Cook the Books, Get Life in Prison: Is Justice Served?

WorldCom founder Bernard J. Ebbers, 65, is due to start serving a 25-year prison term tomorrow for his role in the company's massive accounting fraud. (By Louis Lanzano -- Associated Press)

Fordham University law professor Daniel Richman said shorter sentences in exchange for cooperation reflect the reality of white-collar investigations: Prosecutors must rely on tainted insiders to help convict higher-level executives. In this year's Enron trial, for example, lawyers for Skilling and Lay branded Fastow a liar, a thief and the person most responsible for Enron's collapse who avoided his just deserts by signing a deal with prosecutors.

"Sentences are the currency with which the government buys information," said Richman, a former federal prosecutor.

Not accepting a deal can be costly, as former mid-level Dynegy Inc. executive Jamie Olis, now 40, learned two years ago. Olis, who while growing up was physically abused by his mother's boyfriend and spent time in foster care before working his way through college, became a national symbol of inflexible sentencing policies. He lost his case and was sentenced to more than 24 years in prison -- despite the defense's presentation of his background -- for taking part in a $300 million accounting fraud. Olis's former boss at the energy company signed a plea agreement, testified against Olis and was sentenced to 15 months.

A federal appeals court last year threw out Olis's sentence, and a federal judge in Houston on Friday reduced it to six years. That means Olis is likely to spend about two more years in prison.

"Not every case is Enron, and not every white-collar offender is one of the smartest guys in the room," said Washington defense lawyer Barry Boss, referring to the name of a book and documentary film about the Enron scandal. "We're such a vindictive country."

But white-collar criminals are unusually sensitive to deterrence, according to prosecutors and securities regulators. The sight of colleagues in handcuffs, or signing away their homes and fortunes, sends a powerful message.

What's more, legal experts say, former executives do not deserve lighter treatment than drug dealers or burglars simply because they broke accounting rules or lied -- crimes that are harder to unravel and whose victims are more diffuse.

"You want people to understand that just because they're in high places, they make a lot of money and they can hire fabulous lawyers, that they're not going to walk away with a slap on the wrist," said former Securities and Exchange Commission chairman Harvey L. Pitt. "If you ask me, 'Did Bernie Ebbers destroy lives?' I would tell you that his conduct did."

Historically, white-collar criminals have not received long sentences. Probation was common even for crimes that involved large losses, and even the most famous defendants received sentences that by today's standards appear lenient. Junk-bond king Michael Milken was initially sentenced to 10 years on fraud charges, but a judge reduced the sentence to 33 months, and he was paroled after serving only two years.

That began to change in the mid-1990s, after policymakers expressed concern that punitive sentences for nonviolent drug crimes carried life sentences while white-collar criminals often skated. In 1994, financier Tom J. Billman, who bilked savings and loans of $25 million and fled the country, was sentenced to 40 years in prison. He served about 10 years before being paroled in 2005.

Sentences became even longer when parole was abolished in the federal system and sentencing guidelines were repeatedly amended to increase prison terms for white-collar crimes.

Were the WorldCom and Enron scandals to happen today, the sentences for Ebbers and Fastow might be even longer. Angry lawmakers enacted even tougher penalties for corporate fraud after those companies filed for bankruptcy protection. But the stiff new punishments apply only to people who committed crimes after 2002.

"On a personal level, you've got to feel for people" like Ebbers who will probably die in prison, said University of Texas law professor Henry T.C. Hu, "but overall I think the system's got it right."