CEOs earned harsh sentences
A Times Editorial
Published July 16, 2005
For a time, it seemed Martha Stewart might be the only high-profile executive involved in recent corporate scandals to face imprisonment. But now ex-WorldCom CEO Bernard Ebbers has been handed a 25-year sentence for the $11-billion accounting scandal at his former company, just three weeks after another New York judge gave 80-year-old Adelphia Communications Corp. founder John Rigas a 15-year sentence for the massive spending and debt fraud that helped bankrupt his cable television business.
The courts are sending a message that the rich and powerful are not above the law. It's about time.
In Ebbers' case, Manhattan federal Judge Barbara Jones concluded Ebbers "was clearly a leader in criminal activity" during the WorldCom fraud, which falsely inflated company profits. Under Jones' sentence, the 63-year-old Ebbers will not be eligible for release until age 85, the equivalent of a life sentence.
Rigas' son Timothy received an even harsher sentence than his father, 20 years in prison for corporate crimes that involved stealing $100-million from Adelphia and hiding the company's debt from investors. Other convicted corporate criminals such as former Tyco International executives Dennis Kozlowski and Mark Swartz, who face sentencing in August for helping themselves to $600-million, must be nervous.
So far, there has been just one major acquittal: HealthSouth CEO Richard Scrushy. Charged with overstating company earnings by more than $2-billion to earn millions in bonuses, Scrushy was found not guilty on 36 charges by a Birmingham jury after employing a defense that played to jurors' religious side.
Neither Rigas nor Ebbers has seen the inside of a jail cell yet. Ordered to report to jail in October, Ebbers will likely seek to remain out of prison during his appeal; both Rigases already have won a court decision allowing them to remain free during their appeal.
Still, the elder Rigas and Ebbers each face the possibility of spending the rest of their lives behind bars - a sentence more commonly seen in drug convictions and violent crimes.
The crimes of these corporate executives wiped out the retirement savings of workers, robbed shareholders and damaged public confidence in the markets. This kind of corporate wrongdoing deserves severe punishment, regardless of how white their collars are.
[Last modified July 16, 2005, 00:24:14]
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