October 15, 2014

The Trial Penalty

There’s a recent (or soon-to-be-published) article in a Forbes magazine regarding the “trial penalty” that I wanted to write about. We can define the trial penalty as harsher sentences for those who fight federal charges by taking it to trial compared to if they would’ve just plead guilty. Certainly, part of the leniency with a guilty plea includes the points reduction for “acceptance of responsibility” but a large majority of the discrepancy comes from prosecutors who drop charges and/or re-characterize facts which leads to lower sentences.

So let’s look at this from a few angles. In the vast majority of federal cases, a defendant is a citizen of the US, considered innocent until proven guilty and has a constitutional right to trial. I think we would all agree on these points. However, if they were to exercise their right to trial rather than enter a guilty plea, they often receive a much harsher sentence, which is another way to say that they are penalized by taking their case to trial. Does this sound fair? Is this justice?

I’ll point to a couple cases and then briefly discuss my my own:

1) Matthew Martoma has been all over the news the past few months. Accused of committing insider trading at SAC Capital, he decided to take his case to court and fight it. As a result, he was recently sentenced to nine years in prison. Had he plead guilty, many legal pundits prognosticated that he likely would have received a sentence closer to 4-5 years. So let’s get this straight, because Martoma exercised his right to trial, he received double the jail time. If the prosecutor felt that 4-5 years would satisfy the nature of the cime and ensure retribution, deterrence and rehabilitation (aka “punishment fits the crime”), then why does it jump up to nine years simply because he had his day in court? If this isn’t “punishing” a defendant, then what is it?

2) Let’s look at other examples that aren’t as highly publicized. There are several inmates in here who were small business owners on the street. When the authorities (FBI, IRS, DOJ, SEC, etc.) confronted them over their business practices (which ranged from questionable revenue recognition to the ability pay their employees in gold), the majority of these guys were surprised. Either it was an oversight on their part, something they intentionally did or a gray area that could be disputed, each of them faced the same dilemma: fight the government charges and face significant prison time (8-16 years) or plead guilty on reduced charges and get significantly less time (1-3 years).

Before we discuss their decision(s), let’s go over some stats according to this Forbes article. 97% of all federal defendants end up pleading guilty without ever seeing a jury. Wow! But what is in store for those 3% of all federal defendants who decide to take it to court? ~95% of defendants on trial for federal charges are found guilty. Another eye popping figure! So let’s do some quick math — one can either plead guilty and have a 100% chance of getting 1-3 years (let’s use 2 years as the midpoint) or one can fight the charges and have a 95% chance of receiving 8-16 years (let’s use 12 years as the midpoint). The expected value of each scenario looks like this: (100% * 2 years) vs (95% * 12 years) = 2 years vs 11.5 years. What is one to do? There are people in here that chose different paths for nearly identical crimes. There are those who acquiesced, even though they felt that they had committed no crime, and did not want to fight the government and its unlimited resources against those terrible odds. So they consulted with their family, pushed aside their notion of what’s “right”, and plead guilty to receive the lighter sentence. What about the guys in here who fought it? Well, unfortunately those are the guys who have sentences pushing 10 years, approximately 500% more time simply for taking their case to trial. Is this justice?

One central point that the Forbes article makes is that plea bargains and sentencing negotiations are often not dictated by the crimes committed or the need to fit the punishment with the crime, but rather the behind-the-doors negotiations deal more with prosecutors managing their case load. “You want to plead guilty? OK, here’s the plea bargain on reduced charges. Thanks for saving me time.” vs “You want to take this to trial and make me spend my energy, focus and time on you? OK, now I’m going to bring the pain and make you regret that decision.” Once again, should whether you exercise your right to trial really make THAT much of a difference when determining sentencing?

Making this personal to my case, I have noting bad to say about my prosecutor. I don’t begrudge her for any of her tactics but I can relate to what I’ve mentioned above. However, my story is a little different. There was no decision to make for me. I was clearly in the wrong, confessed my crime immediately once the investigation started and never had any intentions of fighting the charges. But if I did? Well, I was originally indicted with 35 counts of securities fraud (every trade my co-defendant made was deemed one count regardless of the profit made on each trade; if I recall, some were as low as $100 in profit). 35! Each count contained a maximum sentencing of 20 years. So what was my ‘reward’ for not exercising my right to trial and pleading guilty? 34 counts were dropped and I was charged with only one count. But you better believe that they stack the deck against you at indictment as a way to intimidate you into pleading guilty rather than taking it to trial.

So why do prosecutors do this? If they are officers of the court, what drives their motivation to act in this manner? Surely, this is the way the game is played but a reasonable and objective review of this practice would conclude that something is amiss. The answer is incentives. We’re all driven by incentives and I’ll point to one of the more prominent prosecutors out there, Preet Bharara. Bharara is the hard-hitting prosecutor in NY who has taken down many white collar criminals over the last few years. This has won him notoriety and much publicity. What’s his reward for this bulldog approach? According to the latest Economist magazine he is the leading candidate to replace Eric Holder as the Attorney General. Wow, seems like a good reward to me! For those lesser prominent prosecutors, “winning” a high profile case may lead them to being able to set-up their own defense practice which is extremely lucrative compared to working for the government as a prosecutor. I know an acquaintance of mine that took this path. He won an extremely high profile case a couple years back against a celebrity. As a result, he is now no longer a federal prosecutor but now a partner at a prestigious law firm back east.

My mind can’t help but go to this logic: “If I had committed the exact same crime but had done so working at Bob’s Burger Shack instead of Microsoft, would I still have received the same punishment?” In the eyes of the law, it shouldn’t matter where I worked but I can’t help but think that there’s at least a chance that I would’ve received a lighter sentence if I didn’t have the prominent “Microsoft” name attached to me.

Ultimately, it doesn’t matter. I’m at peace with the outcome and focused on using my stumble to make me a better husband, father and worker, while strengthening my relationship with the Lord. But sometimes I can’t help but think about how things could be different.

In closing, I’d like to end with an old adage that we’re all aware of but slightly modified: “Crime doesn’t pay….unless you’re prosecuting it.”

Brian Jorgenson

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