Tuesday, September 26, 2006

Fastow Receives A Six Year Sentence

Cooperation proves very valuable to Andrew Fastow, who received a 6 year sentence today for his activities related to Enron. (See Houston Chronicle here) Although the judge had a 10 year limit, it is perhaps surprising to see the reduction here for such a major player in the Enron case. The Wall Street Jrl here describes the extensive cooperation provided by Fastow, including the fact that one of the victims - the University of California requested leniency for Fastow at his sentencing hearing.

Is it fair for Fastow to receive such a low sentence in large part because of this cooperation?  In some respects this sends a message that if you avail yourself of your constitutional rights and request a jury trial, the risks can be enormous.  (see here) And if you cooperate, you stand to gain a lot.

And is it fair to say that Jamie Olis and Andrew Fastow deserve the same sentence, or is one clearly being given an enormous benefit because of his cooperation with the government?  The answer appears obvious and the message to people is - cooperate or risk a greater sentence.

But it is also important to note that the sentences being given in white collar cases have been outrageous and it is good to see a judge putting an appropriate and thoughtful perspective into the process.

With the Olis sentence now reduced, and Fastow at six years, the big question will be whether Jeff Skilling should suffer a greater sentence.  And if he is given a greater sentence will this be because he decided to proceed to trial?

(esp)

September 26, 2006 in Enron, Sentencing | Permalink | Comments (0) | TrackBack (0)

Monday, September 25, 2006

HIPAA Enforcement & Identity Theft

A recent indictment in Florida presents a novel prosecution theory -  state identity theft becomes a HIPAA violation. The Indictment charges conspiracy and computer fraud, but also adds a count of wrongful disclosure of identifiable health information. Information is allegedly compromised by a medical clinic's employee who steals patient information and then allegedly sells this information. As opposed to proceeding with a state theft charge, the government decides to proceed with a federal prosecution, because after all - if the allegations are accurate - the information is covered under HIPAA.

The Indictment can be found here.

(esp)

September 25, 2006 in Computer Crime, Prosecutions | Permalink | Comments (1) | TrackBack (0)

Technology & The Scrushy Jury

Jury deliberations are supposed to be secret.  And in most cases what happens in the jury room will stay in that room during the deliberations. But with new technologies, it is not surprising to see new issues developing.  According to the Wall Street Jrl here and Guardian Unlimited (AP) here, the court in the Scrushy/Siegelman case is now faced with the issue of whether some jurors may have communicated via email.

Scrushy, the former CEO of HealthSouth was found guilty after a second trial by jury (he was found not guilty in a prior trial related to HealthSouth). His defense counsel is seeking a new trial premised on allegations that there were improper communications. (Id.)

With Treos, Blackberries, and other handheld devices that permit access to the Internet, and with so many people now having computers easily accessible, it will not be surprising to see more instances of jurors communicating during deliberations.  And I am not talking about emailing to see if someone needs a ride to the courthouse. Judges need to be especially cognizant of the new technologies when instructing a jury.  They need to remind jurors that they cannot communicate on the case outside the actual deliberation in the room.  They also need to remind jurors that it is not appropriate to google for answers to questions that might be related to the case.

(esp)

September 25, 2006 in HealthSouth, Prosecutions | Permalink | Comments (1) | TrackBack (0)

Sunday, September 24, 2006

Fastow to Be Sentenced This Week

Both Andrew and Lea Fastow were indicted.  Lea Fastow, the wife of the Enron CFO, plead guilty and served a one year term of imprisonment on a tax charge. (see here).  Andy Fastow stayed free during this time, taking care of the children and testifying for the government in the Lay/Skilling trial. (see here). 

Now Andrew Fastow will be sentenced.  He will receive a sentence of ten years pursuant to an agreement, although he will have to first listen to the sad testimony of victims who suffered as a result of his conduct as CFO at Enron. (see Houston Chronicle here). His lawyers will ask for leniency premised on him being a "changed" man (see here)

Several issues deserve mention here -

  • Is it fair for Fastow to receive this low a sentence all because he cooperated with the government? This is yet another case of the government providing an enormous benefit to someone who cooperates, while demanding a higher sentence for those who decide to go to trial. Selecting to use the constitutional right of a jury trial comes with the enormous risk of a significantly greater sentence if the jury returns a verdict of "guilty."
  • Should the government have given the plea for cooperation to this person, or did they select the wrong person in using their discretion? The government discretion to provide a "deal" to whoever they decide they would like, often produces inequities. In this case one has to ask whether Fastow was more culpable than Jeff Skilling or the now deceased Ken Lay. 
  • Is putting Fastow in prison the correct way to punish a white collar offender?  We did not fear Andrew Fastow while he was free pending his sentencing.  The Houston Chronicle reports on his admirable deeds and recognition for being a good father. (see here). This is a no-win situation.  As with so many white collar cases, the individual is not someone we fear once their ability to commit future white collar offenses is removed.  The sentence is for retribution, and incorporating the victim statements at the hearing just emphasizes this point. But many will suffer by sending Andrew Fastow to prison, most notably his children.  Is prison really the appropriate way to punish this individual, or should the sentence consider the unique characteristics and qualifications of the individual and punish the person with a sentence that will maximize those skills for the betterment of society?

(esp)

September 24, 2006 in Enron | Permalink | Comments (3) | TrackBack (4)

Ebbers to Begin Serving 25 Year Sentence This Week

Bernard Ebbers will begin serving a 25 year sentence this week.  The Washington Post here notes comments on this upcoming sentence, including a comment by Professor Frank Bowman stating that "[m]y own sense is that any sentence over 20 years for anybody for an economic crime is hard to justify."

So why is it that a man with no prior criminal record was given a sentence of 25 years for a non-violent crime? The bottom line is the federal sentencing guidelines.  The effect of these guidelines is to rachet up the sentences for white collar offenses.  The sentence is computed to a large extent based upon fraud loss.  The character of the offender, the lack of prior criminal history, and rehabilitation are basically thrown out the window when courts look at a mathematical forumula that looks solely at the amount of fraud loss, a number that can rarely ever be computed with precision (see Olis). Anyone who contends that we need to worry about the discretion judges have in this post-Booker world, need only watch Ebbers as he goes off to prison.

(esp)

September 24, 2006 in WorldCom | Permalink | Comments (1) | TrackBack (0)