James Sensenbrenner, July 26, 2002

Corporate criminals and wrongdoers need to be punished, and punished harshly, since they essentially steal peoples’ life savings. Corporate officers hold positions of high trust, and when they break the law, they should face stiff penalties.

Earlier this month, in response to the Enron bankruptcy and other recent corporate fiascos, I wrote about what the House had accomplished in terms of passing legislation to help workers preserve and enhance their retirement security, and expressed my desire to increase jail sentences for people convicted of financial fraud. On July 15, the Senate finally passed a bill addressing issues of corporate accountability. However, I felt that the penalty provisions called for in the Senate bill were wholly inadequate. The next day, the House passed a bill I introduced, H.R. 5118, the Corporate Fraud Accountability Act of 2002, which doubled the penalties contained in the Senate bill. H.R. 5118 passed the House floor by an overwhelming vote of 391 to 28.

H.R. 5118 is a tough bill that cracks down on corporate crooks. Under my bill, executives who commit mail or wire fraud will face up to 20 years in jail instead of the current 5 years, or the 10 years called for in the Senate’s proposal. In addition, a distinct securities fraud crime is established with a maximum penalty of 25 years instead of the 10 years called for by the Senate. This bill also strengthens laws that criminalize document shredding and other forms of obstruction of justice and provides a maximum penalty of 20 years, as opposed to the Senate’s 10.

H.R. 5118 further requires top corporate executives to certify that the financial statements of the company fairly and accurately represent the financial condition of the company. Violating this section can subject corporate executives to fines of up to $5 million and 20 years in prison. The Corporate Fraud Accountability Act also increases the criminal penalties for those who file false statements with the Securities Exchange Commission to a maximum penalty of $5 million and 20 years in prison. If a corporation files a false statement, the fines increase up to a maximum of $25 million. The bill passed by the Senate does not change the current penalties of a maximum fine of $1 million and 10 years in prison and corporations would still only face a maximum fine of $2 ˝ million. H.R. 5118 also makes it a crime for someone to knowingly retaliate against a whistleblower, and provides a criminal penalty of up to 10 years for such an offense.

In a conference with House and Senate members to reconcile the differences between the Senate-passed bill and an earlier House-passed bill dealing with accounting reform and corporate responsibility, House members insisted on, and prevailed on, including the tougher penalties of my bill, H.R. 5118. On July 25, by a vote of 423 to 3, the House passed the compromise legislation known as the Accounting Industry Reform Bill. The Senate passed it later the same day 99 to 0.

I, and many of my colleagues, have heard from our constituents, wanting to know what we are doing to punish and stop corporate wrongdoings. Passing this bill will let America know that those who abuse the law and tarnish corporate America’s reputation, will go to jail for a very long time. These are tough penalties that will go a long way towards protecting the life savings of many Americans by making the price of such theft too high. When the President signs this bill into law, as he has indicated he will, the message will be sent - now more than ever, Congress is getting tough on corporate crime.

James Sensenbrenner, a Republican, represents the Ninth Congressional District of Wisconsin.