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Sentencing for White Collar Convictions: Federal Guidelines and Statistics
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Sentencing for White Collar Convictions: Federal Guidelines and Statistics
White collar crime refer’s to non-violent, financially-motivated crimes committed by businesses and government professionals. Examples include fraud, bribery, Ponzi schemes, insider trading, embezzlement, cybercrime, copyright infringement, money laundering, and forgery. While these crimes don’t involve direct violence or drug trafficking, they can still cause serious harm and carry stiff penalties.
In this article, we’ll look at how federal sentencing guidelines and mandatory minimums impact those convicted of white collar offenses. We’ll also examine statistics on incarceration rates and average prison sentences for common economic crimes.
Federal Sentencing Guidelines
Up until the 1980s, federal judges had wide discretion in sentencing for white collar crimes. However, after reports of inconsistent punishments being handed out, Congress passed the Sentencing Reform Act as part of the Comprehensive Crime Control Act of 1984. This legislation established the United States Sentencing Commission, who developed the Federal Sentencing Guidelines to promote uniformity and proportionality in sentencing.
The guidelines provide recommended sentencing ranges based on the severity of the offense and the defendant’s criminal history. For white collar offenses, sentences are primarily driven by the amount of financial loss caused. The greater the loss, the longer the recommended prison term. For example, under the 2018 guidelines:
- Losses greater than $6,500 = 0-6 months imprisonment
- Losses greater than $15,000 = 6-12 months
- Losses greater than $40,000 = 12-18 months
- Losses greater than $95,000 = 18-24 months
The guidelines allow for upward departures from the recommended range if the crime involved sophisticated means, jeopardized national security, endangered public health or welfare, targeted vulnerable victims, or if the defendant abused a position of trust. Downward departures may be warranted if the defendant had a minor role in the offense or accepted responsibility.
While judges aren’t bound by the guidelines, they must consult them and justify any departures. According to the U.S. Sentencing Commission, judges sentenced within the guideline range in over 50% of white collar cases in recent years.
Mandatory Minimum Sentences
In addition to sentencing guidelines, mandatory minimums enacted by Congress require judges to impose a minimum prison term for certain federal offenses. These laws have contributed to longer sentences for economic crimes like fraud.
For instance, the Anti-Drug Abuse Act of 1986 imposed a 5 year mandatory minimum for mail/wire fraud offenses affecting a financial institution. The Sarbanes-Oxley Act of 2002 upped it to 10 years for frauds over $1 million. Other laws like the Major Fraud Act (10 year minimum) and Identity Theft Penalty Enhancement Act (2 years added) have further increased mandatory minimums for white collar convictions.
Critics argue these rigid laws prevent judges from considering individual circumstances and have resulted in excessively long sentences in some cases. But proponents believe they’re an important deterrent and penalty for serious economic crimes.
Incarceration Statistics
According to data from the Bureau of Justice Statistics, around 33,000 people were incarcerated in state and federal prisons for white collar offenses in 2016. This represents about 10% of the total white-collar crime prisoner population. The number has declined in recent years, from a peak of about 47,000 in 2012.
Some of the most common white collar offenses people were imprisoned for include:
- Larceny/Theft – 14,400 prisoners
- Fraud – 9,600 prisoners
- Forgery/Counterfeiting – 3,800 prisoners
- Embezzlement – 3,600 prisoners
- Tax Offenses – 1,800 prisoners
White collar criminals made up a larger portion of federal prisoners, accounting for around 36% of the sentenced population. This reflects the fact that economic crimes are predominantly prosecuted at the federal rather than state level.
Average Sentence Lengths
The average prison sentence length for white collar offenders in 2016 was 22 months in state prisons and 25 months in federal prisons. This compares to an average of 48 months for violent offenders and 36 months for drug offenders in state prisons.
However, average sentences vary significantly depending on the specific offense. For example, the average sentence in federal court in recent years was:
- Tax Offenses – 14 months
- Fraud – 27 months
- Embezzlement – 33 months
- Money Laundering – 63 months
- Forgery/Counterfeiting – 68 months
High loss fraud and money laundering cases over $1 million often result in decade long sentences due to mandatory minimums and sentencing enhancements. Former Enron CEO Jeffrey Skilling received a 24 year sentence, while Bernie Madoff was sentenced to 150 years in prison for a massive Ponzi scheme.
Alternatives to Incarceration
For lower level white collar crimes with smaller losses, judges have alternatives to imprisonment. These include:
- Probation – Offenders remain in the community under supervision of a probation officer. Often includes conditions like community service, fines, or restitution.
- Home Confinement – Offenders are restricted to their residence except for pre-approved reasons like work or medical appointments.
- Community Confinement – Offenders reside in halfway houses, treatment facilities, or other supervised settings.
In 2016, 77% of those sentenced for fraud and 70% of those sentenced for forgery/counterfeiting received probation or some form of community confinement rather than prison. But alternatives are less commonly used as fraud dollar amounts rise.
Takeaways
While white collar sentences tend to be shorter than violent or drug crimes on average, substantial prison terms for economic offenses are not uncommon today. Sentencing guidelines, mandatory minimums, and enhancements for high-loss frauds have resulted in increased sentences compared to the past. Still, alternatives like probation remain options for less serious white collar crimes.
The financial impact of white collar crime is huge, estimated at over $3.5 billion in losses reported to the FBI in 2019 alone. So policymakers continue to balance punishments that deter crime against ensuring sentencing proportionality on a case-by-case basis.
References
United States Sentencing Commission, 2017 Datafile
Bureau of Justice Statistics, White Collar Crime Data