Wednesday, September 18, 2013
US Attorney defends fraud guidelines while others urge reform in USSC eventToday notable events in the federal sentencing reform arena were not confined only to today's U.S. Senate Judiciary Committee hearing on federal mandatory minimums (discussed here and here). Also starting today was a two-day event in NYC in which the U.S. Sentencing Commission is discussing potential reform to the federal fraud guidelines. This Reuters report, headlined "U.S. prosecutor cautions against white-collar sentencing revamp," provides a few notable highlights from the events in NYC:
The U.S. Justice Department opposes a wholesale revamping of white-collar criminal sentences that defense lawyers and some judges have urged, a top federal prosecutor said on Wednesday.
But Melinda Haag, the U.S. attorney in San Francisco, said the department was open to limited changes in white-collar sentencing that could reduce sentences in some fraud cases. The comments came as the U.S. Sentencing Commission is weighing revisions to advisory sentencing guidelines used by judges for securities, healthcare, mortgage and other fraud offenses.
Defense lawyers, the American Bar Association, some judges and others have criticized the guidelines, saying they emphasize financial losses caused by crime over all other factors, sometimes resulting in sentences that are too severe.
Haag, speaking at a symposium on white-collar sentencing in New York, said the Justice Department believes the current guidelines "result in tough but fair sentences in the vast majority of the cases." But she suggested that the department may be open to some changes, saying certain categories of cases, such as securities cases involving frauds on the market, warrant "careful study" by the commission. "Despite our questions and concerns, however, we do agree that in some cases, loss may overstate the seriousness of the offense," Haag said.
A growing number of judges have imposed terms less than prescribed by the guidelines, which became advisory rather than mandatory following a U.S. Supreme Court decision in 2005.
U.S. District Judge Loretta Preska, sitting on a panel with Haag, cited the case of Joseph Collins, a former partner at the law firm Mayer Brown, who was convicted for his role in a fraud at commodities broker Refco Inc. With losses calculated at $2.4 billion, Preska said under the guidelines Collins faced life in prison. She instead sentenced him in July to a year in prison, citing his community service and the fact he didn't financially benefit from the scheme. "This was absurd, absolutely absurd," she said.
Haag said the Justice Department recognized there "may be issues in some high-loss cases." But she said the department didn't believe a wholesale change was needed to the fraud sentencing guidelines or the loss table used to calculate sentences. She said it was a relatively small number of cases that had caused judicial concern. Citing commission statistics, she said 54 percent of economic crime cases involve less than $120,000 in losses and 83 percent involve less than $1 million.
Haag also argued that in some big cases involving investment fraud like Ponzi schemes, judges "don't seem to hesitate in imposing lengthy prison terms, noting the devastation these fraud schemes wreak on other people and the greed that motivated most of the defendants before them."...
In the last 18 months, federal prosecutors have handled investment fraud cases involving 800 defendants and more than $20 billion, she said. For the FBI, investment fraud is now 60 percent of its white-collar case load, she said.
Nonetheless, she said "certain categories of cases warrant careful study by the commission and potentially narrowly tailored amendments" to the fraud sentencing guidelines. Among the suggestions she gave would be for the Sentencing Commission to review how the guidelines treat loss in certain securities fraud cases where a drop in stock value by a few dollars per share can turn into a billion dollar loss.
Friday, September 13, 2013
Corporate official gets above-guideline sentence for conspiracy to hide safety violationsA helpful reader alerted me to this federal sentencing story from West Virginia which provides a useful reminder that federal judges sometimes use their increased post-Booker sentencing discretion to impose sentences above recommended guideline ranges (and may do so even for a defendant who has pleaded guilty and cooperating with authorities). Here are the notable particulars from a lengthy article about a notable white-collar sentencing that followed a high-profile workplace disaster:
A former longtime Massey Energy official will spend 3 1/2 years in prison for his admitted role in a decade-long conspiracy to hide safety violations from federal safety inspectors. David C. Hughart, 54, of Crab Orchard, was sentenced Tuesday afternoon to 42 months in jail and three years of supervised release after he pleaded guilty to two federal charges as part of an ongoing federal probe of Massey's safety practices.
U.S. District Judge Irene Berger ordered Hughart to serve a full year more than the high end of the 24- to 30-month recommended under advisory federal sentencing guidelines. The judge said the stiffer sentence was needed to account for the safety risks Hughart's crimes created and to serve as a warning to other mining officials not to put production before safety. "This sentence will promote respect for the law," Berger said.
The Hughart sentencing is another step forward as U.S. Attorney Booth Goodwin and his top assistant, Steve Ruby, continue what is likely the largest criminal investigation of a coal-mine disaster in modern times. The probe started with the deaths of 29 miners on April 5, 2010, in an explosion at Massey's Upper Big Branch Mine in Raleigh County, and has so far prompted four convictions and expanded well beyond Upper Big Branch....
Hughart is cooperating with prosecutors, having pleaded guilty to one felony count of conspiracy to defraud the government by thwarting U.S. Mine Safety and Health Administration inspections and one misdemeanor count of conspiracy to violate MSHA standards.
During a plea hearing in February, Hughart had implicated former Massey CEO Don Blankenship in the conspiracy, and Hughart's family has said Hughart is being wrongly scapegoated while Blankenship and other top Massey executives have faced no criminal charges. "He was a slave to this industry, and Don Blankenship will never see the inside of a courtroom," Hughart's son, Jonathan Hughart, told reporters after Tuesday's sentencing hearing.
Through his lawyer, Blankenship has denied any wrongdoing. And on his blog, Blankenship has said Hughart lied about him and was fired from Massey for drug use and stealing from the company.
Prosecutors have said that former executives and board members of Massey "may be, or may become" targets in the ongoing federal criminal investigation....
Earlier Tuesday, Hughart's $10,000 personal recognizance bond was revoked by U.S. Magistrate Judge R. Clarke VanDervort after Hughart was arrested on Aug. 30 on charges of possession of painkillers and anti-anxiety medication without a valid prescription. Hughart's bond required him to comply with all local, state and federal laws....
While Hughart hasn't been convicted of the drug charges, the arrest increased his recommended sentence under federal advisory guidelines by nine months. Hughart's lawyer, Michael R. Whitt, had urged Berger to issue a lighter sentence, arguing that Hughart's crimes could not be linked to any mining injury -- let alone to the Upper Big Branch Disaster -- and that his client was caught up in the "corporate culture" at Massey.
Whitt told Berger that Hughart's life has been ruined, with him going from an affluent lifestyle and a six-figure mine official salary to losing his home and becoming essentially destitute. "I think he has the message already," Whitt said. "He already knows without spending another day in jail."
Prosecutors, though, had asked for a stiff sentence, noting the "risk to human life and health" created by the conspiracies that Hughart participated in at Massey. "The defendant risked the lives and health of hundreds of coal miners," Ruby told Berger during Tuesday's hearing.
Previously in the Upper Big Branch probe, a former miner at the operation, Thomas Harrah, was sentenced to 10 months in jail after he admitted to faking a foreman's license when he performed key mine safety examinations at the mine between January 2008 and August 2009, and then lied to investigators about his actions.
Berger sentenced a former Upper Big Branch security director, Hughie Elbert Stover, to 36 months in jail after Stover was convicted of two felonies: making a false statement and obstructing the government probe of the mine disaster.
And in January, the judge sentenced former Upper Big Branch superintendent Gary May to 21 months in jail and a $20,000 fine after he pleaded guilty to plotting to skirt safety rules and cover up the resulting hazards....
During Tuesday's hearing, Hughart apologized for his actions and told Berger he had learned from his early days as a miner that "advance notice" of inspections was the way things were done. "I accepted that as the practice, and I understand now it is a serious issue, and it is against the law," Hughart said.
Berger noted previous evidence in the Upper Big Branch cases that suggested MSHA inspectors knew about -- and perhaps even cooperated with -- mine operators having pre-inspection notice. "Advance notice was apparently a common practice in the industry," Berger said. "It's difficult to believe that the only people who were unaware of these practices were the MSHA inspectors."
Terry Ellison, whose brother, Steve Harrah, died at Upper Big Branch, attended Tuesday's court proceedings. "I came for the 29 miners," Ellison said. "I don't want them to be forgotten. There was no reason they should have been killed that day."
September 13, 2013 in Federal Sentencing Guidelines, Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing | Permalink | Comments (3) | TrackBack
Wednesday, September 04, 2013
Florida prosecutors considering pursuing death penalty for doctor deemed responsible for overdose deathsI am always looking for notable and interesting modern cases to use with my 1L Criminal Law class when covering the topic of causation. Thanks to this local story, headlined "Former West Palm Beach doctor could face death penalty in patients' deaths," it looks like Florida prosecutors not only have presented me with a good classroom candidate, but also are talking up a possible punishment that could ensure the case garners national attention. Here are the details:
State prosecutors have filed court documents announcing their intent to seek the death penalty against a former West Palm Beach doctor facing two counts of first-degree murder for the overdose deaths of his patients.
Authorities with the state attorney's office said Tuesday they have not made a final decision about whether to pursue the ultimate punishment for former West Palm doctor John Christensen, 61, but want to keep that option open. The case will go before the office's death penalty committee, which is expected to review it and decide whether to pursue the penalty within the next month, Chief Assistant State Attorney Brian Fernandes said. "This is a case that's potentially eligible for the death penalty," he said. "We want to make sure that we preserve our rights."
If the state does pursue a death sentence against the doctor, it would be highly unusual. Just a handful of Florida physicians have faced homicide charges for the overdose deaths of their patients, and the majority have been manslaughter cases.
West Palm Beach defense attorney Grey Tesh, who until last month represented Christensen, said he was surprised when the state sent its notice of intent to seek the death penalty. The doctor's new attorney, Richard Lubin, did not return a call seeking comment Tuesday. "At least in Palm Beach County, I don't know of any doctor who has faced the death penalty on a case like this," Tesh said.
In 2002, West Palm Beach doctor Denis Deonarine became the first in the state to be indicted for first-degree murder in the death of a patient who was prescribed painkiller OxyContin. He was ultimately acquitted of first-degree murder charges, and released from prison in December, according to the state Department of Corrections. After the trial ended, one juror told the Sun Sentinel the jury ultimately believed the patient was responsible for his own death.
Christensen, who operated medical offices in West Palm Beach, Port St. Lucie and Daytona Beach, was arrested in July, after a two and-a-half year investigation that focused on the deaths of 35 of his patients. He's facing multiple charges, including the two counts of first-degree murder for prescribing oxycodone, methadone and anti-anxiety drugs to two patients who later overdosed....
Tesh said he expects it will be an uphill battle for the state to get a conviction against Christensen, making the death penalty irrelevant. He said it will be difficult to connect the deaths to him, noting that one of the patients had other substances in her system when she died. "I would be surprised if he's convicted," Tesh said. "The evidence is just not going to be there, not to be proved beyond reasonable doubt."
Even without knowing much about the particulars of Florida homicide law, I share the perspective that state prosecutors are likely to face an uphill battle getting a first-degree murder conviction, let alone a death verdict, from a jury in this kind of case. But I also can identify lots of potential (utilitarian) benefits flowing from just a prosecutorial decision to talk up possible capital charges in this case.
As this very post reveals, simply mentioning the possibility of a death sentence ensures this case gets a lot more attention, and that attention should (and likely will) lead many more doctors in Florida and elsewhere to be at least a bit more careful when writing scripts for potent and potentially lethal prescription drugs. In addition, as in many other cases involving lots of human carnage, the prospect of capital charges might encourage a guilty defendant to plead guilty to lesser (and more fitting) charges. (Of course, some may view the potentially coercive impact of capital charges in a case like this to be an injustice, but I suspect prosecutors might well concluse that such charges are a fitting prescription for this kind of case.)
September 4, 2013 in Death Penalty Reforms, Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing | Permalink | Comments (11) | TrackBack
Thursday, August 29, 2013
Second Circuit upholds huge securities fraud restitution award (without any real Sixth Amendment discussion)A unanimous Second Circuit panel opinion this morning in US v. Gushlak, No. 12-1919 (2d Cir. Aug. 30, 2013) (available here) upholds a restitution award of over $17 million based on seemingly debatable fact-finding by a federal district judge. Here is how the lengthy opinion starts and ends:
Defendant-appellant Myron Gushlak challenges, on various grounds, the May 15, 2012, restitution order entered against him in the United States District Court for the Eastern District of New York (Nicholas G. Garaufis, Judge). The order, which was entered pursuant to the Mandatory Victims Restitution Act of 1996, 18 U.S.C. § 3663A, awarded a total of $17,492,817.45 to victims for losses stemming from Gushlak's role in the manipulation of the price of a publicly traded security. We affirm....
We return to where we began, the inexpertness of most judges in most technical matters, including the forces afoot in the securities markets and their impact on the prices for any particular security at any particular time. We must therefore rely on the testimony of professionals with appropriate expertise. The district court took great pains in addressing the restitution issues over an extended period of time, requiring repeated efforts by the government to obtain a proper valuation for losses under the particular circumstances, and in light of the peculiar challenges, presented by the case before it. It relied on a qualified expert as a guide. We can identify no clear error of fact or mistake of law that the court committed in reaching, with such care, its result.
Based on a quick scan of the opinion, I see no obvious basis to fault or even question the panel's formal analysis of restitution here in Gushlak. But, as the title of this post suggests, I am quite surprised that the defendant apparently here did not argue that the Supreme Court's June 2012 opinion in Southern Union now requires reconsideration of the circuits' prior rulings that the Sixth Amendment jury trial right is not implicated by judicial fact-finding in support of statutory-based restitution punishment.
Though I am not aware of any major rulings reconsidering this Aprrendi-land issue after Southern Union, I am sure that the decision in Southern Union included significant language that provides a strong basis for such reconsideration. And, with over $17 million dollar at stake and with judicial fact-finding apparently so challenging and contestable in a case like Gushlak, I think a Sixth Amendment argument could have had at least some extra traction in a case like this.
Wednesday, August 21, 2013
Bradley Manning gets 35 years from military judge for espionage convictionsAs reported in this breaking news update from USA Today, "Army Pfc. Bradley Manning was sentenced to 35 years in prison after being convicted of espionage and other charges in connection with a massive leak of classified material." Here is more:
The judge in the case, Army Col. Denise Lind, announced the sentence in a military courtroom in Fort Meade, Md. He also received a dishonorable discharge, will forfeit his pay and benefits and was reduced in rank.
Manning faced a maximum of 90 years in prison after his conviction last month on charges of espionage, theft and fraud. Manning was convicted of the largest leak of classified material in U.S. history and was at the center of a growing debate over government secrecy.
Prosecutors urged the judge to sentence Manning to 60 years as a deterrent to others who might be tempted to leak secret documents. "He betrayed the United States, and for that betrayal, he deserves to spend the majority of his remaining life in confinement," Capt. Joe Morrow had said during the sentencing hearing.
Manning's defense had urged the military to sentence Manning, who served as an intelligence analyst in Iraq, to no more than 25 years in prison....
The U.S. government said his actions jeopardized U.S. interests and exposed informants and sources to danger. Manning's defense painted him as a misguided idealist who opposed the war in Iraq. "He had pure intentions at the time that he committed his offenses," defense attorney David Coombs said during the sentencing hearing. "At that time, Pfc. Manning really, truly, genuinely believed that this information could make a difference."
Manning's defense attempted to "play up the human aspect" of Manning by highlighting mental health issues, said Phil Cave, a former military lawyer now in private practice. Defense witnesses testified about Manning's "gender-identity disorder," which contributed to the mental stress he was under....
Under military law, the sentence will be automatically appealed. He would probably be eligible for parole after he served one-third or 10 years of his sentence, whichever is longer.
I have blogged very little about this high-profile sentencing case in large part because I am very ignorant about US military sentencing law and procedure. For example, I did not realize that parole remained available for lengthy military sentences (given that federal civilian law eliminated parole from the sentencing system three decades ago), nor am I conversant on what formal rules or guidelines may have impacted the seemingly broad sentencing discretion of Army Col. Denise Lind or could still play a role in the automatic appeal provided by military law.
Both due to my basic ignorance and due to the high-profile nature of this case, I welcome both informed and uninformed opinions on this sentencing outcome. Do folks think 35 years in prison (with parole eligibility in less than 12 years when Manning will still be in his mid-30s) is a fair and effective sentence in this case? Why or why not?
August 21, 2013 in Celebrity sentencings, Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing | Permalink | Comments (22) | TrackBack
Wednesday, August 14, 2013
"Both Jacksons get prison terms, Jackson Jr. to serve first"The title of this post is the headline of this Chicago Tribune report on today's high-profile federal sentencing in DC. Here are some of the details:
Former Rep. Jesse Jackson Jr. was sentenced today to 30 months behind bars and his wife, Sandi, got a year in prison for separate felonies involving the misspending of about $750,000 in campaign funds.
In addition to the 2.5 years in prison, Jackson Jr. was sentenced to three years of supervised release. Sandi Jackson was ordered to serve 12 months of supervised release following her prison term.
The judge emphasized that Sandi Jackson was sentenced to exactly 12 months, not the year-and-a-day sentence that some criminals get. Defendants sentenced to a year or less cannot qualify for time off for good behavior in prison. But those sentenced to a year and a day can qualify, which means they may end up serving only about 10 months. Under this rule, Sandi Jackson must serve the full year.
Both Jacksons wept in court as they addressed the judge before sentencing. Jackson Jr. apologized for his crimes and expressed special regrets to his mother and father. “Your honor, throughout this process I’ve asked the government and the court to hold me and only me accountable for my actions,” he said.
When Jackson Jr. spoke, he voice was firm except for the few times he wept openly and paused to dry his eyes with tissue, blow his nose and collect himself. “I am the example for the whole Congress,” he said. “I understand that. I didn’t separate my personal life from my political activities, and I couldn’t have been more wrong.”
Talking about his desire to be sent to a federal prison camp in Alabama, he said: “I want to make it a little inconvenient for everybody to get to me.” He said he hoped that his wife could earn enough money in his absence to keep the family together. “When I get back, I’ll take on that burden,” Jackson Jr. said. “By then I hope my children will be old enough that the pain I caused will be easier to bear.”
After a break in the hearing, Sandi Jackson, a former Chicago alderman, got her opportunity to address the court. She started by telling the judge: “I am a little nervous, so I have a written statement that I would like to read to you.”
She continued: “I want to begin by apologizing first to my family, to my friends, my community and my constiuents for the actions that brought me here today." She said she had caused “disappointment in my community” and had “put my family unit in peril.”
“My heart breaks every day with the pain this has caused my babies,” she continued, weeping. “I ask to be parent, provider and support system that my babies will require in the difficult months ahead.” Their children are ages 13 and 9.
Earlier, Jackson Jr.’s lawyer Reid Weingarten said his client felt “horror, shame and distress” over his crimes. But Weingarten also attempted to downplay the impact of Jackson Jr.’s actions, since he took money from his own campaign fund. It’s not as if there are widows and orphans outside the courthouse who are victims and asking for his head, Weingarten said. “This is not a Ponzi scheme,” he said.
Weingarten asked for an 18-month sentence for Jackson Jr. and noted, “He suffers from a very, very serious mental health disease.” He identified the ex-congressman’s illness as bipolar disorder, and conceded that it was relevant even though “we didn’t plead guilty by reason of insanity.”
Matt Graves, an assistant U.S. attorney, countered that Jackson Jr.’s crimes represented one of the largest cases of theft from a campaign treasury that had ever been prosecuted. Graves also took a shot at Jackson Jr.’s reported condition of bipolar disorder, saying normally when mental health issues are litigated in court, there was expert testimony, discovery and an examination of the defendant — and said none had occurred in this case.
“When one looks at the facts,” Graves said, “it’s quite clear that there’s no there there.” He decried Jackson Jr.’s “wasted talent” and “what he threw away.”
Graves said Sandi Jackson's crimes were serious and had occurred over many years. He also pointed out that defendants in federal courts across the country with children were given prison terms.
Jackson Jr., 48, and his wife, Sandi, 49, stood before federal Judge Amy Berman Jackson, who is no relation to the defendants. He pleaded guilty to a felony conspiracy count involving the $750,000 and she pleaded guilty to a related charge of failing to report about $600,000 in taxable income....
The Jacksons, both Democrats, pleaded guilty in February after a yearslong spending spree with campaign funds. Among the loot: a $43,000 Rolex watch, furs, vacations, two mounted elk heads and memorabilia ranging from a Michael Jackson fedora to an Eddie Van Halen guitar.
Prosecutors urged that he serve four years in prison and her 18 months. Defense lawyers wanted probation for her and a lighter term for him.
Jackson Jr. was in the House of Representatives from 1995 to 2012. Sandi Jackson served on the City Council from 2007 until last January. Both resigned their positions leading up to their guilty pleas.
August 14, 2013 in Celebrity sentencings, Offender Characteristics, Offense Characteristics, Procedure and Proof at Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (10) | TrackBack
Tuesday, August 06, 2013
Eighth Circuit panel, though requiring more explanation, suggests probation could be reasonable sentence when guideline range was 11-14 yearsBecause the Eighth Circuit has a well-earned reputation for being pretty tough on criminal defendants in sentencing appeals in the post-Booker era, I find especially notable its nuanced ruling today in US v. Cole, No. 11-1232 (8th Cir. Aug. 8, 2013) (available here). The start of the panel opinion in Cole sets out the basics of the ruling:
A jury found Abby Rae Cole guilty of conspiracy to commit mail and wire fraud, in violation of 18 U.S.C. § 1349; tax evasion, in violation of 26 U.S.C. § 7201; and conspiracy to commit tax fraud, in violation of 18 U.S.C. § 371. The mail and wire fraud conspiracy conviction stems from her company’s theft of nearly $33 million from Best Buy over a four-year period. The tax fraud conspiracy and tax evasion convictions stem from understating tax liability by more than $3 million between 2004 and 2007 by using various schemes to conceal her company’s true profitability. Cole’s advisory Guideline range was 135 to 168 months imprisonment, but the district court varied downward and sentenced her to three years probation on each count, with all terms to be served concurrently. The government appeals Cole’s sentence, arguing it is substantively unreasonable. Cole cross-appeals, challenging her convictions. We affirm Cole’s convictions but remand her case to the district court to provide a fuller explanation of her sentence.
Co-conspirators much more responsible than Cole for the big fraud here got lengthy sentences (15 and 7.5 years), which seems to help explain why the district court decided to give this defendant such a big break. And, as this final key paragraph of the sentencing discussion reveals, the panel here thinks such a big downward variance could be justified, but needs to be more fully explained:
Because Cole’s probationary sentence represents a “major departure” from the advisory Guidelines range, the court’s brief and contradictory explanation of Cole’s sentence is not sufficient “to allow for meaningful appellate review and to promote the perception of fair sentencing.” See Gall, 552 U.S. at 50. Consequently, we cannot evaluate the government’s claim of substantive unreasonableness at this time, and we remand for the district court to more fully explain the defendant-specific facts and policy decisions upon which it relied in determining that the probationary sentence is “sufficient, but not greater than necessary,” § 3553(a), to achieve the sentencing objectives set forth in section 3553(a).
August 6, 2013 in Booker in district courts, Booker in the Circuits, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, Sentences Reconsidered, White-collar sentencing | Permalink | Comments (1) | TrackBack
Thursday, July 25, 2013
Waaaaay below federal guideline prison sentences (but big fines) for UBS bid-riggersAs reported in this Wall Street Journal, headlined "US set back on bid-rig sentencing," a federal district judge in NYC yesterday handed down a set of white-collar sentences that were far below calculated guideline ranges and far below the sentences being sought by federal prosecutors. Here are the details:
US District Judge Kimba Wood of the Southern District of New York handed Peter Ghavami, the former co-head of UBS' municipal-bond reinvestment and derivatives desk, an 18-month sentence. Prosecutors had sought at least 17½ years and as long as 21 years, 10 months for Ghavami, who also served as the Swiss bank's head of commodities at one point.
The much harsher sentence proposed by the government would have been longer than the 11-year term given in 2011 to Galleon hedge-fund founder Raj Rajaratnam for his insider-trading conviction.
But Judge Wood, a one-time nominee to become US attorney general who also sentenced former Drexel Burnham Lambert executive Michael Milken to 10 years in prison, raised questions about the government's method of calculating losses in the case, which it had pegged at about $25 million.
She also praised Ghavami's "admirable history" and noted that he faces other penalties including a $1 million fine and deportation to Belgium, where he is a citizen. Because Ghavami, 45 years old, is not a US citizen, he also has to serve in a "low security" prison instead of a "miminum security" camp.
One of Ghavami's former colleagues, Gary Heinz, 40, a former vice president on UBS' municipal-bond reinvestment desk, was given a 27-month sentence Wednesday, while Michael Welty, 49, another former vice president, got 16 months. Prosecutors had asked for at least 19½ years for Heinz and about 11 years or more for Welty.
Last summer, a New York jury found the three former UBS employees guilty of leading a scheme that caused municipalities to pay millions of dollars more for bond deals than they needed to pay. The case dealt with an obscure corner of the bond market in which local governments raise money from investors through bond deals, then invest the proceeds in investment products that banks and others are supposed to sell in a competitive process....
In the UBS bond-rigging case however, prosecutors sought stiff penalties for actions that took place before the financial crisis, from 2001 to 2006. The three former UBS employees caused cities, states and other municipalities to lose $25 million, the government alleged. "For years, these executives corrupted the competitive bidding process and defrauded municipalities," said Scott D. Hammond, deputy assistant attorney general in the Antitrust Division's criminal-enforcement program, in a statement.....
"We're extremely pleased with the sentence," said Charles Stillman, a lawyer for Ghavami. Ghavami intends to start serving his sentence as soon as possible, instead of waiting to see how his appeal of the case turns out, Stillman added. Ghavami's fine of $1 million was five times greater than the maximum suggested by the government.
Heinz and Welty were fined $400,000 and $300,000, respectively, both more than the government suggested. Marc Mukasey, Heinz's lawyer, said "We're happy that the government's outrageous sentencing request was soundly rejected." Welty's lawyer, Gregory Poe, said that the jury acquitted Welty of wire fraud and said he will appeal the conspiracy convictions, and "we hope to clear his name." He added that his client is grateful that Judge Wood rejected the government's sentencing position.
Over the past half-decade, the Justice Department has pursued the muni-bond cases as part of an effort to punish Wall Street banks for shortchanging cities and states. Prosecutors have enjoyed some victories, so far gathering six convictions and 13 guilty pleas. Several were sentenced before Wednesday, with prison terms ranging from six months to four years. Firms affected by the investigation have paid $745 million in restitution, penalties and disgorgement....
It remains to be seen whether this week's sentencing setback will affect the government's strategy in the other pending sentencing hearings. Two former JP Morgan Chase. employees, two former Bank of America employees and three others involved with the case await sentencing. One case remains pending and awaiting trial.
Last year, three former employees of General Electric were convicted for their roles in conspiracies related to bidding for municipal-bond-proceeds reinvestment. Two were sentenced in October to three years in prison and the third received a four-year term.
At the hearing Wednesday, prosecutors argued that the former UBS officials deserved more prison time than the former GE employees, while Judge Wood said she didn't see the cases as that different. She also expressed doubt that anyone could accurately quantify losses in cases where the bidding process had been corrupted. In the case of the three UBS officials sentenced Wednesday, federal prosecutors also sought fines of $20,000 to $250,000 in the case. Prosecutors called their actions a "sophisticated financial fraud" that went on for years and "victimised municipalities and other bond issuers".
There are obviously lots of interesting aspects to this sentencing story. I am especially eager to praise Judge Wood for using big financial penalties — which make the government money and seem especially fitting for crimes of greed — while refusing to use big imprisonment terms — which cost the government money and seem unlikely to impact public safety for non-violent white-collar criminals. Relatedly, given that this article suggests that all other comparable big-rigging defendants have received sentences ranging from 6 to 48 months, I find stunning and deeply troubling that federal prosecutors were advocating in these cases for sentences ranging from more than 130 months to 260 months. Nice effort to avoid unwarranted sentencing disparities via your advocacy here, DOJ. (Not!)
July 25, 2013 in Federal Sentencing Guidelines, Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (1) | TrackBack
Tuesday, July 23, 2013
Second Circuit finds stat max white-collar sentences procedurally unreasonableThe Second Circuit panel has today handed down a significant reasonableness ruling in US v. Juncal, No. 10-1800 (2d Cir. July 23, 2013) (available here), which should be of special interest to all white-collar sentencing practitioners. The last seven pages of the per curiam panel opinion and the entire nine pages of the concurrence by Distict Judge Underhill (sitting by designation) are must reads for sentencing fans, and the few paragraphs I will reprint here help highlight why.
The per curiam panel opinion find procedurally unreasonable 20-year sentences given to defendants who were part of a conspiracy "which involved a scheme to obtain a three billion dollar loan supposedly intended to finance construction of a pipeline across Siberia [that] resulted in no actual loss." Here is part of the panel opinion's explanation for why these sentences were procedurally unreasonable:
Here, appellants’ lawyers highlighted significant issues with the intended loss calculation both in their briefs and at sentencing. Given the low risk that any actual loss would result — what hedge fund would fall prey to a purported coalition of Buryatian nationals and Yamasee tribesmen using AOL email accounts to offer five billion dollars in collateral for a loan to build a pipeline across Siberia? — counsel argued that a 30 point mega-enhancement vastly overstated both the seriousness of the offense, and the danger of appellants to their community. The Guidelines acknowledge that potentiality; application note 3(C) to U.S.S.G. § 2B1.1 indicates that a downward departure may be warranted where the offense level resulting from a loss calculation overstates the seriousness of an offense. But the sentencing court never resolved appellants’ significant arguments. At Sampson’s hearing the District Court did draw a comparison between other financial crimes and this case, but it never resolved the question raised by the appellants — whether treating intended loss like actual loss under all the circumstances of this case leads to a sentence consistent with the dictates of section 3553(a).
The concurring opinion by Judge Underhill is even more potent as it advocates for a broader ruling that the sentences here are substantively unreasonable, and here is how it gets started
In my view, the loss guideline is fundamentally flawed, and those flaws are magnified where, as here, the entire loss amount consists of intended loss. Even if it were perfect, the loss guideline would prove valueless in this case, because the conduct underlying these convictions is more farcical than dangerous. If substantive review of sentences actually exists other than in theory, it must be undertaken at least occasionally. This would have been an appropriate case in which to do so, because it raises so starkly the problems with the loss guideline. Until this Court weighs in on the merits of the loss guideline, sentences in high-loss cases will remain wildly divergent as some district judges apply the loss guideline unquestioningly while others essentially ignore it. The widespread perception that the loss guideline is broken leaves district judges without meaningful guidance in high-loss cases; that void can only be filled through the common law, which requires that we reach the substantive reasonableness of these sentences.
Friday, July 19, 2013
Local judge gives poll worker five-year prison term for voter fraudA colleague alerted me to this notable sentencing story from the Cincinnati area about a woman who received what seems to be a quite severe sentence for voter fraud. The piece is headlined "Illegal voter gets 5-year prison term," and here are the details:
Calling her a common criminal who abused her authority as a poll worker by violating the principle of “one person, one vote,” a judge sent Melowese Richardson to prison Wednesday for five years following her illegal voting conviction.
“This is not a little thing. It’s not a minor thing. This is what our country’s based on – free elections,” Hamilton County Common Pleas Court Judge Robert Ruehlman told Richardson.
In a case watched around the country, Richardson was a Hamilton County poll worker from 1998 until her arrest earlier this year when she was charged with eight counts of illegal voting. In May, she accepted a plea deal and was convicted of four counts in exchange for the other four being dismissed.
She was convicted of voting twice in the 2012 election and voting three times – in 2008, 2011 and 2012 – for her sister, Montez Richardson, who has been in a coma since 2003.... Richardson told the judge she was bothered that Amy Searcy, the Board of Elections director, had criticized her moments before the sentencing....
The conservative, outspoken judge responded with scathing comments, blasting Richardson for suggesting she was being prosecuted because she was a black Democrat helping a black Democratic presidential candidate. “It has nothing to do with race. It has nothing to do with politics. It has nothing to do with disrespecting you. You did this to yourself,” Ruehlman told her.
“You’re very selfish, self-centered. I really believe President Obama, if he were asked about this today, he would be appalled. He would not want anybody to cheat to get elected.”
Ruehlman noted that two others convicted of illegal voting before Richardson got much lighter sentences but stressed their cases were different. The judge noted Richardson deserved a prison sentence, which was one year less than the maximum possible, because she has a lengthy criminal record, schemed repeatedly over five years to cast several illegal votes and used her training and expertise as a poll worker to try to evade detection.
“‘I’m Melowese Richardson. I can take the law into my own hands,’” the judge said, mocking what he believes is Richardson’s attitude.
Richardson previously was convicted of threatening to kill a witness in a criminal case against her brother, of stealing, of drunken driving and of beating someone in a bar fight.
Anything short of a prison sentence, Assistant Prosecutor Bill Anderson told the judge, would be an attack on the voting system. As a poll worker, “her job is actually to protect the integrity and sanctity of the voting system,” Anderson said. “(She) is an ideologue who was hell bent on stuffing the ballot box with as many Obama votes as possible.”
Bill Gallagher, Richardson’s lawyer, suspected she would be sent to prison but was surprised by the sentence. “I thought prison was a real possibility because of her record of 25 years ago,” Gallagher said. “I don’t think that the length of it was any where near what we expected.”
Tuesday, July 09, 2013
Third Circuit affirms record-long insider-trading sentenceAs reported in this Forbes piece, headlined "Inside Trader Matthew Kluger's 12-Year Prison Term Affirmed," a panel of the Third Circuit today rejected a range of arguments against a lengthy federal sentence for insider trading. Here are the basics:
The prison term given to Matthew Kluger by U.S. District Judge Katharine Hayden (New Jersey) represented the longest ever given to a person pleading guilty to charges of insider trading. Upon his arrest in April 2011, Kluger quickly decided to enter negotiations to plead guilty and throw himself on the mercy of the court. That strategy landed him in prison for 12 years.
Kluger was a lawyer (NYU Law) who worked on mergers and acquisitions of publicly traded companies at prestigious law firms, including Wilson Sonsini Goodrich & Rosati PC. He then passed that confidential information on to a middle man (Kenneth Robinson), who then passed it on to a trader, Garrett Bauer. The scheme worked for 17 years because there was no direct communication between Kluger, the source, and Bauer, the trader. In fact, the two had only met once at the beginning of their illegal trading. The Securities and Exchange Commission had suspicions of Bauer’s trading activities but could never tie him to a source for the information. However, when Bauer backed out of the trading scheme in 2010, Robinson and Kluger continued … that was when the SEC and the FBI pulled everything together. As David Voreacos (Bloomberg) noted in his excellent profile of Kluger, the scheme succeeded for so long because of its simplicity, the discipline of its limited number of people and its essential amoral nature.
The basis of Kluger’s appeal was that Bauer was supposed to buy only small number of shares, to avoid detection from authorities, and then the three would equally share in the profits. However, Bauer, unknown to Kluger, was trading large blocks of shares for his own benefit, resulting in millions in profits. Whereas Kluger believed that the profits were just around $2 million (a little of $600k each), the total profits from the information he provided to the conspiracy approached $37 million with Bauer receiving the majority of the money. Kluger was sentenced by Judge Haydan according to the Federal Sentencing Guideline based on the amount of the total gain and not the amount he personally realized from the trades. His guideline range at sentencing was 11-14 years … so 12 seemed fair to the judge.
The 3rd Circuit agreed with Judge Hayden, stating that Kluger, “… truly was a career criminal.” Upon being notified of the decision, U.S. Attorney Paul J. Fishman (District of New Jersey) released a statement, “We argued at sentencing that a severe penalty was appropriate for one of the longest running insider trading schemes ever prosecuted, and are gratified the Court of Appeals saw it the same way.”
Kenneth Robinson, who recruited Bauer and hatched the initial plan with Kluger, did not appeal his prison term of 27 months. Robinson was the first to cooperate with authorities and recorded conversations with both Bauer and Kluger, which sealed their fate. Note to file; It pays to cooperate early.
The full panel opinion in US v. Kluger, No. 12-2701 (3d Cir. July 9, 2013) (available here) runs 48 pages, and this paragraph from the start of the opinion provides an effective accounting of the sentencing issues raised (and ultimately rejected) on appeal:
On June 13, 2012, Kluger filed a timely appeal, raising the following arguments. First, he challenges the District Court's calculation of his sentencing guidelines range. Second, he contends that the Court procedurally erred in imposing the sentence on him by (1) improperly denying him an evidentiary hearing prior to his sentencing; (2) failing to resolve his objections to the presentence investigation report; and (3) not ordering discovery of materials that the govern ment turned over to the probation department for use in preparing the presentence report. Finally, he contends that the District Court imposed a procedurally and substantively unreasonable sentence
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.
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.)
- You be the prosecutor: what federal sentence should be sought for Jesse Jackson Jr. and his wife?
- Jacksons plead guilty and federal prosecutors recommend significant prison terms for both
- Noteworthy new lawyer and now a new judge for Jesse Jackson Jr. sentencing
- Months before scheduled sentencing, lawyers buzzing about Jesse Jackson Jr.'s mental health
- "Will the Jacksons get a slap on the wrist, or will their heads be mounted?"
UPDATE: This local article now reports that the Jacksons' sentencings have now been set for August 14.
Second Circuit finds (lengthy?) insider trading sentences reasonableAs 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.
- You be the prosecutor: what federal sentence should be sought for Jesse Jackson Jr. and his wife?
- Jacksons plead guilty and federal prosecutors recommend significant prison terms for both
- Noteworthy new lawyer and now a new judge for Jesse Jackson Jr. sentencing
- Months before scheduled sentencing, lawyers buzzing about Jesse Jackson Jr.'s mental health
Friday, June 21, 2013
Enron CEO Jeff Skilling resentenced officially to 14 years after plea dealAs 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.
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 PeughI 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:
- SCOTUS concludes Ex Post Facto Clause still limits application of new guidelines after Booker
- Guidelines are "the lodestone" of federal sentencing (as well as "the starting point and the initial benchmark")
- Lots of reasonable debate over the guidelines and reasonable review from Second Circuit judges
Saturday, May 11, 2013
Taking note of some notable federal tax sentencesThis 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.
Wednesday, May 08, 2013
Feds and Jeff Skilling cut resentencing deal to fix new guideline range at 168 to 210 monthsAs 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.
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 PAAs 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.
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?The 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.
Wednesday, April 17, 2013
Noteworthy new lawyer and now a new judge for Jesse Jackson Jr. sentencingThis 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:
- You be the prosecutor: what federal sentence should be sought for Jesse Jackson Jr. and his wife?
- Jacksons plead guilty and federal prosecutors recommend significant prison terms for both
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.
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 sentencingI 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."
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.
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.
Saturday, March 16, 2013
Thoughtful response to Judge Rakoff's call to scrap fraud guidelinesWes 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:
- Judge Rakoff calls for fraud guidelines to be "scrapped in their entirety" in favor of a "non-arithmetic, multi-factor test"
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."
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:
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.
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.
Thursday, February 28, 2013
You be the prosecutor: what state sentence should be sought for Joan Orie Melvin and her sister?
Regular 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:
- You be the prosecutor: what federal sentence should be sought for Jesse Jackson Jr. and his wife?
- Jacksons plead guilty and federal prosecutors recommend significant prison terms for both
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 bothThis 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:
On the editorial page here, "Unjust Mandatory Minimums":
Attorney General Eric Holder Jr. recently said that his top priority is to improve the criminal justice system. He can start by pushing Congress and the United States Sentencing Commission to fix the unfair problem of excessive mandatory minimum sentences.
On the B section coverpage here, "Prosecutors, Shifting Strategy, Build New Wall Street Cases":
Criticized for letting Wall Street off the hook after the financial crisis, the Justice Department is building a new model for prosecuting big banks. In a recent round of actions that shook the financial industry, the government pushed for guilty pleas, rather than just the usual fines and reforms. Prosecutors now aim to apply the approach broadly to financial fraud cases, according to officials involved in the investigations.
On the D section coverpage here, "Prison and the Poverty Trap":
Why are so many American families trapped in poverty? Of all the explanations offered by Washington’s politicians and economists, one seems particularly obvious in the low-income neighborhoods near the Capitol: because there are so many parents like Carl Harris and Charlene Hamilton.
For most of their daughters’ childhood, Mr. Harris didn’t come close to making the minimum wage. His most lucrative job, as a crack dealer, ended at the age of 24, when he left Washington to serve two decades in prison, leaving his wife to raise their two young girls while trying to hold their long-distance marriage together.
Monday, February 18, 2013
You be the prosecutor: what federal sentence should be sought for Jesse Jackson Jr. and his wife?Regular 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 unreasonableReversals 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.
EDNY federal judge sentencing mobsters to do Sandy-storm community serviceThough 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 PennsylvaniaA 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.
Thursday, February 07, 2013
Feds seeking upward departure for local comptroller engaged in long-time fraudAs 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 fraudAs 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.”
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.
Friday, December 21, 2012
As scripted in plea deal, Peter Madoff gets 10 years for his role in Ponzi schemeAs 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.
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.
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:
- Any early federal sentencing predictions after quick conviction in Gupta insider trading case?
- Interesting commentary on upcoming Gupta sentencing for insider trading
- Rajat Gupta hoping to get by (federal sentencing) with a little help from his friends
- Gearing up for high-profile sentencing of high-profile insider trading defendant
- Might it hurt Rajat Gupta to get sentencing support letters from the 1%?
- "Rajat Gupta Should Walk Free Wednesday"
- Gupta sentencing memos: feds seeking 97 to 121 months in prison, defense requesting probation and "rigorous community service"
- Rajat Gupta gets 24-month prison term, $5 million fine at sentencing for insider trading
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."
Tuesday, October 23, 2012
New Slate commentary on upcoming Gupta sentencingHarlan 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:
- Any early federal sentencing predictions after quick conviction in Gupta insider trading case?
- Interesting commentary on upcoming Gupta sentencing for insider trading
- Rajat Gupta hoping to get by (federal sentencing) with a little help from his friends
- Gearing up for high-profile sentencing of high-profile insider trading defendant
- Might it hurt Rajat Gupta to get sentencing support letters from the 1%?
- "Rajat Gupta Should Walk Free Wednesday"
- Gupta sentencing memos: feds seeking 97 to 121 months in prison, defense requesting probation and "rigorous community service"