Although just one case, at least one federal judge has concluded that the resentment and scapegoating that has driven the criminalization of business during the post-Enron era has gone too far.

In this thoughtful sentencing memorandum relating to the conviction of former Impath, Inc. president Richard P. Adelson on conspiracy and fraud charges. U.S. District Judge Jed Rakoff began and concluded his decision — which is ably dissected by Harlan Protass here, Doug Berman here and here and Ellen Podgor here — with the following comments:

This is one of those cases in which calculations under the Sentencing Guidelines lead to a result so patently unreasonable as to require the Court to place greater emphasis on other sentencing factors to derive a sentence that comports with federal law. . .

To put this matter in broad perspective, it is obvious that sentencing is the most sensitive, and difficult, task that any judge is called upon to undertake. Where the Sentencing Guidelines provide reasonable guidance, they are of considerable help to any judge in fashioning a sentence that is fair, just, and reasonable. But where, as here, the calculations under the guidelines have so run amok that they are patently absurd on their face, a Court is forced to place greater reliance on the more general considerations set forth in section 3553(a), as carefully applied to the particular circumstances of the case and of the human being who will bear the consequences. This the Court has endeavored to do, as reflected in the statements of its reasons set forth at the time of the sentencing and now in this Sentence Memorandum prompted by the dictates of Rattoballi. Whether those reasons are reasonable will be for others to judge.

Along the same lines, Ellen Podgor asks all the right questions in regard to the disappointing Second Circuit decision upholding the absurd effective life sentence of former WorldCom CEO, Bernie Ebbers, while Larry Ribstein chimes in with a new SSRN paper, The Perils of Criminalizing Agency Costs. In a related post, Professor Ribstein rams home the essential point:

. . . criminalizing this business practice is not the answer. There is little doubt that the combination of regulation, civil liability and markets can solve — indeed, probably already has solved — any problems here. In fact, criminal charges are so patently not the answer that I suspect that one big effect of this scandal will be a reexamination of the whole issue of criminalizing agency costs.

Meanwhile, Jamie Olis and his family continue their long wait for justice, while three UK bankers bide their time in Houston far away from their families and friends while facing the daunting decision of whether to risk asserting their innocence against the prospect of a long prison sentence if they are convicted within the cauldron of hate that exists in Houston to anyone who had anything to do with Enron.

As Sir Thomas reminds us “do you really think you could stand upright in the winds [of abusive prosecutorial power] that would blow” if that power were to set its sights on you?

What now is the more serious danger to justice and the rule of law? Out-of-control prosecutors and abusive prison sentences for businesspersons? Or the results generated from the risk-taking businesspersons?