Tougher Penalties for White-Collar Crime, Rule Urges

WASHINGTON â€”  Insisting that tougher penalties would deter price fixing, the chief of the Justice Department’s antitrust division will formally propose today that judges impose much longer jail sentences on errant executives and substantially bigger fines against corporations that engage in illegal anti-competitive practices.

“This country is fed up with white-collar crime and wants judges to start treating white-collar criminals like the crooks they really are,� Assistant Atty. Gen. Charles F. Rule will say in a San Francisco speech. A copy of his prepared text, to be delivered to the American Law Institute and American Bar Assn., was obtained by The Times.

The average price-fixing sentence is just two months, Rule says in his prepared remarks. In one “ludicrous� case, he says, a guilty executive was placed on probation and ordered to organize a charity golf tournament.

Guidelines issued to the federal courts recently by the congressionally mandated U.S. Sentencing Commission call for a minimum of four months, but Rule believes that judges should begin sending business executives convicted of antitrust offenses to prison for terms much closer to the three-year maximum sentence. He wants an end to “country club� sentences that allow convicted executives to spend time in community service rather than behind bars. “Judges may see these (convicted executives) in the community and have a hard time treating them like common thieves,� Rule said in an interview Thursday. “But as Bob Dylan or somebody said, the only thing that distinguishes them from a thief is that they steal with a pen, not a gun.�

Rule said the maximum corporate fine for antitrust violations, now $1 million, should be raised to $10 million so that it would be more likely to deter corporate wrongdoing.

The assistant attorney general said his proposal for tougher sentences represents a personal position rather than an official recommendation of the Reagan Administration. He said he hopes to create a climate of opinion in which the public and judges will be more receptive to tougher sentences.

The Justice Department now has more than 150 grand juries in operation investigating price fixing, rigging bids on government contracts and conspiring to divide markets. It is focusing on government contracts, the soft-drink bottling industry and the waste-disposal business.

“If antitrust criminals thought the punishment they received in the past was severe, they ain’t seen nothing yet,� Rule says in the remarks prepared for delivery in San Francisco.

Jail Time ‘Imperative’

“While we are now witnessing an increased willingness of judges to take antitrust felonies seriously, some judges in the past have shown undue lenience toward antitrust criminals,� Rule notes.

The Administration has often been criticized for its hands-off approach to corporate mergers and takeovers under the antitrust laws. Mergers do not harm consumers as long as there is still free competition within an industry and the opportunity remains for outsiders to enter the industry, according to Administration theorists.

However, Rule says, the government should vigorously prosecute such activities as price fixing and illegal divisions of markets because these practices drive up prices.

“Forcing white-collar criminals to spend some time in jail is imperative,� he said in the interview.

“For those who do not get the message or for whom the message has come too late, the future looks awfully dim,� he says in the text of his speech.

Federal prosecutors will be less willing to bargain with corporations and executives to plead guilty in return for relatively light penalties, he says. Business officials, he says, “cannot look to plea bargaining as a way out.�