Judges Unpredictable When it Comes to Sentencing White-Collar Criminals

Federal judges are handing down wildly different sentences to corporate criminals.

While a former Dynergy Inc. tax executive got 24 years in prison after his March trial for fraud offenses in Texas, three HealthSouth executives who entered guilty pleas to similar crimes in Alabama got off without jail time last week.

"I don't know what messages the judge is trying to send to white-collar criminals," said U.S. Attorney Alice Martin, the lead prosecutor on the HealthSouth case. "Maybe some accountant tonight decides to make a false entry because HealthSouth executives only got probation," Martin told Reuters. "It is disheartening."

Prosecutors have said they were surprised both by the light sentences for the HealthSouth executives, as well as the grim fate of Jamie Olis, the former Dynegy executive who opted for trial rather than a plea bargain that would have given the judge more flexibility in sentencing.

By contrast, HealthSouth executives entered into plea agreements. Judges in Alabama are ignoring government recommendations and have so far given eight HealthSouth executives probation or monitored home detention — a far cry from more than two decades in prison.

A former HealthSouth assistant controller is the only one to get jail time. Emery Harris was sentenced to five months, far less than the government requested.

Sandy Maris, a trial attorney for Jenkens & Gilchrist of Dallas, pointed out that the major players in the scandal, especially former Chief Executive Richard Scrushy, have not been tried yet. It is "way too early" to think about avoiding Alabama for future corporate fraud cases.

John Sturc, a former assistant director for the Securities and Exchange Commission's enforcement division, said the Alabama wrist-slapping does not necessarily predict future sentences for white-collar criminals in the United States. Nor does it signal a failure of the Sarbanes-Oxley Act.

"It establishes a low end of the range," Sturc said. "The fellow from Dynegy marks the other side. The median ought to be somewhere else."

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