Wednesday, July 03, 2013

"China threatens death penalty for serious polluters"

The title of this post is the headline of this notable Reuters article from a few weeks ago that I just came across.  Here is how it gets started:

Chinese authorities have given courts the powers to hand down the death penalty in serious pollution cases, state media said, as the government tries to assuage growing public anger at environmental desecration.

An increasingly affluent urban population has begun to object to China’s policy of growth at all costs, which has fuelled the economy for three decades, with the environment emerging as a focus of concern and protests.

A new judicial interpretation ... would impose “harsher punishments” and tighten “lax and superficial” enforcement of the country’s environmental protection laws, the official Xinhua news agency reported.  “In the most serious cases the death penalty could be handed down,” it said.

“With more precise criteria for convictions and sentencing, the judicial explanation provides a powerful legal weapon for law enforcement, which is expected to facilitate the work of judges and tighten punishments for polluters,” Xinhua said, citing a government statement.  “All force should be mobilised to uncover law-breaking clues of environmental pollution in a timely way,” it added.

Previous promises to tackle China’s pollution crisis have had mixed results, and enforcement has been a problem at the local level, where governments often heavily rely on tax receipts from polluting industries under their jurisdiction.

July 3, 2013 in Death Penalty Reforms, Sentencing around the world, White-collar sentencing | Permalink | Comments (1) | TrackBack

Tuesday, July 02, 2013

Does postponement of Jacksons' sentencing suggest big rulings are in the works?

High-profile white-collar federal sentencing proceedings always intrigue me, especially when they involve a cocktail of dynamic doctrinal and policy issues as is the case in the upcoming sentencings of former Rep. Jesse Jackson Jr., and his wife Sandi. But , as reported here by the Chicago Tribune, it now appears we will have to all wait a bit longer for the Jacksons' day of sentencing reckoning:

The South Side Democrats had been scheduled to learn their fates Wednesday, until the delay was announced by U.S. District Judge Amy Berman Jackson, who is not related to the pair.  A court spokesman said neither the prosecution nor defense asked for the postponement.

"The matter was rescheduled to accommodate the court's schedule and workload — neither side requested a continuance," said Jenna Gatski, a spokeswoman for the U.S. District Court.

Jackson Jr. pleaded guilty to misusing about $750,000 in campaign cash. Sandi Jackson, a former Chicago alderman, pleaded guilty to failing to report about $600,000 on income tax returns over several years.

The postponement was announced after a telephone conference call between the judge and the Jacksons, the court said. Bill Miller, a spokesman for the U.S. attorney for the District of Columbia, said the sentencings would not take place this week.

Jackson Jr., 48, faces 46 to 57 months in prison under federal sentencing guidelines, which are not mandatory. His lawyers want a sentence lower than what the guidelines suggest and assert that Jackson Jr., who reportedly has bipolar disorder, could not get proper medical care in prison. Federal prosecutors want him to serve a four-year sentence and to be placed on supervised release for three years after that.

Sandi Jackson, 49, faces one to two years in prison. Her attorneys want her sentenced to probation, saying the couple's two children, ages 9 and 13, need their mother. Prosecutors want her imprisoned for 18 months and put on supervised release for a year.

The question in the title of this post is my reaction to report that neither side sought a postponement and the indication that the change was "to accommodate the court's schedule and workload."  I would be very surprised if Judge Amy Berman Jackson had a trial or lots of other litigation matters crop up in the middle of this summer holiday week; reading these latest tea leaves now has me wondering (and weirdly excited) that this postponement is based in part on the judge's plans to issue a significant written opinion on federal sentencing law, policy and practice along with her sentencing ruling. (Or maybe the judge just has tickets to see Bryce Harper back playing again for the Washington Nationals during their homestand this week, and she decided it was more fitting to catch a baseball game than to deprive liberty right before we all celebrate Independence Day.)

Related posts:

UPDATE:  This local article now reports that the Jacksons' sentencings have now been set for August 14.

July 2, 2013 in Booker in district courts, Celebrity sentencings, Procedure and Proof at Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (2) | TrackBack

Second Circuit finds (lengthy?) insider trading sentences reasonable

As reported in this Bloomberg News report, "Zvi Goffer, a former Galleon Group LLC trader, failed to win a reduction of his 10-year prison sentence for passing illegal tips and recruiting members for an insider-trading scheme." Here is more about the sentencing aspects of a lengthy Second Circuit opinion in a combined group of appeals:

The sentences of Goffer and co-conspirator Craig Drimal, and the conviction of co-conspirator Michael Kimelman were upheld today by the U.S. Court of Appeals in Manhattan.  The court said a $10 million forfeiture order against Goffer should be reduced based on a change in how such rulings are calculated.

“Defendants’ sentences were reasonable in light of the magnitude of their theft,” the court said.

Drimal was sentenced to 5-1/2 years in prison after pleading guilty to five counts of securities fraud and conspiracy to commit those offenses. Kimelman, who was convicted at trial of two counts of securities fraud and conspiracy, was sentenced to 30 months.

Goffer, convicted of two conspiracy counts and 12 counts of securities fraud, was accused of recruiting members of the scheme and asking participants to use prepaid cellular phones to communicate their tips.  “Goffer’s corrosive influence on the integrity of the financial markets and on the expectation of trust and confidence between attorney and client required a significant punishment,” the appeals court said.

The full Second Circuit panel opinion in US v. Goffer is available at this link, and the extended sentencing discussion starts at page 34. I particularly enjoyed this point made by the panel in its final footnote:

Contrary to Drimal’s assertions on appeal, the district court did not reveal a vendetta against the rich when it noted that Drimal did not have compelling reasons to warp the financial markets. Instead, Judge Sullivan recognized the same moral principles that make Jean Valjean more sympathetic than Gordon Gekko.

July 2, 2013 in Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, Sentences Reconsidered, White-collar sentencing | Permalink | Comments (1) | TrackBack

Monday, July 01, 2013

"Will the Jacksons get a slap on the wrist, or will their heads be mounted?"

The question in the title of this post is the headline of this recent Chicago Tribune commentary, which gets to the heart of the highest-profile federal sentencing story for the coming holiday week.  This commentary was authored by John Kass, and he makes a sassy argument for throwing the book at the Jacksons.  Here is how his commentary gets started:

The two stuffed elk heads of Chicago politics — former U.S. Rep. Jesse Jackson Jr. and his wife, former Ald. Sandi Jackson — are scheduled for sentencing in their corruption and tax cases on July 3.

Our government often delivers bad news at the beginning of a three-day weekend, or before a long holiday like the Fourth of July, so that we taxpayers will have something else on our minds.

So what am I worried about in this case?

That Jackson Jr. gets a light kiss on the wrist and a mere few months at a Club Fed, and that upon his release, he and his father, the Rev. Jesse "King of Beers" Jackson — the hustler who made his career playing the race card — decide to open a restaurant. With Paula Deen.

What should they call it? Butter & Bud.

Prosecutors are asking for four years for Junior, and 18 months for his wife. And although all cases are different, let's not forget another case involving a guy they knew: Former Gov. Rod Blagojevich. He's rotting in prison.

It was Blagojevich who was convicted of trying to sell the U.S. Senate seat that once was held by President Barack Obama. Now Blago is sitting on 14 years. And who was supposed to be the beneficiary of the deal? None other than Stuffed Elk Head No. 1, Jesse Jackson Jr.

But Jackson wasn't charged. He walked away from it, cocky, until, finally, he was hoisted on the horns of his own elk head. Those absurd his-and-hers stuffed elk heads were just two of many ridiculous items the Jacksons purchased when he pilfered $750,000 from his campaign fund.

Most was junk, from the Michael Jackson fedora to shiny wristwatches and jewelry, a list of ostentatious nonsense demonstrating appallingly bad taste. What frosts most of us is that when he was finally caught, Jackson's camp explained it all away by saying he suffered from a bipolar condition.

Yes, he may be ill. But isn't it remarkable that crooked politicos seem to contract a terrible illness just as they're hit by the heartbreak of Feditis?

Some become alcoholics and drug addicts, others develop heart conditions. One guy even lifted his orange jumpsuit to show the judge his terrible belly rash in a plea for mercy. Most recover, miraculously, the moment they're free. And if Jackson's mouthpieces get their way, he won't do any time. They argue that he's mentally ill, but that federal prison psychiatrists aren't good enough for him.

I'm no psychiatrist, but if I were, I'd prescribe four full years in prison, with another four added to help him clear his head.

Related posts:

July 1, 2013 in Celebrity sentencings, Offender Characteristics, Offense Characteristics, White-collar sentencing | Permalink | Comments (0) | TrackBack

Friday, June 21, 2013

Enron CEO Jeff Skilling resentenced officially to 14 years after plea deal

As reported in this new Houston Chronicle article, headlined "Enron’s Skilling gets more than 10 years cut off sentence," today marked the official resentencing of perhaps the highest-profile white-collar defendant this side of Bernie Madoff. Here are the details:

Former Enron CEO Jeff Skilling had more than 10 years cut off his 24-year prison sentence today after a federal judge signed off on an agreement between the disgraced Houston executive and federal prosecutors.  Skilling, 59, could be released as early as 2017.

Skilling, in turn, agreed to drop his ongoing appeals and surrender any claim on the $40 million that had been seized by the government after his indictment for wire fraud, insider trading, conspiracy and related charges stemming from the 2001 collapse of one of Houston's leading companies.

The agreement between prosecutors and Skilling's attorney was announced last month. That his sentence was going to be reduced was known for some time, as appeals courts ruled that one of the theories of the prosecution was not valid, and that one of the factors used to enhance the length of his sentence was improper.  But it was unclear precisely what the sentence would have been as Skilling continued to fight to clear his name of criminal wrongdoing.

By settling with the government, the Enron matter — from a criminal perspective — is all but closed.... Implicit in the formal wording of the agreement was the government's desire to be done with Enron, a corporate scandal that eventually was dwarfed by the financial misbehavior and reckless decisions that helped bring about the economic collapse of 2008....

The sentencing agreement gave federal judge Sim Lake the discretion of a sentence range of 168 to 210 months imprisonment.  Skilling has already served about 78 months, or 6 1/2 years. Skilling currently is housed at a minimum security facility in Littleton, Colo.

June 21, 2013 in White-collar sentencing, Who Sentences? | Permalink | Comments (0) | TrackBack

Thursday, June 20, 2013

"White-Collar Sentences Get a Fresh Look"

The title of this post is the headline of this notable new Wall Street Journal article, which gets started this way:

A hearing scheduled for Friday in a Houston federal court on whether to substantially reduce former Enron Corp. Chief Executive Jeffrey Skilling's 24-year prison sentence comes at a time of growing debate about the rules for punishing white-collar criminals.

Individuals convicted of federal crimes are sentenced using a set of guidelines in which "points" are added or subtracted relating to various aspects of a person's conduct and the crimes involved. Over the past several decades, the potential penalties for a range of crimes have greatly increased in severity, with particularly large increases in certain types of fraud cases, according to legal experts.

Critics of the guidelines in white-collar cases contend that they have come to rely too much on financial-loss calculations, which can quickly mushroom when the crime involves a public company whose stock price falls in connection with the misdeeds. In certain cases, a public-company executive could face life in prison, said James Felman, a Tampa, Fla., defense attorney and member of a recently formed American Bar Association task force looking at proposing revisions in the guidelines for economic crimes.

The U.S. Sentencing Commission, the guideline-writing body created by Congress in the 1980s, has identified possible revision of the economic-crime rules as a priority. The commission has scheduled a September symposium in New York to get input on possible changes.

The guidelines "should be scrapped in their entirety," said Jed Rakoff, a New York federal judge and member of the new ABA Task Force, in a speech earlier this year. For instance, putting heavy emphasis on the calculated loss in determining fraud sentences "does not fairly convey the reality of the crime or the criminal," said Judge Rakoff, a Clinton appointee and longtime critic of aspects of the guidelines. He recommended replacing the arithmetic calculation system with one where judges could use a broad set of factors, none of which would automatically carry extra weight.

More judges seem to be departing from the guidelines. A Sentencing Commission study issued last December found that the percentage of fraud cases in which federal judges gave sentences below the guideline recommendation jumped to 23% of cases for 2007 to 2011 from 9.6% for 1996 to 2003. These percentages don't include cases where the Justice Department recommended a below-guideline sentence for reasons that included cooperation by the defendant in an investigation.

The increasing gap between the guideline calculations and actual sentences was a factor in the Sentencing Commission's decision to look at revising the economic-crime rules, said one person familiar with the matter.

June 20, 2013 in Federal Sentencing Guidelines, Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, Scope of Imprisonment, White-collar sentencing | Permalink | Comments (3) | TrackBack

Wednesday, June 19, 2013

Guest post with more thoughtful perspectives on Peugh

I am very pleased to have received and to now have time to post the following "quick thoughts" of Professor Todd Haugh concerning last week's SCOTUS Puegh decision (basics here):

First, Justice Sotomayor is really establishing herself as the Court's current sentencing scholar, particularly as to Guidelines issues.   By my quick tally, since taking her seat in 2009, she has drafted or significantly contributed to seven or eight important sentencing cases, while others are at two or three.  I imagine her status as the Court's only member to have regularly sentenced defendants as a trial court judge has something to do with this -- she often seems to be the voice expressing the practicalities of sentencing (both from the defendants' and judges' standpoints), which has carried the day in Peugh and some of her other recent opinions (Pepper and Southern Union come to mind, as does the Alleyne concurrence).  Scalia's and Breyer's overall impact may prove to be greater, but Sotomayor appears to be asserting herself in this area (and willing to spar with Alito).

Second, following that thought and in line with some of the comments [to this prior Peugh post ], the Peugh opinion is about the actual practice of federal sentencing versus how the system operates in theory.  The dissent was sunk by its first argument -- that the Guidelines do not constrain district court discretion.  While in theory, based on the language and structure of 3553(a) and the Court's reasonableness review jurisprudence, that may be true (and every defense attorney argues in the hopes of making it true), the realities of in-the-trenches sentencing demonstrate that increased Guideline ranges equal increased sentences (and thus risk of increased punishment under ex post facto analysis). This fact is well-documented by the Commission's recent Booker report, it's yearly data, it's survey of judges; and a host of academic articles concerning the psychological process of judges when sentencing (i.e., anchoring and adjustment, etc. -- see footnote 1 in Judge Calabresi's concurrence in Ingram [discussed here]).  It's why DOJ advocates to members of Congress and the Commission for additional sentencing enhancements -- increased risk to defendants of higher punishments means more bargaining power for prosecutors.  Query whether the majority's argument weakens if variance rates climb both in number and, most importantly, length.

Third, while I don't think this opinion is going to have huge practical effects on federal sentencing because the Seventh Circuit was an outlier (and there is likely harmless error in many of those cases), the opinion may have a lot of rhetorical value.  Defendants basically got a win-win here -- assurance that they will be sentenced under the most favorable Guidelines per the majority and lots of juicy language to quote when they argue for a variance per the dissent.  I would expect to see Peugh cited in a lot of future federal sentencing memos.

Judges, however, may have gotten the short end of the stick because they now face even more complexity when they determine sentences (a trend that has continued since Booker).  Before Puegh, they had to calculate the Guidelines, then decide on departures, then consider a 3553(a) variance (seven factors; four purposes of punishment). Now, Peugh suggests courts should also consider how the evolution of the Guideline at issue (pre- and post-offense) weighs on the sentence.  That could mean at least two more Guideline calculations (1987 version if Doug Berman is your defense counsel and the current, harsher version of the Guidelines if you are facing a prosecutor who reads this blog), but it could mean even more (what about Guideline ranges before and after major changes by the Commission, e.g., before and after SOX or Dodd-Frank, to demonstrate that evolution?).

Recent related posts:

June 19, 2013 in Federal Sentencing Guidelines, Offense Characteristics, Procedure and Proof at Sentencing, Sentences Reconsidered, White-collar sentencing | Permalink | Comments (8) | TrackBack

Saturday, May 11, 2013

Taking note of some notable federal tax sentences

This new Forbes commentary by Robert Wood, headlined "Lauryn Hill Jail Time --- What's A Fair Tax Sentence?", discusses some notable recent federal tax sentencing decisions. Here are excerpts (with a few links preserved):

Grammy winning Singer Lauryn Hill was sentenced in Newark.... Ms. Hill didn’t get probation alone as she had requested, but she drew only 3 months of incarceration. That is quite a good deal compared to the 24 to 36 months she faced. Her lawyer Nathan Hochman did a superb job of keeping her sentence down, stressing how she had stepped up, paid all her taxes, and more. In fact, a prior delay in sentencing may have been due to the fact that paying first is clearly better.

Whether it’s fair could be debated, but most observers would say she was lucky and ably represented. Tax sentencing isn’t an exact science. There are sentencing guidelines, but the judge also has discretion. And that can sometimes make similar missteps seem disparately treated. Just compare Stephen Baldwin’s sentence to Wesley Snipes’ [discussed here].

Ms. Hill pleaded guilty to three counts of failing to file tax returns on more than $1.8 million between 2005 and 2007. Just as with Wesley Snipes, it could have been far worse had she filed false returns....

This is a light sentence given the dollars involved. It’s the second favorable sentence drawn by Hochman in recent weeks. He was one of the lawyers for 79 year-old Mary Estelle Curran of Palm Beach, who had foreign account troubles. Like Ms. Hill, she was facing serious jail time for filing false 2006 and 2007 tax returns.

That case generated national interest with a potential prison term up to six years. U.S. District Judge Kenneth Ryskamp gave Ms. Curran one year probation, then instantly revoked it altogether. The Judge even suggested to Ms. Curran’s lawyers that they seek a Presidential pardon [discussed here].

Ms. Hill couldn’t expect the kind of deference Ms. Curran received, who had actually tried to come forward to the IRS about her foreign accounts and was rebuffed.  But regardless of whether you sympathize with celebrities, they often get bum steers from advisers, as clearly happened with Wesley Snipes.  His three-year stint seemed harsh.

In some ways, tax returns are the great levelers. Some things, after all, you just can’t delegate.

May 11, 2013 in Celebrity sentencings, Offense Characteristics, White-collar sentencing | Permalink | Comments (0) | TrackBack

Wednesday, May 08, 2013

Feds and Jeff Skilling cut resentencing deal to fix new guideline range at 168 to 210 months

As had been previewed a public notice to victims from the Justice Department last month (noted here), federal prosecutors and former Enron CEO Jeff Skilling have reached a deal concerning unresolved matters before Skilling's resentencing. This Reuters article details the basics of this notable high-profile sentencing development:

Jeffrey Skilling, the former Enron Corp chief executive, could be freed from prison nearly a decade sooner than originally expected, under an agreement with federal prosecutors to end the last major legal battle over one of the biggest corporate frauds in U.S. history.

The agreement calls for Skilling to see his federal prison sentence reduced to as little as 14 years, down from the 24 years imposed in 2006. It could result in Skilling's freedom in late 2018, with good behavior.

In exchange, Skilling, 59, who has long maintained his innocence, agreed to stop appealing his conviction. The agreement would also allow more than $40 million seized from him to be freed up for distribution to Enron fraud victims.

A resentencing became necessary after a federal appeals court upheld Skilling's conviction but found the original sentence too harsh....  Wednesday's agreement, which is subject to court approval, recommends that Skilling be resentenced to between 14 and 17-1/2 years in prison, including time already spent there. Skilling has been in prison since December 2006.

A helpful readers forwarded to me the 7-page sentencing agreement, which can be downloaded below.  Here are the essential pieces of the deal:

The Government and the defendant agree that, based on the previous decisions of the Fifth Circuit with respect to proper calculation of the United States Sentencing Guidelines range and this Court's prior sentencing rulings on October 23, 2006, the United States Sentencing Guidelines provide that the defendant should be resentenced using an adjusted offense level of 36 and a criminal history category of I, resulting in an advisory guidelines range of 188 to 235 months of imprisonment.

For the reasons set forth below as "Relevant Considerations," the Government and the defendant agree to recommend jointly that the District Court apply a one-level downward variance and resentence the defendant using an adjusted offense level of 35, pursuant to the United States Sentencing Guidelines.  Given that the defendant is located in criminal history category I for resentencing purposes, the jointly recommended adjusted offense level will result in a jointly recommended guidelines range of 168 to 210 months of imprisonment.

Neither the Government nor the defendant will seek any variance or departure from the jointly recommended guidelines range.  The Government may allocute at sentencing, but the Government will not take a position regarding the particular sentence the District Court should impose within the jointly recommended guidelines range.

The defendant agrees to waive all potential challenges to his convictions and sentence, including a motion for a new trial pursuant to Federal Rule of Criminal Procedure 33, appeals, and collateral attacks, except as set forth [below]....

Neither the Government nor the defendant will appeal a sentence imposed within the jointly recommended guidelines range.  However, the Government and the defendant each reserve the right to appeal a sentence imposed outside this range.

Download Skilling Sentencing Agreement final.cfv

May 8, 2013 in Federal Sentencing Guidelines, Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, Scope of Imprisonment, White-collar sentencing, Who Sentences? | Permalink | Comments (4) | TrackBack

Tuesday, May 07, 2013

Corrupt state supreme court judge and sister facing state sentencing in PA

As reported in this local article, headlined "Former Pennsylvania Justice Orie Melvin, sister face sentencing today," a high-profile corruption case in the Keystone State has finally reached the sentencing stage. Here are the basics:

Former Pennsylvania Supreme Court Justice Joan Orie Melvin and her sister and former court aide Janine Orie will be sentenced today by Allegheny County Common Pleas Judge Lester Nauhaus.

Prosecutors, in briefs filed before the court last month, are seeking incarceration for Ms. Orie Melvin and for her sister, who were convicted in February of misusing state-paid employees in Ms. Orie Melvin's campaign for a seat on the high court in 2003 and 2009. The sisters were found guilty of theft of services, conspiracy and misapplication of government funds. Janine Orie was also convicted of tampering with evidence and solicitation.

In their briefs, Ms. Orie Melvin's defense attorneys asked for probation, citing her dedication to public service, charitable work and her devotion to her family and the hardship incarceration would bring upon her family, including her six children and elderly father.

The sisters were charged with misapplication of government funds, theft of services and conspiracy for using the justice's former Superior Court staff and the legislative staff of a third sister, former state Sen. Jane Orie, to run campaigns for the Supreme Court in 2003 and 2009. Among the allegations were that staffers wrote speeches, drove Ms. Orie Melvin to campaign events and worked the polls....

At the time of the verdict, Matt Mabon, the jury foreman, explained that the jury couldn't reach a decision on the official oppression count, which was connected to the employment of Lisa Sasinoski, chief law clerk for the justice who was a witness. Because there were competing versions of whether she was fired or resigned, jurors couldn't reach a decision, he said.

Ms. Orie Melvin voluntarily stopped hearing cases before the high court when she was indicted a year ago, just hours before the court issued an order suspending her to "preserve the integrity" of the system. That same day, the Pennsylvania Judicial Conduct Board issued a recommendation that she be suspended with pay pending resolution of the criminal case, but in August, the Court of Judicial Discipline ruled that Justice Orie Melvin should not be paid during her suspension. Her salary at the time was $195,309.

Justice Orie Melvin fought unsuccessfully to have the charges against her dismissed, claiming that the Supreme Court itself should have jurisdiction over the allegations and not the criminal courts. A month after the verdict, on March 25, Ms. Orie Melvin announced, in a letter to Gov. Tom Corbett, that she would resign May 1 "with deep regret and a broken heart."...

Jane Orie is serving a 21/2- to 10-year prison term for using her staff for her own and Ms. Orie Melvin's campaigns and for forging documents to cover it up. She was found guilty in March 2012 of 14 of 24 counts against her, including ethics violations, theft of services, tampering with evidence and forgery.

Assistant district attorney Lawrence Claus is seeking consecutive sentences of incarceration in the aggravated range for Ms. Orie Melvin. The standard range is probation to 30 months, versus 48 months in the aggravated range. For Janine Orie, the standard range is probation to 27 months and up to 45 months in the aggravated range.

Related post:

UPDATE:  I am very pleased to see from this local article, headlined "Orie Melvin must write apology letters to Pennsylvania judges on photos of herself," that the sentence for the former judge includes a serious shaming sanction.  Here are the awesome basics, about which I will blog more in a future post:

Disgraced former Pennsylvania Supreme Court justice Joan Orie Melvin was sentenced today to house arrest followed by probation and ordered to send handwritten apologies on photographs of herself to every judge in the Commonwealth.

Allegheny County Court of Common Pleas Judge Lester Nauhaus sentenced Orie Melvin to three years' house arrest with two years' probation to follow.

A jury found Orie Melvin and her sister Janine Orie guilty on Feb. 21 of using judicial staff, as well as the staffers of another sister, former state Sen. Jane Orie, to work on the campaigns in 2003 and 2009 for the Pennsylvania high court.

Orie Melvin, 56, was found guilty on six of seven counts against her, including conspiracy, theft of services and misapplication of government funds. She resigned from the Supreme Court in March.

She must serve in a soup kitchen three times a week and can otherwise only leave her house for church.

Judge Nauhaus also ordered that an official county photographer take a photograph of Orie Melvin, on copies of which she must apologize to each of Pennsylvania's judges. She must pay for the cost. He ordered a deputy to handcuff her and the photo was taken of her in handcuffs.

Her sentence also includes $55,000 in fines, a prohibition on using the title "justice" during her term and handwriting apologies to former members of her campaign staff and that of her sister, former state Sen. Jane Orie, whom she made engage in illegal work.

May 7, 2013 in Celebrity sentencings, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, State Sentencing Guidelines, White-collar sentencing, Who Sentences? | Permalink | Comments (1) | TrackBack

Monday, May 06, 2013

Should the top 1% get sentenced extra tough for defrauding Social Security?

The question in the title of this post is prompted by this notable report of an interesting federal sentencing proceeding taking place today in Minnesota.  Here are the basics:

A North Oaks couple will be sentenced Monday for defrauding the Social Security Administration of more than $300,000 in medical assistance despite a family net worth of $11 million. James and Cynthia Hood pleaded guilty in October to falsely claiming $332,000 in medical assistance payments for their seriously disabled children over five years.

Prosecutors are recommending a 41- to 50-month sentence for James Hood, but no prison time for Cynthia Hood ecause of the critical role she plays in caring for her two disabled children.  One is autistic and the other has spastic quadriplegic cerebral palsy.

U.S. District Judge Joan Ericksen is expected to sentence the couple in a hearing beginning at 11 a.m. at the federal courthouse in Minneapolis.

The U.S. attorney’s office stated it “does not object to a non-incarcerative sentence for Cynthia Marsalis Hood, which includes home confinement, community service and a fine.” She should normally receive a prison sentence of 27 to 33 months for her conduct, federal prosecutors said in a memorandum last month.

The Hoods’ three children are 15-year-old triplets. Two of them are described by the prosecutors as “severely disabled.” Cynthia Hood sleeps next to one child “on a nightly basis” to keep her airways clear, in addition to helping “with all toileting and bathing needs.”...

The prosecution’s recommendation for a lighter sentence cites specific paragraphs from federal guidelines that indicate Cynthia Hood may have cooperated with the federal investigation. When they pleaded guilty in October, she and her husband paid the U.S. Marshals Service $484,312 as part of the plea agreement....

James Hood is a retired professor at Tulane University in New Orleans. Following Hurricane Katrina in 2005, the couple “decided to relocate to Minnesota to take advantage of the health care and educational resources available for their children,” the court documents state.

Social Security Income (SSI) benefits for a child require that a parent and child have no more than $2,000 in income and assets, excluding a house and vehicle. “SSI is meant to be a resource of last resort,” prosecutors wrote. However, in a benefits interview in February of 2006, Cynthia Hood lied, claiming her husband lived in Louisiana and she was the sole legal guardian of her children, authorities said. She also lied about her assets and said she only had $1,400 in the bank, they said.

She failed to disclose that she and her husband owned a house in Louisiana that they had listed for sale at $278,000, that she held at least 16 bank accounts while he had 68 bank accounts, and that their combined interest income in 2006 was $183,000, prosecutors said.   Her husband also owned a farm in Batavia, Iowa, that consisted of 180 acres of timber and farmland where corn and soybeans grew, with an income in 2005 of $187,910 that included $19,000 in state and federal agricultural payments.

The documents state that Cynthia Hood was purportedly unaware that for three years, they also received Medicaid payments from Louisiana for their children, thereby defrauding both Minnesota and Louisiana at the same time.  The medical payments Hood received in Minnesota included more than $20,000 per year in salary to serve as a personal attendant for her children and $30,000 for a wheelchair-accessible elevator installed in the Hoods’ North Oaks home.

I would like to see the proverbial "book" thrown at these white-collar scoundrals, but I do not see the value or need for that book to include costly federal incarceration for either of these defendants.

In my view, it would be far more fitting to require James Hood to do 3+ years of community service rather than spend time (and taxpayer money) getting three squares and a cot in some low-level federal prison facility.  I think Mr. Hood could and should be ordered as part of probation to helping truly poor people secure the Medicaid funding they deserve or ordered to spend time back in New Orleans helping truly needy folks still struggling with post-Katrina challenges.

UPDATE:  This follow-up press report reports on the the sentencing outcomes for the Hoods, which appear to track the recommendations made by prosecutors:

A wealthy North Oaks woman will serve no prison time for defrauding Medical Assistance of $332,000. On Monday, U.S. District Judge Joan Ericksen sentenced her to probation instead, saying her two severely disabled children “are very, very dependent on you.”

Ericksen ordered Cynthia Hood, 55, to pay a $300,000 fine, but said she was entitled to the lighter sentence because she was not the fraud’s ringleader, cooperated with authorities in investigating her husband, and was essential to caring for the children.

Her husband, James Hood, 69, was sentenced to 3½ years in prison and must pay a $200,000 fine. Erickson called his actions “despicable.”

May 6, 2013 in Federal Sentencing Guidelines, Offender Characteristics, Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing | Permalink | Comments (3) | TrackBack

Wednesday, May 01, 2013

Is adjective "draconian" fitting for a proposed 13-year prison sentence for insider trader?

DracoThe question in the title of this post is prompted by this lengthy new Bloomberg article about the defense's sentencing submission in a high-profile, white-collar federal sentencing scheduled for later this month.  The Bloomberg article is headlined "Chiasson Seeks Leniency From U.S. Judge Citing Charitable Deeds," and here are excerpts:

Level Global Investors LP co-founder Anthony Chiasson, convicted of an insider-trading scheme that reaped $72 million, asked a judge to give him less time in prison than the 13-year term called for by U.S. sentencing guidelines.

Lawyers for Chiasson, 39, called such a sentence “draconian” in a, April 29 court filing. They urged U.S. District Judge Richard Sullivan in Manhattan to impose an unspecified shorter prison term, saying the alleged crimes were “aberrant” and that Chiasson has led an “exemplary life.”

Defense lawyers Greg Morvillo and Reed Weingarten cited Chiasson’s charitable work, including his effort to save his Catholic Jesuit high school in Portland, Maine, from closure, the creation of a scholarship program for his alma mater, Babson College, and his contributions to the Robin Hood Foundation and the Michael J. Fox Foundation.  “Anthony Chiasson is an extraordinary man,” Morvillo and Weingarten said in a memo to Sullivan. “But for the conduct that brings him before the court, Anthony has led an exemplary life.”

Chiasson, who began his career on Wall Street at Solomon Brothers and left SAC Capital Advisors LP to start the hedge fund, is scheduled to be sentenced May 13.  While U.S. court officials said that based on non-binding guidelines Chiasson should serve 121 to 157 months in prison, his lawyers said the appropriate range is 78 to 97 months.

A Manhattan federal jury in December found Chiasson guilty of five counts of securities fraud and convicted former Diamondback Capital Management LLC portfolio manager Todd Newman of one count of conspiracy and four counts of securities fraud.  Newman is scheduled to be sentenced May 2.  The U.S. alleged that the two portfolio managers were part of a “corrupt chain” of hedge-fund managers and analysts and insiders at technology companies who swapped and traded on illicit tips.  The U.S. said Level Global earned $68 million as a result of the insider trading based on material nonpublic information Chiasson received from Spyridon “Sam” Adondakis, a former Level Global analyst who worked for him. 

Defense lawyers estimated the fund earned $11.7 million as a result of trading in the stocks of Dell Inc. and Nvidia Corp. They disputed the government’s allegation that Chiasson based the transactions on illicit information and argued that federal sentencing guidelines allow prosecutors to inflate profits generated as a result of alleged crimes.  “There is only one reason the range is so high: the guidelines’ unrelenting predisposition to punish profit,” Morvillo and Weingarten said.

Morvillo and Weingarten also argued that Chiasson “should not be required to forfeit gains of any co-conspirators.” They said that the fund earned more than $21.6 million on trades by David Ganek, a Level Global co-founder who was ruled by Judge Sullivan to be an uncharged co-conspirator in the insider- trading scheme.  Adondakis, who pleaded guilty, testified that he didn’t tell Ganek about the source of his tips.  Ganek hasn’t been charged with wrongdoing....

Chiasson’s lawyers argued that he deserves a sentence comparable to others convicted of insider trading, including former Goldman Sachs Group Inc. director Rajat Gupta, who was ordered to serve two years in prison, and former Primary Global Research LLC executive James Fleishman and Michael Kimelman, the co-founder of Incremental Capital LLC, who were both given 30- month prison terms.  In January, a federal appeals court allowed Gupta to remain free while he fights his conviction.  Both Fleishman and Kimelman were recently released from prison.

The adjective draconian is often used now as a synonym for unduly harsh punishments, and I am sure I have sometimes used the term this way in various settings. But the faint-hearted linguistic originalist in me cannot help but note that arguably no prison terms should be really called draconian because incarceration was largely an unknown punishment in achient Greece and Draco the lawgiver was (in)famous for prescribing death as a punishment for both major and minor crimes. (With tongue-in-cheek, I suppose maybe a different (but less real) Draco could be expected to be a proponent of long prison terms, though I this this character probably realized he and his family only narrowly avoid imprisonment in Azkaban.)

Historical and literary references aside, these latest insider-trader, white-collar sentencing cases are surely worth watching closely.  My sense is that, especially with the economy seeming to be improving, there is diminishing public and social pressure to "throw the book" at wall-street types like Anthony Chiasson.  And yet, as the arguments in Chiasson's case highlight, every below-guideline sentence given in major white-collar cases provide a strong defense argument in later cases that only below-guideline sentences are proper pursuant to the sentencing commands of 3553(a).

May 1, 2013 in Federal Sentencing Guidelines, Offender Characteristics, Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, Scope of Imprisonment, White-collar sentencing, Who Sentences? | Permalink | Comments (4) | TrackBack

Tuesday, April 30, 2013

Might the Gov of Virginia soon be a federal criminal defendant?

The question in the title of this post is prompted by this new Washington Post piece, headlined "FBI looking into relationship between McDonnells, donor."   Here are the basics:

FBI agents are conducting interviews about the relationship between Virginia Gov. Robert F. McDonnell, his wife, Maureen, and a major campaign donor who paid for the food at the wedding of the governor’s daughter, according to four people familiar with the questioning.

The agents have been asking associates of the McDonnells about gifts provided to the family by Star Scientific chief executive Jonnie R. Williams Sr. and actions the Republican governor and his wife have taken that may have boosted the company, the people said.

Among the topics being explored, they said, is the $15,000 catering bill that Williams paid for the 2011 wedding of McDonnell’s daughter at Virginia’s historic Executive Mansion.  But questions have extended to other, previously undisclosed gifts from Williams to Maureen McDonnell as well, they said.

The interviews, at which Virginia State Police investigators were present, began in recent months as an outgrowth of a federal investigation of securities transactions involving Star Scientific, which produces a dietary supplement called Anatabloc.  The company disclosed that probe in a regulatory filing last month, saying it had received subpoenas from the U.S. attorney’s office for the Eastern District of Virginia.

Now, federal officials are trying to determine whether to expand that investigation into a broader look at whether McDonnell or his administration took any action to benefit Star Scientific in exchange for monetary or other benefits, according to the four people familiar with the interviews.  It is unclear whether the probe will be broadened.

April 30, 2013 in Celebrity sentencings, Procedure and Proof at Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (4) | TrackBack

Wednesday, April 17, 2013

Noteworthy new lawyer and now a new judge for Jesse Jackson Jr. sentencing

This new Chicago Tribune article, headlined "For sentencing, Jacksons get new judge named Jackson," reports on some notable pre-sentencing developments in the run up to a high-profile federal sentencing scheduled for later this year. Here are the basics:

The felony cases of former Rep. Jesse Jackson Jr. and his wife, former Chicago Ald. Sandi Jackson, have been assigned to a new judge — named Jackson.

Court papers filed Tuesday moved the cases to U.S. District Judge Amy Berman Jackson, but did not explain why the judge who accepted the Jacksons' guilty pleas, Robert Wilkins, would not be the one to sentence them this summer.

Harvard law professor Charles Ogletree Jr., who recently joined Jesse Jackson Jr.'s legal team, told the Tribune that Wilkins is a former law student whom he knows well, and that Wilkins may have recused himself out of caution.

Ogletree said he joined Jackson Jr.'s team on a pro bono basis and will appear at his sentencing June 28. He said he was not involved in the defense of Sandi Jackson, who will be sentenced July 1.

Under sentencing guidelines, the former congressman faces 46 to 57 months in prison and Sandi Jackson one to two years. The pair pleaded guilty in separate cases in the U.S. District Court for the District of Columbia after Jackson Jr. looted his campaign treasury of more than $750,000 and Sandi Jackson failed to report on joint tax returns about $600,000 in income.

Ogletree, when asked what would be a fair sentence for Jackson Jr., would not say whether that involved prison time but argued that he deserved a "second chance." He said he thought any judge will look not only at the guidelines but at Jackson Jr.'s record of public and community service and work with seniors and young people.

Ogletree, a longtime acquaintance of the Rev. Jesse Jackson Sr., the civil rights leader, said the case was not about the father but about his son, who is "a young man in a very challenging situation who has a story that I hope people will be willing to listen to."

Judge Amy Berman Jackson was chosen for the Jacksons' case based on a random reassignment. She is not related to the couple — but she is a Harvard law alum like Wilkins and Ogletree.

Judge Jackson has familiarity with a convicted congressman: As a defense attorney before her appointment to the bench, she represented Rep. William Jefferson, D-La., who was convicted of corruption after authorities found $90,000 in cash in his freezer.

Recent related posts:

April 17, 2013 in Celebrity sentencings, Offender Characteristics, Offense Characteristics, Procedure and Proof at Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (0) | TrackBack

Monday, April 15, 2013

What should happen after improper federal judicial participation in plea negotiations?

The question in the title of this post is the question being considered by the Supreme Court during oral argument today in US v. Davila. I have not given Davila too much attention until now, in part because I think I would prefer a world with a lot more regulation and judicial involvement in plea negotiation. Moreover, as this SCOTUSblog preview by Rory Little suggests, there may be a host of reasons it makes sense for me to be rooting about the federal criminal defendant in this matter. Here is how Rory's effectivepreview starts:

With apologies to fifty-seven of my fellow “Criminal Law and Procedure Professors” who have filed an amicus brief in support of respondent Anthony Davila in United States v. Davila (set for argument on Monday April 15 -- can that really be a coincidence for a felony tax offender?), this looks like a simple case.  “Deceptively simple,” Davila’s lawyer Josh Rosenkranz might respond -- his brief does a good job of making one pause at the implications of the underlying facts.  But the Question on which the Court granted -- whether “any degree of judicial participation in plea negotiations in violation of Federal Rule of Criminal Procedure 11(c)(1) automatically requires” reversal (my emphasis) -- really does not require examination of these implications.  In recent years, the Court has firmly rejected endorsing “automatic reversal” rules, let alone ones based on procedural rules rather than the Constitution, rules that many states do not follow.   Expect Monday’s argument to be respectful but one-sided on the Question Presented, with the more defendant-friendly Justices perhaps focused on how best to limit a reversal so as to not endorse the disturbing implications that Davila (and his law professor amici) admirably present.

I expect the oral argument transcript in Davila will be available later this afternoon, and I will post it here when it is.

UPDATE:  The transcript in United States v. Davila is now available at this link.

April 15, 2013 in Procedure and Proof at Sentencing, Sentences Reconsidered, White-collar sentencing, Who Sentences? | Permalink | Comments (5) | TrackBack

Saturday, April 13, 2013

"Hurricane Sandy has been good for the Gambino crime family"

The title of this post is the amusing first sentence of this New York Daily News article discussing the latest way-below-guideline federal sentencing outcome for extortion crimes in and around New York.  Here are the factual basics:

Reputed soldier Vincent Dragonetti is the third mobster convicted of extortion to be sentenced to perform community service for victims of last year’s weather disaster instead of jail time.

Federal Judge Dora Irizarry could have sent Dragonetti away for up to 51 months for his extortion of Brooklyn developer Sitt Asset Management, but he gave him 200 hours of service instead.

Irizarry previously sentenced Gambino associates Emmanuel Garofalo and Thomas Frangiapane to Sandy-related relief.

I am not eager to question the sentencing wisdom of Judge Irizarry or any other federal judge who concludes that the goals of sentencing set out by Congress in 3553(a) are better served by community service than by prison time.  That said, I hope that there will be proper monitoring of these community service sentences so that Sandy victims really do directly benefit from the alternative sentences given to these high-profile federal criminals.

April 13, 2013 in Criminal Sentences Alternatives, Purposes of Punishment and Sentencing, Reentry and community supervision, White-collar sentencing, Who Sentences? | Permalink | Comments (2) | TrackBack

Monday, April 08, 2013

Notable perspective on notable class disparities in federal sentencing

I received via this e-mail from a helpful ready the following blog-friendly comment (with links) that I believe merits sharing in this space:

I was reading your blog post about the return of debtors' prisons for those who fail to pay court fines in Ohio, and appreciate your concern about a two-tiered sentencing system: those who can afford to pay, and those who can't.

You may be interested in a similar phenomena in the Brooklyn federal courts where a defendant who has a business which employs others often gets probation because the judges don't want his employees to lose their jobs.  Isn't this favored treatment for the capitalist class, and a penalty for the poor who don't employ others?

Reputed Gambino associate Anthony Scibelli got off with just probation last Friday because the sentencing judge also was reluctant to imprison Scibelli over "concern that incarceration would jeopardize the jobs of 200 employees at his firm" as reported by John Marzulli for the Daily News.

In 2008 another Brooklyn federal judge spared alleged Gambino soldier and Brooklyn restaurateur Joseph Chirico from prison on a money laundering conviction as then reported by Kati Cornell for the New York Post:  "Judge Jack Weinstein said he was hesitant to cut Chirico a break, but wanted to ensure Chirico's workers stay employed."

April 8, 2013 in Race, Class, and Gender, White-collar sentencing, Who Sentences? | Permalink | Comments (9) | TrackBack

Friday, April 05, 2013

"Sentencing the Why of White Collar Crime"

The title of this post is the title of this notable new article by Todd Haugh now available via SSRN. (This article seems especially timely in light of the recent news that a sentencing deal might be in the works for former Enron CEO Jeff Skilling.) Here is the abstract:

“So why did Mr. Gupta do it?” That question was at the heart of Judge Jed Rakoff’s recent sentencing of Rajat Gupta, a former Wall Street titan and the most high-profile insider trading defendant of the past 30 years.  The answer, which the court actively sought by inquiring into Gupta’s psychological motivations, resulted in a two-year sentence, eight years less than the government requested.  What was it that Judge Rakoff found in Gupta that warranted such a modest sentence?  While it was ultimately unclear to the court exactly what motivated Gupta to commit such a “terrible breach of trust,” it is exceedingly clear that Judge Rakoff’s search for those motivations impacted the sentence imposed.

This search by judges sentencing white collar defendants — the search to understand the “why” motivating defendants’ actions — is what this article explores.  When judges inquire into defendants’ motivations, they necessarily delve into the psychological justifications defendants employ to free themselves from the social norms they previously followed, thereby allowing themselves to engage in criminality.  These “techniques of neutralization” are precursors to white collar crime, and they impact courts’ sentencing decisions.  Yet the role of neutralizations in sentencing has been largely unexamined. 

This article rectifies that absence by drawing on established criminological theory and applying it to three recent high-profile white collar cases.  Ultimately, this article concludes that judges’ search for the “why” of white collar crime, which occurs primarily through the exploration of offender neutralizations, is legally and normatively justified.  While there are potential drawbacks to judges conducting these inquiries, they are outweighed by the benefits of increased individualized sentencing and opportunities to disrupt the mechanisms that make white collar crime possible.

April 5, 2013 in Offender Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing | Permalink | Comments (8) | TrackBack

Thursday, April 04, 2013

Resentencing of Enron CEO Jeff Skilling perhaps on the verge of a resolution through a sentencing deal

This new CNBC report, which has a somewhat inaccurate headline and first sentence, provides an interesting update on a long-delayed high-profile resentencing.  The article is headlined "Enron's Jeff Skilling Could Get Early Release From Prison," and the first sentence reads as follows: "Former Enron CEO Jeffrey Skilling, who is serving a 24-year prison term for his role in the energy giant's epic collapse, could get out of prison early under an agreement being discussed by his attorneys and the Justice Department, CNBC has learned."  The rest of the story explain what is going on and reveals why I call the start of the piece inaccurate:

Skilling, who was convicted in 2006 of conspiracy, fraud and insider trading, has served just over six years. It is not clear how much his sentence would be shortened under the deal.

A federal appeals panel ruled in 2009 that the original sentence imposed by U.S. District Judge Sim Lake was too harsh, but a re-sentencing for the 59-year-old Skilling has repeatedly been delayed, first as the appeals process played out, and then as the negotiations for a deal progressed. Those talks had been a closely guarded secret, but Thursday the Justice Department quietly issued a notice to victims required under federal law:

"The Department of Justice is considering entering into a sentencing agreement with the defendant in this matter," the notice reads. "Such a sentencing agreement could restrict the parties and the Court from recommending, arguing for, or imposing certain sentences or conditions of confinement. It could also restrict the parties from challenging certain issues on appeal, including the sentence ultimately imposed by the Court at a future sentencing hearing."

A Justice Department spokesman declined to comment. Skilling's longtime defense attorney, Daniel Petrocelli, could not immediately be reached for comment.

Lake, who imposed the original sentence, would have the final say in the sentence. The posting of the notice, however, suggests the parties have some indication he will go along. Lake held a private conference call with attorneys for both sides last month.

For Skilling, who has consistently maintained his innocence, an agreement would end a long ordeal, although his conviction on 19 criminal counts would likely stand. The government, meanwhile, would avoid a potentially messy court battle over alleged misconduct by the Justice Department's elite Enron Task Force appointed in the wake of the company's sudden failure in 2001.

Skilling's attorneys had planned to move for a new trial based on that alleged misconduct. Under a sentencing agreement, that motion would likely be dropped.

UPDATE: Thanks to a helpful reader, I discovered that the crime victim notice from DOJ referenced in this article is available at this link.

April 4, 2013 in Victims' Rights At Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (1) | TrackBack

Saturday, March 16, 2013

Thoughtful response to Judge Rakoff's call to scrap fraud guidelines

Wes Porter, who is now a law professor but was before a senior trial attorney for the fraud section of DOJ's Criminal Division, has this lengthy new commentary headlined "Sentencing Guidelines Needn't Be Scrapped."  The piece provides a point-by-point response to Judge Jed Rakoff's recent suggestion (blogged here) for the fraud guidelines to be "scrapped in their entirety" in favor of a "non-arithmetic, multi-factor test."  Here are excerpts:

U.S. District Judge Jed Rakoff of the Southern District of New York has offered an important voice on a wide range of issues in federal practice, typically from the bench.... Rakoff recently sounded off from the podium on the current state of federal sentencing. On March 7, as the keynote speaker at the 27th Annual National Institute on White Collar Crime in Las Vegas, Rakoff railed against the numerical calculations and formulaic approach that still drives criminal sentencing in federal court: the U.S. Sentencing Guidelines.

Rakoff said the guidelines represent a set of numbers "drawn from nowhere" that continue to steer most federal judges imposing criminal sentences.  He's right.  The U.S. Sentencing Commission, the congressionally created entity responsible for the guidelines, has never articulated on what basis they equate another $50,000 in loss, the next 40 victims of a scheme, or an additional 20 grams of heroin (each carries a two-level increase in "offense level points" under the guidelines).  Rakoff concluded, "Basically, my modest proposal is that they should be scrapped in their entirety."

I, like other academics and (former) federal practitioners, agree in part.... Rakoff, like many of us, seeks federal sentences that are fair, well-reasoned and consistent throughout the country....

As opposed to "scrapped" completely, the federal government should phase out the numbers and calculations in the guidelines and convert them into factors the court may consider.  District judges could consult the guidelines as specific factors to consider in individual cases.  The numbers and calculations, however, have no sustainable utility. Modern district judges do not consider available sentencing data from the decades of federal sentences preceding the guidelines (pre-1998), right?  That's because sentencing numbers from the past are not helpful to judges imposing sentence tomorrow....

Rakoff states that many in the federal judiciary blindly follow the arbitrary numbers in the guidelines.  That's true.  But removing the guidelines "in their entirety" will not necessarily result in better justified sentences.  Courts would parrot the broad sentencing platitudes and similarly arrive at arbitrary numbers.  And the additional downside would be that federal sentences would become less fair and uniform.

In contrast, rather than throw out the guidelines, if district judges were required only to consult the guidelines' numbers and calculations when they are helpful in a specific case, then judges would deviate from the guidelines more and would be more likely to better justify their sentences.  Also, the U.S. Probation Office, the arm of the federal court that prepares a pre-sentence report, could provide more numeric information to the district judge before sentencing, such as regional sentencing statistics (since 2005), state statistics of comparable offense conduct, and a digest of comparable sentences. The guidelines need not be the only numbers before the sentencing judge. The courts could weigh the additional information and incorporate it into its own reasoning.

If the goal is to make better and more robust judicial reasoning for federal sentences, then rather than forcing judges to calculate and consider unhelpful numbers, make it optional or incentivize the U.S. Probation Office, and others, to provide more numeric information to the courts to supplement those in the guidelines. ...

If we phase out the numbers and calculations of the guidelines, then the existing appellate court review and the "reasonableness" standard will become more robust and meaningful.

I hope Judge Rakoff's voice is heard by leaders in the federal government with the power to change our federal sentencing system, and that a robust discussion follows to reach the most optimal solution for the government and criminally accused.

Recent related post:

March 16, 2013 in Federal Sentencing Guidelines, White-collar sentencing, Who Sentences? | Permalink | Comments (3) | TrackBack

Monday, March 11, 2013

Judge Rakoff calls for fraud guidelines to be "scrapped in their entirety" in favor of a "non-arithmetic, multi-factor test"

As reported in new press accounts here and here, U.S. District Judge Jed Rakoff gave a speech late last week at a white-collar offense conference which should warm the heart of critics of the existing federal sentencing guidelines. The start of this Reuters piece provides these highlights:

A prominent Manhattan judge has called for federal sentencing guidelines to be revamped, saying their current emphasis on losses in white-collar crimes has led to irrational results.

U.S. District Judge Jed Rakoff, a longtime critic of the sentencing guidelines, told attendees of a Las Vegas legal conference Thursday that the United States should move away from its current system of distilling offenses into numbers for calculating a sentence to one that was more flexible.  "My modest proposal is that they should be scrapped in their entirety and in their place there should be a non-arithmetic, multi-factor test," he said.

Rakoff made the remarks during a lunchtime keynote address at the National Institute on White Collar Crime conference sponsored by the American Bar Association.  The ABA's white-collar group has recently created a committee that includes Rakoff as a member to focus on how white-collar sentencing guidelines should be changed.

The guidelines came into place following the passage of the Sentencing Reform Act of 1984, which gave birth to the U.S. Sentencing Commission.  The goal at the time was to reduce discrepancies in sentences.

Rakoff argued that the "fundamental flaw" of the guidelines is they assume every situation can be distilled into a number for the purpose of then calculating a sentence.  He called the numbers assigned to various situations "arbitrary."

"The Sentencing Commission to this day has never been able to articulate why it has two points for this, or four points for that," he said.  "These are just numbers.  And yet once they are placed the whole thing is blessed and said to be rational."

March 11, 2013 in Federal Sentencing Guidelines, Offense Characteristics, Procedure and Proof at Sentencing, White-collar sentencing | Permalink | Comments (2) | TrackBack

Sunday, March 10, 2013

Upcoming symposium at Gerogetown on "Reducing Corporate Criminality"

I was so very pleased that my post here about the fantastic Missouri Law Review symposium in which I participated this past Friday prompted a member of the American Criminal Law Review at Georgetown University Law Center to send me news of another exciting (and free) criminal justice symposium taking place in DC this coming week. Here is the heart of the note about this symposium sent my way:

Your readers may be interested in our symposium next week: "Reducing Corporate Criminality: Evaluating Department of Justice Policy on the Prosecution of Business Organizations and Options for Reform."

Though our symposium is not specifically about sentencing issues, it is likely to be highly relevant to your readership in both public interest and white collar defense practices.  Our goal is to focus on issues facing current practitioners in addition to the traditional theoretical debates found in law reviews.  The symposium on March 15, 2013 will include four panels centered on (1) the evolution of DOJ guidelines on prosecuting business organizations; (2) a presentation on empirical evidence of trends in wrongdoing within business organizations; (3) suggested reforms to DOJ policy governing corporate prosecution; and (4) the effects of DOJ policy on the regulated entities.

More information (including the schedule of these panels and the terrific line-up of speakers) can be found here at this link.

As this post is intended to highlight, I am always eager to note and promote any and all criminal justice events that might be of interest to sentencing fans.  Consequently, as my schedule and energy permits, I will post news of any such event if details are sent my way.  And, when folks fo an effective job of providing me with blog-friendly, cut-and-paste-ready text about the event, it will often be much easier for my schedule and energy to facilitate posting and promotion.

March 10, 2013 in Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (2) | TrackBack

Thursday, February 28, 2013

You be the prosecutor: what state sentence should be sought for Joan Orie Melvin and her sister?

OriesRegular readers know that, often on the eve of a high-profile or unique sentencing proceeding, I urge folks to imagine being the judge and to propose a just and effective sentence for the defendant.  (See, e.g., prior "you be the judge" posts involving a rouge federal judge, a Ponzi schemer, the "Spam King", and an NBA star.)   Earlier this month, however, I generated a notable sentencing debate by changing the script via this post in which I encouraged folks to imagine being a federal prosecutor tasked with recommending a federal sentence for Jesse Jackson Jr. and his wife after it was clear that they intend to plead guilty to political corruption charges stemming from their misuse of campaign finance monies.  (See "You be the prosecutor: what federal sentence should be sought for Jesse Jackson Jr. and his wife?".)

As the title of this post reveals, I think it valuable to encourage readers again to think as a prosecutor about sentencing recommendations for political corruption.  But, as explained via this local story, "Judge sets May 7 sentencing for Joan Orie Melvin," the high-profile upcoming sentencing I have in mind is in state court and concerns a prominent state jurist and her sister after a trial conviction on multiple charges:

Allegheny County Judge Lester Nauhaus has scheduled suspended Supreme Court Justice Joan Orie Melvin's sentencing for May 7, the judge's staff said Wednesday.

A jury on Feb. 21 found Melvin, 56, of Marshall guilty on six criminal charges dealing with her misuse of state-paid employees to campaign for a seat on the high court in 2003 and 2009. The jury deadlocked on a seventh charge of official oppression.

The jury also convicted her sister and former staffer, Janine Orie, 58, of McCandless on six related charges.  Information on her sentencing date wasn't available.  A third sister, former state Sen. Jane Orie, 51, of McCandless is serving 2 1⁄2 years to 10 years in state prison on similar charges.

Obviously, the exact specifics of the crimes and the political positions of Jesse Jackson Jr. and Joan Orie Melvin are quite different.  Nevertheless, the underlying criminal behavior is arguably similar, as is the basic background of the offenders in relevant respects (e.g., both convicted defendants came from prominent political families, had a record of electorial success, and have considerable parental responsibilities).  Of course, Jackson Jr. and his wife are due to be sentenced in the federal no-parole system in which judges must impose exact sentences subject only to a 15% reduction for good prison behavior, whereas Melvin and her sister are to be sentenced in the Pennsylvania with-parole system in which judges general impose sentences in term of broad ranges.  Further, the Jacksons pleaded guilty and have expressed remorse, whereas Melvin and his sister both execised their trial rights and were found guilty on nearly all charges by a jury.

Differencea aside, I am eager to hear what readers think state prosecutors ought to be recommending as a sentence for Joan Orie Melvin and her sister.  Do you think they merit a longer or shorter sentence that what the Jacksons are facing?  Do you think the fact that state sentencing in Pennsylvania involves possibility of parole should lead to state prosecutor to urge for a much longer sentence in the Melvin case than federal prosecutors are urging in the Jackson case?  Do you disagree with my general notion that these crimes are in some ways comparable given that they were prosecuted in different jurisdictions (even though, I think, the feds could have prosecuted both cases)?

I raise these points not only because I see high-profile, white-collar sentences as provide a great setting for debating sentencing issues, but also because I think efforts to compare the sentencing treatment of seemingly similar defendants can often distract from the task of seeking to impose the most just and effective sentence for a singular defendant.  Ergo my interest in reader views on both the upcoming sentencing in this high-profile state political corruption case and how it should be compared to the upcoming sentencing of the Jacksons in federal court.

Recent related posts:

February 28, 2013 in Celebrity sentencings, Purposes of Punishment and Sentencing, Race, Class, and Gender, State Sentencing Guidelines, White-collar sentencing, Who Sentences? | Permalink | Comments (11) | TrackBack

Thursday, February 21, 2013

Jacksons plead guilty and federal prosecutors recommend significant prison terms for both

This recent post, titled "You be the prosecutor: what federal sentence should be sought for Jesse Jackson Jr. and his wife?", engendered a lengthy debate over federal sentencing law and practice as applied to a pair of new high-profile federal defendants.  Now, this New York Times article, headlined "Jesse Jackson Jr. Pleads Guilty: ‘I Lived Off My Campaign’," reports that federal prosecutor, apparently parroting the recommendations of the federal sentencing guidelines, have already urged significant prison terms for Jesse and Sandi Jackson.  Here are the details:

Jesse L. Jackson Jr., the former Democratic representative from Illinois, pleaded guilty on Wednesday to one felony fraud count in connection with his use of $750,000 in campaign money to pay for living expenses and buy items like stuffed animals, elk heads and fur capes.

As part of a plea agreement, prosecutors recommended that Mr. Jackson receive a sentence of 46 to 57 months in prison. The federal judge overseeing the case, Robert L. Wilkins, is scheduled to sentence Mr. Jackson on June 28....

“Guilty, Your Honor — I misled the American people,” Mr. Jackson said when asked whether he would accept the plea deal. Mr. Jackson’s father, the Rev. Jesse L. Jackson, his mother and several brothers and sisters accompanied him to the hearing.

Mr. Jackson’s wife, Sandi, also accompanied him, and later in the day she pleaded guilty to a charge that she filed false income tax statements during the time that Mr. Jackson was dipping into his campaign treasury. Prosecutors said they would seek to have her sentenced to 18 to 24 months....

Last summer, Mr. Jackson took a medical leave from Congress and was later treated for bipolar disorder. After winning re-election in November, he resigned, citing his health and the federal investigation into his use of campaign money.

After the hearing, Mr. Jackson’s lawyer, Reid H. Weingarten, said his client had “come to terms with his misconduct.” Mr. Weingarten said that Mr. Jackson had serious health issues that “directly related” to his conduct. “That’s not an excuse, it’s just a fact,” Mr. Weingarten said.

Court papers released by federal prosecutors on Wednesday provided new details about how Mr. Jackson and his wife used the $750,000 in campaign money to finance their lavish lifestyle.

From 2007 to 2011, Mr. Jackson bought $10,977.74 worth of televisions, DVD players and DVDs at Best Buy, according to the documents. In 2008, Mr. Jackson used the money for things like a $466.30 dinner at CityZen in the Mandarin Oriental in Washington and a $5,587.75 vacation at the Martha’s Vineyard Holistic Retreat, the document said.

On at least two instances, Mr. Jackson and his wife used campaign money at Build-A-Bear Workshop, a store where patrons can create stuffed animals.  From December 2007 through December 2008, the Jacksons spent $313.89 on “stuffed animals and accessories for stuffed animals” from Build-A-Bear, according to the documents....

Documents released on Friday showed how Mr. Jackson used his campaign money to buy items like fur capes, celebrity memorabilia and expensive furniture.   Among those items were a $5,000 football signed by American presidents and two hats that once belonged to Michael Jackson, including a $4,600 fedora.

Because neither Jesse Jr. nor Sandi Jackson would appear to present any threat to public safety whatsoever, I am not quite sure why federal prosecutors believe that imposing a sentence "sufficient but not greater than necessary" to achieve congressional sentencing purposes requires a muti-year prison term for both of them.  I fully understand, of course, that the sentences here ought to be severe enough to serve general deterrence purposes.  But I am not sure that such extended prison terms are needed, especially if the Jacksons' sentences require them now to pay significant criminal fines and penalities in addition to forfeiting all ill-gotten gains and paying all their tax liabilities.

Former federal prosecutor Bill Otis has said repeatedly in recent threads that federal prosecutors should not have their sentencing recommendations defined by applicable sentencing guidelines.  But I surmise that the prosecutors' recommendations here that Jesse Jr. get 46 to 57 months in prison and that Sandi get 18 to 24 months are drawn directly from the guidelines.  (We can be quite sure that the defense attorneys in these cases will not draw their recommendations from the guidelines, and I would guess that the defense will end up making full-throated arguments for non-prison sentences for both Jesse Jr. and Sandi.)

Recent related post:

February 21, 2013 in Booker in district courts, Celebrity sentencings, Federal Sentencing Guidelines, Offender Characteristics, Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, Scope of Imprisonment, White-collar sentencing | Permalink | Comments (44) | TrackBack

Tuesday, February 19, 2013

Grey Lady has lots of sentencing stories fit to print today

Seemingly just conincidentally, the New York Times has these three notable sentencing-related pieces in its print edition today.  Here are the headlines and the start of the stories in the order they appear in the paper:

February 19, 2013 in Mandatory minimum sentencing statutes, Offender Characteristics, Race, Class, and Gender, White-collar sentencing, Who Sentences? | Permalink | Comments (1) | TrackBack

Monday, February 18, 2013

You be the prosecutor: what federal sentence should be sought for Jesse Jackson Jr. and his wife?

Jesse-jackson-jr-wife-Sandi-kids-1Regular readers know that, often on the eve of a high-profile or unique sentencing proceeding, I urge folks to imagine being the judge and to propose a just and effective sentence for the defendant.  (See, e.g., prior "you be the judge" posts involving a rouge federal judge, a Ponzi schemer, the "Spam King", and an NBA star.)   Today, however, as the title of this post highlights, I am changing the script after being inspired by this Chicago Tribune article about a latest very high-profile federal political corrpution case.  the article is headlined "Lawyers: Jackson Jr., wife intend to plead guilty to charges," and here are the (not so simple) basics:

Jesse Jackson Jr. and his wife Sandi intend to plead guilty to federal charges alleging the former congressman misused $750,000 in campaign funds while she understated their income on tax returns for six years, their lawyers say.

Jackson Jr., 47, a Democrat from Chicago, was charged in a criminal information Friday with one count of conspiracy to commit wire fraud, mail fraud and false statements.  He faces up to five years in prison, a fine of up to $250,000 and other penalties.

Sandi Jackson was charged with one count of filing false tax returns.  She faces up to three years in prison, a fine of up to $250,000 and other penalties.

Jackson Jr. is accused of diverting $750,000 in campaign funds for personal use.  Federal authorities allege that Jackson Jr. used campaign funds to purchase a $43,350 men’s gold-plated Rolex watch, $5,150 worth of fur capes and parkas, and $9,588 in children’s furniture.  The purchases were made between 2007 and 2009, according to the criminal information, which authorities noted is not evidence of guilt....

The government also alleged that Jackson Jr. made false statements to the House of Representatives because he did not report approximately $28,500 in loans and gifts he received.  "He has accepted responsibility for his actions and I can confirm that he intends to plead guilty to the charge in the information," Jackson Jr.'s attorney Brian Heberlig said.

Sandi Jackson is accused of filing incorrect joint tax returns with her husband for calendar years 2006 through 2011, reporting income “substantially less than the amount of income she and her husband received in each of the calendar years,” with a substantial additional tax due. Her attorneys released a statement saying she has "reached an agreement with the U.S. attorney’s office to plead guilty to one count of tax fraud."

Jackson Jr. stepped down from the House of Representatives on Nov. 21, citing both his poor health and an ongoing federal probe of his activities.  In a statement then, he said he was doing his best to cooperate with federal investigators and to accept responsibility for his “mistakes.”...

Sandi Jackson's attorneys released a statement saying she "has accepted responsibility for her conduct, is deeply sorry for her actions, and looks forward to putting this matter behind her and her family.  She is thankful for the support of her family and friends during this very difficult time."...

The Rev. Jesse Jackson said he would "leave it up to the courts system" to determine his son's fate. "We express our love for him as a family," he said....

Last June, Jackson Jr. began a mysterious leave of absence for what originally was called “exhaustion” but later emerged as bipolar disorder. He spent months in treatment and won re-election Nov. 6 despite never returning to service in the House or staging a single campaign appearance....

Jackson Jr. was first elected to Congress in 1995. Sandi Jackson was a Chicago alderman until she resigned her post last month. They have two children.

Federal sentencing fans know well that the willingness of the Jacksons to accept responsibility and plead guilty should help them considerably when a federal judge is tasked with imposing a sentence on the alleged federal charges.  Indeed, I have to assume that this willingness to plead guilty is a reason that the initial charges in this case appear to limit Jesse's maximum prison sentence to only five years and Sandi's maximum sentence to only three years.

But, regular readers should recall from recent discussions over the high-profile Amish beard-cutting federal case, federal prosecutors not only need to decide what criminal charges to file, but they also need to decide what sentence should be recommended after convictions are secured.  Ergo the question for readers in the title of this post: assuming the Jacksons both plead guilty and show deep and genuine remose for their wrong-doing, what sentence do you think federal prosecutors should seek for Jessie Jr. and Sandi?  

P.S.  Depite the US Sentencing Commission's website still being down (grrr....), I was able to do a quick guidelines guestimate that Jesse Jr. would be facing, at the very least, three or more years in federal prison as a recommended guideline range (principally because the "loss" amounts alleged here are pretty high).  But, of course, as Bill Otis was quick to remind us in the Amish beard-cutting conversation, federal prosecutors need not (and arguably should not) utilize the guidelines range as a starting metric for any prosecutorial sentencing recommendations.

UPDATE:  I have added a picture of the Jackson family to this post in part because I had been wondering about the ages of their two children.  Though the picture reprinted here may be a bit dated, I have confirmed (via this Wikipedia entry) that the kids are still pretty young — ages 12 and 9 as of this writing — which means they would likely be harmed greatly if both their parents are sent to prison at the same time.  Ergo, if any would-be federal prosecutors are inclined to recommend prison sentences for both Jessie Jr. and Sandi, I wonder if you would oppose a likely request from the defense to stagger any prison terms so that the Jackson children can always have at least one parent on the outside.

February 18, 2013 in Federal Sentencing Guidelines, Offender Characteristics, Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (34) | TrackBack

Friday, February 15, 2013

Sixth Circuit reverses one-week jail sentence for CEO as substantively unreasonable

Reversals of federal sentences on appeal as substantively unreasonable are pretty rare, which itself makes notable the Sixth Circuit's ruling today in US v. Peppel, No. 11-4327 (6th Cir. Feb. 15, 2013) (available here).  Add in that this is a white-collar case, and this reasonableness review story becomes even more noteworthy.  Here is how the Peppel opinion gets started:

Defendant-Appellee Michael Peppel, former President, CEO, and Chairman of the Board of Directors of MCSi, Inc. (“MCSi”), conspired with CFO Ira Stanley to falsify MCSi accounting records and financial statements in order to conceal the actual earnings from shareholders, while at the same time laundering proceeds from the sale of his own shares in a public stock offering.  For this conduct, the sentencing guidelines provided a sentencing range of 97–121 months’ imprisonment.  The district court, based almost solely on its estimation of Peppel as “a remarkably good man,” varied downward drastically from this advisory range, imposing a custodial sentence of only seven days — a 99.9975% reduction.  R. 224 (Sentencing Tr. at 86:10) (Page ID #2433).  Plaintiff-Appellant the government appeals the substantive reasonableness of the seven-day sentence, arguing that a seven-day sentence does not adequately reflect the seriousness of the offense, serve the goal of general deterrence, or avoid national sentencing disparities, and that the district court placed disproportionate weight on disfavored factors.  Peppel contests the government’s arguments and proffers a conditional cross-appeal, contending that the district court erred in its amount-of-loss and number-of-victims calculations that formed the basis of two sentencing enhancements.

We conclude that the district court abused its discretion by imposing an unreasonably low seven-day sentence, but did not err in calculating the amount of loss or number of victims.  We therefore VACATE Peppel’s sentence and REMAND for resentencing consistent with this opinion.

February 15, 2013 in Booker in the Circuits, Scope of Imprisonment, Sentences Reconsidered, White-collar sentencing | Permalink | Comments (1) | TrackBack

EDNY federal judge sentencing mobsters to do Sandy-storm community service

Though the title of this post might sound like a headline from The Onion, it is in fact a reasonable summary of this story out of Brooklyn as reported by the New York Daily News and sent my way by a helpful reader. Here are the details:

There’s more help on the way to Hurricane Sandy victims -- from the mob.  A reputed Gambino associate convicted of extortion was sentenced Thursday to no jail time and 200 hours of community service related to the superstorm. He faced up to two years in prison.

Thomas Frangiapane is the second reputed mobster that Brooklyn Federal Judge Dora Irizarry has ordered to help with recovery efforts as part of their sentence.

Last month the judge sentenced reputed Gambino associate, Emmanuel Garofalo, to 300 hours of community service to repairing storm damage in his beachfront community of Sea Gate, Brooklyn.  Frangiapane and Garofalo both work in the construction industry.

Irizarry did not specify where or how Frangiapane should dedicate his efforts, but Sea Gate would be off-limits because he is barred from associating with Garofalo.

In seeking a lenient sentence, Frangiapane did not raise Hurricane Sandy relief - he argued that putting him jail would jeopardize the jobs of 75 workers he supervises at DeGraw Construction Group.

Assistant U.S. Attorney Whitman Knapp objected, pointing out that Frangiapane pleaded guilty to threatening to shut down the construction of a Brooklyn condo being developed by Sitt Asset Management, which jeopardized the jobs of those workers.

Long-time readers know I am a fan of creative sentencing options, especially when I think they can serve diverse values without compromising community service.  Consequently, I am inclined to praise Judge Irizarry's creativity here.  But perhaps others might think this approach to sentencing in this setting is a bit too creative.

February 15, 2013 in Criminal Sentences Alternatives, Offender Characteristics, Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing | Permalink | Comments (0) | TrackBack

Thursday, February 14, 2013

Are "pink-collar" crimes distinctive calling for distinct sentencing policies and practices?

The question in the title of this post is prompted by this intriguing new commentary by Kelly Richmond Pope at The Daily Beast, which previews a high-profile white-collar federal sentencing scheduled for today in Illinois. The piece is headlined, "Most Notorious ‘Pink-Collar’ Criminal to Be Sentenced for $53 Million Theft: Crundwell may be the most brazen of recent female embezzlers, but she’s not alone, as more and more women achieve positions of power, as well as access to funds."  Here are excerpts (with a few links preserved):

On Valentine’s Day, Rita Crundwell will be sentenced for her role in the largest municipal fraud in U.S. history.   Once known as one of the leading American quarter horse breeders, Crundwell embezzled more than $53 million from the town of Dixon, Illinois, which has a population of 16,000 and an annual budget between $6 and $8 million.  Crundwell, who was Dixon’s comptroller, carried on her scheme for 20 years, but it was discovered only when a Dixon city clerk opened a letter revealing that Crundwell had set up a secret bank account and was embezzling city monies to finance her lavish lifestyle.

While Dixon was cutting jobs, battling a budget deficit, and struggling to complete capital improvement projects, Crundwell was throwing epic birthday parties, building ranches and traveling the world.  According to court records, she stole an average of more than $37,000 for every day she worked for Dixon.

Some people are shocked to hear that a woman was at the center of such a vast scheme, but women in fact tend to be pretty savvy embezzlers. In fact, with more women taking on leadership positions in corporate America, an unexpected phenomenon has begun to emerge: pink-collar crime.

It’s never been a popular topic. In 1975 Rutgers criminologist Freda Adler wrote a groundbreaking yet controversial book, Sisters in Crime: The Rise of the New Female Criminal, that shed light on research analyzing the criminality of women. But in the era of the Equal Rights Amendment, Adler took a ton of heat, as critics believed her book undermined the feminist movement and distorted the facts about the female crime rate. But was Adler wrong?  I would argue she wasn’t.

Pink-collar crime is unquestionably on the ascent.  The term generally refers to the rise of women involved in white-collar crime, but it’s also a theory introduced by criminology professor Kathleen Daly during the 1980s to describe the types of embezzlement crimes typically committed by females.  Based on my research as a forensic accountant and fraud investigator, I’ve watched this trend swell over the years.

While perhaps no pink-col lar crime has been as scandalous as Crundwell’s, she is far from alone. In fact, according to the 2011 Marquet Report on Embezzlement, women are more likely to embezzle than men.  Based on a review of 473 major embezzlement cases in the United States in 2011 alone, nearly two thirds of the cases involved female perpetrators. Among the top 10 cases, five involved “pink-collar criminals” who pocketed anywhere from $4.8 to $16 million.

Before Crundwell, the largest municipal fraud was also an embezzlement case committed by a woman named Harriette Walters.  Walters was convicted of embezzling $48 million over 20 years in her role as a tax-assessment manager for the District of Columbia.  She is currently serving a 16 1/2-year sentence in a West Virginia federal prison.

So why is women’s stealing on the rise?  To help answer this question, I spoke with Kelly Paxton, a licensed private investigator and president of Denver-based Financial Caseworks LLC.  Paxton told me that the increase is due to both greater “perceived needs,” such as material goods, as well as more women being in positions where they have access to funds.

That observation is supported by my conversation with Diann Cattani, whom I interviewed for my documentary “Crossing the Line: Ordinary People Committing Extraordinary Crimes.”  Cattani, who served 18 months in prison for stealing $500,000, felt the need to provide more material possessions for her family in hopes that it would mend some personal issues within her marriage.  But the stigma of being a convicted felon ended up destroying her marriage, and continues to challenge both her personal and professional lives.

Maintaining a lavish lifestyle is a commonly cited rationale for committing white- or pink-collar crimes.  For Crundwell, it appeared to be her top priority. According to court documents, Crundwell first embezzled $181,000 in 1991, which she used to purchase a Suncruiser Pontoon boat and $3,000 worth of diamonds. The theft continued in 1992, when she pocketed $121,000, more than two thirds of which she used to pay off her credit card. In 1999 Crundwell pocketed more than $1 million, using $125,000 to purchase a horse. Even as the recession set in, Crundwell continued to use Dixon as her personal piggy bank, embezzling millions of dollars more....

In 1990 Freda Adler told the Wall Street Journal, "as more women are out in the mainstream, the more mainstream activities they are going to be involved in." We can only imagine what she would have to say about Rita Crundwell.

Recent related post on Crundwell case:

UPDATE:  The headline of this Chicago Tribune piece reports on the sentencing outcome today for Rita Crundwell: "Ex-Dixon comptroller gets 19.5 years for $54 million fraud".

February 14, 2013 in Offender Characteristics, Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, Race, Class, and Gender, White-collar sentencing | Permalink | Comments (7) | TrackBack

Sunday, February 10, 2013

District judge rejects too sweet federal plea deal for long-time fraudster in Pennsylvania

A helpful reader sent along this interesting local article from Pennsylvania, eadlined "Rosetti plea rejected by judge," reports on a case in which a federal judge took the usual step of rejecting a plea deal as too lenient. Here are the details:

In a strong rebuke calling for "just punishment," a federal judge has rejected the plea agreement made by Fred Rosetti, Ed.D., former executive director of the Northeastern Educational Intermediate Unit.   The deal, which called for 12 to 18 months in prison, is not appropriate for the "defendant's longstanding, pervasive and wide-ranging criminal activities," U.S. District Judge Robert D. Mariani wrote in his order.

Dr. Rosetti, who is accused of intentionally failing to record sick and vacation days, creating false travel vouchers and ordering employees to do personal tasks for him, now has the option of withdrawing his plea and going to trial or keeping his plea and letting the judge determine his sentence.  He could also try to negotiate a new plea agreement.

"The sentence proposed by the plea agreement, as well as the agreement's other terms, do not reflect the seriousness of the offense, do not promote respect for the law and do not provide just punishment for the offense," Judge Mariani's order states.

In October, Dr. Rosetti pleaded guilty to theft and mail fraud charges in a plea deal with prosecutors that called for 12 to 18 months of imprisonment and restitution of $120,000....  A presentence investigation report completed earlier this month and prepared by the United States Probation Office "describes a 12-year pattern of abuse of public trust and executive authority for private gain."

The report, which is not available to the public but part of which is detailed in Judge Mariani's order, describes how Dr. Rosetti intentionally failed to document time off from the NEIU, in the form of vacation, personal and sick leave.  For every day he did not record, he received a larger payout....

Other actions described in the order include ... 127 fraudulent travel vouchers, which Dr. Rosetti created or ordered employees to create, at a cost of $18,106.75.  Dr. Rosetti threatened employees with the loss of their jobs if they did not oblige....

The presentence report indicates the loss to the NEIU totals $137,944.13, but the plea agreement calls for restitution of $120,000.  The difference is significant because the amount could lead to a stricter sentence under federal sentencing guidelines that call for 27 to 33 months in prison....

The report also details the defendant's attempt to "obstruct or impede the administration of justice." Dr. Rosetti has been on home confinement since contacting witnesses this spring and subsequently spent 12 nights in jail....

When Dr. Rosetti was indicted in February 2012, prosecutors said that if convicted of the most serious charges, he could have faced 10 years in prison, a $250,000 fine and the forfeiture of $240,000, the contents of two bank accounts and his Archbald home. Dr. Rosetti originally faced 13 counts of fraud, theft and money laundering.  The plea agreement Judge Mariani rejected called for Dr. Rosetti to plead guilty on two counts: Count 1, mail fraud relating to a package delivered at NEIU expense; and Count 8, theft concerning programs receiving federal funds....

A hearing has been scheduled for Feb. 21 to inform Dr. Rosetti of his options and give him an opportunity to withdraw his plea.  If he does not withdraw his plea, a sentencing hearing is scheduled for March 5.  Judge Mariani would then determine Dr. Rosetti's punishment.

The District Court's 11-page order explaining its ruling is available at this link.

February 10, 2013 in Federal Sentencing Guidelines, Offense Characteristics, Procedure and Proof at Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (0) | TrackBack

Thursday, February 07, 2013

Feds seeking upward departure for local comptroller engaged in long-time fraud

As detailed in this Chicago Tribune article, federal prosecutors have found a white-collar case in which they think the federal guidelines are not tough enough. Here are the basics:

In the spring of 2010, the city of Dixon was in a financial death spiral, with a budget deficit closing in on $4 million, no working cash flow and drastic cuts needed in services and hiring to stay afloat.   Longtime Comptroller Rita Crundwell gave commissioners a familiar excuse for the crisis: Declining tax revenues in a bad economy and late state payments had drained the town's coffers.

Yet Crundwell was living it up with massive amounts of stolen taxpayer money. In 2010 alone, federal authorities say, Crundwell plundered more than $5.5 million, money that went to buy an 80-acre ranch and farmhouse outside town, expand her championship horse business, fund lavish birthday parties for herself in tony Venice Beach, Fla., and buy luxury vehicles and jewelry.

In newly filed court papers ahead of Crundwell's sentencing next week, federal prosecutors are seeking as much as 20 years in prison, laying out in the greatest detail yet how her nearly $54 million in thefts beginning in 1991 devastated the northwest Illinois town's budget as well as public confidence in its government officials....

Crundwell ordinarily would face a sentence of about 12.5 to 16 years in prison under federal sentencing guidelines. But prosecutors want U.S. District Judge Philip Reinhard in Rockford to go higher because of the decades-long scheme and staggering losses.

In a response filed Tuesday, Crundwell's attorney, Public Defender Paul Gaziano, asked for a sentence at the low end of the guidelines. Gaziano noted that a 20-year sentence would likely mean that Crundwell, 60, would spend the rest of her life in prison.  He also argued that she has cooperated with authorities once the fraud was uncovered last April and has helped the town recoup some of its losses by selling off millions of dollars in horses, real estate and other assets....

When Crundwell pleaded guilty last November to a single count of wire fraud, acting U.S. Attorney Gary Shapiro called it the largest theft of government funds in Illinois history. In her plea agreement with prosecutors, Crundwell, who served as the city's comptroller starting in 1983, admitted transferring money from city funds into a bank account bearing her name that she secretly opened in December 1990.

The thefts grew bolder over time, but it wasn't until she started spending long periods away from City Hall, traveling the country to compete in horse shows, that her scheme unraveled. In 2011, the city clerk, filling in for Crundwell, discovered the secret account and informed the mayor, who tipped off law enforcement, authorities have said.

In the early years, Crundwell annually stole a few hundred thousand dollars, but by the late 1990s, as her quarter-horse business expanded and gained national attention, the thefts exploded, growing to more than $1 million in 1999, then nearly doubling to $2 million the next year, according to prosecutors.  The town's financial straits worsened, and cuts to each annual budget multiplied.  By 2008, the shortfalls reached crisis levels.  At a special City Council meeting that March, Finance Commissioner Roy Bridgeman reported that the budget deficit approached nearly $1.2 million and warned of staff cutbacks, according to court records.

Professor Todd Haugh sent me an intriguing note about this case after the feds filed its sentencing documents, which he has graciously allowed me to post here:

The government's sentencing memorandum is pretty incredible. Not only does it ask for an upward departure from the sentencing guidelines (which are already at 210-262 months based on the dollar amount and her position of trust) to a sentence of 27-34 years (324-405 months), but it includes a five-part timeline/slideshow detailing the crime and Crundwell's personal expenditures. I've never seen anything like that in 10 years of defending white collar cases, particularly when the original guideline range is that high already.... The tone of the slideshow, not surprisingly, is greed, greed, greed, and it's filled with color pictures of all the things this women bought with the illegally-obtained funds.

To put the possible sentence in perspective, if Crundwell gets anywhere close to 34 years, she will be in the upper-echelon of white collar defendants receiving heightened sentences. Skilling got 24 years; Rajaratnum got 11; Rigas got 20; Peter Madoff got 10; etc. She would be getting close to even the big Ponzi schemers (the CEO of Peregrine just got 50 years for a $100M Ponzi)....

To me, this is classic government piling on of a white collar offender in the name of assuaging community anger (which is highly concentrated here). It does very little to further the goals of sentencing (I suppose retributivists could argue the additional 100+ months are necessary but even that seems a stretch given the already high sentence), and it's simply advancing the crime master narrative of "all white collar offenders should be given life sentences because they are greedy and evil."... But it also demonstrates how the fraud guideline becomes a little silly at the high loss levels and how 3553 can be a weapon for the prosecution, not just a shield for the defense.

February 7, 2013 in Federal Sentencing Guidelines, Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, Scope of Imprisonment, White-collar sentencing, Who Sentences? | Permalink | Comments (6) | TrackBack

Thursday, January 31, 2013

Iowa CEO -- aka "Madoff of the Midwest" -- gets 50 years for major embezzlement and bank fraud

As reported in this New York Times piece, headlined "Ex-Peregrine Chief Sentenced to 50 Years in Prison," another white-collar scoundrel got another functional life sentence in federal court today. Here are the basics:

A prominent futures-industry executive was sentenced to 50 years in prison on Thursday for embezzling from his clients and defrauding banks over nearly two decades.

Russell Wasendorf Sr., the chief executive of the now-defunct brokerage firm the Peregrine Financial Group, stole more than $215 million from his customers in a remarkably crude fraud that involved doctored documents that went undetected for years.

Shackled and dressed in orange prison garb, Mr. Wasendorf sat expressionless as Judge Linda Reade of the United States District Court in Cedar Rapids, Iowa, handed down the maximum sentence recommended by the government....

“The lengthy prison sentence imposed today is just punishment for a con man who built a business on smoke and mirrors,” said Sean Berry, acting United States attorney in Cedar Rapids.

Mr. Wasendorf’s penalty is the latest in a string of stiff sentences handed down by judges for financial crimes.  Bernard L. Madoff received 150 years for perpetrating the largest Ponzi scheme ever uncovered.  Allen Stanford is serving a 110-year term after being convicted of swindling investors of nearly a $7 billion.  Thomas J. Petters got a 50-year sentence for defrauding investors of nearly $4 billion.

Given the extremely lengthy sentences and advanced age of some of the defendants, many of these terms are largely symbolic, intended to reflect the gravity of the crimes and the need for retribution.

The fraud carried out by Mr. Wasendorf, 64, did not involve any opaque financial instruments and took place more than 1,000 miles from Wall Street, in Cedar Falls, Iowa. Federal regulators discovered the crime last summer after local police found Mr. Wasendorf unconscious in his car in Peregrine’s parking lot, a hose running from the exhaust pipe into the passenger compartment.  He left a detailed suicide note explaining his crimes.

Mr. Wasendorf stole millions of dollars from his customers at Peregrine, which also did business as PFGBest, by using laser printers and software like Photoshop and Excel to make near-perfect replicas of account statements from US Bank.  He duped auditors by supplying them with a false address to sending forms to the bank, which he would then intercept and send back on forged US Bank letterhead....

Peregrine’s clients — and Mr. Wasendorf’s 13,000 victims — including speculators betting on the price of orange juice and farmers who use such contracts to protect themselves from large price fluctuations....

Judge Reade rejected any leniency for Mr. Wasendorf because of his contributions to the community. “It is easy to be generous with other people’s money,” she said.

Iowa newspapers nicknamed Mr. Wasendorf “the Madoff of the Midwest.” Though Mr. Wasendorf’s criminal proceeds were a tiny fraction of Mr. Madoff’s, the two men suggested similar reasons for why they turned to a life of crime.

Mr. Madoff has said in interviews that he began his fraud after his investment performance soured and he couldn’t admit defeat.  Similarly, Mr. Wasendorf, in his confession, said he began to steal from his clients when his business slumped and he began to run out of money.  “I guess my ego was too big to admit failure,” wrote Mr. Wasendorf. “So I cheated.”

On Thursday, Mr. Wasendorf, gaunt and diminished, expressed deep remorse.  “I feel I fully deserve whatever sentence I’m given,” he said.  “The punishment I’ve caused myself is worse than anything you can impose.”

January 31, 2013 in Offense Characteristics, White-collar sentencing | Permalink | Comments (4) | TrackBack

Tuesday, January 29, 2013

Should status as sitting state justice be an aggravating sentencing factor under 3553(a)?

The question in the title of this post is prompted by this local report on a federal plea deal put together in a high-profile federal prosecution in Michigan. The article is headlined "Former Michigan Supreme Court Justice Diane Hathaway pleads guilty to felony bank fraud," and here is the backstory:

Retired Michigan Supreme Court Justice Diane Hathaway pleaded guilty to felony bank fraud today and is expected to be sentenced on May 28. Hathaway stood quietly at a podium in U.S District Court in Ann Arbor this morning, acknowledging she intentionally defrauded a federally insured financial institution with the short sale of her Grosse Pointe Park home.

According to an agreement negotiated with the U.S. Attorney’s Office, her punishment is limited to up to 18 months behind bars or could be as little as 4-10 months if a pre-sentence report determines there was no actual financial loss. Hathaway also could receive a sentece of 3-5 years of supervised release, be fined up to $30,000 and pay restitution of up to $90,000, according to the agreement. She waived her right to appeal the case after sentencing....

Hathaway’s only “no” response came when O’Meara asked her about using her position as a Michigan Supreme Court judge as part of the scheme. “Did you use your status as a public employee in your attempt to defraud?” O’Meara asked her. “No,” she responded.

Hathaway was charged Jan. 18 with one count of bank fraud after investigators said she moved ownership of property in Florida to relatives so she could qualify for the short sale. Hathaway allegedly told financial institution ING Direct she could no longer afford the house payments on the Michigan home. In a civil filing in November, the U.S. Justice Department accused Hathaway and her husband, attorney Michael Kingsley, of fraudulently concealing their net worth.

The short sale in Michigan allowed the couple to erase nearly $600,000 in mortgage debt on the $1.5-million Grosse Pointe Park home on Lakeview Court, which eventually sold for $850,000. The debt-free Windermere, Fla., home then went back into their names. Hathaway’s attorney, Steve Fishman, said outside the courthouse that ING Direct is claiming they lost far less than the mortgage debt erased by the short sale.

"It's important for people to know that now we're down to the actual loss as calculated by ING ... and they're saying it's between $40,000 and $90,000," Fishman said, pointing out Hathaway could have just walked away from the home altogether. "I say the loss is nothing ... because the bank netted probably in the vicinity of $150,000 more from the fact that there was a short sale than if it had been a foreclosure and a sheriff's sale. And that will be part of the discussion when we come back for sentencing."

Hathaway left the bench after announcing the decision to retire Jan. 7 after the Judicial Tenure Commission filed a complaint and sought her immediate suspension. The commission alleged she committed "blatant and brazen" misconduct violations in connection with private real estate transactions.

As federal sentencing practitioners know well, the key federal sentencing statute requires a sentencing judge to consider "the nature and circumstances of the offense and the history and characteristics of the defendant." Though it appears there may be some dispute over the details of the offense here, there is no dispute that the defendant was a sitting Michigan Supreme Court Justice at the time of her offense.

If the defendant here had used her official position to facilitate the offense, there is little doubt that her status would be an aggravating factor (and the guidelines themselves include an upward adjustment on this basis). But the question prompted by this story and the title of this post is whether her status ought to be considered an aggravating sentencing factor even though it apparently played no role in her crime.

January 29, 2013 in Federal Sentencing Guidelines, Offender Characteristics, Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing | Permalink | Comments (19) | TrackBack

Friday, January 11, 2013

Lots of new and notable for criminal justice fans in latest SCOTUS cert grants

This time of year, working late on a Friday can sometimes get rewarded with Supreme Court news after its usual Friday conferences: this week brings a Friday afternoon SCOTUS order list with six new cert grants. And, as Lyle Denniston detailed in this new post at SCOTUSblog, half of the grants include cases with notable criminal justice concerns:

The Supreme Court agreed on Friday to decide a major case on the right to remain silent — a case testing whether that right exists for an individual who has not been arrested but is interviewed by police, and was not given Miranda warnings, when that silence was used to help prove guilt at a trial.  That case — Salinas v. Texas (docket 12-246) — was one of six new cases accepted for review.  (The order list is here.)...

Here, in brief, are the other new cases and the issues at stake [from the criminal justice part of the SCOTUS world]:...

** Sekhar v. United States (12-357) — whether the federal anti-extortion act applies to a private individual’s use of a threat in order to get a government authority to withdraw a recommendation that would be adverse to that private individual’s interest in a pension fund.  The issue is whether such a recommendation qualifies as “property” under the Hobbs Act, which makes it a crime to obtain property by threats.

** United States v. Kebodeaux (12-418) — Congress’s authority in 2006 to make it a federal crime for an individual convicted years before of a sex crime to fail to register, after the individual had long since completed a sentence.

Based on this helpful summary, it looks like the new sex offender case, US v. Kebodeaux, should be of greatest interest to sentencing fans. But all criminal cases on the SCOTUS docket, of course, can end up having a sentencing spin or impact.

January 11, 2013 in Criminal Sentences Alternatives, Sentences Reconsidered, Sex Offender Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (0) | TrackBack

Friday, December 21, 2012

As scripted in plea deal, Peter Madoff gets 10 years for his role in Ponzi scheme

As reported in this Bloomberg News article, headlined "Peter Madoff Gets 10 Years for His Role in Brother’s Ponzi Fraud," another participant in perhaps the biggest-ever white-collar crime was sentenced yesterday.  But, as the article details, the sentencing included limited drama because the outcome had already been essentially pre-arranged by the parties via a plea deal:

Peter Madoff, who pleaded guilty to aiding Bernard Madoff’s fraud while claiming he didn’t know his older brother was running a vast, decades-long Ponzi scheme, was sentenced to 10 years in prison.

U.S. District Judge Laura Taylor Swain yesterday sentenced Peter Madoff after considering pleas from victims of the fraud that she not show him any mercy. As part of an agreement with prosecutors, Madoff agreed not to seek less than the maximum 10- year prison term allowed by law.

In a 55-minute hearing in Manhattan, Swain said the notion that Peter Madoff didn’t know about the wide-ranging fraud at firm is “frankly, not believable.”  She urged him to cooperate with investigators who are trying to unravel the Ponzi scheme at his former firm.  “I challenge you to be honest about all that you have done and all that you have seen,” Swain told Madoff before pronouncing sentence.

Peter Madoff, 67, becomes the second person sentenced in the fraud at Bernard L. Madoff Investment Securities LLC, which was exposed in December 2008.  Bernard Madoff, who admitted masterminding the scheme, is serving a 150-year sentence in a North Carolina federal prison....

Swain also sentenced Madoff to one year probation when he’s released and she approved a forfeiture order that Madoff agreed to under which he must surrender all his assets, including Social Security proceeds, up to $143.1 billion. Swain approved the arrangement, which she called “draconian,” saying it “seals Peter Madoff’s financial ruination.”...

Two victims of the Madoff fraud, Michael T. DeVita and Amy Luria Nissenbaum, addressed the court.  “I ask that you show the same degree of compassion for Peter Madoff that he showed for us -- none,” DeVita said, urging Swain to set aside Madoff’s plea agreement and sentence him to more than 10 years.  “He benefited from this scam for over 30 years and he should be in prison for the same amount of time,” Nissenbaum told Swain....

Anthony Sabino, who teaches law at St. John’s University in New York, said many victims of the Madoff fraud are unlikely to be satisfied with Peter Madoff’s sentence, particularly in comparison with the 150 years his brother received.  “Ten years -- it just seems to be on the low end of the scale,” Sabino said.

In papers filed with the court, Peter Madoff’s lawyer, John R. Wing, said his client was “a victim of his brother’s Ponzi scheme.”  Peter Madoff’s “world was shattered” when his brother disclosed the fraud to him, Wing said in the letter, which was made public this week.

Peter Madoff’s guilty plea to two criminal charges came three years to the day after his brother was sentenced to 150 years in prison.  During his plea hearing, Peter Madoff told the court he had no knowledge of Bernard Madoff’s scheme until Dec. 9, 2008, the night his brother confessed to him that the investment business was a sham.  Bernard Madoff was arrested and confessed to authorities two days later, on Dec. 11.

Peter Madoff pleaded guilty to one count of conspiracy and one count of falsifying records of an investment adviser.  Both offenses carry maximum sentences of five years in prison. Peter Madoff admitted to improperly avoiding taxes by having the firm pay many of his expenses, which he didn’t report as income.  He also said he filed false reports with regulators that helped conceal the fraud.  After learning of the Ponzi scheme, Peter Madoff said he helped his brother parcel out $300 million remaining in the firm to select friends and family members.

Peter Madoff repeatedly lied and violated the trust investors had in the firm, prosecutors said. His crimes began in about 1996 and continued until December 2008 when the firm collapsed, according to the government.  Had regulators and clients known the truth about the compliance program overseen by Peter Madoff, “it is possible that the fraud would have been detected years earlier and losses to the many victims would have been avoided,” prosecutors said in court papers Dec. 14....

Federal prosecutors have obtained guilty pleas from Madoff’s former chief financial officer, Frank DiPascali, his former accountant, David Friehling, and former employees Craig Kugel, David Kugel, Enrica Cotellessa-Pitz, Irwin Lipkin and Eric Lipkin.  They haven’t yet been sentenced.  Also facing charges are former employees Daniel Bonventre, Annette Bongiorno, Joann Crupi, Jerome O’Hara and George Perez. They have pleaded not guilty.

December 21, 2012 in Offense Characteristics, White-collar sentencing | Permalink | Comments (0) | TrackBack

Friday, November 30, 2012

Fraud sentencing of National Lampoon CEO no laughing matter (though recommended sentence are funny)

A notable white-collar sentencing took place in federal court in Indiana today, as reported in this AP piece headlined "Ex-National Lampoon CEO sentenced to 50 years in jail."  Here are the details:

A financier and former chief executive of humor magazine National Lampoon convicted of swindling investors out of about $200 million was sentenced Friday to 50 years in prison.

U.S. District Judge Jane Magnus-Stinson said the case against Timothy Durham was characterized by "deceit, greed and arrogance" and that Durham had violated the trust of thousands of small investors from the American Heartland.  "We drive Chevys and Buicks and Ford, not Ducatis. That's how most of us roll," Magnus-Stinson said. "When they're defrauded, it is the most serious offense because it undermines the fabric of this country."...

Prosecutors have said [Durham and his codefendants] stripped Akron, Ohio-based Fair Finance of its assets and used the money to buy mansions, classic cars and other luxury items and to keep another of Durham's company afloat. The men were convicted of operating an elaborate Ponzi scheme to hide the company's depleted condition from regulators and investors, many of whom were elderly.

Durham's attorney, John Tompkins, argued at trial that Durham and the others were caught off-guard by the economic crisis of 2008 and bewildered when regulators placed them under more strict scrutiny and investors made a run on the company. Attorneys for all three men had asked the judge for lighter sentences than those recommended. Tompkins sought a total of five years for Durham — three years in prison and two years of home detention.

Prosecutors had wanted 225 years for Durham. Magnus-Stinson said she couldn't sentence him to that much because that number would be as "puffed up" as statements that he held $280 million in assets. But she clearly showed her displeasure with Durham, telling him he had been "raised better" and noting that though he testified that he "felt terribly" for the victims, he had shown no sincere remorse.

Barbara Lukacik, 74, an Ohio nun who said she lost $125,000 in the Fair Finance collapse, said she had forgiven Durham and the others but testified before the sentencing that a lengthy sentence was warranted. "If you receive a short sentence — a slap on the wrist, so to say — I do not think it will be enough time for your heart and your conscience to realize your sin and your greed," she said.

There is nothing funny about lives ruined by a massive fraud and by a decision to impose a 50-year prison sentence on a white-collar scoundral. But this story struck me as especially blogworthy and somewhat laughable on a Friday afternoon because of the seemingly crazy (though arguably not foolish) sentencing recommendations coming from the parties.  I know I would never in good conscious be able to seriously advocate for a sentence of 225 years in prison for anyone, and I probably also could not urge only 3 years in prison for a massive Ponzi schemer.  At both extremes, the recommendations coming from the parties here seem more fitting for the National Lampoon's pages than federal court filings.

November 30, 2012 in Federal Sentencing Guidelines, Offense Characteristics, Purposes of Punishment and Sentencing, White-collar sentencing | Permalink | Comments (8) | TrackBack

Friday, October 26, 2012

Are criticisms of Rajat Gupta's two-year prison sentence sound or suspect?

The question in the title of this post is prompted by this AP piece headlined "Ex-Goldman Exec's 2-Year Sentence Draws Scrutiny."  Here are excerpts, which also includes some highlights from Judge Jed Rakoff's comments about the federal sentencing guidelines:

A two-year prison sentence for insider trading at the height of the 2008 economic crisis, by a man who was once one of the nation's most respected business executives, is a fifth of the 10 years requested by the government and well below sentencing guidelines.  Now, some experts are questioning whether it's a fair punishment.

Judge Jed Rakoff described the sentence and $5 million fine given to former Goldman Sachs and Procter & Gamble Co. board member Rajat Gupta, 63, on Wednesday as sufficient to deter others and properly punish the Westport, Conn., resident.  "At the same time, no one really knows how much jail time is necessary to materially deter insider trading; but common sense suggests that most business executives fear even a modest prison term to a degree that more hardened types might not.  Thus, a relatively modest prison term should be 'sufficient, but not more than necessary,' for this purpose," Rakoff said.

Some legal observers did not agree.  Chicago attorney Andrew Stoltmann said the sentence should have been closer to the 10 years prosecutors had recommended because Gupta's crimes were more serious than those committed by Raj Rajaratnam, the billionaire hedge fund founder he tipped off. Rajaratnam is serving 11 years in prison.

"Gupta intentionally betrayed his duties to Goldman Sachs as a director of the company, refused to take responsibility for his actions and put the government through a long and exhaustive trial costing taxpayers millions," Stoltmann said. "Judge Rakoff should have thrown the proverbial book at Gupta and sentenced him to the higher range of the 97 to 121 months prosecutors were requesting."...

Rakoff criticized sentencing guidelines that he said called for Gupta to serve at least 6½ years behind bars.  Citing information he received under seal, Rakoff said Gupta's crimes may have occurred because Gupta may have "longed to escape the straightjacket of overwhelming responsibility, and had begun to loosen his self-restraint in ways that clouded his judgment."...

Rejecting defense arguments that a community service sentence would be sufficient, Rakoff said a prison sentence was necessary to send a message to insider traders that "when you get caught, you will go to jail."

"While no defendant should be made a martyr to public passion, meaningful punishment is still necessary to reaffirm society's deep-seated need to see justice triumphant," the judge said. "No sentence of probation, or anything close to it, could serve this purpose."...

Rakoff said he could not spare Gupta from prison and only order him to perform community service.  "It's not a punishment. It's what he finds satisfaction doing," the judge said.... In his attack on federal sentencing guidelines that are meant to be advisory, Rakoff said "mechanical adding-up of a small set of numbers artificially assigned to a few arbitrarily-selected variables wars with common sense."

He added: "Whereas apples and oranges may have but a few salient qualities, human beings in their interactions with society are too complicated to be treated like commodities, and the attempt to do so can only lead to bizarre results."

Notably, long-time federal prosecutor and frequent commentator Bill Otis stated in the first comment to a prior Gutpa post that he has "a hard time seeing what interest would be served by giving [Gupta] a sentence longer than he got." In addition to appreciating Bill's candor, his comment spotlight the import and distorting impact of the guidelines even in a post-Booker world.  Though Bill Otis sees Gupta's two-year prison term to be "sufficient" in light of the commands of 3553(a), federal prosecutors in this case argued that a guideline sentence at least four times longer (more than eight years) was necessary to serve congressional sentencing goals. And even post-game criticism of Gupta's sentence reflected in the above-quoted article is quick to assert that the guideline range was a better benchmark for a proper sentence.

For social and psychological reasons, I continue to understand why guideline provisions and ranges has such a huge anchoring effect on federal sentencing decision-making even now eight years after the Booker ruling. But for normative and humanitarian reasons, I continue to be saddened that a big book of sentencing suggestions still dominates analysis of federal sentencing decision-making even now eight years after the Booker ruling.

Related prior posts on Gupta sentencing:

October 26, 2012 in Booker in district courts, Celebrity sentencings, Federal Sentencing Guidelines, Offender Characteristics, Offense Characteristics, Purposes of Punishment and Sentencing, White-collar sentencing | Permalink | Comments (10) | TrackBack

Wednesday, October 24, 2012

Rajat Gupta gets 24-month prison term, $5 million fine at sentencing for insider trading

The early news reports from US District Court in downtown NYC indicate that former Goldman Sachs director Rajat Gupta was sentenced to two years in prison and a $5 million fine for his insider trading, and that he is scheduled to report to prison on January 8, 2013.

This sentence is between the extremes of th 8-10 years sought by prosecutors and the "rigorous community service" sought by the defense. And it should come as no surprise to regular readers based on my comment in this post after seeing the sentencing submissions: "I will (boldly?) predict that Judge Rakoff will impose a sentence somewhere between these recommendations. I will even set my current betting-line over/under at two years in prison." Though I have no actual experience as a bookie, I think the fact that my betting line hit the actual outcome on the number means that the house keeps all bets. Maybe I should look into the (federal sentencing)bookie business.

UPDATE:  This new Wall Street Journal account of the sentencing includes these excerpts and quotes of note:

"I think the record, which the government really doesn't dispute, bears out that he is a good man," said Judge Rakoff during the hearing. "But the history of this country and the history of the world, I'm afraid, is full of examples of good men who do bad things."...

Mr. Gupta, who was accompanied to court by his wife and four daughters, apologized to his friends, family and the charitable institutions that he helped to found. "The last 18 months have been the most challenging period of my life since I lost my parents as a teenager," he told the judge before sentencing. "I lost my reputation that I built over a lifetime. Much of the first year seemed surreal to me. However, since the trial I've come to accept the reality of my life going forward," he said....

Prosecutors had argued that Mr. Gupta should receive up to 10 years in prison under the federal sentencing guidelines, which in insider-trading cases are largely based on profits, or losses avoided, because of the illegal tips. But the guidelines are advisory and Judge Rakoff often sentences below them....

Manhattan U.S. Attorney Preet Bharara said in an emailed statement: "With today's sentence, Rajat Gupta now must face the grave consequences of his crime — a term of imprisonment.  His conduct has forever tarnished a once-sterling reputation that took years to cultivate.  We hope that others who might consider breaking the securities laws will take heed from this sad occasion and choose not to follow in Mr. Gupta's footsteps."

October 24, 2012 in Celebrity sentencings, White-collar sentencing | Permalink | Comments (11) | TrackBack

Tuesday, October 23, 2012

New Slate commentary on upcoming Gupta sentencing

Harlan Protass has this new commentary at Slate headlined "Rajat Gupta Could Go to Prison for 10 Years for Insider Trading: Even though he wasn’t a major player — is that fair?". Here are excerpts:

On Wednesday Rajat Gupta will appear in Manhattan federal court to be sentenced for passing secrets he learned, while serving on the board of directors of Goldman Sachs, to Raj Rajaratnam, the former chief of hedge fund giant Galleon Group. Rajaratnam himself was convicted in May 2011 of being the center of the biggest insider trading ring in decades. He’s serving 11 years for his crimes, one of the longest sentences ever for insider trading.

Like Rajaratnam, Gupta, the former head of McKinsey & Company, deserves punishment. He was convicted of a type of securities fraud, and fraud is a form of theft. He wrongly used his position of power and influence for personal advancement, corroding Main Street’s trust and confidence in Wall Street.

Still, Gupta is no Rajaratnam. Gupta tipped inside information about one company to Rajaratnam, while Rajaratnam traded on confidential information collected from many sources. So you’d expect that Gupta would be treated differently when he appears for sentencing. Federal sentencing guidelines, however, suggest a prison term for him that’s similar in length to the 11 years Rajaratnam is serving. And prosecutors want a sentence within those guidelines, just as they want for the hundreds of defendants sentenced in federal courts nationwide every day. Because what Gupta and Rajaratnam did is so different, though, sentencing Gupta to anything like the time Rajaratnam is serving undermines the whole purpose of the sentencing scheme that prosecutors say they want to uphold....

Gupta and Rajaratnam are like the kingpin and corner street dealer who do roughly the same amount of time for drug dealing, as happens to a disturbing degree in narcotics cases (which accounted for almost 30 percent of the 80,000-plus cases resolved in federal court in 2011). Because drug sentences are fixed by drug type and quantity, not role, defendants in distribution rings face the same potential penalty, whatever their actual position and conduct. That’s what happened to Jamel Dossie, a small-time, street-level drug dealer’s assistant who was an addict. In New York in March, he received a five-year mandatory minimum sentence for his role as a go-between in four hand-to-hand crack sales for a total gain to himself of $140.

Luckily for Rajat Gupta, his sentencing judge is Jed S. Rakoff, who has said that where the federal guidelines “provide reasonable guidance,” they “are of considerable help to any judge in fashioning a sentence that is fair, just and reasonable,” but also argued that when the guidelines “have run so amok that they are patently absurd on their face,” courts should rely more on general sentencing principles. Judge Rakoff faced this dilemma in the case of Richard Adelson, who was convicted of participating in a conspiracy to overstate the financial results of Impath Inc. (a laboratory services company) and artificially inflate its stock price. The guidelines recommended life imprisonment for him, even though other people had concocted and operated the scheme for years before Adelson joined it. Judge Rakoff gave him 42 months, describing the life sentence recommended by the guidelines as “patently unreasonable.”

It’s because of Judge Rakoff that Gupta is widely expected to receive a sentence considerably less than what federal guidelines recommend, no matter what the government’s lawyers say. (Gupta’s own counsel have asked for probation.) But the approach of this judge is the exception. The reality of federal sentencing means that it should be closer to the rule.

Related posts on upcoming Gupta sentencing:

October 23, 2012 in Celebrity sentencings, Federal Sentencing Guidelines, Offense Characteristics, White-collar sentencing | Permalink | Comments (0) | TrackBack

Friday, October 19, 2012

"Can the CEO Learn from the Condemned? The Application of Capital Mitigation Strategies to White Collar Cases"

The title of this post is the title of this interesting-looking new piece up on SSRN authored by Todd Haugh. I would be eager to read this article based solely on the first sentencing of the abstract, which is "Ted Kaczynski and Bernie Madoff share much in common." But especially with the sentencing of Rajat Gupta scheduled for next week (basics here), I now think this piece should be a weekend must-read for lots of folks. Here is the full abstract:

Ted Kaczynski and Bernie Madoff share much in common. Both are well-educated, extremely intelligent, charismatic figures. Both rose to the height of their chosen professions — mathematics and finance. And both will die in federal prison, Kaczynski for committing a twenty-year mail-bombing spree that killed three people and seriously injured dozens more, and Madoff for committing the largest Ponzi scheme in history, bilking thousands of people out of almost $65 billion. But that last similarity — Kaczynski’s and Madoff’s plight at sentencing — may not have had to be. While Kaczynski’s attorneys tirelessly investigated and argued every aspect of their client’s personal history, mental state, motivations, and sentencing options, Madoff’s attorneys offered almost nothing to mitigate his conduct, simply accepting his fate at sentencing. In the end, Kaczynski’s attorneys were able to convince the government, the court, and their client that a life sentence was appropriate despite that he committed one of the most heinous and well-publicized death penalty-eligible crimes in recent history. Madoff, on the other hand, with almost unlimited resources at his disposal, received effectively the same sentence — 150 years in prison — for a nonviolent economic offense. Why were these two ultimately given the same sentence? And what can Madoff, the financier with unimaginable wealth, learn from Kaczynski, the reclusive and remorseless killer, when it comes to federal sentencing?

The answer lies in how attorneys use sentencing mitigation strategies. This Article contends that federal white collar defendants have failed to effectively use mitigation strategies to lessen their sentences, resulting in unnecessarily long prison terms for nonviolent offenders committing financial crimes. The white collar defense bar has inexplicably ignored the mitigation techniques perfected by capital defense attorneys, and in the process has failed to effectively represent its clients. After discussing the development of the mitigation function in capital cases and paralleling it with the evolution of white collar sentencing jurisprudence, particularly post-Booker, this article will present seven key mitigation strategies currently used by capital defense teams and discuss how these strategies might be employed in federal white collar cases. The goal throughout this Article will be to highlight new strategies and techniques available in defending white collar clients and to enhance sentencing advocacy in federal criminal cases.

October 19, 2012 in Federal Sentencing Guidelines, Offender Characteristics, Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, Scope of Imprisonment, White-collar sentencing, Who Sentences? | Permalink | Comments (9) | TrackBack

Wednesday, October 17, 2012

Gupta sentencing memos: feds seeking 97 to 121 months in prison, defense requesting probation and "rigorous community service"

This new Wall Street Journal article, headlined "Prosecutors Seek as Much as Decade in Prison for Gupta," reports on the sentencing advocacy appearing in the sentencing memoranda filed today for next week's scheduled sentencing of Rajat Gupta.  Here are the particulars:

Rajat Gupta, once part of the upper echelons of American business and a former Goldman Sachs Group Inc. director, should spend as much as the next decade of his life behind bars after he was convicted of insider trading earlier this year, prosecutors said.

However, lawyers for Mr. Gupta, the most prominent figure caught up in the government's broad crackdown on insider trading, said the 63-year-old should instead receive no time in jail and "rigorous community service." More than 70 people have been convicted or pleaded guilty in the government's probe.

A former director at Goldman and Procter & Gamble Co., Mr. Gupta was convicted of three counts of securities fraud and one count of conspiracy for allegedly passing along corporate secrets he learned in the boardroom about Goldman to hedge-fund manager Raj Rajaratnam, whose fund made millions of dollars trading on his tips. He was acquitted of two fraud charges....

"Gupta's crimes are shocking," said Assistant U.S. Attorney Richard Tarlowe in a court filing Wednesday. "Gupta had achieved extraordinary personal and professional success and was at the pinnacle of a profession built on protecting client confidences."... The government asked for a sentence between eight years and 1 month to 10 years and one month in prison....

Gary Naftalis, a lawyer for Mr. Gupta, argued in a court filing that he should face a less onerous sentence, saying the alleged conduct was an aberration and his client has been a upstanding member of the community, contributing to causes ranging from education to treating infectious diseases in the developing world....

"The convictions in this case represent an utter aberration in the life of the man before the Court — a man whose 'personal history and characteristics' are dramatically different from those routinely presented to sentencing courts in white collar cases," Mr. Naftalis said in a court filing....

Mr. Naftalis suggested the Mr. Gupta receive a sentence of probation and be ordered to engage in a full-time program of community service, ranging from working with a U.S. agency that provides emergency shelters and other services for the homeless and at-risk youth to working with Rwanda's government and an international public-health organization to help improve that country's delivery of health care.

Federal sentencing law requires judges to consider and balance a variety of factors, including guidelines for the length of prison terms, the size of the crime, the character and history of the defendant and the need to deter him or her and the public in general from crime in the future.

In Mr. Gupta's case, the judge is likely to consider the defense's arguments that Mr. Gupta has been a model member of society, participating in philanthropic endeavors around the world for years and a dedicated family-man despite his demanding career.

If/when I can find these filings available on-line, I will post them (and maybe even add a few comments). Even before giving them a read, I will (boldly?) predict that Judge Rakoff will impose a sentence somewhere between these recommendations. I will even set my current betting-line over/under at two years in prison, though that might change based on the forces of the sentencing memos.

Related posts on upcoming Gupta sentencing:

 

UPDATE:  A wonderful reader sent me this link where both sentencing memos in US v. Gupta can be found. 

October 17, 2012 in Federal Sentencing Guidelines, Offender Characteristics, Offense Characteristics, Purposes of Punishment and Sentencing, White-collar sentencing | Permalink | Comments (2) | TrackBack

"Rajat Gupta Should Walk Free Wednesday"

The title of this post is the headline of this notable commentary by Walter Pavlo in Forbes with a notable sentencing recommendation for a high-profile federal white-collar sentencing scheduled for next week. Here are excerpts:

On October 24, former McKinsey director, former Goldman Sachs director, former Proctor & Gamble director, former American Airlines director, former Bill & Melinda Gates Foundation director, Rajat Gupta will stand before Judge Rakoff to be sentenced on criminal counts that he was part of an insider trading scheme. The operative word in describing Gupta these days is Mr. “Former” of everything. His life as a professional is over, but that doesn’t mean it should end with a prison sentence.

Gupta no longer sits as an esteemed member on various boards, nor is he sought after by universities to address students ... he is a convicted felon and now we await the crescendo of this criminal prosecution when the prison sentence is announced on Wednesday. Oh and what a spectacle it will be. There will be so much excitement as court artists will capture the moment in chalk, journalists will make a bolt for the courtroom door to fill in the blank (Prison Years) they have in the stories they wrote on Tuesday, and photographers will grab a photo of Gupta entering and leaving the courthouse. If one photographer is lucky he/she will get one of Gupta and his family crying and hugging outside the courtroom. CNBC, FOX and Bloomberg will recruit some former federal inmate to recount his prison experience so that we, the interested public, understand what the Harvard MBA Gupta will expect upon showing up at some prison. The truth is, Gupta shouldn’t be going to prison at all.

Judge Rakoff has an opportunity to give Mr. Gupta a year or two of probation. Ample punishment has already been doled out to Gupta and prison is just a poor excuse as a way to hold him up as an example to the rest of us. Gupta should be treated fairly and fairness would be sending him home to his family and not to some prison camp that would offer no benefit to society.

Such a sentence will put people on notice that there is justice and fairness in our courts. A justice that takes into account a person’s value to society and the detriment of taking that person away. Prison, in the case of Gupta, would not be a remedy, it would simply add to the misconception that prison is the panacea for all criminal cases. My hope is that Judge Rakoff uses this case and this man to make that statement.

Related posts on upcoming Gupta sentencing:

October 17, 2012 in Purposes of Punishment and Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (8) | TrackBack

Saturday, October 13, 2012

Might it hurt Rajat Gupta to get sentencing support letters from the 1%?

The question in the title of this post is prompted by this notable new article in the Wall Street Journal headlined "Dear Judge, Gupta Is a Good Man: Bill Gates, Kofi Annan Among Those Writing in Support of Inside Tipster Ahead of His Sentencing." Here are the story basics:

Rajat Gupta, the former Goldman Sachs Group Inc. director convicted of insider trading, has lost his powerful spots on corporate boards, his reputation and likely his freedom when a judge sentences him later this month. But Mr. Gupta, 63 years old, still has plenty of powerful backers, including Bill Gates and Kofi Annan, and they are lining up to support him with letters to the judge.

Mr. Gates, co-founder of Microsoft Corp., and Mr. Annan, former secretary-general of the United Nations, are among those who have written letters to U.S. District Judge Jed Rakoff on Mr. Gupta's behalf. More than 200 letters have been sent to the judge through Mr. Gupta's lawyers ahead of the Oct. 24 sentencing, according to the submissions, which were examined by The Wall Street Journal....

Mr. Gupta was convicted in June of giving hedge-fund manager Raj Rajaratnam, his friend and business associate, inside information about Goldman's financial results and an investment by Berkshire Hathaway Inc.'s Warren Buffett during the financial crisis. Prosecutors said Mr. Rajaratnam's hedge fund made millions based on Mr. Gupta's tips, while Mr. Gupta, also a former director at Procter & Gamble Co., benefited from the leaks because of their friendship and mutual business interests.

Prosecutors are likely to argue that federal sentencing guidelines dictate a term for Mr. Gupta that could exceed 10 years, based on the illicit trading gains by Mr. Rajaratnam's fund. But the guidelines are advisory, and Judge Rakoff usually hands down less than they suggest....

Mr. Gupta, the former head of McKinsey & Co., the global corporate consulting firm, was active in the philanthropic and charitable communities in the U.S., in his native India and other countries. Letters from his supporters include those from leaders of companies, academics and Wall Street figures. His family also wrote to the judge, including his wife, four daughters and an 84-year-old aunt in India....

It is common for defendants to ask friends, family and prominent figures they may have encountered in their lives to write letters on their behalf to the court ahead of sentencing. Defense lawyers routinely cite such letters at sentencing in hopes of providing a fuller picture of a defendant beyond the crime they've been convicted of committing, particularly when it comes to a defendant's charitable works....

Mr. Gupta's submissions include letters from a class of luminaries not often seen at sentencing, but reflective of those he associated with as a top executive at McKinsey and through the philanthropic causes he supported.

In prior posts and comments, there has been an interesting and robust discussion about whether and how character letters from family, friends, and colleagues can play a role in post-Booker federal sentencing decision-making.  In this case, as the question in the title to this post suggests, I cannot help but wonder if the very high-profile nature of the folks writing on Gupta's behalf could, directly or indirectly, risk creating the impression that Gupta's extraordinary prominence and connections provide a special reason not to give him any kind of special break at his federal sentencing.

Related posts on upcoming Gupta sentencing:

October 13, 2012 in Offender Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing | Permalink | Comments (3) | TrackBack

Tuesday, October 09, 2012

Gearing up for high-profile sentencing of high-profile insider trading defendant

MI-BR721_GUPTA_NS_20121009182408The Wall Street Journal has this notable new article, headlined "In Gupta Sentencing, a Judgment Call," about a high-profile federal sentencing of a high-profile white-collar defendant slated for later this month. Here is how the piece gets started:

Former Goldman Sachs Group Inc. director Rajat Gupta is the highest-profile of more than 70 defendants convicted of insider trading in New York federal court in the past three years.

But this month he will likely receive a more lenient sentence than the 11-year-prison term given to Raj Rajaratnam, to whom Mr. Gupta provided his illegal leaks, legal experts say.

The sentence may have reverberations beyond the 63-year-old Mr. Gupta, a former chief of consulting giant McKinsey & Co. It will be widely watched in executive suites nationwide because it will be among the first handed down to a major corporate figure in the recent insider-trading crackdown. Previous sentences have largely involved traders, lawyers, lower-rung corporate employees and others.

Mr. Gupta, who was convicted in June of three counts of securities fraud relating to tips about Goldman and one count of conspiracy, didn't trade or profit directly from his illegal tips. Before the conviction, he had a long and stellar career in corporate America and philanthropy.

All this will be balanced against the nature of the crimes and the need to discourage others from similar offenses when U.S. District Judge Jed Rakoff hands down his sentence, scheduled for Oct. 24. Judge Rakoff often imposes sentences further below federal sentencing guidelines than some other judges do, according to a Wall Street Journal analysis.

"It's tough for a judge, because on the one hand, you know you are supposed to deter others to make a statement," said Peter Zeidenberg, a former prosecutor and now a white-collar defense attorney in Washington. "On the other hand, you should be looking at individuals as individuals and not as a poster board."

Federal guidelines could dictate a sentencing range for Mr. Gupta of up to 10 years, if Judge Rakoff agrees that the tips produced an amount approaching what prosecutors said in trial exhibits were at least $10 million in illicit profits earned and losses avoided by the Galleon Group, Mr. Rajaratnam's hedge fund. That would include extra time if Judge Rakoff found Mr. Gupta abused a position of trust as a corporate board member.

The range also could be less if the judge determines the illegal gains were less than $7 million, or based on other factors the defense might put forward. Judges must calculate and consider the guidelines at sentencing but needn't impose them. Judge Rakoff in the past has criticized them as "a mirage of something that can be measured."

Since 2010, Judge Rakoff has imposed an average sentence of 21 months on insider-trading defendants who didn't cooperate with prosecutors—about 38% below the guideline minimum, according to the Journal analysis.

By comparison, U.S. District Judge Richard Sullivan issued seven sentences in that period averaging 6.3% below the guideline minimum. U.S. District Judge Paul Crotty issued three sentences at 20.3% less than the minimum.

And former U.S. District Judge Richard Holwell issued three at 39% under the minimum. Mr. Holwell's 11-year sentence for Mr. Rajaratnam was 100 months below the minimum; he gave 30 months to Danielle Chiesi, Mr. Rajaratnam's co-conspirator, seven months under her range.

October 9, 2012 in Booker in district courts, Federal Sentencing Guidelines, Offender Characteristics, Offense Characteristics, White-collar sentencing | Permalink | Comments (1) | TrackBack

Saturday, October 06, 2012

Has the First Circuit blessed disregarding loss in some white-collar sentencings?

The question in the title of this post is prompted by this lengthy new piece in the New York Law Journal by attorney Laura Grossfield Birger, which is headlined "The Impact of First Circuit's 'Prosperi' Decision: Does appellate review constrain district courts to follow Sentencing Guidelines?". Here are a few excerpts from the piece:

The recent decision by the U.S. Court of Appeals for the First Circuit in United States v. Prosperi, 686 F.3d 32 (1st Cir. 2012), affords great discretion to sentencing courts to deviate from the Sentencing Guidelines, despite expressing palpable discomfort with the extent of deviation at issue in this particular case.  For this reason, the opinion is likely to be cited often in the First Circuit and elsewhere, and its analysis and approach warrants examination....

[I]n reviewing the substantive reasonableness of the sentences, the First Circuit initially focused on whether the district court had offered a plausible explanation for minimizing the impact of the loss amount.  The court reviewed the reasons articulated by the district court in detail ... [and] found that the[] findings and conclusions constituted "plausible" explanations for the district court's refusal to give significant weight to the loss amount it calculated pursuant to the Sentencing Guidelines.

The relaxed review applied by the First Circuit to this aspect of the district court's rationale is significant.  As the court recognized, the strength of the justification required to support a variance from a Sentencing Guidelines range fluctuates with the degree of that variance; the greater the deviance from the applicable Sentencing Guidelines range, the more significant the justification required to support it.  Here, the government's principal complaint boiled down to the huge extent of the variance — from a more than seven-year sentence to probation.  By accepting the district court's decision not to give the loss amount much weight, the First Circuit essentially approved a reduction in the spread; once the loss amount is removed as the pivotal factor driving the sentence, the government's argument that the breadth of the variance between zero and 87 months is unjustifiable loses traction.

The balance of the First Circuit's analysis of the district court's rationale reflects its acceptance of its key tenet — the disregard of the loss amount as the determinative factor.  The court reviewed the government's other objections to the district court's proffered justification ... and swiftly rejected them....

Like most sentencing decisions, Prosperi is highly dependent on its facts, yet the opinion is likely to reverberate in white-collar sentencing jurisprudence.  The willingness of the district court not just to mitigate the impact of the loss amount on the sentence, but essentially to disregard its effect entirely, will be an attractive precedent to defendants facing staggering sentences driven largely by loss amounts.  And while the government will surely strive to limit Prosperi to its facts, it will not be difficult for defense lawyers to analogize other fraud cases to at least some of the factors present in Prosperi. Fundamentally, the Prosperi opinion also signals to district courts that, at least in the First Circuit, there are few restraints on their discretion to impose sentences far below the applicable Guidelines range in fraud cases; as long as they explain why they did so, citing lawful considerations, the sentences will not be disturbed on appeal even when the Court of Appeals plainly disagrees with the result.  If embraced by district courts, this may galvanize a trend away from the uniformity that the Guidelines seek to impose, particularly in white-collar cases, and toward a return to the flexibility and discrepancy in sentencing often associated with the pre-Guidelines era.

Related prior post:

October 6, 2012 in Booker in the Circuits, Federal Sentencing Guidelines, Sentences Reconsidered, White-collar sentencing, Who Sentences? | Permalink | Comments (0) | TrackBack

Tuesday, September 25, 2012

Not much for sentencing fans (or Rubashkin supporters) in latest SCOTUS cert grants

As reported here by SCOTUSblog, the "Supreme Court, preparing to open a new Term next Monday, on Tuesday granted review of six new cases." Disappointingly, though the Court did take up a Fourth Amendment blood testing issue concerning drunk drivers in Missouri v. McNeely, none of the other cases I noted in this recent post are on the grant list.  There is also an notable IFP grant in Millbrook v. US concerning the federal government's immunity in lawsuit by a federal prisonder subject to sexual assault by three guards.

A long list of cases in which cert was denied will not be released until next Monday. In all likelihood, the Rubashkin case will be on that list. If so, any and everyone aggrieved by the prosecution and sentencing in Rubashkin will need to turn their attention and energies toward a 2255 petition (or, I suppose, a clemency application).

Related posts on the Rubashkin case:

September 25, 2012 in Offense Characteristics, Procedure and Proof at Sentencing, Sentences Reconsidered, White-collar sentencing | Permalink | Comments (1) | TrackBack

Thursday, September 20, 2012

Can a documentary impact odds of a cert grant in the (in)famous Rubashkin case?

In this post from a few months ago, I wondered about the odds as to whether SCOTUS grants cert in the (in)famous Rubashkin case.  As detailed in an amicus brief on sentencing issues I authored to support Rubashkin's cert petition (discussed here), I am hoping SCOTUS will take up this case.  But the odds of a grant in any case are always long, no matter how much attention a case receives.

That said, as detailed in this Des Moines Register piece, the Rubashkin case is getting a whole new level of attention just days before the cert conference in which the Justices are scheduled to consider the case.  The piece is headlined "Documentary highlights Rubashkin’s fraud conviction, Supreme Court appeal," and here are excerpts:

A documentary short released today that examines the power U.S. federal prosecutors wield in the U.S. criminal justice system features former Agriprocessors executive Sholom Rubashkin.

The 10-minute film, “Unjustified,” includes interviews with a variety of legal experts, among them former Solicitor General Paul Clement, the lead lawyer on Rubashkin’s appeal that asks the U.S. Supreme Court to shorten a 27-year sentence or order a new trial. The high court will decide this fall whether to hear the case....

Rubashkin argues U.S. District Judge Linda Reade, who presided over his trial, could not be impartial because he said evidence shows she met repeatedly with investigators planning the raid. He also argues his prison term was too long for a first-time, nonviolent offender.

The documentary is directed by Emmy-nominated producer Nicholas McKinney, known for his work on Comedy Central’s “The Daily Show” and Michael Moore’s Bravo TV series “The Awful Truth.”

The 10-minute video, titled “Unjustified: The Unchecked Power of America's Justice System," is available via YouTube at this link.

Related posts on the Rubashkin case:

September 20, 2012 in White-collar sentencing, Who Sentences? | Permalink | Comments (1) | TrackBack

Wednesday, September 19, 2012

"Optronics Sentencing Could Break All Sorts of Antitrust Records"

The title of this post is the headline of this new Wall Street Journal article, which gets started this way:

A San Francisco federal courtroom on Thursday could be home to a watershed moment in the history of U.S. antitrust law.

U.S. District Judge Susan Illston is scheduled to sentence Taiwan’s AU Optronics Corp. on its March conviction for participating in a scheme to fix prices on liquid-crystal-display panels. The Justice Department is asking her to impose a $1 billion fine. Yes, that’s billion, with a B.

“This sentencing is one of the most important antitrust events in recent history,” says Allen & Overy partner John Terzaken, a former director of criminal enforcement in the department’s Antitrust Division.

The sentencing hearing is a rare event for several reasons and not all have to do with the financial stakes. But let’s start with the money. The fine sought by the government is twice the size of the largest single fine it has ever collected in an antitrust case — $500 million against F. Hoffmann-La Roche Ltd in 1999, which pleaded guilty to leading a price-fixing cartel on vitamins.

The $1 billion request also is nearly double the amount the Justice Department obtained in total criminal antitrust fines — in all cases — during the last fiscal year. It’s also more than the $890 million in combined criminal fines that seven Asian companies have agreed to pay in the LCD investigation, which dates back to 2008.

Of course, those seven companies, including LG Display Co. and Sharp Corp., agreed to plead guilty. AU Optronics chose to fight the charges at trial, a decision companies rarely make because the potential criminal fines imposed after a conviction can be very high. The AU Optronics jury found the LCD conspiracy resulted in ill-gotten gains of more than $500 million, a finding that allowed the Justice Department to seek the $1 billion fine.

Also of note in Thursday’s hearing, the department is seeking stiff sentences for two convicted company executives, asking Judge Illston to impose 10-year prison terms. That’s far beyond the longest jail sentence the department ever has obtained for a Sherman Act violation: four years.

Lawyers for the two executives say there’s no justification for the lengthy sentences the department is seeking, especially because LCD executives who pleaded guilty have received sentences of 14 months or less.

This sentencing matter could bring new meaning (and a notable price-tag) to the term "trial penalty" for both the company and its executives.

UPDATE:  This AP story reports on the sentencing outcome handed down by the sentencing judge on Sept. 20: "A Taiwanese company has been fined $500 million and two of its former top executives sentenced to three years in prison for their leading roles in a global LCD screen price-fixing conspiracy."

September 19, 2012 in Criminal Sentences Alternatives, Procedure and Proof at Sentencing, White-collar sentencing | Permalink | Comments (0) | TrackBack

Monday, August 20, 2012

Another notable insider trading prosecution now moves to sentencing

White-collar sentencing fans now have another notable case to follow in the wake of the news this morning reported in this New York Times article, which is headlined "Hedge Fund Manager Found Guilty of Insider Trading." Here are the basics:

After less than a day of deliberations, a federal jury found Doug Whitman of Whitman Capital in Menlo Park, Calif., guilty of earning about $1 million in illegal profits trading technology stocks, including Google and Polycom. Mr. Whitman faces a maximum possible sentence of 25 years in prison. His sentencing is set for Dec. 20....

Of the nearly 70 Wall Street traders and corporate executives charged with insider trading by federal prosecutors in Manhattan over the last three years, virtually all have either pleaded guilty or been found guilty. Juries in Federal District Court in Manhattan have convicted all eight defendants who have taken their cases to trial.

Mr. Whitman, 54, fought the charges, arguing that all of his trades were made in good faith and grounded in legitimate stock research. The defense was similar to the one used by Raj Rajaratnam, the former hedge fund billionaire convicted by a jury last year. Mr. Rajaratnam was at the center of an vast insider trading web that ensnared Mr. Whitman.

Prosecutors in Mr. Whitman’s case relied on the testimony of several main cooperating witnesses, including Roomy Khan, a former trader who was also at the center of Mr. Rajaratnam’s trial. Jurors also heard secretly recorded telephone conversations that prosecutors said showed Mr. Whitman trafficking in confidential information.

In a rare tactic for an insider trading defendant, Mr. Whitman took the stand in his own defense. He testified that he never thought his sources possessed any secret information about the stocks that he traded.

Especially because all the recent insider trading convictions appear to be coming out of the same federal district (SDNY), I think an enterprising sentencing researcher could discover a lot of interesting stories by analyzing in depth the ultimate sentences imposed on the "nearly 70 Wall Street traders and corporate executives charged with insider trading by federal prosecutors in Manhattan over the last three years [who] have either pleaded guilty or been found guilty."  I would be especially interested to see what recommended guideline ranges and ultimate sentences were imposed for all the different defendants (and whether and how different offense or offender factors may explain any apparent sentencing disparities).

August 20, 2012 in Federal Sentencing Guidelines, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing | Permalink | Comments (2) | TrackBack

Friday, August 03, 2012

"Former Gov. Don Siegelman sentenced to 78 months in prison"

The title of this post is the headline of this local article reporting on a former Alabama Governor's resentencing outcome this afternoon in federal district court.  Here are the basics:

A federal judge sentenced former Gov. Don Siegelman to 78 months in prison.  U.S. District Judge Mark Fuller handed down the sentence -- 10 months less than what he originally gave Siegelman -- after hearing emotional statements by Siegelman in Montgomery federal court.

Before sentence was passed, Siegelman, his voice cracking, told Fuller that he was sorry for his actions and the embarrassment and disappointment he has caused.  "I do have deep regrets and remorse for my actions," Siegelman said at his sentencing hearing this afternoon.

Siegelman, said he wanted to apologize to the judge, his family and to the people of Alabama.  "I'd like to apologize to the people of Alabama for the embarrassment my actions have caused," Siegelman said.  Siegelman, 66, stood before the same federal judge that sentenced him to more than seven years in prison in 2007, and pleaded for mercy....

A federal jury in 2006 convicted Siegelman of federal funds bribery on allegations that he sold a seat on a hospital regulatory board to former HealthSouth CEO Richard Scrushy in exchange for $500,000 in donations to Siegelman's 1999 referendum campaign to establish a state lottery.

Siegelman served nine months of an 88-month sentence before being released in March 2008 on an appeal bond.  A federal appeals court tossed out two of the charges against him, which prompted today's resentencing.  Siegelman's lawyers had asked for time served plus community service or a lengthy probation.  Prosecutors asked that Siegelman be given 88 months again.

Fuller said he acknowledged Siegelman had good things for the state, but he simply could not give a person who solicited a bribe less prison time than the person who paid it. Scrushy was sentenced to almost seven years in prison although Fuller later cut that by a year.

Fuller said he had no animosity toward Siegelman but noted that today was the first time he heard Siegelman say he respected the system. "Governor Siegelman it has been a long seven years, good luck to you, sir," Fuller said.

August 3, 2012 in White-collar sentencing, Who Sentences? | Permalink | Comments (14) | TrackBack