Expect the Unexpected in Coverage of White Collar Crimes

Corporate scandal has rocked headlines since a wave of white collar crime started in 2002. Now, executives accused of fraud are on trial and up for sentencing. While court proceedings are routine, coverage is anything but.

Business reporters covering corporate scandal have to explain the complexities that result in a wide range of punishment for white collar criminals. Understanding the outcomes of current trials and sentencings will help reporters prepare for next month's sentencing of Dennis Kozlowski, former executive of Tyco International convicted of fraud and for the January trials of top Enron executives Kenneth Lay, Jeffrey Skilling and Rick Causey.

Recently, Bernie Ebbers, 63, former WorldCom chief executive, received a 25-year federal prison sentence for accounting fraud. That's one of the lengthiest sentences yet for white collar crime. Another stiff sentence of 15 years was handed to John J. Rigas, 80, the former Adelphia Communications executive, for his fraud conviction.

On the other end of the spectrum, Richard M. Scrushy, former HealthSouth chief executive, was acquitted of 36 counts of fraud and conspiracy last month. Such extremes in the courtroom have reporters struggling to make sense of it all.

In the Scrushy case, journalists wanted to know why the case ended in an acquittal when all signs pointed to a conviction. Ben White, a reporter for The Washington Post, analyzed this outcome.

He talked to a white collar crime defense lawyer, a former SEC enforcement lawyer and law professors to help analyze the trial. These sources told him that what likely made the difference in the Scrushy trial was location. The convenience of the trial being held in his hometown of Birmingham, Ala., helped him appeal to various communities. The length of the government's case also hurt the prosecution.

By expounding on these points, White was able to provide a well-rounded analysis of the case. He also spoke with Birmingham residents, some of whom provided a voice for the important warm community sentiment for their "hometown boy."

Scrushy has implications for future cases, as well. He went free in Alabama while both Ebbers and Rigas were convicted in New York. The Enron trials will take place in Houston and that may affect the trial, verdict and sentencing.

For convicted executives, sentencing is a major concern and highlights the larger issue of imprisonment as a future crime deterrent. Brooke Masters, also from The Washington Post, wrote such an article pertaining to Ebbers. She talked to legal analysts, prosecution and defense lawyers, and law professors to gather a variety of views on the implications of the sentence.

Masters found that some defense lawyers argued the sentence was too much, "an overcompensation for earlier era", which will have little deterrent effect. On the other hand, prosecutors thought the sentence would have a positive influence on corporate behavior. Law professors said that white collar sentencing may be getting out of control but concede that is does deter behavior. Additionally, a law professor noted that the lengthy sentence is somewhat in response to Scrushy's acquittal.

Patti Bond, a business reporter for The Atlanta Journal-Constitution, put the story in context by looking at past white collar crime cases, talking to an attorney and a corporate governance expert. She presented a historical backdrop for the present situation. Bond also looked at why punishment is stiffer now. Legal experts say stricter corporate governance policies, increased sentencing guidelines and the desire of judges to deter crime all contribute to hefty jail time.

If white collar crime cases have taught business reporters anything, it's to expect the unexpected. However, having a plentitude of knowledgeable sources and a handle on the trial will help make sense of the story. As journalists prepare for Kozlowski's sentencing and the Enron trials, it helps to look at recent corporate crime cases to put the proceedings in context and recognize what's important.

Copyright © 2008 Donald W. Reynolds National Center for Business Journalism