Court Rejects Sentence with no Jail Time for Former Wal-Mart COO

August 28, 2007 ( - The 8th U.S. Circuit Court of Appeals has thrown out the reduced sentence of Wal-Mart Stores former Chief Operating Officer Thomas Coughlin that included no imprisonment and five years' probation on a fraud conviction, and ordered Coughlin resentenced.

According to the opinion written by Circuit Judge William Jay Riley, the only evidence presented for reducing Coughlin’s sentence due to poor health from the standard federal sentencing guidelines was testimony from his treating physician who said sending Coughlin to prison would increase Coughlin’s stress level and significantly increase his risk for another heart attack. The physician admitted he had never visited a Bureau of Prisons (BOP) facility and has no knowledge regarding how the BOP treats the inmates medically, or even what medical capabilities exist within the BOP.

In addition, Riley said the district court imposed the non-guidelines sentence based on Coughlin’s family ties and responsibilities, as well as community ties; Coughlin’s charitable and employment-related contributions, as well as prior good works; and other factors not otherwise considered in the guidelines, such as his “fall from grace.”

According to Riley,  the factors relied upon by the district court are ordinarily not relevant in determining a sentence and are discouraged grounds for the imposition of a non-guidelines sentence; were not weighed against the negative impact Coughlin’s crimes had on his family, community, and employer; and were not balanced with the other considerations of the law in imposing a non-guidelines sentence.

“…in imposing a non-Guidelines sentence, the district court must also consider the seriousness of the offense, promotion of respect for the law, just punishment, adequate deterrence, protection of the public from further crimes, and the avoidance of unwarranted sentencing disparities,” Riley wrote. “Perhaps Coughlin’s family ties and station in the community, as well as his lofty corporate position of trust and power, exacerbate the nature of his crimes, especially for Coughlin’s victims:Wal-Mart, and more generally, American businesses. The record does not reflect the district court ever weighed both the aggravating and the mitigating nature of Coughlin’s conduct upon his family and community, Coughlin’s position with Wal-Mart, and the other relevant factors…”

Fraud Against Wal-Mart

From January 1997 to October 2001, Coughlin was Wal-Mart’s Chief Operating Officer and then Wal-Mart’s Executive Vice President and Vice Chairman of the Board of Directors. During this period, Coughlin defrauded Wal-Mart by directing that Wal-Mart employees’ travel vouchers be falsely adjusted to request unwarranted reimbursements, which were then converted into cash and pocketed by Coughlin; falsifying invoices so Wal-Mart paid Coughlin’s personal expenses; altering Wal-Mart employees’ expense vouchers to include fictitious expenses, which were then converted into cash and pocketed by Coughlin; using large quantities of Wal-Mart gift cards for personal use; and looting audio equipment and cameras using Wal-Mart’s Merchandise Transfer Report.

Coughlin pled guilty to six felony counts: five counts of aiding and abetting wire fraud, and one count of filing false tax returns. After properly calculating an advisory United States Sentencing Guidelines range of 27 to 33 months’ imprisonment, the district court reduced Coughlin’s offense level by eight levels, sentencing Coughlin to no imprisonment, five years’ probation of which 27 months is home detention, a $50,000 fine, and $411,218 in restitution (See Ex-Wal-Mart Exec Hit with Home Confinement Sentence ).

The reduction was based in part on Coughlin’s poor health. Court documents indicate he is six feet four inches tall and weighs about 330 pounds. He survived sudden cardiac death and has had an implantable cardioverter defibrillator since 2003. He also suffers from cardiac arrhythmia, severe pulmonary hypertension, double vessel coronary atherosclerosis, type II diabetes, gout, ethmoid sinusitis, obesity, high blood pressure, severe allergies, and back and knee pain. In addition, severe obstructive sleep apnea necessitates the use of a continuous positive airway pressure machine at night to prevent a dangerous drop in Coughlin’s oxygen levels.

Circuit Judge Kermit Bye dissented from the majority ruling. The opinion is here .