TEXT OF STORY
JEREMY HOBSON: Sentencing is scheduled today in federal court in Los Angeles for the former CEO of KB Home. Bruce Karatz was convicted of fraud in a stock backdating scandal. The judge has to decide whether Karatz will go to prison, or just get house arrest.
And as Marketplace’s Alisa Roth reports, the decision will shine a light on how white collar criminals are sentenced.
ALISA ROTH: The real question is how much money Karatz’s scheme cost KB Home and its shareholders. Prosecutors say the answer is $11 million, which means they think he should go to prison for several years. But it’s not clear how much his crime hurt anybody. So some people are recommending a much lighter sentence: probation and eight months of house arrest. Joshua Fershee is a law professor at the University of North Dakota.
JOSHUA FERSHEE: You didn’t take the money from anybody and that’s the real harm. And so the calculation should be zero.
He says this case actually represents a much bigger issue: whether sentencing guidelines are unfairly harsh to low-level criminals like drug dealers. And too light for white-collar criminals like Karatz.
Prosecutors in this case argue that house arrest for Karatz would amount to a two-tiered criminal justice system. Because under that scenario, he’d be confined to his 24-room mansion in Bel Air.
I’m Alisa Roth for Marketplace.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.