Wednesday, August 6, 2008

The Latest on Jamie Olis and the Consequences of Refusing to Deal

The Houston Chronicle has reported that the judge in the Jamie Olis case has denied a recusal request.

A federal judge — asked to remove himself from former Dynegy employee Jamie Olis' criminal case because he had several things in common with a former prosecutor — ruled this week that he will not.

U.S. District Judge Sim Lake, in a 44-page opinion, said a reasonable person would not think the judge biased because he and the late Mike Shelby, the former U.S. attorney for Houston, happened to have worked at the same law firm, gone to the same law school, served in the same military branch and attended some of the same

Lloyd Kelley, an attorney for the imprisoned Olis, had asked Lake to bow out of Olis' attempts to have his case reopened based on prosecutorial misconduct. Olis' initial 24-year prison sentence was reduced to the six-year term he's serving for conspiracy and fraud.

The Jamie Olis case is a particularly interesting one in the plea bargaining world. I briefly discussed the events surrounding this case in my recent article examining plea bargaining in financial crimes cases after the collapse of Enron, which was entitled "Plea Bargaining's Survival: A Continued Triumph in a Post-Enron World."
Further evidence to support the above conclusions is found through examination of post-Enron cases where one can compare the differential between the plea offer the government presented and the sentence the defendant faced at trial. The best example of the significance of the post-Enron differential is Jamie Olis of Dynegy. Olis, a mid-level executive, was initially sentenced in excess of twenty four years after losing at trial. In comparison, the CEO of the company only received fifteen months in return for a guilty plea. As a mid-level executive, one must imagine Olis was offered a similar, if not more lenient, deal. Therefore, Olis likely faced a differential of fifteen months for pleading guilty or 292 months for proceeding to trial, an almost 2000% increase for putting the government to its burden. It is hard to imagine any defendant, including an innocent one, rejecting such odds. Olis, however, exercised his right to a trial, and, unlike his colleagues, reaped the full wrath of post-Enron reforms. Another example is Lea Fastow, former Director and Assistant Treasurer of Corporate Finance at Enron, who was offered a plea deal that required her to plead guilty to a single count of filing a false tax return and serve one year of supervised release. If she had rejected the offer, she would have gone to trial facing a six count indictment that charged her with participation in a $17 million fraud. If convicted on these six counts, her sentence may have exceeded ten years in prison. Unlike Olis, Fastow chose not to risk facing the trial differential. Other instances of staggering sentences do not allow for a glimpse at what was offered by the government, but do illustrate the type of sentences faced by those who go to trial. For instance, Bernard Ebbers, former head of WorldCom, was sentenced to twenty-five years in prison. More recently, Jeffrey Skilling, former chief executive of Enron, was sentenced to twenty-four years and four months in prison. It appears, therefore, that while those who risk trial face the possibility of radically increased sentences, the 95% or more of defendants who plead guilty, even in some of the most publicized post-Enron cases, have received sentences similar to those handed down in these types of cases for over a decade.
Click here to link to the full article's ssrn page.

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