Tuesday, November 7, 2006
Not surprisingly, the Fifth Circuit Court of Appeals reaffirmed the vacating of Ken Lay's conviction, as a result of his death. (see Houston Chronicle here, Wall Street Jrl. Blog here). The Houston Chronicle reports that the court held, as the district court had, that "when a defendant who has been found guilty of a federal crime dies before exhaustion of his appeal, his prosecution must be abated, his conviction vacated and his indictment dismissed."
Wednesday, October 25, 2006
Unlike some defendants who are immediately taken into custody upon conviction, Jeffrey Skilling has a little bit of remaining time in the semi-free world. He was ordered to report to prison once the Bureau of Prisons has assigned him to a facility. He was not given bond pending the appeal.
The Houston Chronicle here has an interesting story on Jeffrey Skilling's choice of prison. And if given this placement, he will be in a place with at least one other mentioned on this blog (Former Rep. Randy "Duke" Cunningham). Wall Street Jrl blog reports here that he is going to the Federal Correctional Center in Butner, N.C. (see here)
Monday, October 23, 2006
What are others in blogsphere saying about Jeff Skilling's sentence:
Doug Berman - Sentencing Law & Policy here
NormPattis - Crime & Federalism here
Larry Ribstein - Ideoblog here
Tom Kirkendall -Houston's Clear Thinkers here
Howard J. Bashman -How Appealing here
Addendum - Carrie Johnson of the Washington Post reports here that the Enron Task Force was "closing its doors."
Commentary on Jeffrey Skilling's sentence of 24 + years (292 months) by Peter & Ellen -
Will we ever see sentences like these again?
Peter - The collapse of Enron, WorldCom, and Adelphia Communications due to large-scale accounting fraud was, in many ways, unprecedented, the "perfect storm" so to speak. Executives have never been sentenced to such substantial terms before, and I doubt we will see these types of sentences again. Not because corporate crime will cease, but because the ability to engage in these types of accounting tricks is now much more difficult. For one thing, the accountants and the lawyers are paying much more attention to the details, in part because of Sarbanes-Oxley but perhaps even more because the job of those professions is more directed toward policing management. Rogue executives can still engage in criminal conduct, but I would be very surprised if we saw the type of brazen accounting fraud perpetrated by WorldCom. There will be another cycle of corporate misconduct, and I don't think anyone can predict where it will strike. But like the S&L crisis of the 1990s, it is unlikely to be spread across industries and involve conduct at major enterprises. I don't think we'll see another Bernie Ebbers or Jeffrey Skilling on trial for destroying a company, in effect, so corporate crime prosecutions will be for more isolated misconduct. Not that corporate executives should forget these sentences, but they are not at risk of suffering them because at least for the foreseeable future the types of crimes that Ebbers and Skilling engaged in are not going to take place.
Ellen - I also rather doubt we will see sentences like this again, but not because the Enron & Worldcom wave are over or because Sarbanes -Oxley is going to solve the problem. There have always been corporate fraud scandals and there will likely be scandals down the road. Just as we saw new frauds developed throughout our past history, most likely we will see new forms of fraud in the future. What they will be, and how extensive they will be, remains to be seen. And just as Congress reacted to the scandals of today with new legislation (Sarbanes-Oxley) so too will we find reactive legislation passed in the future to handle the new types of criminality that appears on the scene.
But I don't think we will see sentences like this in the future because people will eventually realize the worthlessness of issuing such draconian sentences in non-violent white collar cases. The bottom line is that these sentences are not likely to deter future criminality, as many who engaged in the conduct just did not see themselves as committing crimes. Jeff Skilling's claim of innocence, even at his sentencing, is a statement that in order to deter criminality we need to start teaching law in business schools so that those going into the business world are fully apprised of where the line is between acceptable business practices and criminal conduct.
Do these sentences match the harm in other white collar crime cases?
Peter -While Jeffrey Skilling receives 24 years for presiding over the collapse of Enron, former Congressman Randy (Duke) Cunningham sells his office to a string of defense contractors for a bit over $1 million and receives a sentence of 8 years. Soon-to-be former Congressman Bob Ney will likely be sentenced to less than 3 years in prison for selling out his office to lobbyists led by Jack Abramoff. How can there be such a disparity between the sentences for public corruption and the corporate frauds perpetrated by Ebbers and Skilling? The harm from public officials, especially those elected to office, who abuse their positions for personal gain is, in my opinion, nearly as great as that caused by corporate chieftains who preside over collapsing companies. While one might argue that it is wrong to "criminalize agency costs" by prosecuting corporate officers, we never hear that argument applied to public corruption. The sentences in those cases need to be increased significantly to send an even stronger message to public officials that selling their offices, and the public's trust, is intolerable. Investors don't lose pensions, but the harm is just as great, I believe.
Ellen - I agree that in recent cases we see lighter sentences in corruption cases than we see in the corporate sphere and that this disparity is not warranted. If anything, having the public's trust should be considered a greater threat to society than criminal activity in the private sphere. But I do disagree that this warrants increasing the sentences in corruption cases. More appropriately, this sends the message that recent corporate sentences are not aligned with reality. Sending non-violent offenders to prison for life sentences serves no utilitarian purpose. Sending a person to prison for 25 years as opposed to 10 years for a corporate crime does not offer increased rehabilitation to the individual. After all this person will never be in this position again to commit a like crime. It also serves no deterrent if the individual has no recognition of what is legal and what is illegal. Further, a 10 year sentence would send an equally strong message to anyone entering the corporate world that they need to act properly. The only purpose here is retribution. And the shame of this conviction, a sentence of 10 years, and the collateral consequences faced by the white collar offender easily send that same message.
If we are so intent on punishing the wrongdoer with heavy prison time, then how can we accept Andrew Fastow being sentenced to 6 years, or Scott Sullivan receiving 1/5 of the sentence received by Bernie Ebbers. It becomes clear that what we are really doing here is punishing individuals who exercise their right to a jury trial. And permitting the government to continue this practice is not proper.
Not surprisingly, Jeff Skilling received a sentence in excess of 24 years in prison (292 months). (see Wall Street Jrl here) Surprisingly, he will not be allowed to remain free on bail pending the appeal, although he can remain free until such time as the Bureau Prisons determines his new residence and he has to report there. (see Houston Chronicle here). If one were expecting remorse to mitigate the sentence, it did not happen as Skilling continued to maintain his innocence. More to come....
Jeff Skilling's Forthcoming Sentence & The Role of Cooperation here
The Skilling Sentence here
Skilling Takes Another Shot at Overturning the Guilty Verdict here
More on Fastow here
What the Lay/Skilling Jury Heard from Fastow here
Fastow Receives a Six Year Sentence here
Fastow to Be Sentenced this Week here
Joint and Several Liability and Jeff Skilling here
Court Rejects Overturning Skilling's Convictions here
Asset Forfeiture- Skilling & Lay here
A Hint About How Causey's Guilty Plea Affected the Skilling Defense here
Skilling and Lay Seek to Delay Sentencing here
On to the Sentencing here
The Parameter for CEO Sentencing here
Lay & Skilling Appellate Issues here
Lay & Skilling Convicted here
The Skilling/Lay Closing Argument here
Commentary on Lay/Skilling Trial and Possible Aftermath here
Skilling/Lay Trial Defense Rests here
Here Comes an Ostrich (Instruction) here
Ken Lay's Testimony Ends here
This Week in Enronville here
Tough Day for Skilling here
Cross-Ex of Skilling here
Was Skilling on the Witness Stand Too Long here
Blame Fastow here
It is All Skilling here
Ae Ken Lay and Jeff Skilling Assisting the President here
Will Lay & Skilling testify? And Who Else? here
Intent- Key Issue in Skilling/Lay Trial here
Government Rests its Case Against Lay and Skilling, and Asks for 4 Counts to be Dropped here
Not a Good Day for Skilling here
They're On to Us here
This Week in Enronville here
Another Day in Enron Country here
Lay/Skilling Trial a New Week here
Opening Statements Lay & Skilling Case here
Skilling & Lay Selecting a Jury here
Enron Playbill here
The Latest Pre-Trial Events in the Lay/Skilling Trial here
Using Skillings SEC Testimony Against Him here
Skillings Motion to Dismiss Insider Trading Charges Against Him here
Where Do Nice Guys Finish here
There are many additional entries on this blog related to Jeff Skilling - see here
Sunday, October 22, 2006
With the Skilling sentence set for Monday, all eyes are clearly focused on the possibility that this sentence will be in double digits. The real question is whether it should be. Co-blogger Peter Henning focuses on the issues surrounding this case (here), but lets also look at equity in sentencing and the role of cooperation. Does Skilling's lack of cooperation and desire to avail himself of his constitutional right to jury trial significantly hurt him?
Cooperator Scott Sullivan, former CFO at WorldCom received 6 years as a part of his plea agreement, while Bernie Ebbers who risked a trial received 25 years. Andrew Fastow's sentence was 6 years, and it would be hard to find someone who might predict Skilling's sentence would be equal to or less than that number.
What becomes obvious here is that if you play the government's cooperation game, the rewards are incredible. You can clearly avoid a lengthy sentence by helping the government make its case against others. Is this good and is this proper?
The sentencing guidelines, something the government is quick to advocate for, were enacted in order to have truth in sentencing and to curtail sentencing disparities. Left open within the guidelines was a loophole for government use - the 5K1.1 motion that allows prosecutors to ask for a sentence outside the guideline range. Thus, despite the aim of equity in sentencing, prosecutors were left with an incredible stick that allowed them, and only them, the ability to ask a court to reduce a sentence outside the guidelines when the accused cooperated with them.
This prosecutorial power was weakened with the Supreme Court's decision in Booker, that now allowed judges some opportunity to go outside the guidelines, but still requiring them to use the guidelines as their first step in the process of determining the sentence. The bottom line is that even after Booker, prosecutors still retain significant power in lowering a sentence for cooperation. One need only look at the sentences of cooperators Scott Sullivan, Andrew Fastow, and Jack Abramoff, to confirm this.
Clearly the government needs cooperators to make their cases, and there is no doubt that this provides efficiency to the system in addition to it being less costly. But what happens to the accused's right to a jury trial when there is an enormous disparity between the sentence given to cooperators and that given to those who decide to go to trial?
The right to trial by jury, as guaranteed by the Sixth Amendment, is clearly diminished when there is so great a reward presented to cooperators. Innocence or guilt may become irrelevant as the risk of going to trial in order to receive a "not guilty" verdict is weighed against a possible outcome that is five times greater than could be received if one cooperates with the government. This seems strange since the right to trial by jury, as guaranteed by the Sixth Amendment, was provided "in order to prevent oppression by the government." Duncan v. Louisiana.
Saturday, October 21, 2006
The conclusion of the District Court phase of the prosecution of Jeffrey Skilling should come with the sentencing scheduled before U.S. District Judge Sim Lake on Monday, October 23. The original sentencing date was September 11, and the Judge rather grudgingly granted a defense motion for a postponement. With the end of the highest profile prosecution of Enron defendants nearly upon us, there will be plenty of discussion about the meaning of the case and what comes next, so here are my two cents worth (and that's an overestimation):
- The Sentence: The sentencing materials have been filed under seal, but the government is seeking to use the 2001 version of the Federal Sentencing Guidelines, which provides for a higher sentence based on the amount of the loss. There will be fighting over the loss, which is the main driver of the sentence under the Guidelines. Unlike the Olis/Dynegy case, also presided over by Judge Lake, there are plenty of ways for him to view the collapse of Enron as being traceable to the securities fraud of Skilling (and the now-deceased Ken Lay) that can easily exceed the $400 million threshold for the greatest enhancement. After Booker, the Judge has some flexibility in determining the final sentence, but the Olis sentencing (and resentencing) show that he will hew pretty closely to the Guidelines. As for the final sentence, if the over/under line is twenty years I would bet the over, while a twenty-five sentence strikes me as the likely upper-end. The sentencing of John and Timothy Rigas of Adelphia (fifteen and twenty years respectively) and Bernie Ebbers of WorldCom (twenty-five years) are probably the parameters for CEO sentencing. While former Enron CFO Andrew Fastow received a six-year sentence, I doubt that will play much (if any) role in Judge Lake's final determination.
- Collateral Issues: The Judge is likely to decide the asset forfeiture issue along with the sentence, plus enter a restitution order. The government is looking for $183 million, which includes the amount owed by Lay but lost as a criminal forfeiture due to his death that triggered application of the abatement doctrine. While that's probably more than the Judge will order against Skilling, forfeiture and restitution make it unlikely that Skilling's lawyer, Daniel Petrocelli, will get any of the $30 million O'Melveny & Myers claims it is still owed. Then again, after being paid approximately $40 million so far, not many will shed tears over that unpaid bill (see BusinessWeek article here). I expect the Judge will grant a motion for bail pending appeal, especially after the Fifth Circuit denied en banc review of its decision in the Enron Nigerian Barge prosecution, U.S. v. Brown (see earlier post here). That decision overturned the conviction of three defendants on mail fraud charges involving the same honest services theory used in Skilling's case. I think it's unlikely Skilling will see the inside of an FCI in 2006.
- The Appeal: Plenty of issues, starting with the mail fraud/honest services instruction that may violate the holding in Brown. The problem for Skilling on that issue is that the honest services theory was one part of a few counts, and is unlikely to affect the conviction on other charges. Another issue will be the "ostrich instruction" as a basis for finding knowledge for the securities fraud and conspiracy charges. A significant sentence may be challenged as unreasonable, although Judge Lake may grant a small downward departure from the range recommended by the Sentencing Guidelines to demonstrate that the sentence was the product of a thorough review of the facts and law.
- The Punditry: Every April 15 demands a story about lines at the post office to mail tax returns, and what would the Thanksgiving holiday be without stories of it being the heaviest travel period of the year. Articles on the sentencing I expect will quote at least one former Enron worker (or retiree) who views any sentence less than death or life imprisonment as inadequate. There will be complaints from academics and defense lawyers about the severity of the sentence questioning why non-violent first offenders must spend "X years" in jail when they present no threat to society. The question whether the sentence was "fair" is ultimately unanswerable beyond an assertion of one's opinion, at least when it does not violate the Supreme Court's rather skimpy "cruel and unusual punishment" jurisprudence. Between the extremes of complete judicial discretion and rigid mandatory Sentencing Guidelines, the judge makes an educated guess.
With my track record of predictions, I am a good negative indicator. (ph)
Tuesday, October 17, 2006
There were no surprises in today's dismissal of the indictment against Ken Lay. (see CNN here). As previously noted, the Fifth Circuit in an en banc decision ruled clearly on the status of a criminal conviction after the death of the accused but prior to a review of the case on appeal. (see here and here). And yet despite the clear law, prosecutors opposed the motion for abatement of the conviction. (see here) Tom Kirkendall, at Houston ClearThinkers, offers some commentary here.
Monday, October 16, 2006
The six-year sentence given to former Enron CFO Andrew Fastow came as a surprise to many who thought that he would receive a ten-year term of imprisonment for his role in the fraud at the company. Fastow even testified that he would be sent to prison for ten years. According to a Houston Chronicle article (here), the government may appeal the sentence, although it's not clear whether that will be successful because prosecutors do not appear to have objected to the lower term at the sentencing hearing. According to Fastow's plea agreement (here), "The parties agree that Defendant's sentence under the Sentencing Guidelines shall include 120 months in the custody of the Bureau of Prisons. Defendant agrees that he will not move for a downward departure from the offense level or the guideline range calculated by the Court and that no grounds for a downward departure exist." The agreement seems to restrict what Fastow's attorneys could argue to obtain a lower sentence, and so the basis for U.S. District Judge Kenneth Hoyt's decision to impose the lower sentence will be important. At the hearing, prosecutors extolled the benefits of Fastow's cooperation, so it did not sound like the government had any objection to the lower sentence and may even have silently acquiesced in the six-year prison term.
The judge met with prosecutors and defense counsel in a closed session the day before the sentencing, however. It is not known at this point what was said there, and the court denied a request by prosecutors for immediate access to a transcript of that hearing in order to decide whether to appeal the sentence. Another Houston Chronicle story (here) quotes Judge Hoyt that "because the government was present, it is already in a position to know whether the government itself or the defense committed some act that violated a term of the plea agreement." One hint at what was discussed at that hearing is a request by Fastow's counsel that medical information not be revealed, which may indicate that his attorneys provided information about his condition that may have been a basis for a lower sentence.
But even if Fastow's counsel sought a lower sentence in violation of the plea agreement, the government's failure to object to the lower sentence may put it in the position of establishing a plain error if it decides to appeal. Under Federal Rule of Criminal Procedure 52(b), "A plain error that affects substantial rights may be considered even though it was not brought to the court's attention." If prosecutors did not object to statements by Fastow's attorneys at the time they were made, then the government would have to show that the sentence works a significant injustice and calls into question the integrity of the judicial process. Perhaps even worse, if prosecutors appear to have acceded to the lower sentence, then there would be a waiver of any claim that Fastow violated the plea agreement and the sentence cannot be challenged even for plain error. Given the lack of any objection to the sentence during the hearing or even immediately afterwards, it certainly looks like prosecutors have been inconsistent in their position. (ph)
Friday, October 13, 2006
The SEC brought civil charges against a former Enron executive and accountant, and two former Enron executives. They were accused of violating the antifraud provisions of the federal securities laws and aiding and abetting Enron's violations of the reporting, record-keeping and internal controls provisions. (see SEC Notice here). One of the individuals "agreed to pay $52,150 to settle the charges, while the cases against the other two are pending." Although agreeing to pay a settlement, there was no admission or denial of the allegations, "as is customary in such SEC settlements."
Thursday, October 12, 2006
Former Enron CEO Jeffrey Skilling filed another motion seeking to overturn his conviction, relying on the Fifth Circuit's recent decision that threw out the mail fraud convictions of three defendants in the Enron Nigerian Barge trial. In U.S. v. Brown (here), the Fifth Circuit held that the government's "right of honest services" theory for mail fraud did not apply because the defendants believed they were working in the company's best interests when they engaged in the transaction designed to inflate Enron's earnings. In the Lay/Skilling, the government referenced the right of honest services as one theory of fraud, although the main feature of the government's case was the improper disclosure and omission of important information and not the structure of any particular deal. Nevertheless, the mention of honest services raises a question about the verdict. The Enron Task Force has asked for en banc review of Brown, and it is unlikely that U.S. District Judge Sim Lake will overturn the entire verdict against Skilling on this basis, even if he were inclined to grant the motion as to some counts. If Judge Lake denies the request, then the motion preserves the issue for appeal, which may be the ultimate goal behind the filing. The motion also seeks to have the court grant bail pending the appeal, which has been done for a number of high-profile white collar criminal defendants after their conviction, including Bernie Ebbers, John Rigas, Frank Quattrone, and Martha Stewart. A Houston Chronicle story (here) discusses Skilling's motion. (ph)
Saturday, October 7, 2006
Former Enron executive Paula Rieker received a sentence of 2 years probation for her guilty plea to a charge of insider trading for reaping nearly $500,000 from sales of stock when she knew the company was facing severe financial problems. Rieker was among the eight former Enron officials who entered guilty pleas and later testified against former CEOs Ken Lay and Jeffrey Skilling in the conspiracy and securities fraud prosecution. The government moved for a downward departure in the sentencing of Rieker, noting that she provided valuable evidence implicating Lay in givingmisleading information to analysts during 2001 about the prospects of Enron's broadband unit, a centerpiece of the government's case that Lay committed securities fraud. Rieker was an executive in the investor relations department and then became corporate secretary, reporting directly to Lay. Under the Sentencing Guidelines applicable to Rieker's offense, she was looking at an 18-24 month term, so the probation term means U.S. District Judge Melinda Harmon gave a substantial downward departure for her cooperation. A Houston Chronicle story (here) discusses the sentencing. (ph)
Thursday, October 5, 2006
Bruce Carton on the Securities Litigation Watch Blog has an interesting post (here) calculating the cost of a pending deposition of former Enron CFO Andrew Fastow in the civil securities fraud lawsuit against a number of banks that advised the company and financed its deals. The deposition is expected to take two weeks (ten working days), and eighty (!!!) attorneys are expected to be involved. According to Bruce, using $400 per hour as the average hourly billable rate, that works out to $3.2 million for the deposition alone. A Houston Chronicle story (here) notes that U.S. District Judge Hoyt passed on a motion by the plaintiffs' attorneys to temporarily release Fastow each day from the federal lock-up in Houston so he can prepare for the deposition, saying that the lawyers should approach U.S. District Judge Harmon with that request because she is presiding over the civil case. If Judge Harmon grants the request, Fastow may be spending some time in Houston in the care and custody of his lawyers while he preps for the deposition, and then gets the joy of spending two weeks being grilled by lawyers for the defendant banks. I'm not sure if an FCI is better or worse, it's a tough call. Regarding the $3.2 million estimate, you should also throw in the costs of daily transcripts and the various paralegals and support staff that have to attend to the very important needs of so many lawyers. I wonder whether Fastow will get to keep his witness fee when he finally goes to whatever prison awaits him. (ph)
UPDATE: The Houston Chronicle reports (here) that District Judge Harmon granted the plaintiffs' request that Fastow be released during daylight hours to be deposed in the securities fraud suit. He will be in the custody of U.S. Marshals during the time he is out of the federal detention facility in Houston, and his "liberty" ends on Halloween. (ph)
Wednesday, October 4, 2006
Richard Causey, former Chief Accounting Officer at Enron, has had his sentencing hearing moved from October 19, 2006 to November 15th. This means that Causey would be sentenced after Jeffrey Skilling who is presently set to be sentenced on October 23, 2006.
Monday, October 2, 2006
After watching Andrew Fastow's sentence be reduced to six (6) years, despite a clear plea agreement that called for ten (10) years, one has to wonder what sentence will be imposed on Richard Causey. Tom Kirkendall at Houston ClearThinkers has a discussion of the plea here and the plea agreement can be found here.
The language in the plea agreement is clear. It states, "Defendant cannot and will not be sentenced to a period of incarceration of less than 60 months. Defendant further agrees that he will not move for a downward departure on any grounds and that no such grounds are applicable."
According to the agreement, Richard Causey faces a minimum sentence of five years. Will the court place Causey's sentence on the lower end of the range in light of the new circumstance - the reduction of Fastow's sentence. Or will the court go below the 60 months despite the agreement, as occurred in the Fastow sentencing? Stay tuned - October 19th is the day.
Tuesday, September 26, 2006
Yesterday Andrew Fastow, who received a sentence of six years despite a plea agreement allowing him to receive ten years, was sent to prison. Also yesterday, Bernie Ebbers, who went to trial and received a 25 year sentence, reported to prison to begin serving his sentence.
Both men were given the luxury of waiting a period of time to begin serving their sentences. In the case of Fastow it was to allow his wife to first serve her sentence and also allow him to remain free to assist the government. In the case of Bernie Ebbers it was because he was permitted to remain free pending his appeal.
The freedom each of these individuals experienced prior to starting to serve their sentence is yet another indication that the public does not fear these individuals. Their sentences were for deterrence and retribution purposes and not for incapacitation.
In contrast, former Mayor Bill Campbell was ordered to serve his sentence immediately. His sentence for a tax offense surprisingly was much shorter than both Ebbers and Fastow. (see here)
Some more thoughts on the Fastow sentence:
1. Some may argue that this sentence is another example of why we need strict sentencing guidelines that do not allow for judicial discretion. This is inaccurate. Even with strict guidelines in a pre-Booker world, the court would have had the discretion to give this sentence to Fastow. Sentences premised upon cooperation, that is sentences where the accused receives a 5K1.1 cooperation benefit, are allowed to be outside the guidelines. Thus, even with strict guidelines - Fastow's sentence could have been the same.
2. Are the sentences proportional here? There may be room for argument here in that clearly those who plead are receiving substantially less for the same crime than those who risk a trial. Some may argue that saving the government time and money warrants this disparity. But on the other side, does this diminish the constitutional right to a jury trial?
3. Peter Lattman at the Wall Street Jrl here asks the question, "Did Plaintiffs’ Lawyers Win Andy Fastow a Lighter Sentence?" As noted here, it was the University of California system that was asking for leniency for Fastow. It is rare that one finds a victim asking for leniency for the convicted defendant. But when they personally receive a benefit, it is understandable that they will come forward and be there at the sentencing. This is somewhat bothersome, however, in that poorer individuals, those with no information to offer the government, and those who are last in the prosecution line are individuals who have nothing left to offer in cooperation and are just plain out of luck.
Tom Kirkendall's Houston ClearThinkers has a tremendous post here that includes portions of Fastow's testimony during the Lay/Skilling trial. One of the pieces of testimony he presents is a part of the re-direct examination by Hueston on March 13th, when Fastow testified as follows:
"Q. And as a result of your pledge to cooperate, did you agree to plead guilty to a 10-year minimum sentence of imprisonment?
A. A 10-year maximum imprisonment.
Q. And what is the minimum amount of time that that plea agreement calls for?
A. It calls for a 10-year sentence.
Q. So after January 14th, can your cooperation lower that 10 years?
A. My understanding is that I will be sentenced to 10 years. The Judge ultimately has a discretion; but in my plea agreement, I agreed to the 10-year sentence."
Was it proper for the jury in the Lay/Skilling trial to hear that Fastow would do 10 years in prison and then have him receive a significantly lesser sentence? This may provide another issue for Jeffrey Skilling on his appeal. Check out the other segments that Tom Kirkendall's Houston ClearThinkers provides - here.
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?