Why Nobody Is Really Happy With New Guidelines For Punishing White-Collar Criminals

Why Nobody Is Really Happy With New Guidelines For Punishing White-Collar Criminals

WASHINGTON -- A federal panel voted earlier this month to amend the guidelines that federal judges use when sentencing people who commit economic crimes. But few are happy with those changes: Sentencing reform advocates say they don't go far enough to fix draconian sentences, while the U.S. Department of Justice contends that the changes could give some white-collar criminals a new avenue for unfair leniency.

Recommended sentences for economic crimes under the current rubric are so severe, they are no longer taken seriously, some prosecutors and judges suggest. Those guidelines have relied on complicated calculations involving criminal gain and inflicted losses that spit out sentences that can appear inconsistent or absurd. One federal New York judge called the math "hocus-pocus." In 2008, for example, a federal judge sentenced a 72-year-old man to 330 years in prison for an investment scam.

The U.S. Sentencing Commission is responsible for coming up with the road map that federal judges can use when issuing these sentences. On April 9, the commission approved new guidelines, which now will be submitted to Congress and will go into effect in November, unless lawmakers intervene.

Chief Judge Patti Saris, who chairs the commission, contended last week that the economic crime guidelines are not broken, but has acknowledged that they could provide more clarity on what to do in the cases of certain first-time, low-level offenders.

The changes aim to make punishments more fair by giving greater weight to a criminal's role and his or her intent. So, for example, a receptionist who was aware of a massive kickback scheme in her office, but didn't share the profits, might get a lighter sentence than those behind the scheme. The commission also clarified that when judges look at "intended loss," they must consider whether a defendant purposefully sought to cause harm.

Another change would allow for harsher penalties for criminals who substantially harm a few people, rather than focusing on the sheer number of victims. So a sentence might be greater for a low-life who stripped a grandmother of her savings, rather than a bank executive who swindled a dollar each from thousands of people.

In March, the Justice Department came out against some of these changes, in favor of more targeted reforms. DOJ is worried that the intent clarification could allow white-collar criminals to claim they never meant to hurt anyone. A fraudster running a Ponzi scheme who is caught early, for example, could argue that he hoped the scheme wouldn't fail.

It makes sense that the Justice Department would want to preserve the option to impose harsher sentences in certain cases. Frank Bowman, a professor at the University of Missouri School of Law who has commented on the draft guidelines, said that from DOJ's perspective, stringent guidelines can give them leverage when negotiating plea bargains.

But some legal experts argue that the Obama administration is missing the point in this case. "All we want to do is make guidelines such that a federal prosecutor can actually look a federal judge in the face and say, 'Impose these guidelines as written,'" Bowman said.

If the guidelines had more credibility, he added, judges might be more inclined to follow them and hand down stronger sentences. "The Justice Department is cutting off its nose to spite its face," he said.

Mark Holden, senior vice president and general counsel for Koch Industries, told The Huffington Post that he considered the commission's emphasis on offender intent "a positive development and consistent with the Bill of Rights." He added that the guidelines "are an effort to make the punishment fit the crime," but that more needs to be done on criminal justice reform overall.

Billionaire Charles Koch has said he became interested in criminal justice reform after a lengthy legal battle in which his company was forced to defend itself against dozens of charges for alleged environmental crimes, before they were almost entirely dropped.

Advocates say that when it comes to sentencing reform, there are parallels between drug crimes and economic crime.

Mary Price, general counsel for Families Against Mandatory Minimums, asked, "Do we just count drugs, or do we look at [the harm] people really intended? How much harm did they cause? … Are they the courier or the mastermind?"

She added that she was disappointed with the pending changes to the economic crime guidelines, calling them "rather minimal."

Last year, the commission also focused on reforming drug sentences, but did not reduce the oft-criticized mandatory minimums, which are set by Congress.

Brandon Garrett, a professor at the University of Virginia School of Law, pointed out that under the current guidelines, there is still "no comparison" between the severity of drug sentences and white collar sentences, nor the number of drug offenders in federal prisons compared to those in for economic crimes.

According to the most recent data, about half of federal inmates were in prison for drug offenses, and about 0.4 percent are in for banking and insurance or embezzlement crimes.

He added, "There is far greater need to reform drug sentences."

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