Corporate Defrauders Face More JailJan 9, 2003 | AP
Corporate executives who rip off investors or shred incriminating documents will be sentenced to longer prison terms under guidelines approved by a federal panel.
But the Justice Department complained Wednesday that the new sentence ranges a response to the corporate wrongdoing law enacted last year after the collapse of Enron Corp. did not go far enough. Officials there wanted the new guidelines to affect a broader range of crimes.
Defense lawyers, on the other hand, said the U.S. Sentencing Commission went too far.
The commission usually gets little attention when it meets to revise formulas that judges use to calculate sentences.
Investigations of Enron Corp., WorldCom Inc. and Adelphia Communications Corp. have raised the profile of corporate crime â€” and government's response to it. Executives in those companies could now be sent to prison for life if convicted of wrongdoing, critics said.
"You'd have to kill somebody to get the amount of time that's going to come out of these amendments," said Jim Felman, a defense attorney from Tampa, Fla., who advises the commission. "It's absurd."
The Justice Department wanted increases for all fraud and theft. Department lawyer Eric Jaso told the commissioners that most white-collar crimes would not be affected in their plan, which "sends the wrong message to the corporate world." Jaso is a nonvoting member of the commission, which is controlled by Democrats.
The tougher sentences will affect executives convicted of securities violations or other crimes that endanger the finances of a publicly traded company, people who block investigations and those involved in large-scale frauds. Sentences for some crimes could double.
An officer of a publicly traded company who cheats at least 250 investors of more than $1 million, for example, could be sentenced to 12 years in prison, double current penalties. The sentences would go up for larger frauds.
The sentencing changes will take effect Jan. 25 but for now are only temporary. The commission will have a public hearing this spring and consider making them permanent â€” or even tougher â€” in April. Congress also could order more stringent sentences.
The commission also passed temporary sentencing guidelines for people who violate the new campaign finance law. People who make illegal campaign donations would face longer prison sentences.
Ruben Castillo, a federal judge in Chicago and commission member, said that under the broader recommended fraud changes, about 10,000 people a year would get longer sentences, including people who steal mail or destroy property. He said those people are not the targets of the corporate crime law.
The Justice Department in recent weeks has publicized its anger at the commission.
"In addition to the WorldComs and Enrons, the department prosecutes many smaller-scale frauds around the country that, while evidently less newsworthy, nonetheless constitute heart-rending calamities for their victims," the department said in one letter to the commission.
The political dustup comes at a commission not accustomed to much controversy. Commission Chairwoman Diana E. Murphy, one of three Democratic judges on the panel, said that conflicts are usually settled less publicly and that it does not vote along party lines.
Michael O'Neill, a George Mason University law professor and one of two commission Republicans, said before the meeting that Congress and President Bush want tougher sentences to send the message that "the nation is not going to take people pillaging pension funds and running corporations like their own piggy banks." O'Neill and the other Republican commissioner supported penalty increases for all fraud.
President Bush has not filled two vacancies on the board. If he names two Republicans, the board would have four Republicans and three Democrats.