Prison time is getting longer and tougher for many of the so-called "white-collar" criminals in the United States, thanks to a public outcry and harsher sentencing guidelines. Several defendants recently found guilty of theft and fraud in executive suites have gone to real prisons with real bars, rather than comfortable, minimum-security camps that prosecutors mockingly call "Club Feds", a takeoff on the string of tropical resorts called "Club Meds."
After a spate of recent corporate and bank scandals that, in some cases, stripped employees and investors of their life savings, the U.S. Justice Department cut back on the number of plea bargains that had previously allowed most executive crooks to serve light sentences, in prisons free of murderers, rapists, and other violent offenders. Congress passed a law permitting the U.S. Sentencing Commission to double sentences for some white-collar crimes to 10 or even 20 years. And a law called the "Feeney Amendment," passed earlier this year, makes it easier for appellate courts to overturn light sentences and next to impossible to reduce tough ones.
Criminals sentenced to ten or more years are no longer eligible for dormitory-style work camps or halfway houses. Defendants like John Rusnak, a Baltimore, Maryland, currency trader who hid $700 million in bad trades in order to collect fat bonuses, are increasingly receiving long sentences to be served in full-fledged federal prisons.
Maryland's U.S. attorney, Thomas DiBiagio, who prosecuted John Rusnak, says President Bush and Attorney General John Ashcroft have made it a priority to aggressively pursue and imprison white-collar criminals. "It used to be thought, 'Well, the guy steals a hundred thousand dollars from a bank. No big deal. The insurance company comes and repays the money. He's fired, and everybody's fine. It was just a greed thing, a money crime, and there weren't that many victims.' I think in the last year it's really become apparent that there are real victims. Real people lose their jobs. Real people lose their share prices. These criminals are just like drug dealers.," he says. "They're just like bank robbers. And they should go to jail."
Mr. DiBiagio says now that white-collar felons are getting heftier sentences, they can contemplate the error of their ways in medium-security prisons. John Rusnak, for instance, got a seven-and-one-half-year sentence that he is serving at a federal prison in New Jersey. "He caused the bank to lose $700 million," he says. "As a result of that, the bank was sold. People lost their jobs. The value of the bank shares declined dramatically. He hurt a lot of people. And he went to jail-jail, with the razor wire and with the drug dealers and the bank robbers. I think he did get what he deserved. He got just punishment."
David Irwin is John Rusnak's attorney. He may have deserved to be convicted, Mr. Irwin says, deserved to lose his job and his standing in the community. But he did not deserve to be crushed just to make a point that society is cracking down on white-collar crooks like John Rusnak. "Each case is different. Each person is different. And the judicial system should not make broad pronouncements like that, in my opinion," he says. "You gotta understand, I'm an advocate for an individual who I've come to know and see the good side of. He's a decent person in many ways. I think warehousing someone, other than the most violent predators, for any crime, is a waste of time and government money. The implication of some of the rhetoric of politicians is that white-collar criminals are going to be thrown in to razor-wired facilities with violent criminals, as if some sort of torture within the walls is something that they consider to be a good thing."
Defense attorney Irwin scoffs at the notion that tough sentences for white-collar criminals will be a deterrent to others who contemplate such crimes. "Most of my clients end up as people who are in a tough bind and make bad decisions and think they're going to pay the money back," he says. "I'm not sure that as a general deterrent, people who are caught in the switches of horrible personal circumstances or professional problems are going to think, 'Gee, because Mr. Rusnak got ninety months, I'm not going to take a chance. They delude themselves into thinking they're going to be able to pay the money back."
Mr. Irwin says he believes elected prosecutors and judges are pandering to the get-tough mood in the country to "throw the book" at criminals who, in the past, would likely have received minimal jail time or even probation. Politicians, Mr. Irwin says, are, in his words, "riding the wave."
In Washington, DC, a nonprofit national organization called The Sentencing Project has long advocated alternative sentences to prison for all but violent offenders. Assistant director Marc Mauer notes that the organization has worked to reduce the racial disparity in sentences, in which what some would see as pampered white defendants get far more lenient sentences than streetwise minority criminals. "If you think of white-collar offenders, the stock frauds of recent years, the Enron [Corporation] frauds, things of that nature, the people committing these crimes are, by and large, white men who go to work dressed in a suit and tie," he says. "They look like many members of Congress, judges, and prosecutors. In our public minds and attitudes, whether it's conscious or not, they've gotten somewhat of a free ride because we don't think of them as criminals. We're much more likely to have an image of a criminal as a young, black kid who's breaking into a home to steal a TV. Well, both of these people are committing crimes, and just because you wear a jacket and tie to work doesn't mean that you're somehow less obliged to follow the law. In fact, many of these white-collar offenders committed far more harm than some of the so-called street criminals."
Marc Mauer of The Sentencing Project notes that white-collar crooks can usually mitigate their sentences by hiring top-notch lawyers, pointing to their acts of charity, and assembling a parade of impressive character witnesses. Few house-breaking TV thieves can do so. Until recently, Mr. Mauer says, the severity of sentences has reflected this disparity. All the more reason to toughen sentences of white-collar criminals, Maryland prosecutor DiBiagio says. As he puts it, "they have gotten every opportunity that life can give them" and still chose to lie, cheat, and steal.
But perhaps surprisingly, prosecutor DiBiagio agrees that tougher sentences are not the deterrent people may think they are. He says he's satisfied enough that executive lawbreakers are now getting what he calls "their just desserts." Marc Mauer at The Sentencing Project agrees that just the fear of capture gives more pause to white-collar criminals than the prospect of a long, tough stay in prison. "We devote enormous resources to police drug patrols and busting kids on street corners. Proportionately, we devote far fewer resources to getting behind the corporate suites and looking at the books, and trying to analyze what's going on there. Many people believe it's just the tip of the iceberg, and if we had more scrutiny applied, the thousands, perhaps tens of thousands, of people victimized would be better served," he says.
Someone certainly scrutinized John Rusnak's books. And those of New Jersey stock promoter Robert Brennan, who got a nine-year sentence to a medium-security prison. And the books of Providence, Rhode Island, mayor Buddy Cianci, convicted of racketeering and now spending his five-year sentence in the same New Jersey prison where John Rusnak serves his time.
Next in line for sentencing: former ImClone Corporation chief executive officer Samuel Waksal, who could get 10 years in a tough prison for illegal stock manipulations.