Sunday, June 29, 2014

Two new examinations of white-collar prosecutions and punishment schemes

Lucian Dervan has recently posted two notable new articles on white-collar crime and punishment on SSRN.  Here are links to both articles and their abstracts:

The Quest for Finality: Five Stories of White Collar Criminal Prosecution

Abstract: In this symposium article, Professor Dervan examines the issue of finality and sentencing. In considering this issue, he argues that prosecutors, defendants, and society as a whole are drawn to the concept of finality in various ways during criminal adjudications.  Further, far from an aspirational summit, he argues that some outgrowths of this quest for finality could be destructive and, in fact, obstructive to some of the larger goals of our criminal justice system, including the pursuit of truth and the protection of the innocent.

Given the potential abstraction of these issues, Professor Dervan decided to discuss the possible consequences of our quest for finality through examination of specific cases.  Therefore, the article examines five stories of white collar criminal prosecution.  The five stories are ones in which the players sought to achieve finality in different ways and in which finality came in different forms. Despite their differences, however, the stories do share important commonalities.

First, the stories demonstrate that we must be careful not to value finality over accuracy.  As an example, though plea bargaining offers both the prosecution and the defense a mechanism by which to reach sentencing finality, it must not be used to mask unfounded criminal cases or offer overpowering incentives to innocent defendants to falsely confess in return for a promise of leniency.  Second, the stories remind us that the government must be careful not to confuse achieving a victorious sentencing finality with achieving a just one.  Too often today, the government proceeds after indictment as though winning a sentence at any cost is worth any price.  Third, the stories reveal that, in many ways, the quest for true finality in criminal cases is fleeting.  While we have long been aware of the lingering collateral consequences present even after a sentence is concluded, we now must also recognize that even those who are acquitted face significant collateral consequences from indictment itself.

White Collar Over-Criminalization: Deterrence, Plea Bargaining, and the Loss of Innocence

AbstractOvercriminalization takes many forms and impacts the American criminal justice system in varying ways. This article focuses on a select portion of this phenomenon by examining two types of overcriminalization prevalent in white collar criminal law. The first type of over criminalization discussed in this article is Congress’s propensity for increasing the maximum criminal penalties for white collar offenses in an effort to punish financial criminals more harshly while simultaneously deterring others.  The second type of overcriminalization addressed is Congress’s tendency to create vague and overlapping criminal provisions in areas already criminalized in an effort to expand the tools available to prosecutors, increase the number of financial criminals prosecuted each year, and deter potential offenders.  While these new provisions are not the most egregious examples of the overcriminalization phenomenon, they are important to consider due to their impact on significant statutes.  In fact, they typically represent some of the most commonly charged offenses in the federal system.

Through examination of the Sarbanes-Oxley Act of 2002 and examples of these two types of over criminalization within that law, this article seeks to understand whether new crimes and punishments really achieve their intended goals and, if not, what this tells us about and means for the over criminalization debate and the criminal justice system as a whole.

June 29, 2014 in Offense Characteristics, Procedure and Proof at Sentencing, White-collar sentencing | Permalink | Comments (3) | TrackBack

Thursday, June 26, 2014

Effective review of debate over federal fraud guidelines in preview of another high-profile insider trading sentencing

Newsweek has this lengthy and effective new article on federal fraud sentencing, headlined "Nonsensical Sentences for White Collar Criminals," which seems prompted in part by the upcoming sentencing of hedge fund trader Mathew Martoma of SAC Capital Advisors LP following his conviction of insider trading. Here are a few excerpts:

[A]s the government’s probation department recommends a sentence [for Martoma] that would be the longest ever for insider trading — anywhere from 15 to 20 years — U.S. judges, federal public defenders, the U.S. Sentencing Commission, the U.S. Department of Justice and the American Bar Association are increasingly calling into question the nation’s sentencing guidelines, which, in the words of one federal judge, “are just too goddamn severe.”...

The biggest quibble judges have with white-collar sentencing guidelines is the fact that prison terms are heavily weighted toward how much money is made or lost on a financial crime, regardless of the circumstances of the offense, whether it is insider trading, embezzlement, a Ponzi scheme or some other type of financial fraud....

The problem, says federal Judge John Gleeson, who represents the Eastern District of New York City, has built up over time, as congressional directives and statutes—often pushed by public pressure to treat offenders more aggressively and rigorously—have acted as what he calls a “one-way ratchet,” boosting the austerity and length of sentences ever higher....

The concerns come at a time when insider-trading cases — a subsection of the U.S. Sentencing Commission’s broader financial fraud category — have nearly tripled over the past three years (2011 to 2013), compared with the prior three years (2008 to 2010), according to commission data.

In sum, insider-trading cases are on the rise, with the money involved and the prison sentences growing even as judges continue to abandon federal sentencing guidelines to minimize sentences they believe to be too punitive.  Sentences are “diverging, that’s for sure, and, to some extent, that reflects an absence of respect for the guidelines,” Gleeson says.

June 26, 2014 in Booker in district courts, Offense Characteristics, White-collar sentencing, Who Sentences? | Permalink | Comments (1) | TrackBack

Tuesday, June 24, 2014

How SCOTUS Halliburton ruling could have white-collar sentencing echoes

HallExperienced lawyer and federal sentencing guru Mark Allenbaugh (firm website here) sent me an intriguing set of insights about how yesterday's Supreme Court ruling yesterday in Halliburton v. Erica P. John Fund (available here) could possibly impact some white-collar sentencing arguments. Mark kindly allowed me to reprint his analysis here:

White collar defense practitioners should be aware of today’s ruling in in Halliburton v. Erica P. John Fund. While a civil class action case, Halliburton may have some helpful applicability at sentencing. 

The Court in Halliburton has expanded the application of Basic Inc. v. Levinson, 485 U. S. 224 (1988) regarding WHEN plaintiffs can prove damages in “fraud on the market cases” from a defendant’s misrepresentation.  In Basic the Court, held that a class of plaintiffs could  prove reliance of a defendant’s misrepresentation by “invoking a presumption that the price of stock traded in an efficient market reflects all public, material information—including material misrepresentations.”  The presumption effectively allows plaintiffs to side-step proof of actual reliance on any misrepresentations for purposes of establishing damages.  Without class certification, however, individual plaintiffs cannot invoke the presumption thereby making proof of damages far more difficult.  The Court held that, contrary to the Fifth Circuit, Defendant/Petitioner Halliburton could introduce evidence that any misrepresentation lacked “price impact” to prevent certification of the class.

Halliburton could be helpful in securities fraud sentencing cases inasmuch as the government usually lumps all the victims together to determine a collective “loss” for sentencing purposes without introducing any evidence that any particular victim (save for those few who may have testified at any trial) relied on any misrepresentations of the defendant.  Such a collectivization of victim losses, therefore, implicitly invokes the Basic efficient market presumption allowing the government to side-step having to prove reliance by any particular victim.  But just as the Commission’s (relatively new and untested) modified recissory method for calculating loss in securities fraud case is subject to rebuttal, so too is the Basic presumption.  In light of today’s ruling in Halliburton, counsel should consider providing the Court evidence that any misrepresentation by the defendant lacked “price impact” on the victims sufficient to overcome the de facto Basic presumption with respect to collective victim losses.  In this way, the Government would be required to provide evidence how individual victims relied on any misrepresentations. 

To be sure, unlike in sophisticated civil class actions that require precision, since determining loss at sentencing need only be a reasonable estimate, only those victims that would materially affect the loss amount should not be granted the Basic presumption; in those cases the Government would be required to prove reliance.  But this is as it should be inasmuch as years if not decades of your client’s life could be at stake.

June 24, 2014 in Federal Sentencing Guidelines, Offense Characteristics, Procedure and Proof at Sentencing, White-collar sentencing | Permalink | Comments (0) | TrackBack

Monday, June 23, 2014

SCOTUS rules against defendant concerning required bank fraud intent in Loughrin

The Supreme Court this morning handed down a quasi-unanimous ruling in a federal bank fraud case this morning in Loughrin v. US, No. 13-316 (S. Ct. June 23, 2014) (available here). I call the ruling only quasi-unanimous because a few Justices only concurred in part with the opinion for the Court. Here is the vote break-down:

KAGAN, J., delivered the opinion of the Court, in which ROBERTS, C. J., and KENNEDY, GINSBURG, BREYER, and SOTOMAYOR, JJ., joined, and in which SCALIA and THOMAS, JJ., joined as to Parts I and II, Part III–A except the last paragraph, and the last footnote of Part III–B. SCALIA, J., filed an opinion concurring in part and concurring in the judgment, in which THOMAS, J., joined. ALITO, J., filed an opinion concurring in part and concurring in the judgment.

And here is how Justice Kagan's opinion for the Court in Loughrin gets started:

A provision of the federal bank fraud statute, 18 U. S. C. §1344(2), makes criminal a knowing scheme to obtain property owned by, or in the custody of, a bank “by means of false or fraudulent pretenses, representations, or promises.”  The question presented is whether the Government must prove that a defendant charged with violating that provision intended to defraud a bank. We hold that the Government need not make that showing.

June 23, 2014 in Offense Characteristics, White-collar sentencing | Permalink | Comments (6) | TrackBack

Tuesday, May 27, 2014

Fascinating research on federal mortgage fraud prosecutions and sentencing in Western PA

20140525mortgage-fraud-thumbI am pleased and excited to have learned over the long weekend that the Pittsburgh Post-Gazette and the Duquesne University School of Law collaborated on an innovative Fact Investigations class, led by associate professor and Criminal Justice Program director Wesley Oliver, to study the modern work of Western Pennsylvania's federal prosecutors in response to modern mortage fraus.  As explained in this first article of a series about this work, this group "identified 144 prosecutions alleging mortgage-related crimes in the Pittsburgh area ... [and then] analyzed 100 prosecutions in which sentence had been pronounced and for which the federal sentencing guidelines could be discerned." Before getting into the findings, I want to heap praise on everyone involved in this project because it shows what valuable work can be done when law schools and traditional media team up to examine intricate and dynamic issues concerning the federal criminal justice system.

Here, from the start of the first article in the series, are the basic findings of this terrific project:

In 2008, as the housing market dragged the world economy down, orders came from Washington, D.C., to federal prosecutors nationwide: Bust the people whose lies contributed to the mess.

Six years later, the effort by Pittsburgh's federal prosecutors to punish fraudulent mortgage brokers, appraisers, closing agents, property flippers and bank employees can claim 144 people charged, more than 100 sentenced and no acquittals.

That undefeated record, though, came at a price: Some of the worst offenders got extraordinary deals in return for their testimony against others.

A review by the Pittsburgh Post-Gazette and Duquesne University School of Law students of 100 completed cases showed that the sentences of mortgage-related criminals in the Pittsburgh area were driven more by their degree of cooperation with prosecutors than by the number of people they scammed, the dollars they reaped or the damage they did to the financial system.  Some of the most prolific offenders used their central places in the fraud conspiracy to secure light sentences.

• Leniency for cooperation was doled out liberally.  At least 30 of the 100 defendants were the beneficiaries of prosecutorial motions to reward "substantial assistance" to the investigation.  That cooperation rate is nearly double that seen in fraud cases nationwide, suggesting that prosecutors here rewarded more defendants than normal.

• Most of the mortgage criminals who assisted prosecutors got no prison time, and the average amount of incarceration for those 30 defendants was a little more than three months.  By contrast, defendants who pleaded guilty but didn't provide substantial assistance to prosecutors, got average sentences of three years in prison.  Those few who went to trial faced an average of 6½ years behind bars.

•  Several of the figures most central to the region's mortgage fraud problem cooperated with prosecutors, and got non-prison sentences.  For instance, Kenneth C. Cowden, formerly of McKees Rocks and now of Florida, performed unlicensed appraisals that exaggerated real estate values in the region to the tune of hundreds of millions of dollars. He cooperated and got nine months in a halfway house.  Jay Berger of Fox Chapel, who recruited Cowden and lived lavishly from fraudulent mortgages, was sentenced in 2012 to 15 months in prison, but died this month at age 49 without serving time.

Here are links to all the article in the series:

Regular readers will not be at all surprised to hear me say that I view this terrific bit of investigative journalism as further proof that those who are really concerned about suspect disparities in federal sentencing ought to be much more focused on the application of (hidden and unreviewable) prosecutorial sentencing discretion than about the exercise of (open and reviewable) judicial sentencing discretion.

May 27, 2014 in Data on sentencing, Detailed sentencing data, Federal Sentencing Guidelines, Offender Characteristics, Offense Characteristics, Procedure and Proof at Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (4) | TrackBack

Sunday, May 18, 2014

Identifying better DOJ prosecutorial priorities than low-level drug crimes

Perhaps the main reason I am a supporter of the Smarter Sentencing Act is my desire to have Congress send an important message about federal criminal justice priorities to the US Justice Department and others through a relatively modest revision of existing mandatory minimum sentencing provisions.  Notably, the preamble to the SSA makes express mention of this goal, describing the purpose of the Act as designed to "focus limited Federal resources on the most serious offenders."  By reducing (though not eliminating) mandatory minimums for various drug crimes, Congress would be effectively saying that federal prosecutors ought not prioritize federal prosecutions of first offenders who may have been involved in dealing only a few ounces of crack or meth or heroin.

Critically, under current law and after the SSA were to become law, if and whenever a drug offender has even a single prior drug offense or just possesses a firearm or causes any significant bodily harm, additional heightened mandatory sentences kick in.  Thus, the only drug dealers likely to benefit significantly from the SSA are true first-offenders who deal only a few ounces of crack or meth or heroin.  I feel confident that major dealers, repeat dealers, and those who use or threaten violence will still be a priority for federal prosecutors after passage of the SSA, and that the feds will still have plenty of prosecutorial tools to take down serious drug traffickers.  And by making sure that lengthy prison terms are mandated only for the most serious offenders, federal prosecutorial and corrections resources can and should be better focused on other crimes, especially crimes that only federal prosecutors can effectively and efficiently prosecute.

What kinds of other crimes, you might ask, would I want federal prosecutors to prioritize over going after first offenders involved in dealing only a few ounces of crack or meth or heroin?  Helpfully, old pal (and forner federal prosecutor) Bill Otis in a pair of new posts over at Crime & Consequences identifies two classes of federal fraud and corruption that ought to be a signal concern for federal prosecutors. Here I will provide links and highlights from these two posts:

A New Prosecution Priority for DOJ: "The lead story in the Washington Post today reports that possibly a million applicants for Obamacare subsidies may have 'misstated' their income.... DOJ should not allow something like that to happen again.  Whether one loves Obamacare or hates it, no one has the right to bilk it by cheating.   A few hundred highly publicized false statement prosecutions would go a long way toward keeping applicants honest and, therefore, keeping the program as solvent as it's going to get."
Another Prosecution Priority for DOJ:  "My last post suggested that the Justice Department prosecute at least some of the thousands of Obamacare applicants who have intentionally falsified statements of their income in order to bilk the taxpayers for even more than they're being bilked out of already.  There is second priority I would suggest for DOJ examination -- a priority that, it seems, the Department may have taken up.  As the New York Times reports: 'The Department of Veterans Affairs' inspector general is working with federal prosecutors who are trying to determine whether criminal violations occurred at a medical center in Phoenix accused of falsifying data or creating secret waiting lists intended to hide months long delays for veterans to see doctors, a top official told a Senate committee on Thursday.'"

I suspect Bill would be quick to assert that the federal government in general and DOJ in particular has plenty of resources to keep going after all drug offenders and to now start going after Obamacare cheats and federal executive branch liars.  Though it is surely true that federal prosecutions are not a zero-sum game, the fact remains that the sentencing laws on the books necessarily serve to structure and greatly influence the exercise of prosecutorial discretion for this Administration and others.  Plus, state prosecutors can (and still do) go after low-level (and high-level) drug dealers, whereas state prosecutors cannot go after after Obamacare cheats and federal executive branch liars.

In short, I heartily endorse Bill's suggestion that AG Holder and his prosecutorial agents start going after Obamacare cheats and federal executive branch liars.  And that endorsement of DOJ prosecutorial priorities provides an additional reason for my support of the SSA and its effort to reorient federal prosecutorial priorities accordingly.

Some prior posts about the SSA and debates over federal sentencing reform:

May 18, 2014 in Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (15) | TrackBack

Friday, May 16, 2014

Federal judge splits the difference in sentencing former SAC money manager to 3.5 years

As reported in this Wall Street Journal article, a federal district judge in a high-profile white-collar sentencing today imposed a prison term roughly half-way between what federal prosecutors and the defense sought.  Here are the basics:

A federal judge sentenced former SAC Capital Advisors LP portfolio manager Michael Steinberg to three and a half years in prison Friday, saying he hoped Wall Street would learn from this case. The term was well below what prosecutors had sought.

U.S. District Judge Richard Sullivan called the former senior SAC employee "a basically good man," citing evidence of his character supplied in 68 letters sent by his family and friends. But he also pointed to the seriousness of Mr. Steinberg's insider trading.  "They are crimes that go to the heart of living in an honest society and having a market system," he said during a hearing in Manhattan federal court.  Wall Street, he hoped, would "derive lessons."

Mr. Steinberg, 42 years old, is SAC's most senior former employee to be convicted of insider trading.  Prosecutors had asked for a sentence of 5¼ to 6½ years to send a strong deterrent message to the market.  Mr. Steinberg's lawyers had requested less than half that amount.

Mr. Steinberg was convicted in December on four counts of securities fraud and one count of conspiracy for trading on confidential information, handing prosecutors the first verdict from a federal jury to back up their allegations that there was insider trading at SAC.  There is a chance Friday's sentence won't stick.  A pending appeal in a related insider-trading case could bolster Mr. Steinberg's chances to overturn his conviction.

May 16, 2014 in Booker in district courts, Offender Characteristics, Offense Characteristics, White-collar sentencing | Permalink | Comments (0) | TrackBack

Wednesday, May 14, 2014

"Federal Judges Are Cutting Rich Tax Cheats Big Sentencing Breaks"

The title of this post is the headline of this lengthy and interesting new piece at Forbes by Janet Novack.  Here are excerpts:

Increasingly, federal judges are going easy on tax cheats, or at least easier than the U.S. Sentencing Commission’ s guidelines say they should. The trend has been quietly building since 2007, but was given a high profile Forbes 400 face in January when a Chicago federal judge let billionaire H. Ty Warner off with probation for hiding as much as $106 million in UBS AG and a smaller Swiss bank for more than a decade and evading at least $5.5 million in tax on his secret accounts.  According to the sentencing guidelines, the 69-year-old Warner, who made his fortune by creating Beanie Babies, should have gotten 46 to 57 months in the federal pen.  Prosecutors have appealed Warner’s sentence, asserting, among other things, that the judge was unreasonably impressed by his “not so extraordinary” charity and by gushing letters from employees, and business associates....

[I]n 2005, the Supreme Court ruled in U.S. v Booker that the guidelines were merely advisory.  Subsequent Supreme Court and appellate decisions have made it clear that trial judges have broad discretion to depart from the guidelines and will only be overturned if they’ve failed to properly consider the guidelines or their decision is clearly unreasonable.  “Once they make the noises about calculating the guidelines, they can come up with their own numbers, and they can base it on anything they want,” says Scott A. Schumacher, a professor at University of Washington Law School who has written a new paper on tax-sentencing post-Booker that is being published in the Villanova Law Review.  While the percentage of all sentences that fall within the guidelines has steadily declined since Booker, the change in tax sentences has been particularly dramatic, he adds.

For example, in fiscal 2013, judges gave below guideline sentences, without buy-in from prosecutors, to 45% of those sentenced for tax crimes, but just 28% of those sentenced for embezzlement; 26% of those sentenced for fraud; and 22% of those sentenced for forgery or counterfeiting. (Another 20% of tax offenders got sentence reductions which prosecutors sponsored, usually as a reward for providing “substantial assistance” to the government.)

While the light sentencing of some offshore cheats has gotten attention, the larger leniency-for-tax crimes trend has been mostly obscured by Internal Revenue Service reports, which show the average prison term for “tax and tax related crimes” rising from 21 months in 2004 to 31 months in 2013.  The IRS numbers, however, are skewed by the long prison sentences (some more than 10 years) being meted out to those convicted in the recent epidemic of identity theft refund fraud — a crime Kathryn Keneally, U.S. Assistant Attorney General for the Tax Division described at an American Bar Association Tax Section meeting last week as “more like street crime.”

The Sentencing Commission’s statistics, by contrast, count only pure tax crimes and not those in which identity theft, public corruption, drug dealing or some other charge is considered the primary offense and tax evasion is thrown in.  By the USSC’s figuring, the average sentence for a tax convict last year was just 14 months, with a median of 12 months.  In those cases where sentencing judges handed out a downward departure citing the Booker decision, the commission’s data shows, the median sentence was cut by 78.5%; in such cases the most lenient within-guideline sentence would have been a median of 16 months and the lucky convicts got a median sentence of just four months. (A side benefit: such short sentences can be served in community facilities, instead of the federal pen.)

Surprisingly, the average sentence for tax crimes hasn’t changed much, even as the percentage of tax cheats getting a sentencing break has risen.  The likely explanation is found in the way the sentencing guidelines work, ratcheting up prison terms as the amount of tax the government was cheated out of rises.  As prosecutors have focused more on wealthier tax cheats and bigger dollar cases involving both onshore and offshore evasion, the sentences tax offenders are supposed to get have risen too. Last Friday, for example, a federal judge sentenced Patricia Hough, a 67-year-old Fort Myers, Fla. psychiatrist, to 24 months in jail.  That might sound like a lot, except her guideline sentence was 80 to 100 months....

These days, sentencing judges routinely give lip service to that need for general deterrence, but still seem sympathetic to the argument that by being prosecuted, individual defendants have already suffered more than their chiseling peers.  In offshore cases, defendants’ lawyers never fail to point out that tens of thousands of people (the last count released by the IRS was, 43,000) with undeclared foreign accounts have escaped prosecution through the Offshore Voluntary Disclosure Program....

Sentencing judges also tend to be sympathetic to other arguments typically made by wealthy and successful convicts: that they have given a lot to charity; have already been publicly humiliated; have paid heavy fines (in Warner’s case a $53 million penalty for failing to file required reports of Foreign Bank and Financial Accounts ); and even that they are simply too valuable as either job creators or community volunteers to be sitting in jail. Chicago Federal District Court Judge Charles P. Kocoras, before giving Warner probation, cited all those considerations....

[S]ince the Supreme Court’s Booker decision, only one tax sentence has been reversed on appeal. In that case a sentencing judge gave probation to Frederick L. Engle, who had evaded his taxes for 16 years using shell corporations.  According to sentencing guidelines, he should have gotten 24 to 30 months.  The sentencing judge’s stated reason for the leniency was that Engle, a high earning sales rep for shoemaker Nine West who had relationships with Wal-Mart, Target and J.C. Penny, would be able to earn good money to pay back the IRS if he was kept out of jail and allowed to travel abroad.

In overturning the sentence, a three judge panel of Fourth Circuit Court of Appeals wrote: “Reduced to its essence, the district court’s approach means that rich tax-evaders will avoid prison, but poor tax-evader will almost certainly go to jail. Such an approach, where prison or probation depends on the defendant’s economic status, is impermissible.”

After Engle failed to appear for his new sentencing hearing and continued to evade tax, he was sentenced in absentia to 60 months in jail.  When U.S. Marshals caught up with him, he got an additional year for failure to appear.  Now 73, Engle is serving his time at the Butner, N.C. federal correctional institution and is not scheduled for release until October 2015.

May 14, 2014 in Booker in district courts, Offense Characteristics, White-collar sentencing, Who Sentences? | Permalink | Comments (4) | TrackBack

Tuesday, May 13, 2014

Corruption nets former Israeli prime minister a six-year prison sentence

As reported here via CNN, Israel's former "Prime Minister Ehud Olmert was sentenced Tuesday to six years in prison for taking bribes while mayor of Jerusalem."  Here are more details concerning this high-profile crime and punishment from the promised land:

Olmert was also fined 1 million shekels (about $289,000), Israeli state radio IB reported.

Olmert was convicted in March of receiving about $161,000 in bribes related to a controversial Jerusalem housing project called Holyland. The judge acquitted Olmert on a third count of bribery. The developer of Holyland, Hillel Cherney, had been previously convicted of bribing Olmert and other high-level officials in exchange for Holyland approvals.

Olmert was mayor of Jerusalem from 1993 to 2003. Olmert, an attorney who in 1973 became the youngest person ever elected to Israel's parliament, the Knesset, served as prime minister from 2006 to 2009. He announced his resignation shortly after police recommended corruption charges against him.

In August 2012, he was convicted of breach of trust and acquitted on two corruption-related charges after a trial that lasted nearly three years. He was given a 3-month suspended jail sentenced and fined about $19,000 in that case....

Prosecutors accused him of double-billing government agencies for travel, taking cash from an American businessman in exchange for official favors and acting on behalf of his former law partner's clients.

May 13, 2014 in Celebrity sentencings, Sentencing around the world, White-collar sentencing | Permalink | Comments (0) | TrackBack

Sunday, May 11, 2014

Feds call probation sentence given to Beanie Babies billionaire substantively unreasonable

As detailed in this Chicago Tribune article, federal prosecutors have filed their merits brief with thr Seventh Circuit complaining about the probation sentence given to the billionaire creator of Beanie Babies after he pleaded guilty to hiding at least $25 million from U.S. tax authorities in Swiss bank accounts.  Here are some details of the filing:

The U.S. government on Friday appealed the sentence of billionaire Ty Warner, the Beanie Babies creator who recently received two years' probation for tax evasion.

In January, U.S. District Judge Charles Kocoras rejected calls from prosecutors that he sentence Warner to a prison sentence of at least a year for failing to pay income taxes on millions of dollars that he hid for years in Swiss bank accounts. Kocoras said he was swayed by letters detailing Warner's acts of kindness in giving him probation instead of prison.

The government's appeal on Friday said Kocoras gave too much weight to Warner's charitable acts, considering his wealth and that many of the letter writers were current or former employees....

In a court filing on Friday, prosecutors said the district court judge's ruling was "substantively unreasonable" and that Warner's sentencing should have served as a punishment and deterrence. It also said Warner's sentence provided "unwarranted sentencing disparities" as others have been treated more harshly for tax evasion....

It also said Warner's claim that he donated $140 million to charity was overstated because the figure included the retail value of Beanie Babies he had donated. A more accurate reflection of the cost would have been $36 million, the government said. The government also estimated that Warner's charitable contributions amounted to 2 percent of his net worth -- "a not extraordinary" amount.

A spokesman for Warner said it was unfortunate that "the government is spending resources to challenge a well-reasoned and careful sentence issued by a well-respected judge."

The government filing said the founder of Ty Inc. hid $100 million in Swiss bank accounts, refused to report $24 million of it to the Internal Revenue Service, and evaded $5.5 million in taxes. At the time of his sentencing, his net worth was $1.7 billion.

Critically, though not mentioned in this article and likely not stressed in the government's appeal, in In addition to probation, Judge Kocoras ordered Warner to do 500 hours of community service at Chicago high schools, and Warner had already previously agreed to pay $27 million in back taxes and interest, and a civil penalty of more than $53 million.  Though the absence of any prison time surely bothers the feds and has prompted this appeal, the fact that Warner's foolish bit of tax dodging has already seems to have cost him more ten times the taxes he sought to evade strikes me as punishment enough.  For these sort of economic crimes, I tend to think an expensive economic punishment is more efficient and effective than prison time.  But, obviously, federal prosecutors do not agree.  And it will be interesting to see what the Seventh Circuit will have to say ultimately.

Prior related posts:

May 11, 2014 in Offense Characteristics, Purposes of Punishment and Sentencing, Sentences Reconsidered, White-collar sentencing | Permalink | Comments (5) | TrackBack

Monday, April 28, 2014

Curious SCOTUS cert calls in criminal cases continuing, though overcriminalization now on docket

Court-yates_0056I was lamenting earlier this month in this post that the Justices seem to have relatively little interest in big criminal justice issues of late (especially on sentencing fronts), though I suppose I could have reconsidered this idea after SCOTUS last week took up two new criminal cases as reported here.  Today, via this new order list, SCOTUS showcases some more curious cert pool splashing around as detailed in this post at SCOTUSblog:  

The Court on Monday granted review in two new cases; both will be decided next Term. One seeks clarification of what a home loan borrower must do in order to get out from under the mortgage because the lender allegedly failed to provide full disclosure of the loan terms (Jesinoski v. Countrywide Home Loans).

The second case raises a novel issue about how federal law treats fish as an object that cannot be destroyed because it may figure in a criminal investigation. At issue in Yates v. United States is whether the Sarbanes-Oxley Act’s ban on destroying a “tangible object” includes only materials like documents or other records, or also includes a physical object like a fish. A fisherman convicted of destroying undersized fish that he allegedly caught illegally in the Gulf of Mexico raised the question whether he had fair notice that the law applied to his action. The Court limited its grant to the first question raised in the petition.

The ongoing mystery of what the Court is doing with a California murder case — submitted to the Justices in twenty straight Conferences without word of any action — continued on Monday. The case is Ryan v. Hurles, testing when a federal habeas court must defer to a state court that did not hold an evidentiary hearing on a claim that the judge was biased. Presumably, that case will be listed again this week, for a twenty-first time. It has been put before the Justices in every scheduled Conference since September.

The Court also took no action on the latest attempt to get the Court to expand the Second Amendment right to possess a gun so that it applies outside the home. The case is Drake v. Jerejian, seeking to challenge a New Jersey law that requires an individual to obtain a permit to carry a handgun in public. The law requires proof that an individual has a “justifiable need” to carry a gun in public for purposes of self-defense....

In accepting review of the Yates case, the Court will be spelling out the scope of a law passed in the wake of the corporate scandals, particularly involving Enron Corp. A provision of that law made it a crime to interfere with a federal investigation by destroying, hiding or altering vidence. The law forbids destroying, multilating, altering, concealing or falsifying “any record, document or tangible object,” with the intent to impede or obstruct a federal investigation.

The case involves John L. Yates, a Floridian who captained a commercial fishing vessel, Miss Katie, working the waters of the Gulf of Mexico. An inspector boarded the vessel in 2000 to check for compliance with fishing regulations. While on board, he saw several red grouper fish, which appeared to him to be smaller than the 20-inch minimum size for taking that species. He measured them, and found 72 that he deemed were too small.

Yates and his crew were told to return to port, and not to disturb the catch. Yates later was charged with violating the law against destroying evidence, for allegedly ordering a crew member to throw the undersized fish overboard. The crew then replaced the discarded fish with other red grouper.

At his trial on criminal charges, including destroying evidence, Yates’ lawyers contended that the law against destroying evidence was designed only to deal with documentary evidence, and that its coverage of “tangible objects” meant to apply on to the same category. That argument failed in the trial court, and Yates was convicted of violating that provision by ordering the casting overboard of the small red grouper. The Eleventh U.S. Circuit Court of Appeals upheld his conviction, rejecting his challenge to the scope of the evidence law.

I have complained about the recent tendency of SCOTUS to take up lots of seemingly quirky criminal justice cases unlikely to have a huge impact, and then also dodging big issues like the reach and application of the Second, Sixth and Eighth Amendments in light of recent rulings. This new Yates case strikes me as another example of a seemingly quirky criminal justice case with only limited implications UNLESS some Justices were eager to make a big stink about the feds going criminally after a little fisherman.

If a majority of Justices were to develop some novel jurisprudence to help fisherman Yates prevail (and, as this local article highlights, he seems like a pretty sympathetic character), this Yates case could possibly become a very big part of on-going policy debates concerning the overfederalization and overcriminalization of seemingly small matters that arguably could and should be handled through civil means and without too much federal prosecutorial involvement.  Indeed, I suspect (and certainly hope) that this Yates case might bring out more amici from the right than from the left, largely because the big concern raised by the case is the ability for small local businesses to conduct their affairs without facing criminal prosecution for not playing nice with federal bureaucrats. 

April 28, 2014 in Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, Sentences Reconsidered, White-collar sentencing, Who Sentences? | Permalink | Comments (11) | TrackBack

Feds in NYC corruption sentencing argue 105 and 80 years necessary for white-collar defendants

An interesting white-collar sentencing scheduled for today in Manhattan is previewed in this New York Times article last week which ran under the headline "Decades in Prison Sought for CityTime Scheme." Here are the details that prompt the title of this post:

Federal prosecutors in Manhattan have asked a judge to impose sentences of 105 years, 80 years and up to 40 years on three men who the government has said became “unbelievably rich” in connection with New York City’s scandal-marred payroll modernization project known as CityTime.

The three men were convicted in a federal corruption trial last fall in Federal District Court and are scheduled to be sentenced on Monday. T he cost of the CityTime project was originally budgeted at $63 million but exploded to about $700 million, with almost all of the more than $600 million that New York City paid to its prime contractor, Science Applications International Corporation, or S.A.I.C., tainted by fraud, a federal indictment charged.

“The CityTime fraud, kickback and money laundering scheme that these defendants orchestrated, managed and operated represents one of the worst, if not the worst, financial crimes against the city,” the office of Preet Bharara, the United States attorney in Manhattan, said in a memo filed on Sunday night recommending the sentences, which it said were appropriate under the advisory sentencing guidelines.  “The need for general deterrence supports severe sentences in this case,” the office added.

The government asked the judge, George B. Daniels, to sentence Gerard Denault, 52, who was S.A.I.C.’s project manager on CityTime, to 105 years in prison.  “He used his significant talents to abuse his executive position at S.A.I.C. to an extreme degree,” two prosecutors, Howard S. Master and Andrew D. Goldstein, wrote.  “Testimony at trial from witness after witness reflected that he used his power and his intellect to intimidate and sideline anyone at S.A.I.C who stood in the way of his criminal scheme.”

Mr. Denault’s lawyer, Barry A. Bohrer, said his only comment on the government’s request was “not one that is printable.”  He has requested a five-year sentence for his client.

Mr. Bharara’s office said in the memo that another defendant, Mark Mazer, 50, a former consultant to the city’s Office of Payroll Administration, had “abused his power as the city’s project manager to line his own pockets to a breathtaking degree rarely seen in any fraud or kickback case,” taking about $30 million over five years.  The prosecutors’ office asked that he be sentenced to 80 years.

Mr. Mazer’s lawyer, Gerald L. Shargel, who is seeking a five-year sentence for his client, said in a phone interview on Monday that it was the government’s request that was “breathtaking,” and that such sentences “should be reserved for the worst offenders among us.” Mr. Shargel said that the large amounts of money in the case had helped to inflate the recommended sentences.  “Just because the guidelines give the prosecutors the authority to argue for this sentence, it doesn’t mean that it’s the right thing to do,” Mr. Shargel said. “What do you give a murderer — 160 years?”

Without knowing all the facts of these cases, I cannot comment on whether these fraud defendants are really among the truly "worst of the worst" of white-collar criminals.  But I can comment that federal prosecutors, at least in this case, seem to not be really committed to helping the district judge here determine what sentence would truly be "sufficient but not greater than necessary" to achieve federal sentencing goals under 18 USC 3553(a).

Given that it would be remarkable if the defendants here would be able to live even half as many years in prison as the prosecutors are urging, it is obviously ludicrous to assert that a 105-year sentence is not greater than necessary for a 52-year-old defendant.  But it seems that a representative of the US government is going to stand up in to federal court today and make such a ludicrous sentencing claim.

UPDATE: The headline of this AP article about the now-completed sentencings in this matter reports the basic outcome: "NYC payroll scandal defendants each get 20 years."

April 28, 2014 in Booker in district courts, Offense Characteristics, White-collar sentencing, Who Sentences? | Permalink | Comments (7) | TrackBack

Wednesday, April 02, 2014

Is there any likely sentencing or (private) prison reform aspect to big SCOTUS political speech ruling?

The big SCOTUS news this morning is the split 5-4 First Amendment ruling in McCutcheon v. FEC (available here). This press report on the ruling from the Los Angeles Times provides the basics: 

The Supreme Court on Wednesday freed wealthy donors to give more money directly to congressional candidates, extending its controversial 2010 Citizens United decision that opened the door for unlimited independent spending on political issues.

In a 5-4 decision, the court’s conservative majority struck down Watergate-era aggregate limits that barred political donors from giving more than $123,000 a year in total to candidates running for seats in the House of Representatives or Senate. The court said this limit violated the free-speech rights of the donors, and it was not needed to prevent “corruption” of the political process. The justices noted that donors mush still abide by rules that prevent them from giving more than $2,600 per election per candidate.

Chief Justice John G. Roberts Jr., speaking for the court, said the 1st Amendment protects a citizen’s free-speech right to give to candidates. “Money in politics may at times seem repugnant to some, but so too does much of what the 1st Amendment protects,” he said. If it protects “flag burning, funeral protests and Nazi parades — despite the profound offense such spectacles cause — it surely protects political campaign speech despite popular opposition.”

Justice Stephen G. Breyer, speaking for the four dissenters, said the court had opened a huge legal loophole that threatens the integrity of elections. “Taken together with Citizens United, today’s decision eviscerates our nation’s campaign finance laws,” he said.

The question in the title of this post highlights that I am always a blogging criminal justice hammer seeing every important SCOTUS ruling as a possible sentencing nail. Without even reading the full opinion, I wonder if this ruling might end up helping (1) some white-collar defendants and their wealthy friends better support federal legislators and candidates who advocate sentencing reform in arenas that impact these kinds of defendants, and/or (2) private prison companies and their executives support federal legislators and candidates who advocate for continued or expanded reliance on private prisons.

As usual, I am sure I am stretching a bit to view a non-sentencing story as having significant potential sentencing echoes. But maybe readers agree that there could be something to these early post-McCutcheon speculations.

April 2, 2014 in Elections and sentencing issues in political debates, Prisons and prisoners, White-collar sentencing, Who Sentences? | Permalink | Comments (14) | TrackBack

Thursday, March 20, 2014

"Sentencing in Tax Cases after Booker: Striking the Right Balance between Uniformity and Discretion"

The title of this post is the title of this new paper by Scott Schumacher now available via SSRN. Here is the abstract:

It has been nearly ten years since the Supreme Court’s seminal decision in United States v. Booker, in which the Court invalidated the mandatory application of the United States Sentencing Guidelines.  In the cases that followed, the Court addressed subsidiary issues regarding the application of the Guidelines and the scope of appellate review.  However, despite — or perhaps because of — these opinions, there is little consensus regarding the status and extent of appellate review, as well as the discretion afforded sentencing courts. More troubling, what consensus there is seems to permit judges to impose any sentence they wish, as long as the appropriate sentencing procedures are followed.  As a result, we are in danger of returning to “the shameful lack of parity, which the Guidelines sought to remedy.”

The Sentencing Reform Act and the Sentencing Guidelines were designed to reduce disparity in sentencing and to reign in what one commentator described as a “lawless system.” However, the Guidelines as ultimately conceived drastically limited the sentencing judge’s ability to impose a sentence that was appropriate for the conduct and culpability of the defendant, creating a different kind of sentencing disparity. The current, post-Booker system provides more guidance than the pre-Guidelines system, but permits sentencing judges to disregard the Guidelines and develop their own sentencing policy.  As a result, rather than having a system that allows for sentences to be tailored to individual defendants, the current system allows sentences to be imposed based on the penal philosophy of individual judges. This will inevitably lead to unwarranted sentencing disparity.

This article traces the recent history of criminal sentencing and, relying on the influential works of John Rawls and H.L.A. Hart on theories of punishment, argues for a better system that allows for both guidance to sentencing judges and appropriately individualized sentencing.  My recommendation, although equally applicable to any federal sentence, will be examined through the lens of tax sentencing.

March 20, 2014 in Booker and Fanfan Commentary, Federal Sentencing Guidelines, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (0) | TrackBack

Tuesday, March 18, 2014

Infomercial celebrity to be selling in federal prison for next decade

Kevin_Trudeau-Prison_Escape_PlanAs reported in this local article, headlined "TV pitchman Kevin Trudeau sentenced to 10 years in prison," a salesman many have seen on late-night television will now only be seen in federal prison for a long time. Here are the sentencing details:

When TV huckster Kevin Trudeau stood in a packed federal courtroom to make one final sales pitch Monday, he hardly resembled the tanned, dapper figure seen hawking miracle diets and natural cancer cures on so many late-night infomercials.  After spending four months in jail for contempt of court, Trudeau’s trademark jet black coif was thin and gray. His usual tailored suit was replaced by rumpled orange jail clothes.  Even his typical air of defiance had turned to contrition, a change he said washed over him during his sleepless first night in custody.

“If I ever write a book again, if I ever do another infomercial again, I promise no embellishment, no puffery and absolutely no lies,” Trudeau told U.S. District Judge Ronald Guzman in a remorseful tone.  “I know going forward I will be a better person.”

But the judge wasn’t buying a word.  Moments after Trudeau’s plea for leniency, a visibly irritated Guzman sentenced the best-selling author to 10 years in prison, citing Trudeau’s decades-long history of fraud and calling him “deceitful to the core.”

“He has treated federal court orders as if they were mere suggestions...or at most impediments to be sidestepped, outmaneuvered or just ignored,” Guzman said in handing down an unusually lengthy prison term for a contempt conviction.  “That type of conduct simply cannot stand.”...

Trudeau has been jailed since Nov. 12 when he was convicted by a federal jury of criminal contempt for lying in several infomercials about the contents of his hit book, “The Weight Loss Cure 'They' Don't Want You to Know About.”  Prosecutors said he ignored a previous court order by describing the program as easy when it actually called for punishing calorie restrictions and a crippling list of food restrictions.  Meanwhile, U.S. District Judge Robert Gettleman has repeatedly found Trudeau in civil contempt for failing to pay anything toward a $37.6 million fine imposed by the Federal Trade Commission in spite of continuing to live a lavish lifestyle.

On Monday, prosecutors cited Trudeau’s history of fraud that goes back to a state conviction in 1984.  “He is a habitual liar and a fraudster,” Assistant U.S. Attorney April Perry said.  As a result of the size of the fraud and Trudeau’s two previous felony convictions, federal sentencing guidelines called for 20 to 25 years in prison, a range that Guzman said he thought was “appropriate.”  However, he eventually agreed with prosecutors who said a 10-year term was sufficient since -- unlike in many fraud cases -- no one who bought Trudeau’s book was financially ruined.

Trudeau’s attorneys argued that prosecutors vastly inflated the amount of harm done by Trudeau’s misleading infomercials, saying many buyers were satisfied with the weight loss book.  In his lengthy statement to the court, Trudeau said he has been “completely wiped out” financially and that he and his wife Nataliya Babenko, 26, are “effectively homeless.” He said his time at the Metropolitan Correctional Center has changed his perspective and led him to realize he had made many errors. While he wouldn’t wish incarceration on anyone, the experience has wound up being “one of the best, most positive things in my life,” Trudeau said.

“In the past four months I have been stripped of all ego, defiance, arrogance and pride and for that I am thankful,” Trudeau said as he stooed at a lectern and read from typed notes.

But Judge Guzman was unimpressed, noting that in his three decades of fraud, Trudeau had taken on more than a dozen different aliases and even used his mother’s Social Security number to perpetrate a scam. “That doesn’t happen by accident, and it doesn’t happen by good intentions,” the judge said. “It is a reflection of a person’s character.”

March 18, 2014 in Celebrity sentencings, Offense Characteristics, White-collar sentencing | Permalink | Comments (6) | TrackBack

Monday, March 17, 2014

You be the federal sentencing judge: months, years or decades in prison for notable Medicaid fraudsters?

White-collar crimes, especially when there are few if any individual victims, oft raise especially tough and dynamic issues concerning how to weigh and balance offense- and offender-related sentencing consideration. These realities seem especially true in an interesting federal health care fraud case from South Carolina described in this local article. The piece is headlined "As Medicaid fraud sentencing nears, SC youth agency founder seeks leniency so he can be positive role model for his children," and here are excerpts:

The founder of the Helping Hands Youth and Family Services agency, guilty of bilking the federal Medicaid program for millions of dollars, has asked a federal judge for leniency when he is sentenced Wednesday for six felony charges related to health care fraud.

Truman Lewis — who founded the for-profit youth mentoring agency that had offices in Conway, Georgetown, Columbia and Rock Hill — said in court documents that he still maintains his innocence and deserves no more than a six-month prison sentence.

Lewis and his brother, Norman Lewis, were found guilty in an August jury trial of conspiracy to commit health care fraud, conspiracy to commit money laundering and four counts of wire fraud.  They each face up to 10 years in prison for committing health care fraud and up to 20 years in prison for the money laundering and wire fraud charges. Both men will be sentenced Wednesday in Charleston by Judge Richard Gergel.

The jury found that the Lewises billed Medicaid for $8.9 million — much of it fraudulent  — over a nearly two-year period starting in 2009, and then used the money to buy luxury cars, a beachfront condominium and homes.  At the time of their indictment in June 2012, the Lewises had $1 million in certificates of deposit and bank accounts.  The jury determined that all of those assets can be seized to help pay back the money taken through fraudulent billings.

Helping Hands — which was supposed to provide mentoring services to low-income children with family or behavioral problems — had hundreds of youth clients in Horry and Georgetown counties.  Those clients were referred to the agency by the state’s Department of Social Services and area school officials, even though the agency’s counselors were not licensed.

Truman Lewis, in a court document filed on Friday, said he “may have made mistakes along the way but does not believe he did so with a malevolent intent and is wanting to work his way out of this position he finds himself in.”

At age 35, Truman Lewis is the oldest of 14 siblings who were “sometimes forced to live on food stamps,” the court document states, adding that the youth mentoring agency he founded allowed him “to pave the way for his siblings in school and work to show them there was a way out of poverty.”  Truman Lewis said he never should have faced criminal charges because his agency had entered into a repayment plan with state officials who oversee the Medicaid program before any charges were filed.  He said a long prison sentence would be detrimental to the government because he would not be able to work and pay restitution.

If the court allows Truman Lewis “to serve a sentence below the guidelines range, he may be able to seek employment to help work on restitution to the government,” the court document states.  Truman Lewis said he also wants a minimum prison sentence so he and his wife can continue to be positive influences on their four children.  “The entire family is extremely religious and attend church regularly, sometimes four to five times weekly as a family,” the court document states, adding that Truman Lewis and his wife “have a deep abiding belief in their religious convictions and are trying to pass their beliefs on to the children.”

David McCann, a court-appointed lawyer representing Norman Lewis, filed a document Monday asking for leniency for his client, but the filing does not recommend a specific prison sentence.  A lengthy sentence for the 32-year-old Norman Lewis “interrupts his young family and presents the unnecessary cost to taxpayers for confinement and treatment, if available,” McCann said in the court filing.

Norman Lewis’ previous court appearances have been marred by outbursts and repeated requests to represent himself at trial.  Norman Lewis initially told Gergel he wanted to be represented by God and Jesus rather than a court-appointed defender.  He also spoke during an arraignment hearing about more than 100 songs and poems he has written about his work with Helping Hands, “doing so in a manner that left the court concerned with the defendant’s mental capacity.”

A psychiatric exam in December 2012 showed Norman Lewis was competent to stand trial, prompting Gergel to approve his request to represent himself. Gergel rescinded that request in February 2013 after Norman Lewis repeatedly refused to accept boxes of discovery documents needed for trial preparation.  Norman Lewis’ refusal to meet with a probation officer led to his incarceration three months later and he was charged with contempt of court in July for speaking to potential jurors.

Norman Lewis’ wife, Melanie Lewis, pleaded guilty last year to one conspiracy charge in a plea agreement to avoid a trial.  That charge carries a maximum five-year prison sentence. Melanie Lewis will be sentenced on Thursday in Charleston.

Testimony during the August trial showed Helping Hands officials — most of them Lewis family members — falsified records and submitted bills for ineligible or non-existent clients in order to boost Medicaid payments.  Lewis family members then transferred that money to personal bank accounts and purchased items such as 10 automobiles, including an $89,000 Bentley and a $55,900 Mercedes....

Bank records included in court documents show Helping Hands billed Medicaid a steadily increasing amount starting in January 2009, when the agency received $13,500 from the federal health program.  By April 2010, Helping Hands was billing Medicaid for $1 million per month.  The agency closed for good in 2011.

Based on the amount of money apparently involved in this federal fraud (as well as enhancements for leadership role and other aggravating guideline factors), I would guess that the guidelines recommend a sentence of a decade or more for Truman and Norman Lewis. But would it be more effective and efficient for them to get a shorter prison sentence coupled with a rigorous set of restitution obligations to help ensure federal taxpayers are made whole?

You be the judge (and, ideally, propose in the comments a sentence that makes a clever pun about Helping Hands).

March 17, 2014 in Fines, Restitution and Other Economic Sanctions, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (6) | TrackBack

Tuesday, February 25, 2014

With intriguing coalitions, SCOTUS limits right to challenge pre-conviction asset seizure

The Supreme Court handed down an opinion this morning in Kaley v. US, No. 12-464 (S. Ct. Feb 25, 2014) (available here), which is notable for its holding and the groups of Justices joining together.  Here is the start of the opinion for the Court, which was authored by Justice Kagan and joined by Justices Scalia, Kennedy, Thomas, Ginsburg and Alito:

A federal statute, 21 U. S. C. §853(e), authorizes a court to freeze an indicted defendant’s assets prior to trial if they would be subject to forfeiture upon conviction.  In United States v. Monsanto, 491 U. S. 600, 615 (1989), we approved the constitutionality of such an order so long as it is “based on a finding of probable cause to believe that the property will ultimately be proved forfeitable.”  And we held that standard to apply even when a defendant seeks to use the disputed property to pay for a lawyer.

In this case, two indicted defendants wishing to hire an attorney challenged a pre-trial restraint on their property. The trial court convened a hearing to consider the seizure's legality under Monsanto.  The question presented is whether criminal defendants are constitutionally entitled at such a hearing to contest a grand jury's prior determination of probable cause to believe they committed the crimes charged.  We hold they have no right to relitigate that finding.

Here is the start of the lengthy dissent in Kaley  which was authored by Chief Justice Roberts and joined by Justices Breyer and Sotomayor:

An individual facing serious criminal charges brought by the United States has little but the Constitution and his attorney standing between him and prison. He might readily give all he owns to defend himself.

We have held, however, that the Government may effectively remove a defendant’s primary weapon of defense — the attorney he selects and trusts — by freezing assets he needs to pay his lawyer.  That ruling is not at issue.  But today the Court goes further, holding that a defendant may be hobbled in this way without an opportunity to challenge the Government’s decision to freeze those needed assets.  I cannot subscribe to that holding and respectfully dissent.

The Court also handed another criminal defendant another 6-3 loss today in a Fourth Amendment case from California. Here is how the majority opinion, per Justice Alito, gets started in Fernandez v. California, No. 12-7822 (S. Ct. Feb. 25, 2014) (available here):

Our cases firmly establish that police officers may search jointly occupied premises if one of the occupants1 consents. See United States v. Matlock, 415 U. S. 164 (1974). In Georgia v. Randolph, 547 U. S. 103 (2006), we recognized a narrow exception to this rule, holding that the consent of one occupant is insufficient when another occupant is present and objects to the search. In this case, we consider whether Randolph applies if the objecting occupant is absent when another occupant consents. Our opinion in Randolph took great pains to emphasize that its holding was limited to situations in which the objecting occupant is physically present. We therefore refuse to extend Randolph to the very different situation in this case, where consent was provided by an abused woman well after her male partner had been removed from the apartment they shared.

February 25, 2014 in Procedure and Proof at Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (14) | TrackBack

Monday, February 24, 2014

You be the federal sentencing judge: "tough call" in sentencing former police chief

The title of this post is drawn from the headline of this notable local story about tomorrow's scheduled federal sentencing for Pittsburgh's former police chief. The piece is headlined "Former Pittsburgh police chief's sentencing a tough call for judge Ex-chief Nate Harper's sentencing 'difficult'."  Because I am never quite sure whether I think a law-enforcement background justifies a harsher or lighter sentence, I am very interested in hearing reader instincts about what might be a fitting federal punishment for this former cop. Here are some of the details the federal judge must consider in this case:

When former New York City police commissioner Bernard Kerik -- who once ran the Big Apple lockup Rikers Island -- walked into a federal penitentiary as a prisoner in 2010, it was, he said, like "dying with your eyes open."...

At the Federal Correctional Institution Cumberland, in Maryland, where he served his sentence, he lived among the kinds of people he spent his life locking up. That's what former Pittsburgh police chief Nate Harper could face following his sentencing, set for Tuesday.

Mr. Harper's fate is in the hands of U.S. District Judge Cathy Bissoon, who rose to that post in late 2011 after three years as a magistrate judge. She faces a decision in which she must weigh Mr. Harper's history, his precise role in the conspiracy to commit theft and the importance of deterring others from similar dips into the public cookie jar.

Though federal guidelines suggest a sentence of 1.5 to two years, she can go as low as probation or as high as five years. "It comes down to a very difficult call for a judge," said Bruce Antkowiak, a former federal prosecutor and now a law professor at Saint Vincent College in Latrobe. "The strongest cards [Mr. Harper's attorneys] have to play are his history with the department, the decades of work he has put in, the numbers of other people from law enforcement who evidently respect him."

Those same factors, though, could count against him. "Either you think this is a fundamentally decent guy who did something wrong, or you think this is a public official who should be held to another standard," said Wesley Oliver, the Criminal Justice Program director at the Duquesne University School of Law.

Mr. Harper could argue that his lawman background puts him at risk in prison. The U.S. Supreme Court found in the case of police sergeant Stacey Koon, sentenced to prison in the beating of Los Angeles motorist Rodney King, that judges can give lighter sentences to defendants who are "unusually susceptible to prison abuse."

In the recent case of former corrections officer Arii Metz, though, prosecutors countered that argument by showing that the federal prisons already house many former police in relative security. As of last month, there were 1,269 former law enforcement officials in federal custody, according to the Bureau of Prisons. "There are guys who are going to hate him because he was a cop," Mr. Kerik said. "There are going to be guys who are going to respect him because he was a cop."

Mr. Harper pleaded guilty in October, confirming that he failed to file tax returns for four years and diverted $70,629 in public funds into an unauthorized credit union account and spending $31,987 on himself. The prosecution has maintained that Mr. Harper told two civilian subordinates to open and handle the account, making him a supervisor in the conspiracy, and subject to a harsher sentence.

The defense has countered that Mr. Harper had no co-conspirators, but also that the unauthorized account wasn't his idea. They haven't yet named the alleged mastermind. "The government's response is going to be: Who cares?" Mr. Antkowiak said. "When you admit that you told two city employees to open these accounts and draw the Visa cards on them, you're a supervisor" of the crime....

Two defendants -- both of whom were given credit for cooperation -- publicly blamed Mr. Harper for a separate bid-rigging scheme in hearings before Judge Bissoon. The former chief has never been charged in relation to the incident, a contract won by Alpha Outfitters -- a company controlled by the chief's long-time friend -- to install and maintain computers and radios in police cars.

The judge shouldn't give much weight to their accusations, Mr. Oliver said, though he noted that the charge "tends to tear down the narrative that the defendant is trying to tell" about a good man with a bad debit card.

With the eyes of the public, and especially of law enforcement, on the case, the judge may carefully weigh the deterrent effect of the sentence. "Look, one of the things a judge always considers is what kind of message [she's] sending with this sentence," said John Burkoff, a law professor at the University of Pittsburgh. " 'What's the message I'll be sending to police officers who may be tempted to do something bad if I'm lenient?' "

Mr. Kerik, now an advocate for sentencing reform, suggested that the message has already been sent. It could be amplified, he said, if the judge gives Mr. Harper probation but orders him to speak to police recruit classes about his crime and punishment. "They're going to take his pension," Mr. Kerik said. "You've taken his reputation. He's now a convicted felon. He's going to have legal fees he'll have to pay for. That guy has been destroyed."

UPDATE: This local report details the sentencing outcome in its headline: "Former Pittsburgh chief Harper gets 18-month prison sentence."

February 24, 2014 in Booker in district courts, Offender Characteristics, Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing | Permalink | Comments (3) | TrackBack

Thursday, February 13, 2014

Feds to appeal probation sentence given to tax-dodging Beanie Babies billionaire

As reported in this new AP article, the "U.S. attorney's office in Chicago said Thursday that it's appealing a sentence that included no prison time for the billionaire creator of Beanie Babies for hiding at least $25 million from U.S. tax authorities in Swiss bank accounts."  Here is more:

At H. Ty Warner's sentencing last month, Judge Charles Kocoras heaped praise on the toymaker for his charitable giving, declaring society was better served by letting him go free and giving him two years' probation instead of sending him to prison. Warner had faced up to five years in prison.

Warner, 69, of Oak Brook, Ill., was one of the highest profile figures snared in a long-running investigation of Americans concealing funds in Swiss bank accounts. Others convicted of squirreling away less money in Switzerland than Warner have done prison time. Warner, who grew up poor, created the animal-shaped Beanie Babies in the mid-'90s, triggering a craze that made Warner spectacularly rich. Forbes recently estimated his net worth at $2.6 billion.

A one-page notice of appeal signed by U.S. Attorney Zachary Fardon was filed with the U.S. 7th Circuit Court of Appeals, and a full brief will be submitted later. Justice officials in Washington still must OK the appeal, but that's usually considered a formality.

At a Jan. 14 sentencing hearing, Kocoras spent most of his 20-minute explanation of the sentence expressing admiration for Warner. He also said the businessman had already paid a price in "public humiliation." In addition to probation, Kocoras ordered Warner to do 500 hours of community service at Chicago high schools. Earlier, Warner agreed to pay $27 million in back taxes and interest, and a civil penalty of more than $53 million....

During sentencing, assistant government attorney Michelle Petersen urged Kocoras to put Warner behind bars for at least a year.  "(Without prison time), tax evasion becomes little more than a bad investment," she told him.  "The perception cannot be that a wealthy felon can just write a check and not face further punishment."

This should be a VERY interesting sentencing appeal to watch in the months ahead, and I am already super stoked to read the coming Seventh Circuit briefs from the parties concerning what will surely be differing views on what federal sentencing law demands in a case of this nature.

Prior related post:

February 13, 2014 in Booker in district courts, Booker in the Circuits, Offender Characteristics, Offense Characteristics, Sentences Reconsidered, White-collar sentencing, Who Sentences? | Permalink | Comments (3) | TrackBack

Wednesday, February 12, 2014

Will (and should) former mayor Ray Nagin get a sentence making it likely he dies in federal prison after his corruption convictions?

The question in the title of this post is the first sentencing question that came to mind upon hearing this criminal justice news from a Louisiana federal court this afternoon:

Ray Nagin, the former two-term mayor of New Orleans indicted after he left office, was convicted Wednesday of 20 federal corruption charges for illegal dealings with city vendors, dating back to 2004.  A jury delivered its verdict just before 1 p.m., after six hours of deliberations that followed a nine-day trial.

Nagin, 57, joins a list of Louisiana elected officials convicted of misdeeds while in office, but he is New Orleans' first mayor to be convicted of public corruption.  Under federal sentencing guidelines, he could face a 20-year prison term, possibly more, lawyers have said.

In a case that relied heavily on the testimony of businessmen-turned-convicts -- and a paper trail that showed money changing hands and lucrative city contracts doled out -- prosecutors described a public official "on the take."  Nagin was an opportunist who pursued businessmen under pressure to get government work, targeting them to line his own pockets, prosecutors said....

Nagin was somber and silent as he made his way through a crush of reporters outside of the courthouse -- a far cry from the confidence he showed when he first arrived more than two weeks ago at the start of his trial.  Addressing the press, Jenkins said, "Obviously, I'm surprised. Now we're moving on to the appeal process."

Assistant U.S. Attorney Matt Coman, the lead prosecutor on the case, gave a brief statement. "We are pleased with the verdict and obviously we are very thankful to the jury and the court," he said....

Nagin, a Democrat, was the public face of the city during Hurricane Katrina, making national headlines as he lambasted the federal government for its response to the storm and subsequent flood.

He lives in Frisco, Texas, where he has avoided the spotlight, staying quiet save for an occasional tweet, since his indictment a year ago. Sentencing is set for June 11 before U.S. District Judge Ginger Berrigan.

As the title of this post suggests, I would urge now-convicted Nagin to urge his lawyers to get very focused on the federal sentencing process before they start "moving on to the appeal process." As the article above notes, federal prosecutors are likely to argue that the guidelines applicable here recommend a sentence of decades for Nagin, and judges within the Fifth Circuit tend to be drawn toward imposing within guidelines sentences. Ergo, unless and until Nagin's lawyers start developing some strong sentencing arguments on his behalf, the former mayor of New Orleans may be looking at the real possibility that he gets a federal prison sentence later this year that amounts to a functional life sentence.

February 12, 2014 in Celebrity sentencings, Federal Sentencing Guidelines, Offender Characteristics, Offense Characteristics, White-collar sentencing | Permalink | Comments (12) | TrackBack