Thursday, July 3, 2008

Former CEO Refco Sentenced to Long Prison Term

Former CEO of Refco, Phillip Bennett, was sentenced today.  The Wall Street Jrl article by Chad Bray is titled, "Ex-Refco CEO Bennett Sentenced To 16 Years in Prison for Fraud." Bennett plead guilty (see here) to what the government called a 2.4 billion dollar fraud. Because loss is important in determining a sentence, the 60 year old man faced an enormous possible sentence.

The defense asked for a sentence "well short of the remainder of Mr. Bennett's life."  The government wanted a sentence comparable to that given to Samuel Israel (20 years); Bernie Ebbers (25 years); Steve Hoffenberg (20 years) and Patrick Bennett (22 years).  The government also referenced the sentences given to the Rigases, but the government memo was submitted prior to the three year reduction issued by the court (see here). Sentencing Memorandums for the parties in this case can be found here

This new sentence to the white collar sentencing world, and the ones mentioned above, again emphasize the fact that white collar offenders are being given long stiff sentences. With these recent stiff sentences being given for pleading guilty, more individuals accused of crimes may decide to risk trial. The government may start having second thoughts about their requests for long sentences. The six year sentence given to Andy Fastow for his plea and cooperation is not always being given to others.  This raises the question of what should be the value of cooperation.  When one receives an enormous value, as did Andy Fastow, one has to wonder how this disadvantages those individuals who may have nothing to offer in cooperation.

Indictment Part 1 - Download part_1_of_indictment.pdf

Indictment Part II - Download part_2_of_indictment.pdf

(esp)(w/ a hat tip to Whitney Curtis for her wonderful assistance)

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Actually, I haven't noticed more white collar cases going to trial due to the super long sentences. In fact, just the opposite is true. The fact is that the trial penalty is enormous and that is enough incentive to plead guilty. It all about the guidlelines. When your "loss" amount is in the hundreds of millions, you are facing life. By pleading guilty you hope to avoid the worst.

Posted by: DAG | Jul 3, 2008 9:57:01 PM

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