Until 2004, white-collar sentencing appeared to exemplify the ratchet effect. As the media exposed ever more corporate corruption and shady dealing, lawmakers competed to prove their toughness on crime by raising sentences. This irresistible force, however, met a seemingly immovable object: the Supreme Court's new Sixth Amendment limits on judicial sentencing. Apprendi v. New Jersey, (1) Blakely v. Washington, (2) and most recently United States v. Booker (3) have upended sentencing law by requiring juries, not judges, to find beyond a reasonable doubt facts that raise maximum sentences. Booker's remedy was to invalidate the binding force of the U.S. Sentencing Guidelines. (4) Apprendi and Blakely have had large and obvious effects on violent and drug crime prosecutions. These cases, however, also portend a revolution in white-collar plea bargaining and sentencing. This Essay is a brief effort to speculate about federal white-collar plea bargaining and sentencing after Booker, now that the U.S. Sentencing Guidelines are no longer binding.
Part I summarizes the criminal law's traditional leniency toward white-collar defendants and how that thinking began to change. Part II notes the U.S. Sentencing Commission's and Congress's efforts to toughen white-collar penalties, culminating in the Sarbanes-Oxley Act of 2002. Part III considers how Booker changed this landscape by striking down the Sentencing Guidelines. In the short term, Booker restores some judicial power to counterbalance prosecutorial control of plea bargaining and sentencing. The price, however, is that judges have more leeway to show excessive leniency, which will incense prosecutors and prod Congress to act. Part IV discusses Congress's likely responses to this state of affairs. Congress is unlikely to accept the status quo or to entrust cumbersome fact-finding to juries. Rather, Congress will likely either restore binding minimum guidelines or pass mandatory minimum penalty statutes, which will greatly increase prosecutorial power to charge bargain. White-collar sentencing may replicate some of the pathologies of mandatory drug sentencing, although it will never be as draconian in practice. Part V proposes two modest solutions. First, clarifying how to compute losses would reduce prosecutorial manipulation of white-collar sentences based on speculation about the causes of stock-price drops and the like. Second, greater use of shaming penalties could ensure short sentences with bite, to express the community's condemnation while avoiding disproportionate punishment.
I. TRADITIONAL LENIENCY TOWARD WHITE-COLLAR DEFENDANTS
Traditionally, penalties for white-collar crimes such as fraud, embezzlement, and insider trading were significantly lower than penalties for violent, drug, or even physical property crimes. White-collar offenders were much more likely to receive probation than thieves who stole equivalent amounts, and when white-collar offenders did go to prison their sentences were substantially shorter. (5) For example, before the Sentencing Guidelines, an average of 59% of fraud defendants received straight probation sentences, and the average prison time served was seven months. (6) For tax defendants, the figures were comparable: 57% received straight probation, and the average prison time served was five and a half months. (7) Generally, these white-collar defendants came from well-off backgrounds, had no criminal histories, and seemed unlikely to recidivate, let alone endanger anyone. So there was little need for specific deterrence, and few people thought retribution required imprisonment. Thus, white-collar criminals usually got probation, community service, restitution, or similar soft punishments.
Our thinking about white-collar crime has undergone a sea change in the last two decades. White-collar crime came to epitomize greed, which increasingly seemed morally wrong and more deserving of retribution. (8) Moreover, the sentencing-reform movement focused on meting out equal sentences for equally bad crimes. …