Group warns: Some nonviolent white-collar crimes punished more harshly than sex abuse

By Aruna Viswanatha

WASHINGTON (Reuters) - Americans convicted of fraud and other white-collar crimes gained a new defender on Wednesday as an advocacy group that has long fought strict drug sentences launched a campaign pushing for lighter punishment for financial crimes.

The advocacy group, Families Against Mandatory Minimums, contends that sentences in cases of fraud, insider trading and other economic crimes are sometimes excessive and inconsistent.

Defense lawyers and some federal judges have pushed for lighter sentences for white-collar offenses, but many consumer advocates and members of Congress have faulted the U.S. Justice Department for not bringing more cases against Wall Street executives in the wake of the 2007-2009 financial crisis.

Federal prosecutors in New York and other districts have brought dozens of cases over insider trading, some of which have resulted in lengthy prison terms.

In one of the longest prison terms handed down for insider trading, Matthew Kluger was sentenced to 12 years in prison in 2012 for passing tips about corporate mergers he learned of while working at U.S. law firms.

Hedge fund manager Raj Rajaratnam was ordered in 2011 to serve 11 years in prison for insider trading.

Sentences imposed for economic crimes are often largely tied to the size of financial losses, a factor that critics say can contribute to outsized jail terms.

FAMM cited Rajaratnam's case and said his sentence exceeded the average federal sentences for manslaughter, sexual abuse, armed robbery and arson.

The group, which has testified before Congress and is assisting the Justice Department in its new initiative to offer clemency to some drug offenders, said it was advocating for a more "comprehensive approach" that encouraged judges to consider a broad range of factors in economic crime cases.

Existing guidelines "result in an unbalanced and inherently unfair system that is inconsistent with the principles of justice," Julie Stewart, the president and founder of FAMM, said in announcing the new effort.

The Justice Department has opposed a wholesale revamping of white-collar criminal sentences but has said it was open to limited changes that could reduce some prison terms.

FAMM said it did not object to the sentences imposed on criminals that engaged in massive frauds like Bernard Madoff, who was sentenced to 150 years in prison after he admitted he ran a $65 billion Ponzi scheme.

But it said the guidelines should be revisited for lesser cases.

"We are pretty agnostic about the crime," Stewart said in an interview, speaking of how the group viewed white-collar crimes in relation to drug crimes.

"There are many sentences that are wrong, or calculated in a way that create ridiculous sentences."

(Reporting by Aruna Viswanatha; Editing by Prudence Crowther)

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