Stiff Sentences in U.S. Courts : Judges Throwing the Book at White-Collar Criminals

George Scordel had done time for writing bad checks and he knew that white-collar criminals rarely went to jail for long. So when he started a new scam in 1981, he assured his son that they would not get more than a year if they got caught.

On Monday, a federal judge in Los Angeles sentenced the 54-year-old Scordel to 20 years in prison for masterminding a scheme that used at least nine dummy corporations in Hollywood and the San Fernando Valley to bilk merchants out of more than $8 million.

Compared to Drug Dealer

In sentencing Scordel, U.S. District Judge Terry J. Hatter Jr. compared him to a “major narcotics dealer” whose crimes affect a broad segment of society and said that he was showing leniency in not giving Scordel a 30-year sentence.

Scordel was only the latest in a string of financial con men to find out that the informal rules of the game have changed in U.S. District Court in Los Angeles.

Angered by the spread of financial scams in Los Angeles and Orange County and concerned about the effect on victims and institutions, federal judges here are imposing what may be the toughest prison sentences in the country on white-collar criminals.

Crimes that once would have netted five years at most are drawing double-digit sentences; schemes once severe enough only for probation result in five years of prison. Crooked businessmen are getting hammered even when they plead guilty, a tactic that usually improves the chance for leniency.

In the last 10 months, five 20-year prison sentences have been imposed for financial crimes. At least nine other white-collar criminals have received terms ranging from 10 to 18 years since 1986, and many sentences of five years have been handed down.

Among those receiving 20 years was a 75-year-old former bank president and church leader who pleaded guilty to swindling elderly investors out of $1.5 million.

Comparing the severity of prison sentences is difficult because each case is different. But William M. Rhodes, research director of the U.S. Sentencing Commission in Washington, said the average sentence nationwide in recent years for major white-collar crimes involving $500,000 or more has been about five years.

Indeed, the most celebrated white-collar criminal in years, insider trader Ivan F. Boesky, received only three years in prison for crimes that netted him more than $50 million. Boesky’s term was cut because of his cooperation with authorities.

Harshest in Memory

Officials from the judiciary, U.S. attorney’s office and federal public defender’s office here agreed that the white-collar terms being imposed by federal judges in Los Angeles are the harshest in memory.

“The main reason is because these types of crimes, particularly investment fraud, have become so pervasive,” U.S. District Judge Edward Rafeedie, a judge for 19 years, said in an interview. “When the perception increases that this type of activity is widespread and injurious to many elements of the community, there is a tendency to deal with those cases in a way that would provide a general deterrence.”

Hatter said in an interview before sentencing Scordel that he treats white-collar criminals the same as violent criminals.

“There is little doubt in my mind that people are as harmed by white-collar criminals as they are by people who go out and rob banks,” Hatter said. “The harm may be greater because they tend to touch more people--more investors, retirees, widows. The stories and the heartache are a lot worse.”

The tough sentences are being imposed on crimes committed before new federal sentencing guidelines took effect. The controversial guidelines, which cover crimes committed after Nov. 1, 1987, are expected to result in tougher terms for white-collar crime, but the judges in Los Angeles are well ahead of that trend.

Prosecutors Pleased

Prosecutors are understandably gleeful over the new mood, viewing the sentences as a validation of their efforts in pursuing white-collar crime and as a strong deterrent message.

“There is a genuine opportunity to deter individuals in this type of activity,” said Terree A. Bowers, chief of the major fraud section in the U.S. attorney’s office in Los Angeles. “These are not crimes of impulse or poverty. They are crimes of greed primarily and a lot of these defendants are very intelligent people who can weigh the risks of becoming involved in illegal activities.”

Certainly George Scordel thought he knew the risks back in 1981.

Testifying earlier this year, Steve Scordel said his father told him that, although what they were doing was illegal, “the chances of getting any jail time are very slim and would probably only be a year.”

The two were part of a scheme to obtain merchandise on credit from dozens of businesses through front corporations, sell the merchandise for cash and declare the fronts bankrupt. Steve Scordel was placed on probation for his part in the scam.

George Scordel’s sentence Monday was tough in part because of his record. But few are being spared these days.

O. Monroe Marlowe, 75, a former bank president and church leader with a spotless record, was sentenced to 20 years in prison on April 20 after pleading guilty to bilking elderly investors out of $1.5 million and fleeing to Europe.

Exploited Trust Seen

Prosecutor David A. Katz said at the sentencing that Marlowe exploited the trust he had developed as a banker and leader in the First Baptist Church of Van Nuys and Faith Evangelical Church in Chatsworth.

A 20-year sentence generally translates to seven years in prison under parole guidelines. Marlowe’s lawyer pleaded for leniency, telling U.S. District Judge A. Andrew Hauk that his client would not live long enough to serve out the time. Hauk said he would consider reducing the term only if Marlowe repaid every penny to the victims.

Last month, Tai Thi Tran, a widow, was sentenced to five years in prison after pleading guilty to embezzling $750,000 from the trust department of her employer, Wells Fargo Bank. An accomplice who also pleaded guilty got 3 1/2 years. Both were sent to prison immediately.

Many of the stiff sentences have gone to people involved in telephone solicitation schemes that proliferate in Southern California. The operations are the targets of a special task force of federal, state and local law enforcement authorities.

Todd E. Fisch, 26, was sentenced to 20 years in prison in March for his role in taking $9.5 million from 1,600 people who thought they were speculating in precious metals. He and his accomplices operated telephone solicitation rings in El Toro in Orange County and in Miami. Another defendant, Warren Sharp, was sentenced to 15 years.

10 Years Asked

U.S. District Judge James M. Ideman imposed the sentences although prosecutors had asked for only 10 years for each man.

Schemes that bilk unwitting victims often evoke strong condemnations from judges. But bank fraud and similar scams against businesses are also drawing long sentences as judges express concern over the effect of such crimes on the financial health of the institutions.

John Fred Parrish, an Anaheim mortgage broker, was sentenced to 20 years for defrauding a savings and loan and a pension fund through phony mortgage bonds. Clyde R. Hamblin, a Whittier insurance agent, got 20 years for bilking three banks out of $12 million in a fraudulent loan scheme.

Along with the double-digit terms, Bowers of the U.S. attorney’s office said sentences have gotten stiffer for lesser financial crimes, too. “The message is, if you want to embark on white-collar crime in this district, you are going to end up going to jail in most instances,” he said.