Dateline: 01/16/03

The United States Sentencing Commission has unanimously voted to significantly increase criminal penalties applied to persons convicted of corporate fraud and other serious white collar crimes.

The amended sentencing guidelines, applied by the Commission under emergency authority granted to it in the Public Company Accounting Reform and Investor Protection Act of 2002, will become effective Jan. 25, 2003.

Prison terms almost doubled
As an example of the enhance penalties approved by the Commission, an officer of a publicly traded corporation who defrauds more than 250 employees or investors of more than $1 million will receive a sentence of more than 10 years in prison, almost double the term of imprisonment previously imposed. Officers and directors of publicly traded corporations who commit securities violations are specifically targeted for increases in penalties. 

Increased penalties would apply to persons who commit white collar offenses affecting a large number of victims or endangering the solvency or financial security of publicly traded corporations, other large employers, or 100 individual victims.

"I am happy that the Commission was able to respond so promptly to the concerns of Congress," said Judge Diana E. Murphy, the Commission’s Chair. "The U.S. Sentencing Commission is doing its part in the fight against corporate fraud. The penalty increases that we approved today send a message to those who would commit securities, accounting, and pension frauds that our country will not tolerate this behavior. Officers and directors of public corporations are also on notice."

"These are just emergency amendments to be in effect until November 1," said Judge Murphy. "Congress gave the Commission a brief period to create them, but we also have an ongoing separate process to create permanent amendments, which we will be voting on in April of this year. Interested people will get another bite at the apple."

Obstructers of justice also face stiffer terms
The Commission also voted to increase penalties significantly for offenders who obstruct justice by destroying documents or records. Under the emergency amendments, defendants who substantially interfere with the administration of justice by shredding a substantial number of documents or especially probative documents will receive a guideline sentencing range of approximately three years’ imprisonment (30-37 months). Prior to this amendment, such an offender could receive a sentence as low as 18 months of imprisonment.

The increase in penalties comes in addition to those generated by the Commission’s comprehensive, economic crime package, effective November 2001. That package of amendments increased penalties for high-dollar frauds or thefts and helped reduce unwarranted sentencing disparity by consolidating earlier guidelines on theft, fraud, tax offenses and property destruction. In addition, in February 2002, the Commission formed an ad hoc advisory group of national experts to review the general effectiveness of the federal sentencing guidelines for organizations. The advisory group is expected to complete its work in the summer of 2003.

Election campaign violations also addressed
The Commission also promulgated a new emergency guideline to be used in calculating sentences of violators of the Federal Election Campaign Act of 1971, as amended by the Bipartisan Campaign Reform Act of 2002. These offenses generally constitute violations involving the amount of money an individual, corporation, political action committee, or national political committee may contribute to a federal political candidate or campaign. In response to a congressional directive, the Commission established a new guideline that provides significantly increased sentences for such campaign finance offenders.

About the Sentencing Commission
The U.S. Sentencing Commission functions as an independent agency in the federal judicial branch of government. It was organized in 1985 to develop a national sentencing policy for the federal courts. The resulting sentencing guidelines, which went into effect November 1, 1987, structure the courts' sentencing discretion to ensure that similar offenders who commit similar offenses receive a similar sentence. The Commission has ongoing responsibility to monitor and amend the guidelines.