20 Years Sounds About Right for Dreier


So Marc Dreier was sentenced today to 20 years in prison, plus forfeiture of $746 million and restitution of nearly $388 million (that’s more than a billion dollars, with a “b”). That’s his punishment for his guilty plea to conspiracy, securities fraud, money laundering and wire fraud. The feds had asked for 145 years in prison, and Dreier’s counsel Gerald Shargel had asked for a sentence in the 10-12.5 year range.

We have to say, we’re not offended by this sentence. It’s high enough to be meaningful, but not so high that it will scare away future plea bargains in white collar cases.

It’s important to have a meaningful sentence, if the justice system is to function properly. If justice is not perceived to be done, then law and order lose their authority. For many years, white collar crimes were seen to be treated unjustly, with sentences too low for the harm done. A massive financial fraud could have many more victims than a violent street crime, and can do far more damage to each victim by taking not just their wallet, but the savings representing a lifetime of labor. But until recently, such frauds were punished far more lightly.

In recent years, however, the pendulum began to swing the other way. From Tyco to Enron to MCI to Madoff, we saw white-collar sentences lurch upward and upward. Madoff’s 150-year sentence earlier this summer was just amazing, and not at all proportionate to the harm done. The pendulum had swung too far.

If that was to be the new par for the course, white collar sentencing would be just as unjust as it was in the days of the old slap-on-the-wrist. In addition to the very real problems of perception, in a world where perception equals reality, there is the separate problem of efficiency.

If people think they’re going to get slammed at sentencing whether they plead guilty or not, as Madoff did, then there is no point to pleading guilty. One might as well take one’s chances with a jury and shoot for the off chance of an acquittal. It happens.

(As an aside, there’s an old story of a band of soldiers in medieval China, who had become lost in a swamp en route to a muster. The penalty for being late was death. The penalty for rebellion was death. So they rebelled. And eventually toppled the government. Extreme punishments have had extreme public reactions throughout history. *Cough*drug laws*cough*)

Here, the government wanted 145 years for Dreier, to punish him for putting one over… not on mom and pop investors, but on sophisticated hedge funds who really ought to have done their homework. That would be just five years less than what Madoff got, for essentially doing the same thing. But it would have been a horrible outcome for our criminal justice system if they actually got their way.

Fortunately, Dreier drew Judge Jed Rakoff, who has been vocal in opposing the recent trend towards ever-higher sentences in white collar cases (in addition to his criticism of the severity of the U.S. Sentencing Guidelines). Rakoff is making him give back the money he filched, and forfeit his ill-gotten gains, and serve a prison sentence equal in severity to his crimes.

Nobody can reasonably say Dreier got off light, and nobody should complain that his sentence was unjustly harsh. We think Judge Rakoff nailed this one.

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3 Responses

  1. George R. O'Connor says:

    As an attorney with a very liberal bent – I can, and do, say that Dreier “got off light.” As you note, the death penalty is beyond dysfunctional and we agree that it serves no useful purpose.


    The damage that white collar criminals impose on society is vast. Consider the number of families impoverished by the ENRON collapse and Charles Humphrey Keating’s American Continental Corporation and the Lincoln Savings and Loan Association frauds. Literally thousands of innocents have been irreparably harmed by these “white collar” criminal acts.

    Consider the damage that the average murderer does to society – s/he takes a life and causes irreparable harm to the victim and a small circle of family, friends and community.

    That said, we resolutely and routinely sentence murders to death for their crime.

    What I suggest is that a penalty proportional to the harm inflicted by a white collar criminal demands nothing less than the ultimate penalty.

    If the death penalty would ever be an effective deterrent it should deter the bright, privileged, educated and comfortable white collar criminal.

    Would Madoff and Dreier have committed their crimes if Boesky and Milkin had been executed in the ’80s?

  2. Nathan says:

    There’s definitely something to the argument that there should be proportionality in sentencing, and a white-collar criminal can ruin the lives of thousands while a street thug only hurts one or two. See my longer discussion of this here: http://blog.lawcomic.net/2009/06/30/are-white-collar-sentences-too-harsh-now/

    But as the Supreme Court has long said, and pointed out again on Monday, “the death penalty is different from other punishments in kind rather than degree.” And it is reserved for the worst murders. There’s a huge difference between taking someone’s money — even a huge amount of it — and taking away their very life. There’s just no proportionality there, in the context of current jurisprudence.

    Of course, if you look at it with a coldly rational eye, there is in fact proportionality for the death sentence for even seemingly minor offenses. Take a pickpocket whose actions wind up delaying a Manhattan subway train for 15 minutes during morning rush hour. Let’s say the value of his life, as measured by lifetime earnings and nonmonetary contributions, is around $200,000. The jammed subway car has about 100 people inside already, so there’s about 1,000 people on that 10-car train. And the twenty trains behind that one are also being held up. So that’s 20,000 people who are losing 15, 20, 30 minutes of their lives as the delays build up. That’s about 400,000 minutes, or 6,667 hours. At an average of $50/hr in lost productivity as measured by wages or salary, that’s $333,350 in losses to society caused by his stupid little petty theft. That far outweighs the value of his life, so why not impose the death penalty?

    Because we don’t value life this way in the context of punishment. There’s an intrinsic enormity of human life — any human life — that precludes a mere balancing of worth. Mere economic value like my (admittedly bizarre) example just now isn’t ever going to overcome that enormity. It will never look proportionate. Not to modern sensibilities.

    The difference between that example and your proposal is one of degree, not of kind.

  1. June 6, 2010

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