AUSWR
The Association of U S West Retirees
 

 

 

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?

Comments

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 9:13 am

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 9:32 am

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.” chinaview.wordpress.com/2007/07/04/beijings-rule-of-law-retreat
Next thing you know China will be jailing pro se litigants for being pro se.
Comment by Kay Sieverding - July 9, 2007 at 9:59 am

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 10:12 am

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 10:50 am

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 10:57 am

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 11:04 am

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 Tuesday.
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 crime.
Comment by Rich - July 9, 2007 at 11:13 am

An article with background on Kay.
http://www.rockymountainnews.com//drmn/local/article/0,1299,DRMN_15_4364665,00.html
Comment by lawyer - July 9, 2007 at 11:20 am

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 11:30 am

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 12:55 pm

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, 2007 at 11:48 pm