5th Circuit Rules in Jamie Olis Case

It took a long time for the 5th Circuit to rule, but at last a decision is rendered in the case of United States v. Jamie Olis, former "Senior Director of Tax Planning and International (and later, Vice President of Finance) at Dynegy."  Olis had received a sentence of 24 years (292 months total) for convictions of "securities fraud, mail and wire fraud, and conspiracy" arising from his "work as a tax lawyer and accountant at Dynegy Corporation." (Decision)  The appellate court affirmed his conviction, but not surprisingly vacated the sentence and remanded it for a new sentence.  A superb analysis of this decision is found on Professor Doug Berman's Sentencing Blog here.

The court easily discarded the government's claim that the Booker issue was not preserved for appeal, and moved onto the substantive issues raised by this sentencing claim.  The court proceeded to examine a key issue that arises in white collar cases - the use of the loss calculation as a crucial factor in determining the defendant's sentence. White collar defendants have been faced with increased sentences in cases where the government attributes losses to their conduct. Professor Doug Berman states in describing one of the court's points:

"The Olis court then engages in a thorough discussion of loss calculations (which dictated Olis' long sentence in the district court) to reach the conclusion that 'the district court, faced with a "'cook the books'" fraud, overemphasized his discretion as factfinder at the expense of economic analysis.'  The Fifth Circuit thereafter suggests that 'attributing to Olis the entire stock market decline suffered by one large or multiple small shareholders of Dynegy would greatly overstate his personal criminal culpability.'"

The appellate court in the Olis case states that "[b]ecause the district court's approach to the loss calculation did not take into account the impact of extrinsic factors on Dynegy's stock price decline, Olis is entitled to resentencing on this factor, subject to the principles" discussed within the opinion. 

Although the actual effect on Jamie Olis' sentence remains to be seen, this is clearly an important sentencing decision for white collar offenders. It sends a message that total losses to a company, the market, or the outside world will not just be slapped up on a chart as the determining factor of a sentence.  Those losses can be scrutinized, and scrutinized carefully.

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UPDATE: Co-blogger Ellen Podgor is quoted in the Wall Street Journal story (here) about the Fifth Circuit's decision. (ph)