The "green" Effect on White Collar Sentencing: an Analysis of the Impact of the Economy on Imprisonment Lengths of Sentences for Federal White Collar Defendants - Jsssica P. Morgan

• Jurisdiction: United States,Federal
• Publication year: 2010
• Citation: Vol. 61 No. 4

Comment

The "Green" Effect on White Collar Sentencing: An Analysis of the Impact of the Economy on Imprisonment Lengths of Sentences for Federal White Collar Defendants

On June 29, 2009, Bernard L. Madoff was sentenced to 150 years in prison for his creation and perpetration of an unprecedented, worldwide "Ponzi" scheme, which caused an ultimate loss to thousands of investors totaling upwards of $65 billion.¹ Although Madoff's Ponzi scheme caused more investor losses than any one similar scheme in American history, many were shocked by the severity of Madoff's sentence.² As a man in his seventies, a sentence of 150 years incarceration is well beyond a life sentence and serves as a symbol to deter those who would engage in similar conduct in the future.

After the passage of the Sentencing Reform Act of 1984,³ federal judges were bound by the United States Sentencing Guidelines sentencing ranges.⁴ Since 2005, however, the Guidelines are no longer mandatory, and federal judges currently have a large amount of discretion when determining sentences for violators of federal law.⁵ Exemplary of this discretion is the wide variance in sentence severity for white collar criminals.⁶ Indeed, even during the period in which the Guidelines were mandatory, federal judges used their discretion to depart, either upward or downward, from the Guidelines range when addressing white collar crimes.⁷ As a result, white collar sentencing can be unpredictable despite the Guidelines' arithmetic formula for determining sentencing ranges.⁸

Since the fall of 2008, worldwide financial systems have been on the brink of complete collapse. In the midst of this economic turmoil, one of the leaders of the Wall Street brigade was discovered to have committed the largest Ponzi scheme in American history and was sentenced to a prison term lasting nearly twelve times his remaining life expectancy.⁹ These parallel events raise the question of whether sentences for white collar crimes increase in severity as the economic health of the country decreases. First, because the Guidelines are extremely influential in a federal judge's determination of punishment, this Article will discuss the Guidelines' creation, modification, judicial review, and effects on white collar sentencing. Second, because Madoff's activities and subsequent sentencing were the inspiration behind this Article, it will consider Madoff's sentence as an illustrative example of the application of the Guidelines. Third and finally, the Article will compare the incarceration length of "white collar" criminals with various measures of the health of the United States economy at the time of their sentencing to determine whether there is any correlation between economic turmoil and sentence severity.

I. EVALUATION OF THE UNITED STATES' SENTENCING GUIDELINES

Prior to the enactment of the Guidelines, federal judges had wide sentencing discretion because many federal criminal statutes only stated a maximum term of imprisonment or probation.¹⁰ Thus, a federal judge could sentence a defendant to probation or any term of imprisonment up to the statutory maximum with virtually no appellate review.¹¹ As judges exercised their discretion, punishments became increasingly variable for defendants convicted of similar crimes.¹² This indeterminacy resulted in reformers expressing substantial criticism of a system that relied solely on judicial discretion to determine prison sentence.¹³ First, indeterminacy caused unnecessary prisoner anxiety because of uncertainty regarding release dates and disparity in sentence length compared with other, similar offenders.¹⁴ Second, variations in sentence severity between defendants who have committed like offenses is contrary to the idea of equality and the rule of law.¹⁵

Indeed, sentence disparity between similarly situated defendants inspired Marvin Frankel, a former United States District Judge in the New York District and a Columbia University law professor, to advocate for a more uniform, predictable sentencing system.¹⁶ Judge Frankel spoke against the "wholly unchecked and sweeping" power of district judges to determine punishment and called such a system "terrifyingand intolerable for a society that professes devotion to the rule of law."¹⁷ Judge Frankel continued, stating that resolution would only be achieved through a "Commission on Sentencing" that possessed the "function of actually enacting rules . . . [and] making law."¹⁸

Eventually, the pleas of Judge Frankel and additional legal scholars caught the attention of Senator Edward M. Kennedy.¹⁹ As early as 1975, Senator Kennedy began to draft legislation with the purpose of initiating sentencing reform.²⁰ However, for nearly a decade, Senator Kennedy's efforts made little progress.²¹ Generally, sentencing reform measures often hit a "brick wall" due to the polar opposite positions of the Senate and the House of Representatives.²² Furthermore, the House Judiciary Committee had significant concerns about dramatically limiting the judicial discretion historically possessed by district judges.²³

The tide began to change, however, in the 1980s when Republicans assumed control of the Senate.²⁴ This era greeted legislators with the public's growing concern about crime and a president interested in toughening existing laws and expanding anti-crime measures.²⁵ In 1983 two bills were introduced to the Senate. The first bill was introduced by Senator Kennedy and solely addressed sentencing reform.²⁶ The second bill, called the Comprehensive Crime Control Act of 1983,²⁷ was introduced by Senator Strom Thurmond and Senator Joseph Biden Jr.²⁸ Although this bill addressed many areas of the criminal code, it also contained a sentencing reform provision that was identical to the one drafted by Senator Kennedy.²⁹ Initially, it appeared that both bills would follow the path of their precursors and meet their demise in the House Judicial Committee. However, in a parliamentary coup d'etat, House supporters of the Comprehensive Crime Control Act attached the bill to an urgent funding bill pending before the House.³⁰ On September 25, 1984, the bill passed the full House.³¹ The Senate voted to approve the bill on October 4, 1984.³² On October 12, 1984, President Reagan signed the bill into law and expressed such enthusiasm for the tougher crime provisions that the bill became known as "Mr. Reagan's Bill."³³

As part of the Comprehensive Crime Control Act of 1984,³⁴ the Sentencing Reform Act of 1984³⁵ established the United States Sentencing Commission and charged it with the task of creating sentencing guidelines that would enhance the individualization of sentences compared to the current law.³⁶ The guidelines created by the Commission would generally be mandatory for the courts.³⁷ Contained within the new legislation was the directive that "the court 'shall impose a sentence of the kind, and within the range' established by the guide-lines."³⁸ The Sentencing Reform Act provided that the Commission would be comprised of seven persons, including three active federal judges.³⁹ The federal judges would be chosen by the President from a list of six judges created by the Judicial Conference.⁴⁰ Finally, all members of the Commission would be appointed by the President and needed to be approved by the Senate, each member would serve a term of six years, and the Attorney General and the Chairman of the United States Parole Commission would serve as nonvoting members.⁴¹

In 1986, with the members ofthe Sentencing Commission chosen and approved, the Commission began proceedings to create the United States Sentencing Guidelines.⁴² The purpose of the Guidelines was to create sentences that would:

(A) assure the meeting of the purposes of sentencing as set forth in section 3553(a)(2) of title 18, United States Code; (B) provide certainty and fairness in meeting the purposes of sentencing, avoiding unwarranted sentencing disparities among defendants with similar records who have been found guilty of similar criminal conduct while maintaining sufficient flexibility to permit individualized sentences when warranted by mitigating or aggravating factors not taken into account in the establishment of general sentencing practices; and (C) reflect, to the extent practicable, advancement in knowledge of human behavior as it relates to the criminal justice process.⁴³

William W. Wilkins, Chairman of the Sentencing Commission, emphasized that "unwarranted disparity . . . is the single major problem in our system"⁴⁴ and occurs when "similar defendants commit similar crimes, . . . and yet these defendants receive greatly disparate sentenc-es."⁴⁵ Moreover, the Commission sought to create a system which would be understandable and would articulate to the general public why a particular sentence was appropriate.⁴⁶ On November 1, 1987, the Guidelines became effective.⁴⁷

Although federal judges immediately resented the constraints on their judicial discretion presented by the mandatory Guidelines, the mandatory nature of the Guidelines remained in effect until 2005.⁴⁸ In 2005 the United States Supreme Court, in United States v. Booker,⁴⁹ abolished the mandatory requirements of the Guidelines.⁵⁰ The Court in Booker addressed the question of whether the mandatory Guidelines violated a defendant's right under the Sixth Amendment of the United States Constitution⁵¹ to a trial by a jury.⁵² Booker was charged with possession with intent to distribute at least fifty grams of cocaine and, therefore, could be sentenced to between 210 to 262 months incarceration under the Guidelines. However, during the sentencing hearing, the judge found that Booker actually was in possession of566 grams of crack cocaine, which mandated a sentence between 360 months and life. Therefore, instead of sentencing Booker to twenty-one years imprisonment, the judge sentenced Booker to thirty years imprisonment. The facts regarding the higher amount of crack cocaine were never...