This morning, Bernie Madoff was sentenced to the maximum of 150 years in prison for his role in a ponzi scheme that defrauded investors of billions. In every report I’ve read, Jeff Skilling is mentioned at least once. I have problems with the analogy for several reasons, but the most important one is that Jeff Skilling was an employee of a public corporation who functioned as part of an organization (and that’s what his trial was about: whether he provided Enron Corporation with his honest services.) Madoff, on the other hand was an individual and every decision was his alone. There is simply no-one else to blame in Madoff’s case.
What fascinates me is the punishments of both men. Here’s a crude math problem.
Bernie Madoff received 150 years for $50 billion fraud
Jeff Skilling = 25 years for $50 billion (The Task Force never said he was running a $50 billion fraud, nor was he convicted of bankrupting the company, but $50 billion is about what the company was worth when it collapsed, so I’m using that as a nice round number.)
Bernie Madoff will be paying $33,333,333 per year for his fraud. (50 billion divided by 150 years.)
Jeff Skilling will be paying $200,000,000 per year for basically being a CEO who made a few bad business decisions (50 billion divided by 25 years).
Jeff Skilling is 55 years old.
Bernie Madoff is 71.
The average life expectancy for Madoff is 13 more years.
For Jeff it is 29 more years, which means he can expect to live for four years after he is released from prison (as the sentence stands now.)
In 13 years, $433 million will be paid off of Madoff’s sentence.
In 25 years, $50 billion will be paid off in Jeff’s sentence.
Jeff’s time sentence is 16.7% of Madoff’s; however, Jeff’s financial sentence is 1154.7 % of Madoff’s.
1 Comment
July 3, 2009 at 12:22 am
The punishment for white collar misconduct never seems to scale properly. We have been aware of that reality since Milken…
The offenses can differ in astronomical orders magnitude, and often require phD level comprehension to explain (justify/rationalize/whatever) why this or that was so very bad.
The converse however, is that the punishment of the legal system goes linearly until saturation point at which it is essentially a binary affair. The punishment of the media and public opinion, in these case, is probably more weighty than whatever the opinion of the court may be.