Skip to main content

Wall Street Journal Law Blog Asks Are Sentences Meted Out for White Collar Felons Too Long and I Answer Their Blog

In a recent commentary written by Peter Lattman in the Wall Street Journal Law Blog entitled “Are Sentences for These Men Too Long?” he listed the following sentences recently given to white collar felons:



Twenty-five years for WorldCom’s Bernie Ebbers. Twenty-four years, four months for Enron’s Jeff Skilling. Twenty years for Adelphia’s Timothy Rigas. Twelve years for CA’s Sanjay Kumar. 8 1/3-to-25 years for Tyco’s Dennis Kozlowski. Six years for Enron’s Andrew Fastow. Five years for WorldCom’s Scott Sullivan.


His commentary was based on an article posted in the Sentencing Law and Commentary blog entitled “The realities of mass US incarceration” which is based on a report by National Council on Crime and Delinquency entitled “US Rates of Incarceration: A Global Perceptive" by Peter Hartney.


The report specified that:

  • The US incarcerates the largest number of people in the world.
  • The incarceration rate in the US is four times the world average.
  • Some individual US states imprison up to six times as many people as do nations of comparable population.
  • The US imprisons the most women in the world.
  • Crime rates do not account for incarceration rates.
  • The US has less than 5% of the world’s population but over 23% of the world's incarcerated people.

Peter Lattman asks his readers the following question:

Law Blog Question of the Day: Is our criminal justice system broken? And specifically in the white-collar realm, are the sentences recently meted to the above individuals too harsh?

I posted the following response on his blog which was followed by some very passionate and sometimes personal debate:

The sentences given to recent white collar felons are not too harsh. White collar crime while not a violent crime can be more brutal to society in its consequences. White collar crime inflicts a collective harm on society far beyond the companies affected.

White collar crime adversely affects the integrity and reliability of financial information which is the main pillar of our great capitalist free market economic system. When the financial markets lose faith in the integrity and reliability of financial information the costs of capital and debt increases and the collective market capitalization of all companies are adversely affected. As a result our national wealth is diminished and pensions, 401 k plans, and life insurance policies lose value. The collective reduction of wealth further erodes tax collections to our government.

Employees lose their jobs and are often faced with the future stigma of having worked for a company affected by massive fraud. Creditors do not get paid and often must lay off employees.

The long prison sentences often given to white collar criminals while serving the purpose of imposing responsibility and accountability for felons does not materially prevent white collar crime. No crimes in progress are stopped and no current criminals find morality after learning about the long sentences given to convicted felons.

To prevent and reduce white collar crime we require strong legislation like Sarbanes-Oxley and strong internal controls reviewed by adequately educated, trained, experienced, and skilled independent external auditors. Companies require effective oversight from independent audit committees composed of members adequately suited to perform their responsibilities and not members who are appointed for “window dressing” purposes. Such audit committee members must not be permitted to hold stock or stock options in companies where they serve on such audit committees. We must require strengthened standards of education and capabilities of those board members who are permitted to serve on audit committees.

Our society is coming to the realization of the collective harshness of white collar crime in the long prison sentences imposed on convicted felons. It must now take appropriate steps to prevent white collar crime from happening. We must eliminate the opportunity to commit white collar crime.

Respectfully,

Sam E. Antar (former Crazy Eddie CFO & ex-felon)


I suggest that you read the rest of the comments that followed from other readers.

Comments

Popular Posts

Did a Clever SEC Bait Goldman Sachs into Compounding Its Legal Problems With the "Kiss of Death" Message?

Updated: At 3:48 AM ET 04/20/2010 on bottom

The Kiss of Death

In filing its lawsuit against Goldman Sachs (NYSE: GS) on a Friday, the Securities and Exchange Commission sent what I call the "kiss of death" message to the embattled company. In other words, the SEC wanted to stick it to Goldman Sachs and Fabrice Tourre, the Executive Director of Goldman Sachs International, who is also a defendant in the complaint. While the SEC as a practice does inform target companies and individuals of an impending enforcement action, it does not always tell them exactly when such an action will be filed.

Apparently, the SEC filed its lawsuit without giving Goldman Sachs the heads up that it was planning to file it that day. Business Insider observed that Goldman Sachs was clearly unprepared to respond to the complaint as news of the lawsuit dominated the headlines all day. Goldman issued a short denial around noon and issued an extensive denial late in the afternoon, after most people had …

Overstock.com CEO Patrick Byrne Sleeps With a Gun

In numerous blog posts in the past, and in widespread media coverage, evidence has accumulated for years that Overstock.com CEO (NASDAQ: OSTK) Patrick Byrne has shown signs of being mentally unbalanced and paranoid.

Byrne has blamed his company's financial woes on an unnamed "Sith Lord." He hired paid goons to stalk his real and imagined adversaries and to write lengthy conspiracy theories on the Internet. Byrne has close ties with Bo Gritz. The Anti-Defamation League lists Bo Gritz as a far-right extremist with “extensive connections to both white supremacists and anti-government groups and leaders.”

Patrick Byrne's infamous temper tantrums when he doesn’t get want he wants are well documented too. He made obscene and misogynistic comments to a female reporter. He suggested that she gave “blowjobs” to Goldman Sachs traders. He suggested that a male reporter “Sucks It Likes He’s Paying the Rent.” An independent research analyst was told that “You deserve to be whippe…

Nature's Sunshine Products, Willbros Group, Cal Dive International, and BSQUARE Violate S.E.C. Rules on Calculating EBITDA

Nature’s Sunshine Products (NASDAQ: NATR), Willbros Group (NYSE: WG), Cal Dive International (NYSE: DVR), and BSQUARE (NASDAQ: BSQR) have recently issued earnings reports which include a calculation of EBITDA (earnings before interest, taxes, depreciation, and amortization) that apparently does not comply with Securities and Exchange Commission interpretations for Regulation G governing such non-GAAP financial measures. In each case, their erroneous EBITDA calculations have enabled them to significantly distort their financial performance by erroneously reporting a positive EBITDA, when they should have reported a negative EBITDA in the latest quarter.

How EBITDA is supposed to be calculated under Regulation G

According to the S.E.C. Compliance & Disclosure Interpretations, EBITDA is defined under Regulation G as net income (not operating income) before net interest, taxes, depreciation, and amortization. See below:

Question 103.01Question: Exchange Act Release No. 47226 describes E…

InterOil, John Thomas Financial, and Clarion Finanz: Anatomy of a Stock Market Manipulation Scheme

In this blog post, I will provide evidence of what I believe is a stock market manipulation scheme involving InterOil (NYSE: IOC), John Thomas Financial, and Clarion Finanz AG. I believe that InterOil with the assistance of Clarion Finanz concealed John Thomas Financial’s involvement in helping it raise $95 million through a private placement of convertible debt securities.

Clarion Finanz acted as a buffer between InterOil and John Thomas Financial to help InterOil hide John Thomas Financial's role in raising funds. Afterwards, InterOil filed false and misleading reports with the Securities and Exchange Commission in an effort to conceal John Thomas Financial’s role in helping the company raise $95 million in convertible debt.

Carl Caserta, who in 1991 was barred by the Securities and Exchange Commission from “association with any broker, dealer, or investment advisor” played a role in helping InterOil use John Thomas Financial to obtain funds from investors. InterOil, John Thoma…

Class Action Complaint against Amedisys uses Sarbanes-Oxley Act Corporate Governance Provisions to Battle Alleged Corporate Malfeasance

Updated at bottom of article

Last week, Pomerantz Haudek Grossman & Gross LLP filed a class action lawsuit against Amedisys (NASDAQ: AMED) charging the company, its CEO William F. Borne and its CFO Dale E. Redman with securities fraud.  In the next few days, Bernstein Liebhard LLP and Finkelstein Thompson LLP filed similar class action lawsuits against the company. The lawsuits allege that Amedisys abused Medicare's reimbursement system for at-home therapy care based on a compelling analysis of company revenues in an April 27 Wall Street Journal article.

In addition, the lawsuits innovatively utilize a provision under Section 406 of the Sarbanes-Oxley Act 2002 which provides a back-door way for investors to force ethical corporate governance and sue public companies for malfeasance. That provision requires Senior Financial Officers, such as the CEO and CFO of public companies, to abide by a strict code of ethics which broadly defines corporate malfeasance and effectively makes…