Friday, February 20, 2015

Virginia's former first lady facing sentencing after hubby got only two years

Today brings another high-profile white-collar sentencing in the federal court in Virginia as Maureen McDonnell, former first lady, is to come before the same judge who sentenced former Virginia Gov Robert McDonnell to two years' imprisonment last month. Helpfully, Randall Eliason at the Sidebars Legal Blog provides this preview, titled "What to Expect at Maureen McDonnell’s Sentencing." Randall provides this refined summary of the guideline basics and the parties' recommendations:

The Presentence Report prepared by the U.S. Probation Department concludes that the Sentencing Guidelines call for a sentence of 63-78 months in prison. The prosecution agrees with those calculations but recommends the judge sentence her to only 18 months in prison to avoid an unwarranted disparity between her sentence and that of her husband. Mrs. McDonnell’s attorneys argue that, properly calculated, the Sentencing Guidelines call for only 33-41 months, but urge the judge to depart even further from the Guidelines and sentence her to probation along with 4000 hours of community service.

In addition, the Washington Post has this article headlined "Everything you need to know about Maureen McDonnell’s sentencing." But that piece does not set out these guideline basics, so the headline is not accurate for hard-core federal sentencing geeks like me.

UPDATE:  As this Washington Post piece reports, "Maureen McDonnell was sentenced Friday to a year and a day in federal prison after an emotional, hours-long hearing in which the former first lady of Virginia apologized publicly for the first time since she and her husband were accused of public corruption."

As all competent federal sentencing lawyers know, a sentence of a year and a day for the former first lady is actually better than a sentence of one year. That extra day makes her formally eligible to earn good-time credit, which nearly all non-violent offenders earn. So, practically, Ms. McDonnell is now likely to be released from federal custody after only 10.5 months in the federal graybar hotel.

February 20, 2015 in Federal Sentencing Guidelines, Offender Characteristics, Offense Characteristics, Procedure and Proof at Sentencing, White-collar sentencing | Permalink | Comments (0) | TrackBack

Thursday, February 05, 2015

You be the judge: what federal sentence for Silk Road creator Ross Ulbricht?

Ross-ulbricht-600x450This Wired article provides the basic story on a notable modern federal defendant who, thanks to a jury verdict yesterday, is now a high-profile convicted felon awaiting sentencing:

A jury has spoken, and the mask is off: Ross Ulbricht has been convicted of being the Dread Pirate Roberts, secret mastermind of the Silk Road online narcotics empire.

On Wednesday, less than a month after his trial began in a downtown Manhattan courtroom, 30-year-old Ulbricht was convicted of all seven crimes he was charged with, including narcotics and money laundering conspiracies and a “kingpin” charge usually reserved for mafia dons and drug cartel leaders.  It took the jury only 3.5 hours to return a verdict.  Ulbricht faces a minimum of 30 years in prison; the maximum is life.  But Ulbricht’s legal team has said it will appeal the decision, and cited its frequent calls for a mistrial and protests against the judge’s decisions throughout the case.

As the verdict was read, Ulbricht stared straight ahead. His mother Lyn Ulbricht slowly shook her head, and his father Kirk put a hand to his temple. After the verdict, Ulbricht turned around to give his family a stoic smile.  “This is not the end,” Ulbricht’s mother said loudly as he was led out of the courtroom. “Ross is a hero!” shouted a supporter.

From his first pre-trial hearings in New York, the government’s evidence that Ulbricht ran the Silk Road’s billion-dollar marketplace under the pseudonym the Dread Pirate Roberts was practically overwhelming.  When the FBI arrested Ulbricht in the science fiction section of a San Francisco public library in October of 2013, his fingers were literally on the keyboard of his laptop, logged into the Silk Road’s “mastermind” account.  On his seized laptop’s hard drive, investigators quickly found a journal, daily logbook, and thousands of pages of private chat logs that chronicled his years of planning, creating and day-to-day running of the Silk Road. That red-handed evidence was bolstered by a college friend of Ulbricht’s who testified at trial that the young Texan had confessed creating the Silk Road to him. On top of that, notes found crumpled in his bedroom’s trashcan connected to the Silk Road’s code.  Ulbricht’s guilty verdict was even further locked down by a former FBI agent’s analysis that traced $13.4 million worth of the black market’s bitcoins from the Silk Road’s servers in Iceland and Pennsylvania to the bitcoin wallet on Ulbricht laptop.

Ulbricht’s defense team quickly admitted at trial that Ulbricht had created the Silk Road. But his attorneys argued that it had been merely an “economic experiment,” one that he quickly gave up to other individuals who grew the site into the massive drug empire the Silk Road represented at its peak in late 2013.  Those purported operators of the site, including the “real” Dread Pirate Roberts, they argued, had framed Ulbricht as the “perfect fall guy.”...

But that dramatic alternative theory was never backed up with a credible explanation of the damning evidence found on Ulbricht’s personal computer.  The defense was left to argue that Ulbricht’s laptop had been hacked, and voluminous incriminating files injected into the computer — perhaps via a Bittorrent connection he was using to download an episode of the Colbert Report at the time of his arrest.  In their closing arguments, prosecutors called that story a “wild conspiracy theory” and a “desperate attempt to create a smokescreen.” It seems the jury agreed.

Despite the case’s grim outcome for Ulbricht, his defense team seemed throughout the trial to be laying the grounds for an appeal.  His lead attorney Joshua Dratel called for a mistrial no less than five times, and was rejected by the judge each time. Dratel’s protests began with pre-trial motions to preclude a large portion of the prosecution’s evidence based on what he described as an illegal, warrantless hack of the Silk Road’s Icelandic server by FBI investigators seeking to locate the computer despite its use of the Tor anonymity software. As the trial began, Dratel butted heads with the prosecution and judge again on the issue of cross-examining a Department of Homeland Security witness on the agency’s alternative suspects in the case, including bitcoin mogul and Mt. Gox CEO Mark Karpeles. And in the last days of the trial, Dratel strongly objected again to a decision by the judge to disallow two of the defense’s expert witnesses based on a lack of qualifications....

Ulbricht will nonetheless be remembered not just for his conviction, but also for ushering in a new age of online black markets.  Today’s leading dark web drug sites like Agora and Evolution offer more narcotics listings than the Silk Road ever did, and have outlived law enforcement’s crackdown on their competitors. Tracking down and prosecuting those new sites’ operators, like prosecuting Ulbricht, will likely require the same intense, multi-year investigations by three-letter agencies.

Though I am not familiar with all the likely sentencing particulars, I would expect a guidelines calculation in this case to be life and that prosecutors will urge a guideline-recommended LWOP sentence. The defense surely will seek the minimum sentence, which in this case is the not-so-minimum 30 years in the federal greybar hotel.

In addition to pursuing their appeal, Ulbricht's defense team might reach out to Brian Doherty at Reason, who has this provocative commentary headlined "Silk Road: Ross Ulbricht's Loss is a Loss for Justice, Liberty, Safety, and Peace: The operation Ulbricht was found guilty of managing was one guaranteed to save lives, reduce real crime, and preserve liberty." Here are excerpts:

[T]he government's multi-year, incredibly expensive attempt to take down the site and prosecute Ulbricht were bad for liberty, bad for markets, bad for the safety of those who choose to use substances the government has declared forbidden, and bad for America....

Ulbricht, if he's guilty of what they tried him for, is guilty of nothing but trying, and for a while succeeding, in doing a good thing for his fellow citizens, the world, and the future. His case will be remembered not as one of stalwart cops saving the world from dangerous crime, but of a visionary martyr punished for the good he did.

The combination of cryptography and Bitcoin are out of the bottle, and what it ultimately means is that the war on drugs is even more hopeless than it always was. But the government seems to never run out of candidates to be the last person to be a victim of that war, a victim of that mistake. May Ulbricht be among the last.

February 5, 2015 in Drug Offense Sentencing, Offense Characteristics, Purposes of Punishment and Sentencing, White-collar sentencing | Permalink | Comments (7) | TrackBack

Friday, January 30, 2015

Notable new commentary on Yates v. US and overcriminalization

Via email I learned about these two notable new commentaries discussing issues surrounding the federal criminal case Yates v. United States soon to be resolved by the Supreme Court:

SOX on Fish: A New Harm of Overcriminalization by Todd Haugh

Going Overboard: Yates and DOJ’s “Most Serious Offense” Charging Policy by Scott Coffina & Edward James Beale

January 30, 2015 in Offense Characteristics, White-collar sentencing, Who Sentences? | Permalink | Comments (5) | TrackBack

Tuesday, January 13, 2015

Brief account of what proposed fraud guideline changes might amount to

This new Reuters article, headlined "U.S. panel proposes changes to white-collar prison sentences," provides a reasonable summary of the likely import and impact of the guideline reform proposes announced by the US Sentencing Commission late last week (discussed here). Here are excerpts:

Some executives and others convicted of stock fraud could face shorter prison terms under a U.S. commission's proposal to change how white-collar criminals are sentenced. The U.S. Sentencing Commission on Friday released proposals to amend advisory federal guidelines that would shift the emphasis in calculating a sentence for frauds on the market to financial gains instead of investor losses.

The proposal follows years of criticism by defense lawyers and some judges who say that the guidelines focus too much on financial losses caused by fraud, leading in certain cases to sentences that are too harsh. Judges have discretion to impose any sentence, but are required to consider the guidelines.

In stock fraud cases, losses can be in the hundreds of millions of dollars, contributing to an advisory sentence of life in prison. Under the commission's proposal, judges in these cases would consider the gains from a fraud, a number defense lawyers say would often be considerably smaller.

The Sentencing Commission has scheduled a March 12 hearing on the proposals. The panel has until May 1 to submit any amendments to Congress. If Congress does not act by Nov. 1, the changes become law....

The commission has proposed setting a threshold sentencing level for gains, ensuring punishment in cases where profits are minimal. Depending on what floor is set, there is a "very good chance a number of cases would result in lower guideline sentencing ranges," said David Debold, a lawyer at Gibson, Dunn & Crutcher who heads up an advisory group to the commission.

Defense lawyers cautioned that the proposed changes would not always result in a lower sentencing range. Some frauds like penny stock manipulation, for example, could involve significant gains to defendants and might still lead to lengthy sentences. Other proposals would affect the weight given to factors such as the harm to victims and the sophistication of a fraud.

Some defense lawyers say the proposals overall do not sufficiently emphasize a defendant's culpability and leaves loss as a driving factor for the bulk of fraud cases involving identity theft, mortgage fraud and healthcare fraud. "These changes don't go nearly as far as we would have liked," James Felman, a Florida lawyer and member of an American Bar Association task force advocating changes to the guidelines.

U.S. District Judge Patti Saris, the commission's chair, said in a statement that the panel did not consider "the guideline to be broken for most forms of fraud," but that its review had identified "some problem areas where changes may be necessary." 

Prior related post:

January 13, 2015 in Federal Sentencing Guidelines, Offense Characteristics, White-collar sentencing, Who Sentences? | Permalink | Comments (2) | TrackBack

Friday, January 09, 2015

US Sentencing Commission proposes (modest but significant) changes to the fraud guidelines

Download (1)As reported in this official news release, the "United States Sentencing Commission voted today to publish proposed guideline amendments, including revisions to the sentencing guideline governing fraud." Here are the basics from the release:

The bipartisan Commission voted to seek comment on a proposed amendment to revise guideline §2B1.1 governing fraud offenses by clarifying the definition of “intended loss,” which contributes to the degree of punishment, and the enhancement for the use of sophisticated means in a fraud offense. The proposed amendment also revises the guideline to better consider the degree of harm to victims, rather than just the number of victims, and includes a modified, simpler approach to “fraud on the market” offenses which involve manipulation of the value of stocks.

The proposed revisions to the fraud guidelines come after a multi-year study, which included a detailed examination of sentencing data, outreach to experts and stakeholders, and a September 2013 symposium at John Jay College of Criminal Justice in New York. “We have heard criticism from some judges and members of the bar that the fraud guideline may be fundamentally broken, particularly for fraud on the market cases,” said Judge Patti B. Saris, Chair of the Commission. “Based on our extensive examination of data, we have not seen a basis for finding the guideline to be broken for most forms of fraud, like identity theft, mortgage fraud, or healthcare fraud, but this review has helped us to identify some problem areas where changes may be necessary.”...

Consistent with the Commission’s mission to make the guidelines more efficient and more effective, the Commission also voted today to clarify the provisions allowing for sentence reductions for offenders with mitigating roles in the offense and the provisions governing jointly undertaken criminal activity.  The Commission similarly proposed adjusting the tables based on amounts of money for inflation in an attempt to keep the guidelines current and follow the approach generally mandated by statute for most civil monetary penalties....

The proposed amendments and issues for comment will be subject to a public comment period running through March 18. A public hearing on the proposed amendments will be scheduled in Washington, D.C., on March 12. More information about these hearings, as well as a data presentation on today’s proposed fraud amendment and other relevant data, will be available on the Commission’s web site at www.ussc.gov.

Here are links to new materials already posted on the USSC website this afternoon:

As the title of this post indicates, these new proposed amendments strike me as relatively modest but still quite significant. Most notably, the white-collar defense bar is likely to be very interested in what these changes signal and suggest, and any federal fraud defendants currently serving very long guideline sentences may want to start thinking about whether these proposed amendments might help their cause if they are formally adopted and thereafter made retroactive.

January 9, 2015 in Federal Sentencing Guidelines, Offense Characteristics, White-collar sentencing, Who Sentences? | Permalink | Comments (3) | TrackBack

Tuesday, January 06, 2015

Former Virginia Gov McDonnell gets (way-below-guideline) sentence of two years in prison

As reported here by the Washington Post, a "federal judge sentenced former Virginia governor Robert F. McDonnell to two years in prison Tuesday — a term far lower than what prosecutors had sought and one that means the popular politician will be free before his 63rd birthday." Here is more:

U.S. District Judge James R. Spencer said he was moved by the outpouring of support for McDonnell, though he could not ignore the jury’s verdict. “A price must be paid,” Spencer said. “Unlike Pontius Pilate, I can’t wash my hands of it all.  A meaningful sentence must be imposed.”

The penalty is a win for defense attorneys, who had asked that the former governor be sentenced to mere community service even as prosecutors initially advocated for a prison term stretching longer than a decade.  The U.S. probation office had determined that federal sentencing guidelines called for a term of incarceration between 10 years and a month and 12 years and seven months.

Spencer ordered the former governor to report to prison on Feb. 9. Though McDonnell (R) will certainly appeal his conviction, the sentence brings to a close a stunning narrative of politics, greed and family drama that reached a climax in September when McDonnell, 60, and his wife, Maureen, were convicted of public corruption. A jury found unanimously that the couple used the governor’s office to help a wealthy dietary supplement company executive advance his business interests, and in exchange, the businessman gave the McDonnells $177,000 in loans, gifts and luxury goods.

January 6, 2015 in Celebrity sentencings, White-collar sentencing | Permalink | Comments (3) | TrackBack

Monday, January 05, 2015

Previewing (and predicting) federal sentencing prospects for former Virginia Gov McDonnell

The Washington Post has this lengthy article, headlined "What to expect at former Virginia governor Robert McDonnell’s sentencing," providing an effective preview of a high-profile white-collar sentencing taking place in federal court tomorrow. Here are highlights:

As a federal judge on Tuesday sets the punishment for former Virginia governor Robert F. McDonnell, he will consider legal issues as well as sweeping personal questions.  U.S. District Judge James R. Spencer will look first to guidelines that call for McDonnell to receive as much as 12 years and seven months for trading the influence of his office to a smooth-talking businessman in exchange for sweetheart loans, lavish vacations and high-end merchandise.

But the judge is not bound by those recommendations.  And his ultimate decision rests, in part, on intangible considerations: How serious was McDonnell’s public corruption?  What penalty might deter others in the former governor’s shoes?  What weight should be given to the good the former governor has done?...

rosecutors want McDonnell to spend at least 10 years and a month in prison.  The former governor’s attorneys believe a sentence of community service — and no time behind bars — would be sufficient.

Both sides will make their best pitches to the judge in person beginning at 10 a.m. McDonnell may offer a personal plea, as may some of his supporters.  Spencer has been given more than 440 letters that friends, family members and others wrote on the governor’s behalf, urging leniency and extolling the virtues of the onetime Republican rising star.  Spencer also has reviewed filings from prosecutors, who have accused McDonnell of feeling no remorse and still seeking to blame others....

The starting point for determining the former governor’s punishment is this: The U.S. probation office — the federal agency tasked with calculating a range of appropriate penalties according to the federal sentencing guidelines — has recommended that McDonnell face between 10 years and a month to 12 years and seven months in prison. There is no parole in the federal system, and if McDonnell were to be incarcerated, he would be able to reduce his time behind bars with good behavior by only 54 days a year, at most.

Spencer is not bound by the probation office’s recommendation — it is merely a technical calculation of how the office believes federal sentencing guidelines should be applied in the case — but experts say he typically heeds its advice....

After Spencer determines the guideline range, he will weigh entirely different factors as he fashions what he considers an appropriate punishment.  Among those that prosecutors and defense attorneys highlighted in McDonnell’s case: the nature and circumstances of his offenses, McDonnell’s personal history and characteristics, and the need to deter others from ending up in similar straits....

A former prosecutor and Judge Advocate General’s Corps officer, Spencer was appointed to the court by President Ronald Reagan in 1986.  Known as a no-nonsense and efficient jurist, he took senior status on the bench last year, meaning he is now semi-retired.  Jacob Frenkel, a former federal prosecutor who now does white collar criminal defense work, said Spencer probably will not impose a decade-long sentence, but defense attorneys’ bid for only probation is something of a “Hail Mary.”

I share the view that it is unlikely McDonnell will get either probation as he wishes or the 10 years in prison sought by the feds. As a betting man, I would put the over-under line at around three years. The nature of the crime and the defendant leads me to think the sentencing judges will be likely to impose a substantial prion term, but still something less (perhaps much less) than half a decade.

Prior related posts:

UPDATE: I just discovered that Randall Eliason at his Sidebars Legal Blog has this lengthy post about the McDonnell sentencing which provides much more detailed review of the interesting guideline calculation issues that are in dispute in the case.  

January 5, 2015 in Federal Sentencing Guidelines, Offense Characteristics, Procedure and Proof at Sentencing, White-collar sentencing | Permalink | Comments (1) | TrackBack

Former District Judge Paul Cassell at center of two big new victim-rights stories

ImageLong-time readers of this blog are surely familiar with the name Paul Cassell, perhaps primarily for his notable sentencing rulings back when he was a federal district judge concerning mandatory minimums and the impact of Blakely on the federal sentencing guidelines.  Long-time criminal justice academics are familiar with his long-ago scholarly work on Miranda and related police-practices jurisprudence and modern victim-rights advocates know Paul as one of the leading modern (court-focused) advocates for the interests of crime victims.  

With all that background (and the disclaimer that I have worked with Paul on various issues over the last decade and greatly respect his talents, energies and perspectives), I am now fascinating to see Paul Cassell's name at the forefront of two big new victim-rights stories.  Here are links and the start of articles about these stories:

From the Washington Times here, "Loretta Lynch questioned over secret deal depriving fraud victims of $40M":

More than a year before President Obama nominated federal prosecutor Loretta Lynch to be attorney general, a former federal judge quietly called on Congress to investigate her U.S. attorney’s office for trampling on victims’ rights.

Paul Cassell, a law professor at the University of Utah, said Ms. Lynch’s office, the U.S. Attorney for the Eastern District of New York, never told victims in a major stock fraud case that a culprit had been sentenced — denying them a chance to seek restitution of some $40 million in losses. Mr. Cassell, in written remarks to a House Judiciary Committee panel in 2013, said if prosecutors were using secretive sentencing procedures to reward criminals for cooperating with them, it could violate the Crime Victims Restitution Act.

From the Salt Lake Tribune here, "Utah law professor claims British prince, well-known attorney had sex with teen ‘sex slave’":

University of Utah law professor Paul Cassell has come under fire for filing a motion in a victims’ right suit that claims a client was forced as a girl to be a "sex slave" who allegedly was made available to a well-known attorney and a member of the British royal family.

The motion filed Friday in a federal court in Florida alleges that a woman identified as Jane Doe #3 was sexually exploited beginning at age 15 by billionaire financier Jeffrey Epstein, who also loaned her for sex to politically connected and powerful people — including Harvard Law School professor emeritus Alan Dershowitz and Prince Andrew, a son of Queen Elizabeth II.

Both men have denied the allegations, and Dershowitz is threatening to initiate disbarment proceedings against Cassell and Bradley Edwards, a Florida attorney who also represents Jane Doe #3, according to The Wall Street Journal.

For lawyers and politicians, the story about criticisms of the Attorney-General-nominee is much more important and consequential.  But the teen sex slave story is sure to get a whole lot more attention — and that story could, I think, end up making it difficult for Paul Cassell to be called to testify or otherwise be a visible voice in AG-nominee Lynch's upcoming confirmation hearings.

January 5, 2015 in Criminal justice in the Obama Administration, Current Affairs, Victims' Rights At Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (3) | TrackBack

Sunday, December 28, 2014

Former Virginia Gov McDonnell upcoming sentencing sets out white-collar terms of debate

McdonnellThis lengthy local article from Virginia, headlined "U.S. seeks McDonnell sentence of 10 to 12 years," details the competing arguments being set forth in a high-profile federal white-collar sentencing slated for next month. Here are excerpts from the piece:

Prosecutors are asking that former Gov. Bob McDonnell, convicted of 11 corruption charges in September, be imprisoned for at least 10 years and one month to as much as 12 years and seven months when sentenced Jan. 6 by U.S. District Judge James R. Spencer.

In sentencing memorandums filed Tuesday, the U.S. Attorney’s Office asked for a term within the federal sentencing guideline range determined by the probation office, while McDonnell’s lawyers asked for 6,000 hours of community service instead of prison time and argued the guideline range should be 33 to 41 months.

“After serving as a prosecutor and attorney general, this defendant corrupted an office that few bribery defendants achieve, and then falsely testified and shifted blame for his actions before the jury that convicted him,” wrote Dana J. Boente, the U.S. attorney for the Eastern District of Virginia. McDonnell, the government wrote, “stands before this court as only the 12th governor in the United States — and the first governor of Virginia — to be convicted of a public corruption offense.”

McDonnell and his wife, Maureen, were convicted in a six-week trial in which the marriage and the former first lady were portrayed as troubled.  Maureen McDonnell was convicted of nine charges, one later thrown out, and will be sentenced Feb. 20.  Bob McDonnell testified on his own behalf, but his wife did not.  The McDonnells were indicted in January for accepting more than $177,000 in gifts and loans from Jonnie R. Williams Sr., the then-CEO of Star Scientific, in exchange for promoting a new dietary supplement product. Williams, a key government witness, was granted immunity....

In its 31-page sentencing memorandum, the government urged Spencer to adopt the findings in the presentencing report from the probation office and reject McDonnell’s objections.  Prosecutors argued that McDonnell abused his power and violated his duty to the people of Virginia.

“The defendant is fond of pointing out that under Virginia law, no limits on gifts to elected officials existed and that he thus claims that he was merely a ‘part of the culture of unlimited gifts that has permeated Virginia politics,’ ” prosecutors wrote. “But he was not convicted of accepting gifts; he was convicted of accepting bribes. And bribery has always been a violation of state (as well as federal) law,” they added.  The government said the presentencing report correctly factored in obstruction of justice based on what it termed McDonnell’s lies from the witness stand....

McDonnell’s 51-page sentencing position, also filed Tuesday, took a very different view of the case.  It said: “Bob McDonnell has devoted his life to public service, family, and faith. This offense is a total aberration in what was by all accounts a successful and honorable career.”

McDonnell argued the appropriate guideline range should be 33 to 41 months. “A sentence of imprisonment of any length, however, much less one of 10 years or more, would be a severely disproportionate punishment,” his lawyers contend.  “Instead, a variant sentence of probation with a condition of 6,000 hours of full-time, rigorous, unpaid community service at a remote location served over three years is ‘sufficient, but not greater than necessary,’ to provide a just punishment,” they wrote.

“An outcome in which Mr. McDonnell serves any time in prison ... while Mr. Williams suffers no criminal justice consequences at all would neither promote respect for the law nor provide a just resolution to this case,” McDonnell’s lawyers argued.

Much of McDonnell’s sentencing position is taken up with his biography, accomplishments, and service in the military and as a state legislator, Virginia attorney general and governor.  Seven appendixes, including hundreds of letters of support, were filed along with the document.

The memorandum notes the outline of the scheme for which he was convicted.  “Mr. McDonnell’s actual conduct, however, differs in critical ways from that of others who have been convicted under the same federal bribery laws,” McDonnell’s lawyers argued.  “Mr. McDonnell did not demand or receive cash payments from Mr. Williams.  He did not take briefcases of money or hide stacks of $100 bills in his freezer,” they wrote.  “Rather, the quid that the indictment charges that Mr. McDonnell or his family members received were gifts — a wedding gift to Mr. McDonnell’s daughter and several rounds of golf at Mr. Williams’ country club — as well as three loans at commercial rates that the McDonnells paid back with interest.”

While McDonnell’s decision to accept the items showed poor judgment, Virginia state ethics laws at the time permitted officials to accept unlimited gifts of that nature, McDonnell’s lawyers argued.  “Numerous state officials routinely took advantage of these laws and accepted luxury vacations, rounds of golf, sports tickets, dinners, and other things of value from donors and wealthy hangers-on.”...

The defense contends that McDonnell’s trial and conviction already act as powerful deterrents to criminal conduct by others, making imprisonment unnecessary.  “No elected official would want to live through the last year of Mr. McDonnell’s life,” his lawyers write.  McDonnell and his family “have already suffered tremendously,” the lawyers write. “His once-promising political career is dead,” and “his marriage has fallen apart.”

Defense lawyers wrote that McDonnell’s “sterling reputation in the community has been irreparably damaged,” he has lost his ability to practice law, he is likely to lose his state pension, “and he will have to sell his family home.”  The former governor’s lawyers also contend prison is unnecessary to protect the public because there is no risk McDonnell will commit any further crimes. “He is 60 years old and out of politics.”

Relatedly, this Washington Post article reports on some of the notable letters written to the sentencing judge in support McDonnell. The piece is headlined "Former Virginia governor Bob McDonnell’s downfall is wife’s fault, daughter says," and it provides this link to some notable character letters.

Prior related posts:

December 28, 2014 in Booker in district courts, Celebrity sentencings, Offender Characteristics, Offense Characteristics, Procedure and Proof at Sentencing, White-collar sentencing | Permalink | Comments (3) | TrackBack

Monday, December 15, 2014

Former Virginia Gov McDonnell facing significant (trial?) penalty in his federal guideline calculation

This recent article from the Washington Post, headlined "Early federal sentencing recommendation for McDonnell: At least 10 years in prison," spotlights the seemingly severe sentence recommended by the federal sentencing guidelines for a former Governor's corruption.  Among other notbale aspects of this high-profile sentencing story is the fact that former Virginia Gov Bob McDonnell is now facing a guideline sentencing range that is more than three to four times longer than the longest possible sentence he would have faced had he been willing to plead guilty on terms urged by federal prosecutors.  Here are the notable details at this stage of a developing high-profile sentencing story:

The guidelines recommended by the U.S. probation office are preliminary, and even if finalized, U.S. District Judge James R. Spencer is not required to follow them. But experts said that Spencer typically heeds the probation office’s advice, and judges in his district have imposed sentences within the recommendations more than 70 percent of the time in recent years. “It’s of critical importance,” said Scott Fredericksen, a white-collar criminal defense lawyer. “The fact is, the vast majority of times, courts follow those recommendations closely.”

The matter is far from settled. The probation office recommended a punishment from 10 years and a month to 12 years and 7 months. Calculating an appropriate range of sentences in the federal system is a complicated, mathematical process that takes into account a variety of factors, including the type of crime, the defendant’s role and the amount of loss. The judge has yet to see the arguments from each side.

McDonnell and his wife, Maureen, were convicted in September of lending the prestige of his office to Richmond businessman Jonnie R. Williams Sr. in exchange for $177,000 in loans, vacations and luxury items. McDonnell is scheduled to be sentenced Jan. 6. His wife’s sentencing is scheduled for Feb. 20, and her guideline range is expected to be lower than her husband’s. The probation office has not yet filed a report concerning her.

It is unclear how the probation office determined that the former governor’s crimes necessitate a minimum decade-long sentence. The initial report on the matter is sealed, and people familiar with its contents revealed only the recommended range to The Washington Post.

The range is particularly notable because last December, prosecutors offered to let McDonnell plead guilty to just one count of lying to a bank as part of an agreement that would have meant he could be sentenced to three years in prison at the most and probation at the least. Importantly, though, McDonnell would have been required to sign a statement acknowledging that he helped Star Scientific, Williams’s dietary-supplement company, at the same time the businessman was giving him loot, fully shouldering blame for a relationship he has insisted was not criminal and was driven largely by his wife....

White-collar criminal defense lawyer Matthew Kaiser said McDonnell’s range probably was increased because he was a high-ranking public official, because he took more than one payment from Williams and because the total value of the gifts he received was so high. Kaiser said the probation officer also probably faulted McDonnell because his testimony was contrary to the jury’s verdict.

Prosecutors and defense attorneys will still have an opportunity to argue to the probation officer about whether the range was correctly calculated — although Kaiser said the probation office often “sticks to its guns.” After that, both sides can try to persuade Spencer to modify the recommended range.

Even then, Spencer is not bound by the guideline. Defense attorneys have already begun working vigorously in their bid to sway him toward leniency. This week, they won a legal skirmish with prosecutors so they can file additional pages in their sentencing memorandum — a key document outlining the sentence they believe McDonnell should receive and why. It is unclear whether their efforts to move Spencer away from the probation office’s recommended range will be fruitful.

In the Eastern District of Virginia, where McDonnell is being sentenced, judges imposed sentences within the guideline range more than 70 percent of the time last fiscal year, according to data from the U.S. Sentencing Commission. In about 21 percent of cases, they imposed sentences below the guideline range without a request from prosecutors to do so. Nationally, judges imposed sentences within the guideline range about 51 percent of the time last fiscal year and deviated downward without a request from prosecutors to do so in about 19 percent of cases.

In the McDonnell case, prosecutors are not expected to ask for a sentence below the guideline range.... Brian Whisler, a defense lawyer who used to work as a federal prosecutor in

Richmond, said that Spencer is known to be “largely deferential to the probation office and its sentencing calculations.” Whisler — whose firm, Baker & McKenzie, represented state employees in the McDonnell case — said the judge will likely draw on other cases in the district to inform his conclusion.

The outcome of those might not be to McDonnell’s liking. In 2011, another federal judge in Richmond sentenced former Virginia delegate Phillip A. Hamilton to 9.5 years in prison in a bribery and extortion case. In 2009, a federal judge in Alexandria sentenced former congressman William J. Jefferson to 13 years in prison for accepting hundreds of thousands of dollars in bribes — though, notably, that fell well short of the recommended range of 27 to 33 years.

December 15, 2014 in Booker in district courts, Federal Sentencing Guidelines, Offense Characteristics, Procedure and Proof at Sentencing, Scope of Imprisonment, White-collar sentencing | Permalink | Comments (1) | TrackBack

Wednesday, December 10, 2014

Second Circuit panel finds evidence insufficient to support two major insider trading convictions

There is big news in the white-collar crime (and sentencing?) world this morning coming out of New York thanks to the Second Circuit's significant new opinion in US v. Newman, No. 13‐1837 (2d Cir. Dec. 10, 2014) (available here).  This New York Times article about the ruling helps spotlight why this is Newman ruling is a very a big deal:

A federal appeals court on Wednesday overturned two of the government’s signature insider trading convictions, a stunning blow to prosecutors and their campaign to root out illegal activity on Wall Street.

In a 28-­page decision that could rewrite the course of insider trading law, sharply curtailing its boundaries, the United States Court of Appeals for the Second Circuit in Manhattan tossed out the case against two former hedge fund traders, Todd Newman and Anthony Chiasson. Citing the trial judge’s “erroneous” instruction to jurors, the court not only overturned the convictions but threw out the cases altogether....

The unanimous decision – the first higher court rebuke of an insider trading case filed by Preet Bharara, the United States attorney in Manhattan – could portend a broader revisiting of Mr. Bharara’s insider trading crackdown. It will also offer a blueprint for traders to defend future insider trading cases, a development that is likely to unnerve prosecutors while delighting the defense bar.

Here are a few paragraphs from the start of the Newman opinion:

Defendants‐appellants Todd Newman and Anthony Chiasson appeal from judgments of conviction entered on May 9, 2013, and May 14, 2013, respectively in the United States District Court for the Southern District of New York (Richard J. Sullivan, J.) following a six‐week jury trial on charges of securities fraud....

The Government alleged that a cohort of analysts at various hedge funds and investment firms obtained material, nonpublic information from employees of publicly traded technology companies, shared it amongst each other, and subsequently passed this information to the portfolio managers at their respective companies.    The Government charged Newman, a portfolio manager at Diamondback Capital Management, LLC (“Diamondback”), and Chiasson, a portfolio manager at Level Global Investors, L.P. (“Level Global”), with willfully participating in this insider trading scheme by trading in securities based on the inside information illicitly obtained by this group of analysts.   On appeal, Newman and Chiasson challenge the sufficiency of the evidence as to several elements of the offense, and further argue that the district court erred in failing to instruct the jury that it must find that a tippee knew that the insider disclosed confidential information in exchange for a personal benefit.  

We agree that the jury instruction was erroneous because we conclude that, in order to sustain a conviction for insider trading, the Government must prove beyond a reasonable doubt that the tippee knew that an insider disclosed confidential information and that he did so in exchange for a personal benefit.  Moreover, we hold that the evidence was insufficient to sustain a guilty verdict against Newman and Chiasson for two reasons.    First, the Government’s evidence of any personal benefit received by the alleged insiders was insufficient to establish the tipper liability from which defendants’ purported tippee liability would derive.    Second, even assuming that the scant evidence offered on the issue of personal benefit was sufficient, which we conclude it was not, the Government presented no evidence that Newman and Chiasson knew that they were trading on information obtained from insiders in violation of those insiders’ fiduciary duties. 

 Accordingly, we reverse the convictions of Newman and Chiasson on all counts and remand with instructions to dismiss the indictment as it pertains to them with prejudice.

Though this Newman opinion does not discuss formally sentencing issue, I cannot help but think that modern white-collar sentencing realities might be playing a role (perhaps a significant role) in the review and ultimate rejection of insider-trading convictions here. Both defendants appealing in this case were sentenced to a significant number of years in prison, and appellate judges are surely aware of how high the stakes now are for white-collar defendants subject to novel and aggressive prosecutorial practices.

December 10, 2014 in Offense Characteristics, Procedure and Proof at Sentencing, White-collar sentencing | Permalink | Comments (8) | TrackBack

Tuesday, December 09, 2014

Madoff aides finally getting sentenced for their roles in massive Ponzi scheme

As reported in this new AP article, a notable set of fraud sentences are being handed out this week and next in New York federal court.  Here are the early parts of a high-profile white-collar sentencing story:

The former secretary for imprisoned financier Bernard Madoff was sentenced Tuesday to six years in prison after she apologized to victims of the multi-decade, multi-billion dollar fraud and berated herself for failing to see past her boss's influence and the riches he bestowed on her.

Annette Bongiorno, 66, was sentenced in Manhattan by U.S. District Judge Laura Taylor Swain, who said she believed Bongiorno's testimony at trial that she was largely duped by Madoff into manufacturing fake trade results for his private investment business.  She called her "a pampered, compliant and grossly overcompensated clerical worker who supervised other clerical workers with a ferocious enthusiasm."

The judge said Bongiorno "could and should have recognized that Mr. Madoff's success seemed impossible because it was impossible." Swain added: "Ms. Bongiorno chose to put her life and the life of others in the wrong hands."

One of Madoff's computer programmers was awaiting an afternoon sentencing.  Bongiorno was convicted earlier this year along with four others after a six-month trial.  Sentencing proceedings resulting from it will conclude on Monday.

On Monday, Madoff's director of operations was sentenced to a decade in prison.

Prosecutors said in court papers that Bongiorno was "at the very heart of the fraud" for decades. They had sought a prison sentence of more than 20 years. The fraud cost thousands of investors nearly $20 billion. Madoff, 76, was arrested in December 2008 and is serving a 150-year prison sentence.

Before she was sentenced, Bongiorno portrayed herself as a loyal worker who was in over her head from the time she was hired at age 19. "Not once in my 40 years there did anyone say to me, 'Annette, this is not the way it's done in the real world,'" she said. "I thought I was doing my job as I thought it should be done."...

The judge, who also ordered forfeiture of $155 billion, said she will recommend that Bongiorno serve the last year of her prison term in home confinement.

December 9, 2014 in Booker in district courts, Celebrity sentencings, Offense Characteristics, White-collar sentencing | Permalink | Comments (1) | TrackBack

Sunday, December 07, 2014

Former basketball star taking (wild?) shot at fighting loss calculation in federal fraud sentencing

TateThis notable article from Connecticut reports that a notable fraud defendant is going to be representing himself as he agrues against how loss is being calculated and used against him in his upcoming federal sentencing.  Here are some of the interesting details:

Ever since being convicted on four felony counts in a real estate scheme, former University of Connecticut basketball star Tate George has been complaining about his legal representation.  He criticized his trial attorney, saying he didn't listen to requests for calling witnesses and other strategies.

After dropping his first attorney, George briefly switched to another, who is also out of the picture.  Now George has received permission from a federal judge to represent himself at his sentencing.

A first-round NBA draft pick, George has more basketball experience than legal experience.  He is best known for hitting "The Shot" at the Meadowlands arena in New Jersey in the final second to defeat Clemson in the NCAA playoffs in 1990, one of the most stunning victories in UConn basketball history.

Before his request was granted this week, federal prosecutors warned George in court papers about "the dangers and perils of self-representation."  They quoted the saying that "he who represents himself has a fool for a client."  Prosecutors told George, "There are many complex rules in court, and that most non-lawyers, including yourself, cannot know all of these rules."

But George, 46, has gone his own way before.  After expressing dissatisfaction with his trial attorney, George began sending letters directly from his prison cell to the federal judge instead of sending them through his attorney.  In at least five letters to U.S. District Court Judge Mary L. Cooper in Trenton, George proclaimed his innocence.

"I understand that my life has no value to all those who have gone about defaming my name, but I beg to differ and will continue to fight to prove my innocence," George wrote to the judge.  "Again, for the record, even though the government refuses to want to hear or admit to the truth above their lies to make me look guilty, there are no losses to report at this time, which means there is no crime or victims.  PERIOD! AS I HAVE SAID, BUT NO ONE SEEMS TO BE LISTENING, THERE ARE MONIES OWED YES, BUT NOT LOSSED!"

As part of his legal strategy, George is saying that the $250,000 investment by former UConn basketball star and NBA player Charlie Villanueva that was never repaid should not be counted as a financial loss.  Since he has promised to repay Villaneuva, George says there is no victim and no loss....  

George has said he was upset that his attorney, David E. Schafer, a federal public defender, said that investors in his case had lost $833,000 when George maintained that the actual loss was zero.  Federal prosecutors say the investors lost more than $2.5 million. At one point, a prosecutor described George as a "baby Madoff," referring to the massive Ponzi scheme operated by now-imprisoned New York City financier Bernie Madoff in which investors lost billions of dollars in a long-running scheme.

George was convicted in September 2013 and could face as many as nine years in prison when he is sentenced. Although he was convicted more than a year ago, his sentencing has been postponed multiple times.

December 7, 2014 in Federal Sentencing Guidelines, Offense Characteristics, Procedure and Proof at Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (2) | TrackBack

Wednesday, October 29, 2014

Federal judge (improperly?) delays imposing max sentence on fraudster to allow time to consider withdrawal of plea

This Newsday article provide an account of a seemingly unusual development as a federal district judge was about to throw the book at a high-profile white-collar defendant.  Here are the details:

Onetime New York Islanders part owner Stephen Walsh was hit with the maximum sentence of 20 years for a $50 million fraud on Wednesday, but the judge postponed imposing it to let stunned defense lawyers consider an appeal or voiding his guilty plea.

Walsh, 70, of Sands Point, an Islanders executive and co-owner from 1991 to 2000, was accused in 2009 of bilking investors in his WG Trading Company to finance a lavish lifestyle. He pleaded guilty in April, and partner Paul Greenwood pleaded guilty in 2010.

At the sentencing before U.S. District Judge Miriam Cedarbaum in Manhattan, Walsh said he was "deeply sorry," while his lawyer argued most investors were made whole and said Walsh deserved credit for charitable work, such as co-founding a Long Island Alzheimer's foundation. They asked for 18 to 24 months with community service.

But Cedarbaum was unmoved, noting that the scam went on for 13 years and Walsh fought the charges for five years before pleading guilty and taking responsibility. "The proceeds of this scheme were used for personal extravagances and high living," she said. "Lots of people lost lots of money, and some of it will trickle back to them, but that does not justify using it for your own benefit and spending it on frivolous things."

The judge said she was imposing the maximum penalty for securities fraud of 20 years. That was the sentence recommended by probation officers, called for under federal sentencing guidelines and urged by prosecutors.

Walsh, as part of his plea, had agreed to not appeal any sentence up to 240 months.  But white-collar defendants frequently get more lenient treatment -- in part because many judges feel federal guidelines overemphasize the significance of the amount of loss in calculating sentences -- and the sentence produced gasps from Walsh's friends and family in the gallery. "Oh my God!" said one woman.

Defense lawyer Michael Tremonte first asked Cedarbaum to impose 20 years and a day, so it would become appealable.  "I don't think anyone expected we would be at the outer range of the hypothetical guideline range," he said.  "There is not another case even remotely like it where a 20-year sentence has been imposed."

The judge refused, telling him that she would not circumvent a plea agreement in which Walsh gave up his right to appeal the sentence.  But she agreed to postpone imposing the sentence until Tuesday, to give Tremonte the chance to consult with Walsh and research grounds for withdrawing the plea. Tremonte and prosecutors had no comment after the hearing.

Walsh and Greenwood were charged soliciting $7.6 billion, mostly from institutional investors, to pursue a conservative investing strategy, and then misappropriating it. Walsh allegedly used investor money to finance a divorce settlement and fund businesses for his children, and Greenwood purchased expensive stallions and high-priced teddy bears.

I am inclined to be a bit sympathetic to the defense side here because I find troublesome any and all waivers of the right to appeal a sentence.  That said, I would guess that the defendant here had sound legal representation and knowingly agreed to a plea deal that included such a waiver, and thus I am not especially inclined to believe he should now be able to back out of the deal because it did not work out the way he expected.   And I am not aware of any case in which a judge defered imposition of a sentence to give the defendant a chance to try to undo a plea deal simply because that judge was going to impose a long sentence that was, as reported above, "recommended by probation officers, called for under federal sentencing guidelines and urged by prosecutors."

October 29, 2014 in Procedure and Proof at Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (15) | TrackBack

Tuesday, October 28, 2014

Back from dead, fugitive fraudster gets 30 years in federal pen

As reported in this AP piece, a "former Georgia investment adviser was sentenced to 30 years in prison Tuesday for committing fraud that fueled a bank's collapse, cost investors millions of dollars and turned the accused banker into a fugitive who was ultimately — and mistakenly — declared dead." Here is more on this notable white-collar case:

Aubrey Lee Price, 48, returned to U.S. District Court for sentencing after he pleaded guilty in June to bank, wire and securities fraud. Price lost much of the $40 million he raised from about 115 clients at his private investment firm.  Prosecutors say he also misspent, embezzled and lost $21 million belonging to the Montgomery Bank & Trust in rural southeast Georgia, where Price served as bank director.

Price vanished in June 2012, a few weeks before the bank closed with its assets and reserves depleted, and he left rambling letters saying he planned to jump off a ferryboat.  In December 2013, a year after a Florida judge declared him dead at his wife's request, Price was captured in a routine traffic stop near Brunswick on the Georgia coast.

Price cut a plea deal with prosecutors that called for a maximum of 30 years in prison and in exchange for his guilty pleas to three fraud counts.  Price also agreed to pay tens of millions in restitution for bank and investor money that he lost, despite having convinced the court to appoint him a lawyer because he had no money to hire one.

Price gave rambling speech in front of the judge in which he acknowledged responsibility but also blamed other managers at the bank for its collapse.  Still, he pledged to help recoup money, and officials say he is cooperating with their efforts to collect restitution.  "These clients that are here today, and those who are not here, it's important for them to understand I'm trying my best to help them get their money back," Price said in court....

At his plea hearing June 5, Price told the judge he lied to clients and gave them phony financial statements to cover his tracks as he lost their money in speculative trading and other high-risk investments.  He said his flight from the financial mess left him depressed.  He said he tried smoking marijuana and methamphetamine and had tasted cocaine, but mostly self-medicated with the prescription amphetamine Adderall. Price said he also adopted at least five aliases, including Jason Rollins and Javier Martinez....

The plea agreement settled federal charges pending against Price in Georgia and New York.  Prosecutors agreed to drop 16 related bank fraud counts in Georgia plus charges in Miami related to the Coast Guard's search for Price.

October 28, 2014 in Offender Characteristics, Offense Characteristics, White-collar sentencing | Permalink | Comments (3) | TrackBack

Thursday, October 02, 2014

Up and down the east coast, notable white-collar federal sentencings

My usual review of the week's sentencing news with Google's help turned up a number of noteworthy federal while collar sentencing stories.  These three especially cuaght my eye:

From Delaware, via "Delaware multimillionaire gets prison," we learn: " Former eBay executive Christopher Saridakis of Greenville, Delaware, was sentenced to 15 months in prison for insider trading Wednesday by a U.S. District Court judge. Saridakis, 45, tipped off two family members and two friends in 2011 to the pending sale of GSIC – where he was chief executive officer – to eBay days before the sale was announced. The tip allowed those individuals to realize more than $300,000 profit, according to prosecutors."

From Florida, via "Ponzi schemer Rothstein’s former law partner sentenced to nearly three years," we hear: "The wife and children of Stuart Rosenfeldt said they have forgiven him for spending the dirty money of his former law partner, Ponzi schemer Scott Rothstein, on prostitutes and other criminal conduct. They and other supporters crowded into a Miami federal courtroom Thursday to point out Rosenfeldt’s long history of donating free legal work and personal time to charities in South Florida. But their pleas for mercy did not sway U.S. District Judge Marcia Cooke, who sentenced Rosenfeldt to almost three years in prison instead of a lesser term sought by his defense attorney. His sentencing came almost five years after the collapse of a $1.2 billion investment scheme that Rothstein ran out of their Fort Lauderdale law firm."

From New Jersey, via "RHONJ's Teresa Guidice gets 15 months; 41 for Joe," we see: "Two stars of the Real Housewives of New Jersey will be trading the drama of reality TV for prison after being sentenced on conspiracy and bankruptcy fraud charges.  After an initial delay, U.S. District Court Esther Salas sentenced Teresa Guidice to 15 months in prison Thursday afternoon.  Earlier in the day, her husband Giuseppe "Joe" Giudice was ordered to serve more than three years in prison on conspiracy and bankruptcy fraud charges. He was also ordered to pay $414,000 in restitution."

October 2, 2014 in Offense Characteristics, White-collar sentencing | Permalink | Comments (3) | TrackBack

Tuesday, September 23, 2014

High-profile commentator Dinesh D’Souza gets below-guideline probation sentence for violating federal campaign finance laws

As reported in this New York Times piece, headlined "D’Souza Is Spared Prison Time for Campaign Finance Violations," another notable white-collar defendant got a below-guideline federal sentence today thanks to judges now having broader post-Booker sentencing discretion. Here are the details:

The conservative author and documentary filmmaker Dinesh D’Souza was spared prison time on Tuesday after pleading guilty earlier this year to violating federal campaign finance laws.

Judge Richard M. Berman of Federal District Court in Manhattan handed down a probationary sentence — including eight months in a so-called community confinement center — and a $30,000 fine, bringing to a close a high-profile legal battle that started with Mr. D’Souza’s indictment in January for illegally using straw donors to contribute to a Republican Senate candidate in New York in 2012.

Mr. D’Souza, who has accused President Obama of carrying out the “anticolonial” agenda of his father, initially argued that he had been singled out for prosecution because of his politics. In April, his lawyer, Benjamin Brafman, filed court papers contending that Mr. D’Souza’s “consistently caustic and highly publicized criticism” of Mr. Obama had made him a government target.

A month later, however, on the morning he was scheduled to go on trial, Mr. D’Souza pleaded guilty. “I deeply regret my conduct,” he told the court. Even with his fate hanging in the balance, Mr. D’Souza plowed ahead with his thriving career as a right-wing provocateur. Over the summer, while awaiting his sentencing, he published the book “America: Imagine a World Without Her,” which reached No. 1 on The New York Times’s nonfiction hardcover best-seller list, and a companion documentary film that has made $14.4 million at the box office.

The government charged Mr. D’Souza, 53, with illegally arranging to have two people — an employee and a woman with whom he was romantically involved — donate $10,000 each to the campaign of an old friend from Dartmouth College, Wendy E. Long, with the understanding that he would reimburse them in cash for their contributions. Ms. Long was challenging Senator Kirsten E. Gillibrand, a Democrat.

According to prosecutors, Mr. D’Souza lied to Ms. Long about the donations, reassuring her that “they both had sufficient funds to make the contributions.” Ms. Long pressed Mr. D’Souza on the issue after the election, and he acknowledged that he had reimbursed the two people, the government said, but told Ms. Long not to worry because she had not known about it.

When Mr. D’Souza entered his guilty plea, Judge Berman said he could face up to two years in prison. The federal sentencing guidelines call for 10 to 16 months, but the final decision is up to the judge’s discretion. “Judges are all over the map on these reimbursement cases,” said Robert Kelner, a campaign-finance lawyer at Covington & Burling.

Mr. D’Souza’s lawyers asked for leniency, arguing in a court filing that their client had “unequivocally accepted responsibility” for his crime. “We are seeking a sentence that balances the crime he has regrettably committed with the extraordinary good Mr. D’Souza has accomplished as a scholar, as a community member and as a family member,” they wrote, requesting that he be sentenced to probation and community service at the Boys and Girls Clubs of Greater San Diego.

The government rebutted Mr. D’Souza’s claims, highlighting both the seriousness of his offense and what it called “the defendant’s post-plea failure to accept responsibility for his criminal conduct.” According to the government, Mr. D’Souza assumed a different posture with respect to his case when he was not before the court. It cited a television interview he gave two days after his plea in which he “repeatedly asserted that this case was about whether he was selectively prosecuted.”

This story reminds me why I am so sad Bill Otis no longer comments on this blog; I am so eager to hear from him directly whether he thinks this case is yet another example of, in his words, allowing "naïve and ideologically driven judges" to make sentencing determinations and therefore further justifies embracing mandatory sentencing schemes that would always require judges to impose prison terms on these sorts of non-violent offenders because these sorts of offenses do great harm even if they do not involve violence.

Based on my limited understanding of the crime and criminal here, I feel fairly confident asserting that a prison term for Mr. D’Souza would have achieved little more than spending extra federal taxpayer dollars without any real public safety return on that investment. But Bill and I rarely see eye-to-eye on these matters, and thus I am eager for a distinct perspective in this notable white-collar case.

September 23, 2014 in Federal Sentencing Guidelines, Offender Characteristics, Offense Characteristics, Procedure and Proof at Sentencing, White-collar sentencing | Permalink | Comments (7) | TrackBack

Monday, September 22, 2014

Sixth Circuit reverses Ponzi scheme sentence because loss calculation failed to credit monies paid out

This morning a Sixth Circuit panel has handed down a notable ruling about loss calculations in the federal sentencing of a Ponzi schemer.  Here is how the panel opinion in US v. Snelling, No. 12-4288 (6th Cir. Sept. 22, 2014) (available here) starts and concludes:

Defendant-Appellant Jasen Snelling appeals a 131-month prison sentence imposed pursuant to a plea agreement.  In the agreement, Snelling admitted to charges of conspiracy to commit mail and wire fraud, obstruction of justice, and tax evasion for his part in an investment scheme that defrauded investors of nearly $9 million.  Snelling challenges the sentence based on an allegedly faulty Guidelines-range calculation that employed a loss figure that did not take into account the sums paid back to his Ponzi scheme’s investors in the course of the fraud.

For the reasons below, we vacate the sentence of the district court and remand the case for resentencing.....

Admittedly, there is intuitive appeal to the government’s argument that Snelling should not be allowed to benefit from the payments he made “not to mitigate the losses suffered . . . but to create the means to convince new victim-investors to pay him even more money.”  We need not reflect, however, on whether it is unseemly for Snelling to benefit from the money he paid out to investors in an effort to perpetuate his Ponzi scheme. Undoubtedly, it is.  The only question we must consider is whether the district court correctly applied the Guidelines and whether it used a correct Guidelines range.

An accurately calculated Guidelines range is necessary for a procedurally reasonable sentence — any error in calculating the Guidelines range cannot survive review.  See Gall v. United States, 552 U.S. 38, 49 (2007); see also United States v. Bolds, 511 F.3d 568, 579 (6th Cir. 2007) (“[W]e must ensure that the district court correctly calculated the applicable Guidelines range which are the starting point and initial benchmark of its sentencing analysis.”) (internal alterations and quotation marks omitted).  As appealing as the government’s argument may be, it does not comport with the text of the Guidelines. Accordingly, the district court was in error when it declined to reduce the loss figure by the value of the payments made by Snelling to his investor victims in perpetuating his Ponzi scheme.

September 22, 2014 in Booker in the Circuits, Federal Sentencing Guidelines, Offense Characteristics, White-collar sentencing | Permalink | Comments (1) | TrackBack

Friday, September 19, 2014

"The Most Senior Wall Street Official: Evaluating the State of Financial Crisis Prosecutions"

The title of this post is the title of this notable new article on SSRN authored by Todd Haugh. Here is the abstract:

This September marks six years since the collapse of Lehman Brothers and the height of the financial crisis.  Recently, a growing debate has emerged over the Justice Department’s failure to criminally prosecute Wall Street executives for their role in creating the crisis.  One side of that debate contends the government has failed to bring to justice individual wrongdoers — primarily the heads of banks operating in the mortgage-backed securities market — instead preferencing enforcement decisions that target corporations, resulting in punishments that are “little more than window-dressing.”  The other side argues that cases against individuals are precluded by the realities of the federal criminal justice system, and that “corporate headhunting” will only inhibit meaningful regulatory reform.

It is difficult, however, to evaluate these competing claims without proper context.  This Article explores the recent conviction and sentencing of Wall Street executive Kareem Serageldin as a means of providing that context.  Although Serageldin has been trumpeted as the “the most senior Wall Street official” to be sentenced for conduct committed during the financial crisis, and his conviction was framed as a victory in punishing those accountable for the financial collapse, a critical look at his case reveals he committed only a mundane white collar crime marginally related to the crisis.  This disconnect creates a unique lens through which to understand and evaluate the current state of — and debate surrounding — financial crisis prosecutions.  And it ultimately highlights the merits, and shortfalls, of each camp’s arguments.  The Article concludes by offering something largely absent from the current debate: specific proposals for how we might go about prosecuting individuals so as to prevent the next crisis.

September 19, 2014 in Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (8) | TrackBack

Wednesday, September 17, 2014

Seventh Circuit panel seemingly unmoved by feds appeal of probation sentence given to Beanie Babies billionaire

As detailed in this new Chicago Tribune article, "Prosecutors in Warner tax evasion case grilled by appeals court judges," federal prosecutors apparently did not get a warm reception at oral argument in the Seventh Circuit as they pressed their claims that a probation sentence given to a high-profile tax cheat was unreasonable. Here are the basics:

Federal prosecutors appealing the probation sentence of Beanie Babies founder Ty Warner faced a three-judge panel Wednesday to make the case for why the Westmont billionaire should get prison time for evading taxes.

Warner pleaded guilty last year to one count of tax evasion for failing to report more than $24 million in income and skirting $5.5 million in federal taxes on millions of dollars he hid for more than a decade at two Swiss banks.  Prosecutors had been pushing for a sentence of at least one year in prison, partly to deter others from committing the same crime. Sentencing guidelines had called for a prison sentence of up to 57 months.  His defense lawyers had argued that many tax evaders were allowed to join an amnesty program and that, even among those criminally charged and convicted, more than half who had been sentenced received probation.

Ilana Rovner, a U.S. appeals court judge for the seventh circuit, said Wednesday that she had a problem reconciling why the government was seeking to throw out Warner’s sentence when many tax evaders get probation or might not be prosecuted at all.  Also, the amount of tax he evaded was a fraction of what he has paid in taxes, she noted. Warner has already paid a civil penalty for not reporting the offshore accounts and restitution for what he owed in back taxes and interest....

Rovner also noted that prosecutors seem to be ignoring the “considerable discretion” of the district judge, Charles Kocoras, has in imposing a sentence.  He is a “veteran” judge who “obviously agonized” over the decision, she said.

Judge Michael Kanne noted that Warner’s guilty plea “saved the government some money” and that the appeals court “shouldn’t be the sentencing court.”

Judge Joel Flaum wondered why, if Warner’s conduct was so egregious, he was charged with only one count of tax evasion and why the government was seeking at minimum at least a year in prison.  Rovner chimed in, addressing Petersen: “You agreed to this.”

Judge Kanne noted that one count of tax evasion and a minimum prison sentence of a year “doesn’t sound like deterrence to me.”  Petersen responded that probation is a far more lenient sentence than the minimum of one year the government was seeking.

Anyone eager to hear the oral argument in full can access it via this mp3 link from the Seventh Circuit's website.  Notably, former US Solicitor General Paul Clement argued on behalf of the defendant (and I cannot help but wonder if he got some special Beanie Babies from the defendant in addition to the usual fees for his efforts).

Prior related posts:

September 17, 2014 in Offender Characteristics, Offense Characteristics, Procedure and Proof at Sentencing, Sentences Reconsidered, White-collar sentencing, Who Sentences? | Permalink | Comments (1) | TrackBack