Wednesday, October 12, 2011
"Inside-Trade Sentencing Gets Tougher"
The title of this post is the headline of this new Wall Street Journal piece, which gets started this way:
When disgraced hedge-fund titan Raj Rajaratnam, Wall Street's latest symbol of perfidy and excess, is sentenced in federal court Thursday, he will come up against a hard and unavoidable truth: Inside traders are facing considerably harsher sentences than they did in the past. Mr. Rajaratnam is expected to receive among the longest-ever U.S. prison terms for his role in one of the biggest U.S. insider-trading cases ever, lawyers say.
A higher percentage of those found guilty of such crimes are receiving significant time behind bars than in the past, according to a Wall Street Journal analysis. In the last two years, defendants sent to prison on insider-trading charges in New York federal courts have received a median sentence of about 2½ years, according to the Journal analysis of white-collar sentencing data from court records and archives involving 108 cases. Just Wednesday, hedge-fund trader Michael Kimelman was sentenced to 2½ years in prison for inside trading.
Those sentences compare with a median sentence of 18 months in the past decade and 11½ months from 1993 to 1999, according to the Journal analysis. Meanwhile, a higher percentage of guilty insider-trading defendants on Wall Street and in corporate America have been incarcerated in recent years, according to the analysis. In the past two years, 79% of defendants sentenced in New York have been sent to prison, compared with 59% in the 2000s and less than half from 1993 to 1999, the analysis shows.
Sunday, October 09, 2011
New AP article perpetuates notion (myth?) that federal sentencing is still about luck of the draw
This new AP article, which provides a partial preview of an upcoming high-profile white-collar federal sentencing, has a headline and a theme that suggests that luck of the judicial draw matters more than anything else in modern federals sentencing. The piece is headlined "Sentencing is a wildcard in busy NYC courthouse," and here are excerpts:
The prison term awaiting a one-time billionaire hedge fund founder convicted of insider trading charges is unpredictable at best in a Manhattan courthouse where judges vary considerably in their assessment of how justice should be dispersed at sentencing.
Raj Rajaratnam, 54, is scheduled to be sentenced Thursday for his conviction at trial earlier this year. If federal prosecutors have their way, he'll get between 19½ and 24½ years in prison for what they say were more than $72 million in profits for himself and his Galleon Group of hedge funds. If defense lawyers are persuasive, he'll face between 6½ and 9 years for what they say was about $7 million in illegal profits.
Regardless of the outcome, his fate may have been decided when Judge Richard J. Holwell was selected to hear the case after the Sri Lanka-born Rajaratnam's October 2009 arrest.
"Welcome to the Southern District of New York," said Rita Glavin, a former federal prosecutor who leads the white-collar crime unit at the Manhattan law firm of Vinson & Elkins. "The judge you are assigned to is critical," Glavin said. "Having been on the prosecution side, there were certain judges from a government perspective you loved being in front of whether for trial, sentencing or evidentiary issues. Now that I've moved to the defense side, it's not necessarily the same judges."...
The tone and result in sentencings have varied widely for those charged in the case against Rajaratnam and two dozen co-defendants, all of whom have been convicted, most as a result of guilty pleas. Most of the sentencings have resulted in prison terms ranging from a few months to a few years. Besides the sentencing guidelines, judges are supposed to take into account various other factors, including the defendant's personal history and the need to deter others from committing similar crimes.
The longest sentence handed down — 10 years — came from a stern Judge Richard Sullivan, who last month dispensed some finger-wagging words toward Zvi Goffer immediately after telling him that he viewed Goffer's sentencing as "a tragic day," not a day "for lecturing or finger wagging or table pounding."
He told Goffer that he had a gambler's mentality after his arrest. "You decided to double down and gamble on a trial," Sullivan said, adding that Goffer acknowledged his crimes post-trial. "Had you made that acknowledgement before trial, you might have shaved almost three years off your guideline's sentence," he said as he gave him a sentence near the lower end of the guideline's range.... He added: "I am not saying you are going to be punished for going to trial, but there are consequences that flow from that. You don't get the benefit of people who accept responsibility."
A few hours later, Winifred Jiau, 43, of Fremont, Calif., was sentenced to four years in prison after her conviction in an insider-trading probe that focused on Wall Street consultants who matched up public company employees willing to divulge secrets about earnings and mergers with hedge fund managers. The investigation was a spinoff of the Rajaratnam-Galleon probe.
Jiau received half the prison term recommended by sentencing guidelines from Judge Jed Rakoff, who had a different view of the effects of going to trial. "I know judges vary. It will never be the policy of this court to make a huge difference in sentence between those who exercised their right to go to trial and those who plead guilty, because at that point I think it becomes no longer a recognition of the credit that should justly be given for acceptance of responsibility, it becomes a veiled price of going to trial," he said. "There should be no price on going to trial."...
Annemarie McAvoy, a Fordham Law professor, said she learned as a young federal prosecutor in Brooklyn from 1989 to 1992 that the judge assigned to each case "makes a huge difference."
"There were clearly judges who were more favorable to the government. They did longer sentences. They didn't make it as easy for defendants," she said. "And there were other judges always trying to do as much as they can for defendants and always trying to give them the lowest sentence they could. That was luck of the draw."
Wednesday, October 05, 2011
Interesting battle over guidelines and "gain" in Rajaratnam pre-sentencing hearing
This new New York Law Journal piece, headlined "Financial Gain Hotly Disputed in Galleon Presentence Hearing," provides a great review of some pre-sentencing sparring taking place in the run-up to a high-profile white-collar sentencing schedued for next week. Here are some excerpts:
Prosecutors and defense lawyers were miles apart yesterday as they argued how much financial gain should be attributed to Raj Rajaratnam when Southern District Judge Richard Holwell sends him to prison in the Galleon Group hedge fund scandal.
Special Assistant U.S. Attorney Andrew Z. Michaelson told Judge Holwell that Mr. Rajaratnam was guilty of "serial insider trading" that produced illicit gains of $72 million. That number, if accepted by the judge along with sentencing enhancements for taking a leadership role and obstructing justice, would mean a guidelines sentencing range of 19½ to 24½ years in prison.
But defense lawyer Terence J. Lynam of Akin Gump Strauss Hauer & Feld, one of a half dozen attorneys from Akin Gump who sat with Mr. Rajaratnam, said the government's number vastly exaggerated the alleged profits made by Mr. Rajaratnam and failed to acknowledge the movements in stock prices that were due to market forces or other events....
Yesterday, Mr. Rajaratnam, 54, watched impassively with Akin Gump's John M. Dowd by his side as Mr. Lynam argued against the government's math and the leadership-role enhancement, and co-counsel Samidh Guha argued Mr. Rajaratnam should not be penalized further for allegedly obstructing a probe into insider trading by the Securities and Exchange Commission.
Assistant U.S. Attorney Reed M. Brodsky, who prosecuted the case along with Mr. Michaelson and Jonathan M. Streeter, argued for both enhancements as he called Mr. Rajaratnam "by far and away the clear leader in organizing" a series of "interlocking conspiracies," in which he learned about earnings announcements and corporate transactions and then made millions from the stolen information....
But the bulk of the argument yesterday focused on the amount of the gain, as Mr. Michaelson told the judge that roughly $30 million of the $72 million in gains were racked up through trading ahead of mergers and acquisitions, and another $30 million trading ahead of earnings announcements for entities such as Google and Goldman Sachs. About $10 million came in the form of trading to avoid losses and the remainder came from trades the defense argues cannot be attributed to Mr. Rajaratnam.
Mr. Michaelson was challenged by Mr. Lynam on whether the government's method of calculating gains "sweeps up" other factors affecting stock prices. Mr. Lynam argued that the government should be forced to "back out" the other factors affecting pricing, but Mr. Michaelson said there were no "significant intervening" events that drove the stocks at issue either higher or lower after Mr. Rajaratnam had already placed his bets and the announcement of a merger earnings was made....
Mr. Rajaratnam's defense team is also seeking a break from Judge Holwell because of their client's poor health, but they have yet to publicly reveal his condition and documents relating to the issue remain under seal.
Thursday, September 29, 2011
Another notable example of a (seemingly massive) white-collar sentencing trial penalty
This press report on a set of federal fraud sentencings in Virgina highlights, yet again, what a steep sentencing price some federal white-collar defendants will end up paying if they exercise the right to go to trial and get convicted. Here are the basics from this press report:
Two Houston men have been sentenced to lengthy jail terms for their part in a $100-million life settlement fraud scheme that victimized 800 victims people the U.S. and Canada.
Adley H. Abdulwahab, 36, a hedge fund manager and part owner of A&O Resource Management Ltd., was sentenced to 60 years in prison. Co-founder and vice president of A&O, Christian Allmendinger, 40, was sentenced to 45 years in prison. Many of the victims were looking for safe, conservative investments but lost their entire retirement savings, said U.S. Attorney for the Eastern District of Virginia Neil H. MacBride.
"These defendants used the savings of their unsuspecting, often elderly, investors to live the high life—luxury houses, fancy cars and even a 15-karat diamond ring," said Assistant U.S. Attorney General Lanny A. Breuer. "Having wiped out the life savings of many of their victims and stolen funds marked for retirement, Mr. Abdulwahab and Mr. Allmendinger appropriately now face significant prison terms."...
Five others in the scheme, including David White, 41, the former president of A&O, who received 60 months in jail, were sentenced after pleading guilty. Abdulwahab and Allmendinger were found guilty at trial.
The principals at A&O misrepresented such things as A&O's prior success, its size and office locations, its number of employees, the risks of its investment offerings and its safety and use of investor funds, according to court and trial records. When regulators began looking into the investment scheme, the principals invented two sham companies to hide behind, Blue Diamond and Physician's Trust, court records say.
I do not know any details about this fraud or about the relative roles of the various defendants. Still, the passage I have highlighted above reports that the president of the corrupt company got a sentence of only 5 years after having pleaded guilty, while the defendants who went to trial received, in essence, LWOP sentences.
I ass assume that the defendant who pleaded guilty got lots of sentencing credit and benefits for accepting responsibility and (I assume) helping secure the convictions of the other fraudsters. But still, the remarkable gap between a post-plea sentence of 5 years and the post-trial sentences of 60 and 45 years for (I assume) roughly the same fraudulent behavior provides yet another stark reminder of the extraordinary sentencing consequences than can flow from putting the federal government to its budern of proof at trial in a white-collar case.
September 29, 2011 in Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, Scope of Imprisonment, White-collar sentencing, Who Sentences? | Permalink | Comments (3) | TrackBack
Tuesday, September 27, 2011
Sensible sentencing alternatives for high-profile defendant involved low-level fraud
I want to praise the district judge involved in this notable federal sentencing story, headlined "Former UCA president avoids prison time for fraud," for saving taxpayer money on wasteful prison costs. Here are the details:
Former University of Central Arkansas president Lu Hardin said Monday that he was hooked on the slots the first time he played them more than a decade ago, and that his gambling compulsion and mounting debts led him to lie to school trustees to tap into bonus money he had been promised.
U.S. District Judge James Moody sentenced the one-time rising political star to five years of probation and 1,000 hours of community service, but no prison time. Hardin, 60, pleaded guilty earlier this year to falsifying a document that persuaded trustees to give him early access to a $300,000 bonus so he could pay off gambling debts.
Moody said he was convinced Hardin was "genuinely remorseful and humiliated" by his own actions. Federal sentencing guidelines suggested a sentence of nine to 12 months in prison, but Moody was not bound by that recommendation.
A major factor in Hardin's reduced sentence was his cooperation on a separate federal investigation. Hardin has spoken to the FBI and agreed to testify if the investigation, which a prosecutor would not detail, leads to any charges. An FBI spokesman also declined to comment.
After a career as an Arkansas state senator and the state's higher education director, Hardin became president of the Conway university in 2002. During a six-year tenure, he oversaw dramatic growth in the university's enrollment, endowment and prestige. Trustees approved the $300,000 bonus in full public view....
Only his wife knew about the thousands of dollars of gambling debts he racked up, Hardin said. To pay them off, he made what he called a "horrendous mistake" by forging letters to persuade trustees that he could draw early on the bonus, which was supposed to have been paid to him over five years, according to federal court documents....
Hardin's attorney, Chuck Banks, said his client is a "model person" who paid back the almost $200,000 he collected from the scheme on his own. He argued that Hardin's history of public service and his past medical problems, including a melanoma that left him blind in his right eye, merited leniency.
Moody sided with Banks. Although Hardin's actions were criminal, he had a history of good behavior and he didn't believe Hardin would commit another crime, Moody said. As part of his community service, Hardin will be required to continue attending Gamblers Anonymous meetings and to teach classes about fraud.
Hardin was president of UCA for six years before he resigned in 2008 after the scandal broke. He received a much-criticized $670,000 contract buyout, and became president of Palm Beach Atlantic University in June 2009, but resigned from that job a week before pleading guilty in March.... After pleading guilty, he surrendered his law license and lost his right to vote.
This is a great example of a low-level white-collar offense in which the direct and collateral consequences of the federal prosecution and conviction are themselves likely sufficient punishment in light of the nature of the crime and history of the offender. I often believe a very big fine and lots of community service would be both adequate and effective punishment for low-level white-collar frauds, and I wonder if any readers have any problems with a non-prison, below-guidelines sentence in a case like this.
Thursday, September 22, 2011
"NYC stock trader 'Octopussy' gets decade in prison"
The title of this post is the headline of this BusinessWeek report on the latest sentencing news from a high-profile insider trading case. Here are the interesting details:
A stock trader dubbed the Octopussy because he reached for so much inside information was sentenced Wednesday to 10 years in prison by a judge who said a harsh punishment was necessary because insider trading is so difficult to detect.
Zvi Goffer was convicted with two others in June in a conspiracy to pay bribes to coax confidential information out of two shady lawyers at a Manhattan firm. "Insider trading is very, very hard to detect," U.S. District Judge Richard Sullivan said as he also ordered Goffer to pay more than $10 million in restitution. "Because of that, it has to be dealt with harshly." He added: "These crimes are not going to be tolerated, certainly not in my courtroom."
The 34-year-old Goffer told the judge in a pre-sentencing letter that he now realizes he had warped perceptions of "survival of the fittest." He said "everyone is doing it" is not a good excuse for doing wrong. Goffer was among more than two dozen people convicted in what prosecutors called the biggest hedge fund insider trading case in history.
Given a chance to speak, Goffer apologized first to investors in the stocks in which he had an unfair advantage, saying: "They didn't have the information I had." He began crying when he apologized to his brother, Emanuel, who was convicted at trial along with him and is awaiting sentencing. A third defendant, Michael Kimelman, also awaits sentencing....
The sentence, one of the longest ever given to someone convicted of insider trading, caused Goffer's wife to break down in sobs. "What am I going to do?" she called out in court at one point. "It's not fair!" A woman beside her then shouted a profanity, causing Sullivan to rise from the bench and threaten to bring in U.S. marshals to make arrests. "This is a courtroom, not a street corner," he said.
Goffer was convicted by a jury that viewed evidence that he had arranged to pay two attorneys nearly $100,000 in 2007 and 2008 for inside tips on mergers and acquisitions. During the two-week trial, prosecutors introduced evidence that Goffer gave conspirators prepaid cellular telephones in an effort to reduce detection by law enforcement.
The judge said the message of the prosecution to Wall Street has to be more than a warning that prepaid telephones are not the best way to dodge prosecution. He said Goffer had repeatedly demonstrated that he knew he was breaking the law and didn't care. "It's a game that you and others seem to find exciting," he said.
Before starting his own firm, Goffer worked for nine months for Raj Rajaratnam, a one-time billionaire who was convicted earlier this year of charges at his own insider trading trial... Rajaratnam and Goffer were among more than two dozen people convicted in a case that utilized an unprecedented number of wiretaps for a white-collar case. U.S. Attorney Preet Bharara has said the government was responding to the increased use of techniques more commonly used by drug dealers and mobsters to cover up their crimes.
This Bloomberg piece, headlined "Galleon Insider Trading Case Scorecard: Average Prison Term Is Three Years," provides an effective review of all the sentences so far imposed in this matter. The piece starts this way:
Galleon Group LLC co-founder Raj Rajaratnam will be sentenced on Oct. 13 for insider trading after being convicted by a jury in Manhattan federal court.
Prosecutors say Rajaratnam, who was convicted in May, should serve as long as 24 1/2 years in prison, calling him the “modern face of insider trading.” Yesterday, judges in Manhattan sentenced two other convicted insider traders -- Zvi Goffer and Winifred Jiau -- to prison terms of 10 years and four years, respectively.
Since Rajaratnam’s arrest in October 2009, judges in Manhattan federal court have sentenced 12 defendants in cases linked to Galleon. All but two pleaded guilty. The average prison term has been 35.75 months, or almost three years behind bars.
Monday, September 19, 2011
You make the (sentencing) call: does insider trading merit decades in prison?
This latest insider-trading installment of "You make the (sentencing) call" is prompted by this lengthy new piece from the New York Times, which is headlined "In Galleon Case, Prison Term Is Seen as Test." Here are excerpts:
Federal prosecutors want to send the convicted hedge fund chief Raj Rajaratnam to prison for as long as 24 years, which would be the longest insider trading sentence in history. How a judge rules next week on Mr. Rajaratnam’s punishment is being seen in legal circles as a litmus test of whether the crime of insider trading justifies such a long prison term.
In May, a jury convicted Mr. Rajaratnam, the head of the hedge fund the Galleon Group, of 14 counts of securities fraud and conspiracy. Prosecutors, calling him “the modern face of illegal insider trading,” placed him at the center of a vast insider trading ring, accusing him of using a global network of tipsters to gain about $64 million from illegal stock trading.
The question is whether such a sentence — longer than the average federal prison term for murder — is appropriate. “Given the magnitude of the crimes, it’s hard to feel any pity for him,” said Harlan J. Protass, a defense lawyer who teaches a sentencing class at the Benjamin N. Cardozo School of Law. “Still, there is a real question whether such a lengthy sentence is warranted for an insider trading offender.”...
Today, prison terms measured in decades are common for white-collar criminals. In 2005, Bernard J. Ebbers, the former chief executive of WorldCom, was sentenced to 25 years in prison for a huge accounting fraud. Earlier this year, Lee B. Farkas, a former mortgage company executive, received a 30-year term for his role in a fraud that the government says caused $2.9 billion in losses. On Monday, a federal judge in Miami sentenced Marianella Valera, a former mental health company executive, to 35 years in prison for her role in a $205 million fraud at American Therapeutic; a 50-year sentence was earlier imposed on her co-defendant, Lawrence Duran.
For Mr. Rajaratnam, the government has requested a sentence from 19 years and seven months to 24 years and five months, based on federal sentencing guidelines. The government said he did not deserve leniency because he was a “fundamentally deceptive and dishonest person” who had lied under oath in a deposition and had tried to cover up his crimes.
If Judge Richard J. Holwell of the Federal District Court in Manhattan issues such a sentence on Sept. 27, it will be the longest prison term ever for an insider trading crime. A recent study by Bloomberg News of 43 defendants sentenced in federal court in Manhattan for insider trading in the last eight years found that the longest sentence was 10 years, to a Credit Suisse banker convicted in 2008 of leading a $7.8 million scheme.
Mr. Rajaratnam’s lawyers call the proposed sentence “grotesquely severe” and argue that “the advisory guidelines severely overstate the seriousness of the instant offenses, and would expose Mr. Rajaratnam to a sentence grossly out of proportion to the sentences imposed on other insider trading defendants.”
They point out that the sentence is not only disproportionate to the sentences imposed in other insider trading cases, but also greater than the average federal sentence for murder (23 years), kidnapping (14 years) or sexual abuse (nine years), according to the United States Sentencing Commission.
His lawyers also criticize prosecutors for comparing Mr. Rajaratnam’s crimes to the accounting fraud committed by Mr. Ebbers of WorldCom and the Ponzi scheme run by Bernard L. Madoff. Those crimes “ruined the lives and livelihoods of scores of victims,” while Mr. Rajaratnam’s insider trading offenses victimized no one, his lawyers said.
Insider trading does not cause “the kinds of measurable losses to identifiable victims that conventional fraud causes,” Mr. Rajaratnam’s lawyers wrote in a court filing.
The government has countered that insider trading is not a victimless crime. “Rajaratnam betrayed Galleon’s investors, its employees, the counterparties to its trades, and the capital markets system upon which he built his wealth and success,” federal prosecutors said. The government also urged Judge Holwell to impose a long sentence on Mr. Rajaratnam “to send a strong and clear message that the time for illegal insider trading to end is now.”
In July, Judge Holwell sentenced Danielle Chiesi, a co-conspirator of Mr. Rajaratnam, to two and a half years in prison, which was less than the minimum three-year sentence requested by the government. Yet Ms. Chiesi pleaded guilty, whereas Mr. Rajaratnam fought the government’s charges and took his case to trial, a possible negative factor at sentencing.
Stuart P. Slotnick, a lawyer at Buchanan Ingersoll & Rooney in New York, predicts that Judge Holwell will impose a prison term of 12 to 15 years, which, while less than the government’s request, would still be a record insider trading sentence. That sentence, Mr. Slotnick said, in part reflects attitudes since the financial crisis. “There is a ‘Wall Street is bad’ mentality that permeates the culture,” he said. “It’s now in the social ether that financial crimes of whatever kind cause widespread damage and hurt everybody.”
Recent related posts:
- What insider trading sentence for Raj Rajaratnam would avoid "unwarranted" disparity?
- Brother of Raj Rajaratnam asks friends to write letters to judge urging leniency
- Sentencing debate joined for Raj Rajaratnam in high-profile insider trading case
- Lawyers spar in briefing before Rajaratnam's sentencing for insider trading
"Judge sends therapist to prison for 35 years in massive Medicare-fraud case"
The title of this post is the headline of this new piece in the Miami Herald reporting on the "other shoe" dropping in a record-setting white-collar federal sentencing. Here are the basics from the article:
A federal judge Monday issued another astonishing prison sentence in the nation’s biggest mental-health fraud case, sending a Miami therapist to prison for 35 years. Marianella Valera, 40, a naturalized U.S. citizen from Peru who ran Miami-based American Therapeutic Corp. with her boyfriend, received less time in prison than he did.
On Friday, Lawrence Duran, 49, a New York transplant, got 50 years as the mastermind of the massive Medicare-fraud scheme — accounting for more than $200 million in bogus billing to the taxpayer-funded program. [Previous blog coverage here.]
But in both instances, U.S. District Judge James Lawrence King gave out the longest prison sentences ever for a Medicare-fraud offender. Previously, the longest sentence was a 30-year term imposed in 2008 on a Miami physician convicted in an HIV-therapy scam. This year, Duran and Valera pleaded guilty to a variety of conspiracy, fraud and money-laundering charges after they failed to reach plea deals with the Justice Department.
Prosecutors had pushed for a 40-year sentencing, but Valera’s lawyer, Arthur Tifford, sought considerably less time. Justice Department lawyer Jennifer Saulino argued that Valera abused her “position of trust” as the licensed owner of American Therapeutic. Duran had registered the company in her name to disguise his past ownership of a similar mental-health company, which had carried a $2 million debt....
The couple’s company, with clinics stretching from Miami to Fort Lauderdale to Orlando, collected $87 million in Medicare payments after submitting $205 million in false claims. The couple paid kickbacks to recruiters to supply patients suffering from dementia, Alzheimer’s and addictions, but they could not have benefited from the company’s purported group therapy sessions....
A total of 34 people, including American Therapeutic employees, doctors, therapists, nurses and recruiters, have been charged in the ongoing fraud case, which is being investigated by the FBI and Health and Human Services-Office of Inspector General. This year, about a dozen defendants have pleaded guilty.
The underlying offense facts certainly suggest that American Therapeutic was involved in record-sized frauds. Still given that the loss amounts involved here are far below the losses in cases of mass financial fraud in which defendants have often received sentences of 25 years or far less — I am thinking of some of the usual suspects here (e.g., Bernie Ebbers, Jeff Skilling, Marc Dreier) — I find both notable and remarkable that these defendants (who pleaded guilty, unlike say Ebbers and Skilling) are now to due to spend decades more in prison for their offenses.
Especially in light of the Eleventh Circuit's apparent willingness to sometimes find sentences substantively unreasonable as too short (as evidenced by today's Padilla ruling), I wonder if there might still be some hope for these defendants if they appeal their sentences as unreasonably long.
Recent related post:
Saturday, September 17, 2011
Record-long 50-year prison sentence for Medicare fraud imposed in Florida
As detailed in this Miami Herald article, late yesterday a "federal judge socked a convicted Miami healthcare executive with a 50-year prison sentence, the longest term ever imposed on a Medicare fraud offender." Here are the notable details:
New York transplant Lawrence Duran once ran a multimillion-dollar mental health company in Miami, lobbied Congress for his industry and tooled around town in a Maserati. His next stop: federal prison — likely for the rest of his life.
On Friday, a federal judge slammed Duran, 49, with a 50-year prison sentence for orchestrating a staggering $205 million scam at his Miami-based chain of mental health clinics. The sentence may end up being the longest prison term ever imposed on someone convicted of Medicare fraud.
Duran’s lawyer, Lawrence Metsch, had urged the judge to be realistic and give him a sentence between 20 and 25 years, arguing that 50 years means a “death sentence because he would die in prison.” But the judge, after a three-day sentencing hearing, sided with the government’s push for the extraordinarily high sentence, saying there is a “critical need for deterrence against healthcare fraud” in South Florida, the nation’s capital of Medicare corruption.
Previously, the highest Medicare fraud sentence was 30 years — given in 2008 to a Miami physician, Ana Alvarez-Jacinto, convicted in an HIV-therapy scheme.
After the sentencing, Duran shook his lawyer’s hand and then smiled to tearful relatives, as he shuffled in shackles out of the courtroom escorted by U.S. marshals. His ex-wife, Carmen Duran, and his only sibling, Kenia Duran Ramirez, said the judge’s sentence was not a “fair assessment” of the former executive’s life, saying his work for the mentally ill was “not all bad.”
This year, Duran and his girlfriend, Marinella Valera, co-owners of American Therapeutic Corp., pleaded guilty to a variety of conspiracy, fraud and money-laundering charges after they failed to reach plea deals with the Justice Department.
Duran, in custody since his arrest last October, was probably his own worst enemy during the sentencing hearing. Although he showed remorse for running American Therapeutic as a criminal enterprise for eight years, he also admitted he tried to steal as much money as he could from the taxpayer-funded Medicare program.
His company collected $87 million in Medicare payments after submitting $205 million in bogus bills, which he generated by paying kickbacks to recruiters to supply patients suffering from dementia, Alzheimer’s and addictions. He admitted they could not have benefited from his company’s purported group therapy sessions. Justice Department attorney Jennifer Saulino called Duran a “cold, calculating man” who exploited both vulnerable patients and the government’s healthcare program for the elderly and disabled....
Duran’s girlfriend, Valera, 40, a therapist, is scheduled to be sentenced Monday. Prosecutors plan to urge the judge to give her a 40-year prison sentence. A total of 34 people, including American Therapeutic employees, doctors, therapists, nurses and recruiters, have been charged in the massive fraud case, which is being investigated by the FBI and Health and Human Services-Office of Inspector General.
September 17, 2011 in Booker in district courts, Federal Sentencing Guidelines, Purposes of Punishment and Sentencing, Scope of Imprisonment, White-collar sentencing | Permalink | Comments (2) | TrackBack
Friday, September 16, 2011
Eighth Circuit panel unanimously affirms Rubashkin federal convictions and lengthy prison sentence
The Eighth Circuit has handed down an opinion today in US v. Rubashkin, No. 10-2487 (8th Cir. Sept. 16, 2011) (available here), a high-profile white-collar case out of the heartland involving financial frauds at a kosher meat-packing plant. The panel has unanimously affirmed the Sholom Rubashkin's conviction and sentence; I have followed this case closely, in part because I helped file an amicus brief complaining about what I considered to be an unreasonable of 27-year (within-guideline) federal prison sentence for the defendant's offense conduct.
Though disappointed with the ruling here, I am not especially surprised given the Eighth Circuit's history in sentencing appeals. (That history, along with the frequency with which the Supreme Court has reviewed and reversed the Eighth Circuit's work since Booker, might well mean this case will get more appellate attention in the future). Here is an excerpt of the Rubashkin panel's sentencing discussion:
Rubashkin argues that his 324 month sentence was substantively unreasonable given his age, nonviolence, lack of criminal history, unlikelihood of recidivism, family obligations, and the principal motives for his acts,. We review the imposition of a sentence under "a deferential abuse-of-discretion standard." United States v. Hayes, 518 F.3d 989, 995 (8th Cir. 2008) (quoting Gall, 552 U.S. at 41). Sentences within the guideline range are presumed to be substantively reasonable. United States v. Robinson, 516 F.3d 716, 717 (8th Cir. 2008).
Not only was Rubashkin's sentence of 324 months within the guideline range, it was at the low end of it. Rubashkin argues that because of his past charitable acts and his family obligations he should have been granted a downward departure. These are the very characteristics that the district court properly took into account when considering the § 3353(a) factors. The court weighed Rubashkin's past charitable acts, nonviolence, and the needs of his family against his involvement in multiple fraudulent schemes and the millions of dollars in damage they caused. The cases Rubashkin cites in favor of his unreasonableness argument illustrate instances where downward departures based on charity or family needs have been affirmed. Nothing requires a sentencing court to depart on such grounds. Under all the circumstances the district court did not abuse its considerable discretion in imposing a 324 month sentence.
Related posts on the Rubashkin case:
- "More Former AGs Question Sentence Sought in Bank Fraud Case"
- Can and should religious considerations influence bail decisions?
- Federal sentencing hearing starting in high-profile Rubashkin white-collar case
- Federal prosecutors now seeking 25-year prison term for Rubashkin
- Kosher plant chief Sholom Rubashkin sentenced to 27 years imprisonment
- An appellate amicus brief in the Rubashkin case on sentencing issues
Wednesday, September 14, 2011
Early buzz that feds think Rod Blagojevich's guideline range is 30 years to life in prison
I am a bit skeptical of, though still quite intrigued by, this new story from the Chicago Sun-Times headlined "Feds say Rod Blagojevich could get 30 years to life in prison." Here are the basics:
Federal prosecutors argue Rod Blagojevich could serve 30 years to life in prison, sources say — a sentencing range that will be bitterly disputed by the former governor’s defense lawyers.
Blagojevich attorney Sheldon Sorosky called the government’s numbers “harsh and cruel,” Wednesday but said he wouldn’t discuss them. The prosecution’s calculation was submitted in private. Sorosky said the defense would put forth its own version that is a far cry from the government’s.
“We are preparing a submission to Judge Zagel, which is far, far, far under those draconian and harsh and cruel numbers,” Sorosky said. “We are making our own guideline calculation which is fair and based on facts and the evidence at trial.”
Blagojevich, 54, who is now scheduled to be sentenced Oct. 6, was convicted in June on 17 of 20 counts of corruption, including charges that he schemed to sell President Obama’s vacant U.S. Senate seat. Blagojevich was also convicted last year of one count of making false statements to the FBI....
U.S. District Judge James Zagel will have wide discretion over the former governor’s prison term, as sentencing guidelines for federal judges are advisory. Judges typically listen to all sides and then decide, based on a number of factors that make up the sentencing range....
“While that may be the government’s calculation, it’s good to keep in mind that Judge Zagel has ultimate discretion,” said Patrick Collins, a former prosecutor in the Ryan case. “I would be shocked if he would consider a sentence anywhere near that.”
In the prosecution’s calculations, the government says Blagojevich faces more time because he took the witness stand and allegedly obstructed justice, sources said. As governor, he was also leader of an enterprise, they will argue. The U.S. Attorney’s office had no comment.
Court filings involving Blagojevich’s sentencing are expected on Friday. Though his sentencing is set to begin Oct. 6, Sorosky has previously questioned whether it would begin on time since the same judge is set to begin the corruption trial of Springfield power broker William Cellini three days earlier.
It is not unusual for federal guideline sentencing ranges to go crazy high in white-collar cases in which a lot of money was lost or gained. But I cannot recall any political corruption cases in which the government ran the numbers to get such a high range. This press report may reflect the fact that the government's filing with the probation office suggested the potential applicability of lots of guidelines enhancements even if the PSR is unlikely to find all the enhancements applicable. Whatever the particulars, it seems we can and should expec the feds to be seeking some serious prison time for Blago.
Some related posts following Blago's convictions in June:
- "Jury Convicts Blagojevich"
- You make the sentencing call: What sentence should Blago get?
- 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?
Monday, September 12, 2011
Lawyers spar in briefing before Rajaratnam's sentencing for insider trading
This New York Times piece, headlined "Rajaratnam Lawyers Call Sentence Request ‘Grotesquely Severe’," reports on the last round of briefing before the scheduled sentencing of convicted trader Raj Rajaratnam. Here are some details:
Federal prosecutors and lawyers for Raj Rajaratnam filed their second round of sentencing briefs on Friday, setting the stage for later this month when a federal judge will announce the former hedge fund manager’s prison term.
Mr. Rajaratnam is set to appear before Judge Richard J. Holwell in Federal District Court in Manhattan on Sept. 27. The government has requested a term of 19 and a half to 24 and a half years. “Rajaratnam is arguably the most egregious offender of the insider trading laws prosecuted to date,” federal prosecutors said in their court filing.
Defense lawyers said the government is overreaching by requesting a “grotesquely severe” sentence. “The government asks the court to ignore Raj Rajaratnam the human being and to sentence a caricature instead,” Mr. Rajaratnam’s lawyers said. “This court’s role is not to validate a prosecutorial public relations effort, nor is it to single out one man to serve as the whipping boy for Wall Street misdeeds.”
In May, a jury convicted Mr. Rajaratnam, the co-founder of the Galleon Group hedge fund. He was found guilty of generating illegal gains of $64 million by trading on confidential information about publicly traded companies including Intel and Goldman Sachs.
Mr. Rajaratnam’s lawyers at Akin Gump Strauss Hauer & Feld made several arguments in asking Judge Holwell for leniency. They said that the illegal trades in question accounted for only 1 percent of his trading activity. They argue that the sentence is disproportionate to the sentences imposed in other insider trading cases, and greater than the average sentence for violent crimes, including kidnapping and sexual abuse. They also insist that the government’s requested sentence “would guarantee Mr. Rajaratnam’s death in prison” because of the 54-year-old’s medical issues.
The government urged Judge Holwell to reject the arguments presented by Mr. Rajaratnam’s lawyers. On the issue of the Mr. Rajaratnam’s health, the government challenged the defense to disclose exactly what medical issues would justify a lenient sentence.
I found the defense reply sentencing memo, which runs more than 50 pages, available at this link. I cannot yet find a link to the Government's filing.
A Fifth Circuit reminder that not all federal defendants like the guidelines being merely advisory
One (of many) under-discussed aspects of the post-Booker system is that, in percentage terms, the number of above-guideline sentences have gone up more than the number of below-guideline sentences since the guidelines became adviosry. Roughly speaking, though the number of below-guideline sentences have increased about 50% post-Booker, the number of above-guideline sentences have increased nearly 100% post-Booker.
Though the absolute number of above-guideline sentences remain relatively small, the decision late last week from the Fifth Circuit in US v. Pizzolato, No. 10-30729 (5th Cir. Sept. 9, 2011) (available here), provides a useful reminder that not all federal defendants benefit from the guidelines now being merely advisory. Here is how the Pizzolato opinion starts:
Defendant-Appellant Matthew B. Pizzolato pleaded guilty to multiple crimes related to his conduct in running a fraudulent “Ponzi” scheme. The plea agreement recommended an applicable sentencing range of 151 to 188 months under the Federal Sentencing Guidelines (the “Guidelines”). The district court disregarded the plea agreement’s recommendation and imposed the statutory maximum sentence of 360 months. Appellant argues that the Government breached the plea agreement by providing the district court with facts and arguments supporting a longer sentence than the parties agreed upon. We find no merit to defendant’s arguments and affirm.
September 12, 2011 in Booker in district courts, Booker in the Circuits, Federal Sentencing Guidelines, Procedure and Proof at Sentencing, Scope of Imprisonment, White-collar sentencing | Permalink | Comments (2) | TrackBack
Saturday, September 10, 2011
Record-long (but way below guideline) prison sentence for crooked Mass politician
As detailed in this Boston Globe article, headlined "Disgraced DiMasi is given 8 years; Judge calls former speaker’s fall from grace a ‘dream corrupted’," a high-profile defendants got a lengthy (but way below guideline) prison term in federal court yesterday. Here are the details:
Former Massachusetts House speaker Salvatore F. DiMasi was sentenced yesterday to eight years in federal prison for his conviction on political corruption charges, the longest federal sentence handed out to an elected official in Massachusetts history, climaxing a years-long scandal that had captivated the state’s political establishment.
DiMasi’s codefendant, Richard McDonough, a well-known State House lobbyist, was sentenced to seven years in prison for taking part in the conspiracy to help a software company win state contracts in exchange for kickbacks.
US District Court Chief Judge Mark L. Wolf called the sentence appropriate, saying he balanced the ages of both men, 66, and consideration for their families, against the fact that they had betrayed the public’s trust by orchestrating the criminal scheme....
Wolf asked that the Federal Bureau of Prisons send DiMasi to Fort Devens, allowing him to remain close to his wife, who is fighting breast cancer. DiMasi must serve two years of probation upon his release from prison and forfeit $65,000, the amount of money he directly received in the scheme. McDonough must also serve two years of probation, forfeit the $250,000 he received, and pay a $50,000 fine.
Both men must report to prison by noon Nov. 16, although the judge is still considering whether they should be allowed to remain free pending an appeal.
Wolf’s sentence fell far below the sentencing guidelines he had calculated on Thursday, which allowed for DiMasi to be sentenced to 19 to 24 years and McDonough to 15 years. But the judge -- indicating from the beginning that he would not go as far as the guidelines allowed -- also said he believes the sentence, which is longer than many issued in comparable cases, could serve as a deterrent to those seeking to sell their public office.
"Corruption has very real victims, generally, and in this case," the judge said. "I find the [sentence] is sufficient, but no longer than necessary, to send the message" against corruption.
Prosecutors had asked that DiMasi serve 12 to 15 years in prison and McDonough 10 years, while defense lawyers say both men should have to serve no more than three years in prison.
I always find notable in cases like this how one might "spin" the sentence imposed. I suspect the defense could complain that this 8-year-term is essentially life sentence for both DiMasi and his ill wife; the prosecution could complain that a sentence so far below the guideline range fails to send a strong enough message against political corruption. (Perhaps valuably, I do not think either spin would make a strong basis for a reasonableness appeal of this sentence to the First Circuit.)
Tuesday, September 06, 2011
"OSU book thief sentenced to probation and restitution"
Because this new piece from the Columbus Dispatch, which has the same headline as this post, strikes very "close to home," I am not going to comment on the substance of this notable story of crime and punishment. But, especially because I am pretty sure I never met the now-sentenced former-OSU-law student, I am interested in reader reactions:
A former Ohio State University student avoided prison today but likely has forfeited his future as a lawyer for stealing books from the Moritz College of Law.
In a deal that allowed him to escape jail time, Christopher B. Valdes, 24, formerly of the University District but now living with his mother in Florida, was placed on five years of probation and ordered to pay $34,619.88 in restitution for books he sold online. As of this morning, Valdes has paid back $19,450.
Valdes also agreed that he “will not have or pursue employment or education in the field of law,” according to the details of his guilty plea in Franklin County Common Pleas Court.
Assistant Prosecutor John Litle said the ban on law school and practice is in place only for the five years of probation. But Valdes would have to pass character and fitness requirements to become a lawyer. “As a practical matter ... it’s unlikely that he can do that” because of the felony conviction, Litle said.
Valdes had been indicted on a fourth-degree felony count of theft that could have landed him in prison for up to 18 months. He pleaded guilty in June to a lesser fifth-degree felony punishable by up to a year in prison.
Valdes, who is no longer a student at Ohio State, was accused by campus police of stealing more than 200 books between November 2009 and last October after advertising them for sale online. Officers learned of the thefts in August 2010, when the university received an e-mail from a Brazilian lawyer who had bought a volume online and found a crossed-out OSU ink stamp on its inside front cover, according to court documents.
A check confirmed that the title had vanished from the shelves. Valdes was arrested after police set up a sting involving a hidden camera and a marked book.
September 6, 2011 in Collateral consequences, Criminal Sentences Alternatives, New USSC crack guidelines and report, Offender Characteristics, Offense Characteristics, White-collar sentencing | Permalink | Comments (2) | TrackBack
Wednesday, August 31, 2011
News and notes on the sentencing of Galleon insider traders
The new Bloomberg article, which is headlined "Ex-Galleon Trader Drimal Sentenced to 5 ½ Year Term for Insider Trading," reports not only on today's high-profile white-collar federal sentencing but also on related sentencings past and future. Here are the highlights:
Former Galleon Group LLC hedge fund trader Craig Drimal, who admitted taking part in an insider-trading scheme that stretched from technology firms to pharmaceutical companies, was sentenced to 5-1/2 years in prison.
Drimal, 55, pleaded guilty in April to six counts of conspiracy and securities fraud, admitting that he and others at Galleon traded on inside information obtained from lawyers working on transactions involving 3Com Corp. and Axcan Pharma Inc. Drimal said the tips came from Arthur Cutillo and Brien Santarlas, lawyers at Boston-based Ropes & Gray LLP....
Prosecutors had asked Sullivan, who handed down the 66-month term today in Manhattan, to sentence Drimal within federal guidelines, which Sullivan said call for a sentence of 57 to 71 months. Drimal asked for a sentence below the guideline range. In addition to the prison sentence, Sullivan ordered Drimal to forfeit $11 million and to serve three years of supervised release.
Cutillo, who pleaded guilty in January, was sentenced to 30 months in prison in June. Santarlas, who pleaded guilty and testified at the Goffer trial, hasn’t been sentenced....
Drimal met with government representatives after Federal Bureau of Investigation agents approached him before his arrest in November 2009 and sought his cooperation, the government said. Drimal then contacted former Galleon Group trader Zvi Goffer and told him about the probe, against instructions, prosecutors said. Drimal also lied to SEC personnel in July 2008 when they interviewed him about the reason why he bought Axcan stock, prosecutors said.
Goffer was convicted of all 14 counts against him in June, in the second trial of defendants charged in a nationwide investigation of insider trading at hedge funds. In a sentencing memorandum filed today, Goffer told a judge he’s a changed man and asked to be sentenced to less than the 10 years in prison called for under U.S. sentencing guidelines....
Goffer’s former boss, Galleon Group co-founder Raj Rajaratnam, was convicted of insider trading in May. Prosecutors are seeking a sentence of more than 24 years when Rajaratnam is sentenced Sept. 27.
Friday, August 26, 2011
Feds seeking (within-guideline) sentence of 70-80 months for high-profile insider trader
As detailed in this Bloomberg piece, "Craig Drimal, the former Galleon Group LLC trader who pleaded guilty to insider-trading charges, should get a prison term of 70 to 80 months, which is within federal sentencing guidelines, the U.S. said in a court filing." Here is more about this high-profile white-collar case, which is scheduled for sentencing next week:
Drimal, 55, pleaded guilty in April in federal court in New York charges of conspiracy and securities fraud. Drimal admitted that he and others at Galleon traded on inside information obtained from lawyers working on transactions involving 3Com Corp. and Axcan Pharma Inc. in 2007. Drimal said the information was obtained from Arthur Cutillo and Brien Santarlas, lawyers at Boston-based Ropes & Gray LLP.
Drimal has suggested that the court impose community service or home confinement in lieu of a “substantial” prison term, prosecutors said. The request should be denied in order to send a “strong message of deterrence to others in the hedge fund community” and because the “nature and extent of his criminal conduct doesn’t warrant community service,” prosecutors said.
“Drimal has no excuse for his illegal conduct,” prosecutors said in the sentencing memo, which was filed yesterday. “He grew up in a stable, loving family with no financial difficulties. He is a college graduate. He has a loving and supportive family. He fully understood that insider trading was illegal and yet repeatedly disregarded the law to make a lot of money.”...
Drimal’s attorney, Jane Anne Murray, said she filed a memorandum last week asking the judge impose a sentence below the federal guidelines. “We’re not surprised by their position; it’s been consistent,” Murray said in a phone interview. “We disagree with the government on a number of issues including the applicable guidelines. And we’re seeking a sentence that is substantially lower than the one the government is seeking.”
Thursday, August 25, 2011
Sixth Circuit affirms 30-year sentence for CEO responsible for losses of over $2 billion
A notable white-collar appeal was resolved by the Sixth Circuit today via a lengthy opinion in US v. Poulsen, No. 08-4218 (6th Cir. Aug. 25, 2011) (available here). Most of the 30-page opinion is about trial issues, though there is some notable discussion of loss calculations toward the end of the opinion. In addition, this sharp paragraph at the very end of the opinion explains the panel's rejection of the defendant's substantive unreasonableness claim concerning his 30-year prison term:
Finally, Poulsen argues that his sentence was substantively unreasonable because the district court failed to properly consider unwarranted sentencing disparities. Poulsen submits that he should not have been compared to the CEOs of infamous companies such as WorldCom and Enron. He asserts that every defendant should receive an individualized assessment based upon the specific facts of his particular case. Conversely, Poulsen cites a number of sentences given to those whom he refers to as “the most notorious financial fraudsters in corporate America.” These defendants received shorter sentences for similar crimes. Poulsen inconsistently argues that he deserved individualized treatment and then compares himself to other corporate offenders. Poulsen presents no coherent argument as to why his sentence is substantively unreasonable. We affirm the district court’s sentence in all respects.
Monday, August 22, 2011
Former drug chain CEO gets 3-year (way-below-guideline) prison term
This Bloomberg news report, headlined "Ex-Duane Reade CEO Cuti Gets Three Years in Prison for Inflating Earnings," can be spun lots of different ways because the white-collar defendant received a significant, but way-below-guideline, prison term for corporate fraud. Here are the interesting details:
Former Duane Reade Inc. Chief Executive Officer Anthony Cuti was sentenced to three years in prison for falsely inflating income and misleading investors. Cuti, 65, of Saddle River, New Jersey, was convicted in June 2010 of conspiracy and securities fraud after a federal jury trial in Manhattan. U.S. District Judge Deborah Batts also ordered Cuti today to pay a $5 million fine.
Batts called Cuti “a gifted, arrogant, driven, entitled individual” who “bullied people into committing fraudulent acts to make the company look better than it actually was” to increase his pay.
Batts said Cuti was also guilty of “the height of hubris” for re-writing his employee compensation plan that would allow him to double his compensation even if he was fired for cause, which later occurred, she said.
Cuti didn’t admit any wrongdoing when he spoke in court before the sentence was imposed. “I’ve always led my life with integrity,” Cuti said as his wife, adult daughter and brother sat in the courtroom.... “I always thought I acted for the shareholders first and foremost,” he said. “I’d like to say I’ve had a good career. It was a good run. The conviction is so at odds with what I’ve tried to be.”
Cuti’s lawyer, Reid Weingarten, today asked Batts to impose no jail time and allow his client to remain free to perform public service. “It will be devastating if he’s sent away,” he said. “He was not a guy motivated by greed and driven to line his pockets,” said Weingarten. Investors weren’t harmed, he argued, saying they’d profited from Cuti’s transformation of Duane Reade from “a sleepy nearly-bankrupt drug store on a Manhattan street corner to being a force to be reckoned with.”
Former Duane Reade Chief Financial Officer William Tennant, who was tried with Cuti and convicted of one count of securities fraud, is scheduled to be sentenced Aug. 29. The U.S. said both men engaged in a scheme to falsely increase revenue and lower expenses from 2000 to 2005.
U.S. Probation Department officials calculated that Cuti had faced a term from 17 1/2 years to as long as 21 years and eight months in prison. The agency recommended an unspecified lesser prison term be imposed, court records show....
“The offenses here were very serious, they went on for four and a half years and involved continuous, almost daily conduct by the defendant to inflate earnings of the company,” Assistant U.S. Attorney Jonathan Streeter said today. “It was ongoing, it was continuous, it was deliberate and it was calculated.”
Batts directed Cuti to surrender to U.S. Bureau of Prisons officials on Jan. 31. She denied a bid by Weingarten to allow him to remain free on bond pending his appeal....
Cuti received more than $50 million from Duane Reade and Oak Hill from 2000 through 2005, including $25 million from the 2004 acquisition by Oak Hill, prosecutors said. Cuti left the company in 2005.
The feds can now surely crow a bit about having "crime in the suites" result in serious prison time here, as they do in this press release. And yet, in light of the apparently severe guideline calculation, Cuti and his counsel have to be somewhat thankful he is looking at only about 31 months in club fed after time off for good behavior.
Wednesday, August 17, 2011
Latest data show health care fraud as federal criminal hot-spot
This new report from the Transactional Records Access Clearinghouse, which is headlined "Health Care Fraud Prosecutions for 2011," highlights that the federal court, especially in southern Florida, are seeing many more health care fraud cases these days. Here is the start of the TRAC report:
The latest available data from the Justice Department show that during the first eight months of FY 2011 the government reported 903 new health care fraud prosecutions. Already the activity this year exceeds the level for all of FY 2010.
Numbers were pushed higher by a series of investigations by the Federal Bureau of Investigations which led to prosecutions for health care fraud. In Puerto Rico alone, 420 defendants have been charged this year. Within the fifty states, the Southern District of Florida (Miami) led the nation in activity accounting for one out of every nine health care fraud prosecutions.
Across the nation if this activity continues at the same pace, the annual total of prosecutions will be 1,355 for this fiscal year. According to the case-by-case information analyzed by the Transactional Records Access Clearinghouse (TRAC), this estimate is up 85.4% over the past fiscal year when the number of prosecutions totaled 731.
For criminal justice researchers, I think this growing pocket of cases might be especially interesting to try to track from indictment through sentencing. I sense that these health care fraud cases can often have lots of the most dynamic elements of case-processing discretion that can impact sentencing outcomes.
For example, I suspect: that most of these prosecutions result in pleas (and with some defendants cooperating with the feds), but a few defendants go to trial; that these defendants have diverse roles in the crime and diverse backgrounds; that the amount of loss for sentencing purposes can be varied and will often be disputed; that arguments for departures and variances get different receptions in different courthouses.