Bernie Ebbers Is Old and Sick. Let Him Out of Prison.

(Bloomberg Opinion) -- It was an overcast day in July 2005 when Bernard J. Ebbers walked into a courthouse in lower Manhattan to learn his sentence. Four months earlier, Ebbers, the former chief executive officer of WorldCom Inc., had been convicted of overseeing an $11 billion accounting fraud, at the time the largest such fraud in U.S. history. Investors had lost billions.

Prosecutors wanted U.S. District Judge Barbara Jones to sentence Ebbers to life in prison. Ebbers’s lawyers, needless to say, pleaded for leniency, citing the many letters that had been sent attesting to his good character. Federal guidelines called for Ebbers to receive a sentence of 30 years to life. But earlier that year, the Supreme Court had ruled that sentencing guidelines were discretionary, not mandatory.

Jones strayed from the guidelines, but not by much. Citing the billions of dollars lost, as well as Ebbers’s role as “a leader of criminal activity,” she sentenced Ebbers to 25 years in prison. “As Judge Jones explained the sentence,” wrote New York Times reporter Jennifer Bayot, “thunder from a summer storm could be heard inside the courtroom where Mr. Ebbers, 63, slumped forward in his chair and dabbed his eyes with a handkerchief from his pocket.”

Bayot described Ebbers’s sentence as “perhaps the toughest for corporate wrongdoing in recent memory.”

Bernie Ebbers is now 78. He is legally blind. He has a serious heart condition, and suffers from anemia. “He is frail, weak, shuffles, is hunched over, is skin and bones [and] his memory is fading,” wrote his daughter in a declaration she submitted to the court in September.  And he’s still in prison, currently living in a federal medical facility in Fort Worth, Texas.

I have to say, I was surprised when I first learned that Ebbers was still behind bars. That’s partly because, Ponzi schemes aside, judges don’t hand out 25-year sentences for corporate crimes anymore. The longest white-collar sentence I can recall in recent years was the 11 years given to Raj Rajaratnam, the former hedge fund billionaire convicted in 2011 of insider trading.  (He was released from prison this summer, almost two years ahead of schedule.)

None of the other executives convicted of wrongdoing in the mid-2000s spent anywhere close to 25 years in prison. Andy Fastow, the former chief financial officer of Enron Corp. and the mastermind of the fraud there, agreed to a maximum sentence of 10 years as part of a cooperation agreement. In the end, he was sentenced to six years. His boss, former CEO Jeffrey Skilling, was originally sentenced to 24 years. But he was freed in February, after a little more than 12 years, because of a 2010 Supreme Court decision that mooted some of the charges.

John Rigas, the former CEO of Adelphia Communications Corp., was sentenced to 15 years in 2005. At the age of 91, suffering from cancer, he was released after a decade.

Then there’s Dennis Kozlowski, the former chief executive officer of Tyco International Ltd. In 2005, he was handed a sentence of about eight to 25 years; he wound up getting out after 6 ½ years. And let’s not forget Jamie Olis, the mid-level accountant who bore the brunt of a financial scandal at Dynegy Inc. when he declined to plead guilty to fraud, as his superiors had done. His shocking 24-year sentence was eventually reduced to 6 years.

Since 2005, when Ebbers was convicted, prosecutors and judges have dramatically changed the way they think about white-collar sentencing. Judges in the mid-2000s gave great weight to financial-loss calculations put forth by prosecutors when weighing sentences. Today, says Michael N. Levy, a criminal defense attorney, “there is an increasing recognition that the loss calculation is not always helpful in assessing the venality of a particular crime.”

Many judges no longer consider the sentencing guidelines at all. And courts, in a number of cases, have narrowed what constitutes white-collar crime. 

One or more of these factors helped Skilling, Rigas and Olis (among others) get their sentences shortened. Yet inexplicably, none of this has helped Ebbers, who has now been in prison for over 13 years. In 2016, the Justice Department’s Office of the Inspector General released a report that found that “aging inmates are more costly to incarcerate due to increased medical needs.” It also noted that elderly inmates “engage in fewer misconduct incidents” and are less likely to be re-arrested after being released. The inspector general recommended that the Federal Bureau of Prisons loosen the requirements for compassionate release so that more elderly inmates could leave prison early. Even that hasn’t helped Ebbers.

In September, Ebbers’s daughter Joyce made a new attempt to get him released. She petitioned the Bureau of Prisons to grant him a compassionate release, citing his age and medical condition. The bureau has been notorious for delaying or denying the release of sick and elderly prisoners, and so it was here. On Aug. 12, Ken Hyle, an official in the bureau’s office of general counsel, denied the request. He said that although Ebbers had numerous ailments, they didn’t “substantially diminish his ability to function in a correction facility” — as if that was the only thing that mattered.

Thanks to a new law, the so-called First Step Act,  Hyle’s isn’t the final word. The act imposes a series of reforms on the federal prison system, including an expansion of the compassionate-release program. It also allows prisoners over the age of 60 to seek early release — and gives prisoners the right to appeal a decision by the Bureau of Prisons.

Thus, in early September, Ebbers’s lawyer petitioned District Judge Valerie Caproni of the Southern District of New York — the same court that had convicted Ebbers in 2005 — to release him.  He noted that the warden of the Fort Worth facility had recommended that his release be approved, and he included a declaration from Ebbers’s daughter about his deteriorating physical condition. Finally, he filed a copy of a letter now-retired judge Barbara Jones — who had sentenced Ebbers in the first place — sent to the court, asking that he be released.

After acknowledging that her original 25-year sentence was “unarguably a very lengthy sentence,” she wrote:

The 25-year sentence that I imposed was intended to underscore the seriousness of [his] conduct and to serve as a deterrent to others who would commit financial fraud. A reduction in sentence now, however, after he has served almost 14 years [sic] of his sentence and developed serious medical issues, would not diminish the message that I sought to convey in 2005. It would show compassion. And, to state the obvious, it would not jeopardize public safety.

Incredibly, the government continues to oppose Ebbers’s release.  The top federal prosecutor for the Southern District, Geoffrey Berman, told the court that the Bureau of Prisons could handle Ebbers’s deteriorating health with “around-the-clock care, follow-up psychological evaluations, and other medical testing.” According to Berman, releasing Ebbers would be “grossly insufficient to comply with the sentencing goals” — never mind that those goals have changed radically since 2005.

I’m not so sure Ebbers’s 25-year sentence deterred other top executives from committing fraud. Just three years after Ebbers was sentenced, after all, federal prosecutors couldn’t work up the nerve to indict any of the top executives whose firms helped bring about the financial crisis.

I don’t see how you can argue that keeping Ebbers in prison any longer serves any purpose. Judge Caproni will make her decision soon enough. Here’s hoping she lets Ebbers return home, to be cared for in his last days not by prison personnel but by those who love him.

In addition to Bernie Madoff, who was sentenced to 150 years in prison, another convicted Ponzi schemer, Thomas J. Petters, received a 50-year sentence in 2010. Michael Milken, another notorious white-collar criminal, got 10 years in prison in 1990 for racketeering and fraud. After he cooperated with prosecutors against his former colleagues his sentence was reduced to two years. He served 22 months.

Its official title is TheFormerly Incarcerated Reenter Society Transformed Safely Transitioning Every Person Act.

To contact the editor responsible for this story: Timothy L. O'Brien at tobrien46@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Joe Nocera is a Bloomberg Opinion columnist covering business. He has written business columns for Esquire, GQ and the New York Times, and is the former editorial director of Fortune. His latest project is the Bloomberg-Wondery podcast "The Shrink Next Door."

©2019 Bloomberg L.P.