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July 23, 2010

Justice or unjust disparity for Ponzi schemer getting sentence doubled due to harm to victims?

This local report on a recent federal sentencing for a young fraudster, which is headlined "Pizzolato gets 30-year prison sentence in Ponzi scheme," provides a terrific setting in which to consider and debate concerns about post-Booker sentencing disparity.  First, here are the basics:

A federal judge today gave a 30-year prison sentence to a Tickfaw man accused of swindling more than 160 people, many of them senior citizens, in a Ponzi scheme based out of his Northshore investment companies.

Wearing an orange jail jumpsuit and shackles, Matthew Pizzolato, 26, turned around and faced the victims sitting in the courtroom. Everyday he is "beside himself," Pizzolato said, shaking his head and crying. "I can't understand how my actions hurt so many people." Pizzolato said he hoped the judge's actions would give his victims "some closure."

But U.S. District Judge Lance Africk said Pizzolato's conciliatory expressions had only developed recently, after he learned that the judge intended to give him a longer sentence than what had been laid out in his plea bargain with federal prosecutors.

In the end, the 30-year sentence was double the maximum laid out in the federal sentencing guidelines, but the judge said that was necessary because of several factors, such as the psychological and emotional harm done to the victims and the advanced ages of many victims. "Mr. Pizzolato, you swindled the salt of the earth,'' said Africk. "You stole from hardworking Americans who toiled their whole lives."

During the hearing, multiple victims talked about how Pizzolato had taken their life savings ensuring them that the money would be invested in conservative securities. Much of the money, however, was actually diverted into Pizzolato's own pocket or lost in the high-risk futures market.

Although he had only an eighth-grade education and a high school equivalency diploma, Pizzolato told clients that he was one of the top 10 financial planners in the country, possessed special training in investing, was a certified estate planner and had graduated from law school.

To make investors believe the scheme was legitimate, Pizzolato issued false account statements and "Certificates of Investment." In some cases, he forged the signatures of his clients to make unauthorized withdrawals from their accounts.

Of the $19.5 million he collected, Pizzolato distributed about $2.8 million back to his clients in the form of "lulling payments, " or supposed returns on their investments, in order to quell any suspicions that he was a fraud. Pizzolato diverted another $9.9 million to use in high-risk futures and commodities trading.  The rest, about $1.3 million, he lavished on himself and his family.

As the question in the title to my post is meant to spotlight, I would love to hear readers' views on whether this case is a great example of the ability post-Booker for district judges to do case-specific sentencing justice or a great example of the post-Booker problem of sentencing disparity. 

I think it fair to assert that most district judges would not have imposed a sentence on Pizzolato that was double the guideline range and more than was set forth in the plea bargain he made with federal prosecutors.  Nevertheless, it seems that legitimate sentencing factors played a central role in the decision to send Pizzolato away for 30 years (including perhaps also his young age, given that he still should may be able to be a free man at an age still much younger than the victims he swindled).

To put a fine point on this debate, here are a couple questions I would like to hear answered by any and everyone who has expressed concerns about post-Booker discretion and disparity:

1.  Do you think justice has been served or injustice created by Pizzolato's sentencing?

2.  Do you think the Fifth Circuit ought to reverse Pizzolato's sentence on appeal based on disparity concerns?  (An appeal waiver might even preclude any appeal and I highly doubt the Fifth Circuit would reverse if this matter comes to them.)

3.  Do you think the US Sentencing Commission and/or Congress needs to enact some new guidelines or statutes to diminish this kind of disparate outcome in other cases?

I raise all these question in this context because I genuinely suspect and fear that the vast majority of expressed concerns and complaints about sentencing disparity (especially when coming from current or former prosecutors) are principally concerns and complaints about sentencing leniency.  Thus. when a sentence like Pizzolato's is disparately harsh, it provides a good setting to explore whether and how folks really care about disparity apart from leniency.

July 23, 2010 at 11:49 AM | Permalink

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1. Do you think justice has been served or injustice created by Pizzolato's sentencing?

I think the sentence was sufficient but greater than necessary.

2. Do you think the Fifth Circuit ought to reverse Pizzolato's sentence on appeal based on disparity concerns? (An appeal waiver might even preclude any appeal and I highly doubt the Fifth Circuit would reverse if this matter comes to them.)

No. The Supreme Court has stated clearly that the guidelines are advisory and an appellate court should not substitute its judgment of an appropriate sentence for that of the sentencing court. While I think the sentence is greater than necessary, Judge Africk's sentence and reasoning are reasonable, and thus the sentence should not be reversed.

3. Do you think the US Sentencing Commission and/or Congress needs to enact some new guidelines or statutes to diminish this kind of disparate outcome in other cases?

Yes. As a country, we should make a collective decision about the use of incarceration as punishment and specifically about the scale of imprisonment as punishment. If we democratically decide it's 30 years or so for a million dollar fraudster, so be it. If we decide it's five years, so be it. But we should not have one judge using one scale (30 years) and another judge using another scale (5 years).

Posted by: ??? | Jul 23, 2010 1:15:09 PM

I agree with much of the sentiment expressed by ???. The defense bar campaigned for years against mandatory guidelines and hit the jackpot in January 2005. Some of us warned then that the contents of the jackpot were more than you would wind up liking.

Permitting "more judicial discretion" is all the rage, until the occasional notice gets served that it can get used both ways. Not everyone is Nancy Gertner, as tbis story reminds us.

When you bought the discretion-is-wonderful part of Booker, you bought this. I was taught long ago that, in law, you can't complain when you get what you ask for.

Posted by: Bill Otis | Jul 23, 2010 1:49:17 PM

As you know, Bill, it was DOJ who urged the advisory remedy adopted by Breyer et al. in Booker, not the defense bar. And it is also DOJ that continues to refuse to advocate or endorse making the guidelines mandatory again by simply making guideline fact-finding subject to Blakely 5th/6th amendment requirements.

It is for this reason, Bill, that I get so irked when folks at DOJ and/or federal prosecutors NOW complain about disparity --- I share your view that "you can't complain when you get what you ask for."

That all said, I think you and ??? are avoiding giving a clear answer to the hardest parts of my questions. Reading between the lines, here is what I think I read your answers to be:

1. You and ??? believe injustice has been created by Pizzolato's sentencing, in part because you think the sentence violates the parsimony mandate of 3553(a).

2. Even though you and ??? seem to believe Pizzolato's sentence violates a provision of still-mandatory statutory sentencing law, you and ??? seem to believe that a circuit court should not (perhaps even may not) reverse that sentence.

3. You and ??? believe that the injustice created by Pizzolato's sentencing needs to be addressed by the USSC or Congress, but you do not seem to provide any obvious means or method for doing so.

If I have misunderstood your views of ???'s views, I hope you will engage the dialogue. As I mean to suggest with this post, I think Pizzolato's sentencing provides a great setting to get into some really tough issues concerning disparity, and I want to explore these issues as fully as possible in this forum.

Posted by: Doug B. | Jul 23, 2010 3:32:34 PM

Don't hold your breath on Bill "engaging the dialogue" on this, Prof.B. Whenever you or anyone else brings up the obvious solution to the disparity problem, mandatory guidelines subject to the Blakely requirements, Bill grows uncharacteristically silent.

Posted by: seahorse | Jul 23, 2010 6:04:30 PM

i think it's a criminal crock myself!

"But U.S. District Judge Lance Africk said Pizzolato's conciliatory expressions had only developed recently, after he learned that the judge intended to give him a longer sentence than what had been laid out in his plea bargain with federal prosecutors."

Sorry if the judge didnt' like the deal then he had ONE choice refues it. Not accept it and then CHAGE IT. sorry id' tell him to shove it and i'll see you at a nice LONG EXPENSIVE trial and you will not use one thing from the plea discussions in that trial since be refusing to accept the plea you lose that info.

Posted by: rodsmith | Jul 23, 2010 8:02:58 PM

Doug --

"As you know, Bill, it was DOJ who urged the advisory remedy adopted by Breyer et al. in Booker, not the defense bar."

True but misleading. DOJ's primary position was that mandatory guidelines were constitutional, and thus that NO remedy was called for. It did foolishly suggest, as a fallback position, advisory guidelines. And the defense bar had been calling for advisory guidelines for years. Indeed it is STILL calling for them, on the theory that today's nominally advisory guidelines continue to have too much gravity, and thus are often, for practical purposes, quasi-mandatory.

"And it is also DOJ that continues to refuse to advocate or endorse making the guidelines mandatory again by simply making guideline fact-finding subject to Blakely 5th/6th amendment requirements."

I take zero responsibility for the positions of THIS Department of Justice, which is staffed, at the top, with many former (and future) defense lawyers.

"You and ??? believe injustice has been created by Pizzolato's sentencing, in part because you think the sentence violates the parsimony mandate of 3553(a)."

His sentence is long, that's for sure. Whether it's unjust I don't know, and neither does anyone else who hasn't read the entire file.

"Even though you and ??? seem to believe Pizzolato's sentence violates a provision of still-mandatory statutory sentencing law, you and ??? seem to believe that a circuit court should not (perhaps even may not) reverse that sentence."

As explained, your premise assumes too much. You also assume that there is some fixed definition of the phrase "not longer than necessary" that is the essence of the parsimony provision. But there is none. What seems necessary to one sentencing judge will seem unnecessary to the next. (Which is one reason to bring back mandatory guidelines).

You also omit, as often happens, the part of 3553(a) that calls for the sentence to be commensurate to the seriousness of the crime. There's more in the statute than parsimony.

"You and ??? believe that the injustice created by Pizzolato's sentencing needs to be addressed by the USSC or Congress, but you do not seem to provide any obvious means or method for doing so."

The means for doing it is obvious: Conyers and Leahy should introduce identical bills re-instituting mandatory, but this time Blakelyized, guidelines. Now why do you suppose that hasn't happened? Hint: The defense bar they're in love with would pitch a fit. Trial lawyers are a major Democratic consituency -- not to mention contributors -- and there are isn't going to be a return to mandatory guidelines until we have a different Congress.

Of course it probably won't happen then either, since the Republicans (with arguable justification, although not enough justification for me) don't seem to care as much as needed to do anything.

P.S. I wrote extensively about what a disaster advisory guidelines would become in the Federalist Society magazine Engage, and in the FSR as well. Indeed you were gracious enough to note and link the Engage piece right here on your blog.

P.P.S. I can't wait to get out to Columbus.

Posted by: Bill Otis | Jul 23, 2010 11:10:30 PM

seahorse --

You may now exhale.

Posted by: Bill Otis | Jul 23, 2010 11:15:10 PM

Thanks for the follow-up, Bill, which confirms that we agree more than we disagree. That said, to keep the record clear, AG Gonzales and the Rs in control of Congress until 2007 did not seek to create Blakely-ized guidelines during the roughly 2 years post-Booker when the opportunity for and ease of adopting such a system was at its height.

That said, you are right that the defense bar now prefers an advisory system principally because the guidelines recommend sentences that are very harsh for the vast majority of crimes. I bet that if Conyers and Leahy should introduce identical bills re-instituting mandatory, but this time Blakelyized, guidelines WHICH ALSO SAID DIVIDE THE GUIDELINE RANGE BY 2 AFTER ALL THE CALCULATIONS, such a bill would get the support of the defense bar and prompt opposition from DOJ.

Put differently, the uncontroversial reality is that the defense side favors consistently lenient sentences and prosecutors favor consistently harsh sentences. And the political reality is that sentences are easy to move up, and hard to move down. Add all this up, and the defense side strategically and sensibly is willing to sacrifice consistency in order to have a chance to get SOME lenient sentences from judges. And DOJ strategically and sensibly preaches for more consistency when in fact it just wants to get rid of what it sees as undue leniency in some cases.

The last part of all this is the reality that prosecutors, through charging and bargaining and sentencing decisions, always have discretion to be lenient in any system. Thus, they like a mandatory system not so much because they dislike discretion per se, but rather because they like to be the only player in the system with the discretion.

Posted by: Doug B. | Jul 24, 2010 10:23:05 AM

One more thing, Bill, on 3553(a). The key mandate is that a sentence must be "sufficient but not greater than necessary" to serve statutory sentencing purposes. I agree that this means some sentences can be too low as well as too high, and I wish the circuits would try to achieve greater consistency by really trying to give content to this instruction by reversing sentences that appear to be substantive outliers on both ends of the scale. Indeed, I think the failing of circuit courts to do reasonableness review effectively is what is really causing the post-Booker system to evolve in ways that increase disparity concerns. That's why I stressed appellate review in my set of questions.

Posted by: Doug B. | Jul 24, 2010 10:27:48 AM

Hurray, Bill! As a regular reader of this blog, I had never seen you state your position on Blakelyized mandatory guidelines. Perhaps I had just missed it before, but I was glad to finally learn your position. And I was even more heartened to learn that your position is the same as mine, a decades-long member of the defense bar (that Blakelyized mandatory guidelines are the answer). There is common ground here after all.

Posted by: seahorse | Jul 24, 2010 11:33:35 AM

Doug and seahorse --

I think Booker, and Blakely for that matter, were wrongly decided, but there they are. It would take too long in this forum to explain why they're incorrect. I went into it in the Engage article; basically it's that the Court (and Scalia, as the Blakely author) got the definintion of "statutory maximum" wrong by identifying it as the guidelines maximum rather than the actual maximum set forth in the statute defining the offense of conviction.

Since there is no realistic prospect that the main part of Booker is going to be re-visited in the near future, the only serious question is remedies. All three of us are in agreement that in principle, mandatory guidelines are preferable to the advisory system we have now (and that Stevens utterly debunked in his dissent to the remedial part of Booker).

I also agree with Doug that substantive outcomes underlie the debate on mandatory vs. advisory. As Doug notes, "mandatory guidelines" became synonymous with "long sentences," and this fact underlay a good deal of the defense bar's opposition to them. But that opposition was certain to come back to bite it in cases such as this one.

How long sentences should be is not my primary focus. I am not a criminologist. I will say that the guidelines were written to mimic years of pre-guidelines sentencing outcomes, so as a general matter they reflect what judges have been doing for a long time. I am also sufficiently conservative to think that, if you want to sell meth or knock over the bank, fine, you made your choice and now you assume the risk at sentencing. I do not expect that idea to be popular among the defense bar.

I do not agree that if mandatory guidelines were introduced in Congress, only cut by half, the defense bar would support them. Of course that is speculation (as is the opposite), but my years in the USAO taught me that hope springs eternal in the defense lawyer breast, and that they tend always to believe that THIS DEFENDANT IS THE EXCEPTION AND I COULD STRIKE IT RICH BUT FOR THESE DARN MANDATORY GUIDELINES. This is less foolishness than it is human nature. Human beings are designed to think that, this time, I could hit the jackpot (regardless of the historical evidence that no such thing will happen).

The idea that mandatory minimums give the prosecutor the real discretion at sentencing is overplayed. Whether Defendant X gets charged and convicted of a MM offense is not a product of prosecutorial whim; it's product of the facts about the defendant's behavior. And there would be less push for statutorily defined MMs if Congress had more trust in judges NOT to engage in unjustified leniency. Indeed, as Justice Stevens explained in his Booker dissent, it was Congress's distrust of district judges that led to MM's cousin (mandatory guidelines) in the first place.

On the point raised by seahorse, although I think Apprendi and its progeny are wrong, I have no strong objection to the government's being required to prove objective sentencing facts BRD. I confess that one reason for this (but only one) is that it will make little or no difference in most cases. Once the jury has convicted by the required BRD standard, it's highly likely to buy the rest of the government's argument by that same standard.

Finally, for now, the primary reason there is not going to be Congressional reform in the near future is not that the Democrats have been bought off by the trial bar or the Republicans are too lazy and disinterested. It's that there are other issues, having to do with the deficit, taxes and the economy, that are preempting eveyone's attention.

I thank both of you for a substantive and honest exchange on this subject. It shows what can be the enormous value of this blog.

Posted by: Bill Otis | Jul 24, 2010 3:36:19 PM

And thanks back at you, Bill.

We do differ, though, in our view of what difference it might make to require the government to prove objective sentencing facts BRD. My view is formed by my more than 2 decades as a member of the federal criminal defense bar in 8 different federal districts (none of them the E.D. of VA, by the way).

There are, as you know, significant differences in sentencing practices and philosophies among federal probation officers, federal judges, and U.S. Attorney's offices (notwithstanding edicts from main Justice that try to establish uniformity with respect to the latter), and this was the case even under the pre-Booker mandatory guidelines scheme. In districts where the probation office/judges/U.S. Attorney's office do not have an unduly expansive view of what constitutes relevant conduct (e.g., in drug cases), I agree that proof BRD of sentencing facts might not make much difference. In districts where a more expansive view is taken, however, I think juries could/would rein in some of the very broad relevant conduct assertions I have seen probation officers and AUSA's urge and district-court judges accept (particularly with respect to drug quantity). And this would mean substantially lower (and, in my view, more just) sentences in those cases.

Posted by: seahorse | Jul 24, 2010 5:18:57 PM

OMG you people! I am a victim of Pizzolato, and he does deserve 30 years! I attended the sentencing and it was a joke listening to Pizzolato speak, surprised no one shot him! U.S. District Judge Lance Africk did a Grand job!

Posted by: dawn | Jul 25, 2010 1:55:56 AM

Sorry, I am only a victim of Pizzolato, and I am sick to my stomach after reading this blog. This is my last comment and you can delete it - I do not know how some defense attorneys can sleep at night! Believe me, you do not have to read anymore in files about this crazy young man who deserves, with the rest of his family, 30 or more years!

Posted by: dawn | Jul 25, 2010 2:04:16 AM

Great discussion, all. Dawn, thanks for speaking up.

I am not bothered by disparity, when it's not based on outright corruption. Given the choice between disparity and judicial discretion, I'd choose judicial discretion. Disparity, or disparity in the eyes of any subjective observer, will always exist. The only question is whether judicial discretion will exist. I'm glad it's been returned to the system. I just wish the appellate courts would be more deferential to trial courts, due to institutional competency. That's the next battle to be fought.

Posted by: Mark Pickrell | Jul 27, 2010 9:49:25 AM

he deserves 30 years or even 200 years.
He destroyed and shortened life spans. With my family we suffered a huge loss that recked our lifes because a Ponzi schemes. This criminals are no different than the Manson clan.
They just take your life away financially instead of using a knife or gun.

Posted by: Alfredo Tulipan | Nov 26, 2010 12:47:08 AM

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