Carlos Watson was convicted of conspiracy to commit wire fraud and securities fraud, as well as aggravated identity theft.
When a defendant is convicted in federal court, the US Probation Department prepares a report before sentencing and submits it to the sentencing judge.
The pre-sentencing report includes the Probation Department’s recommendations for sentencing. Probation reports are typically filed under seal, making them inaccessible to the public. However, Watson’s attorney, Ronald Sullivan, publicly filed objections.
Watson attorney Ronald Sullivan told Judge Eric Komitee that he was acting like a prosecutor, not a judge in the Watson case.
The Probation Department recommended 22 years for Watson, while the prosecutors argued he should be within the federal sentencing guidelines range of 25 to 29 years.
According to the Probation Department, Watson was responsible for investors losing $65 million, despite the lack of evidence establishing that fact or a jury agreeing with that number.
Watson filed a motion requesting Judge Eric R. Komitee recuse himself due to an alleged conflict of interest involving four parties the government describes as Watson’s victims: Google, Goldman Sachs, J.P. Morgan Chase, and Live Nation. Judge Komitee holds stocks through his hedge funds in each of these companies and has close ties to both Goldman Sachs and J.P. Morgan Chase.
Judge Komitee denied Watson’s motion for recusal, noting that none of the four “victims” he has stock in lost any money because of Watson.
Assuming the $65 million loss that the government and the Probation Department estimated is accurate, not merely a fabrication with no earthly ties to reality, let’s compare his recommended 22-year sentence to others convicted of similar financial fraud (but for a lot more money).
The government said Watson allegedly cost investors $65 million, and the US Probation Department recommends he serve 22 years.
Here are a few to compare with Watson.
1
Investor Losses: $74 billion = 14 years sentence
Jeffrey K. Skilling, former CEO of Enron Corporation.
2006 Crimes: Conspiracy to commit securities fraud, Insider trading, Lying to investors and regulators.
2
Loss $10 billion = 18 years
Sung Kook “Bill” Hwang, founder of Archegos Capital Management,
Sentenced 18 years. 2024 Crimes: Securities fraud, wire fraud, conspiracy, racketeering, and market manipulation.
3
Loss $3.3 billion = 12 years, 7 months
Walter A. Forbes, former CEO of Cendant Corporation.
2007 Crimes: Conspiracy to commit securities fraud. Securities fraud. Making false statements.
4
Loss $2.9 billion = 6 years, 10 months
Richard Scrushy, founder and former CEO of HealthSouth Corporation.
2007 Crimes: Bribery, Conspiracy, Money laundering.
5
Loss $2.3 billion = 15 years
John Rigas, founder and former CEO of Adelphia Communications Corporation.
2005 Crimes: Conspiracy to commit securities fraud, Securities fraud, Bank fraud.
6
Loss $500 million = 2 years
Ronald E. Ferguson, the former CEO of General Reinsurance Corporation
2008 Crimes: Conspiracy to Commit Securities fraud, Securities Fraud, Making False Statements to the U.S. Securities and Exchange Commission
7
Loss $452 million = 11 years, three months
Elizabeth Holmes, founder and former CEO of Theranos.
2022 Crimes: Conspiracy to Commit Wire Fraud; Wire Fraud
8
Loss: $400 Million = 12 years
Sanjay Kumar, the former CEO of Computer Associates (CA).
2006 Crimes: Conspiracy to commit securities fraud, securities fraud, Obstruction of justice
9
Loss $65 million = 22 years (recommended)
Carlos Watson
Among those compared above, Watson had the lowest estimated losses to investors—specifically, 80 percent lower than the next lowest amount. Despite this, the Probation Department recommended a longer sentence for Watson than for individuals convicted of similar offenses who had much higher losses to investors.
Even men who cost investors billions did not get sentences of more than two decades.
The US Probation Department operates under the United States Courts and is accountable to the judges it serves. The defendant, Watson, upset Judge Komitee by suggesting he believed the judge was biased and had conflicts of interest. If a probation officer, who relies on the goodwill of the judges, recommended a sentence that aligned with common expectations—such as 2 to 5 years—this officer might worry that Judge Komitee would be extremely displeased.
I argue that due to the motions challenging Judge Komitee’s recusal, the faulty jury instructions, accusations of a biased trial, and a juror publicly stating that the judge provided confusing instructions, it was impossible for the Probation Department to produce an unbiased report.
An angry judge can significantly impact a probation officer’s career. He could undermine the future of a probation officer who submits a reasonable sentencing report to a judge determined to impose severe penalties on Watson, a man about whom no one could specify who lost money or how much was lost.
This can all be explained as we explore a significant case of injustice involving a federal judge with numerous conflicts of interest.
