The Chicago Tribune reports here that a "pal" of Govenor Ryan received a sentence of  2 years probation and 8 months home confinement.  Interestingly, the reasoning of the court was premised on age and health.

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The Morning News in Arkansas reports here that Robert Hay, a former Wal-Mart executive, received a prison sentence of one day, six months supervised release and $3,000 fine. The plea was to three counts of wire fraud. One has to admit that this is a pretty light sentence, but then again his role was minimal in the events that led to this fraud.  (See also Wal*MartWatch here) Obviously a key aspect of this plea agreement was cooperation.  And Tom Coughlin, former Wal-Mart executive, has since plead guilty.  (see here)

This case emphasizes the power of the prosecution.  Prosecutors can offer "deals" that provide enormous benefits. Even when one knows that his or her role is minimal and there is the possibility of a "not guilty" of trial, they can’t risk the trial.  If convicted at trial the sentence would likely be significantly higher, as most judges follow the sentencing guidelines.  With a plea and 5K1.1 motion, the accused has a sure thing – albeit a conviction. 

The question is whether prosecutors should have this amount of power?  With judges for the most part following the guidelines, those accused of crimes are left to cooperate with the government to secure the benefits even when they might be found not guilty if they risk a trial.  Are we really providing a right to a jury trial?  Should one be penalized greater just because they decide to exercise that right?

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Dennis Kozlowski, the former CEO of Tyco who was found guilty in state court (NY)  was given a fine and restitution of 167 million. (see here)  Unlike others convicted of white collar crimes, like Bernard Ebbers, he and co-defendant Mark Swartz were ordered to immediately begin serving their time. (see here) The Wall Street Jrl reports here that Kozlowski is trying to sell his Nantucket Estate to raise money to pay this fine.  He has it listed for 23 million, having paid 5 million for it in 1997.   If he gets this amount one could say that this was a good investment.

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Former Mayor Bill Campbell received a sentence of thirty (30) months on his conviction of tax charges. (see AP Newsday here) He had been found not guilty by a jury of charges of racketeering and bribery. See here. The Atlanta Jrl Constitution here reports that the court went beyond the tax charges in sentencing and used obstruction and bribery conduct as a basis for the sentence.

If true, can a judge do this?  The sentencing guidelines permit judges to use uncharged conduct as a basis for increasing a sentence. Obstruction conduct can increase a sentence, although under the sentencing guidelines it requires proof of materiality. In this case, Campbell had been charged with bribery, but found not guilty of that charge.  It sounds like these may be issues that Campbell will be appealing.  Doug Berman’s Sentencing Blog has more on using acquitted conduct here.

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The Houston Chronicle reports here on the first part of the re-sentencing hearing of Jamie Olis, former employee at Dynergy who was convicted for his role with Project Alpha.   Olis initially had been sentenced to 24+ years, but the Fifth Circuit (Hon. Edith Jones authoring the opinion) sent it back for re-sentencing.  The Houston Chronicle reports that at Friday’s initial re-sentencing hearing the defense counsel asked for three months to file a report in response to the Government report.

One has to wonder when the government report was first provided to defense counsel.  Was it a month prior, a week prior, or that day? 

Discovery during sentencing is important, and especially crucial in cases where a fraud loss is being determined. Forensic accountants become important players in helping counsel and the court understand the financial aspects of a case. 

But in all this, one has to wonder if culpability, that is significant culpability, minor role, or a total lack of motive in the wrongdoing, gets lost in the financial determinations.

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Addendum – See Tom Kirkendall’s Houston Clear Thinkers here.

This coming week may shed more light on the Jamie Olis case, as experts will present evidence on what the court should use as the loss factor in determining the sentence. Olis, was employed at Dynergy. He was convicted of mail fraud, wire fraud, securities fraud, and conspiracy. His initial sentence of over 24 years was remanded by the Fifth Circuit (Judge Edith Jones authoring the opinion) as the trial court’s approach to the loss calculation failed to "take into account the impact of extrinsic factors on Dynergy’s stock price decline." (see some prior posts here and here)

Olis was only in his third year working at Dynergy.  His boss, who testified against him, received a sentence of fifteen months in return for a plea that included cooperation. A co-worker, also indicted, received a sentence of one month.

In a post- Booker world this case is a perfect opportunity for the judge to go beyond numerical calculations.  Should individuals be punished so greatly just because they assert their constitutional right to a jury trial?  Should a sentence be so heavily dominated by a numerical calculation that bears little resemblance to the actual culpability of the individual? Professor Doug Berman has some excellent comments on this case here comparing this case with the loss presented in another white collar case. Here is another white collar case that should also be considered. 

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Professor Doug Berman in his wonderful sentencing blog describes here a recent decision of  District Judge Jed Rakoff.  He states that "a corporate president who faced a life sentence under the guidelines after a fraud conviction ‘because shareholder value fell by more than $260 million [SEE BELOW] after the fraud scheme was disclosed,’ received an extraordinary break yesterday when sentenced to less than four years’ imprisonment." Professor Berman describes on his blog, the case of former Impath Inc. President Richard Adelson. (he cites also to an article on this case here)

Are white collar offenders getting the biggest breaks in this post-Booker world?  Some may think this case and other "variances" in sentencing indicate that white collar offenders are getting the big "breaks."  But what is quantified also is that white collar offenders, at least those in the fraud/theft category have had increased sentences in recent years.  According to the Report on the Impact of United States v. Booker on Federal Sentencing, United States Sentencing Commission 71 (March 2006) the average sentence pre-Protect Act for the category theft and fraud under United States Sentencing Guideline 2B1.1 was sixteen months. This increased to twenty months post-Protect Act and twenty-three months post-Booker. Report on the Impact of United States v. Booker on Federal Sentencing, United States Sentencing Commission 71 (March 2006).  The report attributes two factors to this increase: First, the fact that "statutory and guideline penalties increased for many fraud offenses as a result of the Commission’s Economic Crime Package of 2001, the 2002 Sarbanes-Oxley Act and other recent legislation." And second the increased number of prosecutions (although the Trac Report may indicate a somewhat different story here).  Perhaps another factor may be inflation, which will increase the amount of loss and thus the sentence issued by a court.

A second aspect to consider here is whether white collar offender sentences are being questioned by judges in this post-Booker to a greater degree than other sentences.  Should this send a signal to the Congress that these sentences need to be reevaluated? In the desire to crackdown on white collar crime, did Congress go a bit too far.

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Addendum – In reviewing the AP story here it appears that the prosecution claimed the loss to be as stated above, but that Judge Rakoff found otherwise.  The story notes that the court also  "fined [the accused] $1.2 million and ordered [ ] pay[ment of] $50 million in restitution."  The restitution finding says it all.