Maybe crime doesn’t pay, but it doesn’t always cost, either

I missed the news that Jeffrey Skilling, the erstwhile big mahoff at Enron – remember Enron? seems like a million years ago – was recently issued his get-out-of-jail card and moved to a halfway house in Houston. He’d been in the stir since 2006, where he had plenty of time to rue the day he left McKinsey, where he was a hot-shot consultant, to put theory into practice at Enron.

Skilling in a halfway house is quite a remove from the  days when Enron was the “it” company, the darling of Wall Street, and regular awarded the title “America’s Most Innovative Company.” Unfortunately, Enron’s innovation turned out to be mainly on the accounting side, which landed Skilling et al. in prison. And took down the hopes and dreams of employees et al., as Enron’s stock price plummeted from nearly $100 a share to zero.

For those who are particularly interested in white collar crime and punishment, the early 2000’s were heady days:

Soon after Enron collapsed, a rash of other corporate scandals came to light: Tyco, HealthSouth, WorldCom and others. They didn’t end well for those in charge. Dennis Kozlowski, Tyco’s former chief executive, served 10 years in prison. Richard Scrushy, the former CEO of HealthSouth Corp., spent six years behind bars. And Bernie Ebbers, the former CEO of WorldCom, was sentenced to 25 years in prison. He’s still there.(Source: Bloomberg)

(Let’s not forget the other Bernie – Madoff – but he wasn’t the CEO of large public company. He was jut the CEO of Ponzi Scheme, Inc. But he was a white collar crook who’s now a lifer.)

But the world has apparently moved on from tough sentences for fraudsters who cost thousands of folks their savings and their job. These days – and this is certainly disappointing news for those hoping that the long arm of New York State law catches up at some point with Don Jr. and Javanka – the sentences meted out to white collar criminals are no longer harshing the mellow the way they were when Sklling was a newbie con trying on his first orange jumpsuit for size.

Case in point with regards to the kinder, gentler sentences offered recently:

Gary Tanner and Andrew Davenport were executive scam artists (think price gouging and kickbacks) at Valeant Pharmaceuticals. Even though the prosecutors recommended relatively stiff sentences for both these fellows, the judge wasn’t in a hangin’ mood.

Instead, U.S. District Judge Loretta Preska concluded that one year was enough — and even agreed to postpone their prison time until after the holidays! Her reasoning included “the men’s long histories of good deeds, hard work and devoted family lives before they hatched their plan,” as Bloomberg News put it.

Plus the two men were really, really sorry.

Plus Davenport has a heart condition.

For some reason, since the financial crisis, prosecutors have been less zealous about taking out the white collar bad guys, and to some extent “the government simply stopped charging executives criminality.” And they began substituting civil fines for time behind bars:

… even for the most egregious crimes. Angelo Mozilo, the former chief executive of Countrywide Financial, was the classic example. As much as any single company, Countrywide helped bring on the financial crisis — by giving subprime mortgages to people they knew couldn’t afford the homes they were buying — yet no one from the company was ever prosecuted. Instead, a judge signed off on a $67.5 millionn settlement Mozilo reached with the Securities and Exchange Commission. He’s still a very rich man.

And in a variation-on-the-theme of Citizens United, prosecutors started charging companies rather than individuals. As they did with GM and its Mark of Excellence.

In 2014, General Motors Co. acknowledged installing ignition switches that a number of employees knew were faulty, causing at least 124 deaths and 275 serious injuries.

GM paid a $900 million fine, and several billion dollars to settle lawsuits — but none of the employees who knew about the ignition switch were ever charged with a crime. At a news conference in 2015, Preet Bharara, then New York’s top federal prosecutor, said that putting “into the stream of commerce a defective automobile that might kill people” was not a crime

Preet Bharara? Really? I’ll have to consider unfollowing him on Twitter…

And in much the same way that judges of the sober as a judge variety have been known to go easy on DUI offenders,

…judges, who are among society’s elites, tend to have more empathy for their fellow elites than for others who may stand before them for sentencing.

Thus, the poor fellow – make that poor black fellow – with a couple of joints in this pocket gets escorted up the river for 10+ years, while someone who swindled his clients out of a cool million is put on probation and ordered to pay those swindled clients back.

I’m all for prison reform. Maybe justice would have been served well enough if Jeffrey Skilling had gotten a somewhat lighter sentence. After all, Enron didn’t kill anyone, with the possible exception of Enron chairman Kenneth Lay, who had a heart attack and died a couple of months before he was scheduled for sentencing.

White collar crime is different than violent crime. It doesn’t make us afraid to walk down the street after dark; it doesn’t tend to kill.

But white collar crime can do great harm to hopes, dreams, fortunes, and families.

There’s got to be a middle ground between throw away the key and let them just walk. And I’ll bet you anything that, while he’s sitting in his halfway house, Jeff Skilling is kicking himself for having turned to crime a decade or so too early.