Making an example

"We were hoping for the maximum," he said, "to make an example."


Yesterday R. Allen Stanford was sentenced to 110 years in prison after being convicted of multiple counts of defrauding investors by selling phony CD's in an offshore bank.

Mr. Stanford is 62 years old. The sentence, imposed by US District Judge David Hittner, went way overboard. Mr. Stanford will never set foot outside prison again as a free man. He will die behind bars. He would die behind bars if the sentence were 30 years -- probably even much less than that.

A 110 year sentence serves no useful purpose. It gives the prosecutor a big number to put on his resume; maybe white-shoe firms like big numbers. It makes Judge Hittner look like a real tough guy. But why bother?

So what if the federal guidelines - they're advisory, you know - mandate a ridiculously long sentence? Are our federal judges nothing more than clerks who plug in numbers and trace their finger along a column or row in a book? Shouldn't these jurists who were placed on the bench for life have a little discretion at their fingertips?

The quote at the top was from Jaime Escalona, a defrauded investor from Venezuela, who "represented" the Latin American victims of Mr. Stanford's pyramid scheme. The maximum he speaks of was 230 years (an even more absurd big number). What's the example you wish to set, Mr. Escalona?

Those who lost their money will likely never see a penny of it. It's gone. Even those who thought nothing of a high interest rate on a CD, should understand that. It doesn't matter if Mr. Stanford lives to the ripe old age of 172 -- they're never getting paid.

And, as an added bonus, as Mr. Stanford ages and begins to suffer from those maladies that affect older folk, guess who'll be footing that bill. That's right. Us. We'll be the ones on the hook for the increasing medical costs of caring for an aging man.

Mr. Stanford didn't do his case any good when he refused to acknowledge that he defrauded the investors. The judges who like to run their fingers along the columns and rows of the advisory sentencing guidelines tend to take a dim view of someone who refuses to accept responsibility for his actions. They like to use the term upward departure.

Well, sometimes juries convict the wrong person. If Mr. Stanford believes he was wrongly convicted and is looking to appeal, confessing his guilt to the court isn't the best course of action. Harmless error, anyone?

Mr. Stanford ran a pyramid scheme. He promised outrageous returns for supposedly safe CD's which wealthy folks hungry for more money ate up. When he couldn't convince enough people to cough up money he could use to pay the earlier "investors," his company collapsed. He stole nearly $6 billion.

And, lest I forget, Judge Hittner also made Mr. Stanford personally responsible for restitution. Excuse me, Judge Hittner, how the hell is a man sentenced to life in prison supposed to come up with that kind of dough?
And what would the penalty be for not paying it back? Would he have to sit it out for $100 a day?

Mr. Stanford was found guilty. He stole a lot of money. He should go to prison. But the sentence handed out by Judge Hittner was ridiculous.

Just what kind of example did he make?

Psst, brother, can you spare a million or two?

U.S. District Judge David Godbey of Dallas told R. Allen Stanford that he would be glad to release millions of dollars to cover his defense fees -- if Mr. Stanford could prove that the money wasn't tainted by his alleged fraud. Mr. Stanford had requested $10 million to be placed in escrow to cover his mounting legal expenses.

Mr. Stanford's attorney, Dick DeGuerin told U.S. District Judge David Hittner of Houston that he had yet to be paid for his work on the case. Judge Hittner apparently was concerned about Mr. Stanford having no cash to hire an attorney.

Across downtown at the Harris County Criminal (In)justice Center, however, not much concern is shown for those who can't afford to retain counsel. The rule of thumb is if you can get yourself bonded out, then you can certainly afford to hire an attorney. I've heard one judge tell defendants to sell their cars and pawn anything of value and then, if they can't raise enough cash to hire a lawyer, he would consider their requests for appointed counsel.

“We have not received a penny yet,” DeGuerin said Thursday. He also pointed that out to senior U.S. District Judge David Hittner, who presides over the criminal cases in Houston, during a hearing earlier this week.

“I’ll remind the court that the lawyers haven’t been paid either,” DeGuerin said, after noting that the freeze left his client with “zero, zip, nothing.” Hittner said it was a serious concern that a defendant has no cash for a defense.

As to Mr. DeGuerin's concern about his fee -- that's why we collect it up front. I always consider the down payment to be my fee and anything the client pays after that to be found money.

White collar crime and punishment

R. Allen Stanford is just the latest in a long line of accused con men to face the prospect of prison time for his alleged misdeeds. He certainly won't be the last.

My question is whether it makes any sense to put a white collar criminal behind bars in the first place.

Mr. Stanford's alleged crimes include lying to investors and diverting investor funds to his own private bank accounts. Mr. Stanford's firm promised huge returns for those willing to invest in certificates of deposit in his Antigua bank. Of course, as I have pointed out before, it is a law of economics that the riskier the "investment," the higher the return.

Apparently no one questioned why a bank was paying exorbitant interest rates on certificates of deposit. Investors were blinded by greed and neglected to perform their due diligence before handing over large sums of cash to Mr. Stanford's company.

Now, if the allegations are true, I'm not saying that Mr. Stanford didn't do anything wrong. What I am saying is that locking him behind bars for the rest of his life doesn't do anything for the people he allegedly bilked.

I guess there's the lottery for the working poor; casinos for the middle class; and R. Allen Stanford, Bernie Madoff and company for the wealthy.