The challenge of white collar sentencing.

• Author: Podgor, Ellen S.

1. INTRODUCTION

   White collar offenders in the United States have faced sentences far beyond those imposed in prior years. (1) For example, Bernard Ebbers, former CEO of WorldCom, was sentenced to twenty-five years; (2) Jeffrey Skilling, former CEO of Enron, was sentenced to twenty-four years and four months; (3) and Adelphia founder John Rigas received a sentence of fifteen years, with his son Timothy Rigas, the CFO of the company, receiving a twenty-year sentence. (4)

   These greatly increased sentences result in part from the employment of the United States sentencing guidelines structure, which includes in the computation of time the amount of fraud loss suffered. (5) Although the sentencing guidelines have some flexibility resulting from the recent Supreme Court decision in United States v. Booker, (6) the culture of mandated guidelines still permeates the structure and, as such, prominently advises the judiciary. (7) Equally influential in these sentences is the fact that because parole no longer exists in the federal system, the time given to these individuals will likely be in close proximity to the sentence that they will serve. (8)

   Although many are quick to denounce the conduct of these individuals and desire lengthy retributive sentences, their disgust with this criminality often overlooks a commonality among these white collar offenders. Each of these individuals has no history of prior criminal conduct. The corporate white collar offenders of today are typically individuals who have never been convicted of criminal conduct and are now facing incredibly long sentences as first offenders. (9) The sentences imposed on these first offenders for economic crimes can exceed the sentences seen for violent street crimes, such as murder or rape. (10)

   In an effort to crack down on white collar criminality, the courts and legislature have produced draconian sentences that place prominence on the activity involved. In contrast to the approach taken with recidivist statutes such as "three strikes" laws, (11) the focus in white collar sentencing is on the offense, with little recognition given to the clean slate of these offenders. (12)

   This Article, in Section II, traces the history of the term "white collar crime," noting its sociological roots. (13) It contrasts this approach with the way the term "white collar crime" is used today. This section recognizes the deficiencies in a biased methodology that uses factors such as a person's wealth to determine whether the person should face criminal charges or punishment. It notes, however, that a rejection of bias in the sentencing process does not necessitate the elimination of all sociological considerations, especially those that might promote legitimate differences. Section III moves to a discussion of the white collar offender in the corporate world. (14) It looks at the realities and risks faced by this offender in light of the federal sentencing system of today. Section IV extends this discussion, looking at factors that could enhance sentencing in white collar cases. (15) Offered are sociological considerations that provide alternatives to the cold numerical system of "loss" as the key element used in determining the sentence of a convicted white collar offender. Although some of this discussion applies equally to other federal offenders, especially those sentenced in drug cases, (16) the focus of this piece is exclusively on white collar crime.

   White collar sentences need to be reevaluated. In an attempt to achieve a neutral sentencing methodology, one that is class-blind, a system has evolved in the United States that fails to recognize unique qualities of white collar offenders, fails to balance consideration of both the acts and the actors, and subjects these offenders to draconian sentences that in some cases exceed their life expectancy. In essence, the mathematical computations that form the essence of sentencing in the federal system fail to recognize the sociological roots of white collar crime.

2. WHITE COLLAR CRIME: DEVELOPING THE SOCIOLOGICAL ROOTS

   White collar crime is a relatively new concept. Yet despite its recent vintage, it has not been consistently approached by all constituencies. Initially a sociological concept, "white collar crime" is recognized today as a legal term. Translating the sociological concept into a legal one presents deficiencies when placed in the context of the federal sentencing guidelines structure.

   1. SUTHERLAND'S APPROACH

      Crucial to any discussion regarding white collar crime is an understanding of its meaning. This term was initially a sociological term coined by sociologist Edwin Sutherland, whose theme was to recognize crime committed by individuals in positions of power. (17) Although the examples in his initial book were limited to corporations, he argued generically that improper activities in this context should not be considered merely civil wrongs. (18) This was criminal conduct, and he wanted it designated as such. (19)

      Sutherland looked at the offender in designating the conduct as criminal and used a class-based component in his definition. He factored the individual's "high social status" into his definition. Sutherland's sociological approach to white collar crime emphasized criminal acts by those in the "upper socioeconomic class," advocating that these individuals should not escape criminal prosecution. (20)

      What is perhaps the most interesting aspect of Sutherland's work is that a scholar needed to proclaim that crimes of the "upper socioeconomic class" were in fact crimes that should be prosecuted. It is apparent that prior to the coining of the term "white collar crime," wealth and power allowed some persons to escape criminal liability.

   2. DEPARTMENT OF JUSTICE APPROACH

      Since Sutherland's 1939 speech to the American Sociological Society (21) and his later book on the topic of white collar crime, (22) there have been many definitions used to explain this category of crime. (23) In contrast to the offender-based approach favored by Sutherland, the more recent legal definitions of white collar crime focus on the offense. As such, tax evasion can be a white collar crime irrespective if it is the hotel owner who fails to report all of her income or the waiter who fails to report all of his tips. Arguably, an offense-based approach allows for a neutral methodology that is not influenced by a person's class and is not conditioned on political or corporate influence.

      What is particularly problematic about the existing offense-based approach is that there is no list of white collar offenses. Thus, arguing that the act determines the designation but having no clear list of crimes included and excluded leaves one not knowing if a crime should or should not be considered when discussing the topic of white collar crime. (24) This problem is perhaps exacerbated by the increasing number of offenses in the federal system, many of which exist outside of Title 18, the federal criminal code. (25)

      White collar crime definitions often recognize the economic nature of this type of crime. Key components tend to be "deception and absence of physical force." (26) But when examining a criminal statute such as the Racketeer Influenced and Corrupt Organizations Act (RICO), determining whether the offense fits the white collar crime category may be dependent on the specific conduct involved. If the conduct is fraud and the predicate act is mail or wire fraud, it should be designated as a white collar crime. (27) When, however, the RICO predicate relates to a state-based offense such as murder or robbery, it should clearly be outside the realm of being a white collar crime. (28) As such, looking at the specific statute in the abstract may not determine whether the activity should be called a white collar crime. The circumstances of the conduct may be equally important in categorizing the activity.

      One finds a noticeable discrepancy in the way the Department of Justice (DOJ) recognizes white collar crime. First, in DOJ literature, there is no explicit category called "white collar crime," yet there is continual usage of this term. (29) Second, the Trac Reporting System of the DOJ includes antitrust and fraud as white collar crime but fails to include corruption as well as a host of other criminal activity that most people would consider as belonging to this category. (30) The DOJ also does not include environmental offenses, bribery, federal corruption, procurement corruption, state and local corruption, immigration violations, money laundering, OSHA violations, or copyright violations as white collar crime. (31) Each of these forms of criminal conduct is reported in separate categories exclusive of white collar crime. (32) Thus, when the Trac Reporting System finds a "decline of about ten percent from FY 2003 to FY 2004" in white collar crime, the omission of many categories raises doubts about the accuracy of the reporting methodology. (33)

      Even subdivisions of the DOJ do not concur with the existing reporting system. For example, the United States Attorney's Office for the Northern District of California includes public corruption within its prosecutions of white collar crime. (34) This same office also includes environmental offenses, as well as crimes concerning the Food and Drug Administration as white collar crime, and reports on their white collar prosecutions explicitly using this designation. (35)

   3. AN UNBIASED SOCIOLOGICAL APPROACH

      Historically, class was a component of the definition of white collar crime. The offender's position of power allowed the person committing the crime to be labeled a white collar offender. With the present focus on the offense, the accused's background, uniqueness, and circumstances often are omitted in categorizing the crime as either a white or non-white collar crime.

      An offense-based approach, as opposed to an offender-based approach, provides the clearest attempt to achieve...