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

Wednesday, January 22, 2014

Highlights from Federal Sentencing Reporter issue on “White-Collar Sentencing”

I noted in this recent post that I have the honor of speaking this coming Friday morning at a sentencing seminar in New York City sponsored by Proskauer’s White Collar Defense & Investigations Group. This event has been planned in conjunction with the publication of Federal Sentencing Reporter's latest issue on “White-Collar Sentencing” (Vol. 26.1, October 2013). Helpfully, FSR's publisher has made these two articles from this issue available for download without a subscription:

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

Sunday, January 19, 2014

Terrific white-collar sentencing event highlighting terrific FSR issue on white-collar sentencing

FsrFor reasons that should be obvious, I may be showing a bit of bias in my positive description of an event in New York City at which I will be speaking this coming Friday and which is promoting this recent white-collar sentencing issue of a publication that I help manage.  Nevertheless, as highlighted by the invitation and links in this announcement of the event, I do not think my inherent bias undermines the validity of my excitement and praise for this event:

The Current State of White-Collar Sentencing 

Please join Proskauer’s White Collar Defense & Investigations Group and the Federal Sentencing Reporter (FSR) for a seminar on criminal sentencing, presented in conjunction with the publication of FSR’s latest issue “White-Collar Sentencing” (Vol. 26.1, October 2013). 

Friday, January 24, 2014 
Registration and Breakfast: 8:00 a.m. - 8:30 a.m. 
Program: 8:30 a.m. - 11:30 a.m. 

Proskauer 
Eleven Times Square (41st Street and 8th Avenue) 
New York, NY 10036
Register here

Program:
Featured speaker Professor Douglas A. Berman, of The Ohio State University Moritz College of Law, author of the nationally acclaimed Sentencing Law and Policy blog, will lead off the program with a discussion of current topics in white-collar sentencing.  This program will feature a review of recent developments in the field, the latest data and statistics, and proposals from distinguished thought leaders on potential improvements to current sentencing policies and procedures.  Our panelists will include current members of the U.S. Sentencing Commission’s Practitioners Advisory Group, academics, and practitioners:

January 19, 2014 in Federal Sentencing Guidelines, Offense Characteristics, Recommended reading, White-collar sentencing | Permalink | Comments (0) | TrackBack

Tuesday, January 14, 2014

You be the federal judge: what sentence should the Beanie Babies billionaire get for tax evasion?

Beanie babyAs reported in this short AP article, today "the billionaire creator of Beanie Babies is in a Chicago federal courtroom for his sentencing on a tax evasion charge." Here is more:

H. Ty Warner could get up to five years in prison Tuesday for evading taxes on $25 million in income. The 69-year-old Warner was told when he pleaded guilty last year that he would have time at his sentencing to apologize for stashing money in Swiss bank accounts.

Warner's attorneys have asked the judge for a sentence of probation, not prison. They pointed to Warner's unhappy childhood and his charity work. Prosecutors say Warner should spend some time in prison, though they haven't recommend how much. They also say his philanthropy shouldn't be "a get-out-jail card."

Though perhaps not authorized by federal law, my proposed punishment for this billionaire would be a week in jail, a maximum (lifetime?) term of supervised release (for which he has to pay the costs), plus a fine of $100 million (four times the amount of income he tried to hide). According to Forbes here, Warner's net worth is 2.6 billion, and thus a $100 million fine for him is the equivalent of only a $100,000 fine for someone worth $2.5 million. Ergo, such a fine should clearly not be considered constitutionally excessive for Warner and it should better help deter rich folks from illegally trying to avoid paying their fair share.

Importantly, the maxed out term of supervised release is a big aspect of my proposed ideal sentence. Though some may think a few years in prison for a white-collar offender is more onerous than other punishments, I suspect a billionaire like Warner would be much more bothers by forever being subject to control of his liberty by probation officers. (I would also like to order Warner to a community service requirement of coming to my house each year to clear the dust off my kids' stuffed animals, but I am not sure I would be able to get away with such a term of service even if I was a federal judge.)

UPDATE:  This Reuters article indicates that Warner's sentencing outcome in federal court on Tuesday is resulting in him paying for his nonviolent crime in a lot of ways, but not with any time in prison: 

The billionaire creator of Beanie Babies, Ty Warner, will serve two years of probation, including mentoring high school students, following his guilty plea on a tax evasion charge, but no jail time, a federal judge ruled on Tuesday. Warner, 69, who pleaded guilty in October, told U.S. District Court Judge Charles Kocoras in Chicago that his crime was the "biggest mistake" of his life. Warner already had agreed to pay a civil penalty of nearly $53.6 million.

Ranked as the 209th richest American by Forbes with a listed net worth of $2.6 billion in 2013, Warner failed to report more than $24.4 million in income and evaded nearly $5.6 million in federal taxes from millions hidden in Swiss bank accounts, according to Chicago prosecutors.

Prosecutors had argued that Warner should serve time in jail given the extent of the cover-up, and federal guidelines called for up to five years in prison. "I am truly sorry," said the slightly-built Warner, who wore headphones to compensate for hearing loss. He told Kocoras the letters of support he received "made my feelings of shame and embarrassment that much more unbearable."

Kocoras cited Warner's many acts of charity before imposing probation rather than prison. Kocoras said he had reviewed letters from people helped by the billionaire, including a woman with a kidney disease Warner had stopped to ask for directions. After learning of her condition, Warner paid for her treatment. "Society will be best served by allowing him to continue his good works," Kocoras said.

Warner was sentenced to at least 500 hours of community service, which will include mentoring students at Leo High School, a Catholic boys' school in a poor, mostly African-American neighborhood in Chicago....

The federal charge to which Warner pled guilty alleged that, in 2002, Warner earned more than $3.1 million through investments held in his UBS account, but did not tell his accountants and failed to report it on his tax form.

January 14, 2014 in Fines, Restitution and Other Economic Sanctions, White-collar sentencing, Who Sentences? | Permalink | Comments (4) | TrackBack

Thursday, December 19, 2013

Another high-profile insider trading conviction tees up another high-profile federal sentencing

As reported in this New York Times article, headlined "Former SAC Trader Is Convicted of Insider Trading," federal prosecutors got another notable conviction yesterday in a high-profile setting:

Prosecutors lacked the incriminating wiretaps that underpinned past insider trading cases. The emails pointed to no smoking gun.  And the government’s star witness, a felon who testified to avoid prison time, fumbled his way through five days of cross-examination.

And yet a federal jury in Manhattan on Wednesday still convicted Michael S. Steinberg, the highest-ranking employee at SAC Capital Advisors to stand trial for insider trading.  The verdict, delivered minutes after Mr. Steinberg, 41, fainted in the courtroom, underscored the futility of challenging the government’s crackdown on some of Wall Street’s most vaunted hedge funds.

On the eve of trial, prosecutors conceded that the case was not a slam dunk.  But tapping into an anti-Wall Street sentiment — in opening arguments the lead prosecutor claimed that Mr. Steinberg broke the law “to get an illegal edge over ordinary investors who played by the rules” — apparently resonated with a jury of nine women and three men, including two accountants and a former postal worker.

The verdict hands the government a signature victory in its pincerlike pursuit of SAC, the giant fund run by the billionaire stock picker Steven A. Cohen.  Coming just weeks after SAC pleaded guilty to insider trading charges and agreed to pay a record $1.2 billion penalty, Mr. Steinberg’s conviction further clouds the future of a firm that was once the envy of Wall Street.  And it may also embolden federal authorities in their decade-long investigation of SAC.

Here are the post-conviction and sentencing basics noted in this article:

Judge Sullivan set Mr. Steinberg free on bail until his April 25 sentencing.  Mr. Steinberg faces a maximum of 85 years in prison, but will almost certainly receive a sentence of only a few years.  Mr. Steinberg’s lawyer, Barry H. Berke, did not immediately comment on the verdict but is expected to appeal.

December 19, 2013 in Offense Characteristics, White-collar sentencing | Permalink | Comments (6) | TrackBack

Monday, December 16, 2013

You be the disparity judge: very different prison sentences for (similar?) fruadsters in different courts

One reason I never fully understand nor fully appreciate very aggressive efforts to try reduce sentencing disparities is because I never fully understand nor fully appreciate whether and when very different sentences for somewhat similar crimes represents warranted or unwarranted disparities. And these two notable headlines reporting on two notable white-collar sentences imposed today in two different courtrooms have me thinking about these matters yet again:

Here, respectively, are the basics of the crimes and punishments in these two cases taken from the above-link press accounts, the first of which is a report from a state court in Ohio:

Bobby Thompson, convicted mastermind of a national veterans charity scam that bilked donors out of an estimated $100 million, was sentenced to 28 years in prison this morning by Cuyahoga County Common Pleas Judge Steven Gall.  Thompson is a stolen identity used by John Donald Cody, 67, to set up the U.S. Navy Veterans Association, based in Tampa, which solicited donations in Ohio and 40 other states from 2002-2010.

Gall, who addressed Thompson as Mr. Cody, additionally levied a $6.3 million fine against Thompson, plus a $330,778 judgement to cover the cost of prosecution by the Ohio Attorney General. The judge said factors he considered in determining the sentence included the eight-year duration of Thompson's charity "charade," the amount of money swindled from donors, the efforts Thompson made to hide his identity, and Thompson's lack of remorse or acceptance of responsibility for his actions.

Citing the damage done to veterans who could have been aided by the money that Thompson's charity raised, Gall also ordered that Thompson spend each Veterans Day in solitary confinement for the duration of his prison term....

Prior to the sentencing Joseph Patituce, Thompson's attorney, had suggested a possible sentence of 14 years.  After his client got twice that number, Patituce said Thompson still denies that he committed a crime and will appeal.... Patituce said Thompson's refusal to testify in the trial on his own behalf was pivotal. "If he would have testified the verdict would have been different," Patituce said.

Brad Tammaro, an assistant attorney general prosecuting the case, argued against Patituce's suggested 14-year sentence for Thompson, calling that sentence "totally inappropriate." Tammaro also said that "the evidence in the case demonstrates a complete lack of remorse" on the part of Thompson.

And now, from a federal court in Rhode Island:

A federal judge sentenced a Rhode Island lawyer to six years in prison Monday for his role in a $46 million investment fraud that preyed on terminally ill people, calling him the architect of the scheme and saying he didn't seem to recognize the harm he had caused.

Joseph Caramadre was sentenced in Providence after pleading guilty to wire fraud and conspiracy. His lawyers asked for two years in prison and two years in home confinement. Prosecutors sought 10 years. Judge William E. Smith also ordered Caramadre to perform 3,000 hours of community service to help the elderly and terminally ill. He put off the question of restitution because Caramadre's lawyer has objected to the amount.

Caramadre was a prominent lawyer and philanthropist. Prosecutors say he and former employee Raymour Radhakrishnan paid terminally ill people cash, passing it off as charity, then used their personal information to purchase bonds and annuities that would pay out when the person died.

Caramadre pleaded guilty last year but a few months later tried to withdraw his guilty plea. He testified during a hearing on that request that he had committed perjury when he pleaded guilty, prompting the judge to say at the time: "It's amazing to watch a defendant perjure himself by saying he committed perjury the first time." Smith turned down his request to withdraw his plea in May and ordered him immediately into custody.

On Monday, Caramadre stuck with his contention that the plea was a lie, telling the judge he could not say he was sorry for anything although he felt terrible if some terminally ill people felt the investment strategy was not explained to them. "I wish I could play the game," he said, referring to his lack of contrition.

Still, he said, he took responsibility for his guilty plea. Smith said Caramadre seemed to recognize that people were hurt but didn't seem to recognize that he was the one that hurt them.

To the extent I can understand these stories, it seems that many millions of dollars were lost in the fraud on veterans over many years, whereas apparently a lot less money was lost in the fraud on the terminally ill during a shorter period. Also, of course, one defendant was convicted after a lengthy (state) trial and the other was convicted after a (now regretted) federal plea.

Still, is there really any sound way for anyone to assess whether the huge disparity in these two fraud sentences imposed today, one of which is nearly five times as long as the others, are warranted or unwarranted? More broadly, does anyone think it problematic that one defendant was prosecuted in Ohio state court and thus subject to Ohio's sentencing laws that are much different than the other defendant was subject to as a result of his federal prosecution?

December 16, 2013 in Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (45) | TrackBack

Friday, December 13, 2013

SCOTUS grants cert to clarify required intent for federal bank fraud

As reported in this SCOTUSblog post, the Supreme Court this afternoon granted cert on two cases, one of which involves the required mens rea for federal bank fraud charges.  Here is part of Lyle Denniston's summary of the case now officially before the Justices:

The Supreme Court agreed on Friday to clarify ... the kind of proof prosecutors must offer to get a conviction for bank fraud under federal law.... The bank fraud case is Loughrin v. United States....

The newly granted case on federal bank fraud involves a man, Kevin Loughrin, who was sentenced to three years in prison for engaging in a scheme to steal bank checks from peoples’ mailboxes, altering them and then using the checks to buy things at retail stores like Target and Wal-Mart, and then returning the merchandise for cash.

Prosecutors charted him with violations of two provisions of bank fraud law: defrauding a financial institution, and obtaining money from financial institutions by fraud. Both were apparently based on evidence that the checks were drawn on Bank of American and Wells-Fargo Bank and on three credit unions.

Loughrin’s lawyers tried to have the jury told that, in order for him to be convicted on either count, there had to be proof that he intended to defraud a bank or other financial institution....

The Tenth Circuit Court rejected his challenge. Under the bank fraud provision on which he was convicted, the Circuit Court ruled, it was enough that Loughrin had sought to defraud someone else — the retail stores — but there was no need for prosecutors to offer evidence of intent to defraud a bank directly.

December 13, 2013 in Offense Characteristics, Procedure and Proof at Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (6) | TrackBack

Sunday, December 08, 2013

Victims provide some recent historical perspectives on two worst crimes in recent American history

As regular readers may know, I am a huge believer in having criminal justice systems give special attention to victims' interests, rights and perspectives (in part because I believe actual victims, generally speaking, are often interested in a much more dynamic and sophisticated government response to wrong-doing than just the lock-em-up-and-throw-away-the-key attitudes too often claimed to be in their interest by politicians and prosecutors).  For that reason, I am always pleased when victim-oriented matters become big legal cases (as with the SCOTUS Paroline case concerning restitution for child porn victims), and also when the media gives special and extended attention to crime victims.

For these (and other) reasons, I am pleased and intrigued to see today's New York Times has these two extended articles discussing victims' perspectives on two of the worst crimes in recent American history:

I have long felt very fortunate that I personally have only been the victim of relatively minor property crimes (though I do have a number of family members and friends who have had their lives shattered by serious violent crimes). I also feel very fortunate to live in a society that, at least in some high-profile settings for some victims, seeks to be attentive to the unique needs and enduring challenges that all too many crime victims face.

December 8, 2013 in Purposes of Punishment and Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (9) | TrackBack

Saturday, November 23, 2013

Another notable white-collar defendant gets another below-guideline federal sentence

This New York Times article, headlined "Ex-Credit Suisse Executive Sentenced in Mortgage Bond Case," reports on a notable federal sentenced handed down yesterday:

A former top executive at the Credit Suisse Group was sentenced to two and a half years in prison on Friday for inflating the value of mortgage bonds as the housing market collapsed. The prison term makes the executive, Kareem Serageldin, one of the most senior Wall Street officials to serve time for criminal conduct during the financial crisis.

Wearing a dark suit and blue tie, Mr. Serageldin remained stoic as Judge Alvin K. Hellerstein of the United States District Court in Manhattan handed down the sentence, which was less than the roughly five-year sentence called for by nonbinding sentencing guidelines. Judge Hellerstein showed mercy on Mr. Serageldin in part because of what he said was a toxic culture at Credit Suisse and its rivals.

“He was in a place where there was a climate for him to do what he did,” the judge said. “It was a small piece of an overall evil climate inside that bank and many other banks.”

A spokesman for Credit Suisse disagreed with the judge’s remarks, noting that when regulators decided not to charge the bank in connection with Mr. Serageldin’s actions, they highlighted the isolated nature of the wrongdoing, the bank’s immediate self-reporting to the government and the prompt correction of its results.

Mr. Serageldin, 40, led a group at Credit Suisse that traded in mortgage-backed securities. As the housing market soared, his group made hundreds of millions of dollars for the bank by pooling mortgage assets, slicing them up and selling the pieces to investors. Many of those were subprime loans that went to shaky borrowers, however, and banks found themselves holding billions of dollars in sour mortgages when the market collapsed.

Federal authorities began their investigation into Credit Suisse in 2008 after the bank disclosed that Mr. Serageldin’s team had mismarked its mortgage portfolio. The bank suspended the team and cooperated with authorities. Two other traders in that group, David Higgs and Salmaan Siddiqui, were also charged alongside Mr. Serageldin. They all pleaded guilty; Mr. Higgs and Mr. Siddiqui have yet to be sentenced....

“This is the worst day of my life,” Mr. Serageldin told the judge. “I am terribly sorry for what I have done.”

In an unusual moment during the hearing, Judge Hellerstein allowed Mr. Serageldin’s mother to speak about her son. Holding back tears, she told the judge her son had always worked hard to make the family proud. “Please see him in the context of his whole life history,” she told the judge, who commiserated with Ms. Serageldin by telling her that he, too, was the child of immigrants. “Whatever sentence he serves, I will serve.”

The judge asked Mr. Serageldin’s lawyer to explain his client’s misconduct. “This is a deepening mystery in my work,” the judge said. “Why do so many good people do bad things?” Sean Casey, a lawyer at Kobre & Kim, said that Mr. Serageldin was under great pressure during the credit crisis and made a big mistake when confronted with failure for the first time.

Judge Hellerstein said that his sentence was necessary to deter misconduct on Wall Street. “Each person has to look within himself and ask himself what is right, what is wrong,” the judge said. “Even in the worst of times, what is right cannot be sacrificed.”

November 23, 2013 in Federal Sentencing Guidelines, Offense Characteristics, White-collar sentencing | Permalink | Comments (3) | TrackBack

Monday, October 21, 2013

SCOTUS grants cert on federal restitution and state Atkins application cases

I was actually starting to get a bit sad and worried that the US Supreme Court, after a few consecutive years of taking up a host of interesting and important sentencing issues, had decided this term to give little or no attention to the kinds of issues that serve as an obsession for me and this blog.  But, thanks to two cert grants this morning, my belief that the Justices love the sentencing issues I love (or at least my faith that these issues are often too important for SCOTUS to ignore) has been restored.  Here is the early report on these latest grants via SCOTUSblog:

The Supreme Court moved on Monday to settle a long-lingering issue: the legal standard for judging whether a person is too retarded mentally to be executed for a murder.  That is the issue in Hall v. Florida (docket 12-10882).  The Court also agreed to hear a second case, on the scope of restitution as a penalty for bank loan fraud.  That is the issue in Robers v. U.S. (12-9012).....

The new death penalty case from Florida raised this issue: “Whether the Florida scheme for identifying mentally retarded defendants in capital cases violates Atkins v. Virginia.”  In that 2002 decision, the Supreme Court had ruled that it is unconstitutional under the Eighth Amendment to execute individuals who are found to be mentally retarded.  The Court, however, left it to the states to decide who is mentally retarded and thus cannot be given the death penalty.

In the new case, attorneys for Freddie Lee Hall contended that Florida courts have adopted a “bright line” rule that a person is not mentally retarded unless their IQ falls below 70.  The state Supreme Court found that Hall had an IQ of 71.  In an earlier stage of Hall’s case, before the Supreme Court had decided the Atkins case, he had been found to be mentally retarded, the petition said.

The Hall case is certain to get lots of attention, and perhaps justifiably so.  That case is, arguably, the first "major" capital criminal procedure case to be taken up by the Supreme Court in a number of years (and certainly the biggest one I can think of since Justices Kagan and Sotomayor joined the Court).  And a ruling in Hall will necessarily have a some impact on all post-Atkins litigation in all death-penalty states. 

Robers, in contrast, will likely get very little attention because the case appears only focus on a relative narrow and technical issue as to the application of a federal restitution statute.  Nevertheless, even if the briefing in Robers ends up focused only on narrow and technical issues, I suspect the white-collar  bar (as well as corporate counsel in various industries) will want to keep an eye on this case because its resolution could impact an array of corporate crime and punishment issues.

As I will surely cover in future posts as these cases get briefed and argued in early 2014, Hall and Robers both could become "super sleepers" of the current SCOTUS Term because both cases have lurking Fifth and Sixth Amendment issues that could (but likely will not) grab some Justices' attention.  In both cases, critical facts that impact a defendant's sentence exposure are to be assessed and resolved by judges.  Though I do not believe Apprendi-type Fifth and Sixth Amendment claims are being pressed by the defendants in these cases, it is certainly possible that some amici and some Justices will contend that Fifth and Sixth Amendment jurisprudence ought to impact how the issues in Hall and Robers get resolved.

October 21, 2013 in Death Penalty Reforms, Procedure and Proof at Sentencing, Victims' Rights At Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (1) | TrackBack

Friday, October 11, 2013

Record-long political corruption sentence for former mayor of Detroit

As reported in this New York Times article, headlined "Kwame M. Kilpatrick, Former Detroit Mayor, Sentenced to 28 Years in Corruption Case," a remarkable case of political corruption culminated yesterday in a remarkable federal sentence.  Here are excerpts from the press account of the sentencing:

Kwame M. Kilpatrick, the former mayor of Detroit, stood before a federal judge on Thursday and apologized for putting the people of his city through a corruption scandal so vast that prosecutors say it helped accelerate Detroit’s march toward bankruptcy. “They’re hurting,” Mr. Kilpatrick said. “A great deal of that hurt I accept full responsibility for.”

They were solemn words from the formerly boisterous figure, a bear of a man at 6 feet 4 inches who many believed would lead Detroit out of its long economic downturn. But on Thursday he stood slouched, wearing a tan prison uniform instead of the flashy suits he once favored.  Court officers replaced the entourage of bodyguards that used to follow him around. The diamond that once studded his ear, an emblem of his reputation as the “hip-hop mayor,” was gone.

Then, declaring an end to the bribery and thieving that marked the Kilpatrick administration, Judge Nancy G. Edmunds of United States District Court imposed the sentence prosecutors had sought: 28 years in prison.

Mr. Kilpatrick, 43, was convicted in March of two dozen counts that included charges of racketeering and extortion, adding his name to a list of at least 18 city officials who have been convicted of corruption during his tenure. His punishment ranks among the harshest major state and local public corruption cases. Lawyers for Mr. Kilpatrick said that they intend to file an appeal of the convictions and sentence.

The hearing came at a sobering moment for the city he once led, which is now remaking itself in bankruptcy court as residents wrestle over whom to blame for the fiscal mess. For Detroiters, Mr. Kilpatrick’s meteoric fall — from potential savior of a struggling city to prison-bound symbol of financial mismanagement — may be the closest they will get to holding past leaders accountable for decades of disappointment and poor fiscal decisions....

In 2008, Mr. Kilpatrick resigned after he lied under oath during a police whistle-blower lawsuit and approved an $8.4 million settlement to try to cover it up. After pleading guilty to charges of obstruction of justice, Mr. Kilpatrick served four months in jail and was ordered to pay $1 million to the city. He was soon behind bars again for hiding assets from the court and telling a judge that he could afford to pay only $6 a month in restitution.

The former mayor and Bobby W. Ferguson, a city contractor and a friend, were indicted in 2010 on sweeping federal corruption charges. All told, prosecutors contend that Mr. Ferguson received $73 million worth of city contracts as a result of an extortion scheme that involved Mr. Kilpatrick, netting $9.6 million in illegal profit. Mr. Ferguson was convicted of nine counts and will be sentenced on Friday. “The amount of crime, it was astonishing and it had a huge impact on this city,” Mark Chutkow, one of the prosecutors, said as he left the courthouse on Thursday.

Mr. Kilpatrick’s lawyer, Harold Z. Gurewitz, who pushed for a sentence of no more than 15 years, argued in court that Mr. Kilpatrick was being unfairly targeted as a scapegoat for Detroit’s insolvency, with people trying to “send him out with the sins of the city over the last 50 years.” The sentence, he said in an interview later, was tougher than necessary and stiffer than some people get for violent crimes.

Among some of the highest penalties for recent public corruption convictions, James C. Dimora, former commissioner of Cuyahoga County in Ohio, was sentenced last year to 28 years in prison for racketeering and bribery. A year before, Rod R. Blagojevich, former governor of Illinois, was sentenced to 14 years in prison for convictions that included trying to sell the Senate seat President Obama left open when he went to the White House.

In her ruling on Thursday, Judge Edmunds said her decision was another strong warning to elected officials. “That way of business is over,” she said. “We’re done. We’re moving forward.”

October 11, 2013 in Celebrity sentencings, Offender Characteristics, Offense Characteristics, White-collar sentencing, Who Sentences? | Permalink | Comments (8) | TrackBack

Wednesday, September 18, 2013

US Attorney defends fraud guidelines while others urge reform in USSC event

Today notable events in the federal sentencing reform arena were not confined only to today's U.S. Senate Judiciary Committee hearing on federal mandatory minimums (discussed here and here).  Also starting today was a two-day event in NYC in which the U.S. Sentencing Commission is discussing potential reform to the federal fraud guidelines.  This Reuters report, headlined "U.S. prosecutor cautions against white-collar sentencing revamp," provides a few notable highlights from the events in NYC:

The U.S. Justice Department opposes a wholesale revamping of white-collar criminal sentences that defense lawyers and some judges have urged, a top federal prosecutor said on Wednesday.

But Melinda Haag, the U.S. attorney in San Francisco, said the department was open to limited changes in white-collar sentencing that could reduce sentences in some fraud cases. The comments came as the U.S. Sentencing Commission is weighing revisions to advisory sentencing guidelines used by judges for securities, healthcare, mortgage and other fraud offenses.

Defense lawyers, the American Bar Association, some judges and others have criticized the guidelines, saying they emphasize financial losses caused by crime over all other factors, sometimes resulting in sentences that are too severe.

Haag, speaking at a symposium on white-collar sentencing in New York, said the Justice Department believes the current guidelines "result in tough but fair sentences in the vast majority of the cases." But she suggested that the department may be open to some changes, saying certain categories of cases, such as securities cases involving frauds on the market, warrant "careful study" by the commission. "Despite our questions and concerns, however, we do agree that in some cases, loss may overstate the seriousness of the offense," Haag said.

A growing number of judges have imposed terms less than prescribed by the guidelines, which became advisory rather than mandatory following a U.S. Supreme Court decision in 2005.

U.S. District Judge Loretta Preska, sitting on a panel with Haag, cited the case of Joseph Collins, a former partner at the law firm Mayer Brown, who was convicted for his role in a fraud at commodities broker Refco Inc. With losses calculated at $2.4 billion, Preska said under the guidelines Collins faced life in prison. She instead sentenced him in July to a year in prison, citing his community service and the fact he didn't financially benefit from the scheme. "This was absurd, absolutely absurd," she said.

Haag said the Justice Department recognized there "may be issues in some high-loss cases." But she said the department didn't believe a wholesale change was needed to the fraud sentencing guidelines or the loss table used to calculate sentences. She said it was a relatively small number of cases that had caused judicial concern. Citing commission statistics, she said 54 percent of economic crime cases involve less than $120,000 in losses and 83 percent involve less than $1 million.

Haag also argued that in some big cases involving investment fraud like Ponzi schemes, judges "don't seem to hesitate in imposing lengthy prison terms, noting the devastation these fraud schemes wreak on other people and the greed that motivated most of the defendants before them."...

In the last 18 months, federal prosecutors have handled investment fraud cases involving 800 defendants and more than $20 billion, she said. For the FBI, investment fraud is now 60 percent of its white-collar case load, she said.

Nonetheless, she said "certain categories of cases warrant careful study by the commission and potentially narrowly tailored amendments" to the fraud sentencing guidelines. Among the suggestions she gave would be for the Sentencing Commission to review how the guidelines treat loss in certain securities fraud cases where a drop in stock value by a few dollars per share can turn into a billion dollar loss.

September 18, 2013 in Federal Sentencing Guidelines, Offense Characteristics, Scope of Imprisonment, White-collar sentencing, Who Sentences? | Permalink | Comments (0) | TrackBack

Friday, September 13, 2013

Corporate official gets above-guideline sentence for conspiracy to hide safety violations

A helpful reader alerted me to this federal sentencing story from West Virginia which provides a useful reminder that federal judges sometimes use their increased post-Booker sentencing discretion to impose sentences above recommended guideline ranges (and may do so even for a defendant who has pleaded guilty and cooperating with authorities).  Here are the notable particulars from a lengthy article about a notable white-collar sentencing that followed a high-profile workplace disaster:

A former longtime Massey Energy official will spend 3 1/2 years in prison for his admitted role in a decade-long conspiracy to hide safety violations from federal safety inspectors. David C. Hughart, 54, of Crab Orchard, was sentenced Tuesday afternoon to 42 months in jail and three years of supervised release after he pleaded guilty to two federal charges as part of an ongoing federal probe of Massey's safety practices.

U.S. District Judge Irene Berger ordered Hughart to serve a full year more than the high end of the 24- to 30-month recommended under advisory federal sentencing guidelines. The judge said the stiffer sentence was needed to account for the safety risks Hughart's crimes created and to serve as a warning to other mining officials not to put production before safety. "This sentence will promote respect for the law," Berger said.

The Hughart sentencing is another step forward as U.S. Attorney Booth Goodwin and his top assistant, Steve Ruby, continue what is likely the largest criminal investigation of a coal-mine disaster in modern times. The probe started with the deaths of 29 miners on April 5, 2010, in an explosion at Massey's Upper Big Branch Mine in Raleigh County, and has so far prompted four convictions and expanded well beyond Upper Big Branch....

Hughart is cooperating with prosecutors, having pleaded guilty to one felony count of conspiracy to defraud the government by thwarting U.S. Mine Safety and Health Administration inspections and one misdemeanor count of conspiracy to violate MSHA standards.

During a plea hearing in February, Hughart had implicated former Massey CEO Don Blankenship in the conspiracy, and Hughart's family has said Hughart is being wrongly scapegoated while Blankenship and other top Massey executives have faced no criminal charges. "He was a slave to this industry, and Don Blankenship will never see the inside of a courtroom," Hughart's son, Jonathan Hughart, told reporters after Tuesday's sentencing hearing.

Through his lawyer, Blankenship has denied any wrongdoing. And on his blog, Blankenship has said Hughart lied about him and was fired from Massey for drug use and stealing from the company.

Prosecutors have said that former executives and board members of Massey "may be, or may become" targets in the ongoing federal criminal investigation....

Earlier Tuesday, Hughart's $10,000 personal recognizance bond was revoked by U.S. Magistrate Judge R. Clarke VanDervort after Hughart was arrested on Aug. 30 on charges of possession of painkillers and anti-anxiety medication without a valid prescription. Hughart's bond required him to comply with all local, state and federal laws....

While Hughart hasn't been convicted of the drug charges, the arrest increased his recommended sentence under federal advisory guidelines by nine months. Hughart's lawyer, Michael R. Whitt, had urged Berger to issue a lighter sentence, arguing that Hughart's crimes could not be linked to any mining injury -- let alone to the Upper Big Branch Disaster -- and that his client was caught up in the "corporate culture" at Massey.

Whitt told Berger that Hughart's life has been ruined, with him going from an affluent lifestyle and a six-figure mine official salary to losing his home and becoming essentially destitute. "I think he has the message already," Whitt said. "He already knows without spending another day in jail."

Prosecutors, though, had asked for a stiff sentence, noting the "risk to human life and health" created by the conspiracies that Hughart participated in at Massey. "The defendant risked the lives and health of hundreds of coal miners," Ruby told Berger during Tuesday's hearing.

Previously in the Upper Big Branch probe, a former miner at the operation, Thomas Harrah, was sentenced to 10 months in jail after he admitted to faking a foreman's license when he performed key mine safety examinations at the mine between January 2008 and August 2009, and then lied to investigators about his actions.

Berger sentenced a former Upper Big Branch security director, Hughie Elbert Stover, to 36 months in jail after Stover was convicted of two felonies: making a false statement and obstructing the government probe of the mine disaster.

And in January, the judge sentenced former Upper Big Branch superintendent Gary May to 21 months in jail and a $20,000 fine after he pleaded guilty to plotting to skirt safety rules and cover up the resulting hazards....

During Tuesday's hearing, Hughart apologized for his actions and told Berger he had learned from his early days as a miner that "advance notice" of inspections was the way things were done. "I accepted that as the practice, and I understand now it is a serious issue, and it is against the law," Hughart said.

Berger noted previous evidence in the Upper Big Branch cases that suggested MSHA inspectors knew about -- and perhaps even cooperated with -- mine operators having pre-inspection notice. "Advance notice was apparently a common practice in the industry," Berger said. "It's difficult to believe that the only people who were unaware of these practices were the MSHA inspectors."

Terry Ellison, whose brother, Steve Harrah, died at Upper Big Branch, attended Tuesday's court proceedings. "I came for the 29 miners," Ellison said. "I don't want them to be forgotten. There was no reason they should have been killed that day."

September 13, 2013 in Federal Sentencing Guidelines, Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing | Permalink | Comments (3) | TrackBack

Wednesday, September 04, 2013

Florida prosecutors considering pursuing death penalty for doctor deemed responsible for overdose deaths

I am always looking for notable and interesting modern cases to use with my 1L Criminal Law class when covering the topic of causation.  Thanks to this local story, headlined "Former West Palm Beach doctor could face death penalty in patients' deaths," it looks like Florida prosecutors not only have presented me with a good classroom candidate, but also are talking up a possible punishment that could ensure the case garners national attention. Here are the details:

State prosecutors have filed court documents announcing their intent to seek the death penalty against a former West Palm Beach doctor facing two counts of first-degree murder for the overdose deaths of his patients.

Authorities with the state attorney's office said Tuesday they have not made a final decision about whether to pursue the ultimate punishment for former West Palm doctor John Christensen, 61, but want to keep that option open. The case will go before the office's death penalty committee, which is expected to review it and decide whether to pursue the penalty within the next month, Chief Assistant State Attorney Brian Fernandes said. "This is a case that's potentially eligible for the death penalty," he said. "We want to make sure that we preserve our rights."

If the state does pursue a death sentence against the doctor, it would be highly unusual. Just a handful of Florida physicians have faced homicide charges for the overdose deaths of their patients, and the majority have been manslaughter cases.

West Palm Beach defense attorney Grey Tesh, who until last month represented Christensen, said he was surprised when the state sent its notice of intent to seek the death penalty. The doctor's new attorney, Richard Lubin, did not return a call seeking comment Tuesday. "At least in Palm Beach County, I don't know of any doctor who has faced the death penalty on a case like this," Tesh said.

In 2002, West Palm Beach doctor Denis Deonarine became the first in the state to be indicted for first-degree murder in the death of a patient who was prescribed painkiller OxyContin. He was ultimately acquitted of first-degree murder charges, and released from prison in December, according to the state Department of Corrections. After the trial ended, one juror told the Sun Sentinel the jury ultimately believed the patient was responsible for his own death.

Christensen, who operated medical offices in West Palm Beach, Port St. Lucie and Daytona Beach, was arrested in July, after a two and-a-half year investigation that focused on the deaths of 35 of his patients. He's facing multiple charges, including the two counts of first-degree murder for prescribing oxycodone, methadone and anti-anxiety drugs to two patients who later overdosed....

Tesh said he expects it will be an uphill battle for the state to get a conviction against Christensen, making the death penalty irrelevant. He said it will be difficult to connect the deaths to him, noting that one of the patients had other substances in her system when she died. "I would be surprised if he's convicted," Tesh said. "The evidence is just not going to be there, not to be proved beyond reasonable doubt."

Even without knowing much about the particulars of Florida homicide law, I share the perspective that state prosecutors are likely to face an uphill battle getting a first-degree murder conviction, let alone a death verdict, from a jury in this kind of case.  But I also can identify lots of potential (utilitarian) benefits flowing from just a prosecutorial decision to talk up possible capital charges in this case.

As this very post reveals, simply mentioning the possibility of a death sentence ensures this case gets a lot more attention, and that attention should (and likely will) lead many more doctors in Florida and elsewhere to be at least a bit more careful when writing scripts for potent and potentially lethal prescription drugs.  In addition, as in many other cases involving lots of human carnage, the prospect of capital charges might encourage a guilty defendant to plead guilty to lesser (and more fitting) charges. (Of course, some may view the potentially coercive impact of capital charges in a case like this to be an injustice, but I suspect prosecutors might well concluse that such charges are a fitting prescription for this kind of case.)

September 4, 2013 in Death Penalty Reforms, Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing | Permalink | Comments (11) | TrackBack

Thursday, August 29, 2013

Second Circuit upholds huge securities fraud restitution award (without any real Sixth Amendment discussion)

A unanimous Second Circuit panel opinion this morning in US v. Gushlak, No. 12-1919 (2d Cir. Aug. 30, 2013) (available here) upholds a restitution award of over $17 million based on seemingly debatable fact-finding by a federal district judge.  Here is how the lengthy opinion starts and ends:

Defendant-appellant Myron Gushlak challenges, on various grounds, the May 15, 2012, restitution order entered against him in the United States District Court for the Eastern District of New York (Nicholas G. Garaufis, Judge). The order, which was entered pursuant to the Mandatory Victims Restitution Act of 1996, 18 U.S.C. § 3663A, awarded a total of $17,492,817.45 to victims for losses stemming from Gushlak's role in the manipulation of the price of a publicly traded security. We affirm....

We return to where we began, the inexpertness of most judges in most technical matters, including the forces afoot in the securities markets and their impact on the prices for any particular security at any particular time. We must therefore rely on the testimony of professionals with appropriate expertise. The district court took great pains in addressing the restitution issues over an extended period of time, requiring repeated efforts by the government to obtain a proper valuation for losses under the particular circumstances, and in light of the peculiar challenges, presented by the case before it. It relied on a qualified expert as a guide. We can identify no clear error of fact or mistake of law that the court committed in reaching, with such care, its result.

Based on a quick scan of the opinion, I see no obvious basis to fault or even question the panel's formal analysis of restitution here in Gushlak. But, as the title of this post suggests, I am quite surprised that the defendant apparently here did not argue that the Supreme Court's June 2012 opinion in Southern Union now requires reconsideration of the circuits' prior rulings that the Sixth Amendment jury trial right is not implicated by judicial fact-finding in support of statutory-based restitution punishment.

Though I am not aware of any major rulings reconsidering this Aprrendi-land issue after Southern Union, I am sure that the decision in Southern Union included significant language that provides a strong basis for such reconsideration. And, with over $17 million dollar at stake and with judicial fact-finding apparently so challenging and contestable in a case like Gushlak, I think a Sixth Amendment argument could have had at least some extra traction in a case like this.

August 29, 2013 in Criminal Sentences Alternatives, Procedure and Proof at Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (3) | TrackBack