Ebbers' Sentence Shows Times Have Changed for the Better

Bernie Ebbers got a 25-year sentence on Wednesday for his role in the WorldCom collapse. As CEO, he oversaw the rise and spectacular fall of the company that resulted in an $11 billion bankruptcy – the largest in American business history. At 63, the sentence amounts to a life-term since parole in the Federal system is not an option. While some may argue that this is too harsh, no one can argue that, for white-collar criminals, times have changed. Things are better for the law-abiding investment public.

Back in the bad old days, say sometime in the Carter administration, a crook who robbed people with a fountain pen instead of a gun would get a slap on the wrist. But then came the insider trading scandals of the 1980s. Ivan Boesky got 3 years in jail and Mike Milken, whose shenanigans made and then broke Drexel Burnham Lambert, got 10 years. However, thanks to the soft-on-crime Reagan administration both men were out in 22 months.

It took the Savings and Loan disaster of the late 1980s, which besmirched the reputation of presidential brother Neil Bush (Silverado), to get the nation serious about financial crime. Charles Keating, of Lincoln Savings & Loan, got himself a 12.5-year stretch and actually did four years in stir before an appeals court freed him in 1999. Meanwhile, the politicians to whom he donated money [Alan Cranston (D-CA.); Dennis DeConcini (D-AZ); John Glenn (D-OH); John McCain III (R-AZ); and Donald Riegle (D-MI}] never quite faced the music, but that is another story for another time.

In 1987, the big change came when Congress essentially told judges that sentences should be linked to financial damage done. Parole was abolished, and both sides were allowed to appeal sentences. This set the table for the prosecution of corporate crooks at Enron, World Com, Adelphia, and the others. Richard Scrushy, of HealthSouth infamy, is the only one of the bunch who doesn’t seem to face years upon years in jail – he was acquitted.

Mr. Ebbers and his lawyers are appealing the sentence on the grounds of his health, his charitable works and personal financial loss in the WorldCom bankruptcy. Henry Bruen, a former WorldCom employee who testified at the sentencing hearing hopes the appeal is rejected. “I was one of the hard-working employees at a great company that was destroyed by Bernard Ebbers,” he said, a man who rose through the sales ranks at WorldCom. Mr. Bruen has lost his savings and his medical benefits and has been unemployed since 2003 when he was fired without notice. How many Henry Bruens are there? Thousands. Maybe 25 years is about right, maybe it isn’t, but a slap on the wrist and six months at “Club Fed” would certainly have been wrong.


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