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.

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

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.

Just asking.

“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.

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?

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.

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.]

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.

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.

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

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.

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

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.)

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.

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.