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Should a corporate executive convicted of financial crimes go to jail for more than twice the time typically served by murderers and rapists? Enron Corp.’s demise in 2001, and Chief Executive Officer Jeffrey Skilling’s sentence on Oct. 23, present various questions about the value we place on human life and on life savings, and the appropriate punishments for the illegal taking of both. Is it any surprise that jurors and judges are angry when the average American household income is equivalent to four or five executive shower curtains? Economic realities may be infiltrating our judicial system, with financial pressures on American families leading to convictions and “life sentences” for financial crimes. But can the range in recent white-collar sentences-from 25 years down to one month-seriously be defended? Does this range tell us the system works or that it’s broken? And for corporate officers and executives at 50 or 60 years of age, is an effective life sentence warranted when murderers, rapists and child-abusing pedophiles return to the streets in significantly less time than white-collar defendants? Is financial loss now equivalent to, or worse than, horrendous violent crimes? Have American affluence and materialism reached a new peak when, just short of capital punishment, life sentences are imposed for financial crimes? It is a worthy exercise to pause after the deluge of cases since 2000 to consider where we are and whether it is where we want to be. We have recently witnessed the largest spate of major white-collar criminal prosecutions since the “junk” securities and savings-and-loan cases in the 1980s. Unlike then, corporate officers now take the “perp walk” and go to trial on television. America watches megarich executives spend company funds on $6,000 shower curtains and lavish parties and then precipitously fall . . . to jail. And the case that forever changed corporate governance finally concluded with the recent sentencing of Skilling. Before the long-anticipated Enron convictions, the courts had sentenced numerous white-collar defendants. These highly visible white-collar cases raise fundamental questions about our legal system, corporate governance standards and sentencing. WorldCom Inc.’s Bernie Ebbers was sentenced to 25 years in 2005 in a New York federal court; Enron’s Skilling, to 24 years by a Houston federal judge; Tyco International Ltd.’s Dennis Kozlowski received a state maximum sentence of 25 years (but is eligible for parole in only six); and Dynegy Inc.’s Jamie Olis was originally sentenced to 24 years (the record, until Ebbers’ subsequent sentence). The CEOs participated in the largest corporate accounting and securities frauds in history, but midmanager Olis originally received the same sentence, without the top-level executive perks. Putting aside Kenneth Lay’s untimely death in July, these corporate executives would be eligible for Social Security (or interment) upon completion of their ordered sentences. In sharp contrast, Andrew Fastow, embroiled at the very center of the Enron debacle, received only six years-thanks to a generous plea agreement growing out of his promise to testify for the prosecution. Dynegy’s Gene Foster and Helen Sharkey also entered pleas and later received much reduced sentences of 15 months and one month, respectively. And after the federal appeals court vacated Olis’ original 24-year sentence, the trial court resentenced him to six years on remand-an 18-year haircut. Does this staggering range in sentences demonstrate that the system metes out justice on an individualized basis or does it suggest that politics, venues, expensive legal representation or other factors reveal severe injustice in our system? In these times of increasing frustration and angst, employees may seek to punish bosses more harshly than hard-core criminals. After all, what is the difference between a thief who robs our house, and one who robs our 401(k) account? Fairness and justice There are several explanations offered for the range in sentences for financial crimes. Federal courts have struggled to apply the requirements-e.g., determining the magnitude of “loss” caused by improper transactions-of the Federal Sentencing Guidelines (formerly “mandatory,” but made “advisory” in 2005 by the U.S. Supreme Court’s decision in U.S. v. Booker). Do modified guidelines explain how the same federal judge hearing the same evidence at the same trial initially sentenced Olis to 24 years, but later reduced the sentence to six years? Or how that judge applied Olis’ original sentence to Skilling for one of the largest frauds in U.S. history? And why should Kozlowski be eligible for parole in six years while Ebbers serves 25, and Skilling 24? Conventional wisdom defends this disparity, and those for violent crimes, merely as the difference between the sentencing standards federal courts must apply as compared to the broader sentencing flexibility available in the state criminal courts. Sympathetic stories also lend credence to this current standard as workers who lose retirement funds are compelled to keep working or to become dependent on government and family or to eat cat food. Perpetrators of financial crimes that destroy the security of thousands of families and financial markets, therefore, receive sentences beyond that of an individual murderer. In a society where the loss of a life’s savings is punished by a 24-year sentence, but a loss of a life is punished by only a 10-year sentence, we must ask ourselves: What do we value, and do our punishments reflect our values? Van VanBebber is a litigation partner in the Dallas office of Hughes & Luce, practicing white-collar, securities and criminal tax defense, and complex commercial litigation.

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