Corporate Crime

Have the Organizational Sentencing Guidelines Produced Results?

By By Dean Reeves, CFE

On Sept. 30, 1995, Frederick Copeland found out that he was $19 million richer. He was to receive the money from a whistleblower lawsuit he initiated more than two years earlier resulting from fraud allegations. In 1993, Copeland, a former machinist, and an assistant attorney general filed a qui tam law suit in civil court alleging that defense contractor Lucas Western Inc. and Lucas Aerospace Inc. falsified charts to conceal major defects in gearboxes used in aircraft and military systems.

Lucas Industries pleaded guilty to 37 counts of making false certifications to the Department of Defense and was ordered to pay, under the-then new U.S. Organizational Sentencing Guidelines, criminal penalties of $18.5 million.2 The total amount of restitution, fines, and all penalties was $88 million.3 

The impact of the 1991 guidelines is undetermined. However, we now have more than eight years of statistics and anecdotal evidence, such as the Lucas case, from which to draw a meaningful analysis. When Edwin H. Sutherland coined the term white-collar crime, he probably had in mind the idea of corporate crime, and the notion that illegal acts are committed by the wealthy and powerful to further their capitalistic and business interests. Could it be that the most effective corporate crime legislation in the history of our country is taking place some 70 years after the works of criminologists Sutherland and his protégé, Donald R. Cressey? Or could it be that the Organizational Sentencing Guidelines are just another token legislative movement enacted to pacify the agenda of the anti-corporate faction of our country? Or is it something in between?

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