soft time

The Baltimore Sun

We've all seen it on TV: A criminal is convicted and immediately led out of the courtroom, usually in handcuffs, and on to prison. That's the way the justice system works, right?

Not always.

When it comes to white-collar crime, federal judges and even prosecutors can seem a little soft on sentencing and detention, allowing convicted criminals relatively liberal latitude in when they begin serving time. In some cases, it can take months before a criminal is made to report for prison.

Last year, a Baltimore woman was sentenced to prison time for fixing stock-option prices but permitted to stay free for months so she could spend Easter with her family. A Hunt Valley fraudster got to wait until after Christmas to start his nine-year term and was allowed to travel out of state to a trade show in the meantime. And a Crofton man serving a home detention sentence for tax evasion was authorized to take a business trip to Virginia.

"With white-collar defendants, judges tend to give them more flexibility with respect to scheduling, primarily because they don't typically pose a risk of flight or a danger to the community," said Andrew C. White, a former federal prosecutor now in private practice in Baltimore.

"They tend to be allowed to adjust the prosecution's schedule and the court's schedule more around theirs," he said.

Sometimes a white-collar criminal will ask to go to prison quickly. Martha Stewart, for example, asked to report as soon as possible after her insider-trading conviction in 2004 so she could be home "to plant the new spring garden." She was released March 4 of the next year.

According to the Federal Bail and Detention handbook, courts consider four fundamental factors in deciding whether to let defendants roam free through the granting of bail or, afterward, to make travel allowances:

* The nature and circumstances of the offense, including whether violence or drugs were involved.

* The weight of the evidence.

* The defendant's history and characteristics, including family ties, employment, community relationships, criminal record, and drug or alcohol abuse tendencies.

* The risk the person poses to the community.

The goal is to make sure that defendants show up in court and that their release doesn't put the public or themselves in danger. Maryland federal judges said posing a physical danger to the public is considered a bigger threat than posing an economic danger, and is treated as such.

So blue-collar offenders, particularly those alleged to have committed narcotic or violent crimes, are frequently imprisoned while awaiting trial and, after their convictions, while awaiting sentencing. But white-collar defendants, like money manager Bernard Madoff, who barely made his $10 million bail after his arrest in December, often get to stay home.

Madoff is accused of perpetrating one of Wall Street's largest financial frauds, a $50 billion Ponzi scheme with thousands of victims. And even though he's promised not to dispose of his assets, which may be needed to repay investors, he recently sent roughly $1 million worth of jewelry to relatives. Still, he still gets to stay in his $7 million Manhattan penthouse, albeit under "round-the-clock" monitoring, while he is awaiting trial.

In a 22-page decision last month, federal Judge Ronald L. Ellis said Madoff could remain at home because the government failed to prove that "there is a serious risk that Madoff will flee or that there is a serious risk that he will obstruct justice or attempt to."

Once set free, defendants tend to stay that way until they're convicted, sentenced and forced to report to prison.

That's Steven L. Berman's situation. The long-time Baltimore real estate investor pleaded guilty in June to rigging bids at various Maryland tax lien auctions. He was ordered to pay a $750,000 fine, is awaiting sentencing of up to 10 years in federal prison, and the Federal Bureau of Investigation said it considers him part of a continuing investigation.

Still, Berman got to spend New Year's Eve in the Caribbean, taking his wife and four children on a $17,000, eight-night cruise aboard the Independence of the Seas, which left from Florida and stopped in Puerto Rico, St. Thomas, St. Maarten and Haiti.

A U.S. district judge ordered Berman to surrender his passport after his guilty plea. But the court gave it back on Sept. 22 so he could take the planned vacation.

The Department of Justice, which prosecuted Berman, did not oppose the travel request. A spokeswoman confirmed that Berman is required to cooperate as part of his plea agreement.

"I would suspect that he has given [investigators] something substantially useful" to be allowed to take such a trip without objection from prosecutors, said Tom Dunlap, managing partner with Dunlap, Grubb & Weaver, a firm specializing in business litigation. He is not involved in the Berman case. "He probably already has an inked deal getting probation," Dunlap said, adding that the crime sounds "fairly low-level."

Berman's D.C. attorney, Geoffrey Garinther, confirmed that his client is cooperating as promised and viewed as "neither a risk of flight or danger to the community."

Nor, apparently, is Stanley Lee, allowed to leave home detention in Crofton to go to Christopher Newport University in Newport News, Va., provided he makes up the five days at the end of his sentence.

"The reason for this request is that my company is required by contract to perform an in place mock-up installation of a terrazzo floor for architectural approval and my expertise is required," Lee wrote in a letter to Greenbelt U.S. District Court.

In June, he pleaded guilty to conspiracy to defraud the Internal Revenue Service through a family ceramic-tile business. He was sentenced to six months' home detention and ordered to pay nearly $46,000 in restitution.

In October, entrepreneur Alan B. Fabian was sentenced to nine years in federal prison for defrauding companies, creditors and colleagues of $40 million. His attorney asked if Fabian could spend Christmas at home, and the judge relented, allowing the felon to report to prison after the holiday.

In December, Fabian was also allowed to travel to New Jersey for a Realtor trade show, so he could "market a Web application" developed by his newest startup company, 4th Sector Ventures, even though he was convicted of using his businesses to run scams. The travel request wasn't opposed by the pretrial services officer supervising Fabian, who reported to prison in January.

(Earlier this month, allegations he made against former Maryland Lt. Gov. Michael S. Steele surfaced, leading to an FBI inquiry about Steele's handling of campaign funds in his 2006 Senate bid. Fabian is a former finance committee chairman for Steele.)

Among the less surprising concessions came in January 2008, when New York U.S. District Judge Jed S. Rakoff allowed Carole Argo to stay home with her husband and two children through Easter before reporting for a six-month sentence.

Argo was convicted of illegally manipulating dates on stock options for SafeNet Inc. of Harford County, but she never profited from the scheme - her colleagues did. She was also admired for her charity work and general kindness, according to supporters who submitted letters to the court.

"Miss Argo is the sort of person who most people would rightly admire," Rakoff said before handing down a sentence below guidelines and allowing the Easter stay, which she later rejected.

Argo, who has two children, wanted to report earlier to Alderson Federal Prison Camp in West Virginia so she would be released before a new school year began.

And she did.

given latitude

Alan B. Fabian

Local entrepreneur was sentenced in October to nine years in prison for fraud but was allowed to delay the sentence until after the Christmas season and was permitted to travel to a trade show in New Jersey.

Carole Argo

Sentenced in January 2008 for manipulating dates on stock options for local information security company SafeNet. She was allowed to tailor her six-month sentence so she could be released before her children's school year began.

Bernard Madoff

Money manager awaiting trial on charges he orchestrated a $50 billion Ponzi scheme affecting thousands of clients. He has been allowed to remain at his Manhattan penthouse, though under round-the-clock monitoring.

Martha Stewart

Lifestyle entrepreneur convicted in 2004 of insider trading. She asked to serve her five-month sentence right away, so she could be released in time "to plant the new spring garden."

An article in Sunday's editions about sentencing of white-collar criminals mischaracterized Martha Stewart's 2004 federal conviction. She was convicted of obstructing justice and lying to the government about a suspiciously timed stock sale.The Sun regrets the error.
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