Corporate Looters Feel Sting of U.S. Crackdown

INDIANAPOLIS — With his prison pallor, oversize glasses and skinny arms poking from a wrinkled T-shirt, 63-year-old David Heath Swanson didn't look like much of a threat.

But U.S. District Judge Sarah Evans Barker viewed him differently.

Unless he is incarcerated for a very long time, Swanson will return to a life of crime, Barker said in November as she imposed a 12 1/2 -year prison term. "He would go right back to it. He knows how to do it."

Mafia don? Drug kingpin? No, CEO.

Swanson was among the first corporate chief executives convicted in the recent government crackdown on white-collar crime.

Like most prominent business figures brought to justice, Swanson is a nonviolent first-time offender, a University of Chicago and Harvard graduate who headed several agribusiness companies before he got caught looting one.

Now he is a prime example of a simmering legal conflict over how to treat these unusual convicts. Two decades ago Swanson might have had a shot at probation. Now, under much stricter sentencing guidelines, stiff penalties are the rule. Yet recent Supreme Court decisions have made those guidelines merely advisory, giving judges greater discretion.

As Barker told Swanson at his hearing, "The rules of the road have changed in no inconsiderable way."

The upshot: longer sentences than in the past, to be sure, but also a rise in disparities from judge to judge or jurisdiction to jurisdiction. And even greater inconsistencies could well be in the offing, with landmark cases still to be heard involving business titans such as Enron's Kenneth L. Lay and Hollinger's Conrad Black, whose media empire included the Chicago Sun-Times.

Already, disparities have emerged as corporate-crime sentences have lurched from 25 years for WorldCom Inc. Chairman Bernard J. Ebbers to home detention and probation in the massive fraud at HealthSouth Corp.

At the federal courthouse in downtown Houston one judge sentenced a mid-level Dynegy Corp. accountant to 24 years, while another judge down the hall imposed 30 months on a senior Merrill Lynch executive involved in fraud at Enron Corp. The Dynegy sentence was overturned on appeal.

The differing outcomes follow a years-long debate that culminated in the punitive Sarbanes-Oxley legislation of 2002 -- and left doubts about the merits of jailing executives for decades.