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Martha may seek early release
Court ruling striking down sentencing guidelines could be good news for corporate execs on trial.
January 13, 2005: 2:30 PM EST
By Krysten Crawford, CNN/Money staff writer

NEW YORK (CNN/Money) - A U.S. Supreme Court ruling striking at sentencing guidelines could have a big impact on past and future trials of executives caught up in recent corporate scandals, legal experts said Thursday.

"Every criminal defendant on trial now or awaiting sentencing (in cases) involving massive financial crimes should be dancing in the aisles," said Orin Snyder, a former federal prosecutor who is now in private practice where, among other things, he represents white-collar criminals.

Convicted executives potentially affected by the ruling include Martha Stewart, ex-Credit Suisse First Boston banker Frank Quattrone and Jamie Olis, a former Dynegy executive.

Attorneys for Stewart said Thursday that they were studying whether the high court decision could lead to an early release for their client.

"We believe that the decision does affect Ms. Stewart and we are evaluating what her options are," said David Chesnoff, one of Stewart's attorneys.

The Supreme Court on Wednesday ruled that federal sentencing guidelines are unconstitutional because judges were given the authority to add time to defendants' sentences. The high court said that power violates a defendant's constitutional right to be tried by a jury.

The Supreme Court did not throw out the sentencing guidelines, first put into place two decades ago and designed to bring uniformity in U.S. courts. But the court gave judges the freedom to use the guidelines as a suggestion, not as a mandatory formula.

Quattrone faces 18 months in prison. He is appealing his conviction.  
Quattrone faces 18 months in prison. He is appealing his conviction.

Legal experts said the ruling could affect the prison terms of corporate executives, past and future, who are convicted of crimes.

Prison sentences for white-collar criminal defendants have increased dramatically in the three years since Enron Corp.'s collapse triggered a wave of corporate scandals. Some judges were uncomfortable doling out stiff sentences, but felt that their hands were tied, noted Frank Bowman, an Indiana University School of Law professor and co-author of a book on federal sentencing guidelines.

The Supreme Court ruling appears to have given judges the discretion they didn't have before to be more lenient, Bowman and other experts said.

"I think high-level corporate defendants should certainly be pleased," said Bowman. "They are likely to get a real benefit out of this (ruling)."

Appeal wave seen

The ruling is expected to create a rush of appeals of sentences.

"We think the decision does affect our case," said Bob Chlopak, a spokesman for Quattrone. Quattrone is appealing his conviction and 18-month sentence for obstructing justice.

Unlike Stewart, Quattrone was given a longer sentence after prosecutors argued that Quattrone perjured himself at his trial -- a contention that did not go before the jury which, in light of Wednesday's court decision, may have violated his constitutional rights.

A big beneficiary of the ruling could be Olis, the ex-Dynegy executive who is serving more than 24 years behind bars.

A happy man? Legal experts said court ruling could be good news for Olis.  
A happy man? Legal experts said court ruling could be good news for Olis.

Although legal experts thought the punishment was unusually severe given the crime -- and the trial judge himself indicated he was reluctant to impose the sentence -- Olis was found guilty of participating in a fraud whose value exceeded $100 million. Sentencing rules automatically tacked more than 10 years onto his prison term.

Olis "is probably a very happy man today," said Snyder, a partner in Manatt, Phelps & Phillips.

David Gerger, a lawyer for Olis, declined to comment on his client's case, but praised the Supreme Court's ruling for giving "back to judges the discretion they need to be fair and the discretion they need to make sure that sentences are based on reliable and tested evidence." Olis is appealing his conviction.

Martha Stewart's lawyers were equally guarded.

Chesnoff said Stewart, the lifestyle expert who is serving time in a minimum-security prison in West Virginia, was aware of Wednesday's court ruling but had not yet had a chance to confer with her lawyers at length and determine her next step.

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"We are still focused on the big picture, which is reversing her conviction," said Chesnoff.

Stewart, the founder of Martha Stewart Living Omnimedia (up $0.60 to $28.35, Research), is due to be released from federal prison in March. She faces five months of home detention afterward, following her conviction last year on obstruction of justice charges.

At the time of her sentencing, Stewart's lawyers asked U.S. District Court Judge Miriam Goldman Cedarbaum to give her an alternate sentence outside the guidelines, but the judge refused. Her sentence was at the bottom range of the 10 to 16 months set out in the federal guidelines.

Stewart continues to appeal her conviction. But that appeal is not expected to be complete before her release.

Douglas Berman, a law professor at Ohio State University and an expert on sentencing law, said Stewart and her lawyers now face an "interesting" strategic choice. They can try for an early release from prison and the home detention portion of her sentence, or stay focused on her appeal.

Unlike the majority of defendants affected by the Supreme Court's decision, Stewart has public perception to take into account.

"In Martha Stewart's case, she's interested in pursuing issues other than her sentencing," said Berman. "Given that she's served most of her (prison) sentence already, re-opening that part of the question may not be worth her lawyers' time and energy."  Top of page




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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.