"Carrot and Stick" Sentencing: Structuring Incentives for Organizational Defendants

Abstract

The new Draft Guidelines for Organizational Defendants released by the U.S. Sentencing Com mission on October 25,1990, explicitly adopt a 'carrot and stick' approach to sentencing. While the boldly instrumental use made of sentencing penalties and credits in these guidelines will trouble some, the larger question is whether the Commis sion's social engineering will work. Two issues stand out: First, is the Commission's mightier than its stick? At first glance, this may seem a surprising question because the stick in the Commission's guidelines seemingly packs a Ruthian wallop: fines under the draft guidelines are based on a multiple of the greater of (a) the pecuniary gain to the defendant, (b) the pecuniary loss to victims, or (c) an amount from a fine table, scaled to reflect the seriousness of the offense, which table goes up to a maximum of $165,000,000.* Thus, because the maximum multi plier is three, a fine of up to $495,000,000 is author ized for the most serious offenses, and, in cases where a pecuniary gain or loss is readily calculable, even greater fines could be presumptively required. Still, this stick may be illusory, because the Commission's carrot will often trivialize it. Under