This is not directly related to a bankruptcy issue, but interesting nonetheless to the extent it involves a corporate fraud criminal case. Many of these companies end up in Bankruptcy Court, and this provides some indication of the Circuit Court’s view of these cases and individuals.
Seemingly fed up with the lenient sentences imposed on former HealthSouth CFO Michael Martin by former U.S. District (Ala.) Judge U.W. Clemon, the 11th Circuit dismissed him from the case and reassigned it to another judge. Yesterday the appeals court overturned Martin’s seven-day prison sentence, calling it “shockingly short.” It had previously tossed Judge Clemon’s initial sentence — only five years of probation — for being too lenient. The federal sentencing guidelines had called for a sentence of nine years or more. Here’s the opinion.
Though Judge Clemon cited Martin’s cooperation for its leniency, the 11th Circuit would have none of it. Martin’s cooperation, said the court, “while commendable and extremely valuable, is not a get-out-of-jail-free card.” It continued:
Martin not only participated in this fraud for over three years as HealthSouth’s CFO before finally resigning, he also chose not to approach authorities about the conspiracy until they had learned independently about his criminal conduct. Put simply, the 7-day sentence imposed by the district court wholly fails to take into account the egregious years-long nature of Martin’s crimes.
In reassigning the case, the 11th Circuit wrote, “In light of the two reversals in this case and three other appeals in which we have reversed the same judge for extraordinary downward departures that were without a valid basis in the record, we find it likely that the original judge would have difficulty putting his previous views and findings aside.”