I was reading this article which describes the sentencing of a stock broker who ripped off his customers:
Huh?
So, because there is a pervasive culture of corruption this guy should get off relatively lightly?
Perhaps if the book was thrown at this guy (and others) they may think twice about the value of engaging in this behavior. Afterall, spending the last half of your life in jail may not seem like a good trade for ripping off your customers. However, make enough money and a chance at 5 years plus some monetary penalties might be thought worth a go.
Sorry, but I just do not get it. The judge in this case is described as well respected and having loads of experience. Am I missing something that is obvious to the legal system that escapes me?
A second offense marijuana possession of an ounce (30 grams but close enough) in Illinois gets you a 2-5 year sentence and a $150,000 fine. There is a pervasive culture of marijuana use. Should I get a light sentence as a result (if I were to be busted under this)?
In Illinois if I steal $10,001+ it is a class 2 felony and I can be put in jail for up to 7 years. If I steal $100,001+ up to 15 years.
This guy managed to zap over $1.12 billion.
Something seems seriously messed up with that. Please tell me where I am thinking about this incorrectly.
There has long been an aspect of intent to criminal cases, the mens rea tests for example. If everyone was doing it, then it was normal, and it’s hard to justify busting one guy for just going along with what everyone around him was doing. Usually the criminal mindset is different from the non-criminal, the criminal is doing something unusual, knowingly, to screw someone over. If everyone is screwing over their clients, then this guy wasn’t doing anything unusual.
A more common example is if you’re speeding and everyone around you is speeding too. Technically you’re breaking the law, but since everyone is doing it, you can plead that you weren’t guilty of doing anything other than what circumstances dictated. Speed, or get run over. In this guy’s case, it was defraud the client or be out-competed by someone who would defraud the client anyway.
I’m torn on this one. Personally I think they ought to lock up the whole bunch of the bastards, including this guy. On the other hand, since they can’t bust an entire industry, is it fair to make this guy pay a disproportionate price when he was just going with the flow? When Paris Hilton was spending a fraction of her sentence in jail, as pretty much everyone who gets that sentence in that area does, was it fair for the judge to call her back and make her serve the whole sentence? Justice is about fairness, not retribution. These guys need to be smacked back to the stone age, but you can’t do that one guy at a time, because that punishes an individual for the crimes of the many.
Missing the Mens Rea bit and how it figures in here.
I never thought “everyone else was doing it” was a viable defense. A crack dealer in an inner-city may well say everyone else is selling it. Or a drug user may say everyone else was using. Not sure I have ever heard that help them in their legal defense. Certainly when I have been caught speeding this never helped me (and I actually tried once…was in Wisconsin and guy ahead of me was going faster but he had Wisconsin plates and I had Illinois plates and I got the ticket). When I told the judge others were going even faster she was entirely unsympathetic and my ticket stuck.
I thought breaking the law was breaking the law. Even ignorance of the law is supposedly no excuse. Certainly this guy had to know what he was doing was illegal.
Granted you do not bust a whole industry on the back of one guy but if the courts are aggressive in not tolerating this and giving hefty sentences (as provided for by the law) then, presumably, it will dissuade others from following this path.
If I was a trader and willing to be dishonest I might look at this and decide I have a chance at oodles of cash with only a “maybe” of getting caught and spending 5 years (likely less with parole) in jail. Chance at multi-millions in money versus that? Not too bad a dice roll.
I don’t buy the “everyone was doing it” line. This wasn’t a borderline case - this guy was changing trade confirmations. I know brokers may fudge about what a security is, but this guy knew exactly what he was doing and acted to cover his tracks.
I don’t think he will be eligible for parole - if I remember federal sentences don’t have parole.
That said, I am not sure I agree with you on the dice roll calculation. It isn’t the length of sentence that is the key factor in deterrence here, it is the likelihood of getting caught. 5 years is a long time in prison. I am not sure, for white collar criminals, that 15 years deters a lot more than 5. Spend the effort upping enforcement, and improving the detection rate, and you get a much better return.
Where I am on side with you is the disparity aspect. Had this guy been black, and broken into rich white folks houses in gated communities, he would, I have no doubt, be looking at much higher time. And that’s wrong.
I agree upping detection and enforcement are good choices to spend the time/effort/money on. That said I am not sure 5 years and 15 years would be seen as remotely equivalent. Let’s say the guy is 40 (no idea). Getting out at 45 and 55 is a big difference to me. Plus, he faced a potential 45 year sentence which is most of anyone’s life (seems Feds asked for 15 years).
I do not know that criminals make a conscious decision to risk getting arrested but surely it must figure in there somewhere. Would this guy risk 5 years in jail to steal $10? I am betting no. Where the line is drawn is different for each person but when you talk about millions the attraction to take the legal risk is pretty damn high.
I’d say there is a cut off point on sentencing above which increased time doesn’t add to the deterrence factor. And as that point is approached, each extra year of the sentence yields a lower return in deterrence.
Our sole disagreement is where that point is. And, I think obviously, it will differ for different crimes and different criminals. Now that brings in a whole different set of calculations, based on fairness. If it could be shown, for example, that a lesser sentence was needed to provide the same deterrence for powder cocaine use or dealing than for crack, would that be acceptable? From a straight deterrence viewpoint, it probably would. But once you add the fairness aspect in, you may well come to a different conclusion.
There are three immediate variables that spring to mind if we are assuming rationality (big assumption I know) on the part of a criminal - the reward from the crime, the possibility of getting caught & convicted, and the sentence. In this sort of crime, the reward is extremely high. He stole a HUGE amount of money. While I agree that 15 years is worse in the calculation than 5 years, I’d argue it is significantly less than three times worse.
That said, 5 years probably comes in below the level of real diminishing returns. I’d argue my base stronger if it was something like the difference between 15 years and 30 years, for example. So yes, while I would still rather see them spend the time and resources on increasing the conviction rate, I’ll agree with you that 5 years is somewhat on the low end. Though whenever I see a journalist writing “only five years in prison” I am willing to bet they have never set foot inside a prison…
Probably although I am guessing a guy like this gets to go to a minimum security prison and not into the general population with murderers and rapists. While still not pleasant I doubt he will be subjected to the horror show that a maximum security prison seems to be.
Yes, but rapists and murderers don’t get sent to maximum security prisons because we want to punish them extra hard. They get sent to maximum security because they represent a security risk. And a mild mannered non-violent criminal gets sent to a minimum security prison because they represent a small security risk.
The security level of the prison is determined by the professionals who run the prison system, not the sentencing judge. If a white collar convict starts causing trouble for the guards he’s going to find himself in lockdown pretty quick.
Well certainly, and it is also federal, which is the prison system of choice if you are to be locked up. After all, your murderers, rapists and other choice roomies tend to be in the state pen.
We deal with a fair amount of white collar crime here, and the threat of jail sentences of almost any length is a very persuasive tool from the government to roll people.
I agree. I worked for a company with a CEO that stole 500 million from our company. Overnight I lost half of my retirement when the stock tanked.
He is doing 7 years in prison which I think is a crime in itself. I will never get my hard earned money back and it will effect me the rest of my life, not just 7 years.
When you steal from thousands of people you should get a long sentence like Madoff did.
I think the problem is these men are so rich that they have the best legal representation. Corporate fraud is not getting the penalties it should seeing the long term effects it has on the people they steal from.
Comments like this make me very nervous. The first part anyway. It is a problem that someone has the best legal representation they can? Who decides what level of legal representation someone should be allowed?
As to higher penalties for corporate fraud, I am in general agreement, though I think you are wrong to suggest 7 years in prison won’t affect him for the rest of his life.
This is not always the case. The one time I went to traffic court, there was a video that everyone had to watch first. They said is was to inform us of our rights, and it did touch on our rights a bit. Mostly, though, it was a list of arguments that won’t fly, so don’t even bother to make them. “Everyone else was going that speed” was on that list. Just don’t even bother, at least in that court.
I think the judge’s point was that Eric Butler was employed by a corrupt company, working in a corrupt industry, pushing the same junk CDO investments everyone else was pushing. While it would be satisfying to pile on this one man for what happened, that doesn’t account for the particular time and place in which he was operating. Now I’m not saying the sentence wasn’t lenient, but don’t you think his employer should bear some blame for setting up an earnings structure that rewarded guys like Butler for pushing riskier investments and only concerning themselves with the amount of money they brought in and not whether they were behaving legally and ethically?
So boost the funding for the Public Defender system. Which, by the way, includes some of the finest lawyers I have every had the privilege of meeting and/or working with. But the solution isn’t to say that it is a problem that people can pay for their own legal representation.