Corporate – White Collar Crime Sentences May be changed. New Guidelines on Prison Alternatives Approved

April 27, 2010

While on one hand I expect a bit of an outcry from the public that, at times, seems to have a taste for blood, the alternative prison sentence possibilities that have been approved are long over due.  Yes…White Collar Crime does create victims and the pain that people feel at the hand of a fraudster is very real, however, the real travesty is that many who have committed white collar crimes and have the ability to work (in some capacity) to make restitution, are disallowed that due to the practicality of an active prison sentence.

The information is listed below in blue:

After considerable public input, the U.S. Sentencing Commission recently voted to send Congress amendments to the federal sentencing guidelines that, among other changes, would increase the availability of alternatives to prison and would alter the sentencing of corporate offenders.

Although the sentencing guidelines are no longer mandatory, judges continue to look to them on a regular basis in determining appropriate punishment.

Under the alternatives-to-prison proposal, courts could depart from the guidelines when an offender’s criminal activity was related to drug or alcohol abuse or significant mental illness and when sentencing options, such as home or community confinement or intermittent confinement, would serve a specific treatment purpose. The commission also recommends that courts consider the effectiveness of residential treatment programs as part of their decision to impose community confinement.

By adjusting offense levels, the proposed amendments would make more offenders eligible for alternative sentencing options, such as split sentences (half in prison, half in alternative), home or community confinement.

“The commission has heard from virtually every sector of the criminal justice community that there is a great need for alternatives to incarceration,” said Chairman William Sessions III in an April 19 statement. “Providing flexibility in sentencing for certain low-level, non-violent offenders helps lower recidivism, is cost effective, and protects the public.” Sessions called the changes a “very modest step” in the right direction.

The commission also has proposed changes on the sentencing of organizations. Most importantly for corporations, a larger number of offending organizations would be eligible for a credit for having an effective ethics and compliance program.

In a firm memo discussing the proposed changes, Gibson, Dunn & Crutcher noted that a number of groups had urged the commission to eliminate the “absolute bar” to getting that credit if “high-level personnel” had participated in, condoned, or were willfully ignorant of the offense. The term “high-level personnel” is defined to include a director, an executive officer, and “an individual in charge of a major business or functional unit of the organization.”

Although no statistics are available, the law firm noted that the per se disqualification applies to several convicted corporations annually. David Debold, of counsel to Gibson Dunn, is co-chair of the Sentencing Commission’s Practitioners Advisory Group.

The commission eliminated the per se bar but attached certain conditions for the credit to apply, the most important of which is that “the individual or individuals with operational responsibility for the compliance and ethics program … have direct reporting obligations to the governing authority or an appropriate subgroup thereof (for example, an audit committee of the board of directors).”

The change, according to Gibson Dunn, would expand the direct reporting required between the person with day-to-day responsibility for compliance—often the general counsel—and the members of the board.

In other changes, it would be appropriate to consider such factors as an offender’s age, physical, mental and emotion conditions, and military service—currently considered “not ordinarily relevant”—in determining whether to sentence outside the guidelines. However, the factors in the particular case would have to be relevant to an unusual degree and distinguish the case from the typical case.

“Through this amendment, the commission is providing the criminal justice system, and particularly judges, with the information they have long sought,” said Sessions. “The more information we can provide on the use of specific offender characteristics during the sentencing process, the more consistency and uniformity will result and the more justice will be served.”

Another amendment responds to the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act of 2009 by broadening the guideline for offenses involving individual rights to include the new hate crime offense. The act makes it unlawful to willfully cause bodily injury to a person because of the person’s race, color, religion, national origin, gender, sexual orientation, gender identity, or disability. The act also made it unlawful to attack a U.S. serviceman on account of his service, and the sentencing amendment would incorporate this new offense. The commission also expanded the definition of a hate crime in its penalty enhancement for hate crimes to include victims who were targeted because of their “gender identity.”

The amendments must be submitted to Congress by May 1 and will become effective Nov. 1 unless Congress rejects them.

For those who are active readers of this blog, I would suspect that many attorneys representing those who have been convicted of white collar crime will be either working to postpone their sentence or looking for alternative sentencing options which it appears will be available later this year.

I would love to hear your comments on whether you agree or disagree with this new approach to sentencing.

YOUR COMMENTS ARE WELCOME.


Brad Stinn Sentenced – Every Choice Has A Consequence – Update by Chuck Gallagher Ethics Speaker

April 29, 2009

On of the most viewed Blog entries was the one about Brad Stinn and Friedman’s Jewelers.

Pump up those sales! We’ve got to make the quarter! How often are those command heard and how tempting is it to make the wrong choices in order to please the investing public and Wall Street?

Following six weeks of trial – Bradley Stinn, age 47, – former CEO of Freidman’s, Inc. and Crescent Jewelers, found himself being convicted of securities fraud, mail fraud and conspiracy. Likewise, in addition to Stinn’s conviction, the former CFO, Victor Suglia and form Controller, John Mauro have entered guilty pleas into what was a massive accounting fraud.

Having been found guilty, the wheels of justice in the federal system move slowly at times.  Many have wondered just what outcome would befall Brad Stinn  prison1who some hated and others sympathized with.  Well, today the verdict has been handed down.

His sentence:

12 years in federal prison

3 years probation

$4M restitution

He should report sometime in the next 60 days

Speaking from experience, Stinn will be required to serve 85% of his active sentence, which means that he’ll serve 122.4 months – which is a long time!

US Attorney’s New Release:

Bradley Stinn, the former Chief Executive Officer of Friedman’s Inc. and its affiliate, Crescent Jewelers, was sentenced today to 12 years’ imprisonment for securities fraud, mail fraud, and conspiracy. On March 24, 2008, following a six-week trial, a federal jury in Brooklyn convicted Stinn on all counts in the indictment and returned a forfeiture verdict against him in the amount of $1,019,000. The trial and sentencing proceeding were held before Senior United States District Judge Nina Gershon.

The sentence was announced by Benton J. Campbell, United States Attorney for the Eastern District of New York.

During the period of the conspiracy, Friedman’s was a national jewelry chain whose shares were traded on the New York Stock Exchange. The evidence at trial established that Stinn led a multi-year securities fraud scheme that inflated Friedman’s reported financial performance and hid from the market the serious problems the company had collecting money owed for hundreds of millions of dollars of jewelry that it had sold on credit. As part of the scheme, Stinn and his co-conspirators repeatedly lied to shareholders and the investing public about Friedman’s financial performance, made false and fraudulent representations to Friedman’s auditors, and manipulated the company’s accounting in order to prevent auditors from discovering the falsity of Friedman’s financial statements. As found by the court at sentencing, Stinn’s fraud scheme resulted in Friedman’s shareholders and other victims of the scheme losing more than $20 million.

Several months after the announcement of the government’s investigation in November 2003, Friedman’s stock was de-listed from the New York Stock Exchange. Friedman’s ultimately filed for bankruptcy in January 2005.

As always, this blog is open for comments.

Do you think that this sentence is fair?

Would you, if you had the opportunity to serve on a jury, have given Brad – more, less or this amount a punishment for his guilty plea?

COMMENTS ARE WELCOME!


A Likely Prelude to the Wesley Snipes Sentence – Kevin Lynn Terry Sentenced to Prison for Failure To File Tax Returns…

April 16, 2008

The day before tax returns are due is a fitting day to find out your sentence for not filing your tax returns. That is the situation that Kevin Terry found himself in on Monday – April 14, 2008.

KEVIN LYNN TERRY, 45, a chiropractor in Puyallup, Washington, was to three months in prison and seven months in a halfway house. U.S. District Judge Benjamin H. Settle also ordered TERRY to file all delinquent tax returns and to pay all remaining taxes due. In November 2007, TERRY pleaded guilty to a three count Information charging him with willfully failing to file tax returns for the calendar years 1999 through 2001.

Now, doesn’t this seem similar to the Wesley Snipes trial – with less fanfare? Snipes will be sentenced next week for his conviction for the very same thing – failure to file.

According to the US Attorney’s office: For the tax years 1996 and 1997, Terry used trusts to conceal his chiropractic income and personal assets, including his home. Those two years were audited by the IRS and the trusts were found to be shams. TERRY later agreed to the IRS’ tax assessments for those years.

Beginning in 1998, TERRY changed tactics and began to willfully evade the IRS’ ability to assess and collect tax for the years 1999 through 2001. This included not filing individual Form 1040 returns. TERRY also formed a corporation in 1998, named Puyallup Chiropractic Clinic, Inc., with himself as president, for which he did not file Corporate 1120 tax returns. TERRY prepared and filed IRS Forms 940 and 941 returns reporting employee earnings, which falsely omitted funds paid to himself. TERRY sent correspondence to third parties, including banks, directing them to not comply with IRS summonses for the production of records. TERRY also prepared and submitted to the IRS a false “sight draft” purporting to be a check paying his back taxes and provided tax protestor literature to his employees. During the subject years of 1999 through 2001 Terry evaded tax of about $70,000. Before criminal charges were brought he filed tax returns for the subject years and paid the taxes due.

At sentencing today U.S. District Court Judge Settle said, “the term tax protestor is merely a polite way of saying tax cheater.” The judge stated further that “it’s not enough to just pay when you are caught. If being caught results only in having to pay the tax, our system would collapse.”

In a national poll, one out of five Americans admitted to cheating the IRS on their tax returns. The IRS says that 17% of taxpayers don’t fully comply with the tax laws on a regular basis. If you throw in people who cheat by not filing tax returns, the number is closer to one in four. Undoubtedly he figure would be higher if wage earners did not have axes withheld by their employers and the self-employed did not have their earnings reported to the IRS on 1099 forms.

As you can imagine, with a system of voluntary compliance, the IRS and Federal Government need to have convictions with teeth in order to scare folks into complying. That is what was a stake with the Perry sentence and will, likewise, be a stake with Wesley Snipes.

Expect Wesley to go to jail!

Your comments welcome! Chuck Gallagher, host of Wise Choices – The Great Advice Radio Show and speaker – signing off…


Choices and Consequences – Former Frisco, Texas High School Teacher Sentenced to 10 Years In Federal Prison

January 16, 2008

U. S. Attorney – John L. Ratcliffe – announced that former Frisco High School teacher and soccer coach, Robert Lamascus, was sentenced to 10 years in federal prison for child pornography.

According to information presented in court, Lamascus used his computer and internet provider to download and trade images and video clips of child pornography in 2006 and 2007. Lamascus was employed as a public high school teacher and girls soccer coach with Forney ISD from August 3, 2004 to May 25, 2005 and Frisco ISD from August 10, 2005 until February 2, 2007, which was three days after federal agents executed search warrants at his Aubrey, Texas residence. Lamascus pleaded guilty to a 1-count Information on August 28, 2007 charging him with using a computer to obtain and possess child pornography. Lamascus received the maximum penalty of 10 years in prison today at his sentencing.

“Trading or collecting images of child pornography is not a victimless crime, “said U.S. Attorney Ratcliffe. “Each image represents graphic physical and sexual abuse of an actual child. Anyone who uses the internet to trade images of these horrific crimes deserves the kind of lengthy sentence imposed here today.”

While most of my blogs deal with business ethics, as a business ethics speaker I address groups about choice and consequences.  (See YouTube Demo Video)  In fact, my leading presentation deals with the Truth About Consequences. And since Every choice has a consequence, it appears that Mr. Lamascus will have a long while to contemplate his choices.

With such a long sentence, Lamascus will not be placed in a minimum security facility. Hence, the education he will receive will be beyond his wildest imagination. He will be placed in situation that should be unfamiliar to him – in a place that will remind him daily of the choices he made and the substantial price he will pay.

He will leave prison a changed man. But for every choice that one makes that bring negative consequences, you can also make choices that bring positive results. For Robert Lamascus sake and the sake of his family, let’s hope that finds an outlet for positive choices and that before he turns 50 he will have an opportunity to rebuild his life through the positive choices he makes.

Lamascus made the following comments at his sentencing hearing:

“I’m sorry. I committed a crime, and I think it’s fair I should have to do it. I’m sorry.”

“I’m an idiot,” said Lamascus. “That’s all I can say. I’m an idiot.”

Question:

Do you think his sentence was fair and just?