Monday Morning Sentencing Roundup
The Wall Street Journal
Posted by Ashby Jones
Monday, July 9, 2007
Thanks in part to President Bush’s recent commutation of Scooter
Libby’s prison term, we’ve got sentencing on the brain. The
latest from this world:
We’ve written before about the four executives at Enterasys
Networks, a Massachusetts network router company, who were
convicted late last year on a variety of charges, including
conspiracy and securities fraud, for their role in an accounting
fraud at the company in 2001. Late last week, the four received
their sentences. The company’s former CFO, received over eleven
years, and its former senior VP for finance got over nine years.
The other two executives received prison terms of eight and
three years. According to the press release from the U.S.
Attorney’s office in New Hampshire, where the gang was tried:
Evidence at trial showed that starting in the
summer of 2001, the four defendants and other Enterasys
executives inflated Enterasys’s revenue figures in order to
satisfy the publicly reported expectations of Wall Street
analysts and to increase, or at least maintain, the price of
Enterasys stock. The conspirators backdated and falsified
documents and concealed material terms of business transactions
from Enterasys’s auditors in order to inflate revenues. . . .
The court found that public investors lost at least $97 million
as a result of the fraudulent scheme.
Joe Nacchio, the former chief executive at Qwest who was
convicted in April on multiple counts of insider trading, is set
to be sentenced on July 27. But in a filing made on Friday,
prosecutors let it be known that they want him to serve a
10-year sentence and pay a combined $71 million in fines and
restitution. Here’s the story from the Denver Post.
Nacchio’s lawyers countered the government on Friday, arguing
that Judge Edward
Nottingham should consider the perilous health of two of
Nacchio’s family members before agreeing to the 10-year
sentence. The motion doesn’t identify the family members, and
Nacchio’s lawyer wasn’t reached by the Post for comment.
The government’s sentencing statement said a departure from
guidelines is warranted only where the defendant is the only one
able to provide assistance to a family member. “The defendant’s
wife has the time and the resources to take care of other family
members,” the statement said.
Of course, we’re always interested in hearing the views of our
readers on sentences. What do you think? Does 10 years for
Nacchio fit the bill?
The criminalization of business runs counter to traditional
American values. These gentlemen should not serve one day in
jail. We are not the Chinese government, who criminalizes
business. The treatment of these hugely successful businessmen
is awful. Why can’t we just put them on probation or something?
Comment by Tort Reform - July 9, 2007 at
I wouldn’t count on any leniency based on consideration for
family members from Judge Nottingham. He put me in jail without
an evidentiary hearing, possibility of bail, or a sentence for
over 4 months knowing that I contributed to the family income
and had a minor child: “She faces a real possibility of
incarceration, as she knows, because its happened before
(p.4)….She knows she’s not to pursue these lawsuits and that
does not cover her appeals from these lawsuits….once she’s in
custody, she will not get out of custody until those are
actually dismissed…She has played games…with the defendants long
enough.(p.5)”…“She was told in unequivocal terms to dismiss both
of those lawsuits…those lawsuits have to be dead, lifeless, and
she is not to pursue them on appeal….” (p.7-8) Judge Nottingham
p. 6 (9/22/06 hearing transcript 02-cv-1950)
Comment by Kay Sieverding - July 9, 2007 at
So “tort reform” thinks the Chinese legal system represses
business owners. The Wall Street Journal, Human Rights Watch,
and ChinaView published an article by Nicholas Bequelin on the
Chinese Courts’ treatment of business leaders:
“recent discovery of hundreds of slave laborers working in
feudal conditions… a woefully inadequate legal system that lacks
true independence from the government, cannot address citizen
concerns and exacerbates rather than alleviates local
corruption…. Importing entire chunks of Western-style legal
institutions, the party established a modern court system,
enacted thousands of laws and regulations, and formed hundreds
of law schools to train legal professionals. It publicized
through constant propaganda campaigns the idea that common
citizens have basic rights, and elevated the concept of the
“rule of law” to constitutional prominence in the mid-1990s… Yet
huge numbers of Chinese citizens are still unable to use the
system to seek justice. Predatory officials rob farmers of their
land, forcibly evict residents from their homes, and cover up
extravagant abuses of power — typically embezzlement, but also
rape and murder. These officials close their eyes to labor
exploitation and condone or profit from criminal rackets, human
trafficking and illegal mining. There is even a term in Chinese
for local officials’ collusion with criminal gangs: “black
umbrellas,” which refers to officials who give protection to
illegal activities in exchange for bribes…. Recent prominent
corruption cases include the police chief of Shenyang in
Liaoning province, the party secretary of Shanghai and the head
of the national food and drug administration…. China’s key legal
institutions — the police and the courts — are under the
authority of the party’s political and legal committees. Through
these institutions, local power holders can easily instruct the
police to abandon investigations, foreclose legal challenges,
dictate the outcome of particular cases to judges, or frame
protesters and activists on vague charges of threatening state
security and social stability… urgent need for a functioning
legal system… no signs that Beijing intends to empower the legal
system to operate in an effective and independent manner.”
Next thing you know China will be jailing pro se litigants for
being pro se.
Comment by Kay Sieverding - July 9, 2007 at
The Supreme Court has ruled that that Sentencing Guidelines are
just that– recommendations based upon a complex formula of
points and departures which account for the presence or absence
of such things as recidivism, cooperation with the prosecution,
complexity of the scheme, amount lost, etc–guidelines and not
handcuffs which interfer with judicial discretion. Inevitably,
judges bring with them some element of their own values to the
bench. That judges come down particularly hard these days upon
white collar defendants may be due to some sort of strong moral
compass. However, I think that the fact that we compensate our
judges so poorly — paradoxically keeps them more attuned to the
point of view of the poor and middle classes, rather than
encourage them to be sympathetic and lenient when it comes to
those defendents who with whom they really share similar
educational, professional and social backgrounds.
Comment by Anonymous - July 9, 2007 at
Prison for these types of accounting crimes seems silly and
cruel. Fines, restitution, probation, restrictions on
employment, etc. all seem reasonable. But to put someone in jail
for a decade for “cooking the books” ust strikes me as wrong. I
suppose that’s because I am from the school of thought that sees
the main purpose of prison time as a way to protect society from
criminals, not as the punishment itself (or as a deterrent or to
reform the criminals). Violent criminals should be in prison.
Non-violent offenders should be removed from the means to repeat
their offenses. The danger these white-collar defendants pose to
society can be prevented by limiting their access to financial
markets and their control of companies. Why not just put them in
a position where they can continue to support their families,
but only by working conventional blue-collar jobs?
Comment by A.Non.E.Mous - July 9, 2007 at
While I have found good from my time in prison (speaking to
youth and adults about choices and consequences -
www.chuckgallagher.com), I question the strict adherence to
the sentencing guidelines.
I was sentenced based on the guidelines even though I had made
complete restitution before any criminal investigation had
begun. Further, sentencing happened four years after restitution
and, at the time, I was the primary provider of income for my
two children. One could assume that conviction and probation
would have been appropriate.
That said, I would not be today the person I am without having
served time…so I don’t look back with any ill feeling. Every
choice has a consequence. The challenge we have is making the
best of outcomes from our choices.
Comment by Chuck Gallagher - July 9, 2007 at
If I steel from the gas station, I go to jail. If I don’t pay my
taxes I go to jail. If I commit perjury, I go to jail. Amazing
how that works for the poor and working class who cannot afford
big time lawyers. This man caused the reduction in retirement
valuation for thousands of working class people without so much
of one ounce of caring. He has always been for himself. Getting
rich is not the crime, steeling from others is.
Comment by Rambette - July 9, 2007 at
I find it interesting that the guy that sticks up the 7-11 for
$100 gets thrown in jail, but the CEO that sticks up the
shareholders for millions, we want to spare prison time.
The comments along the lines of “He’s no danger to society”, etc
make no sense to me. Are we really saying that we should fine
these people a fraction of their ill gotten gains and release
them to live in their mansions? (Joe has at least 2)
Where is the deterrence in this scenario? If I were guaranteed
this kind of treatment, I’d commit shareholder fraud every
As one who lost six figures from his 401K as a result of the
Qwest debacle, I can assure you that this was not a victimless
Comment by Rich - July 9, 2007 at
An article with background on Kay.
Comment by lawyer - July 9, 2007 at
White collar crimes have been recognized as crimes for
centuries. What is a white collar crime anyway–Hitler’s henchmen
were guilty of conspiracy to deprive rights under collar of law.
I am sick of people posting these Rocky Mountain News articles
in an attempt to undermine my credibility. The lawyers for the
newspaper I sued, Christopher Beall and Thomas Kelley, also
represent the Rocky Mountain News. I asked the RMN to let me
correct the article but they refused. Apparently the RMN is also
insured by Mutual Insurance of Bermuda, which insured the multi
state multi media company I sued (The World Company of Lawrence
Kansas AKA the Steamboat Pilot). Mutual Insurance is not
registered to do business in Colorado or any other state that I
checked. The defense sent me bills for over 25 ex parte
conferences. Mr. Beall billed for discussing the publication
strategy about the lawsuit.
Comment by Kay Sieverding - July 9, 2007 at
I have worked in the telecom industry for years and had the
great mis-fortune of working with Joe earlier in his career.
This man got exactly what he deserved. He has ruined many
careers before he ever went to Quest. Everyone in my office was
very amused when he went to Quest to “turn-around” the company.
We were also not surprised as to his legacy with Quest. Why
should we treat these white-collar criminals as if they
committed misdemeanor crimes with no victims? He should do the
time and pay the fine. Even that is less than what he deserves.
Comment by hardliner - July 9, 2007 at
The reaction to Libby’s pardon shows that what scares some
people is only jail, not fines. I think that corruption in this
country is growing exponentially.
Comment by Kay Sieverding - July 9,