Las Vegas Sun

March 18, 2024

Editorial: White collar; blue future

Bernard Ebbers, former chief executive of WorldCom, and L. Dennis Kozlowski, former chief executive of Tyco International, are among a host of disgraced business executives who have reasons to be concerned about their future. Ebbers was convicted in March of deceiving investors and regulators about his company's falling fortunes. Jurors agreed with prosecutors that Ebbers, as the company's top executive, was responsible for WorldCom's financial results being overblown by some $11 billion. As for Kozlowski, he and another Tyco executive were convicted this month of looting Tyco of $600 million.

Why these and other recently charged or convicted corporate executives have reason to be concerned has to do with prison sentences that were handed down on Monday. John Rigas, 80, who founded Adelphia Communications Corp. in 1952 and turned it into the nation's sixth-largest cable company, was sentenced to 15 years by an unsympathetic federal judge in Manhattan. Rigas' son, Timothy, who served as the company's chief financial officer, was sentenced to 20 years. The two were convicted last July of bank fraud, securities fraud and conspiracy. Unknown to investors and securities officials, over time father and son had diverted $2.3 billion in company revenue to their own uses.

The lawyer for the elder Rigas tried to sway the judge by relating how generous the company founder had been in his community of Coudersport, Pa. "Do you see what he did?" the judge barked. "To be a great philanthropist with other people's money really is not very persuasive."

It appears the mood may have swung in this country against corporate criminals, who could in the past count on lenient sentences, affording them a lifetime to enjoy their pillaged funds. In the late 1980s, for example, Ivan Boesky, a Wall Street corporate takeover specialist, was convicted on charges of insider trading after making a fortune. In exchange for informing on others also engaged in the practice, he was allowed to enter a plea bargain. He was fined $100 million (a fraction of his fortune), ordered to never again work in the securities business and sentenced to three and a half years in prison, of which he served two.

Sentences of 15 and 20 years in prison are a far cry from those days. These are serious sentences, almost unheard of. Additionally, in earlier legal proceedings against Adelphia, the Rigas family agreed to surrender 95 percent of its assets -- $1.5 billion -- to help their former company emerge from bankruptcy and to set up a fund for repaying the victims of the family's fraud.

Earlier this month, Ebbers, scheduled to be sentenced July 13, asked the court for leniency. In our view, the judge in the Rigas' case had it right. White collar criminals who steal millions are no more deserving of leniency than the more common crooks who receive lengthy sentences every day.

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