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NEW YORK (Reuters) - The U.S. Justice Department opposes a wholesale revamping of white-collar criminal sentences that defense lawyers and some judges have urged, a top federal prosecutor said on Wednesday.
But Melinda Haag, the U.S. attorney in San Francisco, said the department was open to limited changes in white-collar sentencing that could reduce sentences in some fraud cases.
The comments came as the U.S. Sentencing Commission is weighing revisions to advisory sentencing guidelines used by judges for securities, healthcare, mortgage and other fraud offenses.
Defense lawyers, the American Bar Association, some judges and others have criticized the guidelines, saying they emphasize financial losses caused by crime over all other factors, sometimes resulting in sentences that are too severe.
Haag, speaking at a symposium on white-collar sentencing in New York, said the Justice Department believes the current guidelines "result in tough but fair sentences in the vast majority of the cases."
But she suggested that the department may be open to some changes, saying certain categories of cases, such as securities cases involving frauds on the market, warrant "careful study" by the commission.
"Despite our questions and concerns, however, we do agree that in some cases, loss may overstate the seriousness of the offense," Haag said.
A growing number of judges have imposed terms less than prescribed by the guidelines, which became advisory rather than mandatory following a U.S. Supreme Court decision in 2005.
U.S. District Judge Loretta Preska, sitting on a panel with Haag, cited the case of Joseph Collins, a former partner at the law firm Mayer Brown, who was convicted for his role in a fraud at commodities broker Refco Inc.
With losses calculated at $2.4 billion, Preska said under the guidelines Collins faced life in prison. She instead sentenced him in July to a year in prison, citing his community service and the fact he didn't financially benefit from the scheme.
"This was absurd, absolutely absurd," she said.
Haag said the Justice Department recognized there "may be issues in some high-loss cases." But she said the department didn't believe a wholesale change was needed to the fraud sentencing guidelines or the loss table used to calculate sentences.
She said it was a relatively small number of cases that had caused judicial concern. Citing commission statistics, she said 54 percent of economic crime cases involve less than $120,000 in losses and 83 percent involve less than $1 million.
Haag also argued that in some big cases involving investment fraud like Ponzi schemes, judges "don't seem to hesitate in imposing lengthy prison terms, noting the devastation these fraud schemes wreak on other people and the greed that motivated most of the defendants before them."
Among the examples she cited was Bernard Madoff, who received a 150-year prison sentence in 2009 after admitting to running his $65 billion Ponzi scheme, and Allen Stanford, who last year was sentenced to 120 years in prison for running a $7 billion scheme.
In the last 18 months, federal prosecutors have handled investment fraud cases involving 800 defendants and more than $20 billion, she said. For the FBI, investment fraud is now 60 percent of its white-collar case load, she said.
Nonetheless, she said "certain categories of cases warrant careful study by the commission and potentially narrowly tailored amendments" to the fraud sentencing guidelines.
Among the suggestions she gave would be for the Sentencing Commission to review how the guidelines treat loss in certain securities fraud cases where a drop in stock value by a few dollars per share can turn into a billion dollar loss.
Reporting by Nate Raymond; Editing by Eddie Evans and Kenneth Barry