Tuesday, July 19, 2016
Nearly four years(!?!) in federal prison for MLB scout who hacked into rival team's research and notes
As reported in this local article, headlined "Former Cardinals scouting director sentenced to 46 months for hacking Astros database," a notable defendant got a significant federal prison sentence for some illegal corportate espionage. Here are some of the details:
The former St. Louis Cardinals scouting director who admitted he hacked accounts of the Houston Astros to gain insight into their operations was sentenced Monday afternoon to 46 months in prison.
Chris Correa pleaded guilty in January to five counts of unauthorized access to a protected computer. As part of his plea, Correa admitted to using the accounts of three Astros employees to view scouting reports, amateur player evaluations, notes on trade discussions and proposed bonuses for draft picks. The information he accessed was given an estimated value of $1.7 million by the U.S. Attorney’s office.
Correa, 36, also admitted taking measures to conceal his identity. The sentence includes two years of supervised release and restitution payment of $279,038.65. He will remain free until he is to report to prison, in two to six weeks....
During his guilty plea six months ago, Correa contended he hacked into the Astros accounts to see if former Cardinals employees had taken proprietary data or statistical models to use in their new positions with the Astros. Correa told prosecutors he found evidence that it did occur, U.S. Attorney Kenneth Magidson told the Post-Dispatch at that time....
Giles Kibbe, general counsel for the Astros, said after the sentencing that Correa accessed the Houston team’s database 60 times on 35 different days. “I don’t know what he saw or thought he saw,” Kibbe said, adding that what was clear from listening to U.S. District Judge Lynn N. Hughes during the sentencing is this: “The Astros were victims in this case.”...
Houston and its general manager, Jeff Luhnow, who began his baseball career with the Cardinals more than a decade ago, have repeatedly denied that Luhnow or any other former Cardinals employees brought information to the Astros. “The Astros refute Mr. Correa’s statement that our database contained any information that was proprietary to the St. Louis Cardinals,” the team said in a statement in January. Along with the U.S. attorney’s investigation, in which no other member of the Cardinals’ organizations was charged, the team completed an internal investigation; its outcome was Correa’s dismissal a year ago....
Correa read a four-minute statement to the judge before Hughes handed down his sentence. “I behaved shamefully,” Correa said, in apologizing to the Astros. “The whole episode represents the worst thing I’ve ever done by far.”
As he continued reading, offering an apology to his family with the promise to “regain your trust,” Hughes stopped Correa, asking him to turn around and speak directly to family members attending the hearing. Correa did so, his voice breaking as he repeated his apology. Correa said that because of his actions, he lost his career and his house, and he will work with his wife to rebuild “a quiet life of integrity.”
Hughes chastised Correa several times for his actions, comparing them to middle-school behavior. The judge used as an example a teacher asking Correa if he threw the eraser to which Correa would justify the action by saying: “Bobby did, too!”
“I hope it didn’t work then. It’s not going to work now,” Hughes said. The judge likened Correa’s hacking actions to altering a check by adding extra zeroes “and wiping out someone’s bank account.” Hughes also disclosed in court that Correa had been using prescription drugs without a prescription since the hacking charges, and that he could also have been prosecuted for that crime.
Hughes noted that Correa had taken college classes in ethics, asking: “At any time did you think hacking the Astros’ computers and using other people’s passwords was ethical?”
“No, your honor,” Correa said. Correa left the courthouse without comment, climbing into the passenger seat of a white SUV that was quickly driven away....
As part of his plea in January, Correa admitted to illicitly accessing Houston’s database through three accounts from at least March 2013 to the end of June 2014. He began by accessing the email account of one Astros employee who used to work for the Cardinals, referred to in the documents as “Victim A.” Although never mentioned by name in the documents, two of the former employees being described are believed to be Luhnow and Sig Mejdal. Both were key architects in the early days of the Cardinals’ analytic departments, and both are now baseball operations execs in Houston.
Correa took advantage of the fact that “Victim A” had used a password for his Astros email that was similar to the one he used with the Cardinals. He had gained the password when “Victim A” turned in his Cardinals laptop before leaving the team. Correa was able to access the accounts of two other Houston employees and through them see information in a database nicknamed “Ground Control.” On March 24, 2013, Correa viewed an Excel file of every amateur player eligible for the draft as well as the Astros’ internal evaluations and the scouts’ proposed bonuses to offer the players. He also looked at the Astros’ evaluations of Cardinals’ prospects.
That June, during the draft, Correa entered Ground Control and filtered the Astros’ information on players not yet drafted. He also looked at specific pages for two players, neither of whom the Cardinals drafted.
During that visit he looked at Houston’s scouting information for three of the eight players the Cardinals’ selected the previous day in rounds three through 10. At baseball’s trade deadline, July 31, Correa peered into Houston’s notes on trade discussions. In March 2014, he again entered the database and looked at 118 pages of what court documents called “confidential information.”
Cardinals general manager John Mozeliak and other team officials have stated they did not know about the breaches until investigators alerted them in early 2015.
I have reprinted the details of this "hacker's crime" because I am struggling to see what aggravating factors justified a nearly four-year prison sentence for a white-collar offenders who would appear to present no obvious risk to public safety and who has admitted his misdeeds and seems to show genuine remorse for his computer crimes. I sumrise from the press description here that the the defendant's federal sentencing guidelines range was driven up significantly by the U.S. Attorney's determination that the "estimated value" of corporate information accessed here was $1.7 million. But the fact that the defendant was ordered to pay less than $300K in restitution suggest that the actual harm to the Cardinals was far less than the economic number that appears to have driven the defendant's sentence up so much under the applicable sentencing guidelines.
Because I have not done a careful study of lots of recent computer crime cases, I am not sufficiently informed about whether this particular defendant's crime was distinctly bad or whether his sentence is distinctly severe. But I do know that modern problems in the US with mass incarceration is aggravated when we now have persons who pose no threat to public safety and who commit crimes that seem to have a relatively small impact on a huge rich company getting sent away to federal prison for a really long period of time.
July 19, 2016 in Examples of "over-punishment", Federal Sentencing Guidelines, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, Scope of Imprisonment, White-collar sentencing | Permalink | Comments (30)
Thursday, July 14, 2016
First trader federally convicted for "spoofing" gets significant (below-guideline) prison term
As reported in this local article, headlined "Trader Michael Coscia 1st in nation to be sentenced under 'anti-spoofing' law," a notable new type of federal white-collar offender got a notable old-school type of punishment yesterday in federal court in Chicago. Here are some details:
In the outcome of a closely watched trial that could set precedent, convicted futures trader Michael Coscia was sentenced in federal court Wednesday to three years in prison and two years of supervised release for spoofing and commodities fraud.
Coscia, 54, of Rumson, N.J., was the first defendant in the country to stand trial under new anti-spoofing laws included in the 2010 Dodd-Frank Act. In November, he was found guilty of six counts of spoofing — the use of computer algorithms to rig markets in fractions of a second — and six counts of commodities fraud.
Prosecutors had recommended five to seven years in prison, while the defense had sought probation. Ultimately, U.S. District Judge Harry Leinenweber settled in the middle, citing Coscia's age and health, as well as the ambiguous amount of financial loss incurred by the victims.
"This is a very serious crime and it has serious consequences. ... (Coscia) has helped a lot of people over the years, not only family and friends, but also fellow traders. But he also engaged in spoofing and had no financial need to do so," Leinenweber said shortly before announcing the sentence.
Federal prosecutors were pleased with the outcome. "There was and has been this sort of suggestion throughout the course of this prosecution that this criminal case is somehow murky or unclear because of technology, because of the use of algorithms. Well, guess what? A lie is a lie. Deceit is deceit. ... The defendant cheated faceless victims out of money through deceit over the internet. Today's result and sentence, I think, is a reflection of that," U.S. Attorney Zachary Fardon said.
Assistant U.S. Attorney Sunil Harjani added that the sentence of imprisonment would send a message to traders in Chicago and throughout the U.S.
Coscia made about $1.4 million in only about two months by victimizing traders including those at Citadel, the Chicago financial services firm formed by billionaire Ken Griffin, when he manipulated the prices of futures contracts on the Chicago Mercantile Exchange, prosecutors have said.
Upon leaving the courtroom, Coscia declined to comment. He smiled as he hugged friends and family who had come to show support. During the hearing, he gave a brief statement asking for leniency and saying that he takes responsibility for his actions.
Stephen Senderowitz, Coscia's attorney, said he will file an appeal. During the hearing, Senderowitz emphasized that it's not clear how much money any individual trader lost because of Coscia's actions. That will be among the issues argued further during the appeal, during which the defense will also challenge the constitutionality of the spoofing law, he said afterward....
The Coscia case is "just the tip of the iceberg" in terms of the government's increasingly active role in such prosecutions, said Renato Mariotti, lead prosecutor on the case before recently joining a private practice. "For years, many people scoffed at the notion that the government could explain high-frequency trading strategies to judges and juries. No one is laughing anymore," Mariotti said in a statement after the sentencing.
Coscia commissioned the design of computer programs, known as algorithms, to manipulate prices in the markets of various commodities, including gold, soybean meal, soybean oil, high-grade copper, Euro FX and Pounds FX currency futures, prosecutors said.
Among Coscia's family, there was some feeling that the sentencing could have gone worse. During the hearing, Anthony Coscia, Michael Coscia's uncle and a counselor at a Catholic high school in Brooklyn, N.Y., quoted passages from Shakespeare and the Bible while speaking on behalf of his nephew's character.... "The judge seemed to show some compassion," the elder Coscia said as he left the courtroom.
Tuesday, July 12, 2016
Federal prosecutors want former Gov Blagojevich to get same 14-year prison term at resentencing despite a few vacated convictions
As reported in this local article, headlined "Feds: Give Blago 14 years all over again," federal prosecutors do not believe that the partial success that former Illinois governor had when appealing his corruption convictions should produce any benefit at his upcoming resentencing. Here are the details from resentencing memos filed this week:
Federal prosecutors want former Gov. Rod Blagojevich sentenced to 14 years in prison all over again. But Blagojevich hopes the federal judge who originally hammered him with that 14-year sentence will reconsider and give him as little as five years behind bars.
Blagojevich has already been locked up for four years in a Colorado prison. Next month, his battle to overturn his conviction could land him back in front of U.S. District Judge James Zagel for re-sentencing, after years of cries that Blagojevich was dealt too severe a punishment. The feds stood by the sentence in a sentencing memo filed just before midnight Monday, though.
“Corruption spreads unless it is deterred,” Assistant U.S. Attorney Debra Riggs Bonamici wrote in the memo. “Public officials who gain from corrupt deals are incentivized to do more, and successes inspire other public officials to see if they can do it too.”
Meanwhile, Blagojevich’s lawyers made an appeal for mercy and opened a window into Blagojevich’s four years behind bars. They said the former governor worked in the kitchen warehouse, taught Civil War and World War II history and studied music as a way to connect to his daughter Annie, who studied classical piano. Lawyer Leonard Goodman wrote that Blagojevich formed a band with another inmate called “The Jailhouse Rockers” that broke up when the other inmate was released.
“Blagojevich’s number one priority during his four plus years of incarceration has been to repair and mitigate the harm that his actions have done to his wife and children,” Goodman wrote. “Blagojevich speaks to his family nearly every evening.”
Some older related posts on the Blagojevich case:
- You make the sentencing call: What sentence should Blago get?
- Early buzz that feds think Rod Blagojevich's guideline range is 30 years to life in prison
- Feds asking for prison term of 15 to 20 years for Rod Blagojevich
- Insightful commentary questions why Blago is getting huge break from federal prosecutors
- "Prison is too good for Blago"
- Bold (and misguided?) prediction of 20-25 years in the federal pen for Blago
- Do would-be white-collar offenders actually "get the message" from long sentences?
- Blagojevich sentencing and the failings (and limits?) of the federal sentencing guidelines
- "Ex-Gov. Rod Blagojevich sentenced to 14 years"
Wednesday, July 06, 2016
Split Eighth Circuit panel affirms three-month sentence for Iowa egg executives whose company caused salmonella outbreak
As reported in this AP piece, the Eighth Circuit today rejected an array of challenges to upheld short jail sentences for two egg industry executives who pleaded guilty to misdemeanor corporate crimes. Here is more about the case and the ruling:
In a 2-1 decision, the 8th U.S. Circuit Court of Appeals upheld three-month jail sentences issued last year to 82-year-old Austin "Jack" DeCoster and his son Peter DeCoster, 53.
The DeCosters were aware of unsanitary conditions at their sprawling Iowa egg farms but failed to improve them before the outbreak, which sickened up to 56,000 people and left some with permanent injuries, Judge Diana Murphy wrote. "We conclude that the record here shows that the DeCosters are liable for negligently failing to prevent the salmonella outbreak," Murphy wrote, joined by Judge Raymond Gruender.
The case, a rare prosecution against those responsible for an outbreak of foodborne illness, was closely watched by advocates for consumer safety and food and drug manufacturers. The Justice Department praised the ruling, saying the DeCosters disregarded basic food safety standards for years and deserved jail time....
At issue was whether corporate executives could face imprisonment for violating the federal Food, Drug, and Cosmetic Act, which allows "responsible corporate agents" to be held criminally liable even if they were not aware of the wrongdoing. The DeCosters, who owned and operated Quality Egg LLC, had pleaded guilty to violating the law by introducing adulterated eggs into interstate commerce. They said they did not know the eggs were contaminated but acknowledged they were in a position to stop the problems had they known.
U.S. District Judge Mark Bennett ordered the jail time in April 2015, saying they knew or should have known about the risks posed by the presence of salmonella in and around millions of egg-laying hens. But he allowed the DeCosters to stay free while they appealed the sentences, which they argued were unconstitutional and unreasonably harsh.
Business groups, including the U.S. Chamber of Commerce and the National Association of Manufacturers, filed friend-of-the-court briefs backing the DeCosters' appeal. They argued that it would be unfair to send corporate executives to prison for violations that they were unaware of or that were committed by subordinates.
Murphy rejected those arguments, saying Congress did not require executives to have known about the violations to be subject to the food safety law's criminal penalties. She said the jail terms were relatively short, within federal guidelines and "not grossly disproportionate to the gravity of their misdemeanor offenses." Gruender added in a concurring opinion that the DeCosters were not being punished for the acts of others, saying their own failure to take steps to prevent the outbreak was to blame.
Dissenting Judge C. Arlen Beam said prosecutors failed to show that the DeCosters had criminal intent, and therefore "there is no precedent" for sending them to jail. He said they were not aware the products were tainted with salmonella and that they immediately recalled hundreds of millions of eggs once the outbreak was confirmed "at great expense."...
Quality Egg paid a $6.8 million fine after pleading guilty to felony charges of shipping eggs with false processing and expiration dates and bribing a U.S. Department of Agriculture inspector to approve sales of poor-quality eggs.
The full ruling in US v. DeCoster, No. 15-1890 (8th Cir. July 6, 2016), is available at this link.
Friday, June 17, 2016
"'Loss' Revisited: A Guarded Defense of the Centerpiece of the Federal Economic Crime Sentencing Guideline"
The title of this post is the title of this notable new article authored by Frank Bowman now available via SSRN. Here is the abstract:
This article discusses "loss," the concept at the heart of the Federal Sentencing Guidelines section governing economic crimes, Section 2B1.1. It notes the common criticism that "loss" plays too large a role in federal economic crime sentencing, but distinguishes between the sound observation that structural problems in Section 2B1.1 cause loss amount to generate too many "offense levels" and critiques of the core definition of "loss."
The article summarizes previous suggestions made by the author and others to address the arguably disproportionate role played by "loss," but it focuses primarily on the Guidelines' definition of "loss," whether actual or intended. The article defends the fundamental soundness of the existing "loss" definition, but suggests some points on which improvements might be made, particularly to the definition of intended loss.
The article was solicited as a response to an article by Mr. Daniel Guarnera, published in the same issue of the Missouri Law Review, in which Mr. Guarnera argues for a revision of the definition of intended loss to include unrealized harms as to which the defendant was reckless.
Monday, June 13, 2016
Intriguing Ninth Circuit ruling about restitution and forfeiture and the Excessive Fines Clause
The Ninth Circuit handed down an interesting new opinion dealing with various challenges to various financial sanctions in US v. Beecroft, No. 12-10175 (9th Cir. June 13, 2016) (available here). Here are snippets from the start and heart of the extended ruling:
Following her convictions for participating in an extensive mortgage-fraud conspiracy, a defendant was ordered to pay more than $2 million in restitution and to forfeit more than $100 million. We must decide whether either amount was erroneously calculated or unconstitutionally excessive....
As noted, Beecroft has not demonstrated error in the district court’s calculation of the amount of losses suffered by the banks injured by Beecroft’s actions. Without error in the loss calculation, Beecroft cannot show that requiring her to pay that amount back to the victims was somehow excessive or grossly disproportional to her crimes, which caused the loss in the first place. And we reiterate that Beecroft was not ordered to pay anything approaching the full amount of the banks’ losses. Uncontroverted evidence was presented to the district court showing that the scheme in which Beecroft participated caused losses in excess of $50 million; requiring her to pay slightly more than $2 million of that back is not an unconstitutional and excessive punishment....
The $107 million Beecroft was ordered to forfeit for the conspiracy (Count 1) stands apart. As with the other counts of conviction, for Count 1 Beecroft could be fined no more than $1 million (with a Guidelines range beginning as low as $20,000). In other words, for Count 1, Beecroft was ordered to forfeit a sum more than 100 times greater than the maximum fine allowable and more than 5,000 times greater than the lower-end of the Guidelines range. Even accounting for the fact that Beecroft faced potentially significant prison time as well, see Mackby, 339 F.3d at 1018, this is a tremendous disconnect between the forfeiture amount and Beecroft’s legally available fine. Indeed, such a disconnect stands out even among forfeiture orders which have previously been held grossly disproportional....
The government cites no case upholding a forfeiture order with a disparity similar to the one here, and it has not attempted to argue that the $107 million otherwise corresponds to injuries sustained by the government or the banks....
We have little doubt that the Eighth Amendment allows Beecroft to be ordered to forfeit a substantial sum of money for her participation in such an extensive and damaging conspiracy. But difficulty remains with the exceptional amount of forfeiture the court did impose. Without even an argument supporting the propriety of the $107 million forfeiture, we have no choice but to conclude that an order which so vastly outpaces the otherwise available penalties for Beecroft’s criminal activity runs afoul of the Excessive Fines Clause. Even on plain-error review, we must vacate the forfeiture order with respect to Count 1 and remand to the district court for reconsideration of that amount in light of the Eighth Amendment’s Excessive Fines Clause.
Thursday, June 02, 2016
"Rich Defendants’ Request to Judges: Lock Me Up in a Gilded Cage"
The title of this post is the headline of this lengthy front-page New York Times article. Here are excerpts:
Last October, Ng Lap Seng, a Chinese billionaire indicted on charges that he bribed the former president of the United Nations General Assembly, was granted bond of $50 million, secured by $20 million cash and a Midtown apartment where he would be confined and subjected to GPS monitoring and roundtheclock guards at his own expense.
Many thousands of people arrested in New York languish in the city’s jails because they are unable to make even modest bail. So advocates for prisoners and lawyers for indigent defendants say the idea that some defendants are able to stay out of jail because they have the means to finance a novel confinement plan is blatantly unfair.
“It just reinforces for me the point that our entire system of pretrial detention is predominantly based on wealth,” said Inimai M. Chettiar, a lawyer at the Brennan Center for Justice who runs an initiative to end mass incarceration. Joshua Norkin, a lawyer at the Legal Aid Society of New York, said the elaborate bail package that was being proposed for Mr. Zarrab and that was granted to Mr. Ng should remind judges in the state court system that they have the tools to release low-income people “on alternative and more creative forms of bail, and they’re failing to do it.”
The cases of wealthy defendants’ receiving special bail conditions are not limited to international defendants. In 2009, Marc S. Dreier, a Manhattan lawyer who pleaded guilty to running an elaborate scheme that defrauded hedge funds and other investors of $700 million, was granted a $10 million bond pending trial and remained in his East Side apartment, secured by electronic monitoring and armed security guards, which his family paid for.
Thursday, May 26, 2016
Making my way to DC for U.S. Chamber/NACDL Symposium: "The Enforcement Maze: Over-Criminalizing American Enterprise"
Highlighting the many ironies of modern travel, this morning I got to the airport extra early for a flight to DCA because of all the talk about TSA under-staffing and long security lines. But after breezing through securing in a matter of minutes, I am now stuck in the CMH terminal delayed hours awaiting a working plane to ferry me to our nation's capital to participate in a symposium on overcriminalization. I am bummed about the delay because I was looking forward to hearing the morning panels at this inside-the-Beltway event to which I am heading: The U.S. Chamber Institute for Legal Reform (ILR) and the National Association of Criminal Defense Lawyers (NACDL) Law & Policy Symposium on "The Enforcement Maze: Over-Criminalizing American Enterprise."
Undaunted, I remain upbeat because I am cautiously optimistic I will still make it to DC in time to hear fellow lawprof Lucian Dervan present a "TED Talk-inspired" presentation on "The Symbiotic Relationship Between Overcriminalization and Plea Bargaining." I am also looking forward to an afternoon of highlights at this event that include a luncheon keynote by David Ogden, former Deputy Attorney General of the United States, as well as closing remarks by Senator Orrin Hatch.
For those revved up by these topics, here is the description of my afternoon panel:
The Public Policy Consequences and the Road to Recovery: This panel will address the erosion of respect for criminal law, costs incurred by taxpayers, over-incarceration, and the squashing of business ingenuity and growth, and will explore solutions to these problems.
I expect to talk briefly about the importance of mens rea considerations at the sentencing of persons convicted of business-related crimes (and I may do a future post or two on this topic). But, in light of the panel's description, I would welcome reader comments on what I should make sure gets covered my someone on my panel.
Saturday, May 21, 2016
"Trespass, Not Fraud: The Need for New Sentencing Guidelines in CFAA Cases"
The title of this post is the title of this new paper authored by Orin Kerr now available via SSRN. Here is the abstract:
This article argues that the existing regime for sentencing violations of the Computer Fraud and Abuse Act (CFAA) is based on a conceptual error that often leads to improper sentencing recommendations. The Federal Sentencing Guidelines treat CFAA violations as economic crimes. Most CFAA crimes are rooted in trespass, however, not economic loss such as fraud crimes. The difference is significant. The economic crimes framework now in place leads guidelines calculations to focus too much on economic loss and not enough on the circumstances of the crime. The article concludes by sketching out a new and better way to calculate sentencing recommendations in CFAA cases.
Tuesday, May 17, 2016
"How to solve the biggest issue holding up criminal justice reform: Republicans and Democrats can't agree on 'mens rea' reform. Here's a middle ground."
The title of this post is the headline of this notable new Politico commentary authored by Professor Alex Sarch. Here are excerpts:
Despite gridlock and the distraction of a presidential election, Congress hoped to pass legislation this year that would overhaul our flawed criminal justice system. But with the election approaching, that hope is rapidly disappearing over disagreements on one controversial issue: “mens rea reform.”
“Mens rea” — Latin for “guilty mind” — refers to requirements in criminal law that concern a defendant’s mental state, like the intent to cause harm or knowledge of what one was doing. Republicans have demanded that criminal justice reform also make such requirements in federal law stricter, forcing prosecutors in many cases to prove that defendants knew they were breaking the law. Democrats have balked at the proposed reforms, arguing that they would make it much harder to prosecute corporate executives for white-collar crimes.
Both sides have a point. Mens rea reform can increase clarity in the law and make unfair prosecutions less likely. But the Republican proposals, in both the House and Senate, are so strict that they would insulate many highly culpable actors from conviction. Instead of allowing the mens rea issue to derail criminal justice reform, lawmakers should agree on a middle ground that imposes a simple default mens rea requirement — knowledge of the facts constituting the offense. Such an agreement would improve our criminal law and pave the way for comprehensive criminal justice reform....
Late last year, Republicans introduced bills in the House and Senate to reform the mens rea requirements in federal law. But both bills have significant flaws that may actually create more confusion and protect culpable actors. Since courts already presume that criminal statutes include a mens rea requirement, an ill-conceived mens rea policy would be worse than the status quo.
The Senate bill would make it too hard to convict culpable actors because it says that for crimes without an explicit mens rea requirement, prosecutors must prove willfulness — defined as “knowledge that the person’s conduct was unlawful.” This standard has scary implications.... [W]hy should we immunize the bank executive who knew full well he was issuing misleading public statements, but who just happened to be unsure whether his actions were criminal (perhaps because he didn’t make time to research it)? For this reason, Department of Justice officials and other policy groups have criticized the proposed mens rea reform bills for making it harder to prosecute corporate crime.
The Senate bill does include an important exception for statutes to which Congress affirmatively intended no mental state requirement to apply. Moreover, the bill would not change any mental state elements established by Supreme Court precedent (though notably not precedent from Federal Courts of Appeals). However, these provisions do not make up for the bill’s dangerous new willfulness standard.
The House bill has been criticized as confusing, but it is a less extreme proposal than the Senate bill. It generally requires only knowledge of the facts constituting the offense as the default mental state requirement. In addition, when it comes to crimes that a reasonable person would not know to be illegal — largely crimes in technical areas like securities, tax or environmental law — the government would also have to prove that “the defendant knew, or had reason to believe, the conduct was unlawful.” In other words, it would have to show that they 1) knew the facts constituting the offense and 2) should have known their conduct was illegal. This means that mere negligence as to illegality would suffice for these crimes.
So for a bank executive accused of accounting fraud, for example, the government would only have to show that she 1) knew what she was doing (i.e., making false statements) and 2) should have known — based on her experience and professional role — that her actions were illegal.... However, the House bill has two problems. First, unlike the Senate bill, it does not make exceptions for statutes that courts have already interpreted to include a mens rea element or for statutes that Congress clearly intended to have no mental state requirement. Second, the bill makes it easier for culpable actors to escape liability by claiming ignorance of the law. Those accused of a technical crime could avoid punishment by claiming they didn’t realize their actions were illegal and that it wasn’t their responsibility to find out.
However, these problems can easily be fixed: Congress should add exceptions to the House bill and adopt regular knowledge as the default mens rea. Effectively, this deletes the second requirement from the House bill. In other words, for technical crimes, the government would not have to prove a defendant should have known his conduct was illegal, just that it was illegal and that the defendant knew the circumstances of the action. This knowledge standard would not make ignorance of the law any kind of excuse. Such a modest proposal should be an acceptable compromise, as it is only a small departure from the House bill. Republicans are right that the lack of clear mental state requirements in federal statutes lets courts interpret the law in uneven and unpredictable ways. But their proposed reforms would make it too hard to convict culpable actors. Instead, lawmakers should agree on a simple default mens rea — like the House bill’s basic requirement of knowledge of the facts. Such changes would provide clarity for courts and break the political logjam blocking criminal justice reform.
Though I appreciate this effort to find a mens rea middle ground that might help create more consensus on criminal justice reforms in Congress, I continue to feel strongly that those who oppose the incorporation of a high mens rea requirement in federal criminal laws to be misguided. Put simply, I really do not see any "scary implications" of having a high mens rea requirement for federal criminal offenses given that our massive regulatory state already has no shortage of civil laws (with significant penalties) that do not require showing mens rea.
Tuesday, May 03, 2016
Former New York Assembly speaker gets lengthy (way-below guideline) federal sentence for corruption
This Wall Street Journal article reports on today's notable sentencing of a notable crooked New York politician under the headline "Sheldon Silver Sentenced to 12 Years: The former New York state Assembly Speaker also was ordered to pay a $1.75 million fine." Here are the details on this sentencing (and related others to come):
Sheldon Silver was sentenced to 12 years in prison on Tuesday, making the former New York Assembly speaker one of the most powerful politicians in the state to be given time behind bars. U.S. District Judge Valerie Caproni, who also ordered Mr. Silver to pay a fine of $1.75 million and forfeit about $5.3 million he reaped from the criminal schemes of which he was convicted, said she hoped the punishment would serve as a deterrent.
“I hope the sentence I impose on you will make other politicians think twice, until their better angels take over,” said Judge Caproni. “Or, if there are no better angels, perhaps the fear of living out ones golden years in an orange jumpsuit will keep them on the straight and narrow.”
In a brief statement before the sentence was announced, Mr. Silver, 72 years old, said he had let down his family, colleagues and constituents. “I’m truly, truly sorry for that,” said Mr. Silver, who was found guilty in November of honest-services fraud, extortion, and money laundering.
Prosecutors had asked Judge Caproni for a sentence greater than any previously imposed on a New York legislator convicted of public corruption, a term that court filings suggest was 14 years. Federal sentencing guidelines suggested a range from about 22 to 27 years. Judge Caproni said Tuesday that imposing such a sentence in this case would be “draconian and unjust” given Mr. Silver’s age.
Prosecutors said Mr. Silver used his public position and power to obtain millions of dollars in kickbacks and bribes. Mr. Silver’s schemes were “multifaceted and nefarious,” Assistant U.S. Attorney Carrie Cohen said before the sentence was announced Tuesday. Ms. Cohen said Mr. Silver needed a significant prison term that reflects the public toll of his crimes and the need to deter similar conduct in Albany. “His conviction caused unparalleled damage: to our political systems, to the public’s belief in our state government,” she said.
Attorneys for Mr. Silver questioned the benefit of sending him to prison, and described their client as a committed public servant who already had suffered an extraordinary fall from grace. “He is already crushed,” attorney Joel Cohen said Tuesday. “He’s been devastated by everything that occurred over the last year and a half.”...
The conviction of Mr. Silver, a Manhattan Democrat who served as speaker for more than two decades, was a significant victory for Manhattan U.S. Attorney Preet Bharara, who has aggressively pursued public-corruption cases. “His crimes struck at the core of democratic governance — a man with unparalleled power over the affairs of New York State was secretly on the take, abusing all that power to enrich himself and prevent anyone from learning about his corrupt schemes,” prosecutors from Mr. Bharara’s office wrote in sentencing documents. “Today’s stiff sentence is a just and fitting end to Sheldon Silver’s long career of corruption,” Mr. Bharara said in a statement.
Two of Mr. Silver’s former Albany colleagues are expected to be sentenced later this month. Former state Senate Majority Leader Dean Skelos, who in December was found guilty of public-corruption charges including conspiracy, bribery and extortion, is scheduled to be sentenced on May 12. Former state Sen. John Sampson, who was found guilty in July of obstruction of justice and making false statements to investigators, is scheduled to be sentenced in Brooklyn federal court on May 19.
Prior related post:
Wednesday, April 27, 2016
Former House speaker gets black hole of federal prison for 15 months after sentencing supernova
In this post yesterday, I explained why I called today's sentencing of former House Speaker Dennis Hastert a sentencing supernova. Today, this ABC News piece reports on the sentencing events and outcome in federal court this morning:
Former Speaker of the House John Dennis Hastert was sentenced today in federal court to 15 months in prison and two years of supervised release after he faced one of his accusers, who identified himself publicly for the first time as Scott Cross, a former Yorkville High School wrestling student.
Cross, who was until now identified in court documents only as “Individual D,” took the stand and introduced himself as a father, husband and businessman. Cross described his abuse by Hastert as “his darkest secret as he [Hastert] became more powerful.”
Hastert has also been required to comply with a sex offender treatment program. The sentence follows an almost year-long hush money case hinging on payments Hastert made to a student he allegedly sexually abused while acting as a wrestling coach at Yorkville High School in Illinois.
Cross said Hastert had "offered massages" to him in order to help him lose weight. He went on to describe a one-time incident when he was 17, saying Hastert "grabbed my penis and began to rub me. Stunned, I pulled up my shorts and ran out of the locker room.” Cross said he decided to testify after Hastert and his defense team reached out to his brother, Illinois politician Tom Cross, for a letter of support. Tom Cross served in the Illinois House of Representatives for 22 years. Scott Cross was on the varsity wrestling team at Yorkville High School when Hastert was a coach in the 1970s.
Using a walker, Hastert approached the judge. “I am deeply ashamed to be standing here today,” he said. “I know I am here because I mistreated some of my athletes that I coached. ... I want to apologize to the boys I mistreated. I was wrong and I accept that.” Judge Durkin referred to Hastert as a "serial child molester" while delivering the sentence.
The man formerly second in line for the presidency was wheeled into court this morning by attendants. In a January court filing, Hastert’s lawyers revealed that the former speaker’s health had rapidly declined following a stroke and a blood infection, and that he now needed “assistance for most daily activities.” Hastert technically faced a maximum penalty of five years.
Dozens of Hastert’s supporters have written letters to the judge asking for mercy, including former Republican Congressional leader Tom Delay, who called Hastert “a man of integrity. He loves and respects his fellow man.” CIA Director Porter Goss called Hastert “a rock solid guy with center-of-the country values.”
Hastert pleaded guilty in October to violating bank laws in connection with paying out hush money over the years allegedly to one of his victims, and in April his defense team made a filing publicly acknowledging the “harm” he caused to “others” for “misconduct that occurred decades ago.”
Tuesday, April 26, 2016
You be the judge for "sentencing supernova": what punishment for former House speaker Dennis Hastert for structuring (and sex) offenses?
I have decided to call tomorrow's scheduled sentencing for former House speaker J. Dennis Hastert a "sentencing supernova." As science geeks know, and as this Wikipedia entry explains, a supernova is "an astronomical event that occurs during the last stellar evolutionary stages of a massive star's life, whose dramatic and catastrophic destruction is marked by one final titanic explosion." I consider any former speaker of the House to be a "massive star" and I look at his coming sentencing as the culmination of a "dramatic and catastrophic destruction" as it was slowly unearthed by federal authorities that he was committing federal banking offenses in order to pay hush money to one (of now it appears many) of Hastert's long-ago sex abuse victims.
I also am thinking of Hastert's sentencing in "supernova" terms because there are so many dynamic and debatable sentencing issues swirling around his case. This recent Chicago Tribune article, headlined "More than 40 letters in support of Hastert made public before sentencing," reviews just some of the sentencing issues in play (with my emphasis added):
More than 40 letters in support of former U.S. House Speaker Dennis Hastert — including one from his former congressional colleague Tom DeLay — were made public Friday evening in advance of his sentencing next week on hush money charges.
"We all have our flaws, but Dennis Hastert has very few," wrote DeLay, the Texas Republican who served as majority leader under Hastert in the early 2000s. "He doesn't deserve what he is going through. I ask that you consider the man that is before you and give him leniency where you can."...
Also included were letters from Hastert's wife, Jean, and sons Joshua and Ethan, who wrote of his devotion to his family and his good deeds as a coach, teacher and later as a politician. They also wrote of concerns over his failing health — Hastert's lawyers have said he suffered a stroke and near-fatal blood infection last year that left him hospitalized for weeks. "This has taken a terrible toll on our family," his wife wrote. "I am particularly worried that if he is taken from his home and the care he needs, his health will continue to deteriorate."
Hastert, 74, faces probation to up to five years in prison when he is sentenced Wednesday, although his plea agreement with prosecutors calls for a sentence of no more than six months behind bars. He pleaded guilty in October to one count of illegally structuring bank withdrawals to avoid reporting requirements, admitting in a plea agreement that he'd paid $1.7 million in cash to a person identified only as Individual A to cover up unspecified misconduct from decades earlier.
In a bombshell sentencing memorandum filed earlier this month, prosecutors alleged Hastert had sexually abused at least four wrestlers as well as a former team equipment manager when he was coach at Yorkville [more than 35 year ago]. The abuse allegedly occurred in hotel rooms during team trips and in almost-empty locker rooms, often after Hastert coaxed the teens into a compromising position by offering to massage them, prosecutors said. The filing also alleged that Hastert set up a recliner chair outside the locker room showers in order to sit and watch the boys....
When he was confronted by FBI agents about the unusual bank withdrawals in December 2014, Hastert lied and said he was just keeping his money safe because he didn't trust security at the banks, according to prosecutors. Later, he accused Individual A of extorting him by making false accusations of sexual abuse and even agreed to record phone conversations for the FBI — a gambit that fell apart when agents realized it was Hastert who was lying, according to prosecutors.
I have highlighted above the notable fact, thanks to a shrewd plea deal in this case, Hastert's punishment is statutorily limited to a prison sentencing range of zero to five years and that prosecutors are bound to recommend a sentence of no more than six months imprisonment. Prosecutors cut this deal, I suspect, because they realize that Hastert's old age and poor health and recent history of public service would make unlikely that a judge would sentence him to a very lengthy prison term.
That all said, it appears nearly undisputable that Hastert did sexually abuse numerous boys while serving as a wrestling coach decades ago and essentially got away with these crimes. (It is my understanding that the statute of limitations has passed so that he could not now be prosecuted for them.) His more recent bank/money structuring crimes are, of course, connected to these long-ago terrible crimes and Hastert also actively lied to public officials in a manner that could also have readily brought separate serious criminal charge for obstruction of justice.
Based on all these facts, I could make reasonabe arguments for sentences ranging from probation to five years, and I also could imagine lots of arguments for creative alternative sentencing terms instead of (or in addition to) a prison stint. For example, I believe some members of the community have urged the judge to require Hastert to make significant payment to groups that work with sexually abused boys. And perhaps one could strain to read federal law to argue that all of those abused by Hastert long ago are still technically victims of his more recent offenses and thus should be able to obtain some kind of restitution through his sentencing. (This would seem to be stretch, but there are reports that some other "victims" are planning to testify at Hastert's sentencing.)
So I sincerely wonder, dear readers, what supernova sentence you think should be impose in this case?
April 26, 2016 in Criminal Sentences Alternatives, Offender Characteristics, Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, Sex Offender Sentencing, Victims' Rights At Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (37)
Thursday, April 21, 2016
"Slimy Sheldon Silver should serve substantial slammer stint, sentencing statement says"
An awesome, amusing, amazing alliteration about prosecutors' potent politico punishment proposal after federal fraud findings made for too good a title for me not to reuse the headline of this New York Daily News piece. Here are the serious senetencing specifics:
Disgraced ex-Assembly Speaker Sheldon Silver should serve more than 14 years behind bars for corruption — a longer term than any other state pol convicted of similar crimes, federal prosecutors argued Wednesday.
Silver, a Democrat convicted last November on seven corruption counts, should serve a sentence that reflects the “unprecedented magnitude, duration, and scope of his abuse of power,” Manhattan federal prosecutors said in the sentencing memo.
“It should reflect the immeasurable damage Silver caused to the democratic process and to the public trust. It should punish Silver for the vast harm he has caused and the position of trust that he exploited, deter other elected officials from the temptation towards corruption, and communicate to the public that the rule of law applies even to the most prominent of public officials.”...
Sentencing guidelines for Silver suggest a range from 262 to 327 months — that’s between 22 and 27 years — in a federal lockup. “The guidelines range is high because the United States Sentencing Commission explicitly has recognized the ‘threat to the integrity of democratic processes’ caused by public corruption offenses,” the feds wrote.
Manhattan U.S. Attorney Preet Bharara’s office also said the hefty suggestion stemmed from “the many egregious aspects of the defendant’s crimes — including Silver’s role as a high-level public official, his engagement in multiple corrupt schemes, the millions of dollars in bribe money Silver took in, and his laundering of his crime proceeds.”
Bharara wants Silver, 72, to forfeit the $5.2 million he pocketed in the scheme and cough up “a substantial fine of at least $1 million is appropriate in this case, particularly in light of the defendant’s significant remaining resources and his more than $70,000-per-year pension, paid for by New York State taxpayers.”
Silver’s lawyers maintain in their sentencing memo that Manhattan Federal Judge Valerie Caproni should consider “a term of rigorous community service — whether as an alternative to incarceration, or as a component of an appropriate below-guidelines sentence” due to his age and poor health. "One letter after another — written with full awareness of the jury's verdict - from Mr. Silver's constituents, neighbors, friends, family, fellow Assembly members, and other government officials attest to his outstanding character and unrivaled contributions," they wrote in the memo, filed Wednesday.
Silver's lawyers went on to quote a key staffer who said that Silver "acted with integrity and exhibited a deep, consistent commitment to issues that he felt best served the public interest." They also quoted former Mayor David Dinkins as saying, "Mr. Silver has shown himself to be a person of integrity, committed to working in partnership on the side of New York City's citizenry."
Wednesday, April 06, 2016
Former coal exec gets maximum misdemeanor sentence for conspiracy to evade mine safety regulations
As reported in this AP piece, a federal "judge sentenced former coal executive Don Blankenship to a year in prison Wednesday for his role in the deadliest U.S. mine explosion in four decades, saying he was part of a 'dangerous conspiracy'." Here is more on a high profile federal misdemeanor white-collar sentencing result:
One day after the sixth anniversary of the Upper Big Branch Mine explosion, which killed 29 men, U.S. District Judge Irene Berger gave the ex-Massey Energy CEO the maximum prison time and fine of $250,000. A federal jury convicted Blankenship on Dec. 3 of a misdemeanor conspiracy to violate mine safety standards at Upper Big Branch. MOBlankenship's attorneys contended he should receive probation and a fine, at most. The judge denied their motion for Blankenship to remain free as he appeals. It's not clear when he must report to prison.
As Blankenship left the courthouse, a few family members of miners who were killed started yelling at him while he and his attorneys spoke with reporters. "We buried our kid because of you," said Robert Atkins, whose son Jason died in the explosion. "That's all I got is a goddamn tombstone." Asked by a reporter what he had to say to the shouting family members, Blankenship said: "Well, just that the coal miners didn't cause the accident."...
U.S. Secretary of Labor Thomas Perez echoed prosecutors in saying the maximum punishment didn't fit the crime. "This administration continues to support efforts in Congress to strengthen those penalties, and we stand ready to work with members who believe that no worker should lose their life for a paycheck," Perez said in a news release.
At Upper Big Branch, four investigations found worn and broken cutting equipment created a spark that ignited accumulations of coal dust and methane gas. Broken and clogged water sprayers then allowed what should have been a minor flare-up to become an inferno. Blankenship disputes those reports. He believes natural gas in the mine, and not methane gas and excess coal dust, was at the root of the explosion.
Sens. Joe Manchin and Shelley Moore Capito and the United Mine Workers of America spoke favorably about the decision. The sentencing capped a wide-spanning investigation into Massey following the explosion. Four other workers in the corporate chain were convicted of crimes including faking a foreman's license, lying to federal investigators and conspiring in an illegal scheme to warn miners and other subsidiaries of surprise safety inspections. Their sentences ranged from less than a year to more than three years in prison.
The judge described Blankenship's rise from a meager, single-mother Appalachian household to one of the wealthiest, most influential figures in the region and in the coal industry. "Instead of being to be able to tout you as a success story, we are here as a result of your part in a dangerous conspiracy," she said.
During the trial, prosecutors called Blankenship a bullish micromanager who meddled in the smallest details of Upper Big Branch. They said Massey's safety programs were just a facade — never backed by more money to hire additional miners or take more time on safety tasks. Blankenship was acquitted of felonies that could have stretched his sentence to 30 years....
In 2011, Alpha Natural Resources, which bought Massey after the explosion, agreed to pay $210 million to compensate grieving families, bankroll cutting-edge safety improvements and pay for years of violations by Massey Energy. Under the deal with federal prosecutors, Alpha wasn't criminally charged. The judge already ruled that Blankenship won't have to pay $28 million in restitution to Alpha Natural Resources, helping him avoid a serious blow to his personal fortune. Berger also ruled that Blankenship would not have to pay restitution to about 100 people, including former miners and family members.
Friday, April 01, 2016
Federal district judge astutely asks feds for accounting of political corruption sentences before high-profile NY pol sentencing
As reported in this New York Post article, headlined "Judge in Shelly Silver’s case wants to know how much time crooked pols usually get," a federal district judge has ordered federal prosecutors to help her discharge her post-Booker sentencing duties under 18 USC 3553(a)(6) to consider "the need to avoid unwarranted sentence disparities among defendants with similar records who have been found guilty of similar conduct." Here are the interesting details:
Manhattan federal Judge Valerie Caproni wants a chart outlining sentences for previously convicted New York politicians ahead of Sheldon Silver’s sentencing next month. In an order to prosecutors filed Thursday, Caproni asked for the information to “consider the need for unwarranted disparities between similarly situated defendants.”
The judge wants the government to include in its sentencing submission paperwork “a summary chart containing the sentences imposed on elected state and federal officials who were convicted in federal court of corruption-related offenses in the last five years to the extent that information is not unduly burdensome to obtain,” the one-page order says.
Prosecutors will have their hands full: Dozens of New York politicians have been convicted of charges varying from bribery to mail fraud and racketeering to tax evasion, prosecutors said.
Ex-City Councilman Dan Halloran was slapped with a stiff 10-year prison sentence for masterminding a failed $200,000 bribery plot to rig the 2013 mayoral election for then-state Sen. Malcolm Smith. Meanwhile, ex-Senate Majority Leader Smith, who was also busted, got seven years behind bars.
And Hiram Monserrate, the Democratic state senator who looted nearly $100,000 in taxpayer money to win higher office, was sent away for two years in 2012 after pleading guilty. Another disgraced ex-state senator, Pedro Espada Jr., received a five-year sentence for bilking a taxpayer-funded nonprofit to pay for his lavish lifestyle.
Silver faces up to 130 years behind bars after he was convicted in November of corruption charges. The 72-year-old ex-Assembly speaker will likely receive far less at his sentencing April 13.
Prosecutors’ sentencing submission is due by April 6, court records show. Ex-Senate Majority Leader Dean Skelos — who was convicted with his son, Adam, of bribery and corruption just weeks after Silver — also faces 130 years. The Skeloses will be sentenced April 28.
Based on the quote of this article, it seems that Judge Caproni has asked not merely for sentencing details on convicted New York politicians, but all "elected state and federal officials who were convicted in federal court of corruption-related offenses in the last five years." I am guessing there could be hundreds of politicians nationwide who fit into this category. I would be especially interested to see what this summary chart looks like, and I hope to be able to post it on this blog whenever it becomes publicly available.
Thursday, March 31, 2016
"A Fatally Flawed Proxy: The Role of 'Intended Loss' in the U.S. Sentencing Guidelines for Fraud"
The title of this post is the title of this notable new article authored by Daniel Guarnera now available via SSRN. Here is the abstract:
Of all federal criminal defendants, those convicted of fraud are among the most likely to receive a sentence below the term recommended by the U.S. Sentencing Guidelines. The most important (and controversial) driver of fraud sentences under the Guidelines is the economic loss — actual or intended, whichever is greater — resulting from the crime.
This Article examines the role of the “intended loss” calculation. The U.S. Sentencing Commission designed the intended loss enhancement to function as a rule-oriented proxy for defendant culpability. By applying the framework of rules and standards, this Article argues that culpability, by its nature, is too multifarious a concept to be accurately represented by a single variable. Furthermore, a recently-enacted amendment to the definition of intended loss — which restricts its scope to losses “that the defendant purposely sought to inflict” — will only exacerbate the problem by excluding a significant subset of plainly culpable conduct.
Rather than attempt to fine-tune the intended loss calculation any further, this Article contends that the purposes of sentencing in general (and the goals of the Guidelines in particular) would be better served by enabling judges to conduct a more standard-based inquiry into the wide array of facts that can bear on culpability. It evaluates several proposals that would give judges greater discretion while, at the same time, minimizing the risk of unwarranted sentencing disparities.
Wednesday, March 30, 2016
Fascinating SCOTUS Sixth Amendment splintering in Luis v. United States
The Supreme Court this morning handed down an opinion this morning that is fascinating based simply on the line-up of Justices: "BREYER, J., announced the judgment of the Court and delivered an opinion, in which ROBERTS, C. J., and GINSBURG and SOTOMAYOR, JJ., joined. THOMAS, J., filed an opinion concurring in the judgment. KENNEDY, J., filed a dissenting opinion, in which ALITO, J., joined. KAGAN, J., filed a dissenting opinion." This line-up ruled for the criminal defendant in Luis v. United States, No. 14-419 (S. Ct. March 30, 2016) (available here), and here is how Justice Breyer's plurality opinion starts:
A federal statute provides that a court may freeze before trial certain assets belonging to a criminal defendant accused of violations of federal health care or banking laws. See 18 U. S. C. §1345. Those assets include: (1) property “obtained as a result of ” the crime, (2) property“traceable” to the crime, and (3) other “property of equivalent value.” §1345(a)(2). In this case, the Government has obtained a court order that freezes assets belonging to the third category of property, namely, property that is untainted by the crime, and that belongs fully to the defendant. That order, the defendant says, prevents her frompaying her lawyer. She claims that insofar as it does so, it violates her Sixth Amendment “right . . . to have the Assistance of Counsel for [her] defence.” We agree.
Thursday, March 24, 2016
Am I crazy to really like the "White Collar Crime Offender Registry" now being developed in Utah?
The question in the title of this post is prompted by this notable new Wall Street Journal article headlined "Financial Crime: a New Twist on the Sex-Offender Registry: Utah is most aggressive jurisdiction in publicly shaming financial criminals." Long-time readers likley know that I tend to be a supporter of shaming sanctions as an alternative to imprisonment in some settings, and I see financial crimes as an especially useful arena to explore alternative punishments. Here are details on how Utah is engaged in an alternative sanctions experiment:
States have taken the idea of the sex-offender registry and applied it to everything from kidnapping to animal abuse. Utah is expanding it into new territory: financial crime. An early version of the White Collar Crime Offender Registry, which has been online since February, includes more than 100 people convicted of tax, credit-card or insurance fraud; thefts from employers or friends; and bilking investors.
They include 41-year-old Kenneth Ray Wagner. “Eye Color: Blue. Hair Color: Blonde … Targets: Insurance company.” The registry displays Mr. Wagner’s mugshot and explains that he was convicted in 2008 of fraud for dismantling his motorcycle, hiding the parts in a storage locker and claiming to his insurance company that it had been stolen.
The list makes Utah the most aggressive jurisdiction in the country when it comes to publicly shaming financial criminals. No other state operates such a list. The Securities and Exchange Commission often shields the identities of offenders. The agency last month refused a public-records request by The Wall Street Journal for information on sanctions paid by specific individuals, saying that providing such information would be “a clearly unwarranted invasion of personal privacy.”
The Financial Industry Regulatory Authority does require disclosure of events like some criminal convictions, regulatory actions and customer complaints. But it only applies to securities professionals, and the disclosures are intermingled in a database that includes more routine facts like work history.
Utah lawmakers say their list, which is being administered by the state’s attorney general, will help protect investors by offering easy access to information about con artists. It could also create leverage to get felons to make their victims whole. Convicts who comply with court orders on time and pay restitution in full won’t appear on the list. “That’s the carrot,” Utah Attorney General Sean Reyes said.
The new policy plunges the state into a broader debate about using name-and-shame tactics to punish convicts who have already served their time. Registries have proliferated rapidly in the U.S., experts say. While some lists restrict access to law-enforcement agencies or fire officials, others can be viewed online by anyone, according to the National Conference of State Legislatures. In addition to the 50 states that publicly track sex offenders, five states including California require registration for arson. Minnesota, Illinois and six others maintain lists of methamphetamine producers. In Indiana, a public website lets visitors use Google Maps to find the location of homes that have been used as meth laboratories. Tennessee requires registration for animal abuse— something nine other state legislatures are debating. Florida law requires registration by anyone convicted of a felony of any kind for up to five years after completing the sentence.
Utah itself maintains a sex-offender and kidnap-offender list, as well as its new financial-crimes registry. In all, the number of Americans on such lists will soon approach a million, if it isn’t already there, said J.J. Prescott, a law professor at the University of Michigan. He warned of possible unintended consequences from applying a public alert designed for sex offenses to other crimes, such as the risk of drug-offender registries being used by addicts to find suppliers....
Utah’s white-collar registry will include anyone convicted of second-degree frauds or other financial felonies since January 2006. A total of about 230 people are expected to be on the registry when it is formally launched in a few months, officials said. The state will generally keep people registered for 10 years after a first offense. A second offense adds another decade, and people with three convictions never get off.
Mr. Wagner’s lawyer, Tara Haynes, said he already has paid a considerable price for his crime. He appeared on the list after serving 90 days in county jail and being ordered to pay more than $16,000 in restitution. “He is not a white-collar criminal,” Ms. Haynes said. "He’s a blue-collar construction worker.”
Utah lawmakers voted last year to create the registry to stem what they called a growing tide of white-collar crime in the state, particularly by con artists preying on its close-knit religious communities. Convicts need to fill out a form to register, arrange to have a photo taken and update their address and phone number if they change. All but one entry in the early version of the registry includes a photo, typically a mugshot, while some also list aliases such as “ Missy Moniker” or “Connie.”
The site has some glitches. It included one man who died of cancer last year—he was removed after The Wall Street Journal sent officials a link to his obituary—and another where the wrong offense was initially shown. Mr. Reyes said the state is still vetting the registry, including by asking offenders to check the accuracy of their entries. “We want to be fair,” he said.
Some legal experts say Utah’s approach could be an improvement on federal efforts to encourage restitution.... The SEC has yet to collect $9.4 billion of $17.7 billion of sanctions it has imposed in the last five fiscal years, according to data on its website.
The question of whether Utah’s registry violates defendants’ rights could end up in court. Clair Rulon Hawkins, a former employee of a Utah real-estate firm, was convicted in 2013 of defrauding an investor who lost $852,000 deposited on two lots of land that Mr. Hawkins helped sell. Mr. Hawkins served four months in Salt Lake County jail and a halfway house. He remains subject to a restitution order for more than $1.4 million. The 50-year-old is appealing his conviction. He also plans a legal challenge to his inclusion on the Utah registry, arguing it violates his constitutional rights to due process, privacy and economic liberty, his lawyer said.
State lawmakers and other officials hope their idea will catch on nationally. Mr. Reyes, the attorney general, said his office has been contacted by legislators in several states as well as by federal prosecutors interested in replicating the experiment. “I know we’re the first in the nation for doing it,” said Michael McKell, a Republican who sponsored the bill in the Utah House to create the white-collar registry. “I certainly don’t think we will be the last.”
Sunday, March 13, 2016
"Feds want convicted journalist to serve 5 years, his lawyers ask for no prison time"
The title of this post is the headline of this interesting ArsTechnica article previewing an interesting federal sentencing scheduled for later this month in federal court in California. Here are the particulars with all links from the original article to the parties' sentencing submissions and related materials:
Federal prosecutors have asked a judge to impose a sentence of five years against Matthew Keys, who was found guilty last year on three counts of criminal hacking under the Computer Fraud and Abuse Act. That federal law, which was passed in 1984, was what the late activist Aaron Swartz was prosecuted under. Last year, President Barack Obama called for Congress to expand prison sentences for those found guilty under this law.
Keys worked previously as an online producer for KTXL Fox 40, a Sacramento, California-based television station. Prosecutors argued that in December 2010, shortly after his dismissal, he handed over login credentials to a Tribune Media content management system (CMS), which allowed members of Anonymous to make unauthorized changes to a Los Angeles Times story. (At the time, both companies were both owned by Tribune Media.) Those changes amounted to a short-lived prank: they lasted only 40 minutes, and there is little evidence that the prank was widely noticed. Criminal charges were not filed until March 2013.
Even after he was found guilty, Keys continued to deny the government’s narrative. In a brief interview with Ars after his trial concluded, he described the prosecution’s theory as "total bullshit."
"A sentence of five years imprisonment reflects Keys’s culpability and places his case appropriately among those of other white-collar criminals who do not accept responsibility for their crimes," Matthew Segal, an Assistant United States Attorney, wrote in the Thursday sentencing memorandum.
In the 12-page filing, Segal explained that, although Keys initially "succeeded in deflecting suspicion away from himself," the FBI changed course after it reviewed chat logs found on the computer belonging to Wesley "Laurelai" Bailey, a former Anonymous member. Those chat logs between Bailey and Ryan Ackroyd (aka "Kayla"), included a line where Kayla wrote: "Iol he's not so innocent and we have logs of him too, he was the one who gave us passwords for LA times, fox40 and some others, he had superuser on alot of media." Segal explains further that Keys’ attack was "an online version of urging a mob to smash the presses for publishing an unpopular story," adding that Keys employed "means that challenge core values of American democracy."
Keys’ defense lawyers filed their own sentencing memorandum on Wednesday, asking the court to impose no prison time at all or go with a "non-custodial sentence." The 69-page filing goes to great lengths to illustrate Keys lengthy history in journalism, going way back to his elementary school days when he edited the school bulletin. "In recent years, Matthew’s sacrifices have paid off in the form of impactful journalism that has received national attention," wrote Jay Leiderman, his attorney, who has also worked on many other Anonymous-related cases. "His stories have encouraged discourse, influenced policy and won the attention and accolades from his peers in the industry, public interest groups and even law enforcement officials."
Leiderman also notes that if the government’s recommendations stand, "[Keys] faces a far more severe sentence than any member of Lulzsec served. 60 months, which the Government seeks, would be more than any person engaged in hacking crimes during this period — by about double!"
I am a bit sorry I am not teaching my sentencing class this semester because the issues raised in this case and the parties' filing provide a great primer on guideline calculation disputes and the application of post-Booker sentencing jurisprudence based in the factors set forth in 3553(a). (I am teaching a 1L legal writing class in which students have to develop variance arguments for a white-collar offender, and I may urge my students to look at the parties' submissions for inspiration.)
March 13, 2016 in Booker in district courts, Federal Sentencing Guidelines, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing | Permalink | Comments (2)
Wednesday, February 24, 2016
"Judging Federal White-Collar Fraud Sentencing: An Empirical Study Revealing the Need for Further Reform"
The title of this post is the title of this notable new paper now available via SSRN authored by Mark Bennett, Justin Levinson and Koichi Hioki. Here is the abstract:
White-collar federal fraud sentencing has long been fraught with controversy and criticism. As a result, the U.S. Sentencing Commission’s intensive multi-year examination of sentencing for fraud crimes generated tremendous interest among the Department of Justice, criminal defense organizations, the academy, and a wide-range of advocacy groups. In November 2015, the Commission’s publicly announced proposed amendments became law without Congressional change. These amendments, while commendable in process and purpose, fall short of sorely needed reforms that would serve to realign white-collar fraud punishments with legitimate penal justifications. This Article portrays the recent historical tension between the Federal Sentencing Commission and federal judges, and presents the results of an original empirical study that demonstrates clearly the continuing need for significant reforms.
The Article begins by framing the problem of fraud sentencing within modern criminal law, and examines the statistical reality of economic crime sentencing since the 1980s, which has been increasingly characterized by downward departures from harsh recommend minimum sentences. It then details an original empirical study we conducted on 240 sitting federal and state judges, just as the new sentencing guideline amendments were passing untouched through Congress. This study presented judges with a realistic pre-sentence report for a multimillion-dollar economic crime, and asked judges to sentence the defendant. We found that a remarkable 75% of federal district court judges sentenced the defendant to the precise minimum sentence of a possible seven year range. The study further compared the judges’ sentences across judicial cohorts and evaluated the role of judges’ individual sentencing philosophies, age, religion, and the political party of the appointing president. Despite a range of interesting differences in sentencing philosophy and self-reported attitudes found based on these factors, federal judges’ overwhelming agreement regarding minimum sentencing largely transcended their other differences.
The Article considers the results of the study in the context of the revised guidelines as well as scholarly reform suggestions, and offers five specific proposals to reform the guidelines, beginning with significant cuts to the so-called “loss table” as well as the specific offense characteristics that frequently lead to near-nonsensical sentencing guidelines.
February 24, 2016 in Data on sentencing, Federal Sentencing Guidelines, Offense Characteristics, Purposes of Punishment and Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (2)
Wednesday, February 17, 2016
"Of Systems and Persons: The Ability and Responsibility of Corporate Law to Improve Criminal Punishment"
The title of this post is the title of this interesting-looking new paper available via SSRN authored by W. Robert Thomas. Here is the abstract:
The federal government has used criminal fines to punish corporations for as long as it has been punishing corporations. Yet to this day, with more than a century in which to get the punishment right, corporate-criminal fines fail to satisfy virtually any standard justification that underlies criminal punishment.
Attempts to address the failure of corporate-criminal fines founder on two shoals. First, there is a deep and abiding ambiguity about what it means to designate corporate fines as a failed punishment. Second, there is a tendency to see the failure of punishment as a problem for criminal law to solve, and in doing so to treat corporate law as a fixed, immutable feature of the legal background. This particularly is a profound mistake: the failure of corporate-criminal fines is as much a corporate-law problem as it is a criminal-law problem.
Corporate punishment stands at the vanguard of the conceptual and regulatory interplay between corporate and criminal law. At the heart of this conflict is an interaction between drastically different regulatory functions that operate on the basis of conflicting conceptions of the corporation: corporations as persons for criminal law, and corporations as systems for corporate law. While pluralism about the nature of corporation works well when cabined to specific legal do-mains, corporate-criminal punishment forces these domains, and their competing conception of the corporation, to reconcile or give way.
This Article explores the intimate connections between corporate law and criminal punishment — specifically, how corporate law creates the conditions for, makes necessary, and yet at the same time undermines criminal law’s efforts to punish corporations. Appreciating these interconnections requires understanding not just the conceptual frames implicit to each area of law, but also the historical contingency of associating certain conceptions of the corporation with particular legal domains. To be sure, this project is reform-minded: I consider what it would mean to improve criminal fines through corporate law reforms designed to redistribute the harms attendant to criminal fines in a manner that better aligns the punishment with standard penological aims. That said, the ambition first and foremost is to reveal a blind spot in current discussions of corporate-criminal punishment by drawing attention to the conceptual intricacies that attend a practice — corporate-criminal punishment — that stitches together diametrically opposed conceptions of the corporation.
Tuesday, February 16, 2016
"Fifty Shades of Gray: Sentencing Trends in Major White-Collar Cases"
The title of this post is the title of this new Note appearing in the February 2016 issue of the Yale Law Journal authored by Jillian Hewitt and now available via SSRN. Here is the abstract:
Between 1987 and 2005, federal judges sentenced defendants pursuant to binding Sentencing Guidelines that severely curtailed their discretion. In United States v. Booker, the Supreme Court held the mandatory Guidelines sentencing scheme unconstitutional and rendered the Guidelines advisory. This Note offers a picture of white-collar sentencing in “shades of gray.” It conducts an empirical analysis of sentencing decisions after Booker to assess the consequences of the return to judicial discretion.
In particular, the Note examines major white-collar cases in the Southern District of New York, where many such cases of national and international significance are prosecuted. The Guidelines instruct judges in white-collar cases to calculate the amount of economic loss attributable to the defendant and apply a sentencing enhancement — often a sizable one — on the basis of that loss. The findings reveal that a significant majority of defendants in these cases receive sentences of imprisonment shorter than those recommended by the Guidelines. Moreover, when judges impose sentences below the Guidelines range, the resulting sentences are often dramatically shorter than those produced under the Guidelines.
Based on these findings, this Note argues that the U.S. Sentencing Commission should revise its approach to white-collar cases in three ways. The Commission should amend the Guidelines to reduce the severity of the economic loss table; calculate economic “loss” differently; and add additional, though less severe, enhancements to punish pecuniary gain and intended loss. Absent such changes, judges will — and should — continue imposing sentences far below the Guidelines range. These proposed changes better capture the seriousness of the offense and the culpability of the offender, even if they do not resolve the fundamental tension between individualized sentencing and the rigid quantification that characterizes the Guidelines system.
Wednesday, January 20, 2016
Justified criticisms of Prez Obama's not-so-justified criticisms of proposed mens rea reform
This new National Review commentary authored by James Copland and Rafael Mangual, headlined "On Criminal-Justice Reform, Obama Should Practice What He Preaches — Civility," levels complaints at the Obama Administration for complaining about mens rea reform efforts in Congress. Here are excerpts:
In his final State of the Union address, President Obama expressed his hope to reach across the aisle on what he described as a “priority” issue: criminal-justice reform. Although we strongly agree with the president that reforming the federal approach to criminal justice should be a priority, he has unfortunately jeopardized such reforms with an uncompromising hostility to Republicans’ — and other Democrats’ — reform ideas....
Following the lead of left-wing advocacy groups including Public Citizen and Think Progress, the White House and the Justice Department almost instantly came out against both criminal-intent bills [introduced in the House and Senate]. A White House official told the Huffington Post that these bills would “enable defendants charged with a range of offenses — including violent crimes, terrorism, and sexual offenses — to potentially escape liability for egregious and harmful conduct.”
These claims are pure poppycock and completely at odds with the president’s State of the Union call for a “rational, constructive,” and “more elevated debate.” To be sure, there might be reasonable critiques of the draft legislation and possible amendments that could create different definitions or standards — just as the sentencing reforms supported by President Obama ought to be vetted to make sure that they are not releasing violent criminals back onto the streets. But by drawing a line in the sand against Republican priority reforms — and by suggesting that Republican and Democratic legislators who support criminal-intent standards are somehow soft on terrorism or sexual assault — the president is hardly being constructive or elevating the debate on criminal-justice reform.
In essence, the bill so vehemently opposed by the White House would merely require Congress to be explicit whenever it wishes to criminalize conduct without regard to the intent of the actor. It would prevent courts from assuming from congressional silence that Congress meant to send unknowing violators of a law or regulation to jail, as opposed to merely hitting them with an often-hefty civil fine or penalty.
Democrat stalwarts on the House Judiciary Committee, including John Conyers (D., Mich.) and Shelia Jackson Lee (D., Texas), are supporting this reform because they understand it’s a matter of fundamental fairness. They also understand that it is small businesses and individuals, disproportionately minorities and those less well off, that tend to get unknowingly entangled in the labyrinthine federal code; big businesses and their executives have teams of lawyers to advise them.
The fact is that 15 states have explicit “default” standards for criminal intent like those in the bipartisan task force’s bill. Michigan enacted such a reform most recently, in December 2015. The Michigan ACLU spoke in favor of the law, and it passed both houses of the legislature unanimously.
If President Obama really does care about getting something done on the issue of criminal-justice reform, he ought to heed his own advice and take a more civil tone in his own contributions to that debate. It’s hardly “constructive” to demonize others’ positions and adopt a “my way or the highway” negotiating stance. With Republicans enjoying majorities in both chambers, the criminal-intent piece of the reform effort — a product of more than two years’ effort by a bipartisan task force — is especially important if the president truly hopes to achieve meaningful progress toward criminal-justice reform in his remaining year in office.
Some recent and older related posts:
- Can and will Prez Obama effectively help get a federal sentencing reform bill to his desk?
- Might misguided mens rea reform concerns derail federal sentencing reform's momentum?
- "The Pressing Need for Mens Rea Reform"
- So thankful for federal sentencing reform moving ahead in Congress... but...
- "Our Voluminous Laws And The Need For ‘Mens Rea’ Reform"
Wednesday, January 13, 2016
Might misguided mens rea reform concerns derail federal sentencing reform's momentum?
The question in the title of this post is prompted by this new Atlantic piece headlined "A New Hurdle in the Push for Criminal-Justice Reform: A disagreement between a House Republican and the Obama administration creates a challenge." Here is how the article starts:
The stars seem to have aligned. An unlikely coalition of liberals and conservatives has coalesced around criminal-justice reform, as the public appears to be paying more attention to fatal police shootings and mass incarceration. President Obama has worked to gin up momentum for reform, and is expected to press for action during his final State of the Union address Tuesday evening.
Even with that common ground, however, tensions are bubbling up. A debate over the burden of proof for criminal convictions now threatens to throw a wrench into the effort to overhaul the nation’s criminal-justice system. That debate was on full display Tuesday during a conversation between House Judiciary Committee Chairman Bob Goodlatte and The Atlantic’s Washington Editor-at-Large Steve Clemons at an Atlantic Exchange event. The Republican chairman suggested that the House of Representatives won’t approve a criminal-justice deal without changes to the way the U.S. criminal code determines criminal intent, despite the fact that the White House opposes the changes.
“A deal that does not address this issue is not going anywhere in the House of Representatives,” Goodlatte said when asked if he would oppose a deal that did not include such a provision. “It has to be overcome. This is a critical element to doing justice in this country.”
The disagreement points to the possibility that negotiations will break down. It highlights the challenges, and potential pitfalls, of assembling a left-right coalition, and raises the question of how much various interests at play will be willing to compromise. The dispute also threatens to stall sentencing reform, an issue that the president has elevated as a top priority in his second-term.
At stake is a question of fairness. Goodlatte, along with conservative and libertarian organizations, support legal changes that they say would protect citizens from being unfairly charged with crimes they unknowingly committed. The White House, along with liberal organizations, believe that altering the burden of proof could make it more difficult to prosecute criminal activity. Critics also fear the proposal could let big business off the hook for illicit activities that lawyers could claim a company didn’t know were illegal.
That conflict could derail sentencing reform. Goodlatte indicated Tuesday that he would not support an effort to deal with criminal-intent and sentencing reform separately as a way of bolstering the odds of passing legislation to cut down on mandatory minimums for certain offenses.
As the question in the title of this post suggests, I think Rep. Goodlate is 100% right that a provision clarifying that nobody should face serious federal criminal charges without federal prosecutors having to prove the accused had a significantly culpable mens rea is "a critical element to doing justice in this country." Indeed, one of the reasons I stopped considering myself a "liberal" as that term is now understood is because of these kinds of issues where so-called "liberals" seem eager to deny a premise I consider fundamental in a liberal society, namely that one should not be treated like and branded a serious criminal by the government unless and until that government can prove an individual has acted and thought like a serious criminal.
Notably, I know that at least one serious criminal justice reform group, the National Association of Criminal Defense Lawyers is supportive of mens rea reform. Consequently, I suspect and fear the "liberal organizations" against this kind of reform are the same type that were cheerleading the laws contributing to mass incarceration passed during the Clinton era when Democrats were eagerly trying to earn political points by being even tougher on crime than their political adversaries. Blah.
Some recent and older related posts:
- Can and will Prez Obama effectively help get a federal sentencing reform bill to his desk?
- "The Pressing Need for Mens Rea Reform"
- So thankful for federal sentencing reform moving ahead in Congress... but...
- "Our Voluminous Laws And The Need For ‘Mens Rea’ Reform"
January 13, 2016 in Criminal justice in the Obama Administration, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (5)
Tuesday, December 01, 2015
"Our Voluminous Laws And The Need For ‘Mens Rea’ Reform"
The title of this post is the title of this new posting at Right on Crime. It gets started this way:
As Congress has begun to consider various reforms to the federal criminal justice system in the last several months — sentencing and re-entry policies in particular — another element of federal law that merits consideration is beginning to receive its due, as well: namely, ensuring that criminal statutes or regulations have adequate mens rea, or criminal intent, requirements.
In yesterday’s edition of the Cato Daily Podcast, Caleb Brown interviewed Robert Alt, President of the Buckeye Institute in Ohio, about the current landscape of state and federal criminal law, where Alt succinctly describes the growing problem: “We’ve noticed over the years, both at the Congressional level and the state level, that more and more crimes are being passed that either have no criminal intent requirement at all — where you can be convicted for mere accidents — or they have inadequate mens rea requirements.”
A long-standing tradition among common law jurisdictions has held that criminal actions generally have two elements: the bad action itself (actus reus), and a guilty state of mind (mens rea). In recent decades, legislatures haven’t had much difficulty passing statutes detailing new crimes, or enabling regulatory agencies to concoct administrative rules that also bear criminal penalties. As Alt explains, an American Bar Association task force found in 1998 that the body of federal criminal law was so cumbersome that a single, “conveniently accessible” repository listing them all didn’t exist. Shortly thereafter, they commissioned a study to generate an inventory, in which case over 3,000 federal criminal statutes were detailed.
In 2007, a similar inventory performed by the Heritage Foundation and others found that the number had jumped to roughly 4,500, and this is to say nothing of federal regulatory offenses; estimates have pegged the Federal Register at approximately 300,000 regulations, though no one knows the exact number as those responsible for finding them eventually stop counting.
What hasn’t occurred with regularity as these new laws or rules are being promulgated is inclusion of the second element of crime: establishing culpable intent on the part of the actor. This has the effect of creating new criminals out of people who had no intention or knowledge of running afoul of the law, and can have adverse, long-term consequences.
You be the judge: what federal sentence for beloved elderly preist who embezzled half-million dollars?
This local article, headlined "Dozens ask judge for mercy in sentencing of embezzling Detroit-area Catholic priest," provides the interesting backstory for an interesting federal sentencing scheduled for late today. Here are the basics:
A beloved Catholic priest in Troy was scorned when allegations came forth that he embezzled more than $500,000 from church coffers. Rev. Edward A. Belczak, 70, admitted to diverting $572,775 collected by the church, most of which he kept in a secret private bank account. He also spent $109,570 to purchase a Florida condo in 2005.
Despite the admissions, dozens of people, including many of the parishioners he defrauded, have come forward to ask for a lenient sentence on behalf of the priest who headed St. Thomas More church in Troy from 1984 until 2013. He's scheduled to be sentenced Tuesday.
Belczak pleaded guilty to mail fraud as part of the plea agreement. In exchange, the U.S. Attorneys Office dismissed more serious charges and asked U.S. District Judge Arthur J. Tarnow to sentence Belczak to just over three years in prison.
Attorney John J. Morad, a friend and supporter of the priest, thinks any prison time is too much. "He made a terrible mistake and I know that he is embarrassed, ashamed and humiliated by the fact that he disappointed so many people who have grown to love and respect him for the work he has done among the people," Morad wrote in a letter to the judge. " ... I know he has confessed his sins and I'm certain God has forgiven him. Should we do anything less?"
The defense has asked for home detention, while sentencing guidelines call for a prison term of between 33 and 41 months. The theft from the church is believed to have occurred between 2004 and 2012.
UPDATE: This Detroit Free-Press article about the sentencing of Father Belczak report on the basic outcome via its headline: "Embezzling priest gets 27 months: 'It's .. my destiny'"
Monday, November 16, 2015
Sentencing prominent federal defendants: should sex offender Jared Fogle or Sunwest CEO fraudster get longer prison term?
Two notable (and notably different) federal prosecutions are to reach sentencing this week in Indiana and Oregon. Though the crimes and defendants are not similar, the range of sentences being requested by prosecutors and defendants in these two cases are comparable. Via press reports, here are the basic elements of these two federal cases (with links to some underlying documents):
Jared Fogle, who pleaded guilty to federal sex offenses, "Jared Fogle asks for 5-year prison term in court filing before sentencing":
Jared Fogle's attorneys asked for a five-year prison term for the former Subway restaurant pitchman in a court filing before his sentencing Thursday. The filing says Fogle will speak publicly during his hearing before Judge Tanya Walton Pratt in federal court in Indianapolis. "He is painfully aware of the fact that he has impacted the lives of minor victims, hurt those closest to him and, for all practical purposes, destroyed the life he worked to build over the last 18 years," the filing says.
Fogle has agreed to plead guilty to two counts: possession of child pornography and traveling across state lines to engage in sex with a minor. The prosecutor is asking for 12½ years in prison, followed by a lifetime of supervised probation. That was the maximum sentence the U.S. attorney had agreed to seek in a plea bargain struck with Fogle in August. Fogle faced a maximum sentence on the two federal felony charges of 50 years. The judge has discretion to sentence Fogle to more or less than what the prosecution has requested.
The defense filing acknowledges that the advisory sentencing guideline is 135 to 168 months, but said it is "entitled to little weight because it is the result of a flawed and widely criticized set of … provisions."
Jon Michael Harder, who pleaded guilty to federal fraud offenses, "Former Sunwest CEO, facing sentencing for $130 million fraud, apologizes for 'carnage and problems'":
U.S. prosecutors accuse former Sunwest Management CEO Jon Michael Harder of orchestrating the biggest investment fraud in Oregon history, and they are asking a judge to sentence him to 15 years in prison. IRS criminal investigators say that as the head of a vast network of assisted living centers, he helped make off with $130 million from 1,000 investors between 2006 and 2008.
Harder will go before a judge Monday morning for a rare two-day sentencing hearing before U.S. District Judge Michael H. Simon, who found him guilty last January of mail fraud and money laundering.
Harder's legal team, seeking leniency, is asking Simon to sentence him to five years in prison. Assistant Public Defender Christopher J. Schatz took the unusual step of filing a court declaration that describes his client as possibly suffering from undiagnosed post-traumatic stress disorder from the emotional clubbing he took after Sunwest's failures. "Many of the investors in Sunwest were family members, family friends and members of the Seventh Day Adventist community," Schatz wrote. "Mr. Harder feels that he let all the investors down, that he failed them all."
Harder, too, filed a court paper — a letter of apology to Simon. "I feel incredibly badly for all the carnage and problems that I have caused," he wrote. "I have obsessed, over the last 7 ½ years, about what I should have or could have done differently in operating Sunwest."
A government sentencing memo paints Harder as a chief executive who burned through corporate cash as if it were his own. He drove luxury cars, owned six homes, and once flew about 100 people to Alaska — most of them Sunwest employees — to go fishing.
Intriguingly, it seems that the federal sentencing guidelines would call for a much, much longer sentence for the fraudster than the sex offender: while Jared Fogle appears to be facing a guideline sentencing range of roughly 12 to 14 years, Jon Harder appears to be facing a guideline sentencing range of life without the possibility of parole.
November 16, 2015 in Federal Sentencing Guidelines, Offender Characteristics, Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (10)
Saturday, November 14, 2015
"Is Deterrence Relevant in Sentencing White-Collar Defendants?"
The question in the title of this post is the title of this notable new article authored by Peter Henning and now available via SSRN. Here is the abstract:
This article is part of the Wayne Law Review symposium “Sentencing White-Collar Defendants: How Much Is Enough?” held in October, 2014. The article looks at the primary justification for imposing punishment on a defendant convicted of a crime, which is deterrence of both the individual who committed the offense (special deterrence) and others similarly situated who will be dissuaded from pursuing similar misconduct (general deterrence). White-collar crimes are different from traditional street crimes, both in the type of conduct involved and the nature of the perpetrators.
One would expect that well-educated individuals, the type of person who commits a white-collar crime, would be easily deterred from violations because of the penalties suffered by others and knowledge of the consequences that is communicated through sentences imposed on others in the same industry or profession. This article considers whether that message is heard because most white-collar offenses occur in seemingly unique circumstances, at least from the defendant’s point of view, and the person rarely expects to be caught, or may even believe that the conduct is not a crime.
The real value of deterrence is in keeping judges from succumbing to the impulse to view white-collar defendants as offenders who, having many good qualities, should not suffer any significant punishment. Deterrence does not so much stop future crimes but acts as a means to inform judges about the need to impose punishments that do not let white-collar defendants use their social status and other resources to avoid the consequences of violations.
Thursday, October 29, 2015
Did former House Speaker Hastert get a sweetheart sentencing deal from federal prosecutors?
The question in this post is prompted by this lengthy new Politico article headlined "Hastert's sweet deal: Lawyers question whether federal prosecutors are following guidelines." Here are excerpts:
House Speaker Dennis Hastert’s guilty plea in a hush-money case has some lawyers asking whether the former speaker is getting a sweetheart deal.
At a court hearing in Chicago Wednesday, the prosecution and defense unveiled Hastert’s plea bargain under which he admitted to a felony charge of structuring $952,000 into 106 separate bank withdrawals to avoid federal reporting requirements. The two sides agreed that sentencing guidelines call for Hastert to receive between zero and six months in jail.
But legal experts say those guidelines arguably call for a much longer sentence—closer to two to three years or more, including a potential enhancement for obstruction of justice. And some lawyers say they’re baffled that prosecutors would buy into a calculation that opens the door to Hastert getting a sentence of probation. “It seems like a sweet deal,” University of Richmond law professor Carl Tobias said. “It’s just hard to understand.”
The indictment in the case also charged Hastert with lying to the FBI about what he did with the money, concealing that he paid it to a longtime associate in an effort to hide past misconduct. In the plea deal, Hastert admitted to misleading the FBI, but prosecutors agreed to drop the false statement charge....
The agreement between prosecutors and Hastert’s defense that the zero-to-six-month sentencing range is applicable to his case is not the end of the matter. A probation officer will also calculate the range and could disagree with the parties. Durkin will ultimately decide what the guidelines call for. Under the plea deal, Hastert retains the right to appeal the sentence to the 7th Circuit.
Under a 2005 Supreme Court decision, the judge is required to consult the guidelines but he can impose a more or less severe sentence. Experts in structuring cases say judges often sentence below the guidelines, especially in so-called “clean money” cases where the government does not allege that the funds were the product of illegal activity like drug dealing or were being used to avoid taxes.
"The sentencing guidelines for clean-source money cases are totally out of whack," the ex-prosecutor said. "It's insane to sentence someone for a purely regulatory violation as severely if not more severely than someone who defrauded someone out of $952,000. Having said that, there are a good measure of bad acts here, so maybe there would be some rough justice in it."
Prosecutors have alleged that Hastert paid the $952,000 in illegally structured withdrawals to a longtime associate because of Hastert’s past misconduct against that person, identified in court filings only as “Individual A.” Sources have alleged the behavior involved sexual contact with a male student while Hastert was a coach and high school teacher several decades ago, but the indictment does not mention any sexual aspect to the charges.
Experts say Hastert could not be charged or sued today over such acts years ago because the relevant statutes of limitations have expired. Lawyers say a key factor in Hastert's ultimate sentence could be whether Durkin decides Hastert's underlying misconduct is relevant for the purpose of sentencing on the bank reporting charge.
Criminal defense attorney Michael Monico, who co-authored a handbook on federal court practices in Illinois and the greater Midwest, said Durkin will want to know Hastert's motivation for paying out the $3.5 million and the exact nature of the behavior he was trying to hide.
"If I were the judge I would ask about it, I would want to know. I would want to know, what was he hiding?" Monico said. "I think that’s the number one question in the case: Is it relevant to his sentencing what Hastert did to this fellow decades ago? If it isn’t relevant, then probation is OK. If the conduct was despicable then it’s not an appropriate sentence. It seems to me that’s a question the judge has to answer."
October 29, 2015 in Federal Sentencing Guidelines, Offender Characteristics, Offense Characteristics, Procedure and Proof at Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (8)
"The Corporation as Snitch: The New DOJ Guidelines on Prosecuting White Collar Crime"
The title of this post is the title of this notable new essay by Elizabeth Joh and Thomas Joo available via SSRN. Here is the abstract:
Volkswagen, the world’s largest auto maker, acknowledged in September 2015 that it had equipped its cars with software designed to cheat diesel emissions tests. The VW scandal may become the first major test of the Department of Justice’s recently announced guidelines that focus on individual accountability in white collar criminal investigations. Criminal investigations into safety defects at two other leading car makers, General Motors and Toyota, yielded no criminal charges against any individuals.
But in a recent speech announcing the new guidelines, Deputy Attorney General Sally Yates stated, “Crime is crime,” whether it takes place “on the street corner or in the boardroom.” “The rules have just changed.” We raise questions about this new approach and some of its possible implications. The new cooperation policy’s emphasis on individual prosecutions could itself result in leniency: prosecutors may award excessively generous credit to corporations in order to build cases against individuals.
Tuesday, October 06, 2015
The title of this post is the title of this notable paper about a notable federal sentencing provision authored by Miriam Baer and now available on SSRN. Here is the abstract:
This essay, written for the Wayne Law Review’s 2014 Symposium on white collar crime and sentencing, examines the rising popularity of the “sophisticated means” enhancement under Section 2B1.1 of the United States Sentencing Guidelines. Over the past decade, the rate at which federal courts apply the enhancement in criminal fraud cases has more than tripled.
This Essay considers several possible explanations for the enhancement’s increasing prevalence, including the possibilities that: (i) fraud offenders as a whole have become more sophisticated; (ii) federal prosecutors are investigating and charging more sophisticated frauds; and (iii) the enhancement’s meaning has, over time, gradually expanded to include additional conduct, a phenomenon I refer to as “sentencing creep.” With this final explanation in mind, the Essay concludes with some practical advice for reinvigorating the enhancement as a useful sorting device.
Tuesday, September 22, 2015
Former peanut CEO (sort of) gets less than LWOP for salmonella outbreak
As reported in this Reuters article, high-profile federal white-collar sentencings yesterday culminated in a set of severe sentences for executives culpable in a harmful food safety crime. Here are the details:
The former owner of a peanut company in Georgia was sentenced to 28 years in prison on Monday for his role in a salmonella outbreak that killed nine people and sickened hundreds, a rare instance of jail time in a food contamination case.
Stewart Parnell, 61, who once oversaw Peanut Corporation of America, and his brother, Michael Parnell, 56, who was a food broker on behalf of the company, were convicted on federal conspiracy charges in September 2014 for knowingly shipping salmonella-tainted peanuts to customers. Contamination at the company's plant in Blakely, Georgia, led to one of the largest food recalls in U.S. history and forced the company into liquidation.
U.S. District Judge Louis Sands gave Michael Parnell 20 years in prison. Mary Wilkerson, 41, a former quality control manager at the plant who was found guilty of obstruction, was sentenced to five years in prison. Stewart Parnell faced life in prison and his brother faced about 24 years.
Before the judge issued the sentences, Stewart Parnell said; “This has been a seven-year nightmare for me and my family. I’m truly, truly sorry for what’s happened.”
A man whose mother died from eating tainted peanut butter was among those who told a federal judge on Monday that the Parnells should receive stiff prison time. Jeff Almer, of Brainerd, Minnesota, said his mother, Shirley Almer, was among the nine people killed in the salmonella outbreak linked to the company in 2009. "My mother died a painful death from salmonella, and the look of horror on her face as she died shall always haunt me," Almer said during the hearing on Monday in Albany, Georgia. "I just hope they ship you all to jail," Almer said.
During the seven-week trial last year, prosecutors said the Parnell brothers covered up the presence of salmonella in the company's peanut products for years, even creating fake certificates showing the products were uncontaminated despite laboratory results showing otherwise. The Parnells have said they never knowingly endangered customers, and their supporters asked a judge on Monday to show mercy....
An official with the Centers for Disease Control and Prevention testified at the trial that the company's peanut products sickened 714 people in 46 states, including 166 of whom were hospitalized.
Though not formally an LWOP sentence, the federal prison term here means the main defendant will have to live until well into his mid-80s to make it through his whole sentence even with time off for good behavior (and the brother will need to make it to his mid 70s). Thus, while I believe these are technically below-guideline sentences, they are still quite severe given the defendants' ages.
Prior related posts:
- Executive facing "unprecedented" LWOP sentence for food-poisoned peanut butter
- You be the federal judge: how long a prison term for peanut executives convicted of selling salmonella-tainted food
Sunday, September 20, 2015
You be the federal judge: how long a prison term for peanut executives convicted of selling salmonella-tainted food?
In this prior post a few months ago, I highlighted that a peanut company executive convicted of selling salmonella-tainted food was facing an “unprecedented” federal life without parole sentence according to the recommended guideline sentencing range. The sentencing proceeding, as reported in this new AP piece, is slated to go forward this Monday. Here is context for answering the query in the title of this post:
A year after a federal jury convicted him of crimes behind a salmonella outbreak blamed for killing nine people and sickening hundreds more, former peanut executive Stewart Parnell returns to court facing possible imprisonment for the rest of his life.
A sentencing hearing was scheduled for Monday in Albany, Georgia, for the 61-year-old former owner of Peanut Corporation of America. Due in U.S. District Court with Parnell were two co-defendants — his brother and a plant manager — also found guilty in what experts called the first food-poisoning trial of American food processors.
Parnell was convicted Sept. 19, 2014, of knowingly shipping salmonella-tainted peanut butter from his plant in Blakely, Georgia, to Kellogg's and other customers who used it in products from packaged crackers to pet food. The jury also found Parnell and his brother, food broker Michael Parnell, guilty of faking results of lab tests intended to screen for salmonella.
The brothers were charged after a salmonella outbreak that sickened 714 Americans in 46 states was traced to Peanut Corporation's plant in Blakely, Georgia, in early 2009. The Centers for Disease Control and Prevention reported that nine people who ate tainted peanut butter died during the outbreak in 2008 and 2009, though it couldn't say for sure salmonella caused each death.
Federal investigators found a leaky roof, roaches and evidence of rodents, all ingredients for brewing salmonella. They also uncovered emails and records showing food confirmed by lab tests to contain salmonella was shipped to customers anyway. Other batches were never tested at all, but got shipped with fake lab records saying salmonella screenings were negative.
In a court order Friday, Judge W. Louis Sands noted Stewart Parnell faces a possible prison sentence of 9,636 months — which comes to 803 years. The U.S. Probation Office, which prepares pre-sentencing reports to help guide federal judges, recommended the stiff sentence based on the number of illnesses as well as estimates that the outbreak, which triggered one of the largest food recalls in U.S. history, cost Parnell's corporate customers $144 million.
The judge has the authority to impose a lighter sentence. Randy Napier, whose 80-year-old mother in Ohio died from salmonella poisoning after she ate contaminated peanut butter from Parnell's plant, said he plans to testify at the hearing and ask the judge to show little mercy. "We need to send a message to these food manufacturers," said Napier of Durham, North Carolina. "No one else should have to go through what we did, watching my mother die. I'm hoping to have closure. It's been six years of utter hell."
Attorneys in the case say voluminous testimony from victims seeking stiff sentences and defendants' relatives asking for leniency could push the sentencing proceedings into a second day Tuesday.
Parnell's attorneys insist locking him up for life would be too harsh. Even food-safety attorney Bill Marler, who represented many families of victims in the salmonella outbreak, has said life imprisonment would be "unprecedented."...
Michael Parnell, who was convicted on fewer counts than his brother, faces a recommended punishment of 19 to 24 years in prison. Co-defendant Mary Wilkerson, the Georgia plant's quality control manager, faces five years. She was convicted of obstruction of justice.
Three deaths linked to the outbreak occurred in Minnesota, two in Ohio, two in Virginia, one in Idaho and one in North Carolina.
Prior related post:
Friday, September 18, 2015
Shouldn't former federal judge Mark Fuller now be federally prosecuted for perjury?
The question in the title of this post prompted by this new AP article, headlined "Judicial Conference says former federal judge's conduct was reprehensible, impeachable." Here are the details:
Judicial investigators told Congress this week that a former federal judge — arrested last year on a domestic violence charge — had demonstrated "reprehensible conduct" and there was evidence that he abused his wife several times and made false statements to the committee reviewing his behavior.
The Judicial Conference of the United States, in a report to Congress this week, said former U.S. District Judge Mark Fuller of Alabama brought disrepute to the federal judiciary and that his conduct might have warranted impeachment if he had not resigned this summer.
In a letter to the House Judiciary Committee [which can be accessed here], the Judicial Conference noted Fuller's resignation, but said the severity of Fuller's misconduct and its finding of perjury led it to turn the information over to Congress for whatever action lawmakers deem necessary. "This certification may also serve as a public censure of Judge Fuller's reprehensible conduct, which has no doubt brought disrepute to the Judiciary and cannot constitute the 'good behavior' required of a federal judge," Judicial Conference Secretary James C. Duff wrote in a Sept. 11 letter to House Speaker John Boehner....
The Judicial Conference wrote that there was substantial evidence that the judge "physically abused Kelli Fuller at least eight times, both before and after they married, which included and culminated in the assault that took place on Aug. 9, 2014, in the Ritz-Carlton Hotel in downtown Atlanta, Georgia." The conference wrote that Fuller denied under oath to the investigating committee that he ever hit, punched or kicked his wife, and that the investigating committee considered those to be false statements. The Judicial Conference also cited a separate incident, on which it did not elaborate, saying Fuller in 2010 made a false statement to the chief judge that caused a disruption in operations and a loss of public confidence in the court.
The House committee is not releasing the full report, which contains some sensitive victim information. Fuller was placed on leave after his arrest. In May, he announced that he was resigning effective Aug. 1. The Judicial Council of the U.S. 11th Circuit at the time said Fuller's actions might have warranted impeachment, but the reasons for the determination were not released until this week.
Fuller was appointed to the bench in 2002 by then-President George W. Bush. He is perhaps best known for presiding over the 2006 public corruption trial of former Alabama Gov. Don Siegelman and former HealthSouth CEO Richard Scrushy.
As celebrity white-collar attorneys surely recall, in recent times a number of prominent public figures ranging from Barry Bonds to Roger Clemens to Marion Jones to 'Lil Kim to Scooter Libby have been federally prosecuted for alleged acts of perjury that seems far less serious and consequential than what the Judicial Conference has found former judge Mark Fuller committed. Absent some prominent explanation for why a federal perjury prosecution would not be worthwhile in this setting, I will be mighty disappointed and a bit concerned if Fuller does not face sanctions for his apparent criminal behavior in this matter. (Critically, I am not — at least not yet — asserting that Fuller should be imprisoned for his lying under oath to cover up his misbehavior and stay in his position as a federal judge. But I am saying (former state DA prosecutor) Fuller ought to at least face federal criminal charges and be subject to the heat that comes with a formal federal prosecution.)
Thursday, September 10, 2015
New Justice Department sound and fury about white-collar prosecutions signifying....?
The interrupted question in the title of this post is my first-cut reaction and uncertainty in response to this front-page New York Times report on new Justice Department guidance concerning white-collar prosecutions. The NYTimes piece is headlined "Justice Department Sets Sights on Wall Street Executives," and here are excerpts:
Stung by years of criticism that it has coddled Wall Street criminals, the Justice Department issued new policies on Wednesday that prioritize the prosecution of individual employees — not just their companies — and put pressure on corporations to turn over evidence against their executives.
The new rules, issued in a memo to federal prosecutors nationwide [which can be accessed here], are the first major policy announcement by Attorney General Loretta E. Lynch since she took office in April. The memo is a tacit acknowledgment of criticism that despite securing record fines from major corporations, the Justice Department under President Obama has punished few executives involved in the housing crisis, the financial meltdown and corporate scandals.
“Corporations can only commit crimes through flesh-and-blood people,” Sally Q. Yates, the deputy attorney general and the author of the memo, said in an interview on Wednesday. “It’s only fair that the people who are responsible for committing those crimes be held accountable. The public needs to have confidence that there is one system of justice and it applies equally regardless of whether that crime occurs on a street corner or in a boardroom.” Photo
Though limited in reach, the memo could erase some barriers to prosecuting corporate employees and inject new life into these high-profile investigations. The Justice Department often targets companies themselves and turns its eyes toward individuals only after negotiating a corporate settlement. In many cases, that means the offending employees go unpunished.
The memo, a copy of which was provided to The New York Times, tells civil and criminal investigators to focus on individual employees from the beginning. In settlement negotiations, companies will not be able to obtain credit for cooperating with the government unless they identify employees and turn over evidence against them, “regardless of their position, status or seniority.” Credit for cooperation can save companies billions of dollars in fines and mean the difference between a civil settlement and a criminal charge....
But in many ways, the new rules are an exercise in public messaging, substantive in some respects but symbolic in others. Because the memo lays out guidelines, not laws, its effect will be determined largely by how Justice Department officials interpret it. And several of the points in the memo merely codify policy that is already in place.
“It’s a good memo, but it states what should have been the policy for years,” said Brandon L. Garrett, a University of Virginia law professor and the author of the book “Too Big to Jail: How Prosecutors Compromise With Corporations.” “And without more resources, how are prosecutors going to know whether companies are still burying information about their employees?”
It is also unknown whether the rules will encourage companies to turn in their executives, but Ms. Yates said the Justice Department would not allow companies to foist the blame onto low-level officials. “We’re not going to be accepting a company’s cooperation when they just offer up the vice president in charge of going to jail,” she said.
Under Attorney General Eric H. Holder Jr., the Justice Department faced repeated criticism from Congress and consumer advocates that it treated corporate executives leniently. After the 2008 financial crisis, no top Wall Street executives went to prison, highlighting a disparity in how prosecutors treat corporate leaders and typical criminals. Although prosecutors did collect billions of dollars in fines from big banks like JPMorgan Chase and Citigroup, critics dismissed those cases as hollow victories.
Justice Department officials have defended their record fighting corporate crime, saying that it can be nearly impossible to charge top executives who insulate themselves from direct involvement in wrongdoing. Ms. Yates’s memo acknowledges “substantial challenges unique to pursuing individuals for corporate misdeeds,” but it says that the difficulty in targeting high-level officials is precisely why the Justice Department needs a stronger plan for investigating them....
Ms. Yates, a career prosecutor, has established herself in the first months of her tenure as the department’s most vocal advocate for tackling white-collar crime. She foreshadowed plans for the new policy in a February speech to state attorneys general, in which she declared that “even imposing unprecedented financial penalties on the institutions whose conduct led to the financial crisis is not a substitute for holding individuals within those institutions personally accountable.”...
While the idea of white-collar investigations may conjure images of raids of corporate offices by federal agents, the reality is much different. When suspected of wrongdoing, large companies typically hire lawyers to conduct internal investigations and turn their findings over to the Justice Department. Those conclusions form the basis for settlement discussions, and they are likely to take on greater significance now that companies will be expected to name names....
Still, even if the Justice Department’s effort succeeds, it will not automatically put more executives behind bars. Mr. Garrett, the University of Virginia law professor, analyzed the cases in which corporate employees had been charged. More than half, he said, were spared jail time.
I am going to need to read the new Yates memo a few times before I will have any sense of whether and how this new guidance to federal prosecutors is likely to really "move the needle" with respect to white-collar prosecutions. But, in part because my white-collar expertise and experience is at the sentencing stage after an individual has been charged and convicted of a federal economic crime, I am not sure I will ever be able to see clearly from the very back-end of the federal criminal process how much this memo could alter what typically happens at the very front-end of the federal criminal process in the corporate crime world.
In turn, I would be grateful to receive (in the comments or off-line) input from persons with more experience than me on the front-end of corporate criminal investigations about whether this Yates memo signifies much or not so much in the white-collar world. If nothing else, I suspect the Yates memo will prompt many "client alert memos" from big corporate law firms to their corporate clients, and perhaps what those client alerts say about the Yates memo could matter as much as what the Yates memo itself says.
UPDATE: At this link one can now find the text of the big speech Deputy Attorney General Sally Quillian Yates delivered today at New York University School of Law concerning DOJ's "New Policy on Individual Liability in Matters of Corporate Wrongdoing." White-collar practitioners will want to read the speech in full, and here is one thematic paragraph from the heart of the text:
But regardless of how challenging it may be to make a case against individuals in a corporate fraud case, it’s our responsibility at the Department of Justice to overcome these challenges and do everything we can to develop the evidence and bring these cases. The public expects and demands this accountability. Americans should never believe, even incorrectly, that one’s criminal activity will go unpunished simply because it was committed on behalf of a corporation. We could be doing a bang-up job in every facet of the department’s operations — we could be bringing all the right cases and making all the right decisions. But if the citizens of this country don’t have confidence that the criminal justice system operates fairly and applies equally — regardless of who commits the crime or where it is committed — then we’re in trouble.
September 10, 2015 in Fines, Restitution and Other Economic Sanctions, Offender Characteristics, Offense Characteristics, Procedure and Proof at Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (1)
Wednesday, September 02, 2015
Prison realities and reform insights from "Mr. Smith Goes to Prison"
Politico magazine has this fascinating excerpt from a new book titled "Mr. Smith Goes to Prison: What My Year Behind Bars Taught Me About America’s Prison Crisis." The book is authored by Jeff Smith, a former Missouri state senator, who spent a year in federal prison for violating federal election laws, and parts of the excerpt read a bit like the Y-chromisone version of Orange is the New Black. But, as these passage highlight, it appears the book covers much more than just the fish-out-of-water elements of prison life for a white-collar offender:
Long story short: Five years after losing the election, I pleaded guilty to two counts of obstruction of justice for impeding the federal investigation Carnahan had initiated. But I requested an unorthodox sentence: two years of home confinement and full-time community service during which I would be allowed to leave my house only to teach civics and coach basketball at a St. Louis charter school I’d co-founded a decade earlier. It would’ve saved taxpayers about $175,000: two years of a teacher’s salary, plus the cost of housing a federal prisoner, since I would’ve paid for my electronic monitoring. More than 300 people, including a bipartisan group of the state’s top elected officials, wrote public letters to the to the judge requesting clemency and arguing that — as the prison counselor in Kentucky would later note — locking me up would be a waste. But the Feds portrayed me as the mastermind of a “textbook case of political corruption” and pushed for a harsh sentence at the top of the federal guidelines. The judge gave me a year and a day in federal prison.
Six months later, I was adrift in a sea of sharks — a professor-turned-politician-turned-felon forced to learn prison patois and the politics of survival. Among other areas, I’d studied and taught criminal justice policy as a political scientist for a decade. But in prison I would be the student, not the teacher.
This is the story of what I learned — about my fellow prisoners, the guards and administrators, and the system in which we operated. It is a cautionary tale of friendship and betrayal. It is a story of how politics prepared me — and didn’t — for prison, and how prison prepared me for life. But more broadly, it is a scathing indictment of a system that teaches prisoners to be better criminals instead of better citizens, and a prescription for how America can begin to decarcerate and harness the untapped potential of 2.2 million incarcerated people through programs that will transform offenders’ lives, infuse our economy with entrepreneurial energy, increase public safety and save taxpayers billions by slashing sky-high recidivism rates....
Prisons have been called “training grounds for rapists,” and according to one estimate based on two decades of surveys, nearly 300,000 rapes occur annually in U.S. prisons. The most recent Justice Department data concluded that from 2003 to 2012, nearly 2 million inmates were sexually assaulted, costing society as much as $51.9 billion annually, including the costs of victims’ compensation and increased recidivism. Advocates hoped that passage of the 2003 Prison Rape Elimination Act (PREA), which sought to prevent, uncover and address sexual assault, would help, but many large states have refused to comply with it (with little consequence). In 2011, a typical prisoner’s likelihood of being raped was roughly 30 times higher than that of a given woman on the outside, suggesting a depressingly steady trendline despite PREA’s passage. And since reporting assaults will only bring more trouble from fellow prisoners and COs alike, most victims remain quiet, rendering official prison data unreliably low.
Exacerbating this is a dearth of post-rape psychological treatment during incarceration and reentry, which increases the likelihood that victims will suffer from PTSD as well as their odds of recidivism — especially for crimes involving sexual assault. Tragically, prison rape often causes compensatory aggression as untreated victims commit rapes upon release to reclaim their manhood in the same way they imagine it was lost. This vicious cycle by which (frequently) nonviolent offenders become violent is the opposite of the duty that “correctional institutions” are meant to perform....
I spent less than a year in prison. In the words of my first cellie, I had less time in prison than he had done on the prison toilet. I had every advantage upon re-entry: I was a white guy with a Ph.D. from a top school, community and family support, and financial savings. Yet getting a decent job was a struggle. I often think about the re-entry of the guys I was locked up. Most had a GED earned in prison; some hadn’t had a visit in years, or even a decade, and had no one to call on the phone; few had savings to fall back on. They would be coming home to a world in which four of five landlords and nine of 10 employers run criminal background checks on prospective tenants and employees to screen out felons, in which many are not allowed to vote or use food stamps and in which they must immediately find money to pay for a halfway house room and urinalysis tests even as they cannot afford clothes for a job interview.
Mass incarceration is driven in large part by sky-high recidivism rates, and when one contemplates the myriad obstacles to successful prisoner re-entry, one grasps that the system is not, as many claim, broken at all; rather, it appears to be a well-oiled machine, keeping millions of people out of our economic mainstream. And only a shift in our cultural mindset — a realization that people who are incarcerated could, to paraphrase President Obama after his recent prison visit to a federal prison, be our brothers, our sons, our mothers, or ourselves — will change that.
Monday, August 31, 2015
SCOTUS lets convicted former Virginia Gov to remain free pending cert decision
As reported in this local article, headlined "U.S. Supreme Court lets McDonnell stay free for now," a high-profile white-collar federal defendant has gotten a kind of prison sentence reprieve while continuing to pursue his appeals. Here are the basics:
In a surprise to many observers Monday, the U.S. Supreme Court allowed former Gov. Bob McDonnell to remain free while the justices decide whether to take up his appeal....
Should the justices not take the case, the stay ordered this afternoon will end automatically. If the court takes the case the stay will continue, the court ordered.
"Wow," said Randall Eliason, former chief of the Public Corruption/Government Fraud Section at the U.S. Attorney's Office in Washington. "It suggests there is some level of interest at the Supreme Court in reviewing the case, even though not a single appellate judge in the 4th Circuit agreed with his arguments.”
Henry Asbill, one of McDonnell’s lawyers, said “We’re very grateful for this order and we’re gratified that the justices recognize that this case raises substantial and important legal questions and we look forward to a full merits briefing."
McDonnell’s lawyers made the request to Chief Justice John G. Roberts Jr., who referred the matter to the full court. McDonnell needed a majority vote for the stay - it is unclear if the full court voted - but only needs four votes for the court to agree to take up his appeal.
"I am surprised," said Carl Tobias, a professor at the University of Richmond School of law. "There's no explanation" provided by the justices, "so it's really hard to know what the vote might have been. But I think it may be a hopeful sign for McDonnell," he said.
"It certainly buys some time," perhaps four months or more while the court considers taking the case, he said. "I think it shows there is some interest on the court in this case," but not necessarily the ultimate outcome. "There's still a lot of steps to go," he said.
The government opposed continued bond for McDonnell and argued that he should begin serving his two-year term. A spokeswoman for the U.S. attorney had no comment on the order. McDonnell and his wife, Maureen, were convicted of corruption charges stemming from $177,000 in gifts and loans from Jonnie R. Williams Sr., the former CEO of Star Scientific, in exchange for helping with the promotion of a product.
I am a bit disinclined to assert that the former Gov is getting the benefit of celebrity justice, especially because there is good reason to believe McDonnell would have possibly served the majority of his two-year prison sentence before SCOTUS would be able to decide the case on the merits if it ultimately chooses to take up his appeal. Still, many white-collar defendants (despite presumably not being a risk to public safet) do not often get the opportunity to remain free on bail pending an appeal of right to a circuit court, let alone a cert appeal to SCOTUS.
Prior related posts:
- Former Virginia Gov McDonnell (and wife) now facing high-profile federal sentencing after jury convictions on multiple charges
- Former Virginia Gov McDonnell facing significant (trial?) penalty in his federal guideline calculation
- Former Virginia Gov McDonnell gets (way-below-guideline) sentence of two years in prison
- Fourth Circuit refuses to allow convicted former Virginia Gov to remain free pending SCOTUS appeal
Friday, August 28, 2015
Arkansas political corruption case showcases corruptness of federal sentencing guidelines
This local reporting from Arkansas, headlined "Martha Shoffner gets 30 months in bribery case," details today's federal sentencing of a significant political figure in the Natural State. Here are the basics, with some commentary to follow:
Judge Leon Holmes has sentenced former Arkansas Treasurer Martha Shoffner to 30 months in prison for taking bribes for state bond business. It will be followed by some supervised release. No fine was assessed. The 71-year-old will have to report to a Fort Worth prison in 60 days.
She faced as much as 15 years in prison under federal sentencing guidelines. Her attorney had asked for 12 to 18 months, with half that in home detention. U.S. Attorney Chris Thyer, who'd asked for 60 months, said he was satisfied with the outcome....
Judge Leon Holmes said Shoffner had netted little — he ordered restitution of $31,000 she'd kept in bribes — but as a public official should do prison time....Shoffner's attorney argued that the only loss was $36,000 in bribes, not the value of the bond business of $1.7 million. Holmes held there were multiple payments for multiple actions and the $36,000, paid in six installments, didn't amount to a single payment, which also means a potential enhancement of the sentence. He said [bribe giver Steele] Stephens benefited from the bribes to the tune of $900,000 the amount by which his $1.7 million in commissions exceeded the next biggest bond dealer who did business with Shoffner.
[Defense attorney Chuck] Banks asked the court to show mercy on Shoffner, saying she "made a terrible, terrible error in judgment" and characterizing her as "gullible" and "clueless." He said that she was inclined to accept the bribes from Stephens in large part because she was in a bad financial situation, having underestimated the cost of commuting on a regular basis between Newport and Little Rock.
Banks asked Holmes to consider Shoffner's "good deeds," including her work for the Humane Society. He presented the court with a picture of her dog, Fred, and said he was moved by the fact that after Shoffner was first arrested, she asked Banks to call her sister to check on Fred. He called two character witnesses to the stand to testify on her behalf.
He also said that in her capacity as treasurer, Shoffner's books consistently balanced and audits found no problems in the accounts of the office itself. "She was in all honesty doing a pretty dadgum good job," Banks said. "I'm proud to be standing with this poor woman here at this dark hour ... she really is gullible. She really is naive."...
Banks said Shoffner has experienced the most public vilification that he has ever seen in his career as an attorney. He compared her haggard appearance today with a picture of her being sworn in a few years ago, to show the physical toll her ordeal has taken. He said she was now "disgraced," "broke" and "ostracized" and noted that she drove to the courthose in a 2003 Oldsmobile this morning.
He also pointed out that Steele Stephens received complete immunity from prosecution for his cooperation with the FBI. Stephens got a $25,000 fine and lost his brokers license, and "that's it," Banks said.
The attorney argued that sentencing Shoffner to a long period in jail would not serve the public interest, and urged Holmes to give her only as much punishment needed "to repair people's confidence in the office." She might not live out a harsh sentence, he said.
Especially because to this day I remain grumpy Bill Clinton never got prosecuted for his crimes while in office, I tend not to be eager to argue for mercy for lawbreaking politicians. But, if I read the facts here right, it seems the bribe-giver netted nearly $1 million dollars in benefits and gets only a small fine for his misdeeds because of his FBI cooperation while the bribe-taker is headed off the prison for a couple years even though she has already been disgraced and likely never posed any real risk to public safety.
That all said, I do not find either the 30-month sentence imposed by the federal judge or even the 5-year sentence recommended by the federal prosecutor too troublesome. What offends me is a guideline structure that would recommend a 15-year(!) prison sentence for a 71-year-old, first-time offender who poses no risk to public safety. That guideline recommendation strikes me as crazy on these facts, and it is reassuring that the prosecutor here had the good sense to only urge a sentence only 1/3 as long as the guidelines recommend and that the judge imposed a sentence only half as long as the prosecutor requested. And it is cases like this that still lead me to consider circuit courts misguided in the post-Booker jurisprudence to embrace any kind of presumption of reasonableness for within-guideline sentences.
Thursday, August 20, 2015
Fourth Circuit refuses to allow convicted former Virginia Gov to remain free pending SCOTUS appeal
As reported in this local article, headlined "Bob McDonnell headed to prison after appeals court rejection," a high-profile white-collar federal defendant has just learned that he may no longer avoid serving his imposed prison sentence while continue to pursue his appeals. Here are the basics:
Former Virginia governor Bob McDonnell is likely headed to prison after a federal appeals court turned down his request to remain free while he appeals his federal corruption conviction to the Supreme Court....
The decision means we should know when and where McDonnell will serve his sentence in seven days. McDonnell’s attorneys planned to petition the Supreme Court to allow the former governor to remain free on bond.
“I am saddened by the Court’s decision today to deny me freedom while I pursue vindication in the U.S. Supreme Court,” McDonnell wrote in a statement released Thursday afternoon. “I am innocent of these charges and will petition the U.S. Supreme Court for a grant of bond. I ask my exceptional friends across the nation to continue to support and pray for me and my family during this agonizing time. I thank God for His abundant grace and strength as I continue this difficult journey.”
Earlier this month, the 4th Circuit Court unanimously rejected’s McDonnell’s second request to consider an appeal.
McDonnell was found guilty of corruption charges and sentenced in January to two years in federal prison. Since then McDonnell has been trying to get his guilty verdicts thrown out. As a result, McDonnell’s lawyer Henry Asbill said his team would appeal the conviction to the Supreme Court.
Wednesday, August 19, 2015
"Why Not Treat Drug Crimes as White-Collar Crimes?"
The question in the title of this post is the title of this notable new article available on SSRN authored by Thea Johnson and Mark Osler. Here is the abstract:
Drug dealing is a business enterprise. At its core is the manufacture, transport, financing, and selling of illegal narcotics. The most successful drug dealers are the ones who are skilled in the tools of business, and success is measured in the profit generated. Given these undeniable realities, shouldn’t we treat narcotics trafficking the way we do other business-based crimes like fraud or embezzlement?
One odd point of distinction between narcotics and other business crimes has been the frequent use of harsh sentencing measures to create deterrence in the former but not the latter. This is odd because deterrence works where a potential violator both (1) is aware of possible sanctions, and (2) performs a rational cost-benefit analysis that incorporates those possible sanctions. White collar defendants are a better target for deterrence measures by both of these metrics, yet we use those tough measures often in addressing drug crimes and almost never in tackling other business crimes.
To conflate the punishments for narcotics crime and other business crimes would be fairly simple. They could fall under a single guideline in a guideline system, with sentences determined in proportion to the amount of profit taken. Statutes could be similarly constructed. Many sectors of society want to lower incarceration and bring new integrity to the criminal justice system. Treating drug crimes for what they are — crimes of commerce — would go a long way towards that goal.
Monday, August 03, 2015
Two distinct notable tales of crimes and punishment via the Grey Lady
The New York Times starts the work week off with these two intriguing lengthy pieces about two different stories of crimes and punishment:
Friday, July 31, 2015
Executive facing "unprecedented" LWOP sentence for food-poisoned peanut butter
I just came across this AP story from last week reporting on a notable sentence being urged by federal guidelines in a notable white-collar case. Here are the details:
Federal court officers have recommended a sentence of life in prison for a peanut company executive convicted of selling salmonella-tainted food, a move that attorneys on both sides called “unprecedented” for a food-poisoning case. The potential life sentence for former Peanut Corporation of America owner Stewart Parnell was disclosed by prosecutors in a court filing Wednesday. Parnell, 61, is scheduled to be sentenced Sept. 21 by a federal judge in Albany, Georgia....
Stewart Parnell ran the now-defunct company from his Bedford County home, just outside Lynchburg city limits. Parnell's defense attorneys confirmed the recommendation Thursday to The Associated Press, calling the possible punishment “unprecedented.” Bill Marler, a lawyer for victims sickened by peanut butter from Parnell's southwest Georgia plant, used the same word.
In fact, Marler and other experts say the trial of Parnell and two co-defendants last year was the first federal food-poisoning case to be tried by an American court. A jury convicted Parnell of 71 counts including conspiracy, obstruction of justice, wire fraud and other crimes related to a salmonella outbreak in 2008 and 2009. The Centers for Disease Control linked the outbreak to nine deaths and 714 illnesses. It prompted one of the largest food recalls in U.S. history.
Justin Lugar, one of Parnell's defense attorneys, confirmed Thursday that the recommendation before Judge W. Louis Sands is for life in prison, with no lesser range. Parnell's lawyers are trying to persuade the judge to disregard numbers used as aggravating factors to boost the suggested sentence to its maximum: an estimate that Parnell's customers suffered $144 million in losses as well as health officials’ tally that 714 people got sick....
“That recommendation is truly absurd,” said Ken Hodges, an attorney on Parnell's defense team. “We hope the judge will see that Stewart Parnell never meant to hurt anyone. He ate the peanut butter himself. He fed it to his children and to his grandchildren.”...
“Life in prison, especially in a food case, it's frankly unprecedented,” said Marler, who has represented victims of food-borne illnesses for two decades. “But the case itself, on a factual basis, is unprecedented.” Marler said he suspects the judge and prosecutors will think carefully before deciding to pursue a life sentence for Parnell. Still, he said, even the possibility of such a stiff sentence sends a message to food companies....
Even if objections raised by Parnell's attorneys to the sentencing recommendation are denied, it's still possible the judge could impose a lighter sentence. Federal judges are required to consider recommendations based on complex sentencing guidelines, but they are not bound by them.
Parnell and his co-defendants were never charged with sickening or killing anybody. Instead prosecutors used the seven-week trial to lay out a paper trail of emails, lab results and billing records to show Parnell's company defrauded customers by using falsified test results to cover up lab screenings that showed batches of peanut butter contained salmonella. The tainted goods were shipped to Kellogg's and other food processors for use in products from snack crackers to pet food.
Prosecutors wrote that court officers “correctly calculated” Parnell's recommended sentence, but stopped short of saying whether they plan to ask the judge to impose a life sentence. A spokeswoman for the Justice Department in Washington, Nicole Navas, declined to comment.
Prosecutors’ legal briefs also noted stiff sentences were recommended for Parnell's two co-defendants. Punishment of 17 to 21 years in prison was recommended for Parnell's brother, food broker Michael Parnell, who was convicted on fewer counts. The recommendation for Mary Wilkerson, the Georgia plant's quality control manager, was eight to 10 years. She was convicted of obstruction of justice.
Thursday, July 30, 2015
What accounts for decline in federal white-collar prosecutions (and should we care)?
The question in the title of this post is prompted by this new data report from Syracuse University's Transactional Records Access Clearinghouse (TRAC), which is titled "Federal White Collar Crime Prosecutions At 20-Year Low." Here are some details from the start of the report:
Federal prosecution of individuals identified by the government as white collar criminals is at its lowest level in the last twenty years, according to the latest data from the Justice Department.
The available records show an overall decline that began during the Clinton Administration, with a steady downward trend — except for a three-year jump early in the Obama years — continuing into the current fiscal year.
During the first nine months of FY 2015, the government brought 5,173 white collar crime prosecutions. If the monthly number of these kinds of cases continues at the same pace until the end of the current fiscal year on September 30, the total will be only 6,897 such matters — down by more than one third (36.8%) from levels seen two decades ago — despite the rise in population and economic activity in the nation during this period.
The projected FY 2015 total is 12.3 percent less than the previous year, and 29.1 percent down from five years ago. These counts are based on tens of thousands of case-by-case records obtained from the Executive Office for United States Attorneys (EOUSA) under the Freedom of Information Act (FOIA) by Syracuse University's Transactional Records Access Clearinghouse (TRAC).
The decline in federal white collar crime prosecutions does not necessarily indicate there has been a decline in white collar crime. Rather, it may reflect shifting enforcement policies by each of the administrations and the various agencies, the changing availabilities of essential staff and congressionally mandated alterations in the laws.
White collar crimes — as defined by the EOUSA — involve a wide range of activities including the violation of health care, tax, securities, bankruptcy, antitrust, federal procurement and other laws. Because such enforcement by state and local agencies for these crimes sometimes is erratic or nonexistent, the declining role of the federal government could be of great significance.
Tuesday, July 21, 2015
"Sentencing the Wolf of Wall Street: From Leniency to Uncertainty"
The title of this post is the title of this notable new paper now available via SSRN authored by Lucian Dervan. Here is the abstract:
This Symposium Article, based on a presentation given by Professor Dervan at the 2014 Wayne Law Review Symposium entitled "Sentencing White Collar Defendants: How Much is Enough," examines the Jordan Belfort (“Wolf of Wall Street”) prosecution as a vehicle for analyzing sentencing in major white-collar criminal cases from the 1980s until today.
In Part II, the Article examines the Belfort case and his relatively lenient prison sentence for engaging in a major fraud. This section goes on to examine additional cases from the 1980s, 1990s, and 2000s to consider the results of reforms aimed at “getting tough” on white-collar offenders. In concluding this initial examination, the Article discusses three observed trends. First, today, as might be expected, it appears there are much longer sentences for major white-collar offenders as compared to the 1980s and 1990s. Second, today, there also appears to be greater uncertainty and inconsistency regarding the sentences received by major white-collar offenders when compared with sentences from the 1980s and 1990s. Third, there appear to have been much smaller sentencing increases for less significant and more common white-collar offenders over this same period of time.
In Part III, the Article examines some of the possible reasons for these observed trends, including amendments to the Federal Sentencing Guidelines, increased statutory maximums, and judicial discretion. In concluding, the Article offers some observations regarding what the perceived uncertainty and inconsistency in sentencing major white-collar offenders today might indicate about white-collar sentencing more broadly. In considering this issue, the Article also briefly examines recent amendments adopted by the U.S. Sentencing Commission and proposed reforms to white-collar sentencing offered by the American Bar Association.
Friday, July 17, 2015
You be the federal judge: should tax cheating former rep Michael Grimm go to prison?
As previewed by this AP article, headlined "Ex-NY Congressman Grimm Faces Sentencing in Tax Case," a high-profile white-collar defendant is due to be sentenced in federal court today. Here are the basics about the case to enable answering the question posed in the title of this post:
Lawyers for former U.S. Rep. Michael Grimm have asked a judge to spare him a prison term at his sentencing, while prosecutors argue he deserves at least 2 years behind bars for tax evasion. The sentencing Friday in federal court in Brooklyn before U.S. District Judge Pamela Chen follows Grimm's guilty plea late last year to aiding in filing a false tax return — a charge that stemmed from an investigation into the Staten Island Republican's campaign financing.
Prosecutors say the tax fraud began in 2007 after Grimm retired from the FBI and began investing in a Manhattan eatery called Healthalicious. An indictment accused him of underreporting more than $1 million in wages and receipts to evade payroll, income and sales taxes, in part by paying immigrant workers, some of them in the country illegally, in cash.
Grimm, 45, won re-election in November while fighting the charges, but later resigned. In court papers asking for a sentence of probation, defense lawyers called Grimm's offense "an aberration in an otherwise remarkable life in selfless service of his country," including a stint in the Marine Corps. They also argued that losing his career in Congress was punishment enough.
Grimm "is tremendously remorseful over his offense," they wrote. "He understands that his tax violation is not something to be taken lightly, and he is anguished over his wrongdoing and will live with the shame of it the rest of his life."
Prosecutors countered by telling the judge Grimm's record of "falsely minimizing his criminal conduct and impugning anyone who questions him is indicative of an individual who has not come to terms with his own crimes." The government papers cite a news conference last year outside the courthouse where Grimm called the case "a political witch hunt." The papers also refer to an episode in which Grimm threatened to throw a local cable TV news reporter off the balcony of the capitol for asking about the campaign financing inquiry.
If there was a formal sentencing enhancement for acting like a pompous ass, I might expect Grimm to be heading to the federal pen. But I would guess that Grimm's ultimate willingness to plead guilty and resign from Congress will help him secure a nonprison punishment in this case.
UPDATE: This local article details that I was wrong in my guess that Grimm would not be sentenced to prison; as the headline explains, "Michael Grimm gets 8 months in prison at sentencing."
Sunday, July 12, 2015
Seventh Circuit panel affirms as reasonable probation sentence for tax dodging Beanie Babies billionaire
Late Friday, a Seventh Circuit panel rejected the government's claim that a probation sentence given to a high-profile tax cheat was unreasonable. The lengthy opinion in US v. Warner, No. 14 -1330 (7th Cir. July 10, 2015) (available here), gets started this way:
Defendant H. Ty Warner, the billionaire creator of Beanie Babies, evaded $5.6 million in U.S. taxes by hiding assets in a Swiss bank account. He pled guilty to one count of tax evasion, made full restitution, and paid a $53.6 million civil penalty. The Sentencing Guidelines provided a recommended 46- to 57-month term of imprisonment, but the district judge gave Warner a more lenient sentence: two years’ probation with community service, plus a $100,000 fine and costs. The government claims his sentence is unreasonable because it does not include a term of incarceration.
In a typical case, we might agree. But this is not a typical case. The district judge found Warner’s record of charity and benevolence “overwhelming.” Indeed, the judge remarked that Warner’s conduct was unprecedented when viewed through the judge’s more-than-three decades on the bench. In the district court’s opinion, this and other mitigating factors — including the uncharacteristic nature of Warner’s crime, his attempt to disclose his account, his payment of a penalty ten times the size of the tax loss, and the government’s own request for a sentence well below the guidelines range — justified leniency. District courts enjoy broad discretion to fashion an appropriate, individualized sentence in light of the factors in 18 U.S.C. § 3553(a). The court here did not abuse its discretion. Rather, it fully explained and supported its decision and reached an outcome that is reasonable under the unique circumstances of this case. We therefore affirm Warner’s sentence.
Though the panel stresses unique factors applying only in this case to support its reasonableness ruling, white-collar practitioners (especially those in the Seventh Circuit) will find a lot of broader interest and potential value in this opinion.
Prior related posts:
- You be the federal judge: what sentence should the Beanie Babies billionaire get for tax evasion?
- Feds to appeal probation sentence given to tax-dodging Beanie Babies billionaire
- Feds call probation sentence given to Beanie Babies billionaire substantively unreasonable
- Seventh Circuit panel seemingly unmoved by feds appeal of probation sentence given to Beanie Babies billionaire
July 12, 2015 in Booker in the Circuits, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, Sentences Reconsidered, White-collar sentencing, Who Sentences? | Permalink | Comments (1)
Friday, July 10, 2015
Evil doc gets 45 years in the federal pen for fraudulent cancer treatments
I noted in this prior post about his upcoming sentencing, I used the term evil to describe the Michigan oncologist who pleaded guilty to mistreating cancer patients and bilking the government through false Medicare claims. Today the doctor learned our federal criminal justuce system's response to his evil deed, as this local press account reports:
A metro Detroit cancer doctor who made nearly $20 million off hundreds of patients suffering from unneeded chemotherapy and other stunningly bad treatments was sentenced today to 45 years in federal prison.
"This is a huge, horrific series of criminal acts that were committed by the defendant," U.S. District Judge Paul Borman said, later adding that Dr. Farid Fata "practiced greed and shut down whatever compassion he had." Borman said the crimes called for "a very significant sentence for very, very terrible conduct."
Fata, 50, who openly wept in court today as he apologized for his actions, admitted to fraudulently billing Medicare, insurance companies and at least 550 patients through misdiagnoses, over-treatment and under-treatment. In some cases, he gave nearly four times the recommended dosage amount of aggressive cancer drugs; in at least one, a patient was given toxic chemotherapy for five years when the standard treatment was six months, according to former patients and experts in court this week.
"I misused my talents... because of power and greed. My quest for power is self-destructive," a sobbing Fata told the court before sentencing. He said he is "horribly ashamed of my conduct" and prays for repentance.
Defense attorney Christopher Andreoff asked Borman to sentence Fata to no more than 25 years in prison, saying even that could be a life sentence because of Fata's health. "Our recommendation will give him nothing more than a chance for release before he dies," Andreoff said.
U.S. Assistant Prosecutor Catherine Dick told the court her office has "has never seen anything like this before. ,,. And that is because of the harm."
"Fata was greedy and he wanted that money," Dick said. "What this defendant did is unquantifiable. There is no way to quantify the suffering." Dick, whose office had asked for 175-year sentence, said patients died in horrible pain from Fata's treatments.
Borman had set the sentencing guidelines to 30 years to life on Thursday based on the charges and circumstances. "My role.. is to impose a sentence sufficient but not greater than necessary," Borman said this morning.
The federal court this week heard accounts of about 22 victims, who shared unthinkable experiences of a healthy adult undergoing chemotherapy and losing nearly all his teeth, of a patient diagnosed with lung cancer when he had kidney cancer, and more. Some statements were read by family members of patients who died. Some patients with no documented iron deficiencies were given overwhelming amounts of iron, while others were given lower-than-needed doses of chemotherapy drugs, experts testified.
U.S. Attorney Barbara McQuade previously called his case the "the most egregious" health care fraud case her office has seen.
Fata pleaded guilty in September to 13 counts of health care fraud, two counts of money laundering and one count of conspiring to pay and receive kickbacks. The case involves $34.7 million in billings to patients and insurance companies, and $17.6 million paid for work Fata admitted was unnecessary.
Prior related post:
Tuesday, July 07, 2015
You be the judge: what federal sentence for evil cancer doctor?
A few weeks ago, I was discussing with my kids whether they thought some humans were innately evil. In any such discussion, it might make sense to bring up the story of the Michigan oncologist who pleaded guilty to mistreating cancer patients and bilking the government through false Medicare claims. The doctor's federal sentencing began this week, and this AP story provides an overview of the proceedings and basic information to enable any would-be judges to suggest sentences for the doc in the comments:
Patients of a Detroit-area doctor received "stunning" doses of a powerful, expensive drug that exposed them to life-threatening infections, an expert testified Monday as a judge heard details about a cancer specialist who fleeced insurance companies and harmed hundreds of people.
Dr. Farid Fata is headed to prison for fraud and other crimes. But U.S. District Judge Paul Borman first is hearing from experts and former patients about the extent of his scheme to reap millions of dollars from Medicare and other health programs.
Nearly three dozen ex-patients and family members, many dressed in black, chartered a bus to attend the hearing, which could last days. Some will testify Tuesday."This is a small fraction of the people this guy has hurt," said Terry Spurlock, 52, of Holly, who had three more years of treatments after a tumor on his neck disappeared. "He gave me so much treatment, it stopped my immune system."
Fata, 50, pleaded guilty last fall to fraud, money laundering and conspiracy. The government is seeking a 175-year prison sentence, while the Oakland County man is asking for no more than 25 years.
The government said 553 people have been identified as victims, along with four insurance companies. There were more than 9,000 unnecessary infusions or injections. "There is an aggressive approach to treating cancer. This was beyond. This was over the top," said Dr. Dan Longo, a Harvard medical professor and deputy editor at the New England Journal of Medicine, who testified Monday as a $400-an-hour expert for prosecutors after examining 25 patient files, a tiny portion of Fata's practice.
Longo was asked about patients who were given a drug called Rituximab, which can weaken the immune system if overused. It is typically given eight times for aggressive lymphoma, but one patient got it 94 times. Another got it 76 times.... Later, he told the judge that "all the files I looked at had problems, but I would not say all the treatment was inappropriate."
It was the first time that many former patients had seen Fata in months, if not years. He has been in custody since his 2013 arrest. He wore a white dress shirt and dark suit in court.
"I wanted to knock that smirk off his face," said Geraldine Parkin, 54, of Davison, who[se] husband, Tim, has survived non-Hodgkin lymphoma but has other chronic problems because of excessive treatments. "He has a lot of anger," Parkin said.
Tuesday, June 09, 2015
You be the federal defense attorney: would you urge Dennis Hastert to cut a plea deal?
I often highlight and review high-profile cases by urging readers to place themselves in the shoes of a judge facing a tough sentencing decision or a prosecutor having to recommend a specific sentence. But, as the title of this post connotes, now I am urging folks to think about how the attorneys for former House Speaker Dennis Hastert ought to approach (sentencing?) discussions with their client and their adversaries. This lengthy Politico account of the Hastert charges and proceedings by Josh Gerstein provides all the needed background and includes these excerpts:
After more than a week in seclusion, former House Speaker Dennis Hastert pleaded not guilty Tuesday to two criminal charges that he violated federal banking law and lied to the FBI as they investigated his alleged agreement to pay $3.5 million in hush money to cover up a past transgression.
Hastert, who became the longest-serving Republican speaker before the GOP lost the House in 2006, was released after entering the plea in front of U.S. District Judge Thomas Durkin at an afternoon hearing which raised questions about whether Durkin will continue or the case will be reassigned to another judge.
Hastert, 73, looked much as he did during the height of his power, slightly stooped and with a shock of gray hair as he trudged into the packed courtroom clad in a dark pinstripe suit and blue tie. He stood in front of the judge’s bench throughout the roughly 15-minute hearing, softly answering the judge’s questions — usually with a “Yes, sir.”
Hastert’s lead defense attorney, Tom Green, spoke for the former speaker when it came time to offer a plea. “The defendant enters a plea of not guilty to both counts of the indictment, your honor,” Green said....
At Tuesday’s hearing, the defense waived a formal reading of the indictment, which alleges Hastert agreed to pay $3.5 million to an unnamed individual and forked over $1.7 million of that before the charges were filed. Nearly $1 million of that was withdrawn from the former speaker’s bank accounts in increments of $10,000 after bankers warned him that larger donations would trigger reports to the authorities, the indictment claims.
Prosecutors said little during the session, but when the judge asked for details of the potential penalties, Block noted Hastert could face up to five years in prison and a $250,000 fine on each of the two felony counts. However, judges usually impose sentences in accordance with federal guidelines that call for more lenient punishment for offenders with no serious criminal record.
A plea deal, if there were to be one, could also reduce Hastert’s sentence. Many criminal defense lawyers believe such a deal is probable because a jury is not likely to look favorably on a defendant trying to cover up alleged sexual abuse of a student.
One of the charges brought against Hastert — structuring cash transactions to avoid federal reporting requirements — is unpopular among defense lawyers and libertarians because it can render routine cash banking transactions in increments of just under $10,000 illegal even if the reason for the cash payments or withdrawals is lawful. Critics contend that prosecutors use the structuring law to bring charges or force guilty pleas from defendants when the government lacks proof to make a case for drug trafficking or tax evasion. Some judges have reacted skeptically when the feds have brought cases in which there is no charge that the underlying conduct was illegal.
The nature of Hastert’s reported relationship with the acquaintance who allegedly received the hush money is unclear, but experts say the statute of limitations in Illinois for a criminal prosecution on sexual abuse from the 1970s expired long ago.
Hastert, who as speaker was once second in line to the presidency, resigned his House seat in 2007 after he lost the speaker’s post due to the Democrats’ victory in 2006. He is the highest-ranking current or former federal official to face criminal prosecution since Vice President Spiro Agnew resigned in 1973 and pleaded guilty to a felony tax evasion charge.