#4 ------------------ D695.M.250.C.C ------------------ It is difficult to discern a current trend in prosecuting financial crime a judges' decisions run from lenient to harsh. A city councilman pleaded guilty to felony forgery, but a superior court judge reduced the charge to a misdemeanor and ordered community service with probation. A city administrator pleaded guilty to mail fraud in a scheme that bilked investors out of $3 million, a crime which carries a maximum sentence of five years in prison, but a US District judge gave him only five years probation and ordered $20,000 in restitution. Political extremist Lyndon LaRouche was sentenced to 15 years in prison on a mail and tax fraud conviction that could have brought him 65 years. However, two businessmen whose fraud resulted in the collapse of a savings and loan were sentenced to 15 and 12 years and ordered to make restitution of $6.8 million. This was hailed by the prosecuting US attorney as a significant victory for the government in its efforts to punish those responsible for the savings and loan crisis. Certain judges have sent similar clear messages at sentencing. US Superior Court Judge Letts railed against the tolerance of some judges to white-collar crime as he sentenced a tax advisor to a 10-year prison term for orchestrating a multimillion-dollar tax shelter scheme. Other judges have imposed harsh penalties, stating their hope that they would act as deterrents. US District Judge Wood said the unexpectedly long prison term for Michael Milken was intended to make him an example. ------------------ D695.M.250.C.E ------------------ Individuals convicted of so-called white-collar crimes such as felony forgery, mail fraud, tax fraud, wire fraud, bank fraud, investment fraud, securities fraud, pension fraud, embezzlement and grand theft are no longer getting by with a slap on the wrist. Judges are increasingly imposing stiff sentences and levying stiff fines as deterrents. Those on the margin of a fraudulent scheme may sometimes escape with a very short sentence such as 30 days. Some of the white-collar criminals escape prison by paying a heavy fine and making restitution. Increasingly harsh sentences for some of those found guilty have included a multi-year prison term, plus several years of probation during which community service is to be performed, plus a stiff fine and also restitution may be required. This dramatic increase in the length of prison terms is part of a nationwide trend beginning with the savings and loan scandal. One judge said that the nearly half million dollar fine he levied on a specialist firm on the New York Stock Exchange was done as a deterrent. Prison sentences have ranged as high as 25 years. Fines and restitution requirements have been in the millions of dollars. Having a widely recognized name in the business world has not saved Leona Helmsley, Ivan Boesky and Michael Milken from doing time. ------------------ D695.M.250.C.F ------------------ Perpetrators of white collar crimes sometimes get off easy. But several cases in 1989 and 1990 illustrate the opposite: Barry Minkow, who built a fraudulent $100-million empire, was sentenced to 25 years in prison for fraud and conspiracy, plus payment of $26 million in restitution. Janet Faye McKinzie was convicted of looting the now-defunct North America Savings & Loan. She was sentenced to 20 years in jail. A Los Angeles federal judge imposed a 15-year prison sentence on David A. Feldman, convicted of a massive bank fraud, and ordered him to pay $70.7 million in restitution to Bank of America. A federal judge sentenced a stunned Michael Milken to 10 years in prison. Milken had pleaded guilty to six felony securities law violations. A federal judge sentenced political extremist Lyndon H. LaRouche, Jr. to 15 years in prison on mail and tax fraud convictions. Leona Helmsley, the self-proclaimed queen of a luxury hotel chain, was sentenced to four years in federal prison and fined $7.1 million for criminal tax offenses. On the other hand, a former executive of Digital Equipment Corp. and two others pleaded guilty for siphoning nearly $300,000 from the company and agreed to repay the money in lieu of a prison term. An Irvine, California, city councilman who forged a check for $48,000, was put on one-year's probation, given a year's suspended jail sentence, and ordered to perform community service. Six New Jersey defendants, convicted of racketeering, were sentenced to only a few months in prison. ------------------ D695.M.250.C.J ------------------ By 1990 financial--or white-collar--crimes were beginning to draw heavier sentences. In 1986 a crooked investment banker got only 2 years in jail and an insider trader got 3 years. In 1989 Lyndon LaRouche drew a 15-year sentence, while Barry Minkow got 25 years and a $25 million restitution order. Leona Helmsly was given a 4-year sentence, a $7.1 million restitution, 3 years probation, 750 hours of public service, and ordered to pay her taxes. Michael Milken-- the junk bond king--drew 10 years in jail, 3 years probation, 1,800 hours of community service, and $600 million in fines. Savings and loan collapse criminals began to draw heavy jail sentences such as 20, 15, and 12 years. Not all got heavy sentences. One insurance embezzler got 30 days, 300 hours of public service, and a $10,000 fine. Executives of a computer company only were ordered to repay the money. White-collar criminals were beginning to get the same treatment as other criminals, even to include denying bail. Prosecutors were using the Racketeer Influenced and Corrupt Organizations Act to go after white-collar crimes that had once been treated as civil cases. Sentences were stiffer for those convicted of thrift savings fraud. The average sentence was 3 years, with 78% being sent to prison. Sentences of 10 years or more were given to 25% of these criminals. Judges were calling white-collar crimes "heinous", denouncing liars, and imposing high fines as a deterrent, especially for those guilty of insider trading.