Kozlowski sentencing Monday calls into question lengthy prison terms

Other white-collar felons effectively got life


NEW YORK - On Monday morning, L. Dennis Kozlowski, the former chief executive of Tyco International, will learn his fate.

Kozlowski, who was convicted of grand larceny, falsifying business records, securities fraud and other charges, is to be sentenced in New York State Supreme Court in Manhattan and, unless he is granted bail, could be whisked off to Rikers Island to be processed.

The 58-year-old former executive faces a prison sentence as long as 30 years.

While recent lengthy sentences for white-collar crimes have been hailed by some as desperately needed deterrents after a deluge of corporate scandals, the sentencing of Kozlowski, comes at a time when a number of lawyers, including former prosecutors, are questioning whether such sentences are justified.

Bernard J. Ebbers, the former chairman of WorldCom who was convicted of masterminding an $11 billion accounting fraud that bankrupted the company, was sentenced to 25 years in prison.

Because Ebbers is 63, some have contended that the sentence amounts to a life term. John J. Rigas, the 80-year-old founder of Adelphia Communications, was sentenced to 15 years in prison.

"You have to ask yourself whether the proof in these cases warrants such a sentence," said Otto G. Obermaier, a former U.S. attorney in Manhattan who had been an aggressive prosecutor of white-collar crimes when he ran the office from 1989 to 1993.

"Ebbers' sentence moved the goal posts pretty far back. You can describe it as a pendulum switch, but it is an overreaction."

Unlike Ebbers, Rigas and most other convicted corporate chiefs, Kozlowski and Mark H. Swartz, Tyco's former chief financial officer, are being sentenced in a state court.

As a result, the judge in the Tyco case, Michael J. Obus, may have more latitude in his sentencing than federal judges, who have a strict set of guidelines to follow.

The convictions of Kozlowski and Swartz also differ markedly from some other recent white-collar cases. While prosecutors are asking that Kozlowski and Swartz be sentenced to 30 years, Obus has the latitude to give them as little as one to three years in prison.

Depending on the length of the sentence, both men could be incarcerated in a maximum security prison like Attica. No lawyer is suggesting that white-collar criminals not serve time.

The question in legal circles has become: What is an appropriate sentence for white-collar crimes relative to punishments for other crimes in a post-Enron world?

Jonathan Simon, a professor of law at University of California, Berkeley, said: "The most obvious comparison for the emerging attitude toward white-collar criminals is the harsh punishment we give to people involved in the drug trade. But both represent increasingly irrational and inhumane levels of punishment."

Noting that he thought Ebbers' sentence was "draconian," he added that "25 years is more than most people would get for rape or a nonaggravated murder."

Of course, the main argument for imposing lengthy sentences is that they serve as a powerful warning to other executives not to break the law.

After Ebbers' conviction in July, Alan G. Hevesi, the New York state comptroller and court-appointed lead plaintiff in the WorldCom securities class action, said it was "important to send a strong message with a severe sentence" because of the billions of dollars and thousands of jobs that were lost as a result of the fraud.

Yet Simon said he had doubts about whether an especially long sentence worked as a significantly greater deterrent to potential white-collar criminals than shorter periods.

"White-collar workers are extraordinarily sensitive to threats," Simon said, "since their whole socialization and environment encourage calculation of future benefit and cost."

Simon suggested "it would be far more effective to impose a lot of short sentences on a wider group of offenders rather than the example model of harshly punishing a few celebrity cases while most potential offenders know that they are unlikely ever to be caught and punished."

Still, some prosecutors and lawyers suggest that lessons that were supposedly learned during the crackdown on corporate crime in the late 1980s did not stick, in part because the sentences were too lenient.

Michael R. Milken was sentenced to 3 1/2 years in prison and served less than two.

Lawyers for Kozlowski and Swartz are expected to emphasize at the sentencing Monday how different their cases are from those at Enron, WorldCom and Adelphia, companies that were forced to file for bankruptcy protection as a result of the crimes.

Tyco never filed for Chapter 11 protection, and its underlying business was relatively unaffected by the crimes, despite swings in its stock price. The two Tyco figures were convicted of stealing about $150 million by paying themselves unapproved bonuses and conspiring to keep the thefts secret.

In addition to determining a sentence, Obus is expected to make Kozlowski and Swartz forfeit the money they stole.

Prosecutors also may seek to have the men pay hundreds of millions of dollars that they say shareholders lost as a result of the two executives' falsifying business records and hiding other information from investors, as well as possibly millions of dollars in fines.

It is unclear whether the judge will rule on how much money shareholders should be reimbursed because no definitive amount was established during the trial.

The judge could decide to hold a hearing to determine the amount or he may leave that to the civil courts, which are overseeing lawsuits against the two men.

Lawyers for Kozlowski and Swartz declined to comment.

A spokeswoman for the Manhattan district attorney's office did not return a call seeking comment.

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