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April 30, 2012

Florida cases support(?) DOJ's expressed concerns about white-collar sentencing disparities

In a speech last month (reported here), AAG Lanny Breuer continued the Justice Department's tendency to lament what it sees as growing post-Booker sentencing disparities, especially in white-collar sentencing. Specifically, in this speech, Breuer complained that "with increasing frequency, federal district courts have been sentencing fraud offenders -- especially offenders involved in high-loss fraud cases -- inconsistently."  Assuming DOJ is keeping a file with examples of this disparity, this new sentencing story from Florida, headlined "Marian Morgan sentenced to 35 years in prison," provides seemingly strong support for these concerns.   Here is how the local story gets started:

Convicted in September for running a multimillion-dollar Ponzi scheme from her Sarasota mansion, Marian Morgan on Friday was sentenced to 35 years in federal prison.

That's more than twice as long as the sentences for two other notorious Sarasota-based fraud perpetrators — Arthur Nadel and Beau Diamond — even though Morgan's scheme involved fewer victims and less money overall....

Defense attorney Todd Foster argued that Morgan, 57, would be unlikely to turn to crime again if released after 15 to 20 years.  The judge countered that recidivism would not be an issue because of the length of the sentence.

A federal pre-sentencing report recommended Morgan's prison time be based on the size of the fraud; the number of victims; and the sophistication of the crime, among other criteria.  Morgan and her husband, John, stole roughly $28 million from 87 victims, prosecutors said during trial.

Of course, what looks on the surface to be an ugly example of so-called sentencing disparity might upon closer examination really turn out to be more of an ugly example of the so-called trial penalty.  Consider these additional details:

Morgan and her husband were indicted last summer on 22 felony counts that included wire and mail fraud, money laundering and conspiracy. Their Ponzi scheme came to light shortly after two others that were also hatched in Sarasota — Nadel's Scoop Management and Beau Diamond's Diamond Ventures scams.

Diamond was convicted at trial of stealing more money than the Morgans and from more investors.  He is currently serving a 15-year sentence in federal prison in Miami. Nadel robbed more than 400 investors of $162 million, prosecutors determined. Instead of going to trial, Nadel plead guilty to 15 felony fraud counts and was sentenced to 14 years in prison in October 2010.  He died earlier this month in North Carolina at age 79.

In contrast to his wife, John Morgan received a 10-year sentence after pleading guilty to a pair of felony counts. He also agreed to co-operate with prosecutors — which included providing information against his wife....

Marian Morgan, who as managing director of Morgan European Holdings had the most interaction with investors, was defiant to the end. She turned down a plea deal last fall that would have limited her sentence to 18 years, choosing instead to go to trial....

[Morgan's] victims were lured by the promise of monthly double digit returns, with payoffs as short as three months in some cases.  Instead, investors received only frequent emails from Marian Morgan, which promised payments were to arrive soon.  She also offered detailed explanations concerning delays, and later in the scheme threatened that investors would never see their principal again if they contacted authorities....

Morgan plans to appeal her sentence through Tampa defense attorney Barry Cohen. Long and other victims have alleged the money to pay both Cohen and Foster may have come from investors in the Ponzi scheme.  Morgan will likely be imprisoned well into her eighties, even with time already served in Pinellas and time off for good behavior.

Based on this article, it would seem that the "going rate" at sentencing for a significant Ponzi scheme in south Florida is somewhere around 15-years in federal prison.  With this number in mind, the 10-year prison term given to the cooperating Mr. Morgan seems roughly in line with local norms with a five-year discount for cooperation.  And the plea offer capping Ms. Morgan's sentencing exposure at 18 years coming from the feds also seems reasonable under the circumstances.

And yet Ms. Morgan gets with a 35-year prison term (and I suspect that the recommended guidelines range may have been even higher).  If DOJ is truly concerned about unwarranted sentencing disparity in financial fraud cases — rather than, as I fear, really just concerned about the post-Booker potential for unwarranted sentencing leniency or about some defendants who have the temerity to exercise their trial rights not having to pay an extra heavy sentencing price — then federal prosecutors ought to consider supporting Ms. Morgan's sentencing appeal to the Eleventh Circuit.  But I would bet a whole lot of money that on appeal federal prosecutors will defend this extremely long white-collar sentence as reasonable even though it surely does appear out of line with the sentences given to similar defendants convicted of similar crimes.

April 30, 2012 at 02:47 PM | Permalink

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1. "And yet Ms. Morgan gets with a 35-year prison term (and I suspect that the recommended guidelines range may have been even higher). If DOJ is truly concerned about unwarranted sentencing disparity in financial fraud cases — rather than, as I fear, really just concerned about the post-Booker potential for unwarranted sentencing leniency or about some defendants who have the temerity to exercise their trial rights not having to pay an extra heavy sentencing price — then federal prosecutors ought to consider supporting Ms. Morgan's sentencing appeal to the Eleventh Circuit."

The very first rule of appellate lawyering is that you cannot seek something in the district court and then complain in the court of appeals that you got it.

2. Back when they were mandatory, the Guidelines did not count as "disparity" even major variations in the sentences given co-conspirators in the same case. The caselaw holds that disparity is to be viewed much more broadly than that.

3. What gets referred to as the "trial penalty" is actually the "bargain bonus." As we all surely know by now, the idea that giving sentencing credit for pleading is an unconstitutional chilling of the right to trial has been rejected by every circuit. Time to give that one a rest.

Nor is this just a matter of Guidelines law. For decades of pre-Guidelines practice, defendants routinely got a break at sentence for pleading. If that was ever held unconstitutional, I'm not aware of it. Pleading guilty when you are guilty does indeed show a degree of acceptance of responsibility that is otherwise absent, and that any sensible system would count in the defendant's favor at sentencing.

4. When mandatory guidelines went out the window, the SCOTUS explicitly recognized (per Justice Ginsburg, I believe) that a degree of increased disparity was the unavoidable price of the "advisory-only" remedy. It's late in the day to be complaining that she was right.

Posted by: Bill Otis | Apr 30, 2012 10:06:18 PM

And if NACDL is truly concerned with out-of-guideline sentences and the "trial tax" (as the defense bar and law professoriate put it) then they'll advocate a return to guideline sentencing -- and their leadership will stop pointing to their own client's guilty plea as a reason for lowball sentences.

What do you want to bet that every practicing defense lawyer, within a week of whatever article/blog-post/courtroom-speech they make decrying the "trial tax" goes right into a different courtroom for another client saying "your honor, my client deserves probation because his early guilty plea demonstrates remorse, acceptance of responsibility, etc..."

It's no fair to charge hypocrisy on one side and ignore it on the other. That's... hypocritical.

Posted by: Follow up on Bill | May 1, 2012 10:34:47 AM

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