It’s sweeps week for corporate crooks.
On Monday US District Judge Leonard Sand sentenced John Rigas, the ailing octogenarian founder and former CEO of Adelphia Communications, to fifteen years in federal prison. Rigas was convicted last July of fraud and conspiracy charges relating to $50 million in cash advances and $252 million more in margin loans. He has suffered from bladder cancer and underwent triple bypass surgery several years ago.
Rigas’s sentence should be of some concern to L. Dennis Kozlowski, the former CEO of Tyco, and Mark Swartz, his main lieutenant. Both of them were convicted by a Manhattan jury just three days earlier on charges relating to the theft of $150 million and the covert sale of stock worth nearly $500 million more. The Tyco convictions (twenty-two counts each) cap a three-year investigation involving two trials, nearly ten months of testimony and several weeks of jury deliberations. Swartz and Kozlowski’s sentencing hearing is scheduled for August 2.
But as huge as a half-billion-dollar fraud may be, both the Adelphia and Tyco cases pale in comparison to the verdict returned on March 15 against former WorldCom CEO Bernard Ebbers, who was convicted of engineering an unprecedented $11 billion fraud. Ebbers is set to be sentenced in a few weeks.
Because the Supreme Court has declared the federal sentencing guidelines to be advisory rather than mandatory, US District Judge Barbara Jones (like Judge Sand before her) will have extraordinary latitude when she sentences Ebbers next month. Technically free to impose a sentence she deems just in light of all the facts and circumstances, Judge Jones could, in theory, order anything from home confinement to a functional life sentence (Ebbers is 63). And she is not alone. Even in state court, where Kozlowski and Swartz will meet their fate, Judge Michael Obus has the discretion to impose a sentence that could wind up being as short as a year or as long as two decades.
Both judges are allowed to do something else, too: Each may make a nonbinding recommendation about where the defendants should serve their respective sentences. (The Bureau of Prisons makes the final decision.) And though the headlines are certain to focus on the number of years each judge imposes, it is actually this recommendation, rather than the length of the sentence, that may be the most effective way for a judge to deter corporate crime.
Most sentencing schemes rest on two philosophical pillars–the idea of just deserts and the notion that penal sanction decreases the likelihood of future crime, either through the incapacitation of the offender or by deterring others. And while just deserts are often invoked in the stern lectures of judges sentencing individual offenders, it is the power of deterrence that is regularly cited by politicians around the country to justify ever-harsher criminal laws and ever more draconian sentencing measures. Standing before the cameras, our lawmakers insistently talk of insuring that bad guys will “think twice” before committing whatever act they happen to be railing against.