June 01, 2006
Overcriminalization
Posted by Ellen S. Podgor

The jurors heard the evidence and presented a thoughtful verdict that demonstrated a careful deliberation of the charges against Jeff Skilling and Ken Lay. This was not a technical accounting fraud case.  It was a simple case of - did Lay lie to people - and did Lay & Skilling participate in illegal activities that caused harm to many. The prosecution did an outstanding job of keeping the case simple despite the very technical nature of much of the evidence presented.

The questions as I see them are: 1)  what allowed the government to keep it simple, and; 2) should this be the standard used in cases with penalties that may reach levels never seen before in white collar cases. 

The government had an array of offenses available in its arsenal that were so broad that it is easy to fit just about any conduct.  For example, Ken Lay was convicted of one count of wire fraud, a statute predicated on the mail fraud statute, and a statute with a long history of being broad.  Chief Justice Burger went so far, in dissenting opinion, to call it "a stopgap device to deal on a temporary basis with the new phenomenon, until particularized legislation can be developed and passed to deal directly with the evil."  (Maze)

The problem with the possibility of giving enormous sentences to these two first-offenders is that despite the outcry to punish them, in the back of some of our minds is the question of whether they would have engaged in this conduct if they thought they might be facing criminal charges.  To so many in this situation, it is a business decision, albeit in many cases unethical, that triggers criminal statutes when the government feels the need to punish someone because of the harm suffered by so many. To some, however, the criminality is not apparent.  We all know what murder or burglary is, but how many really understand wire fraud.

Some may argue that punishing Lay and Skilling will serve as a deterrent of future criminality.  And there is some truth here, perhaps.  But my response is two-fold: 1) perhaps we could have prevented the conduct before it happened if there were clearer rules in place that were easily understandable by individuals who are not lawyers, and 2) could we accomplish the same deterrence with significantly lesser sentences.

I have some other suggestions, and they can be found on the white collar crime blog here.

(esp)

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