectancy of a Ponzi schemer is sufficient punishment. Here are the details:

Convicted Ponzi scheme operator R. Allen Stanford should be sentenced to the maximum allowable term of 230 years in prison, prosecutors argued in court papers.  Stanford, who the government said is seeking a sentence of "time served," is to be sentenced next week in U.S. District Court in Houston.

"Robert Allen Stanford is a ruthless predator responsible for one of the most egregious frauds in history," the Justice Department said in a 34-page filing.  "Displaying an audacity that only further illustrates his depravity, Stanford seeks a sentence of time served, brazenly arguing that there are no losses" and rehashing arguments rejected by the jury that convicted him in March.

Stanford, 62, was found guilty of defrauding more than 20,000 investors of $7 billion through the sale of what the government called bogus certificates of deposit at his Antigua- based Stanford International Bank Ltd.  A court-appointed receiver gathering the ex-billionaire's assets has located less than $500 million in cash and assets to use to repay investors.

Stanford's own sentencing recommendation was filed under seal.  Prosecutors said he asked U.S. District Judge David Hittner for leniency, in part because he is a first-time offender. Stanford also denied that investors suffered any losses while he was running Stanford Financial Group and "complains that he was stripped of all his assets," by the government, prosecutors said.

The recommended 230 years is at the top of the range of sentences for Stanford's crime under federal guidelines, the prosecutors said in the filing.  "Nothing speaks more eloquently of Stanford's character than his sentencing arguments in this case," the Justice Department lawyers wrote.  "After everything that he has done to so many innocent victims, Stanford does not show a hint of remorse for his misconduct, only the same arrogant, narcissistic behavior that led to it."

Stanford has been incarcerated as a flight risk since his indictment in June 2009. He was charged about three months after U.S. securities regulators seized his companies on suspicion they were a "massive" Ponzi scheme, in which late-arriving investors' funds were used to pay earlier investors.

Stanford's lawyers have requested a prison sentence of 31 to 44 months, prosecutors said.

Robert A. Scardino, one of Stanford's criminal-defense lawyers, said by phone that his side is "hoping for the best and preparing for the worst" at the June 14 sentencing. Scardino declined to comment further, citing a court order not to speak publicly about the case.

I understand completely why federal prosecutors are eager to huff and puff and demand a sentence in this high-profile case that can be measured in decades, not just in months.  But to request a sentence of 230 years for a man in his 60s is not just silly, it is truly preposterous in light of the mandate in federal law for judges to impose sentences that are "sufficient but not greater than necessary" to achieve congressional punishment purposes.

I would love for the sentencing judge in this case to request that federal prosecutors explain in writing just just why they believe that a sentence of, say, 75 years would be insufficient under these circumstances and why they think only a sentence more than three times that length is needed in this case.

June 6, 2012 at 06:20 PM | Permalink


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Great post, Doug. I find these requests so baffling. If I were the judge, I'd engage in a long discussion, on the record, about exactly why a 210-year sentence was insufficient. Just to demonstrate the absurdity of the entire enterprise.

Posted by: AnonymousOne | Jun 6, 2012 6:30:45 PM

Multiple-century sentences are more for satisfying the public's lust for punishment more than deterrence. Up until now, the only offenders getting multi-century-long, determinate (non-life) sentences have been child porn downloaders and other sex offenders.

Posted by: Eric Knight | Jun 6, 2012 6:54:03 PM

The real issue has nothing to do with this case. As Doug has noted, almost any believable sentence for Stanford will exceed his life expectancy.

The benefit to the government is in comparative terms. If they can get 230 years for Stanford, then they’ll seem comparatively generous when they ask for “only” 10 or 20 years for some small-time swindler.

The Madoff sentence was similar. Even though it exceeds his life expectancy by many years, it sets a benchmark by which other defendants will be measured.

Posted by: Marc Shepherd | Jun 6, 2012 7:04:06 PM

The government's request for time out of mind is as silly as the defendant's request for time served. The only difference is that people expect the government to be serious, while no one expects it from the defense.

Posted by: Bill Otis | Jun 6, 2012 9:45:02 PM

The problem I have with this case is that they prosecuted Stanford at all. When you prosecute the Stanfords of the world you create a moral hazard. The public is induced to naively believe that a regulated market with rules and punishments relieves said public from asking hard questions to their investment advisors, like "where is my money?" and "do you have third party audited statements of all the accounts you manage and can I view them?" or "how do you manage to obtain yields of twelve to fifteen percent, year in, year out, while all my friends are in the negative or flat". I suggest that everyone ask their broker these questions tomorrow and if he can't answer them to your satisfaction then you put your money somewhere else.

The public should assume that every investment advisor or broker is not to be trusted and the financial markets should be viewed no differently than a casino, the lotto, or the races. The sooner that happens, the safer the public will be from predators like Stanford.

Posted by: Jardinero1 | Jun 6, 2012 10:21:54 PM

Will I laughed at Bill's comment I think Marc has the true measure of the issue. By asking 230 years from this guy (which he will never serve) it then seems reasonable and rational to ask for ten years for the guy who robs the food stamps program of $5,000 (which of course he will serve).

So we can pretend that we are even handed and fair and ignore the practical reality that the man who stole seven billion will serve just as much time in jail as the guy who stole 5K.


If what you say is true is it even fair to call Stanford a "predator" then? You make him sound more like a scavenger.

Posted by: Daniel | Jun 6, 2012 10:43:38 PM

Here's an approach that in principle could jusify a sentence well in excess of an individual defendant's lifespan.  Assume that a defendant swindled the life savings of on average $50,000 from 1000 people from his large church to fund a lavish personal lifestyle over the course of 10 years that comes crashing down as all Ponzi schemes do.  When the feds come in to clean up they recover, say $5 million of the original $50,000,000.  This defendant is now 65 years old with a lifespan of 20 more years.  That would mean that he would be getting .02 years for each victim if his sentence equalled 20 years.  That's 7.3 days for every person he stole from or 1 day for each $6,164 not recovered.  You can play with the math, but you can see how in that way the 20 year penalty (or 40 or 60) might not seem to be sufficient. For Scardino, at $7 billion of theft with 20,000 victims and a 230 year sentence that comes out to 4.19 days for each victim and 1 day for each $83,383 stolen.
My view is that the court is duty bound to sentence both for the offense and the offender.  18 USC 3553 appears to incorporate this concept, however sometimes these are in tension with each other.  The defendant has only limited time on this earth and has only one life to give for his crimes, but sometimes the conduct is simply so severe, or the victims so numerous that to minimize the crime by saying "well, for what he did to you, he got 4 days." It just does not sound right. 

The very large sentence, in excess of a lifespan, is more palatable for violent crime, but honestly morally bankrupt people who steal from the trusting among us sometimes reflects a darker soul than many of the violent criminals I have prosecuted.  While public safety considerations in violent crime are paramount as a practical matter, it hardly any defense for the repeat thief who commits numerous crimes over a long period of time to complain of getting more time than the lifespan he has available to serve.
Honestly, what is wrong with 230 years, it is not like he will survive it, or 100 or 50.  Call it LWOP if you want, or to alleviate Daniel's concern maybe we should give him death.  In all seriousness though, I am confident that the fact that Scardino stole $7 billion and got the remainder of his life in prison should not be the benchmark by which the small time swindler sentence is measured even though Scardino will not serve all of which he deserves.

Posted by: David | Jun 7, 2012 12:37:17 AM

What Marc Shepherd said.

The importance of these sentences is the way they advance the sinister, hyper-punitive fiction that a year or two or five or 10 in prison is a walk in the park.

We don't simply punish people for their transgressions. We stomp them into dust.

And no, Bill Otis, I'm not talking about killers, rapists or child molesters.

Posted by: John K | Jun 7, 2012 9:13:18 AM

I somewhat agree with John K and Marc Shepherd, but think there's something else going on as well. The feds have prosecuted VERY few white collar cases and so seeking absurdist sentences draws headlines and makes the public think they're attacking corporate crime when they're mostly not. In particular, Texas' southern district where this is being prosecuted has shifted nearly all their resources to immigration cases and rarely pursue white collar crimes, despite promises from the Obama Administration to the contrary. So in the rare instances when they do white collar cases, they want to maximize credit because it doesn't happen very often.

Posted by: Gritsforbreakfast | Jun 7, 2012 10:33:55 AM

Another way of looking at it: The people need a way to symbolically place various crimes along a gradient of bad-to-terrible. One way to do that would be to impose punishments that would in fact be barbaric in execution -- such as the death penalty for white-collar crimes (as in China), or torture, or less humane conditions of confinement as punishment for the crime.

Rather than do that, we take the comparatively mild, but symbolic step of imposing sentences whose total number of years exceeds the defendant's lifespan. In actual execution, this has no effect on the prisoner, so it is much more humane than the other possibilities above. For symbolic purposes, it helps to reflect the nature and extent of the crime, so it fulfills the statutory goals of sentencing.

Posted by: Another view | Jun 7, 2012 11:53:06 AM

"The people need a way to symbolically place various crimes along a gradient of bad-to-terrible."

How does this have anything to do with what "the people need"? Whatever the reasoning behind the decision, it was made based on what federal prosecutors felt THEY needed (e.g., a public relations bonanza that deflects attention from their failure to prosecute most white-collar crime). "The people" were not consulted and if they were they might have said something like this.

Posted by: Gritsforbreakfast | Jun 7, 2012 12:21:34 PM

Well, Grits -- since prosecutors either are elected or ultimately serve at the pleasure of elected officials, they're the best proxy we got for what the people want. Granted, it's an imperfect proxy. Would you prefer jury sentencing, like they have in Virginia? My understanding is that that typically results in much longer sentences -- which (together with elected representatives' enactment of man-min laws and higher max laws) may go to show that the people do in fact want long sentences.

Posted by: Another view | Jun 7, 2012 1:43:21 PM

The public likely realizes a 230 years sentence is theater and interprets the sentence as a life sentence.

Posted by: C | Jun 7, 2012 7:05:36 PM

Both the 230 year sentence requested for Allen Stanford and the 150 years given for Bernie Madoff are markedly shorter than the 845 year sentence imposed in 2000 upon Sholam Weiss in the Middle District of Florida for white collar crimes (74 counts). Because he was a fugitive at the time of sentencing, he was sentenced "in absentia" and his direct appeal to the Eleventh Circuit was dismissed pursuant to the fugitive disenfranchisement doctrine. He was later captured in Austria and extradited back to the U.S. The Department of Justice has not kept the promises it made to Austria to secure that extradition, so Mr. Weiss has been litigating a 2241 Habeas Corpus Petition, also in the Middle District of Georgia, where he was represented by Prof. Stephen A. Saltzburg of George Washington University Law School and 2008 Chairman of the ABA Committee on Criminal Justice. That Judge took 10 years off his sentence without actually holding a new sentencing hearing(now Weiss's sentence is "only" 835 years) and entered a new Order of Judgment and Commitment, which triggered a new right to appeal. That appeal is now pending at the Eleventh Circuit. Weiss is now about 60 years old and has already served 12 years of his sentence, which is still being contested in the Federal courts. His sentence is believed to be the longest white collar sentence imposed in American history, even though the loss calculation was only about $40 million.

Posted by: Jim Gormley | Jun 8, 2012 3:41:53 PM

i think its kind of scary so many people invest. Im not sure in what to say you want to belive that someone is changed but you never know. So i think if he really wanted to cheat people still he could do it in or outside the prison.

Posted by: dildo | Aug 3, 2012 7:45:36 PM

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