Category: Sentencing

Sentencing – General Re Exec

December 16th, 2008

The Hartford Courant reports on the sentence of a former General Re executive. See Convicted Gen Re Executive Gets 2 Years In Prison. See also Colleen McCarthy, Business Insurance, Ferguson gets two-year sentence for finite fraud. For background see here and here. Doug Berman over at Sentencing Law & Policy here also presents thoughtful comments on the sentence. Dan Slater at the WSJ Blog discusses who represented this individual. (see Former GenRe CEO Gets Off With a Mere Two Years)

The government’s sentencing memo looked at a significant loss figure (see here) There was also the judge’s conclusion on the loss figure – "30 levels will be added to the defendants’ guidelines for loss of more than $400 million, 6 levels will be added for more than 250 victims, and no restitution will be ordered." There was the possibility of an extremely long sentence based upon this loss figure.

But now seeing the sentence imposed and the amount of loss previously stated, it appears that the court used reason in imposing a sentence that not only meets the offense, but more importantly focuses on the offender. It is good to see a movement away from using strict mathematical computations to determine a sentence, and to see that it is important to remember that it is an individual being sentenced.

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Addendum, Chad Hemenway, Bestweek/Bestwire, Feds in Ferguson Case: Former Gen Re Chief Executive Sentence Sends Message
Should Barney, A Repeat Offender, Receive A Pardon?

November 17th, 2008

Unlike most white collar cases that have individuals who have no prior convictions, reports are that Barney the white house canine is a repeat offender. See Rodrique Ngowi,TBO (AP), Reporter wasn’t White House dog’s 1st bite victim. And it seems that the victims have a commonality (all press people).

It was questioned here whether Barney would appear on the President’s outgoing pardon list. Most pardon grants are first offenders, and often their convictions are very old. Who will receive President Bush’s outgoing pardons remains to be seen. Mind you, I don’t have a dog in this fight.

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Sentencing Gen Re Execs

November 8th, 2008

Previously noted here, both the government and defense filed their sentencing memos in a case with arguments far apart on what should be the appropriate sentence for the defendants found guilty following a reinsurance contract between AIG and General Re.

Douglas McLeod, over at Business Insurance, has been providing comprehensive coverage on the case here, the most recent entry being the judge’s Ruling on Loss Calculation, Victim Enhancement, and Restitution here. The judge concludes that "30 levels will be added to the defendants’ guidelines for loss of more than $400 million, 6 levels will be added for more than 250 victims, and no restitution will be ordered."

But the actual sentence remains to be seen. Courts now have the ability to look beyond mere mathematical calculations and sentence the individual.

See also Doug Berman’s Sentencing Law & Policy here.

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White Collar Sentencing Decision

October 6th, 2008

How many times should a person be sentenced and at what point does the continued uncertainty constitute part of the punishment. Although the First Circuit does not cover this aspect in its recent decision in the United States v. Thurston case, it does state:

"This, the third review of William Thurston’s sentence, was necessitated by the Supreme Court’s decision in United States v. Gall, 128 S. Ct. 586 (2007). We affirm the sentence. . . . To say that the journey of this case has been arduous for the parties involved would be an understatement."

The defendant was convicted of "conspiring to defraud the Medicare program of more than five million dollars." The district court sentence, given deference by this court, was for 3 months incarceration and 24 months supervised release.

Opinion – Download Thurston.pdf

(esp) (w/ a hat tip to Paul Kamenar)
Internal Investigation Costs as Restitution

October 6th, 2008

In United States v. Amato, the Second Circuit held that restitution could be ordered under the mandatory Victims Restitution Act of 1996 for victim’s expenses of attorney fees and auditing costs that were a "direct and foreseeable result of the offense." The court stated:

"Defendants perpetrated a complicated fraud against a large corporation and a number of its clients, as well as the states to which those clients were required to turn over escheated funds. That this fraud would force the corporation to expend large sums of money on its own internal investigation as well as its participation in the government’s investigation and prosecution of defendants’ offenses is not surprising. There is no doubt that EDS’s attorney fees and auditing costs were a direct and foreseeable result of defendants’ offenses."

See also Daniel M. Gitner & Brian Jacobs, New York Law Journal, Seeking Restitution for the Costs of Internal Investigation

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Who Says White Collar Sentences Are Dropping Below the Guidelines?

September 27th, 2008

Despite recent Supreme Court opinions that provide some flexibility when sentencing a convicted defendant, guideline sentences appear to be part of a culture that is not changing. A recent white collar case that demonstrates a court not departing below the guidelines, is the recent sentencing of T. Milton Street. A brother of former Philadelphia Mayor John F. Street, T. Milton Street received a sentence of 30 months for his convictions for tax charges. (see Emilie Lounsberry, Philadelphia Inquirer, T, Milton Street Sr. gets 30 months for dodging taxes) The trial was an unusual one, with the accused arguing the unconstitutionality of the tax code (see here). The jury failed to convict the accused of the fraud charges brought by the government, and also did not convict of all the tax charges that had been brought. (see here). In addition to the stiff tax sentence, the court failed to grant the accused bail pending his appeal. (see Michael Hinkelman, Philadelphia Inquirer, T. Milton Street Sentenced to 30 Months) This does not, however, preclude him from asking the appellate court for bail.

(esp)(w/ a hat tip to Peter Goldberger)
Upcoming Sentencing – General Re Related Case

September 14th, 2008

The defendants found guilty following a reinsurance contract between AIG and General Re, contracts that the the government argued made it appear that (1) "General Re had transferred approximately $100 million in insurance risk … to AIG when in fact, no real insurance risk had been transferred; (2) General Re was Paying AIG $10 million in cash ‘premiums’ when, in fact, General Re never would be out on the transaction; and (3) General Re had offered the transaction to AIG when, in fact AIG offered the transaction to General Re." Sham deals and side-deals form the basis of the criminality alleged by the government. And with convictions in hand, the government is moving to sentencing.

The government has filed its sentencing memo and so too the defendants. The ball now rests with the judge. The disparity is great – with one side focusing on the offender loss and computing numbers and another looking at a first offender with a truly stellar life record. It is fascinating to see in the government’s sentencing memo, the admission that there can be more than one way to compute the loss. The government presents two different ways. Should a sentence for a crime be based on mathematical calculations that by the government’s own admission are subject to multiple approaches? The real showdown here is with the U.S. Sentencing guidelines.

Government’s Sentencing Memo – Download us_sentencing_memo.pdf

See also Douglas McLeod, Sentencing Fight Looms in Finite Case

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Upcoming ABA Sentencing Conference

September 7th, 2008

Sentencing Advocacy, Practice and Reform Institute

Presented by The American Bar Association Criminal Justice Section

October 24, 2008

The Marvin Center, George Washington University 800 21st St., Washington, DC

The Section is holding a block of sleeping rooms at The River Inn, 924 25th Street, N.W., a short walk to the Marvin Center at GWU, where the program will be held. Room rate is $219 single/double and can be reserved by calling 800/424-2741. The block expires on Tuesday, September 23, 2008 at 5:00 p.m.

This First Of Its Kind Sentencing Institute Will Feature:

A broad array of sentencing and post-sentencing presentations that address the most pressing criminal justice issue of our time. Three tracks of instruction, each focused on issues of concern to different segments of the criminal justice community including prosecutors, public defenders, judges, academics, sentencing consultants, mitigation specialists, corrections personnel, victim advocates, white collar criminal defense attorneys and policy experts. A White Collar Crime Track that will focus on practice and procedure issues of particular concern to criminal defense attorneys in general and white collar practitioners in particular. A Policy Track that will examine sentencing trends and opportunities for reform in both the federal and state courts. A Corrections Track that will focus on conditions of and alternatives to incarceration as well as cutting edge efforts to reduce recidivism. A plenary session on the state of the sentencing union covering rates of incarceration, sentencing trends, racial disparities, alternatives to incarceration and recent federal legislation.

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Abramoff Sentenced

September 4th, 2008

The Reward for Cooperation is four years. Perhaps the most important reward here was that his sentence would be served concurrently with his prior sentence (see here).

See Wall St Jrl (AP), Lobbyist Abramoff Faces Sentencing

Neil Lewis, NYTimes, Abramoff Is Sentenced to 4 Years in Prison

Doug Berman, Sentencing Law & Policy, Jack Abramoff getting cooperator’s benefit

Del Quentin Wilber & Carrie Johnson, Abramoff Sentenced to 4 Years in Prison for Corruption

Mike Scarcella, The BLT: The Blog of the Legal Times, Abramoff Sentenced to 4 Years in Prison

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Upcoming Sentencing of Goyal, former CFO of McAfee

September 2nd, 2008

Prabhat Goyal, former CFO of McAfee, will be sentenced in early October. Convicted in May 2007 for securities fraud and for making false statements to auditors, Goyal was found to have failed to recognize revenue generated by sales to a distributor using sell-in accounting.

Like the recent trials of the Rigases and Bernie Ebbers, the government failed to call an expert to testify on the alleged improper accounting. Although the trial court did not discard the verdict, the judge did acknowledge that at least one civil court had found that the SEC failed to meet its burden in a civil case when an expert was not used to provide an understanding of the alleged improprieties.

Although the defense argues differences with the Rigases and Ebbers cases, the fact that the same issue mentioned in their case is again being mentioned gives pause. CFOs rely on accountants and auditors for guidance. When there is a showing that no material information was being withheld, one has to wonder if a higher standard, or at least the civil standard ought to be considered.

One also has to wonder if the Supreme Court will eventually consider whether it is proper for the government to not present experts of a GAAP violation, and proceed without this substantiation and deliberation. For the time being,it looks like another appellate court will get to examine this issue.

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