United States v. Ebbers, Docket No. 05-4059-cr (2d Cir. July 28, 2006) (found here)
Bottom line: the 25-year sentence imposed on Ebbers was "harsh but not unreasonable." But there is more to the Ebbers opinion than the loss calculation analysis that comprises the majority of the Second Circuit's sentencing analysis.
First, Ebbers argued that his sentence was unreasonable because of the shorter sentences imposed on his co-defendants (such as CFO Scott Sullivan, who received a sentence of 5 years, and other former WorldCom executives who received sentences shorter than that of Sullivan). More specifically, Ebbers relied on 18 U.S.C. 3553(a)(6) in arguing that his sentence should have been shorter because district court's must consider the "need to avoid unwarranted sentence disparity among defendants with similar records who have been found guilty of similar conduct." The Second Circuit rejected Ebbers' argument because of the existence of a "reasonable explanation of the different sentences," namely, the "varying degrees of culpability and cooperation between the various [co-]defendants".
But the Second Circuit did not reject Ebbers' underlying legal argument that co-defendant disparity is a valid basis for challenging a sentence under that 18 U.S.C. 3553(a)(6) -- an issue that the Second Circuit has not yet directly addressed. Specifically, the Second Circuit could have said that co-defendant disparity is not a valid basis for imposition of a non-Guidelines sentence. Or the Second Circuit could have limited its analysis by just assuming arguendo that co-defendant disparity is a valid basis for imposition of a non-Guidelines sentence (as it has in numerous other cases discussed on this blog). But, no, the Second Circuit did neither. Rather, the Second Circuit seemed to accept that co-defendant disparity is a valid basis for imposition of a non-Guidelines sentence. Is this therefore perhaps a "look under the robes" as to the Second Circuit's views with regard to the co-defendant disparity issue?
Second and as detailed above, the Second Circuit found that the 25-year sentence imposed on Ebbers was "harsh but not unreasonable." More interesting than that ultimate conclusion, however, are the Second Circuit's statements prior to reaching that conclusion. Specifically, the Second Circuit noted initially that "[t]wenty-five years is a long sentence for a white-collar crime, longer than the sentences routinely imposed by many states for violent crimes, including murder, or other serious crimes such as serial child molestation." The Second Circuit then went on to detail that which any defense lawyer who has handled a financial fraud cases knows -- the Guidelines are hard on financial fraud because the loss analysis drives the Guidelines analysis and that loss figures can very quickly increase the Guidelines range to heights that seem disproportionate to the offense as well as that the Guidelines can be a powerful force in forcing pleas, to wit:
"Under the Guidelines, it may well be that all but the most trivial frauds in publicly traded companies may trigger sentences amounting to life imprisonment -- Ebbers' 25-year sentence is actually below the Guidelines level. Even the threat of indictment on wafer-thin evidence of fraud may therefore compel a plea. For example, a 15 cent decline in the share price in a firm with only half the number of outstanding shares that WorldCom had would constitute a loss of $200 million. No matter how many reasons other than the fraud may arguably account for the decline, a potential defendant would face an enormous jeopardy, given the present loss table, and enhancements for more than 250 victims, for being a leader of a criminal activity involving 5 or more participants, and for being an officer of the company."
Ultimately and notwithstanding the foregoing, the Second Circuit found that Ebbers' 25-year sentence was "harsh but not unreasonable" because: (1) the Guidelines reflect Congress' judgment as to the approprate national policy for such crimes (interestingly, relying on Rattoballi); and (2) of Ebbers' greed (to wit, that "the securities fraud here was not puffery or cheerleading or even a misguided effort to protect the company, its employees, and its shareholders from the capital-impairing effects of what was believed to be a temporary downturn in business. The methods used were specifically intended to create a false picture of profitability even for professional analysis that, in Ebbers' case, was motivated by his personal financial circumstances").
25 years. Perhaps it is reasonable today. But would it have been reasonable 15 years ago? I don't think so. And, if not, what accounts for the change in view as to why 25 years is reasonable today and not yesterday? Is "reasonableness" an objective or subjective standard? Which should it be?
UPDATE: Check out the critical analysis and interesting questions posed by the White Collar Crime Prof Blog here.