Friday, January 11, 2013

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

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

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

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

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

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

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

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

Friday, December 21, 2012

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Friday, November 30, 2012

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

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

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

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

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

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

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

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

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

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

Friday, October 26, 2012

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

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

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

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

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

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

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

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

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

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

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

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

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

Related prior posts on Gupta sentencing:

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

Wednesday, October 24, 2012

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

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

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

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

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

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

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

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

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

Tuesday, October 23, 2012

New Slate commentary on upcoming Gupta sentencing

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

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

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

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

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

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

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

Related posts on upcoming Gupta sentencing:

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

Friday, October 19, 2012

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

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

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

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

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

Wednesday, October 17, 2012

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

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

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

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

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

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

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

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

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

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

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

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

Related posts on upcoming Gupta sentencing:


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

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

"Rajat Gupta Should Walk Free Wednesday"

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

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

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

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

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

Related posts on upcoming Gupta sentencing:

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

Saturday, October 13, 2012

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

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

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

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

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

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

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

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

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

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

Related posts on upcoming Gupta sentencing:

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

Tuesday, October 09, 2012

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Saturday, October 06, 2012

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

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

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

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

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

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

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

Related prior post:

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

Tuesday, September 25, 2012

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

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

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

Related posts on the Rubashkin case:

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

Thursday, September 20, 2012

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

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

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

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

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

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

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

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

Related posts on the Rubashkin case:

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

Wednesday, September 19, 2012

"Optronics Sentencing Could Break All Sorts of Antitrust Records"

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

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

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

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

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

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

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

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

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

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

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

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

Monday, August 20, 2012

Another notable insider trading prosecution now moves to sentencing

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

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

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

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

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

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

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

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

Friday, August 03, 2012

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

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

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

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

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

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

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

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

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

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

Tuesday, July 31, 2012

High-profile Cleveland corruption case culminates with 28-year prison term for Jimmy Dimora

As reported in this local article, headlined "Jimmy Dimora sentenced to 28 years in prison, defense attorney calls it a 'death sentence'," a very high-profile federal criminal corruption case involving Cleveland politicians concluded with a very long sentence handed down this afternoon. Here is how the local article begins:

U.S. District Judge Sara Lioi handed down a 28-year sentence to former county Commissioner Jimmy Dimora, who was convicted in March of racketeering and 32 other bribery- and corruption-related crimes.

Afterward, Stephen D. Anthony, Special Agent in Charge of the Cleveland FBI said: "There are lots of reasons to be positive and optimistic going forward. It is our hope this case will give pause to any individual who considers violating the public trust."

Dimora, 57, gave an emotional brief statement in court today, denying any wrongdoing or that he bilked Cuyahoga County taxpayers. Wiping tears from his face, Dimora also asked Judge Sara Lioi to not separate him from his family because of his health.

His attorney, William Whitaker, said Dimora's statement to the court was true and accurate -- that he never traded his votes for anything. He said his defense has raised a number of issues, including Dimora's ability to get a fair trial. They will appeal those issues, as well as the 28-year sentence, which he called "grossly unfair." Whitaker called Lioi's ruling a "death sentence."

Dimora would be 85 years old if he were to complete the 28-year prison sentence. His attorneys requested he be sentenced to prison in Buckner, N.C., because of its health facilities for prisoners. Lioi said she would recommend it.

While using his walker as he was escorted from the courtroom, Dimora said to prosecutors, "I hope you guys are happy."

Before she handed down the sentence, Lioi said Dimora abused his power as a politician. “The reach of his corruption was far and wide,” Lioi said. "The destruction left in its wake is incalculable."

The conduct was part of daily workings in Cuyahoga County, a pervasive pattern of corruption, she said. "In the world of Cuyahoga County corruption, they had somewhat of a symbiotic relationship," she said.

Lioi said that while Dimora did good things as mayor of Bedford Heights, his behavior become less about helping others and more about helping Jimmy Dimora. "Somewhere along the way he began using his power and authority for his own benefit."

This just-before-final-sentencing local article about the Dimora case reveals how guideline calculations and lawyer advocacy might have played a role in this sentencing judgment:

U.S. District Judge Sara Lioi said [based on her] federal sentencing guideline [calculations] that Dimora could be looking at between 292 to 365 months in prison....

Federal prosecutors have asked Lioi to put Dimora behind bars for at least 22 years for racketeering and 31 other corruption-related charges. Federal probation department officials recommended Dimora be sentenced to life in prison, while defense lawyers had asked for a much lighter, although unspecified, sentence....

Dimora's attorneys argu[ed] he should get less time due to physical condition and age. Andrea Whitaker, one of Dimora’s attorney, asked for the court to consider less of a prison sentence due to what she described as his “ailing health” conditions.

“Prison is a more severe experience for people with health conditions,” Whitaker said. "Mr. Dimora's health issues are real, they aren't imagined." Whitaker said mass behind his lungs and also suffered from an aneurysm. She also said he had other health related conditions.

Assistant U.S. Attorney Antoinette Bacon, however, said Dimora had the same health issues when he committed the crimes. “He’s only 57 years old,” Bacon said. “He is a relatively young man who has a long life ahead of him.”

Dimora is going to need to have a long life ahead of him if he will even be free again (unless he can get some kind of relief on appeal).  Even if he gets full credit for good behavior, the lengthy prison term given to Dimora today means he cannot be free until at least 2036 and is in his 80s.

As an interesting point of reference, I think it is notable that Dimora's sentence is fully twice as long as the sentence given to former Illinois Governor Rod Blagojevich (basic here). Indeed, I cannot recall and am unaware of any sentence for political corruption longer than even 20 years, and thus Dimora may well have today received the longest sentence for political corruption in modern history.

July 31, 2012 in Scope of Imprisonment, White-collar sentencing | Permalink | Comments (2) | TrackBack

Monday, July 30, 2012

Huge Iranian fraud results in death sentences

As reported in this New York Times piece, which is headlined "Iran Sentences Four to Death Over $2.6 Billion Bank Fraud," Iran has imposed a notable set of sentences in a notable fraud case. Here are the details:

In the first sentences to be handed down in a $2.6 billion embezzlement case, an Iranian court ordered the death penalty for four people in the fraud that was uncovered in a network of Iranian banks last year, Iranian state media reported on Monday.

The four, who were not named in the report by the Fars news agency, were among 39 suspects who were convicted in what the Iranian authorities have described as the biggest financial swindle in the country’s history. The top prosecutor, Gholam Hossein Mohseni-Ejei, told reporters that two of the defendants had been given life sentences, while the others were given sentences of up to 25 years....

The other suspects were not named, but have been said to include managers of bank branches, and a number of clerks who were accused of accepting bribes. Fars quoted Mr. Mohseni-Ejei as saying that the other sentences that were handed down included prison terms of 10 and 20 years, as well as lighter sentences.

July 30, 2012 in Death Penalty Reforms, Sentencing around the world, White-collar sentencing | Permalink | Comments (2) | TrackBack

Saturday, July 28, 2012

George Will assails "abuse of criminal law for capricious bullying" in whale of federal tale

George Will has this notable new commentary in the Washington Post , headlined "Blowing the whistle on the federal Leviathan," about one extreme federal prosecution.  Here are excerpts:

The huge humpback whale whose friendliness precipitated a surreal seven-year — so far — federal hunt for criminality surely did not feel put upon.  Nevertheless, our unhinged government, with an obsession like that of Melville’s Ahab, has crippled Nancy Black’s scientific career, cost her more than $100,000 in legal fees — so far — and might sentence her to 20 years in prison.  This Kafkaesque burlesque of law enforcement began when someone whistled.

Black, 50, a marine biologist who also captains a whale-watching ship, was with some watchers in Monterey Bay in 2005 when a member of her crew whistled at the humpback that had approached her boat, hoping to entice the whale to linger.  Back on land, another of her employees called the National Oceanic and Atmospheric Administration (NOAA) to ask if the whistling constituted “harassment” of a marine mammal, which is an “environmental crime.” NOAA requested a video of the episode, which Black sent after editing it slightly to highlight the whistling. NOAA found no harassment — but got her indicted for editing the tape, calling this a “material false statement” to federal investigators, which is a felony under the 1863 False Claims Act, intended to punish suppliers defrauding the government during the Civil War.

A year after this bizarre charge — that she lied about the interaction with the humpback that produced no charges — more than a dozen federal agents, led by one from NOAA, raided her home. They removed her scientific photos, business files and computers. Call this a fishing expedition. She has also been charged with the crime of feeding killer whales when she and two aides were in a dinghy observing them feeding on strips of blubber torn from their prey — a gray whale....

Never mind. This pursuit of Black seems to have become a matter of institutional momentum, an agent-driven case. Perhaps NOAA, or the Justice Department’s Environmental Crimes Section, has its version of Victor Hugo’s obsessed Inspector Javert. In any event, some of the federal government’s crime-busters seem to know little about whales — hence the “whistle-as-harassment” nonsense.

Six years ago, NOAA agents, who evidently consider the First Amendment a dispensable nuisance, told Black’s scientific colleagues not to talk to her and to inform them if they were contacted by her or her lawyers.  Since then she has not spoken with one of her best friends.  To finance her defense she has cashed out her life’s savings, which otherwise might have purchased a bigger boat.  The government probably has spent millions. It delivered an administrative subpoena to her accountant, although no charge against her has anything to do with finances.

In 1980, federal statutes specified 3,000 criminal offenses; by 2007, 4,450. They continue to multiply. Often, as in Black’s case, they are untethered from the common-law tradition of mens rea, which holds that a crime must involve a criminal intent — a guilty mind. Legions of government lawyers inundate targets like Black with discovery demands, producing financial burdens that compel the innocent to surrender in order to survive.

The protracted and pointless tormenting of Black illustrates the thesis of Harvey Silverglate’s invaluable 2009 book, “Three Felonies a Day: How the Feds Target the Innocent.” Silverglate, a civil liberties lawyer in Boston, chillingly demonstrates how the mad proliferation of federal criminal laws — which often are too vague to give fair notice of what behavior is proscribed or prescribed — means that “our normal daily activities expose us to potential prosecution at the whim of a government official.” Such laws, which enable government zealots to accuse almost anyone of committing three felonies in a day, do not just enable government misconduct, they incite prosecutors to intimidate decent people who never had culpable intentions. And to inflict punishments without crimes.

By showing that Kafka was a realist, Black’s misfortune may improve the nation: The more Americans learn about their government’s abuse of criminal law for capricious bullying, the more likely they are to recoil in a libertarian direction and put Leviathan on a short leash.

July 28, 2012 in Procedure and Proof at Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (34) | TrackBack

Friday, July 20, 2012

"Insider Traders Face Longer Sentences as Judges Get Tough‎" (except for cooperators)

The title of this post is drawn from the headline of this Bloomberg article, which my editorial addition in parenthesis. Here are excerpts:

Inside traders have more to fear when they stand before Manhattan federal judges for sentencing.  Since Jan. 1, 2011, the judges have sent the average violator to prison for more than 22 months, according to an analysis of sentencing data by Bloomberg News.  That was a 20 percent increase from the average term of 18.4 months during the previous eight years.

The harsher sentences come three years into a federal crackdown on insider trading on Wall Street.  Since August 2009, federal prosecutors in Manhattan have charged 71 people with insider trading and won 65 convictions, with six cases still pending.  Some of those convicted, including former Goldman Sachs Group Inc. director Rajat Gupta, are awaiting sentencing.

“There are different insider-trading cases now,” Ellen Podgor, a professor at Stetson University College of Law in Gulfport, Florida, said.  “You look at the individuals they’re going after now -- it’s a higher level.”

Judges in Manhattan federal court are also slightly more likely to send offenders to prison. Twenty-one of 36 defendants sentenced for insider trading since the start of 2011 -- or 58 percent -- were jailed.  By comparison, 24 of the 43 defendants sentenced from 2003 through 2010, or 56 percent, lost their freedom.  Of late, most of those who avoided prison cooperated with the government.

The longer terms for insider trading are consistent with lengthier terms nationally for all forms of fraud.  According to U.S. Sentencing Commission statistics, the average sentence in fraud cases in fiscal 2011 rose to 23 months from 14.4 months eight years earlier, a 60 percent increase.  “White-collar sentences all across the U.S. are going up,” Podgor said in a phone interview....

Cooperating with the government has kept some of those convicted out of jail.  Since the start of 2011, judges have sentenced 12 defendants who admitted their guilt and agreed to provide evidence for prosecutors.  Cooperators have secretly recorded their friends and colleagues, interpreted documents and worked in other ways with federal agents.  Eleven of the cooperators avoided prison altogether, according to the data.  One got six months.

“It’s important that cooperating witnesses do get lower sentences,” said Christopher Garcia, former chief of the securities fraud unit in the U.S. Attorney’s Office in Manhattan.  “The hope of reduced sentences is a powerful tool for prosecutors in persuading and encouraging people to make cases against others.”

Anil Kumar, a former McKinsey & Co. director who testified against both Rajaratnam and Gupta, was sentenced yesterday to probation.  U.S. Circuit Judge Denny Chin cited Kumar’s “extraordinary cooperation” and his effort to “make amends for what he did.”

Judges in most insider cases imposed terms less than those recommended by the Sentencing Commission’s guidelines, according to court records.  Rajaratnam, facing from 19 years to 24 1/2 years under the guidelines, got 11 years behind bars.  Holwell explained at sentencing that Rajaratnam was sick and had a history of doing charitable works.  In another case, James Fleishman, a Primary Global executive convicted of leaking tips, got 30 months when the guidelines called for a term of 87 to 108 months.  U.S. District Judge Jed Rakoff, who has been critical of the sentencing guidelines, handed down the sentence.

James Felman, a lawyer in Tampa, Florida, who serves as the American Bar Association’s liaison to the Sentencing Commission, said many judges are willing to undercut the harsh terms urged by the guidelines in white-collar cases.  The U.S. Supreme Court ruled in 2005 that the guidelines were no longer mandatory.  “All guideline sentences have been increasing,” Felman said in a phone interview.  Of the recommended white-collar sentences, he said that “even the government is aware they’re frequently too high.”

Still, a conviction for insider trading almost always means prison time for non-cooperating defendants.   Of 24 non-cooperators who pleaded guilty or were convicted at a trial during the period measured here, 20 were ordered imprisoned for an average of 33 months.  The four spared played minor roles in the schemes, judges said.

July 20, 2012 in Data on sentencing, Offense Characteristics, Scope of Imprisonment, White-collar sentencing | Permalink | Comments (2) | TrackBack

Thursday, July 19, 2012

Effective review of Southern Union's impact and potential import

For various understandable reasons, the Supreme Court significant Sixth Amendment ruling in Southern Union has not gotten all that much attention.  But this effective Indiana Lawyer article, headlined "US Supreme Court: Criminal fines require jury finding," provides a nice reminder of the significance of the ruling. Here are excerpts from this piece:

An end-of-term U.S. Supreme Court decision did far more than reduce a penalty in a federal criminal environmental judgment from $18 million to $50,000. It created a new reality for how the government will have to pursue such prosecutions in the future, experts say.

A rare coalition of conservative and liberal justices ruled 6-3 in Southern Union Co. v. United States, 11–94, that the Sixth Amendment right to a jury trial requires a jury to determine facts to support a sentence imposed after a guilty verdict....

“This is definitely a win for the defendants,” [Indiana University law professor Ryan] Scott told the Indiana Lawyer. “That said, the history of Apprendi is one of the Supreme Court recognizing more and more expansive jury rights and the government responding with great resilience.”

In essence, experts said, juries will have to determine factors such as lengths of violations for sentences involving fines on a “per day/per violation” basis, or losses and potential penalties in federal fraud cases. A simple guilty verdict such as that in Southern Union no longer is sufficient to allow a judge to use his or her discretion in levying criminal fines....

Southern Union seems to suggest that Apprendi may apply to any penalties inflicted by the government for the commission of offenses.... Also left for future consideration: “When does an offense rise beyond the level of ‘non-petty’ and become substantial enough to invoke the Apprendi rule?”

Scott also sees more Apprendi questions arising. The jury trial right could be a matter for the courts to decide in cases involving restitution determinations and in matters where asset forfeiture is ordered, he said.

July 19, 2012 in Blakely in the Supreme Court, Procedure and Proof at Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (0) | TrackBack

Wednesday, July 18, 2012

Rajat Gupta hoping to get by (federal sentencing) with a little help from his friends

Sgt. Pepper's Lonely Hearts Club BandThis new sentencing story from Fox Business, which is headlined "Gupta Seeks Help From Friends for Lenient Sentence," has me in a Beatles mood today.  (This mood may also be the product of my being at Oxford in the UK and thinking about making a sojourn to Liverpool.  Folks reading this post in the US can think about Joe Cocker (and check out this classic live performance) for an American version of the same musical spirit.)  The story concerns a request made by a very high-profile white-collar defendant in preparation for his federal sentencing scheduled for this fall. Here are the details:

Rajat Gupta, the former Goldman Sachs board member recently convicted for providing illegal trading tips to former Galleon chief Raj Rajaratnam, has made an unusual request to former business associates and prominent acquaintances urging them to write letters of support to the judge in the case so he can receive the most lenient sentence for his crimes, the FOX Business Network has learned.

A copy of the request, obtained by FBN, even goes so far as to suggest that U.S. District Judge Jed Rakoff “would like to receive letters of support from friends and family” so the judge can “understand me as a person. This gives the judge a full idea of who I am and significantly influences the decision.”...

“I look forward to hearing from you with a positive response,” Gupta added in the request sent earlier in the month, “and thank you very much in advance.”

Gupta is scheduled to be sentenced on Oct. 18, and faces as many as 20 years in jail for securities fraud. So-called support letters of this kind have been known to prod judges to hand out more lenient sentences, though Gupta may have overplayed his hand in suggesting that Rakoff is personally requesting the letters.

The Fox Business Network has learned that Gupta sent the request to numerous people without his attorney reviewing the content.  A press official for Rakoff said there has been “no active solicitation of letters” from the judge.  FBN has also learned that after being alerted to the language in the request, Gupta’s attorney Gary Neftalis, reissued the correspondence removing the line implying the judge’s advocacy for the letters and simply pointing out that such letters of support delivered to the sentencing judge are “customary.”...

Columbia University law professor John Coffee said Rakoff is known to take letters of support seriously in doling out sentences, though he said Gupta’s aggressive pitch to friends and colleagues “is not going to help” in gaining leniency.

The aggressive tone of the letter underscores the difficult spot that Gupta finds himself in following the guilty verdict.  The former Goldman board member, and head of the giant McKinsey & Co., was cleared of two counts during his trial last month.  Yet he was convicted of several more, and is widely regarded as the most prominent business executive snared in the government crackdown on insider trading.  Among the most sensation counts Gupta was convicted on involved leaking to Rajaratnam details of a Goldman Sachs board meeting involving Warren Buffett’s infusion of cash into the firm at the height of the financial crisis.

Prosecutors showed phone records in which Gupta called Rajaratnam shortly after the board meeting and Rajaratnam purchased shares of Goldman before Buffett’s move was made public.  Rajaratnam himself was convicted of multiple counts of securities fraud and insider trading violations and is serving an 11-year sentence.  Most legal experts don’t expect Gupta to receive as lengthy of a jail term as Rajaratnam; prosecutors are likely to ask for a decade of jail time based on sentencing guidelines, but Gupta himself never traded on the inside information.  The best prosecutors could do was portray Gupta as using his inside knowledge and tips to curry favor and do business with Rajaratnam, once a billionaire fund manager and one of Wall Street top traders.

In Gupta’s favor is Rakoff’s reputation for handing less jail time than what prosecutors often recommend, which is why Gupta’s request for letters from prominent people -- many of them in fields outside of Wall Street -- is so important.  Friends of Gupta say both he and his family were hit hard by the guilty verdict, and the likelihood of jail time and the letter suggests as much....

One additional reason for the aggressive pitch may be that Gupta believes Rakoff will be less likely to cut such a prominent person a break on sentencing.  A former prosecutor who has argued cases before Rakoff says the judge is known to come down hard on white collar defendants who “should have known better.”  Rakoff sentenced attorney Marc Drier to 20 years in prison for stealing $400 million from his clients.

“Let’s face it, Gupta is a board member of Goldman and the former head of McKinsey,” the former prosecutor said. “He knows that he’s isn’t supposed to be telling people about what goes on during board meetings, and that may force Rakoff to come down harder on him than he would otherwise.”

Fox Business has made available at this link the letter referenced in its article.  I do not view the tone or wording of this letter as such a big deal; but the way in which Fox Business covers this seemingly minor pre-sentencing development confirms my sense that Gupta's sentencing will be one of the highest profile and most interesting federal sentencing cases of 2012.

Related posts on upcoming Gupta sentencing:

July 18, 2012 in Offender Characteristics, Procedure and Proof at Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (7) | TrackBack

Monday, July 16, 2012

First Circuit affirms (way-)below-guideline sentence for Big Dig white-collar offenders

Because I am on the road throughout July, I fear I may miss some notable circuit sentencing opinions.  Thus, I am especially grateful that a helpful reader alerted me to the especially noteworthy opinion handed down by the First Circuit late last week in US v. Prosperi, No. 10-1739 (1st Cir. July 13, 2012) (available here). Here is how the lengthy Prosperi opinion starts:

The United States challenges the sentences imposed on appellees Robert Prosperi and Gregory Stevenson after their conviction of mail fraud, highway project fraud, and conspiracy to defraud the government.  Both appellees were employees of Aggregate Industries NE, Inc. ("Aggregate"), a subcontractor that provided concrete for Boston's Central Artery/Tunnel project, popularly known as the "Big Dig."  The government charged that over the course of nine years Aggregate knowingly provided concrete that failed to meet project specifications and concealed that failure by creating false documentation purporting to show that the concrete provided complied with the relevant specifications. Several employees of Aggregate, including Prosperi and Stevenson, were convicted of criminal offenses for their roles in the scheme.

At sentencing, the district court calculated the guidelines sentencing range ("GSR") for Prosperi and Stevenson as 87- to 108-months incarceration.  Then, explaining fully its rationale for a below-guidelines sentence, the court sentenced Prosperi and Stevenson to six months of home monitoring, three years of probation, and 1,000 hours of community service.  The government now appeals, arguing that under Gall v. United States, 552 U.S. 38 (2007), the sentences imposed by the district court were substantively unreasonable and that the appellees' crimes warrant incarceration.

We affirm.  Although the degree to which the sentences vary from the GSR gives us pause, the district court's explanation ultimately supports the reasonableness of the sentences imposed.  The district court emphasized that its finding on the loss amount caused by the crimes, the most significant factor in determining the GSR, was imprecise and did not fairly reflect the defendants' culpability.  Hence it would not permit the loss estimate to unduly drive its sentencing decision.  Relatedly, it found that there was insufficient evidence to conclude that the defendants' conduct made the Big Dig unsafe in any way or that the defendants profited from the offenses.  The court then supplemented these critical findings with consideration of the individual circumstances of the defendants and concluded that probationary sentences were appropriate.  We cannot say that it abused its discretion in doing so.

As this introduction suggests, the (unanimous) Prosperi opinion discusses lots of loss issues and ultimately affirms the district court's desire and decision to give little weight to what it saw as an inflated loss calculation.  For this reason and others, Prosperi is a must-read not just for white-collar federal sentencing practitioners, but for all those still unsure about the scope of sentencing discretion in the post-Booker world.

July 16, 2012 in Booker in district courts, Booker in the Circuits, Federal Sentencing Guidelines, Offender Characteristics, Offense Characteristics, White-collar sentencing, Who Sentences? | Permalink | Comments (0) | TrackBack

Tuesday, July 10, 2012

Another corrupt former governor gets another light federal sentence

The title of this post is meant to be (harmfully?) sensational, because the local story here about the former Missouri Gov. Roger Wilson being sentenced to probation in federal court reveals that he was not really very corrupt, that his misdeed was committed after he left office, and and he did not really get an unduly lenient sentence given that he was convicted only of a misdemeanor and his probation term was a within-guideline sentence. Here are the white-collar crime and punishment specifics in this case:

U.S. Magistrate Judge Mary Ann Medler's sentence was expected. Wilson faced probation to six months in prison under federal sentencing guidelines. His lawyer, Robert Haar, had asked for probation, citing his long public service record.

After a lengthy investigation, Wilson was indicted in April on a misdemeanor insurance charge for laundering a total $8,000 in campaign contributions from Missouri Employers Mutual Co., a state-created workers' compensation company based in Columbia, to the Missouri Democratic Party through a St. Louis law firm, Herzog Crebs. Former Herzog Crebs partner Ed Griesedieck III was also indicted.  Wilson was president and CEO of MEM at the time.

Medler sentenced Wilson to two years of probation and ordered him to pay a $5,000 fine and $5,000 in restitution. He will also complete 100 hours of community service. Griesedieck received one year of probation. The other aspects of his sentence were the same.

In court Wilson read a short statement in which he thanked his family and friends. He apologized and said he looks forward to a future in community service. "There are no excuses," he said. "I made a mistake." He read a similar statement outside the courthouse. He also said that he had already paid the fine and half of the restitution. Griesedieck presumably has or will pay the rest....

Wilson served two terms as lieutenant governor and nearly 14 years in the state senate. He also formerly chaired the Missouri Tourism Commission and the Missouri Rural Economic Development Council.  Wilson was sworn in as Missouri's 52nd governor following the death of Gov. Mel Carnahan in 2000 in a plane crash.  After leaving office, Wilson worked for a money management firm and served as the Missouri Democratic Party's chairman from 2004 to 2007.

July 10, 2012 in Offender Characteristics, Offense Characteristics, White-collar sentencing | Permalink | Comments (0) | TrackBack

Monday, July 02, 2012

Record big criminal fine for big drug company involved in big fraud

This new AP article, headlined "GlaxoSmithKline to pay largest health care fraud fine in U.S. history," reports on a notable financial punishment for a corporate criminal. Here are the details:

GlaxoSmithKline will pay $3 billion and plead guilty to promoting two popular drugs for unapproved uses and to failing to disclose important safety information on a third in the largest health care fraud settlement in U.S. history, the Justice Department said Monday.

The $3 billion fine also will be the largest penalty ever paid by a drug company, Deputy Attorney General James M. Cole said. The corporation also agreed to be monitored by government officials for five years to attempt to ensure the company's compliance, Cole said....

"For far too long, we have heard that the pharmaceutical industry views these settlements merely as the cost of doing business," Acting Assistant Attorney General Stuart F. Delery, head of Justice's civil division, said at the news conference. "That is why this administration is committed to using every available tool to defeat health care fraud."...

Prosecutors said GlaxoSmithKline illegally promoted the drug Paxil for treating depression in children from April 1998 to August 2003, even though the FDA never approved it for anyone under age 18. The corporation also promoted the drug Wellbutrin from January 1999 to December 2003 for weight loss, the treatment of sexual dysfunction, substance addictions and attention deficit hyperactivity disorder, although it was only approved for treatment of major depressive disorder.

Justice Department officials also said that between 2001 and 2007 GlaxoSmithKline failed to report to the FDA on safety data from certain post-marketing studies and from two studies of the cardiovascular safety of the diabetes drug Avandia. Since 2007, the FDA has added warnings to the Avandia label to alert doctors about potential increased risk of congestive heart failure and heart attack.

The drug corporation also agreed to resolve civil liability for promoting the drugs Paxil, Wellbutrin, Advair, Lamictal and Zofran for off-label, non-covered uses. The company also resolved accusations that it paid kickbacks to doctors to prescribe those drugs as well as the drugs Imitrex, Lotronex, Flovent and Valtrex....

Of the penalties, $1 billion covers criminal fines and forfeitures and $2 billion is for civil settlements with the federal government and the state governments of Massachusetts and Colorado.

July 2, 2012 in Criminal Sentences Alternatives, Offense Characteristics, White-collar sentencing | Permalink | Comments (3) | TrackBack

Saturday, June 30, 2012

Did (white-collar?) arsonist poison himself in courtroom right after hearing verdict and sentence?

The main question in thie title of this post present the interesting mystery in reported in this Huffington Post piece, which is headlined "Michael Marin, Ex-Wall Street Trader, Dies In Courtroom After Conviction." Here are the details:

An ex-Wall Street trader collapsed and died in a Phoenix-area courtroom Thursday, shortly after being found guilty of setting his mansion on fire in a ploy to escape his mortgage debt.

Police are now investigating whether the man, Michael Marin, purposefully killed himself. Shortly after the jury read its verdict and sentenced him to 16 years in prison, Marin appeared to place something in his mouth several times and drink from a bottle he brought with him into the courtroom. Minutes later, he suffered from a seizure and died. Police can't yet confirm whether Marin’s death was a suicide.

Marin’s mansion in a ritzy Phoenix neighborhood caught fire in 2009, the Arizona Republic reports. Marin claimed he had to escape from the house wearing a scuba tank and mask to protect himself from the smoke, but investigators found evidence that he set the fire himself. Though he had grown accustomed to a lifestyle that reportedly included owning Picasso sketches and $800 climbing boots, Marin’s financial situation grew dire the year before the fire. His bank account balance fell to only $50 from $900,000 even while he had a monthly mortgage payment of more than $17,000, according to the Arizona Republic.

In addition to the interesting possibility that the defendant here decided to sentence himself to death rather than go to state prison, I have also flagged this story because I wonder just how we ought to characterized Marin's crime of arson.  Is this crime properly called vioent or non-violent?  Is it a white-collar offense?  A property offense or a fraud offense? One of the many challenges of studying crime and sentencing data is trying to fully understand what gets placed into which data catergories, and this kind of case reinforces my persistent concern than many crimes defy easy categorization.

June 30, 2012 in Data on sentencing, Offender Characteristics, Offense Characteristics, White-collar sentencing, Who Sentences? | Permalink | Comments (4) | TrackBack

Thursday, June 28, 2012

Second Circuit panel now affirms Lynne Stewart's (way below guideline) 10-year prison sentence

One of many noteworthy legal developments today sure to be overshadowed by the Supreme Court's health care ruling is today's Second Circuit panel opinion upholding the 10-year prison sentence of (in)famous defense lawyer Lynne Stewart.  The lengthy unanimous opinion in US v. Stewart, No. 10-3185 (2d Cir. June 28, 2012) (available here), covers a lot of interesting sentencing ground, though the most extensive discussion concerns Stewart's claim that enhancement of her sentence due to her initial post-sentencing public comments violated the First Amendment.   Here are a few paragraphs from the start and end of the panel ruling:

Appellant Lynne Stewart appeals from a judgment of the United States District Court for the Southern District of New York (John G. Koeltl, Judge) sentencing her principally to 120 months' imprisonment following our vacatur on grounds of procedural error of her previous sentence of 28 months and remand of the district court's previous judgment insofar as it imposed that sentence. The details of this case were recounted at length in our prior opinion, United States v. Stewart, 590 F.3d 93, 100-08 (2d Cir. 2009) ("Stewart I"). We repeat them here only insofar as we think it necessary to explain our judgment [of affirmance]....

Finally, Stewart argues that her sentence is substantively unreasonable, principally because of the more than fourfold increase from her original sentence of 28 months' incarceration to the currently imposed sentence of 120 months.  She asserts that aside from her public statements, "no change in circumstances or information available to the sentencing court . . . supported increasing Ms. Stewart's sentence by this magnitude." Def.'s Br. at 101.  She also contends that the district court was not permitted to increase the sentence in response to suggestions that it do so in the dissent from our panel opinion, and in the dissents accompanying the denial of rehearing en banc.  Def.'s Br. at 103.  And she urges that in light of her personal characteristics, the sentence imposed on her was so "shockingly high" as to render it substantively unreasonable....

It is the "rare case" in which we will find a sentence substantively unreasonable, and we place "great trust" in a sentencing court.  Rigas, 583 F.3d at 123.  In Stewart I, we expressly recognized and were "impressed by the factors that figured in Stewart's modest sentence -- particularly her admirable history of providing, at no little personal cost to herself, proficient legal services in difficult cases to those who could not otherwise afford them."  Stewart I, 590 F.3d at 147-48.  But, nonetheless, she engaged in severe criminal conduct in aid of a terrorism conspiracy, and she did so by abusing the trust that the government had placed in her as a member of the bar.  When confronted with these transgressions, she lied repeatedly under oath.

From the moment she committed the first act for which she was convicted, through her trial, sentencing, and appeals, Stewart has persisted in exhibiting what seems to be a stark inability to understand the seriousness of her crimes, the breadth and depth of the danger in which they placed the lives and safety of unknown innocents, and the extent to which they constituted an abuse of her trust and privilege as a member of the bar.  We cannot agree with her that the sentence imposed on her was "shockingly high" so as to warrant a finding of substantive unreasonableness.

June 28, 2012 in Booker in the Circuits, Celebrity sentencings, Offender Characteristics, Offense Characteristics, Procedure and Proof at Sentencing, Sentences Reconsidered, White-collar sentencing | Permalink | Comments (6) | TrackBack

Wednesday, June 27, 2012

"Madoff's Brother to Plead Guilty to Criminal Charges"

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

The brother of convicted Ponzi scheme operator Bernard Madoff will plead guilty to criminal charges Friday, marking the first time a family member has admitted guilt aside from Mr. Madoff himself since the fraud came to light 3½ years ago.

Peter Madoff, who worked as the Madoff firm's chief compliance officer and senior managing director, is expected to plead guilty to two charges at a hearing Friday, including falsifying the records of an investment adviser and conspiracy to commit securities fraud and other crimes.

As part of an agreement with prosecutors, Peter Madoff has agreed to a sentence of 10 years in prison, prosecutors said in a letter to U.S. District Judge Laura Taylor Swain, which was filed on Wednesday.  He also has agreed to forfeit about $143.1 billion, prosecutors said.

I trust I will not be the only one who wonders about and sees the irony in a mega-fraudster like Peter Madoff, thanks to the exercise of prosecutorial charging/sentencing discretion, is now apparently going be serving just 10 years in federal prison (actually, probably less than 9 years given good-time credits) while many low-level federal crack offenders are still serving their second or third decade of federal prison time because a federal judge lacked any sentencing discretion to impose a lower sentence deacdes ago under then-applicable mandatory minimums and/or then-binding mandatory guidelines.

June 27, 2012 in Offense Characteristics, Purposes of Punishment and Sentencing, Scope of Imprisonment, White-collar sentencing, Who Sentences? | Permalink | Comments (7) | TrackBack

Wednesday, June 20, 2012

Interesting commentary on upcoming Gupta sentencing for insider trading

Writing at Forbes, Richard Levick has this interesting new commentary headlined "The Sentencing of Rajat Gupta: Why It Matters." Here is how it begins:

Here’s a quaint news item from 1987 about how a certain Ivan F. Boesky, one of the world’s most powerful speculators and symbol de jour of Wall Street greed, was sentenced to three years in prison for insider trading-related violations.  It was one of the longest jail terms ever imposed in such a case and, apparently, a source of satisfaction to then-U.S. Attorney Rudolph Giuliani.

Twenty-five years later, we have hedge fund bigwig Raj Rajaratnam setting a new record as he serves an 11-year sentence for similar misdeeds.  Maybe the lesson is that you’re better off getting caught committing financial crimes in prosperous times.  Maybe it’s that persistent violations over decades wear down public patience, accelerating demand for ever more severe punishments that, it’s fancied, will better deter future wrongdoers.

In any event, last week’s conviction of Rajat Gupta for leaking insider information to Rajaratnam has naturally generated much discussion about how the retired head of McKinsey & Company and former Goldman Sachs board member will fare when Judge Jed Rakoff of the Federal District Court in Manhattan passes sentence in October. (Gupta was convicted on one count of conspiracy and three counts of securities fraud.)

Yet the discussion is more than just an odds-maker’s game. Gupta’s ultimate fate raises substantive issues that speak to public perception as well as the narrower considerations that drive judges, influence the future actions of enforcement officials, and impact markets.

June 20, 2012 in Federal Sentencing Guidelines, Offense Characteristics, White-collar sentencing | Permalink | Comments (1) | TrackBack

Sunday, June 17, 2012

"Valuable" cooperation gets con man's sentence recommendation reduced from LWOP to 5+ years

Federal sentencing practioners know that defendants involved in very serious federal crimes, even those with very long and very serious criminal histories, can escape very long prison terms by making nice with the government and helping the feds go after others.  The latest notable example of this reality is reported in this new Chicago Tribune article, which is headlined "Prosecutors: Levine among 'most valuable' witnesses in 3 decades." Here are the details:

Prosecutors called their key witness against former Gov. Rod Blagojevich and two top advisers "one of the most valuable cooperators" in three decades of public-corruption prosecutions in a late-Friday filing arguing for a light sentence.

Stuart Levine could have faced life in prison under federal sentencing guidelines but prosecutors agreed to recommend a sentence of 5 years and 7 months in exchange for Levine's cooperation. Friday's filing comes after U.S. District Judge Amy St. Eve, during a hearing in April, asked for a "lengthy recitation of Levine's cooperation."...

"The government not only used information provided initially by Levine in the case against Blagojevich, it was Levine's decision to cooperate that set in motion the series of events that led directly to the government obtaining the evidence and witnesses it needed to prosecute Blagojevich," prosecutors wrote.

Friday's filing, in advance of Levine's June 28 sentencing, recognizes both Levine's cooperation and his extensive criminal history.

More background on the man getting this (justified?) sentencing break from federal prosecutors comes from this local article from a few month ago headlined "How Stuart Levine — a thief and con man — became star witness."  Here is a snippet from that article:

On a recent day in federal court, a quiet settled over the courtroom as Stuart Levine answered questions about his past. It wasn’t just the drug-binge parties and snorting 10 lines of animal tranquilizer mixed with crystal meth at the Purple Hotel that stunned the courtroom. It was an interminable list of scams that one man was able to pull off for decades.

Did he steal $6 million from one charity, keep half and never pay it back? “Yes,” he said plainly.  Levine, wearing an ill-fitting suit and glasses, was asked if he rewarded a dying friend who entrusted him with his estate by stealing $2 million from the dead man’s children.  “Yes,” he said.

He’d answer “yes” to handing out bribes to politicians, to school board members, to a postal union worker and to using his position on state boards to work kickback deals amounting to millions of dollars.  Levine even admitted that once the FBI caught him and he swore to tell the truth, he initially lied about Vrdolyak.  Was that because, even while under FBI scrutiny, he still wanted to secretly take part in a $1.5 million kickback scheme with Vrdolyak?  Levine answered predictably: “Yes.”

June 17, 2012 in Federal Sentencing Guidelines, Offender Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (8) | TrackBack

Saturday, June 16, 2012

Any early federal sentencing predictions after quick conviction in Gupta insider trading case?

As reported here by CNN, "Rajat Gupta, the consummate corporate insider and former director at Goldman Sachs, was found guilty of insider trading on Friday," and it took the  "federal jury in New York ... just over a day of deliberation [to find] Gupta guilty of four of six criminal counts."  In this New York Times piece, Professor Peter Henning provides a great preview of some sentencing basics now facing Gupta:

The jury convicted Mr. Gupta on tips he made to Mr. Rajaratnam in September and October 2008, about developments at Goldman.  Prosecutors had wiretaps of Mr. Rajaratnam describing his source on Goldman’s board, which pointed a finger directly at Mr. Gupta.  With sentencing scheduled for Oct. 16, the focus of the case will now shift to his punishment as well as the potential issues his defense lawyers may introduce on appeal.

In recommending prison terms for insider trading, the federal sentencing guidelines for insiders focus primarily on the financial gains made by a defendant.  Mr. Gupta did not personally trade in Goldman Sachs or Procter & Gamble shares based on the inside information he received.  But by tipping off Mr. Rajaratnam, he is responsible for the transactions conducted through Galleon Group based on the information he provided.

By convicting Mr. Gupta of conspiracy, prosecutors will most likely argue that he is responsible for all trading cited in the indictment — which was estimated at trial to have generated for Galleon over $16 million in gains or in losses avoided. Prosecutors will also seek to add on to the sentence by arguing that Mr. Gupta “abused a position of trust” by leaking information while serving as a director of Goldman and P&G. Based on these two issues, the sentencing guidelines recommend a sentence of 8 to 10 years.

Mr. Gupta will argue for a much lower sentence, claiming that the acquittal on two counts should mean that any trading gains from transactions related to those charges should be excluded from the sentencing calculation. He is also likely to argue that Mr. Rajaratnam himself made the decision on how much to invest, and so the amount of the gain overstates the harm from the insider tips.

But even based solely on the 2008 Goldman trades in which he was convicted of tipping Mr. Rajaratnam, the sentencing guidelines range would still dictate 6 to 8 years in prison. Mr. Gupta is likely to claim that other factors should be taken into consideration — his strong reputation in the business world and extensive charitable efforts — to argue for a much lower sentence, perhaps even home confinement.

Judge Jed S. Rakoff of the Federal District Court in Manhattan will determine the sentence, and he has shown some hostility toward the sentencing guidelines in a previous securities fraud case. So he may be persuaded to impose a lower prison term than the government wants.

In United States v. Adelson, an accounting fraud case, the guidelines calculation called for a life sentence for a company’s former president who had helped cover up an accounting fraud.  But Judge Rakoff rejected such a severe punishment, describing “the utter travesty of justice that sometimes results from the guidelines’ fetish with abstract arithmetic, as well as the harm that guideline calculations can visit on human beings if not cabined by common sense.”

You can be sure that Mr. Gupta’s defense team will include the Adelson opinion prominently in its sentencing arguments. And prosecutors naturally will do their best to explain why insider trading is different.

In 2009, Judge Rakoff sentenced the lawyer Marc Dreier to 20 years in prison for leading a scheme that defrauded investors of nearly $700 million, rejecting the government’s recommendation of a 145-year prison sentence. At the sentencing, Judge Rakoff said that “Mr. Dreier is not going to get much sympathy from this court, but he is not Mr. Madoff from any analysis, and that’s why I can’t understand why the government is asking for 145 years.” As a result, prosecutors are likely to temper their sentencing recommendation, and will have to defend their interpretation if they want the court to impose a stiff sentence.

Based on Henning's guideline calculations and my expectation that Gupta's lawyers will put together a strong set of sentencing materials, I would place the over/under betting line for Gupta's sentencing at around 5 years' imprisonment. 

My instinct is that Rajaratnam's 11-year prison term providing a functional ceiling on Gupta's sentencing exposure, and that Judge Rakoff is going to be strongly inclined to impose some term of imprisonment.  Splitting the difference within those basic parameters, and given Judge Rakoff's historic inclination to resist rigid application of the fraud guidelines, Gupta can reasonably hope for a sentence of only a few years imprisonment.  But, especially in this political climate and in the wake of a jury conviction, I am sure prosecutors will be advocating forcefully for a prison term closer to a decade.

UPDATE:  This new Bloomberg piece provides lots of background on Judge Rakoff's recent sentencing history in white-collar cases.  It notes, inter alia, that last year Judge Rakoff "entenced Winifred Jiau, a Stanford University-educated consultant convicted of corrupting friends and selling confidential information, to four years in prison, less than half of the maximum 10 years sought by federal prosecutors."  That datum makes me inclined to move the over/under betting line for Gupta's sentencing down to 4 years' imprisonment.

June 16, 2012 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 (0) | TrackBack

Thursday, June 14, 2012

Will feds seek to (cross)appeal Stanford's sentence of "only" 110 years in prison?

The question in the title of this post is my tongue-in-cheek response to this news (via this article) that " R. Allen Stanford, the Texas financier convicted of fleecing 30,000 investors from 113 countries in a $7 billion Ponzi scheme, was sentenced on Thursday to 110 years in jail." Here is more on the sentencing:

A defiant Mr. Stanford, in a rambling statement to the court before the sentencing, intermittently fought back tears and shuffled papers, and said, “I’m not up here to ask for sympathy or forgiveness. I’m up here to tell you from my heart I didn’t run a Ponzi scheme.” He blamed the government for the collapse of his businesses and asserted that “we could have paid off every depositor and still have substantial assets remaining.”

In response, federal prosecutor, William J. Stellmach, called Mr. Stanford’s version of events “obscene.”

“This is a man utterly without remorse,” Mr. Stellmach said. “From beginning to end, he treated all of his victims as roadkill. He went after the middle class, including people who didn’t have money to lose. People have lost their homes. They have come out of retirement.”

A federal jury in March convicted Mr. Stanford of 13 out of 14 counts of fraud in connection with a worldwide scheme over more than two decades in which he offered fraudulent high-interest certificates of deposit at the Stanford International Bank, which was based on the Caribbean island of Antigua.

Prosecutors argued that Mr. Stanford had consistently lied to investors, promoting safe investments for money that he channeled into a luxurious lifestyle, a Swiss bank account and various business deals that almost never succeeded.

Mr. Stanford’s defense lawyers pleaded for a sentence effectively of time served because of the three years he spent in prison waiting for his trial.  Prosecutors recommended 230 years....

As regularreaders know, the feds are not usually too pleased when a district judges imposes a sentence less than half of what prosecutors have sought.  In this case, though, I predict confidently that only Mr. Stanford will be appealing.  I also predict the Fifth Circuit is unlikely to be moved by any sentencing appeal.

June 14, 2012 in Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, Scope of Imprisonment, White-collar sentencing, Who Sentences? | Permalink | Comments (9) | TrackBack

You be the sentencing judge: what should "putrescent" Ponzi scheme R. Allen Stanford get?

The latest greatest notorious Ponzi schemer, R. Allen Stanford, is due to be sentenced in federal court in Houston today.  Here are the basics and some sentencing predictions from this Bloomberg piece:

R. Allen Stanford, found guilty of leading a $7 billion international fraud scheme by a U.S. jury, will spend the rest of his life in prison if a federal judge grants prosecutors’ request.

Stanford, 62, will be sentenced today by U.S. District Judge David Hittner in Houston. Jurors in March convicted the Stanford Financial Group principal of 13 charges, including five counts of mail fraud and four of wire fraud, each punishable by as long as 20 years in prison.

Prosecutors asked for a 230-year term, the maximum under federal sentencing guidelines. Ali Fazel, one of Stanford’s lawyers, said the defense asked for a sentence of 31 to 44 months, based on a different, much-lower calculation of investors’ losses. Prosecutors contended that such a sentence was tantamount to “time served” for Stanford, who has been in custody since June 2009.

A sentence of about 30 years is more likely, according to Douglas Burns, a New York criminal defense lawyer. “This isn’t the Madoff case,” Burns said, referring to Bernard Madoff, the New York financier who received a 150-year term for a Ponzi scheme that bilked investors of more than twice as much money as Stanford’s victims. “This doesn’t seem to be at the same level.”

Stanford’s jury found he lied to buyers of certificates of deposit issued by his Antigua-based Stanford International Bank Ltd. and sold in the U.S. by his Houston-based securities firm, Stanford Group Co.... “Robert Allen Stanford is a ruthless predator responsible for one of the most egregious frauds in history,” the Justice Department said in its 34-page filing on June 6....

Barry Pollack, Washington criminal defense lawyer, said the government’s recommendation is inappropriate for a symbolic sentence. Stanford would be 77 if he served 15 years and would be unlikely to commit crimes after being released, Pollack said. “It’s hard to take a request for a 230-year sentence seriously,” Pollack said yesterday in a telephone interview.

Burns, a former federal prosecutor, agreed. “The government, I think, is not looking for this 230-year sentence,” he said. Given Stanford’s age, “a life sentence approximates 25 years.”

U.S. District Judge Denny Chin was under “unbelievable pressure” when he sentenced Madoff in 2009, Burns said, adding he doubted Hittner would mete out a comparable punishment. “I don’t think he’s going to give him a Bernie Madoff-like sentence because I don’t think the case is viewed like the Madoff case,” he said. A 12 1/2-year sentence would fairly and severely punish the financier, he said.

Thomas Petters, 54, a Minnesota businessman found guilty of orchestrating a $3.5 billion fraud in Dec. 2009, received a 50- year prison term. Galleon Group LLC co-founder Raj Rajaratnam last year was sentenced to 11 years for insider trading. He will be 55 tomorrow. Enron Corp. Chief Executive Officer Jeffrey Skilling, found guilty of both fraud and insider trading at the world’s biggest energy trading company, got a 24-year term in 2006. He is now 58....

More than 300 victims’ letters have been received by the court. Two fraud victims will address the judge before the financier is punished, according to court papers. “Madoff may go down in history for operating the world’s biggest Ponzi scheme, but I hope Judge David Hittner gives Allen Stanford the ‘bragging rights’ he deserves for operating the world’s most criminal Ponzi scheme,” victims advocate Angela Shaw said in an e-mailed statement. “His actions have ruined thousands of lives, for which he has shown no remorse.”

The evocative adjective "putrescent" comes from a line in the Government's quite compelling sentencing memo (available here), which does quite a nice job painting a picture of Stanford as even worse that Bernie Madoff.  That memo, as well as the fact that Stanford went to trial and seems to have lived even more lavishly than Madoff with his ill-gotten gains, leads me to think Stanford may ultimately get a sentence closer to the 230 years recommended by the feds than the merely 30+ months sought by the defense (which seems almost as kooky and silly as the prosecutors' recommendation).

If I were the judge, I would probably would be going into today sentencing hearing with an eye toward a prison term set somewhere between 50 and 100 years.  There is no magic in that recommendation, but I do think a fraudster of Stanford's status has earned himself a sentence that leaves him with no prospect of ever leaving prison alive.

June 14, 2012 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 (10) | TrackBack

Tuesday, June 12, 2012

Effective commentary on upcoming sentencing of Ponzi schemer Allen Stanford

As reported in this post last week, federal prosecutors have submitted a sentencing memo seeking a 230-year prison term for R. Allen Stanford. Today, via this posting on the DealBook section of the New York Times, Professor Peter Henning provides has some astute thoughts on the upcoming sentencing. The piece is headlined "Viewing Financial Crimes as Economic Homicide," and here are excerpts:

R. Allen Stanford, who was found guilty of operating a multibillion-dollar Ponzi scheme, is likely to receive a sentence later this week that will require him to spend the rest of his life behind bars. If that happens, it will continue a pattern in which white-collar defendants convicted of committing large-scale fraud have received long prison terms, far longer than what has been meted out in the past.

In March, Mr. Stanford, a Texas tycoon, was convicted on 13 counts of fraud and money laundering related to the collapse of Stanford International Bank, based in Antigua. Investors lost billions of dollars in what were billed as high-yield certificates of deposit but turned out to be largely worthless.  Thousands of victims throughout the United States and the Caribbean were affected.

In a sentencing recommendation filed in the Federal District Court in Houston, prosecutors asked Judge David Hittner for 230 years in prison, the maximum permitted by federal law for the convictions.  Not surprising, Mr. Stanford is seeking a much lower punishment that would effectively result in a sentence of time served since he was jailed after being charged in 2009.

I’m not really going out on a limb by predicting that the actual sentence will be somewhere in between those two recommendations.  But how high is the sentence likely to be? ...

One reason prosecutors have asked for such a startlingly high amount for Mr. Stanford is that a court can only sentence a defendant to the maximum permitted under the statute. Thus, prosecutors have asked the judge to impose separate sentences for each violation, totaling 230 years in prison.

If Judge Hittner follows the government’s recommendation, the sentence would exceed the 150-year sentence imposed on Bernard L. Madoff for perpetrating the greatest Ponzi scheme in history.  Such a long sentence could never be completely served, so it would be largely symbolic, intended to reflect the impact of Mr. Stanford’s crimes.

While it is unlikely that Judge Hitter will impose the statutory maximum term the government is seeking, it would not be surprising to see a sentence of at least 30 years -- and perhaps as much as 100 years.  That would fit in the pattern in recent financial fraud cases in which federal prosecutors sought long prison terms and judges have agreed to punishments that put white-collar defendants in jail for the rest of their lives.

Other defendants found guilty of financial frauds have received stiff sentences.  Edward Okun, who was convicted of defrauding customers of $126 million through his tax-deferral service, received a 100-year prison term in August 2009 after prosecutors recommended a sentence of 400 years.  Thomas J. Petters received a 50-year prison sentence in April 2010 for defrauding investors of approximately $3.7 billion after prosecutors recommended he receive the maximum term of 335 years.  Lee B. Farkas was sentenced to 30 years in June 2011 for his role as an executive at the mortgage lender Taylor, Bean & Whitaker after prosecutors urged a sentence of 385 years for a fraud that resulted in the collapse of Colonial Bank.

Mr. Stanford faces two significant hurdles in seeking a shorter sentence . First, he has not exhibited any contrition or remorse that can sway a judge.  He has maintained his innocence at trial, and he plans to appeal the convictions.

A second, greater problem is the attitude of many judges after the financial crisis.  Many have come to view financial frauds as crimes worthy of the type of sentences that was once reserved for violent offenders.  White-collar defendants are no longer given light sentences because they were not viewed as threats to society.

Prosecutors often speak of the deterrent value that a long sentence will have on other financial executives who will be chastened to avoid defrauding investors and clients.  As I discussed last year in a piece on Mr. Farkas’s sentencing, that is a message likely to be lost on other corporate executives because they do not view themselves as engaging in the type of misconduct that can lead to convictions, or life sentences.

Sentencing a white-collar defendant to a substantial prison term is really more about expressing society’s outrage at a misconduct that took advantage of investors and destroyed their financial well-being.  These types of fraud are akin to economic homicide, and courts are treating them more and more as such.

Recent related post:

June 12, 2012 in Offense Characteristics, Purposes of Punishment and Sentencing, Scope of Imprisonment, White-collar sentencing | Permalink | Comments (2) | TrackBack

Thursday, June 07, 2012

"Criminal Affirmance: Going Beyond the Deterrence Paradigm to Examine the Social Meaning of Declining Prosecution of Elite Crime"

The title of this post is the title of this new article authored by Mary Kreiner Ramirez available now via SSRN. Here is the abstract:

Recent financial scandals and the relative paucity of criminal prosecutions against elite actors that benefited from the crisis in response suggest a new reality in the criminal law system: some wrongful actors appear to be above the law and immune from criminal prosecution.  As such, the criminal prosecutorial system affirms much of the wrongdoing giving rise to the crisis.  This leaves the same elites undisturbed at the apex of the financial sector, and creates perverse incentives for any successors.  Their incumbency in power results in massive deadweight losses due to the distorted incentives they now face. Further, this undermines the legitimacy of the rule of law and encourages even more lawlessness among the entire population, as the declination of prosecution advertises the profitability of crime.

These considerations transcend deterrence as well as retribution as a traditional basis for criminal punishment.  Affirmance is far more costly and dangerous with respect to the crimes of powerful elites that control large organizations than can be accounted for under traditional notions of deterrence.  Few limits are placed on a prosecutor’s discretionary decision about whom to prosecute, and many factors against prosecution take hold, especially in resource-intensive white collar crime prosecutions.  This article asserts that prosecutors should not decline prosecution in these circumstances without considering its potential affirmance of crime. Otherwise, the profitability of crime promises massive future losses.

June 7, 2012 in Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (5) | TrackBack

Wednesday, June 06, 2012

Federal prosecutors urging 230-year sentence (!?!) for Ponzi schemer Allen Stanford

As reported in this new Bloomberg piece, headlined "Stanford Should Get 230-Year Term in Ponzi Scheme, U.S. Says," apparently federal prosecutors believe that only a sentence 10 times the remaining life expectancy of a Ponzi schemer is sufficient punishment. Here are the details:

Convicted Ponzi scheme operator R. Allen Stanford should be sentenced to the maximum allowable term of 230 years in prison, prosecutors argued in court papers.  Stanford, who the government said is seeking a sentence of "time served," is to be sentenced next week in U.S. District Court in Houston.

"Robert Allen Stanford is a ruthless predator responsible for one of the most egregious frauds in history," the Justice Department said in a 34-page filing.  "Displaying an audacity that only further illustrates his depravity, Stanford seeks a sentence of time served, brazenly arguing that there are no losses" and rehashing arguments rejected by the jury that convicted him in March.

Stanford, 62, was found guilty of defrauding more than 20,000 investors of $7 billion through the sale of what the government called bogus certificates of deposit at his Antigua- based Stanford International Bank Ltd.  A court-appointed receiver gathering the ex-billionaire's assets has located less than $500 million in cash and assets to use to repay investors.

Stanford's own sentencing recommendation was filed under seal.  Prosecutors said he asked U.S. District Judge David Hittner for leniency, in part because he is a first-time offender. Stanford also denied that investors suffered any losses while he was running Stanford Financial Group and "complains that he was stripped of all his assets," by the government, prosecutors said.

The recommended 230 years is at the top of the range of sentences for Stanford's crime under federal guidelines, the prosecutors said in the filing.  "Nothing speaks more eloquently of Stanford's character than his sentencing arguments in this case," the Justice Department lawyers wrote.  "After everything that he has done to so many innocent victims, Stanford does not show a hint of remorse for his misconduct, only the same arrogant, narcissistic behavior that led to it."

Stanford has been incarcerated as a flight risk since his indictment in June 2009. He was charged about three months after U.S. securities regulators seized his companies on suspicion they were a "massive" Ponzi scheme, in which late-arriving investors' funds were used to pay earlier investors.

Stanford's lawyers have requested a prison sentence of 31 to 44 months, prosecutors said.

Robert A. Scardino, one of Stanford's criminal-defense lawyers, said by phone that his side is "hoping for the best and preparing for the worst" at the June 14 sentencing. Scardino declined to comment further, citing a court order not to speak publicly about the case.

I understand completely why federal prosecutors are eager to huff and puff and demand a sentence in this high-profile case that can be measured in decades, not just in months.  But to request a sentence of 230 years for a man in his 60s is not just silly, it is truly preposterous in light of the mandate in federal law for judges to impose sentences that are "sufficient but not greater than necessary" to achieve congressional punishment purposes.

I would love for the sentencing judge in this case to request that federal prosecutors explain in writing just just why they believe that a sentence of, say, 75 years would be insufficient under these circumstances and why they think only a sentence more than three times that length is needed in this case.

June 6, 2012 in Federal Sentencing Guidelines, Offense Characteristics, Procedure and Proof at Sentencing, Scope of Imprisonment, White-collar sentencing | Permalink | Comments (15) | TrackBack

Monday, June 04, 2012

Tipping lawyer gets record long insider trading sentence

As reported in this AP article, federal prosecutors notched another record white-collar sentence today in federal court in New Jersey.  Here are some of the notable sentencing details:

A former attorney who admitted feeding privileged information to two confederates over the course of a 17-year insider stock trading scheme was sentenced Monday to 12 years in prison, the longest sentence ever handed out for insider trading, and the trader who reaped more than $20 million in profits from the tips received a nine-year sentence, authorities said.

U.S. Attorney Paul Fishman said former attorney Matthew Kluger's sentence is the longest handed out for that crime.  The scheme was carried out from 1994 to 2011 and is believed to be the longest ever uncovered by law enforcement, though the crimes charged dated only to 2005....

The 51-year-old Kluger, of Oakton, Va., and former trader Garrett Bauer, 44, of New York, admitted last year they conspired with a third man, New York mortgage broker Kenneth Robinson, who acted as the middleman.  Robinson was arrested in 2011 and secretly recorded conversations with the other men, including one in which Bauer discussed lighting $175,000 on fire to erase his fingerprints, according to court documents.  Robinson, who pleaded guilty to his role in the scheme, is scheduled to be sentenced Tuesday.

Kluger admitted passing advance information on company mergers to Robinson, who would give it to Bauer.  The trio was estimated to have made $11 million on tech company Oracle's acquisition of Sun Microsystems.

Assistant U.S. Attorney Judith Germano told the judge that Kluger was the mastermind. "He had wealth, intelligence and family support," she said. "He abused it all. Why? Because he could."  Defense Attorney Alan Zegas argued for a shorter sentence for Kluger and said that Bauer realized the lion's share of the profits while Kluger took only a small fraction of the total and was not aware of many trades that Bauer made on his own.

U.S. District Judge Katharine Hayden rejected Zegas' argument and said that every one of more than 30 insider trades made by Bauer was based on information provided by Kluger, whom she characterized as "amoral" and "thuggish."  She compared the trio to drug dealers for the way they used throwaway cellphones and multiple ATM accounts to withdraw cash and exchange it in envelopes or bags.

Zegas said he would appeal the sentence. Kluger, who said in remarks to the court that he was "deeply, deeply sorry," insisted afterward that the sentence was too harsh.  Hedge fund billionaire Raj Rajaratnam was sentenced to 11 years in October after being convicted in the biggest insider trading case in U.S. history.  "I guess it's better to take $68 million and go to trial and be unwilling to accept responsibility for what you did," Kluger said, referring to Rajaratnam, who maintained that he traded only on publicly available information.

Defense attorney Michael Bachner attempted to persuade the judge to reduce Bauer's sentence by mentioning the numerous public speaking appearances Bauer has made since his arrest at business schools and law schools and the extensive work he has done with children's charities.

Intriguingly, based on other press reports, it appears that both of these sentences were imposed within the calculated applicable guideline ranges.

June 4, 2012 in Federal Sentencing Guidelines, Scope of Imprisonment, White-collar sentencing | Permalink | Comments (4) | TrackBack

Tuesday, May 22, 2012

Two interesting Politico reports on high-profile federal (not-yet-sentencing) cases

One professional vice made worse by this blog is my tendency to root for interesting and high-profile criminal defendants to get convicted so that I have interesting and high-profile sentencings to discuss. This spring, there are two on-going federal trials that fit this bill. And today, as reported in these two posts at Josh Gerstein's Under the Radar column at Politico, it seems are notable developments in both trials:

I have not followed either of these cases closely enough to know if I should start gearing up potential federal sentencing guideline calculations. But I do know that the arguments likely to be made at any sentencing in either of these cases ought to be very blog-worthy.

Anyone eager to start the predictions game in the comments either as to likely verdicts or possible sentences?

May 22, 2012 in Celebrity sentencings, Federal Sentencing Guidelines, White-collar sentencing | Permalink | Comments (0) | TrackBack

Tuesday, May 15, 2012

Fascinating DOJ report on number of prosecuted Wall Street executives

Yesterday's Wall Street Journal had this notable report on an exchange of letters between Senator Charles Grassley and the US Department of Justice concerning how many Wall Street executives have been prosecuted and convicted for financial crisis misdeeds.  The article is headlined "Missing: Stats on Crisis Convictions," and here are excerpts:

It is a question that has been asked time and again since the financial crisis: How many executives have been convicted of criminal wrongdoing related to the tumultuous events of 2008-2009?  The Justice Department doesn't know the answer.

That is because the department doesn't keep count of the numbers of board-level prosecutions. In a response earlier this month to a March request from Sen. Charles Grassley (R.,Iowa), the Justice Department said it doesn't hold information on defendants' business titles.  "Consequently, we are unable to generate the [requested] comprehensive list" of Wall Street convictions stemming from the 2008 meltdown, the letter from the Department of Justice to Mr. Grassley said.

The explanation raises eyebrows among legal experts.  Adding up the numbers of financial chief executives and chief financial officers put behind bars for their role in the crisis shouldn't be too difficult, they say.

"It's not a big number to count, that's for sure," said Chris Swecker, who ran the Federal Bureau of Investigation's criminal division from 2004 to 2006.  William Black, a former bank regulator, said the government used to keep these figures....

The Securities and Exchange Commission highlights on its website its civil crisis-related enforcement actions against senior corporate officers -- a total of 55 so far.  Mr. Black, an associate professor of economics and law at the University of Missouri-Kansas City, said it seems "smart" of the Justice Department to no longer keep score of boardroom prosecutions.  "I can tell you why you wouldn't keep the data," he said. "Because it would be really embarrassing."

A spokeswoman for the Justice Department said the numbers of financial-fraud cases being brought has increased since the crisis. "When we find sufficient evidence of criminal conduct, we will not hesitate to bring charges," she added....

In the three years since the crisis peaked in October 2008, the Justice Department has filed financial-fraud cases against 14,843 defendants, according to the letter to Mr. Grassley.  Over that time, it said, more than 1,100 people have been sentenced to prison for mortgage fraud.

The letter names 17 CEOs and other senior corporate officers convicted of significant financial crimes.  Most of the 17 committed frauds that weren't directly related to the financial crisis.  They include Allen Stanford, convicted in March of running a Ponzi scheme; Raj Rajaratnam, jailed last year for insider trading; and Zevi Wolmark, who pleaded guilty this year to bid-rigging in the municipal-finance market. Courtney Dupree, convicted last year of a $21 million bank fraud, makes the Justice Department's list.

But only one of the cases mentioned by the Justice Department in the letter to Mr. Grassley concerns alleged wrongdoing by a Wall Street firm directly related to the financial crisis: the criminal charges filed this year against three former Credit Suisse Group AG CSGN.VX +0.16% employees for allegedly inflating mortgage-bond values.

Mr. Grassley said the letter "substantiates my suspicion" the government "isn't going after the big banks, big financial institutions or their executives."  The Justice Department is instead "hiding behind a bunch of mortgage fraud prosecutions," Mr. Grassley said in a statement.

But officials said the scarcity of crisis-related prosecutions might reflect a lack of criminal behavior, rather than any failure of law enforcement.... The only criminal trial against Wall Street executives for alleged wrongdoing related to the crisis involved two former Bear Stearns hedge-fund managers. Their acquittal on all charges in 2009 was a significant setback for federal prosecutors.

The WSJ has provided links to Senator Grassley's letter and DOJ's response, both of which are interesting reading, though I think one needs an on-line subscription to get this access.

May 15, 2012 in Offense Characteristics, White-collar sentencing, Who Sentences? | Permalink | Comments (2) | TrackBack

Wednesday, May 02, 2012

DOJ conducts "nationwide takedown" of 100+ persons involved in Medicare fraud

I just received a whole bunch of e-mails from the US Justice Department concerning what it is calling a "nationwide takedown" of lots and lots of persons involved in Medicare fraud.  This primary (and very lengthy) official press release provides the basics: 

Attorney General Eric Holder and Health and Human Services (HHS) Secretary Kathleen Sebelius announced today that a nationwide takedown by Medicare Fraud Strike Force operations in seven cities has resulted in charges against 107 individuals, including doctors, nurses and other licensed medical professionals, for their alleged participation in Medicare fraud schemes involving approximately $452 million in false billing....

This coordinated takedown involved the highest amount of false Medicare billings in a single takedown in strike force history.

HHS also suspended or took other administrative action against 52 providers following a data-driven analysis and credible allegations of fraud. The new health care law, the Affordable Care Act, significantly increased HHS’s ability to suspend payments until an investigation is complete.

The joint Department of Justice and HHS Medicare Fraud Strike Force is a multi-agency team of federal, state and local investigators designed to combat Medicare fraud through the use of Medicare data analysis techniques. More than 500 law enforcement agents from the FBI, HHS-Office of Inspector General (HHS-OIG), multiple Medicaid Fraud Control Units, and other state and local law enforcement agencies participated in the takedown. In addition to making arrests, agents also executed 20 search warrants in connection with ongoing strike force investigations....

The defendants charged are accused of various health care fraud-related crimes, including conspiracy to commit health care fraud, health care fraud, violations of the anti-kickback statutes and money laundering. The charges are based on a variety of alleged fraud schemes involving various medical treatments and services such as home health care, mental health services, psychotherapy, physical and occupational therapy, durable medical equipment (DME) and ambulance services.

According to court documents, the defendants allegedly participated in schemes to submit claims to Medicare for treatments that were medically unnecessary and oftentimes never provided. In many cases, court documents allege that patient recruiters, Medicare beneficiaries and other co-conspirators were paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could submit fraudulent billing to Medicare for services that were medically unnecessary or never provided. Collectively, the doctors, nurses, licensed medical professionals, health care company owners and others charged are accused of conspiring to submit a total of approximately $452 million in fraudulent billing....

In Miami, a total of 59 defendants, including three nurses and two therapists, were charged today and yesterday for their participation in various fraud schemes involving a total of $137 million in false billings for home health care, mental health services, occupational and physical therapy, DME and HIV infusion....

Seven individuals were charged today in Baton Rouge, La., for participating in a fraud scheme involving $225 million in false claims for CMHC services....

In Houston, nine individuals, including one doctor and one nurse, were charged today with fraud schemes involving a total of $16.4 million in false billings for home health care and ambulance services....

Eight defendants, including two doctors, were charged in Los Angeles for their roles in schemes to defraud Medicare of approximately $14 million. In one case, two individuals allegedly billed Medicare for more than $8 million in fraudulent billing for DME.

In Detroit, 22 defendants, including four licensed social workers, were charged for their roles in fraud schemes involving approximately $58 million in false claims for medically unnecessary services, including home health, psychotherapy and infusion therapy.

In Tampa, Fla., a pharmacist was charged with illegal diversion of controlled substances. One defendant was charged last week in Chicago for his alleged role in a scheme to submit approximately $1 million in false billing to Medicare for psychotherapy services.

May 2, 2012 in Offense Characteristics, White-collar sentencing, Who Sentences? | Permalink | Comments (21) | TrackBack

Monday, April 30, 2012

Florida cases support(?) DOJ's expressed concerns about white-collar sentencing disparities

In a speech last month (reported here), AAG Lanny Breuer continued the Justice Department's tendency to lament what it sees as growing post-Booker sentencing disparities, especially in white-collar sentencing. Specifically, in this speech, Breuer complained that "with increasing frequency, federal district courts have been sentencing fraud offenders -- especially offenders involved in high-loss fraud cases -- inconsistently."  Assuming DOJ is keeping a file with examples of this disparity, this new sentencing story from Florida, headlined "Marian Morgan sentenced to 35 years in prison," provides seemingly strong support for these concerns.   Here is how the local story gets started:

Convicted in September for running a multimillion-dollar Ponzi scheme from her Sarasota mansion, Marian Morgan on Friday was sentenced to 35 years in federal prison.

That's more than twice as long as the sentences for two other notorious Sarasota-based fraud perpetrators — Arthur Nadel and Beau Diamond — even though Morgan's scheme involved fewer victims and less money overall....

Defense attorney Todd Foster argued that Morgan, 57, would be unlikely to turn to crime again if released after 15 to 20 years.  The judge countered that recidivism would not be an issue because of the length of the sentence.

A federal pre-sentencing report recommended Morgan's prison time be based on the size of the fraud; the number of victims; and the sophistication of the crime, among other criteria.  Morgan and her husband, John, stole roughly $28 million from 87 victims, prosecutors said during trial.

Of course, what looks on the surface to be an ugly example of so-called sentencing disparity might upon closer examination really turn out to be more of an ugly example of the so-called trial penalty.  Consider these additional details:

Morgan and her husband were indicted last summer on 22 felony counts that included wire and mail fraud, money laundering and conspiracy. Their Ponzi scheme came to light shortly after two others that were also hatched in Sarasota — Nadel's Scoop Management and Beau Diamond's Diamond Ventures scams.

Diamond was convicted at trial of stealing more money than the Morgans and from more investors.  He is currently serving a 15-year sentence in federal prison in Miami. Nadel robbed more than 400 investors of $162 million, prosecutors determined. Instead of going to trial, Nadel plead guilty to 15 felony fraud counts and was sentenced to 14 years in prison in October 2010.  He died earlier this month in North Carolina at age 79.

In contrast to his wife, John Morgan received a 10-year sentence after pleading guilty to a pair of felony counts. He also agreed to co-operate with prosecutors — which included providing information against his wife....

Marian Morgan, who as managing director of Morgan European Holdings had the most interaction with investors, was defiant to the end. She turned down a plea deal last fall that would have limited her sentence to 18 years, choosing instead to go to trial....

[Morgan's] victims were lured by the promise of monthly double digit returns, with payoffs as short as three months in some cases.  Instead, investors received only frequent emails from Marian Morgan, which promised payments were to arrive soon.  She also offered detailed explanations concerning delays, and later in the scheme threatened that investors would never see their principal again if they contacted authorities....

Morgan plans to appeal her sentence through Tampa defense attorney Barry Cohen. Long and other victims have alleged the money to pay both Cohen and Foster may have come from investors in the Ponzi scheme.  Morgan will likely be imprisoned well into her eighties, even with time already served in Pinellas and time off for good behavior.

Based on this article, it would seem that the "going rate" at sentencing for a significant Ponzi scheme in south Florida is somewhere around 15-years in federal prison.  With this number in mind, the 10-year prison term given to the cooperating Mr. Morgan seems roughly in line with local norms with a five-year discount for cooperation.  And the plea offer capping Ms. Morgan's sentencing exposure at 18 years coming from the feds also seems reasonable under the circumstances.

And yet Ms. Morgan gets with a 35-year prison term (and I suspect that the recommended guidelines range may have been even higher).  If DOJ is truly concerned about unwarranted sentencing disparity in financial fraud cases — rather than, as I fear, really just concerned about the post-Booker potential for unwarranted sentencing leniency or about some defendants who have the temerity to exercise their trial rights not having to pay an extra heavy sentencing price — then federal prosecutors ought to consider supporting Ms. Morgan's sentencing appeal to the Eleventh Circuit.  But I would bet a whole lot of money that on appeal federal prosecutors will defend this extremely long white-collar sentence as reasonable even though it surely does appear out of line with the sentences given to similar defendants convicted of similar crimes.

April 30, 2012 in Federal Sentencing Guidelines, Offense Characteristics, Scope of Imprisonment, Sentences Reconsidered, White-collar sentencing, Who Sentences? | Permalink | Comments (2) | TrackBack

Saturday, April 28, 2012

Unusual (but justified) three-strikes 25-to-life sentence for repeat California fraudster

This Los Angeles Times article, headlined "Housing scam brings up to life sentence under three-strikes law," reports on an unusual (but arguably justified) long state prison term for a repeat fraudster.  Here are the details:

An Orange County man who swindled elderly people out of their homes after promising to help them avoid foreclosure was sentenced to 25 years to life in prison under California's tough three-strikes law.  Defense lawyers and prosecutors across the state could not recall any other case in which a white-collar offender received such a lengthy sentence under a statute typically applied in violent crime cases.

The sentencing of Timothy Barnett was unusual because his entire criminal record involved fraud.  The 49-year-old was convicted last month of 17 felonies for tricking five people into unknowingly granting him title to their homes.  He had been convicted of similar charges in the 1990s.

"The worst thing you can do is take somebody's home," Los Angeles County Superior Court Judge Stephen A. Marcus said Friday in explaining the lengthy sentence.  "Instead of helping people, he stripped the equity from their homes and left five people homeless," the judge said. "Even Bernie Madoff didn't take people's homes from them."

Defense attorney Amy Konstantelos had urged the judge to impose a lesser sentence, noting that Barnett had never been convicted of a violent crime. "Three strikes should never be used in a case like this," she said after the sentencing in Los Angeles. "It's another reason the law should be amended." Konstantelos said she intended to file an appeal.

Barnett's latest crimes occurred between 2005 and 2007.  The victims were older residents of poor South Los Angeles communities who had used the explosion of real estate values to borrow against their equity, only to fall behind on the payments.  That's when Barnett appeared.  Victims testified that he went to their homes and prayed with them, saying he could help keep their homes, bring loans current and reduce monthly payments. What Barnett didn't make clear enough was that he would end up owning the homes, Marcus said. Along with their homes, the victims cumulatively lost nearly $900,000 of equity to Barnett....

Many people across the country have been accused of victimizing desperate homeowners since the real estate market collapsed in 2008, without facing a potential life sentence. What set Barnett's case apart was two prior "strikes" he received after pleading guilty to two burglary charges in the 1990s. That made him eligible for a life sentence if convicted of a new felony, as he was in March....

[Deputy Dist. Atty. Robert] Knowles, the prosecutor, said he was pleased with the sentence. "I think it's appropriate, given the facts of the case and the purpose of the three-strikes law, which is to protect citizens from recidivist offenders," Knowles said.

April 28, 2012 in Offense Characteristics, Scope of Imprisonment, White-collar sentencing | Permalink | Comments (6) | TrackBack

Thursday, April 26, 2012

Significant (but below-guideline) prison term for corrupt NY state pol

This New York Times article, headlined "Kruger Sentenced to Seven Years in Corruption Case," reports on a notable white-collar federal sentencing today.  Here are a few details:

Carl Kruger, the once-powerful state senator from Brooklyn who resigned his office in disgrace and pleaded guilty to corruption charges in December, was sentenced to seven years in prison on Thursday by a federal judge in Manhattan.  Mr. Kruger, 62, was the first defendant to be sentenced in a widespread bribery conspiracy case that originally ensnared eight people, and was seen as offering yet more evidence of the apparent unending wave of corruption in Albany.

Prosecutors had asked the judge, Jed S. Rakoff of Federal District Court, to impose 9 to 11 and a quarter years, as recommended under the advisory federal sentencing guidelines. The judge issued the lesser sentence to Mr. Kruger, citing his "many good deeds."  But he made it clear that such credit was outweighed by the fact that Mr. Kruger had entered into "extensive, long-lasting, substantial bribery schemes that frankly were like daggers in the heart of honest government."...

Mr. Kruger, who was elected to the State Senate in 1994 and rose to become the chairman of the Senate Finance Committee, had been accused by the authorities of accepting over $1 million in bribes from two hospital executives, a prominent lobbyist and a health care consultant.  In return, he agreed to take official action to benefit them or their clients, prosecutors said.  As part of his plea deal, Mr. Kruger agreed to forfeit $450,000....

Mr. Kruger was convicted of two counts of conspiracy to commit honest services fraud, and two counts of conspiracy to commit bribery.  He faced up to 50 years in prison, Judge Rakoff had told him in December.

Dr. Turano, 50, who also pleaded guilty, to one count of conspiracy to commit bribery, was sentenced to two years in prison by Judge Rakoff, who again chose a more lenient sentence than the federal guidelines had called for.

Preet Bharara, the United States attorney in Manhattan, said the sentencing of Mr. Kruger and Mr. Turano “takes us one step closer to closing this sorry chapter in the continuing story of public corruption in New York State and City government.”...

Mr. Kruger’s lawyer, Benjamin Brafman, had asked the judge to impose only “a short period of incarceration,” and in a letter, described Mr. Kruger as “a true friend” for whom “the shame is forever, and a brilliant career has been destroyed beyond redemption.”

April 26, 2012 in Federal Sentencing Guidelines, Offense Characteristics, White-collar sentencing | Permalink | Comments (0) | TrackBack

Wednesday, April 18, 2012

Intriguing Second Circuit ruling on restitution awards and plain error

Today the Second Circuit handed down an interesting little white-collar crime ruling in US v. Zangari, 10-4546 (2d Cir. Apr. 18, 2012) (available here), which gets started this way:

In this appeal, we consider, as a matter of first impression in this Circuit, the propriety of substituting a defendant’s gain for his victims’ losses in calculating restitution under the Mandatory Victim’s Restitution Act (“MVRA”), 18 U.S.C. §§ 3663A–3664.  Although we join several of our sister circuits in concluding that such a substitution is error, we decline to exercise our discretion under Federal Rule of Criminal Procedure 52(b) to notice the error in this case because the defendant failed to object to the restitution calculation before the District Court and has not satisfied his burden of persuading us that the erroneous restitution order both “affected [his] substantial rights” and “seriously affect[s] the fairness, integrity or public reputation of judicial proceedings.”  Puckett v. United States, 556 U.S. 129, 135 (2009) (internal citation and quotation marks omitted). The judgment of the District Court is therefore affirmed.

April 18, 2012 in Criminal Sentences Alternatives, Procedure and Proof at Sentencing, Sentences Reconsidered, Victims' Rights At Sentencing, White-collar sentencing | Permalink | Comments (1) | TrackBack

Monday, April 16, 2012

Eleven lawyers — five funded by taxpayers — now involved in Clemens perjury trial

As reported in this new AP piece, which Fox News has given the fitting and lovely headline "Feds bulk up for Roger Clemens perjury retrial," a whole lot of lawyers are now involved in the trial fight over whether the Rocket lied to Congress about his steroid use.  Here are the pricey details:

The Justice Department, embarrassed by blundering into a mistrial of Roger Clemens last year, has added more prosecutors as it tries again to convict the famed pitcher of lying to Congress when he said he never used performance-enhancing drugs.  Jury selection in the new trial begins Monday.

The legendary former pitcher, who famously reveled in staring down hitters, will face a prosecution lineup of five lawyers -- more than double the two from the first trial.

Last July, U.S. District Judge Reggie Walton declared a mistrial on only the second day of testimony, after prosecutors showed jurors evidence that had been ruled inadmissible. Walton also will preside over the new trial, which is expected to last four weeks to six weeks.

The Clemens team won't be outgunned. It has six lawyers working on the case, led by Houston lawyer Rusty Hardin, whose Rusty Hardin & Associates has represented sports stars such as quarterback Warren Moon, baseball star Wade Boggs and NBA great Scottie Pippen, each a Hall of Famer....

Michael McCann, a law professor and director of the sports law institute at Vermont Law School, said it was unusual to have so many prosecutors "for a perjury case that isn't terribly complicated."... McCann said the department has extra motivation to convict Clemens, given the amount of money spent on the case and the underwhelming outcome of its more-than-seven-year investigation of Barry Bonds over steroids.

Bonds, baseball's career home run leader, was found guilty last year on just one count, obstruction of justice, for giving an evasive answer to a grand jury when asked about drug use. He received a sentence of 30 days confinement at his estate in Beverly Hills. Prosecutors dropped three other counts charging Bonds with making false statements after the jury deadlocked on those charges. Bonds has appealed his conviction.

"For the government to lose this case after obtaining a very mild victory against Bonds," McCann said, "would invite a lot of questions about the appropriateness of these prosecutions."...

If convicted on all six charges, Clemens faces a maximum sentence of up to 30 years in prison and a $1.5 million fine. Maximum penalties are unlikely because Clemens doesn't have a criminal record, but Walton made plain at the first trial that Clemens was at risk of going to jail.   Under U.S. sentencing guidelines, Clemens probably would face up to 15 months to 21 months in prison.

As I have explained in some prior post, I think the prosecution of Clemens is MUCH more justifiable than some other "lying about steroids" cases.  In the wake of being named in the Mitchell report on steroid use in baseball, Clemens essentially requested a chance to "clear" his name through high-profile televised testimony to Congress.  Though I have limited sympathy for any high-profile liars and cheats, I am especially unsympathetic toward those like Clemens who, in essence, actively promote their lies.  In addition, I personally view lying under oath to Congress as an even more serious offense than lying to government officials in other settings.

That all said, I would love to see some kind of reasonable accounting of what the lengthy Clemens prosecution has already cost federal taxpayers.  I would not be at all surprised if the final "bill" for this single case may end up making all the monies recently wasted by the GSA during its conference boodoggles look like chump change.

April 16, 2012 in Celebrity sentencings, Procedure and Proof at Sentencing, White-collar sentencing | Permalink | Comments (17) | TrackBack

Friday, April 13, 2012

US Sentencing Commission promulgates new guideline amendments

As reported in this official press release, earlier today "the United States Sentencing Commission promulgated amendments to the federal sentencing guidelines responding to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) regarding securities fraud, mortgage fraud, human rights offenses, drug offenses, and other offenses." Here are some of the specifics via this press release:

The Dodd-Frank Act contained directives to the Commission to review the fraud guideline with respect to securities fraud, fraud on financial institutions, and mortgage fraud. Judge Patti B. Saris, chair of the Commission, noted “Fraud offenses represent almost ten percent of the federal criminal docket annually, and have been the focus of congressional attention as evidenced by the directives to the Commission.” Judge Saris explained, “The Commission’s action today increases penalties for insider trading cases and ensures that no defendant will receive a reduced penalty because of a federal intervention, such as a bailout. The Commission also adopted presumptive rules governing the calculation of loss in mortgage and securities fraud cases.”

“This is the first step in a multi-year review of the fraud guideline,” stated Judge Saris. “We have received feedback from a number of stakeholders that broader review of the operation of the fraud guideline should be undertaken. Specifically, we have heard from the courts, defense attorneys, and prosecutors that the interaction of the loss attributed to an offense and the number of victims in an offense (the loss and victims tables in the guidelines), particularly in high-loss fraud cases, may result in disproportionate or disparate sentences. This is an area of the guidelines that the Commission must continue to review in a comprehensive manner.”...

The Commission also promulgated an amendment to the federal sentencing guidelines to cover substantive human rights violations.... The Commission also promulgated an amendment to the federal sentencing guidelines to address the growing number of federal drug cases involving the stimulant “BZP.”... The Commission also promulgated an amendment that provides a sentence reduction under the guidelines for certain low-level, non-violent offenders convicted of offenses involving precursor chemicals, which parallels provisions already in the federal sentencing guidelines for low-level, non-violent drug offenders who meet certain criteria.

The Commission also resolved a circuit conflict by confirming that for purposes of calculating a defendant’s criminal history under the federal sentencing guidelines, driving while intoxicated, driving under the influence and similar offenses are, without exception, always counted. The Commission’s actions today also resulted in amendments to the guidelines covering contraband cell phones in prison, cigarette offenses, trafficking in fake Indian goods, and animal crush videos.

The Commission must submit its 2011-2012 amendment package to Congress by May 1, 2012. Congress has 180-days to review the amendments submitted by the Commission. The amendments have a designated effective date of November 1, 2012, unless Congress affirmatively acts to modify or disapprove them.

An "unofficial" version of the new proposed amendments can be accessed at this link.  They run 62 (fun-loving) pages, and I hope to find time this weekend to try to figure out the biggest story within.

April 13, 2012 in Federal Sentencing Guidelines, Offense Characteristics, White-collar sentencing, Who Sentences? | Permalink | Comments (0) | TrackBack

Friday, April 06, 2012

Russian arms dealer gets below-guideline federal sentence of 25 years

As reported in this Bloomberg article, which is headlined "Viktor Bout Gets Minimum Prison Term of 25 Years for Weapon Plot," a notorious arms dealer actually got preety nice treatment at his federal sentencing yesterday. Here are the sentencing specifics:

Viktor Bout, the international arms dealer convicted of conspiracy for plotting to sell weapons to a Colombian terrorist group, was sentenced to 25 years in prison, the minimum term he faced.

A former officer in the Soviet Union, Bout, 45, was also sentenced yesterday to five years’ probation and ordered to forfeit $15 million by U.S. District Judge Shira Scheindlin in Manhattan.... Scheindlin rejected prosecutors’ arguments that Bout be jailed for life, saying he responded to the deal presented in the sting operation and otherwise wouldn’t have sought out an opportunity to sell weapons to be used against Americans....

Scheindlin said that while Bout “has sold weapons to some of the most vicious and violent regimes in the world,” it was unfair to impose an increased sentence applicable to terrorists. The judge said she would recommend that Bout serve his sentence near his lawyers in New York. She also said she would ask the Bureau of Prisons not to put Bout in solitary confinement.

Bout’s lawyer, Albert Y. Dayan, had urged the judge in a letter to refuse to punish Bout and not to become “an unwilling party in his wrongful prosecution.” In the hearing yesterday, he asked Scheindlin to give his client the minimum 25-year term. Federal sentencing guidelines, which are not binding, called for a life sentence, prosecutors said....

At Bout’s trial, Andrew Smulian, an associate who pleaded guilty and cooperated with the government, and two undercover agents testified that Bout offered to sell them millions of dollars in weapons, including surface-to-air missiles, armor- piercing rocket launchers and AK-47 rifles. Prosecutors said Bout, who also worked as an arms dealer in East Africa in the 1990s, controlled a fleet of as many as 50 cargo planes capable of transporting weapons and military equipment to Africa, South America and the Middle East.

During his address to the judge, which was translated by an interpreter, Bout thanked his lawyers and court officers who had shown him respect. He pointed to government agents in the courtroom and said, “Let God forgive you, and you will answer to him, not to me.”

April 6, 2012 in Booker in district courts, Federal Sentencing Guidelines, Offender Characteristics, Offense Characteristics, White-collar sentencing | Permalink | Comments (1) | TrackBack

Friday, March 30, 2012

Interesting appeal by federal prosecutors of interesting white-collar sentence

This local press report, headlined "U.S. appeals sentence of Michael Peppel, former MCSi executive," reports on federal prosecutors' decision to appeal an interest white-collar sentence that gave a maximum fine but minimum jail time to a corporate criminal.  Here are the basic details: 

Federal prosecutors are challenging the seven-day jail sentence given last year to Michael E. Peppel, former top executive of MCSi Inc., for his guilty pleas to felony crimes related to the company’s 2003 collapse and insolvency.

Peppel’s sentence failed to reflect the seriousness of his offenses, provide just punishment, promote respect for the law or send a message of deterrence for those who would commit similar crimes, U.S. Attorney Carter Stewart argued in his written arguments filed with the 6th U.S. Circuit Court of Appeals on Tuesday.

Stewart asked the Cincinnati-based appeals court to throw out the seven-day punishment and order resentencing by U.S. District Judge Sandra Beckwith, who sentenced Peppel on Oct. 24....  Peppel was also fined the legal maximum of $5 million, must disclose his criminal record to all employers, must submit to random drug testing and must do community service, according to his sentencing terms.  He has already served his seven days behind bars.

His lawyer, Ralph Kohnen, said the defense will fight efforts to impose a longer term of incarceration on Peppel, who was MCSi’s president and chief executive officer. “The government’s decision was unfortunate,” Kohnen said Thursday. “Judge Beckwith’s sentence was thoughtful and appropriate. Her sentence was just, proper and fair.”

Under a court-approved agreement that took effect this month, Peppel has committed to pay $3,000 per month toward his $5 million fine.  At that rate, it would take him 50 years to pay $1.8 million of the fine and 100 years to have paid $3.6 million of it.

Peppel, 44, avoided trial in August 2010 by pleading guilty to willful false certification of a financial report by a corporate officer; money laundering, and conspiracy to commit securities fraud. He could have faced up to 50 years in prison. The government said his crimes helped sink MCSi, a Kettering-based computer and audiovisual equipment company. Its failure cost 1,300 employees their jobs, benefits and retirement income and left investors holding worthless stock.

Beckwith initially determined that, under federal sentencing guidelines, a prison term for Peppel of eight to 10 years would be appropriate.   But after the defense presented 113 letters of support from Peppel’s family and friends, and argued that he had already been publicly humiliated and agreed to a lifetime ban on his ever serving again as a corporate chief executive, the judge imposed the seven-day jail term. Beckwith said she does not believe Peppel is likely to repeat his crimes and does not represent a threat to the public.

For a variety of reasons, in cases like this in which there appears to be no threat to public safety, I see as quite reasonable a judge's decision to impose a huge fine (which makes a defendant essentially an indentured servant to federal taxpayers for life) rather than requiring a lengthy prison term (which requires federal taxpayers to pay for a defendant's room-and-board while he catches up on reading at Club Fed).  But, obviously, federal prosecutors have a different view and I will be very interested to see how this appeal ends up playing out in the Sixth Circuit.

March 30, 2012 in Booker in district courts, Booker in the Circuits, Criminal Sentences Alternatives, Offense Characteristics, Scope of Imprisonment, Sentences Reconsidered, White-collar sentencing, Who Sentences? | Permalink | Comments (7) | TrackBack

Wednesday, March 14, 2012

"60-year sentence reinstated for Hurricane Katrina housing scam"

The title of this post is the headline of this local news report, which gets started this way:

The Louisiana Supreme Court on Tuesday reinstated a 60-year prison sentence for a former Alabama lawmaker who bilked a half-dozen New Orleanians out of $250,000 with the promise of new modular homes after Hurricane Katrina. The court found that Orleans Parish Criminal District Judge Darryl Derbigny didn't abuse his discretion on Feb. 12, 2010, when he sentenced John Colvin to six consecutive 10-year sentences.

Colvin, 65, a former state legislator and water board member in Rainbow, Ala., pleaded guilty in 2009 to six counts of theft.

From the end of 2007 through the spring of 2008, Colvin held himself out as a licensed contractor, though he never registered as one in Louisiana. Colvin invoked God, his mother and children to secure contracts with mostly older residents put out by the storm.

He took from $39,400 to $63,500 from each victim, much of it Road Home money, and did little or none of the promised work. In some cases, his victims said, he left some holes dug or a few stakes in the ground.

A panel of the Fourth Circuit Court of Appeal overturned Derbigny's sentence, citing a 1979 Louisiana Supreme Court decision that states: "For an offender without prior felony record, ordinarily concurrent rather than consecutive sentences should be imposed ..."

Judge Roland Belsome also cited those who spoke on Colvin's behalf -- Alabama Lt. Gov. Jim Folsom sent a letter of support -- along with his lack of a criminal record and his attempt to return $5,000 to one victim before his arrest. But in an odd twist, the appeals panel also said it didn't think a 10-year sentence -- with each count running concurrently -- was enough, considering the "economic and emotional harm" to the victims.

The Supreme Court rendered that opinion moot Tuesday, finding in its 10-page reversal that the 60-year sentence wasn't disproportionate to the offense. Colvin engaged in "a pattern of conduct that clearly reflected more than business ineptitude and was fraudulent from the outset, " the court found.

The court also didn't buy Colvin's expression of remorse and contrition at his sentencing hearing, noting that only a month earlier he had blamed another contractor for botching the jobs and sapping the money. Colvin's attorney, Craig Mordock, didn't immediately return a call for comment.

The 10-page opinion for the Supreme Court of Louisiana is available at this link.

March 14, 2012 in Offense Characteristics, Procedure and Proof at Sentencing, Sentences Reconsidered, White-collar sentencing, Who Sentences? | Permalink | Comments (0) | TrackBack