Thursday, January 18, 2007
When the Tenth Circuit recently reversed the convictions of former Westar CEO David Wittig for securities fraud and false statements, it appeared that he would have clear sailing out of the FCI in which he has spent the past year. Wittig was first sent to jail for a bank fraud conviction not directly related to Westar in early 2006, for which he received a five-year prison sentence. On a second appeal of that sentence, the Tenth Circuit held that the district court improperly calculated the amount of loss, finding that the proper sentencing range was 0-6 months; the court rejected the government's argument that the sentence would have been the same, stating that a "dramatic variance" ten times greater than the Guidelines sentence required a remand for resentencing (see opinion here). Wittig has served more than the presumptive Guidelines sentence, and requested immediate release. With the reversal of the Westar fraud convictions, Wittig appears to have a good argument that he should be released, but U.S. District Judge Julie Robinson has ordered resentencing on the bank fraud charge in early February, so Wittig gets to wait in prison longer before learning when he will be released. A report (here) states that federal prosecutors have asked Judge Robinson to resentence Wittig to a five-year term, despite the Tenth Circuit's Guidelines analysis. Prosecutors have not announced whether they will retry Wittig on the Westar charges that were only reversed but not barred by double jeopardy.
As is so often the case in these kinds of white collar prosecutions, there is a raft of civil litigation between the former executive and the company. A Wall Street Journal story (here) states that Westar has already paid $8.4 million of Wittig's attorney's fees, and he is claiming another $12 million. Most companies have generous reimbursement policies, and the reversal of the conviction may well entitle Wittig to payment of a significant portion of the claimed fees. In addition, Wittig has a $52 million claim under a severance agreement with the company, and the Tenth Circuit's decision on the Westar fraud charges likely strengthens his case. With that much money at stake, look for the fight to continue. (ph)