Editorial by Herbert J. Hoelter
August 25, 2002
Last week, as I sat in federal court in Philadelphia anxiously awaiting the sentencing of one of my clients, I couldn’t help but wonder if the political climate regarding white-collar crime among corporate executives – President George W. Bush proclaiming, “No more easy money for corporate criminals, just hard time” – would have an undue influence on the judge. My client was a lawyer who for more than two decades had provided sound tax guidance to a wealthy businessman, but violated the law two years ago by helping him create documents to support improper deductions. For my defendant, it was an aberrant act in an otherwise productive and ethical career. He pleaded guilty and accepted full responsibility for his actions.
The Internal Revenue Service had been paid all taxes due, with penalty and interest. My client had lost his partnership in a blue-chip law firm and voluntarily resigned from the bar. His family had been humiliated and disgraced.
Notwithstanding the offense, this man, like many white-collar defendants, had lived a life of which most of us would be proud. He worked hard, paid his taxes, raised a fine family and spent years helping community agencies. Would the judge still be swept up in the fury that led Congress to pass and Bush to sign, on July 30, a law that, among other things, quadruples, to 20 years, the maximum prison sentence for mail and wire fraud, and creates a new felony – securities fraud – punishable by up to 25 years in prison?
I’d seen this sort of bandwagon rolling before, in the insider trading cases of the early 1980s, the savings and loan cases later that decade and the antitrust case in the 1980s. The recent “perp walks” choreographed by the prosecutors for Scott Sullivan, WorldCom’s ousted chief financial officer, and the 6 a.m. televised raids on the homes of Adelphia executives – were exercises in déjà vu. In mid-1980s, FBI agents led traders off the New York Stock Exchange floor in handcuffs. It didn’t matter that they were subsequently acquitted.
Those of us who have worked in the criminal justice system for any length of time have come to expect this kind of showboating and political grandstanding. Does anyone really think that “Corporate Responsibility” slogans plastering the wall behind Bush as he delivered his Wall Street speech on that subject will deter crime?
The debate is suffused with misinformation. One of the most distorted perceptions involving white-collar defendants – and the reason Bush stressed “hard time” – is that they get preferential treatment. Nothing could be further from the truth. After arrest, white-collar defendants are subjected to intense scrutiny of every aspect of their lives, from the art they have purchased to the restaurants they have dined in. Their entire careers, not just the alleged criminal activity, become suspect. Pictures of their houses, their cars and even their families become news. Even before the trial, the negative publicity can ruin personal and professional relationships.
At sentencing, prosecutors aggressively seek severe prison terms, even for first-time white-collar offenders, arguing that with the stroke of a pen a defendant has stolen more money than the thief who just got sentenced to 10 years. Yet for the average, first-time nonviolent criminal defendant, prosecutors usually will accept a sentence of probation and a second chance. They argue that white-collar defendants are unworthy of second chances.
In non white-collar cases, prosecutors inevitably use a defendant’s criminal background to argue for imprisonment. In white-collar cases, they argue that the defendant’s background is meaningless. Notwithstanding their criminal conviction, many defendants have built stellar careers and have contributed time and money to their communities for decades. Fortunately, many judges still share the view that all of a defendant’s entire life should be evaluated, not simply the period where their judgment was compromised.
Perhaps the most perplexing misinformation is the notion that white-collar prisoners serve their sentence in a “Club Fed,” watching big-screen television, playing tennis and hanging out at the pool. This is preposterous. Having spent a good part of my career visiting clients in federal prisons, I can unequivocally state that there are no luxury rooms available.
Serving time in a minimum-security federal facility is imprisonment. Prisoners work at mundane jobs, get paid 11 cents an hour and are regularly subjected to strip searches, shakedowns and cellblock counts. When being transported they are handcuffed and shackled. Phone calls are recorded, mail is opened and inspected by guards and visitors are limited. To suggest that deprivation of liberty is somehow easier or compromised because there are no steel cells or barbed-wire fences is simply wrong.
Unpopular as it may sound, the most frustrating part of white-collar imprisonment is the incredible waste of resources. White-collar defendants, who pose virtually no risk of recidivism, are an incredible pool of talent. If presented with reasonable alternatives, some judges will accept community service and other sentencing options in lieu of prison. In some of the cases in which we have consulted on sentencing, defendants have built camps for children with spina bifida, tutored inner-city children, helped ex-offenders obtain employment or developed recreation programs at senior citizen centers. Given the tremendous needs of our society, spending $22,000 per year – the average cost of imprisonment – to have a white-collar defendant mow lawns or landscape the warden’s house is ridiculous.
Punishment can and does occur in many ways, and using a combination of correctional resources, such as house arrest, community corrections centers (halfway houses) and community service can deprive a defendant of liberty while contributing to the community.
Fortunately, many judges are seeing the wisdom in this type of sentence, including the judge in my client’s case in Philadelphia. Acknowledging the background and prior charitable work of my client and the collateral consequences already suffered, the court imposed a sentence of six months in a community corrections center, five months of house arrest, 250 hours of community service helping an agency which provides affordable housing for the elderly and a stiff fine.
Calling it an “integrated sentence,” the judge found it fulfilled the purposes of sentencing: punishment, deterrence and restitution.
Admittedly, my client’s crime may pale beside the cases now under investigation. But I hope that judges will have the wisdom and courage to decide the sentence for each case based on its own merit.
Herbert J. Hoelter is chief executive officer of the National Center on Institutions and Alternatives in Baltimore, MD. He specializes in white-collar sentencing and prison consultation.