Just in Crime : Guiding Economic Crime Reform after the Sarbanes-Oxley Act of 2002

The collapse of Enron in the fall of 2001 left investors, creditors, former employees, and legitimate business leaders asking whether the bankruptcy of the company was solely the product of bad business practices or the consequence of criminal conduct. Deregulation in the energy and telecommunications industries, special access to politicians through lawful generous campaign contributions, and civil litigation "reforms" limiting private securities litigation permitted Enron's conduct to continue unabated by either government regulation or private enforcement. In response to the corporate and accounting scandals that began with Enron, Congress attempted to restore faith in America's financial markets by enacting the Sarbanes-Oxley Act of 2002, which included new criminal statutes and mandated stiffer penalties for economic crimes. Included in the legislation were directives for the United States Sentencing Commission ("Sentencing Commission") to promulgate any amendments to the Guidelines necessary to "reflect the serious nature" of corporate fraud. This Article considers the application of the Federal Sentencing Guidelines to current economic crime, addressing two Guidelines-related issues that will impact sentencing of the new millennium's economic criminals: first, whether substantive changes in the Sentencing Guidelines based on the new legislation are needed given the recently adopted 2001 Economic Crime Package and Money Laundering Guidelines; and second, whether the increased trend in downward departures under the Guidelines can be curbed to affect the nature of the Economic Crime Package and corporate fraud reforms in light of the broad discretion permitted sentencing judges as acknowledged by the Supreme Court. Currently, either because of deregulation or litigation "reform," the civil deterrence matrix is insufficient. History has shown that it is not just the consumers, the investors, and the employees who are harmed. The business community itself cannot function with companies like Enron slowly eroding the confidence in our financial markets. While the revisions to the fraud section of the Guidelines are a start, this Article suggests that the use of downward departures in economic crime cases must be restricted to rare instances when the Sentencing Guidelines do not adequately take into account extraordinary circumstances. In that vein, this Article sets forth a "guided" departure scheme for sentencing economic crimes to narrow discretionary departures in economic crime cases so that the basis for departure is not permitted to alter the sentencing range by more than a fraction of the overall term of imprisonment