April 18, 2003

News Release

U.S. Sentencing Commission
One Columbus Circle NE
Washington, DC 20002-8002

For Immediate Release:
Thursday, April 18, 2003

Contact: Michael Courlander
Public Affairs Officer
(202) 502-4597

SENTENCING COMMISSION TOUGHENS PENALTIES FOR WHITE COLLAR FRAUDSTERS

Agency Also Boosts Penalties for Cybercrime and Manslaughter

WASHINGTON, D.C. (April 18) — The United States Sentencing Commission this week voted unanimously to increase penalties significantly for corporate and other serious white collar frauds. The amendment to the sentencing guidelines makes permanent and builds upon a temporary amendment that the Commission previously approved using emergency authority granted by Congress in the Sarbanes-Oxley Act of 2002.

“The Sentencing Commission, by passing this amendment, is continuing to perform its important role in combating corporate fraud,” said Judge Diana E. Murphy, Commission chair. “We are pleased that we were able to work with Congress, the Department of Justice, and other interested groups to develop these new guideline provisions. We believe the result will be tough, but fair sentences and additional deterrence for these types of crime.”

This vote significantly affects offenses such as wire fraud and mail fraud by increasing the base penalties that apply to these crimes. In addition, it expands the scope of the recently enacted sentencing enhancement that targets officers and directors of publicly traded corporations so that it now also applies to registered brokers, dealers, and other investment advisors who defraud investors or employers.

Now made permanent is the emergency amendment of January 25, 2003. This establishes significant sentencing enhancements for white collar offenses that affect a large number of victims or endanger the solvency or financial security of publicly traded corporations, other large employers, or 100 individual victims. Officers and directors of publicly traded corporations who commit securities violations were targeted for particularly substantial increases in penalties. For example, an officer of a publicly traded corporation who defrauds more than 250 employees or investors of more than $1 million will receive a sentence of more than 10 years in prison (121-151 months) under the emergency amendment, almost double the term of imprisonment previously provided by the guidelines.

The amendment also increases penalties significantly for offenders who obstruct justice by destroying documents or records. Defendants who substantially interfere with the administration of justice by shredding a substantial number of documents or especially probative documents will receive a guideline sentencing range of approximately three years’ imprisonment (30-37 months). Prior to the amendment, such an offender could receive a sentence as low as 18 months of imprisonment.

In response to the Homeland Security Act of 2002, the Commission voted to promulgate an amendment bolstering penalties for offenses under 18 U.S.C. § 1030, the computer crime statute. The amendment provides significantly enhanced penalties for computer offenses that involve (1) computer systems used to maintain or operate a critical infrastructure, or used by or for a government entity in furtherance of the administration of justice, national defense, or national security; or violations of privacy; (2) a heightened level of intent to cause damage to a protected computer; and (3) substantial disruption of a critical infrastructure.

In response to congressional concerns, the Sentencing Commission voted to increase the base offense level for reckless involuntary manslaughter from a range of 15-21 months to a range of 27-33 months for a first offender. The Commission voted to increase the penalty for criminally negligent involuntary manslaughter offenses, from a range of 6-12 months to a range of 10-16 months. These increases are based on a Commission study examining state penalties and input from the Commission’s Ad Hoc Advisory Committee on Native American Sentencing Issues, the Department of Justice, and the Federal and Community Public Defenders. The amendment also reflects recent congressional interest in achieving harsher penalties for drunk driving cases that, through reckless conduct, result in death.

The new amendments to the sentencing guidelines will be submitted to Congress by May 1, 2003, and will take effect November 1, 2003, following an 180-day period of congressional review.

The United States Sentencing Commission, an independent agency in the judicial branch of the federal government, was organized in 1985 to develop a national sentencing policy for the federal courts. The resulting sentencing guidelines structure the courts’ sentencing discretion to ensure that similar offenders who commit similar offenses receive similar sentences. Since nationwide implementation in January 1989, federal judges have sentenced approximately 600,000 defendants under the guidelines.


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