Presentation on theme: "Sentencing in Fraud Cases Guideline Amendments Below-Guideline Sentences Wrightsville Beach, North Carolina March 14, 2013 Jennifer Niles Coffin Sentencing."— Presentation transcript:
Sentencing in Fraud Cases Guideline Amendments Below-Guideline Sentences Wrightsville Beach, North Carolina March 14, 2013 Jennifer Niles Coffin Sentencing Resource Counsel Federal Public and Community Defenders
The Guidelines Are Not “Heartlands” % Within% Judge Below % Govt Below % Above Fraud Money Laundering Tax Forgery/Counte rfeiting Bribery Environmental Antitrust Food & Drug USSC, Preliminary Quarterly Data Report, 4th Quarter Release, tbl.3. By District and Circuit: Get from Interactive Sourcebook on when 2012 Sourcebook comes out.www.ussc.gov
To Get the Lowest Sentence Low-as-Possible Guideline Range Structural problems with the guidelines: –GLs do not include factors bearing on culpability (e.g., motive, mens rea), or any mitigating circumstances bearing on the need to incapacitate or deter –Range is flawed – e.g., it has increased 500% since 1987 for no reason related to sentencing purposes Individualized mitigating circumstances –E.g., motive, age, education, family, etc.
Structural problems – Rita, Kimbrough: –Guideline recommends punishment greater than necessary to satisfy sentencing purposes aside from special mitigating facts Mitigating facts -- Pepper, Gall: –The mitigating facts in this case are relevant to the purposes of sentencing and the parsimony command. Departure if available – e.g., offense level overstates seriousness, 2B1.1, note 19 –Do not argue for a departure alone.
Amendments Nov. 1, 2011 Specific congressional directive in Patient Protection and Affordable Care Act -- § “aggregate dollar amount of fraudulent bills” submitted to government health care program is “prima facie evidence of the amount of the intended loss by the defendant” – –D has to rebut it “loss plus” -- extra 2-, 3-, and 4-level increases for loss of $1mm-$7mm, $7mm-$20mm, over $20mm –if health care offense related to government health care program
Amendments Nov. 1, 2012 Two general directives in the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No , secs. 1079A(a)(1) & (a)(2) (2010). –Review, and if appropriate, amend. 5 amendments to commentary to § 2B1.1, including two new rebuttable presumptions. 1 amendment to § 2B1.4 and 2 amendments to commentary to § 2B1.4.
USSG § 2B1.1 – Securities Fraud Rebuttable presumption that “modified rescissory method” provides “reasonable estimate of the actual loss. ” –Difference in average price of security during period fraud occurred and average price during 90- day period after disclosure of the fraud. –NOT “market adjusted method” as in Olis (5th Cir.) and Rutkoske (2d Cir.) –But D can show change in value was caused by external forces not caused, foreseen, or intended by D
USSG § 2B1.1 – Securities Fraud New downward departure example of offense level overstates seriousness of offense. –“A securities fraud involving a fraudulent statement made publicly to the market may produce an aggregate loss amount that is substantial but diffuse, with relatively small loss amounts suffered by a relatively large number of victims” –“In such a case, the loss table in subsection (b)(1) and the victims table in subsection (b)(2) may combine to produce an offense level that substantially overstates the seriousness of the offense.”
USSG § 2B1.1- Mortgage fraud Rule for determining credit against loss where collateral has not been disposed of at the time of sentencing. Rebuttable presumption that the most recent tax assessment is a “reasonable assessment of the fair market value,” with factors for the court to consider. –Where tax assessed value is much lower than FMV, will lower presumptive credit and increase presumptive loss amount –Burden on D to show tax assessed value is not a reasonable estimate of FMV –Government said this method, though easy, “is not always a just statement of the value of the property.”
USSG § 2B for substantially endangering the solvency or financial security of an organization –Still get it if one or more criteria listed “was likely to result from the offense but did not because of a federal government intervention, such as a bailout.” New upward departure example if offense created risk of substantial loss beyond loss determined under loss table: –“Such as a risk of significant disruption of a national financial market.”
USSG § 2B1.4 – Insider trading Minimum offense level 14 if offense involved “an organized scheme to engage in insider trading.” –Comm’n’s “view” that such Ds (as opposed to opportunists) “warrant, at a minimum, a short but definite period of incarceration.” –Ensures that GL “requires” prison even if little gain. Abuse of position of trust +2 under §3B1.3 “should be applied” if D was employed in a position creating, issuing, buying, selling, or trading securities or commodities –Examples –“would apply” (e.g., hedge fund professional) –“ordinarily would not apply” (e.g., clerical worker in investment firm)
Loss actual or intended (the greater) relevant conduct: reasonably foreseeable and within scope of D’s agreement “credits” and other ways to mitigate loss gain only if there is a loss (can’t be no loss) but it can’t reasonably be determined
Decisions on Loss US v. Manatau, 647 F.3d 1048 (10th Cir. 2011) –“[T]o be included in an advisory guidelines calculation the intended loss must have been an object of the defendant’s purpose.” –“We hold that ‘intended loss’ means a loss the defendant purposely sought to inflict. ‘Intended loss’ does not mean a loss that the defendant merely knew would result from his scheme or a loss he might have possibly and potentially contemplated.”
Exclude loss caused by other factors - in securities cases – overcome new rebuttable presumption and use this method –US v. Olis, 429 F.3d 540 (5th Cir. 2005) –US v. Rutkoske, 506 F.3d 170 (2d Cir. 2007) –US v. Nacchio, 573 F.3d 1062 (9th Cir. 2009) Actual loss must have causal link to D’s conduct –US v. Whiting, 471 F.3d 792 (7th Cir. 2006) –US v. Rothwell, 387 F.3d 579 (6th Cir. 2004) –US v. Allmendinger, 706 F.3d 330 (4th Cir. 2013) (downward departure may be appropriate “where actual loss caused by the defendant’s fraud has other causes more proximate than the fraud”) Mortgage fraud – actual loss unless D intended lenders would not be repaid –Goss, 549 F.3d (5th Cir. 2008)
Mortgage fraud – use actual loss unless D intended lenders would not be repaid US v. Goss, 549 F.3d 1013 (5th Cir. 2008)
US v. Crandall, 525 F.3d 907 (9th Cir. 2008) - error not to reduce loss by value of properties US v. Leonard, 529 F.3d 83 (2d. Cir. 2008) - error not to reduce “loss” by investment’s value to victims US v. Goss, 549 F.3d 1013 (5th Cir. 2008) - loss must be reduced by value of collateral returned
US v. Staples, 410 F.3d 484 (8th Cir. 2005) - loss should be reduced by FMV of collateral at time of sentencing US v. Redemann, 295 F. Supp. 2d 887 (E.D. Wis. 2003) - downward departure where loss was caused by multiple factors and defendant’s gain was miniscule –Note – this should be framed as a variance or variance and departure today
US v. Coghill, 204 Fed. Appx. 328 (4th Cir. 2006) - loss = outstanding principal less amount victim recovers from liquidation US v. Confredo, 528 F.3d 143 (2d Cir. 2008) - defendant entitled to show he subjectively intended loss less than face amount of loan application
No “economic reality” principle under the guidelines” – loss includes amounts “impossible or unlikely to occur” Grounds for departure if impossible or unlikely -- variance or variance plus departure today US v. McBride, 362 F.3d 360 (6th Cir. 2004)
Evidentiary Hearings United States v. Thomas, Criminal Action No. 11– –Government proffered “loss” in excess of $1,300,000 in mortgage fraud scheme –Evidentiary hearing “winnowed [it] down” to $350, –Government filed motion to add back loss of $185, from a particular sale Even if successful, will be less than half the government's claimed “loss” Described in US v. Gurley, 860 F. Supp.2d 95 (D. Mass. 2012)
Some offender characteristics now “may be” relevant as grounds for departure Age Mental and emotional conditions Physical condition including physique Military service If “present to an unusual degree and distinguish the case from the typical cases covered by the guidelines” Same standard as “not ordinarily relevant” – “present to an exceptional degree” Drug or alcohol dependence or abuse now “ordinarily not relevant” rather than “not relevant”
If Judge Likes Departures Check Compilation of Departure Provisions –http://www.ussc.gov/Guidelines/2011_Guidelines/Manual_PDF/Co mpilation_of_Departure_Provisions.pdf Also listed in back of 2012 Manual –35 downward departure provisions Often subject to narrow restrictions and limitations –23 neutral departure provisions (up or down) 12 of which appear in rarely used GLs –Watch out upward departure provisions Often very broadly stated Never argue for a departure alone.
18 U.S.C. 3553(a) Shall impose a sentence sufficient but not greater than necessary to satisfy the need for just punishment in light of the seriousness of the offense, deterrence, incapacitation, rehabilitation in the most effective manner In light of all offense and offender circumstances, all kinds of sentences available by statute, and avoiding unwarranted disparities.
Courts Must Consider All Mitigating Factors, Ignore Contrary Policy Statements Gall v. United States, 552 U.S. 38, 50 n.6, (2007) –3553(a)(1) is a “broad command to consider... the history and characteristics of the defendant” –Court approved variance based on factors the policy statements deem “not” or “not ordinarily relevant” and ignored the policy statements
Question is Whether the Facts are Relevant to Purposes and Parsimony Pepper v. United States, 131 S. Ct. 1229, (2011) “No question” that Pepper’s –remaining drug-free for five years –attending college and achieving high grades –succeeding at work –re-establishing a relationship with his father –marrying and supporting a family Are “highly relevant” to the need for deterrence, incapacitation, and treatment and training And “bear directly on the District Court’s overarching duty to ‘impose a sentence sufficient, but not greater than necessary’ to serve the purposes of sentencing”
Policy statement prohibiting consideration of these factors was not a reason to uphold 8th Circuit’s judgment –“the Commission’s views rest on wholly unconvincing policy rationales not reflected in the sentencing statutes Congress enacted.” Id. at –Policy statements that conflict with § 3553(a) may not be elevated above relevant factors. Id. at –Judge must instead give appropriate weight to relevant factors. Id. at 1250.
Courts Must Consider All Kinds of Available Sentences, May Ignore Zones Must consider all “kinds of sentences available” by statute, § 3553(a)(3), even if the “kinds of sentence... established [by] the guidelines” recommend only prison. Gall, 552 U.S. at 59 & n.11. Probation authorized for any offense with a statutory maximum below 25 years unless expressly precluded. See 18 USC § 3561(a); 18 USC § 3559(a).
Courts May Vary From Guidelines That Lack Empirical Basis and Recommend Punishment Greater Than Necessary Rita, 551 U.S. at 351, 357 –Judge may find the “Guidelines sentence itself fails properly to reflect § 3553(a) considerations,” or “reflects an unsound judgment” Kimbrough v. United States, 552 U.S. 85, 101 (2007) –“courts may vary [from Guideline ranges] based solely on policy considerations, including disagreements with the Guidelines.” (citing Rita) –not an abuse of discretion to conclude that a guideline that is not the product of “empirical data and national experience... yields a sentence ‘greater than necessary’ to achieve §3553(a)’s purposes, even in a mine-run case.”
Support Arguments with Evidence Not much explanation required for a GL sentence if it is “clear” the sentence is based on USSC’s “own reasoning” and you did not contest the GL sentence. Rita, 551 U.S. at 357. Judge need not address “frivolous” arguments. Id. Judge must consider nonfrivolous arguments and must explain why if he rejects them. Id. at 351, 357. If fails to explain how the sentence complies with 3553(a) or fails to address your arguments and evidence, reverse for procedural error. Gall, 552 U.S. at 51.
Procedural Error “Significant procedural error” –Fail to calculate the guidelines correctly –Treat the guidelines as mandatory –Fail to consider 3553(a) factors –Fail to address parties’ arguments –Fail to adequately explain Comes before review for substantive reasonableness.
Frequent Reversals on D’s Appeal for Procedural Error At least 81 within, 29 below, and 11 above guideline sentences reversed for failing to explain why sentence is SBNGTN in light of the arguments and evidence presented. Only 5 within, 10 above, and 2 below guideline sentences reversed as substantively unreasonable on D’s appeal See sentencing/app_ct_decisions_list.pdf
When courts of appeals reverse for inadequate explanation or failure to adequately address a nonfrivolous argument, the sentence on remand is different in the majority of cases. Jennifer Niles Coffin, Where Procedure Meets Substance: Making the Most of the Need for Adequate Explanation (Nov. 2011), CHAMPION, MAR. 2012, at 36.
Fourth Circuit Has reversed 24 within-guideline sentences and 6 above-guideline sentences on D’s appeal for failure to address a nonfrivolous argument or failure to explain the sentence imposed in terms of 3553(a). United States v. Lynn, 592 F.3d 572 (4th Cir. 2010) No reversals for substantive unreasonableness on D’s appeal.
What Kind of Evidence? Facts showing the guideline itself –recommends a sentence greater than necessary to achieve sentencing purposes –was not developed based on empirical data and national experience Facts about the defendant and the offense + empirical evidence showing why those facts are relevant to purposes and parsimony Tie the evidence to purposes and parsimony
Seriousness of Offense Should = Harm + Culpability 1.Nature and Seriousness of Harm 2.Offender’s Degree of Blameworthiness, e.g., –Mens rea –Motive –Role –Mental illness –Other diminished capacity Richard S. Frase, Excessive Prison Sentences, Punishment Goals, and the Eighth Amendment: “Proportionality” Relative to What?, 89 Minn. L. Rev. 571, 590 (February 2005)
Guidelines One Dimensional Constructed solely of aggravating factors said to reflect “harm” --- Loss + Enhancements Fail to include intent, motive, capacity, any mitigating offender characteristics; small effect for role –“wide variety of culpability” among Ds with same amount of “loss.” US v. Cavera, 550 F.3d 180, 192 (2d Cir. 2008) (en banc ) –Numerous mitigating factors bearing on culpability not included in the guidelines. US v. Ovid, 2010 WL (E.D.N.Y. 2010)
Guidelines do not address, or reject, other § 3553(a) purposes and factors No attempt to reflect “need” for deterrence, incapacitation, rehabilitation Mitigating factors required to be considered under § 3553(a)(1) prohibited or discouraged as grounds for “departure” “Kinds” of sentences permitted by statute other than prison, § 3553(a)(3), generally not recommended GUIDELINES = MATH WITHOUT SUBTRACTION.
Loss not a good measure of offense seriousness Loss “is not a fair representation of the defendant’s culpability” where “[t]here is no evidence that the defendant intended to enrich himself personally or intended to harm the  project or the taxpaying public.” US v. Prosperi, 686 F.3d 32 (1st Cir. 2012) (affirming downward variance from GL range of mos. to 6 mos. home detention + 1,000 hours community service). Amount of loss is often “a kind of accident” and thus “a relatively weak indicator of [ ] moral seriousness... or the need for deterrence.” US v. Emmenegger, 329 F.Supp.2d 416 (S.D.N.Y. 2004). The “Guidelines... in an effort to appear ‘objective,’ tend to place great weight on putatively measurable quantities, such as... the amount of financial loss in fraud cases, without, however, explaining why it is appropriate to accord such huge weight to such factors.” US v. Adelson, 441 F.Supp.2d 506 (S.D.N.Y. 2006), aff’d, 301 Fed. Appx. 93 (2d Cir. 2008). Loss “is not always a reliable proxy for the culpability of an individual defendant.” United States v. Lenagh, 2009 WL , *3-4, 6 (D. Neb. Feb. 6, 2009). Gain to an insider trader is “[a]t best... a very rough surrogate for the harm to... the institution that owned the information.” US v. Gupta, __ F. Supp. 2d __ (SDNY 2012).
41 Relevant Conduct John Steer, former Commissioner and co-author of “Relevant Conduct: The Cornerstone of the Federal Sentencing Guidelines,” now says: –uncharged conduct “is the aspect of the guideline that I find most difficult to defend.” –acquitted conduct should not be used to calculate range. See An Interview with John Steer, CHAMPION, Sept. 2008, at 40, 42. See also Deconstructing the Relevant Conduct Guideline, criminal-defense/sentencing- resources/subsections/deconstructing-the-guidelines
Factor Creep Cumulative and overlapping increases -- Comm’n recognizes problem. See USSC, Fifteen Year Review at 137 “This precision is false.” Breyer, Federal Sentencing Guidelines Revisited, 11 Fed. Sent. R. 180 (Jan./Feb. 1999) Judge should vary or depart. –With 6 additional SOCs, “the calculations under the guidelines have so run amok that they are patently absurd on their face.” US v. Adelson, 441 F.Supp.2d 506 (S.D.N.Y. 2006)
Judges recognize 2B1.1 often recommends a sentence that is too high “Although I began the sentencing proceeding ‘by correctly calculating the applicable Guidelines range,’... it is difficult for a sentencing judge to place much stock in a guidelines range that does not provide realistic guidance.” United States v. Parris, 573 F. Supp. 2d 744, 751 (E.D.N.Y. 2008) The “Guidelines were of no help; if not for the [five-year] statutory maximum, the Guidelines for an offense level 43 and criminal history I would have called for a sentence of life imprisonment” for a defendant who made no $$. United States v. Watt, 707 F. Supp. 2d 149 (D. Mass. 2010)
“As has become common among district courts sentencing white-collar offenders in financial fraud cases, the Court finds that the loss calculation substantially overstates the gravity of the offense here and declines to impose a within-Guidelines sentence.” United States v. Faulkenberry, 759 F. Supp. 2d 915, 928 (S.D. Ohio 2010), aff’d, 461 Fed. App’x 496 (6th Cir. 2012).
Guidelines “reflect an ever more draconian approach to white collar crime, unsupported by empirical data.” “By making a Guidelines sentence turn on this single factor [loss or gain], the Sentencing Commission ignored [3553(a)] and... effectively guaranteed that many such sentences would be irrational on their face.” “The numbers assigned by the Sentencing Commission... appear to be more the product of speculation, whim, or abstract number-crunching than of any rigorous methodology -- thus maximizing the risk of injustice.” US v. Gupta, __ F. Supp. 2d __ (SDNY Oct. 24, 2012) (Rakoff, J.)
“Since Booker, virtually every judge faced with a top- level corporate fraud defendant in a very large fraud has concluded that sentences called for by the Guidelines were too high.” Frank O. Bowman III, Sentencing High-Loss Corporate Insider Frauds After Booker, 20 Fed. Sent. R. 167, 169, 2008 WL , at *4 (Feb. 2008).
Jurors too … Mail Fraud –GL range months –Juror average – 7 months Perjury –GL range months –Juror average – 2 months Judge James S. Gwin, Juror Sentiment on Just Punishment: Do the Federal Sentencing Guidelines Reflect Community Values?, 4 Harvard Law & Policy Review 173 (2010).
USSC “Priority” Multi-year study of 2B1.1 and possible amendments in response to: –high rates of below-range sentences in cases involving relatively large loss amounts in securities fraud and similar offenses –public comment and judicial opinions suggesting impact of loss table or victims table (or combined impact) may overstate culpability –Proposed Priorities (May 2012); 77 Fed. Reg. 2778, (Jan. 19, 2012); Priorities, 77 Fed. Reg. 51, 1113 (Aug. 23, 2013) –Will be holding a roundtable Fall 2013
“[T]he fraud guideline, despite its excessive complexity, still does not account for many of the myriad factors that are properly considered in fashioning just sentences, and indeed no workable guideline could ever do so.” United States v. Ovid, slip op., 2010 WL , *1 (E.D.N.Y. Oct. 1, 2010) “While the fraud guideline focuses primarily on aggregate monetary loss and victimization, it fails to measure a host of other factors that may be important, and may be a basis for mitigating punishment, in a particular case.” Alan Ellis & John Steer, At a “Loss” for Justice: Federal Sentencing for Economic Offenses, 25 Crim. Just. 34 (2011)
How It Happened Two reasons it may be “fair to assume that the Guidelines, insofar as practicable, reflect a rough approximation of sentences that might achieve §3553(a)’s objectives.” Rita, 551 U.S. at Commn used “empirical approach” to develop initial guidelines, beginning “with an empirical examination of 10,000 presentence reports setting forth what judges had done in the past.” 2.Guidelines can “evolve” in response to judicial decisions, sentencing data, criminological research, and consultation with experts and all stakeholders (not just DOJ). Rita, 551 U.S. at
51 “Notably, not all of the Guidelines are tied to this empirical evidence.” Gall, 552 U.S. at 46 n.2. Did not include probationary sentences in estimating average past sentence length, or in making probation available –38% of all sentences in 1984 were probation; now about 7% Prohibited or deemed “not ordinarily relevant” offender characteristics considered in the past Required increases for acquitted and uncharged crimes (“relevant conduct”) at same rate as if charged and convicted
52 White Collar Sentences “Significantly More Severe” than Past Practice Initial guidelines “significantly more severe than past practice” for “the most frequently sentenced offenses in the federal courts.” –White collar offenses –Drug trafficking –Crimes of violence U.S. Sent’g Comm’n, Fifteen Years of Guidelines Sentencing at 47 (2004), llaneous/15_Year_Study/chap2.pdf
Comm’r Breyer explained … Some complain white collar guidelines “too harsh,” but –“once the Commission decided to abandon the touchstone of prior past practice, the range of punishment choices was broad” and the “resulting compromises do not seem too terribly severe.” But guidelines will “evolve” based on information from actual practice – i.e., departures. Stephen Breyer, The Federal Sentencing Guidelines and the Key Compromises Upon Which They Rest, 17 Hofstra L. Rev. 1, 18-20, 23 (1988).
54 “Evolved” in a One-Way Upward Ratchet Amended in a “one-way upward ratchet increasingly divorced from considerations of sound public policy and even from the commonsense judgments of frontline sentencing professionals who apply the rules.” Frank O. Bowman III, The Failure of the Federal Sentencing Guidelines: A Structural Analysis, 105 Colum. L. Rev. 1315, (2005).
Mythical Deterrence Rationale Original Commission -- “the definite prospect of prison, though the term is short, will act as a significant deterrent to many of these [economic] crimes, particularly when compared with the status quo where probation, not prison, is the norm.” USSG, ch. 1, intro., pt. 4(d) (1987). Abandoned “short” but “definite” All empirical research shows longer sentences do not deter. James Client Memo at 14-15; Baron-Evans & Coffin, Sentencing by the Statute at No difference in deterrent effect of prison v. probation for white collar offenders. See David Weisburd et al., Specific Deterrence in a Sample of Offenders Convicted of White Collar Crimes, 33 Criminology 587 (1995)
Example James Client, owner of securities firm managing pension funds and health benefit savings accounts Embezzled $19 million client funds Sent. Memo., Topics---sentencing/James-Client----Fraud- Sentencing-Memo pdfhttp://www.fd.org/docs/Select- Topics---sentencing/James-Client----Fraud- Sentencing-Memo pdf
Guideline Range 7base offense level 20loss between $ million 6more than 250 victims 2sophisticated means 2abuse of position of trust -3acceptance of responsibility _______________________________________________ TOTAL OFFENSE LEVEL 34 GUIDELINE RANGE months
Past Practice Sentence Touted in Rita months for highest $$ sophisticated fraud 18% received probation U.S. Sent’g Comm’n, Supplementary Report on the Initial Sentencing Guidelines and Policy Statements 33 (1987), content/pdfs/reports/USSC_Supplementary%20Report.pdf
Commission abandoned past practice and violated a congressional directive in the very beginning. Comm’n “decided to abandon the touchstone of prior past practice” with respect to white collar offenses. Breyer, 17 Hofstra L. Rev. at A “sentence other than imprisonment” is “general[ly] appropriate” where the defendant is a first offender who has not been convicted of a crime of violence or an otherwise serious offense” 28 U.S.C. § 994(j).
500% Increase Since 1987 Past Practice Sentence – based on “10,000 presentence reports,” Rita v. US. –18-24 months for highest $$ sophisticated fraud –30-37 months for highest $$ sophisticated embezzlement months 1989 – months 2001 – months 2008 – months
For No Good Reason 1989: 4 levels added if $20 M loss “to provide additional deterrence and better reflect the seriousness of the conduct.” App. C, Amend. 154 (Nov. 1, 1989) Real reason: DOJ convinced 4 Commissioners that statutes were “oblique signals” from Congress when statutes “said no such thing” “gratuitously” increased for reasons “overtly political and inexpert” abandoned statutory mandates by failing to rely on own data, failing to measure the effectiveness or efficiency of guideline sentences, and failing to provide analysis of prison impact –Jeffrey S. Parker & Michael K. Block, The Sentencing Commission, P.M. (Post-Mistretta): Sunshine or Sunset?, 27Am. Crim. L. Rev. 289 (1989) Contrary to all evidence re deterrence.
2001: 5 more levels added if $20 M loss Increased for moderate and high loss amounts. Removed more than minimal planning but folded it into increased penalties for moderate and high loss and kept 2 levels for sophisticated means. Stated reason: “[C]omments received from the Department of Justice, the Criminal Law Committee of the Judicial Conference, and others, that the offenses sentenced under the guidelines consolidated by this amendment under-punish individuals involved with moderate and high loss amounts, relative to penalty levels for offenses of similar seriousness sentenced under other guidelines.” App. C, Amend. 617 (Nov. 1, 2001).
What did they really say? AAG Robinson for DOJ: “sentences for economic crimes should not be set, in our view, to match sentences for drug crimes.” –http://www.ussc.gov/Research/Research_Projects/Economic_Cri mes/ _Symposium/ePlenaryIII.PDF at 59. Judge Gilbert for CLC: drug crimes are “punished too harshly,” high loss fraud “too leniently,” “apples and oranges.” Id. at 56. Prof. Cohen: “drug offenses are broke so they need to be fixed,” but no “evidence that fraud is broke,” and “deterrence isn’t supported.” Id. at 65-66, 69.
Raised Fraud Guideline Based on Drug Guidelines Drug Guidelines Based on Mandatory Minimums, not empirical research or nat’l experience. Kimbrough, 552 US at 96; Gall, 552 US at 46 n.2 Upward ratchet in action
2003: raised BOL from 6 to 7 DOJ applied intense pressure on Comm’n to raise all sentences, then enlisted a Senator to change the legislative history, invoking drug guidelines. Frank O. Bowman III, Pour Encourager Les Autres?, 1 Ohio State J. Crim. L. 373 (2004).
Additional Enhancements Based on Directives Without Empirical Support Comm’n need not do anything in response to general directives - study and amend if appropriate Comm’n is required to follow specific congressional directives Courts are free to vary from resulting guidelines based on policy considerations or individual circumstances Brief for the United States, Vazquez v. United States, 2009 WL The “premise that congressional directives to the Sentencing Commission are equally binding on the sentencing courts... is incorrect.” Petition granted, judgment vacated, remanded for reconsideration. Vazquez v. United States, 130 S. Ct (2010).
What would Client have to do to get the same or a lower guideline range? Rob a bank of any amount over $5 million, discharge a firearm = months Second degree murder = months Voluntary manslaughter = months Forced sexual act with a child under 16 = months Aircraft piracy = months Distribute 49 kg. of cocaine and possess a firearm = months Sell or buy a child for use in production of pornography = months
Objective Number for Sentence You Propose Past practice sentence for sophisticated fraud with highest $$ amount months 18% received probation At most, 1987 guideline range of months Back it up or reduce further with evidence of individualized circumstances bearing on the purposes of sentencing
A Modest Proposal “The Sentencing Commission to this day has never been able to articulate why it has two points for this, or four points for that.... These are just numbers. And yet once they are placed the whole thing is blessed and said to be rational.” “[T]he [fraud guidelines] should be scrapped in their entirety and in their place there should be a non-arithmetic, multi-factor test." –Judge Rakoff (E.D.N.Y.) (keynote speech at the ABA’s Nat’l Inst. on White Collar Crime, March 2013).
Just Punishment in Light of the Seriousness of the Offense 3553(a)(2)(A)
Reduced Culpability US v. Ovid, 2010 WL (E.D.N.Y. 2010) –Did not start as a fraud, started with best of intentions –Never drew a salary –Provided his own money –Cut back on costs –Wasn’t present for some key events –Fully forthcoming –Truly remorseful Varied to 60 months from months at government’s request
Motive, Intent, Remorse, No Gain, Efforts at Restitution, Good Character Varying from months to 24 months in insider trading case where D did not share in monetary gain and behavior was aberrant. US v. Gupta, __ F.Supp. 2d __ (SDNY 2012) “[T]here is a wide variety of culpability amongst [white collar] defendants” that is not reflected in loss, so decisions to “impose different sentences based on the factors identified in § 3553(a,)” “if adequately explained, should be reviewed especially deferentially.” US v. Cavera, 550 F.3d 180 (2d Cir. 2008).
Aberrant, Isolated Incident, Financial Pressures U.S. v. Hadash, 408 F.3d 1080, 1084 (8th Cir. 2005) (“law abiding citizen, who [did] an incredibly dumb thing”) U.S. v. Howe, 543 F.3d 128 (3rd Cir. 2008) (“isolated mistake” in otherwise long and entirely upstanding life) U.S. v. Davis, 2008 WL (S.D.N.Y. June 5, 2008) (prompted by economic pressures of unemployment by first offender who had throughout his 15-year marriage worked at lots of jobs to educate his six children) United States v. Gupta, __ F. Supp. 2d __ (SDNY Oct. 24, 2012) (Rakoff, J.) (“[USPO] believe[s] the defendant’s commission of the instant offenses was aberrant behavior — not aberrant as defined by the U.S. Sentencing Guidelines, but rather as defined by Merriam-Webster:... Atypical.”)
Collateral consequences add punishment US v. Anderson, 533 F.3d 623 (8th Cir. 2008) (“suffered atypical punishment such as the loss of his reputation and his company”) US v. Pauley, 511 F.3d 468 (4th Cir. 2007) (“lost his teaching certificate and state pension as a result of his conduct,” consideration of which “is consistent with § 3553(a)’s directive that the sentence reflect the need for ‘just punishment’ and ‘adequate deterrence.’”) US v. Vigil, 476 F.Supp.2d 1231 (D. N.M. 2007) (“suffered incalculable damage to his personal and professional reputation as a result of tremendous media coverage of his case and the case against his co-conspirators” and “was forced to resign his position as State Treasurer”) More – Barrett, Collateral Consequences Resource List, source%20List pdf.
Prison can be unjust punishment Medical problems BOP will not adequately treat BOP often does not provide “required medical services to inmates.” U.S. Dep’t of Justice, Office of the Inspector General, Audit Division, The Federal Bureau of Prisons’ Efforts to Manage Health Care (Feb. 2008), U.S. v. Martin, 363 F.3d 25 (1st Cir. 2004) U.S. v. Gee, 226 F.3d 885 (7th Cir. 2000) U.S. v. Pineyro, 372 F. Supp. 2d 133 (D. Mass. 2005) U.S. v. Rausch, 570 F. Supp. 2d 1295 (D. Colo. 2008) Empirical research shows that defendants who are old, young, small are subject to abuse, rape, violence in prison No More Math Without Subtraction at 64-66, 104, , sentencing/No_More_Math_Without_Subtraction.pdf
Defendants who are older and/or infirm suffer more Hannah T.S. Long, The “Inequality” of Incarceration, 31 Colum. J. L. & Soc. Probs. 321, (1998) U.S. Dep’t of Justice, National Institute of Corrections, Correctional Health Care: Addressing the Needs of Elderly, Chronically Ill, and Terminally Ill Inmates, at 10 (2004) Elaine Crawley & Richard Sparks, Older Men in Prison: Survival, Coping, and Identity, in The Effects of Imprisonment 343, (Alison Liebling & Shadd Maruna eds., 2005)
Medical Condition … U.S. v. Alemenas, 553 F.3d 27 (1st Cir. 2009) U.S. v. Kemph,2009 WL (4th Cir. March 13, 2009) U.S. v. McFarlin, 535 F.3d 808 (8th Cir. 2008) U.S. v. Spigner, 416 F.3d 708 (8th Cir. 2005) U.S. v. Garcia-Salas, 2007 WL (10th Cir. Dec. 27, 2007) Rodriguez-Quezada v. U.S., 2008 WL (S.D.N.Y. Sept. 15, 2008) U.S. v. Carmona-Rodriguez, 2005 WL (S.D.N.Y. April 11, 2005) U.S. v. Truesdale, 286 Fed. Appx. 9 (4th Cir. 2008)
Need for Deterrence 3553(a)(2)B)
Debunk the Myth No particular amount of imprisonment or any imprisonment is necessary for deterrence. Michael Tonry, Purposes and Functions of Sentencing, 34 Crime & Just. 1, 28 (2006) Zvi D. Gabbay, Exploring the Limits of the Restorative Justice Paradigm: Restorative Justice and White Collar Crime, 8 Cardozo J. Conflict Resol. 421, (2007) Andrew von Hirsch et al., Criminal Deterrence and Sentence Severity: An Analysis of Recent Research (1999) David Weisburd et al., Specific Deterrence in a Sample of Offenders Convicted of White Collar Crimes, 33 Criminology 587 (1995) Francis T. Cullen et al. Prisons Do Not Reduce Recidivism: The High Cost of Ignoring Science, Prison Journal 91: 48S (2011)
Say It Again: “Increases in severity have no deterrent effect.” No difference even between probation and imprisonment in deterrent effect. –See studies collected in Sentencing by the Statute at 7-9, sentencing/Sentencing_By_the_Statute.pdf. –Sentencing Memo in Fraud Case, at 14-15, Client----Fraud-Sentencing-Memo pdf
US v. Kuhlman, __ F.3d __, 2013 WL (11th Cir. Mar. 8, 2013) DCT varied downward 57 months to probation. Gov’t appealed, squawking about general deterrence. “Such a sentence fails to achieve an important goal of sentencing in a white-collar crime prosecution: the need for general deterrence.... We are hard-pressed to see how a non- custodial sentence serves the goal of general deterrence.” D did not challenge myth w/ evidence. Reversed as substantively unreasonable.
US v. Prosperi, 686 F.3d 32 (1st Cir. 2012) DCT varied downward from mos to 6 mos home detention + 1,000 hours community service. Considered general deterrence as “the only [benefit]” of incarceration, but balanced against government costs and personal costs to D. Gov’t appealed, squawking about general deterrence (among other things). Affirmed as substantively reasonable. The district court “fulfilled its obligation to consider the importance of general deterrence... It rejected the view that  general deterrence could only be served by incarceration.” Id. at
Need for Incapacitation 3553(a)(2)(C)
Age “Recidivism rates decline relatively consistently as age increases,” from 35.5% under age 21, to 9.5% over age 50. USSC, Measuring Recidivism (2004), _Recidivism_Criminal_History.pdf (includes less serious SR violations – not all new crimes)
Recidivism Drops Precipitously with Age Sampson, Robert J. and Laub, John H., Life-Course Desisters: Trajectories of Crime Among Delinquent Boys Followed to Age 70, 451 CRIMINOLOGY 555 (2003)
What if the client is young? Young offenders reform in a shorter period of time. –Laurence Steinberg & Elizabeth S. Scott, Less Guilty by Reason of Adolescence: Developmental Immaturity, Diminished Responsibility, and the Juvenile Death Penalty, 58 Am. Psychologist 1009, (2003) –Robert J. Sampson & John H. Laub, Crime in the Making: Pathways and Turning Points Through Life, 39 Crime & Delinq. 396 (1993) Young offenders (e.g., in their 20s) are less culpable than the average offender because of brain development. –Jay N. Giedd, Structural Magnetic Resonance Imaging of the Adolescent Brain, 1021 Annals N.Y. Acad. Science (2004); Margo Gardner & Laurence Steinberg, Peer Influence on Risk Taking, Risk Preferences and Risky Decision Making in Adolescence and Adulthood: An Experimental Study, 41 Developmental Psych. 625, 632 (2005); Federal Advisory Committee on Juvenile Justice, U.S. Dep’t of Justice, Office of Juvenile and Delinquency Prevention, Annual Report 8 (2005),
Other characteristics predicting low risk of recidivism USSC, Measuring Recidivism (2004), 05_Recidivism_Criminal_History.pdf First Offenders: rate of reconviction for those with 0 points is 3.5%, with 1 point is 5.5%, with 2 or more points is 10.3% Employment: recidivism rate far less if employed in past year than if unemployed Education: the more education, the lower the recidivism rate Family: recidivism lower if ever married even if divorced Abstinence from drugs: recidivism rate far lower if abstinent for past year than if used drugs Non-Violent Offenders: fraud, larceny and drug offenders the least likely to recidivate
BOP Research Low Risk of Recidivism Family, education, job Miles D. Harer, Federal Bureau of Prisons, Office of Research and Evaluation, Recidivism Among Federal Prisoners Released in 1987 (Aug. 4, 1994), eports/recidivism/oreprrecid87.pdf. eports/recidivism/oreprrecid87.pdf
First Offenders – 0 points Lower recidivism rates than other defendants in Criminal History Category I. –Michael Edmund O’Neill, Abraham’s Legacy: An Empirical Assessment of (Nearly) First-Time Offenders in the Federal System, 42 B.C. L. Rev. 291 (2001). –A Comparison of the Federal Sentencing Guidelines Criminal History Category and the U.S. Parole Commission Salient Factor Score, 15 (Jan. 4, 2005), http// www. ussc. gov/ publicat/ Recidivism Salient FactorCom.pdf. –Recidivism and the First Offender (May 2004), gov/publicat/Recidivism-First Offender.pdf.
Lengthy imprisonment increases recidivism by disrupting employment, reducing prospects of future employment, weakening family ties, exposing less serious offenders to more serious offenders. Lynne M. Vieraitis et al., The Criminogenic Effects of Imprisonment: Evidence from State Panel Data , 6 Criminology & Pub. Pol’y 589, (2007) U.S. Sent’g Comm’n, Staff Discussion Paper, Sentencing Options Under the Guidelines (Nov. 1996), on/SENTOPT.HTM Miles D. Harer, Do Guideline Sentences for Low-Risk Drug Traffickers Achieve Their Stated Purposes?, 7 Fed. Sent. Rep. 22 (1994)
Rehabilitation in the Most Effective Manner, 3553(a)(2)(D)
Mental Health Treatment Works Dale E. McNiel & Renée L. Binder, Effectiveness of a Mental Health Court in Reducing Criminal Recidivism and Violence, 16 Am. J. Psychiatry ( 2007) Ohio Office of Criminal Justice Services, Research Briefing 7: Recidivism of Successful Mental Health Court Participants (2007), briefing7.pdf
Need for Mental Health Treatment Outside of Prison U.S. v. Duhon, 541 F.3d 391 (5th Cir. 2008) U.S. v. Polito, 215 F. App’x 354 (5th Cir. 2007) U.S. v. Crocker, 2007 WL (D. Kan. Sept. 30, 2007) U.S. v. Taylor, 2008 WL (S.D.N.Y. June 2, 2008)
Drug treatment works. Nat’l Institute on Drug Abuse, National Institutes of Health, Principles of Drug Abuse Treatment for Criminal Justice Populations (2006), Susan L. Ettner et al., Benefit-Cost in the California Treatment Outcome Project: Does Substance Abuse Treatment “Pay for Itself?”, Health Services Res. 41(1), (2006) USSC, Symposium on Alternatives to Incarceration, at 34 & Taxman-8 (2008)
Drug treatment in the community works even better. Missouri Sent’g Advisory Comm’n, Smart Sentencing, Vol. 1, Issue 4 (July 20, 2009) Doug McVay, Vincent Schiraldi, & Jason Ziedenberg, Justice Policy Institute Policy Report, Treatment or Incarceration: National and State Findings on the Efficacy of Cost Savings of Drug Treatment Versus Imprisonment at 5-6, 18 (2004) Elizabeth K. Drake, Steve Aos, & Marna G. Miller, Washington State Institute for Public Policy, Evidence-Based Public Policy Options to Reduce Crime and Criminal Justice Costs: Implications in Washington State (2009), pdf.
Avoid Unwarranted Disparity and Unwarranted Uniformity, 3553(a)(6) Compare to other Ds in same case or other cases who are different. –District court should avoid unwarranted similarities among defendants who are not similarly situated. Gall, 552 U.S. at 55. Compare to other similar cases –Chart in James Client memo –Chart in US v. Parris, 573 F. Supp. 2d 744, 756 (E.D.N.Y. 2008) –US v. Panice, 598 F.3d 426 (7th Cir. 2010) (reversing b/c judge did not consider evidence of sentences in similar cases) High rate of below guideline sentences for this type of crime – 43% for fraud (non-gov’t and gov’t-sponsored) Average sentence for fraud offenders who plead guilty = 21 months
Similar/Dissimilar Cases E.g., –360 reduced to 60 months, US v. Parris, 573 F. Supp. 2d 744, 745 (E.D.N.Y. 2008) –85 years reduced to 42 months, US. Adelson, 441 F. Supp. 2d 506 (S.D.N.Y. 2006) Start with govt websites, e.g., –U.S. Department of Health and Human Services, Office of the Inspector General, –Summary of Major U.S. Export Enforcement, Economic Espionage, Trade Secret and Embargo-Related Criminal Cases (January 2007 to the present: updated May 2, 2012), –Securities Fraud cases – search for “securities fraud” on –Published decisions, media searches Supplement w/info from PACER
US v. VandeBrake, Appellant’s Brief
Disparity caused by government’s use of guidelines to punish going to trial. United States v. Ring, 811 F. Supp. 2d 359 (D.D.C. 2011)
Disparity Caused by Failure to File Motion Under 5K variances for cooperation without §5K1.1 motion. –USSC, 2011 Sourcebook, tbls.25, 25A, 25B. –US v. Arceo, 535 F.3d 679, 688 & n.3 (7th Cir. 2008) –US v. Blue, 557 F.3d 682, 686 (6th Cir. 2009) –US v. Jackson, 296 Fed. App’x 408, 409 (5th Cir. 2008) –US v. Doe, 218 Fed. App’x 801, 805 (10th Cir. 2007) –US v. Fernandez, 443 F.3d 19, 35 (2d Cir. 2006) –US v. Lazenby, 439 F.3d 928, 933 (8th Cir 2006)
Overarching Parsimony Command US v. Martinez-Barragan, 545 F.3d 894, 898, (10th Cir. 2008): “When crafting a sentence, the district court must be guided by the ‘parsimony principle’--that the sentence be ‘sufficient, but not greater than necessary, to comply with the purposes’ of criminal punishment, as expressed in § 3553(a)(2).” US v. Johnson, 635 F.3d 983 (7th Cir. 2011): “unacceptable risk that, in imposing a life [guideline] sentence,” court “did not account appropriately for the parsimony clause in the governing statute or for the individual circumstances of Mr. Johnson's case. Accordingly, we vacate and remand for a redetermination of the sentence in light of the parsimony principle of 18 U.S.C. § 3553(a).” Court must “construct a sentence that is minimally sufficient to achieve the broad goals of sentencing.” US v. Rodriguez, 527 F.3d 221, 228 (1st Cir. 2008). See also US v. Henderson, 2011 WL (9th Cir. Apr. 29, 2011); US v. Dorvee, 616 F.3d 174, 182 (2d Cir. 2010); US v. Chavez, 611 F.3d 1006, 1010 (9th Cir. 2010); US v. Williams, 475 F.3d 468, (2d Cir. 2007).
Sentencing Options 3553(a)(3) Community Service – rehabilitative, saves the community money, saves incarceration costs, keeps families together Fines – based on ability pay; can be more punitive than prison US Sent’g Comm’n, Staff Discussion Paper, Sentencing Options under the Guidelines (Nov. 1996), ation/SENTOPT.PDF
First Time Non-Violent Offenders Were Supposed To Get Probation. Commn “shall insure that the guidelines reflect the general appropriateness of imposing a sentence other than imprisonment in cases in which the defendant is a first offender who has not been convicted of a crime of violence or an otherwise serious offense.” 28 USC 994(j).
What is a “policy disagreement”? A determination that the guideline recommends punishment that is excessive (or insufficient) to achieve the purposes of sentencing Apart from mitigating case-specific facts that might otherwise justify a variance, i.e., “even in a mine-run case.”
Policy Disagreements - Kinds of Evidence to Present Facts about the guideline to show that it –was not developed based on empirical data and national experience –recommends a sentence greater than necessary to achieve sentencing purposes (see, e.g., James Client Memo at 26-40) Shouldn’t Be Based “Solely on Judge’s View”
Kimbrough paradigm Basis is disagreement with the guideline “itself,” grounded in the policy objectives set forth in § 3553(a), apart from case-specific mitigating (or aggravating) facts. Commission did not use an “empirical approach” based on average time served before the guidelines for drug trafficking guidelines. –Instead, ranges set to meet and exceed the two mandatory minimum punishment levels specified in the Anti-Drug Abuse Act of 1986 and spread the scheme across many quantity levels. Examined assumptions underlying those punishment levels and the scientific and criminological evidence showing that they were unfounded. Guidelines did not evolve consistent with current experience and research. Held: Since “the cocaine Guidelines, like all other Guidelines, are advisory only,” it “would not be an abuse of discretion for a district court to conclude when sentencing a particular defendant that the crack/powder disparity yields a sentence ‘greater than necessary’ to achieve § 3553(a)’s purposes, even in a mine-run case.” No occasion to discuss “closer review” because crack guidelines not based on “empirical evidence and national experience.”
108 Policy disagreements -- indispensable to a constitutional system Cunningham v. California, 549 U.S. 270, (2007) Rita v. United States, 551 U.S. 338, 351, 357 (2007) Kimbrough v. United States, 552 U.S. 85, 101 (2007) Spears v. US, 555 U.S. 261(2009)
Applies to all Guidelines including GLs based on congressional directives 11th Circuit: Judge may not disagree with career offender guideline because Congress directed the Commission to create it. Brief for the United States, Vazquez v. United States, 2009 WL –The “premise that congressional directives to the Sentencing Commission are equally binding on the sentencing courts... is incorrect.” –“[T]he very essence of an advisory guideline is that a sentencing court may, subject to appellate review for reasonableness, disagree with the guideline in imposing sentencing under Section 3553(a).” –GVR’d. Vazquez v. United States, 130 S. Ct (2010).
Supreme Court Has Never Adopted “Closer Review” Dismissed suggestion that “closer review may be in order” for a variance “based solely on the judge’s view” that the guideline range “fails properly to reflect § 3553(a) considerations even in a mine-run case” Theory: Commn has capacity “to base its determinations on empirical data and national experience” “No occasion for elaborative discussion of this matter” because crack guidelines not based on “empirical data and national experience.” Kimbrough And “closer review” would be unconstitutional. (Scalia, J., concurring) Disagreeing with a guideline that does “not exemplify the Commission's exercise of its characteristic institutional role” is entitled to as much “respect” on appeal as an individualized determination. Spears Ignored J. Breyer’s plea for “closer review” in Pepper
Unlikely To Become a Holding If policy disagreements are necessary for GLs to be advisory and constitutional Courts of appeals cannot forbid under “closer” review Unconstitutional –if court of appeals held judge could not disagree with a particular guideline, the only basis for a guideline sentence or an above-guideline sentence would be judge-found facts –Violates Sixth Amend. See Cunningham.
Fourth Circuit – has flirted with “closer review” US v. Engle (4th Cir. 2010) “If ‘closer review’ of a district court's policy disagreement is ever warranted, we believe it would be appropriate in this case.” But can’t do it on this record. Rev’d for procedural error b/c DCT failed to consider Comm’n policy statements re: general deterrence in tax cases.
Practice Tips Don’t let the judge or court of appeals call it a “policy disagreement” if it’s based on case-specific facts, in whole or in part Present evidence as in Kimbrough, James Client Memo Present evidence as in Gall, Pepper regarding individualized facts Combine with “offense level overstates the seriousness of the offense” departure if available
Contact us if problems with “closer review”
Sentencing Resources – Sentencing by the Statute –Important Overview and Information on Sentencing Purposes, Variances, Probation, How to Determine Past Practice Sentence, Deconstruction No More Math Without Subtraction, Part IV –Empirical Research, Statistics, and Caselaw on numerous mitigating factors Where Procedure Meets Substance: Making the Most of the Need for Adequate Explanation (Nov. 2011) Appellate Decisions After Gall Hemingway & Hinton, Departures and Variances - Outline of Caselaw on All Kinds of Variances and Departures Fighting Fiction with Fact: Research to Help Advocate for Lower Sentences Deconstructing the Guidelines; briefs, papers, articles –Career Offender –“Relevant” Conduct -- Acquitted and Uncharged Crimes –Child Pornography –Drugs –Firearms –Fraud –Immigration –Probation –Tax –Mitigating Factors