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Sentenced to 24 Years

Dave Hoffman

Dave Hoffman is the Murray Shusterman Professor of Transactional and Business Law at Temple Law School. He specializes in law and psychology, contracts, and quantitative analysis of civil procedure. He currently teaches contracts, civil procedure, corporations, and law and economics.

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27 Responses

  1. Patrick S. O'Donnell says:

    I’m not a lawyer or law professor, but as a citizen I think the sentence was perfectly appropriate, and your response to those ‘outraged’ right on target.

  2. Chris says:

    I think that its clear that sentencing in the US is just broke. The punishments vary too much and are too far removed from the crimes.

    Its fair to point out that Skilling’s punishment was no more harsh than some of these others – but they are out of whack as well.

  3. fishbane says:

    It is notable that many who complain about stiff white collar criminal sentences are completely silent about nonviolent drug sentencing. If one didn’t know better, one might catch a whiff of class warfare, which we all know doesn’t exist anymore.

  4. M. Hodak says:

    I’m not sure what fishbane is whiffing, but most of the people outraged by the lengthy sentences of white-collar criminals tend to be libertarian-minded folks who believe that drug possession should get NO time in prison.

  5. CL says:

    I’m not sure what fishbane is whiffing, but most of the people outraged by the lengthy sentences of white-collar criminals tend to be libertarian-minded folks who believe that drug possession should get NO time in prison.

    Perhaps that’s the case in the legal academy, but in the world at large, I’ve seen a lot more outrage from the pro-business, pro-morality types.

  6. Dave, I do think Skilling’s punishment under the Guidelines is nonproportionate. For that matter, I think that sentences in federal drug crimes are inconsistent and nonproportionate. However, your list of other “sentenced for 24 years” crimes is misleading. I clicked on three links (one was broken). The cop didn’t just steal drugs. He stole drugs out of the police evidence room and sold them to a drug dealer for two years, which screwed up ongoing cases as well as lined his pockets. So basically for two years he wasn’t a cop at all, but took city money while driving around in a Rolls Royce and buying real estate. Notably, under the Guidelines, he could have gotten 10 years, but the judge gave him the maximum. Skilling basically got the minimum, which was 24 1/3 years. And the girlfriend who was sentenced to 24 years for conspiracy apparently only served six because she was pardoned by Bill Clinton. And of course Jamie Olis’ sentence was reduced from 24 years to six years by reversal by the Fifth Circuit, so I’m not sure that one proves your point either. (Look, Skilling’s sentence isn’t so bad because it’s exactly the same as sentences so egregious they were overturned by the judicial and executive branches!) Yes, an empirical examination of various sentences (federal drug crimes v. white collar crimes) would be interesting, but it would have to be accurate.

  7. Dave Hoffman says:

    Christine:

    I’m glad you clicked through, because it allows me to make the point that if Skilling has a real case for outrageousness and pardon, presumably he will make it in a number of years, when the level of heat surrounding the case has died down. But if, as I expect, further investigations only reinforce the sense that Enron was built on a fraudulent foundation, the case for his pardon or resentencing will be weak.

    I don’t think of this blog post as an empirical examination, but, rather a collection of selected and biased anecdotes. But I’m interested in the idea of “proportionate” v. “nonpropotionate” sentencing. I take it that you are thinking retributively – the evil must be met with an equivalent amount of sentence. But wouldn’t a deterrence rational, especially in the Enron/accounting context, suggest that proportionality must be thought of with a wider lens?

  8. Matt says:

    I’m outraged at such punishments every day — or every time I read about them. I agree that Skilling gets more coverage than the average drug dealer sentenced to 24 years — though he also seems to get a lot more public opprobrium, for whatever that’s worth. I agree with M. Hodak that most people I know who object to this sentence also object to other long sentences for nonviolent offenses — and add that, if there’s any whiff of class warfare here, it’s from those who generally believe that nonviolent offenders shouldn’t get lengthy jail terms but make exceptions for rich ones.

    I’m in the outrage camp. Most people who are glad Skilling is in jail can’t articulate a reason why, or even say what crime he committed — he *didn’t* steal money from the company, and *didn’t* cause it to go bankrupt. He was pretty much convicted of making overoptimistic statements while Enron slid into bankruptcy — a crime maybe, but not something that “sentenced hundreds of thousands of people to poverty” or whatever the buzzwords are. If you care about retribution, Skilling didn’t intentionally harm anyone, steal any money, etc. If you care about deterrence, (1) it’s hard to deter crimes (or at least hard to justify the deterrence) if they’re only criminalized after the fact and (2) if you believe this deters, it massively overdeters — if Skilling had known he faced a reasonable probability of 1 year in jail there’s no way he would have done what he was charged with.

  9. Reader says:

    I think the original post’s absurdity and various fatal problems have been adequately pointed out by other commenters (like Hurt, Matt, etc.).

    So: May I point out another egregious misstatement in the original post?:

    “Moreover, it seems to me that Skilling isn’t being punished for going to a jury (while others took the plea discount). He’s being punished because the jury disbelieved his testimony.”

    Instead of explaining what’s wrong with it, I’ll just let its obvious wrongness sink in.

  10. LM says:

    Matt,

    I think the deterrence effect isn’t necessarily aimed at the offender so much as it is others who might consider doing as the offender has done. And I think, though no one else here has said so explicitly, that that was the point of Skilling’s lengthy sentence: to make a model of him. I.e., to let his actions, and consequent punishment, serve as a warning to others.

    As to whether Skilling himself might’ve been deterred by the possibility of imprisonment, I don’t know that he would have. The possibility of a 1-year sentence (as you suggest) is hardly a deterrent when you (or your company) stand to gain millions of dollars by fraudulently inducing investors.

    Plus, there’s always the question of whether Skilling truly knew what was going on to begin with. If he didn’t think he was committing a crime, what’s there to deter? (Although, given that the jury seemed to think that Skilling was cognizant of the conspiracy to defraud, I suppose we could say that this question has been “resolved.” On the other hand, the jury may have convicted Skilling simply because it wanted to have someone to blame for Enron’s collapse. Your view may depend on how much faith you place in juries to decide issues in complex litigation.)

  11. Dave Hoffman says:

    Reader – if I’m wrong, I’m wrong – but I don’t think that anonymous sniping is going to convince me of it.

  12. Peter Henning says:

    Dave,

    While I appreciate being grouped together with Christine, Ellen, and Larry, I don’t think my point is that the Skilling sentence is wrong, and no where have I ever lamented the prosecution of Enron executives, although I have some questions about some of the tactics used. The point of my post on the White Collar Crime Prof blog was to call attention to the lighter sentences in public corruption cases, which I see as being at least equal to the harm caused by an Enron situation. While Skilling’s long sentence is at the outer limit of what I view as appropriate, I think the twenty-four years (which will turn out to be a bit less than twenty if the conviction & sentence is upheld on appeal) is defensible. Larry, Ellen, and Christine may object to being lumped with me, and of course any club that will have me as a member . . . .

    peter henning

  13. Orin Kerr says:

    Reader,

    Would you be so kind as to explain your point? I’m not sure why what Dave said was wrong, much less so “obviously wrong” that it requires no explanation.

  14. Larry E. Ribstein says:

    Although I agree with Reader that the quoted statement was obviously wrong, I nevertheless belabor the obvious, and other problems, here:

    http://busmovie.typepad.com/ideoblog/2006/10/defending_skill.html

  15. I’m of the mind that non-violent convictions generally don’t deserve long prison sentences (yes, including drug possession) so the 24 years here does seem excessive…especially as it is juxtaposed with Lynne Stewart’s outrageous sentence of only 28 months…

  16. Lawstudent says:

    Could someone please explain why there should be a magic dividing line between violent and nonviolent offenses? To me, proportionality should be based on harm, not violence. Surely there are non violent harms that are greater than violent ones. I would rather be punched in the face than loose my life savings at mid life or retirement. In fact, I would probably rather be robbed at gunpoint for my pocket money than loose my life savings. Shilling, moreover, had a great many more “victims” than a typical violent offender. Of course, this assumes he did commit the crime, but shouldn’t that be a given in discussing the proportionality of his sentence?

    This may sound uncharitable, but could the issue here be merely one of class and social norms? Judges and bloggers can more easily imagine themselves defrauding shareholders than robbing a bank. (Not to imply that anyone here would commit either crime).

    By the way, someone above commented that if Shilling didn’t realize he was doing anything wrong, there is nothing to deter (presumably for future Shillings). I disagree. Part of the deterrent effect is motivating would be Shillings to make darn sure they’re not committing fraud. We don’t want to send the message that future Shillings can protect themselves by staying in the dark.

  17. Matt says:

    Tom Kirkendall, as always, is a must-read on this. http://blog.kir.com/archives/003545.asp If you believe that the Skilling sentence is justified, you really owe it to yourself to know what exactly he was convicted of, and I think Kirkendall has it exactly right.

    Skilling didn’t cause investors’ losses, didn’t steal any money for himself, didn’t take anyone’s life savings, etc. People think he did because they’d rather believe that one evil MBA stole their life savings than that the market, or business conditions, or a liquidity crisis, did — but there’s no reason at all to believe that Enron’s collapse is in any way Skilling’s fault.

  18. Matt says:

    I should have said that there’s no reason to believe that Enron’s collapse is the result of any criminal or fraudulent conduct of Skilling’s, or of anything that he was charged with or convicted of. Obviously the collapse of a company will always be in large part the fault of its CEO — but failing at business has only recently and tacitly become a crime.

  19. Reader says:

    Orin:

    Our criminal justice system penalizes those who choose to exercise their constitutional right to demand that the government prove to the jury beyond a reasonable doubt that they committed a crime. The government (prosecutor) does this by saying: If you choose to go to trial, you might get acquitted, but you might also get 25 years. On the other hand, if you plead, you will just get 3 years. The government “punishes” those who choose to go to the jury by threatening them with draconian sanctions. That is the sense in which people get punished for exercising their jury trial right.

    Yes, technically, Dave is right – the jury is the one who convicts, not the prosecutor. But that’s just semantics – and no one disagrees with that technical point anyway. The problem is that Dave ignores the way in which the system penalizes those who opt for the jury trial – this is done through overcriminalization, harsh guidelines, and broad prosecutorial discretion. I thought this was obvious to anyone paying attention, especially a lawyer, especially a law professor, and especially a criminal law professor/scholar. I guess I was wrong.

    [Author Responds: Reader misses the point, which was that defendants who go to trial and testify are self-selectedly different from those who either (a) don't testify; or (b) plea out. They cost the system more resources, and we may fairly imply that the factfinder has disbelieved their claim of innocence. That is, they are more likely guilty than their non-testifying, non-trial counterparts, and punishment is more appropriate. I should also note that I've deleted another comment of anon's that I thought added nothing to the thread.]

  20. Lawstudent says:

    “Our criminal justice system penalizes those who choose to exercise their constitutional right to demand that the government prove to the jury beyond a reasonable doubt that they committed a crime. The government (prosecutor) does this by saying: If you choose to go to trial, you might get acquitted, but you might also get 25 years. On the other hand, if you plead, you will just get 3 years.”

    I don’t understand. As you said, when you go to jury, you have the possibility of being acquited. So why it is wrong that your expected sentence, if convicted, is much higher than what you get if you give up the possibility of acquittal? (Especially given that acquittal is substantially better than a sentence of any length). If you knew you would get, at most, 3 years and 2 days from the jury, you would go to the jury every time. And I’m not sure that creates the right incentives.

    This seems especially true for someone like Skilling, who spent approximately 8 gazillion dollars on his defense. Basically, Skilling could have accepted a shorter sentence through a plea. Instead he decided to pour $$$ into a defense in the hopes of scoring an acquittal. It seems hard to argue that he was treated unfairly, assuming he was guilty. But the question of whether he committed a crime seems separate from these sentencing issues.

    To be fair, I think your point is valid with regard to the typical defendant. This just seems like a poor example.

  21. M. Hodak says:

    Being an economist and not an attorney, maybe someone can help me with this example:

    The DA’s office descends on my place of work gunning for my CEO, questions me, and decides that I have information that can implicate my boss, which gives the prosecutors leverage over her, etc. I believe I’ve done nothing worng, but my choice becomes to cooperate, including admitting my part in some conspiracy, to be allowed to plea to a minor charge that gets me 6-12 months in jail, or to continue insisting on my innocence, and face a trial that could land me up to ten years. The DA acknowledges that my attorney is correct in that I have the facts on my side and probably a 75-80% chance of winning at my trial. But they remind me that even a 20% chance of getting 10 years is still an expected value of 2 years, plus the risk and cost of a trial. I can argue that I didn’t do anything wrong and that I don’t think my boss did anything wrong, but the DA will say, “Hey, if you want to play roulette with your freedom, I’ll quickly enough find someone else who won’t.” This seems to me a template for white-collar prosecutions going forward. (If there is an occasional guilty party in the mix, all the better for the DA.)

    So, tell me how, even if I have the facts on my side and the resources to defend myself, that the prospects of a harsh sentence don’t compel a rational plea? It seems to me that a system that allows prosecutors to simply throw out high enough numbers is inherently unjust. And in this era where a five minute conversation can count as conspiracy, and an ambiguous e-mail can count as wire fraud, those numbers seem to get very big, very fast. And if the system is inherently unjust, what point is there to discuss the substance of the accusations, or the fairness of the ultimate verdicts?

  22. Reader, now astonished says:

    Dave Hoffman:

    “That is, they are more likely guilty than their non-testifying, non-trial counterparts, and punishment is more appropriate.”

    Huh? Do I have this right? You are defending a system in which those who are less “likely guilty” routinely accept convictions by the government?

    This conversation has taken a bizarre turn, and that’s a polite way of putting it. I will forego the less polite way of putting it, as I don’t want to be deleted again. At least M. Hodak gets it.

    And I didn’t miss your point. I perfectly get your point; I just think you are wrong.

    Lawstudent: Notice you have shifted to the term “incentives.” Read M. Hodak’s post and what kinds of incentives are given, and see if you think they are just.

  23. elizabeth nowick says:

    Just to be clear, is now the right time to share my view that IF YOU DO NOT WANT TO GO TO JAIL, DO NOT BREAK THE LAW?

    Just asking.

  24. Lawstudent says:

    I’m not sure what you mean by “shift to the term incentives.” What was this a shift from? And yes, I did in fact notice that I had used that particular word, despite your condescending suggestion to the contrary. Do you disagree? Do you think it creates the right incentives for a jury verdict to lead to roughly the same sentence as a plea?

    Also, what exactly is it you object to? The jury verdict leads to the sentence prescribed for the crime. The prosecutor’s offer is a “deal.” Do you favor a system that is the same, except prosecutors don’t offer deals. That would seem like an odd and ineffective way of dealing with the problem. If you’re saying that sentences are too high, well then I would agree with you–at least with regard to federal sentences for street crime. But that is not a problem of the plea system. That is just a problem of legislating high sentences.

    Anyway, this discussion seems off-base. Sentences for white collar crimes are far lower than those for street crimes hat, in my opinion, cause significantly less social harm. And the white collar defendants are much better lawyered. So the problem certainly exists, but not really here. There’s no epidemic of M. Hodaks.

  25. Nicholas says:

    You say that the jury didn’t believe him. When the government goes to the lengths they did in this case to terrorize exculpatory witness and to coerce plea bargains, can the jury possibly have had the facts to make that determination? This trial, the verdict, and the sentence all stink.

  26. Lawstudent says:

    Skilling spent 30 million on his defense and you still don’t think he got a fair trial?

    Who did the government coerce a plea bargain from? Fastow? Did he not deserve to go to prison either?

  27. NickBranch says:

    To Lawstudent,

    The government’s prosecution asserted that there were two frauds at Enron.

    The first was that Mr. Fastow and Mr. Kopper conspired to steal from Enron. Mr. Glisan was a part of this conspiracy through his participation in “Southampton” (the name of the Houston subdivision where both Fastow and Kopper lived). All three plead guilty to this action (although Mr. Glisan initially refused to cooperate with the investigation–a stance that apparently changed after he was thrown into solitary confinement, was offered a significant reduction in time served, was transfered to a lower security facility and allowed weekend furlloughs). Extensive documentary evidence exits to confirm this conspiracy including computer spreadsheets where Mr. Fastow and Mr. Kopper split up the proceeds, e-mails from Mr. Fastow directing distruction of computers, and a range of false tax filings designed to hide income (including the filings that led to the incarceration of Mr. Fastow’s wife).

    The second was the “grand conspiracy” to steal from Enron’s shareholders. This second conspiracy is not documented and formed the basis of the charges against Mr. Lay and Mr. Skilling. It is this conspiracy that was hotly denied (and after his sentencing, continues to be denied, by Mr. Skilling). The existence of this conspiracy relied exclusively on testimony obtained through plea agreements and the strange characterization of an undated, hand-written note by Mr. Fastow called “Global Galactic” (a note that has been “authenticated” only by Mr. Fastow who supposedly “found” it the week that he was negotiating his plea agreement with the government. The court transcript provides no evidence that Mr Skilling or Mr. Lay ever heard of this note or had ever heard of the term “Global Galactic”. Tellingly, in his cross examination by the government Mr. Skilling was asked not one question about this note).

    Fundamentally, outside of the Fastow crowd, the government’s entire case for this second conspiracy was obtained from individuals who were threatened with long prison sentences unless they signed on to the theory. Amazingly, the transcript confirms that in every one of these cases, the pleaders also confirmed that they were not a part of a conspiracy and that they were not instructed by Mr. Skilling or Mr. Lay to do anything wrong.

    In addition, relying on somewhat circular reasoning, the government then went to work on preempting any potentially exculpatory evidence from any non-pleading witnesses. In a move that I believe is unprecedented in US jurisprudence, they named over 100 individuals as “unindicted co-conspirators”, effectively signalling, in no uncertain terms, that testimony would result in indictment. No specific evidence of participation was offered. Then, just to make sure that no hole was left unplugged, they refused to publish this list to make sure that ANY potential witness (reasonably) feared that his name was on the list. (As a side benefit, this co-conspirator action allowed heresay evidence to be provided by the Fastow crowd).

    No expenditure on legal defense can offset this kind of prosecutorial conduct. Mr. Petrocelli, Mr. Skilling’s lawyer, is said to have commented that “I’d trade any amount of fees to have the ability to throw witnesses in jail if they didn’t say what I wanted them to say”.

    I repeat, this trial, this verdict, and this sentence stink.