No more wrist slapping as executives face real time.

BEFORE Joseph Shew pleaded guilty in September to his role in the Homestore Inc. accounting scandal, he gave some thought to how it would look to his son if he didn't admit his role in inflating the company's revenues during a 10-month stint as its chief financial officer.

"Joe wanted to be able to look his son in the eye like a man," said Shew's attorney Robert Fairbank. "He realized he couldn't tell his son to take responsibility and tell the math if he couldn't do it himself. So he had to face up to the truth."

No doubt, other criminal defendants have different considerations. Nevertheless, more and more are reaching the same conclusion as Shew--that is, copping a plea and avoiding increasingly lengthy prison terms for securities violations.

Earlier this month, former eConnect Holdings Inc. Chief Executive Thomas Hughes avoided an upcoming trial on six charges of securities and wire fraud by pleading guilty to three counts related to the issuance of false press releases aimed at inflating the company's stock price.

In April, three executives of the former L90 pleaded guilty to securities fraud charges for illegally booking ad-bartering deals with Homestore and other companies as revenues, and reporting revenues officials knew they could never collect.

Former Chief Executive John Bohan--who resigned from the company, now called MaxWorldwide after the allegations surfaced--faces up to 10 years in prison for his role in the alleged scheme, as does former Executive Vice President Mark Roah, who allegedly implemented the bartering program. The former vice president, Lucrezia Bickerton, may serve five years for her role in allegedly coordinating the fraud.

In March, Shew's former lieutenant at Homestore, Jeffrey Kalina, pleaded guilty to one count of securities fraud for using his knowledge of the accounting fraud at the company to reap $69,802 in profits from stock sales over a three-month period. As part of the deal, Kalina was barred by the Securities and Exchange Commission from ever appearing before it as an accountant.

Not every executive is going quietly into the night.

Pugnacious former Gemstar-TV Guide International Inc. Chairman and Chief Executive Henry Yuen is battling with the SEC over charges that he and former Chief Financial Officer Elsie Leung inflated the TV Guide publisher's revenues by $223 million over a three-year period.

But others have decided that pleading guilty--and cooperating with prosecutors--is the better mute.

Tougher Sentences

Copping a plea isn't exactly a new thing. During the insider trading and S&L scandals of the late 1980s, arbitrage baron Ivan Boesky and Drexel Burnham Lambert investment banker Dennis Levine pleaded guilty and gave information about their cohorts in exchange for lighter sentences.

One reason to plea bargain is that prosecutors often encourage it--in exchange for cooperation. Another reason is tougher sentences for those who don't to cooperate and are convicted.

Three years ago, an executive facing a single count of securities fraud would likely face a five-year prison sentence--less with a guilty plea--and could get credit for good behavior. But beginning in October, Congress began increasing the maximum sentences for corporate malfeasance. After the most recent changes in May, the maximum sentence for securities fraud is now 10 years, depending on such factors as the number of investors defrauded and the complexity of the fraud itself.

Now, a former chief executive convicted of seven counts of securities fraud could spend the rest of his or her life in prison. This has forced executives and their defense attorneys to think twice about jousting with prosecutors.

Typical is Shew's former colleague at Homestore, John Giesecke, who was the chief operating officer, as well as Shew's predecessor as chief financial officer. Giesecke copped a plea after he and his attorney, Jan Handzlik, considered the drawbacks.

"Today the average lawyer will pull out his sentencing guideline book before discussing the facts of the case or defense strategies," said Handzlik. "[Giesecke] wasn't an active participant in the scheme, but it didn't matter because Shew told him about it and he didn't report. So it's better to put the matter behind him than drag things out."

Neither Shew nor Giesecke will be sentenced until after the U.S. Attorney's investigation into Homestore is complete. Giesecke faces up to 10 years in jail; Shew, who was the first Homestore executive to plead guilty, faces five years despite his deeper involvement.

While many have decided to cooperate, others haven't. The SEC reported that the number of defendants challenging its enforcement actions jumped 43 percent during the first six months of the fiscal year ending Sept. 30.

"The potential punishment even after pleading guilty is so high that they feel they might take a chance," said Handzlik. "And some people might be factually innocent and want to exercise their right to a fair hearing."