Wednesday, August 21, 2013

Bradley Manning gets 35 years from military judge for espionage convictions

As reported in this breaking news update from USA Today, "Army Pfc. Bradley Manning was sentenced to 35 years in prison after being convicted of espionage and other charges in connection with a massive leak of classified material." Here is more:

The judge in the case, Army Col. Denise Lind, announced the sentence in a military courtroom in Fort Meade, Md. He also received a dishonorable discharge, will forfeit his pay and benefits and was reduced in rank.

Manning faced a maximum of 90 years in prison after his conviction last month on charges of espionage, theft and fraud. Manning was convicted of the largest leak of classified material in U.S. history and was at the center of a growing debate over government secrecy.

Prosecutors urged the judge to sentence Manning to 60 years as a deterrent to others who might be tempted to leak secret documents. "He betrayed the United States, and for that betrayal, he deserves to spend the majority of his remaining life in confinement," Capt. Joe Morrow had said during the sentencing hearing.

Manning's defense had urged the military to sentence Manning, who served as an intelligence analyst in Iraq, to no more than 25 years in prison....

The U.S. government said his actions jeopardized U.S. interests and exposed informants and sources to danger. Manning's defense painted him as a misguided idealist who opposed the war in Iraq. "He had pure intentions at the time that he committed his offenses," defense attorney David Coombs said during the sentencing hearing. "At that time, Pfc. Manning really, truly, genuinely believed that this information could make a difference."

Manning's defense attempted to "play up the human aspect" of Manning by highlighting mental health issues, said Phil Cave, a former military lawyer now in private practice. Defense witnesses testified about Manning's "gender-identity disorder," which contributed to the mental stress he was under....

Under military law, the sentence will be automatically appealed. He would probably be eligible for parole after he served one-third or 10 years of his sentence, whichever is longer.

I have blogged very little about this high-profile sentencing case in large part because I am very ignorant about US military sentencing law and procedure. For example, I did not realize that parole remained available for lengthy military sentences (given that federal civilian law eliminated parole from the sentencing system three decades ago), nor am I conversant on what formal rules or guidelines may have impacted the seemingly broad sentencing discretion of Army Col. Denise Lind or could still play a role in the automatic appeal provided by military law.

Both due to my basic ignorance and due to the high-profile nature of this case, I welcome both informed and uninformed opinions on this sentencing outcome. Do folks think 35 years in prison (with parole eligibility in less than 12 years when Manning will still be in his mid-30s) is a fair and effective sentence in this case? Why or why not?

August 21, 2013 in Celebrity sentencings, Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing | Permalink | Comments (22) | TrackBack

Wednesday, August 14, 2013

"Both Jacksons get prison terms, Jackson Jr. to serve first"

The title of this post is the headline of this Chicago Tribune report on today's high-profile federal sentencing in DC.  Here are some of the details:

Former Rep. Jesse Jackson Jr. was sentenced today to 30 months behind bars and his wife, Sandi, got a year in prison for separate felonies involving the misspending of about $750,000 in campaign funds.

In addition to the 2.5 years in prison, Jackson Jr. was sentenced to three years of supervised release. Sandi Jackson was ordered to serve 12 months of supervised release following her prison term.

The judge emphasized that Sandi Jackson was sentenced to exactly 12 months, not the year-and-a-day sentence that some criminals get. Defendants sentenced to a year or less cannot qualify for time off for good behavior in prison. But those sentenced to a year and a day can qualify, which means they may end up serving only about 10 months. Under this rule, Sandi Jackson must serve the full year.

Both Jacksons wept in court as they addressed the judge before sentencing. Jackson Jr. apologized for his crimes and expressed special regrets to his mother and father. “Your honor, throughout this process I’ve asked the government and the court to hold me and only me accountable for my actions,” he said.

When Jackson Jr. spoke, he voice was firm except for the few times he wept openly and paused to dry his eyes with tissue, blow his nose and collect himself. “I am the example for the whole Congress,” he said. “I understand that. I didn’t separate my personal life from my political activities, and I couldn’t have been more wrong.”

Talking about his desire to be sent to a federal prison camp in Alabama, he said: “I want to make it a little inconvenient for everybody to get to me.” He said he hoped that his wife could earn enough money in his absence to keep the family together. “When I get back, I’ll take on that burden,” Jackson Jr. said. “By then I hope my children will be old enough that the pain I caused will be easier to bear.”

After a break in the hearing, Sandi Jackson, a former Chicago alderman, got her opportunity to address the court. She started by telling the judge: “I am a little nervous, so I have a written statement that I would like to read to you.”

She continued: “I want to begin by apologizing first to my family, to my friends, my community and my constiuents for the actions that brought me here today." She said she had caused “disappointment in my community” and had “put my family unit in peril.”

“My heart breaks every day with the pain this has caused my babies,” she continued, weeping. “I ask to be parent, provider and support system that my babies will require in the difficult months ahead.” Their children are ages 13 and 9.

Earlier, Jackson Jr.’s lawyer Reid Weingarten said his client felt “horror, shame and distress” over his crimes. But Weingarten also attempted to downplay the impact of Jackson Jr.’s actions, since he took money from his own campaign fund. It’s not as if there are widows and orphans outside the courthouse who are victims and asking for his head, Weingarten said. “This is not a Ponzi scheme,” he said.

Weingarten asked for an 18-month sentence for Jackson Jr. and noted, “He suffers from a very, very serious mental health disease.” He identified the ex-congressman’s illness as bipolar disorder, and conceded that it was relevant even though “we didn’t plead guilty by reason of insanity.”

Matt Graves, an assistant U.S. attorney, countered that Jackson Jr.’s crimes represented one of the largest cases of theft from a campaign treasury that had ever been prosecuted. Graves also took a shot at Jackson Jr.’s reported condition of bipolar disorder, saying normally when mental health issues are litigated in court, there was expert testimony, discovery and an examination of the defendant — and said none had occurred in this case.

“When one looks at the facts,” Graves said, “it’s quite clear that there’s no there there.” He decried Jackson Jr.’s “wasted talent” and “what he threw away.”

Graves said Sandi Jackson's crimes were serious and had occurred over many years. He also pointed out that defendants in federal courts across the country with children were given prison terms.

Jackson Jr., 48, and his wife, Sandi, 49, stood before federal Judge Amy Berman Jackson, who is no relation to the defendants. He pleaded guilty to a felony conspiracy count involving the $750,000 and she pleaded guilty to a related charge of failing to report about $600,000 in taxable income....

The Jacksons, both Democrats, pleaded guilty in February after a yearslong spending spree with campaign funds. Among the loot: a $43,000 Rolex watch, furs, vacations, two mounted elk heads and memorabilia ranging from a Michael Jackson fedora to an Eddie Van Halen guitar.

Prosecutors urged that he serve four years in prison and her 18 months. Defense lawyers wanted probation for her and a lighter term for him.

Jackson Jr. was in the House of Representatives from 1995 to 2012. Sandi Jackson served on the City Council from 2007 until last January. Both resigned their positions leading up to their guilty pleas.

August 14, 2013 in Celebrity sentencings, Offender Characteristics, Offense Characteristics, Procedure and Proof at Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (10) | TrackBack

Tuesday, August 06, 2013

Eighth Circuit panel, though requiring more explanation, suggests probation could be reasonable sentence when guideline range was 11-14 years

Because the Eighth Circuit has a well-earned reputation for being pretty tough on criminal defendants in sentencing appeals in the post-Booker era, I find especially notable its nuanced ruling today in US v. Cole, No. 11-1232 (8th Cir. Aug. 8, 2013) (available here). The start of the panel opinion in Cole sets out the basics of the ruling:

A jury found Abby Rae Cole guilty of conspiracy to commit mail and wire fraud, in violation of 18 U.S.C. § 1349; tax evasion, in violation of 26 U.S.C. § 7201; and conspiracy to commit tax fraud, in violation of 18 U.S.C. § 371. The mail and wire fraud conspiracy conviction stems from her company’s theft of nearly $33 million from Best Buy over a four-year period. The tax fraud conspiracy and tax evasion convictions stem from understating tax liability by more than $3 million between 2004 and 2007 by using various schemes to conceal her company’s true profitability. Cole’s advisory Guideline range was 135 to 168 months imprisonment, but the district court varied downward and sentenced her to three years probation on each count, with all terms to be served concurrently. The government appeals Cole’s sentence, arguing it is substantively unreasonable. Cole cross-appeals, challenging her convictions.  We affirm Cole’s convictions but remand her case to the district court to provide a fuller explanation of her sentence.

Co-conspirators much more responsible than Cole for the big fraud here got lengthy sentences (15 and 7.5 years), which seems to help explain why the district court decided to give this defendant such a big break. And, as this final key paragraph of the sentencing discussion reveals, the panel here thinks such a big downward variance could be justified, but needs to be more fully explained:

Because Cole’s probationary sentence represents a “major departure” from the advisory Guidelines range, the court’s brief and contradictory explanation of Cole’s sentence is not sufficient “to allow for meaningful appellate review and to promote the perception of fair sentencing.”  See Gall, 552 U.S. at 50.  Consequently, we cannot evaluate the government’s claim of substantive unreasonableness at this time, and we remand for the district court to more fully explain the defendant-specific facts and policy decisions upon which it relied in determining that the probationary sentence is “sufficient, but not greater than necessary,” § 3553(a), to achieve the sentencing objectives set forth in section 3553(a).

August 6, 2013 in Booker in district courts, Booker in the Circuits, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, Sentences Reconsidered, White-collar sentencing | Permalink | Comments (1) | TrackBack

Thursday, July 25, 2013

Waaaaay below federal guideline prison sentences (but big fines) for UBS bid-riggers

As reported in this Wall Street Journal, headlined "US set back on bid-rig sentencing," a federal district judge in NYC yesterday handed down a set of white-collar sentences that were far below calculated guideline ranges and far below the sentences being sought by federal prosecutors.  Here are the details:

US District Judge Kimba Wood of the Southern District of New York handed Peter Ghavami, the former co-head of UBS' municipal-bond reinvestment and derivatives desk, an 18-month sentence. Prosecutors had sought at least 17½ years and as long as 21 years, 10 months for Ghavami, who also served as the Swiss bank's head of commodities at one point.

The much harsher sentence proposed by the government would have been longer than the 11-year term given in 2011 to Galleon hedge-fund founder Raj Rajaratnam for his insider-trading conviction.

But Judge Wood, a one-time nominee to become US attorney general who also sentenced former Drexel Burnham Lambert executive Michael Milken to 10 years in prison, raised questions about the government's method of calculating losses in the case, which it had pegged at about $25 million.

She also praised Ghavami's "admirable history" and noted that he faces other penalties including a $1 million fine and deportation to Belgium, where he is a citizen. Because Ghavami, 45 years old, is not a US citizen, he also has to serve in a "low security" prison instead of a "miminum security" camp.

One of Ghavami's former colleagues, Gary Heinz, 40, a former vice president on UBS' municipal-bond reinvestment desk, was given a 27-month sentence Wednesday, while Michael Welty, 49, another former vice president, got 16 months. Prosecutors had asked for at least 19½ years for Heinz and about 11 years or more for Welty.

Last summer, a New York jury found the three former UBS employees guilty of leading a scheme that caused municipalities to pay millions of dollars more for bond deals than they needed to pay. The case dealt with an obscure corner of the bond market in which local governments raise money from investors through bond deals, then invest the proceeds in investment products that banks and others are supposed to sell in a competitive process....

In the UBS bond-rigging case however, prosecutors sought stiff penalties for actions that took place before the financial crisis, from 2001 to 2006.  The three former UBS employees caused cities, states and other municipalities to lose $25 million, the government alleged. "For years, these executives corrupted the competitive bidding process and defrauded municipalities," said Scott D. Hammond, deputy assistant attorney general in the Antitrust Division's criminal-enforcement program, in a statement.....

"We're extremely pleased with the sentence," said Charles Stillman, a lawyer for Ghavami. Ghavami intends to start serving his sentence as soon as possible, instead of waiting to see how his appeal of the case turns out, Stillman added.  Ghavami's fine of $1 million was five times greater than the maximum suggested by the government.

Heinz and Welty were fined $400,000 and $300,000, respectively, both more than the government suggested.  Marc Mukasey, Heinz's lawyer, said "We're happy that the government's outrageous sentencing request was soundly rejected."  Welty's lawyer, Gregory Poe, said that the jury acquitted Welty of wire fraud and said he will appeal the conspiracy convictions, and "we hope to clear his name."  He added that his client is grateful that Judge Wood rejected the government's sentencing position.

Over the past half-decade, the Justice Department has pursued the muni-bond cases as part of an effort to punish Wall Street banks for shortchanging cities and states. Prosecutors have enjoyed some victories, so far gathering six convictions and 13 guilty pleas.  Several were sentenced before Wednesday, with prison terms ranging from six months to four years.  Firms affected by the investigation have paid $745 million in restitution, penalties and disgorgement....

It remains to be seen whether this week's sentencing setback will affect the government's strategy in the other pending sentencing hearings.  Two former JP Morgan Chase. employees, two former Bank of America employees and three others involved with the case await sentencing.  One case remains pending and awaiting trial.

Last year, three former employees of General Electric were convicted for their roles in conspiracies related to bidding for municipal-bond-proceeds reinvestment. Two were sentenced in October to three years in prison and the third received a four-year term.

At the hearing Wednesday, prosecutors argued that the former UBS officials deserved more prison time than the former GE employees, while Judge Wood said she didn't see the cases as that different.  She also expressed doubt that anyone could accurately quantify losses in cases where the bidding process had been corrupted. In the case of the three UBS officials sentenced Wednesday, federal prosecutors also sought fines of $20,000 to $250,000 in the case.  Prosecutors called their actions a "sophisticated financial fraud" that went on for years and "victimised municipalities and other bond issuers".

There are obviously lots of interesting aspects to this sentencing story.  I am especially eager to praise Judge Wood for using big financial penalties — which make the government money and seem especially fitting for crimes of greed — while refusing to use big imprisonment terms — which cost the government money and seem unlikely to impact public safety for non-violent white-collar criminals. Relatedly, given that this article suggests that all other comparable big-rigging defendants have received sentences ranging from 6 to 48 months, I find stunning and deeply troubling that federal prosecutors were advocating in these cases for sentences ranging from more than 130 months to 260 months. Nice effort to avoid unwarranted sentencing disparities via your advocacy here, DOJ. (Not!)

July 25, 2013 in Federal Sentencing Guidelines, Offense Characteristics, Procedure and Proof at Sentencing, Purposes of Punishment and Sentencing, White-collar sentencing, Who Sentences? | Permalink | Comments (1) | TrackBack

Tuesday, July 23, 2013

Second Circuit finds stat max white-collar sentences procedurally unreasonable

The Second Circuit panel has today handed down a significant reasonableness ruling in US v. Juncal, No. 10-1800 (2d Cir. July 23, 2013) (available here), which should be of special interest to all white-collar sentencing practitioners. The last seven pages of the per curiam panel opinion and the entire nine pages of the concurrence by Distict Judge Underhill (sitting by designation) are must reads for sentencing fans, and the few paragraphs I will reprint here help highlight why.

The per curiam panel opinion find procedurally unreasonable 20-year sentences given to defendants who were part of a conspiracy "which involved a scheme to obtain a three billion dollar loan supposedly intended to finance construction of a pipeline across Siberia [that] resulted in no actual loss." Here is part of the panel opinion's explanation for why these sentences were procedurally unreasonable:

Here, appellants’ lawyers highlighted significant issues with the intended loss calculation both in their briefs and at sentencing. Given the low risk that any actual loss would result — what hedge fund would fall prey to a purported coalition of Buryatian nationals and Yamasee tribesmen using AOL email accounts to offer five billion dollars in collateral for a loan to build a pipeline across Siberia? — counsel argued that a 30 point mega-enhancement vastly overstated both the seriousness of the offense, and the danger of appellants to their community.  The Guidelines acknowledge that potentiality; application note 3(C) to U.S.S.G. § 2B1.1 indicates that a downward departure may be warranted where the offense level resulting from a loss calculation overstates the seriousness of an offense.  But the sentencing court never resolved appellants’ significant arguments.  At Sampson’s hearing the District Court did draw a comparison between other financial crimes and this case, but it never resolved the question raised by the appellants — whether treating intended loss like actual loss under all the circumstances of this case leads to a sentence consistent with the dictates of section 3553(a).

The concurring opinion by Judge Underhill is even more potent as it advocates for a broader ruling that the sentences here are substantively unreasonable, and here is how it gets started

In my view, the loss guideline is fundamentally flawed, and those flaws are magnified where, as here, the entire loss amount consists of intended loss.  Even if it were perfect, the loss guideline would prove valueless in this case, because the conduct underlying these convictions is more farcical than dangerous. If substantive review of sentences actually exists other than in theory, it must be undertaken at least occasionally.  This would have been an appropriate case in which to do so, because it raises so starkly the problems with the loss guideline. Until this Court weighs in on the merits of the loss guideline, sentences in high-loss cases will remain wildly divergent as some district judges apply the loss guideline unquestioningly while others essentially ignore it.  The widespread perception that the loss guideline is broken leaves district judges without meaningful guidance in high-loss cases; that void can only be filled through the common law, which requires that we reach the substantive reasonableness of these sentences.

July 23, 2013 in Federal Sentencing Guidelines, Procedure and Proof at Sentencing, Sentences Reconsidered, White-collar sentencing, Who Sentences? | Permalink | Comments (6) | TrackBack

Friday, July 19, 2013

Local judge gives poll worker five-year prison term for voter fraud

A colleague alerted me to this notable sentencing story from the Cincinnati area about a woman who received what seems to be a quite severe sentence for voter fraud.  The piece is headlined "Illegal voter gets 5-year prison term," and here are the details:

Calling her a common criminal who abused her authority as a poll worker by violating the principle of “one person, one vote,” a judge sent Melowese Richardson to prison Wednesday for five years following her illegal voting conviction.

“This is not a little thing. It’s not a minor thing. This is what our country’s based on – free elections,” Hamilton County Common Pleas Court Judge Robert Ruehlman told Richardson.

In a case watched around the country, Richardson was a Hamilton County poll worker from 1998 until her arrest earlier this year when she was charged with eight counts of illegal voting. In May, she accepted a plea deal and was convicted of four counts in exchange for the other four being dismissed.

She was convicted of voting twice in the 2012 election and voting three times – in 2008, 2011 and 2012 – for her sister, Montez Richardson, who has been in a coma since 2003.... Richardson told the judge she was bothered that Amy Searcy, the Board of Elections director, had criticized her moments before the sentencing....

The conservative, outspoken judge responded with scathing comments, blasting Richardson for suggesting she was being prosecuted because she was a black Democrat helping a black Democratic presidential candidate. “It has nothing to do with race. It has nothing to do with politics. It has nothing to do with disrespecting you. You did this to yourself,” Ruehlman told her.

“You’re very selfish, self-centered. I really believe President Obama, if he were asked about this today, he would be appalled. He would not want anybody to cheat to get elected.”

Ruehlman noted that two others convicted of illegal voting before Richardson got much lighter sentences but stressed their cases were different. The judge noted Richardson deserved a prison sentence, which was one year less than the maximum possible, because she has a lengthy criminal record, schemed repeatedly over five years to cast several illegal votes and used her training and expertise as a poll worker to try to evade detection.

“‘I’m Melowese Richardson. I can take the law into my own hands,’” the judge said, mocking what he believes is Richardson’s attitude.

Richardson previously was convicted of threatening to kill a witness in a criminal case against her brother, of stealing, of drunken driving and of beating someone in a bar fight.

Anything short of a prison sentence, Assistant Prosecutor Bill Anderson told the judge, would be an attack on the voting system. As a poll worker, “her job is actually to protect the integrity and sanctity of the voting system,” Anderson said. “(She) is an ideologue who was hell bent on stuffing the ballot box with as many Obama votes as possible.”

Bill Gallagher, Richardson’s lawyer, suspected she would be sent to prison but was surprised by the sentence. “I thought prison was a real possibility because of her record of 25 years ago,” Gallagher said. “I don’t think that the length of it was any where near what we expected.”

July 19, 2013 in Offense Characteristics, Race, Class, and Gender, White-collar sentencing, Who Sentences? | Permalink | Comments (6) | TrackBack

Tuesday, July 09, 2013

Third Circuit affirms record-long insider-trading sentence

As reported in this Forbes piece, headlined "Inside Trader Matthew Kluger's 12-Year Prison Term Affirmed," a panel of the Third Circuit today rejected a range of arguments against a lengthy federal sentence for insider trading. Here are the basics:

The prison term given to Matthew Kluger by U.S. District Judge Katharine Hayden (New Jersey) represented the longest ever given to a person pleading guilty to charges of insider trading. Upon his arrest in April 2011, Kluger quickly decided to enter negotiations to plead guilty and throw himself on the mercy of the court. That strategy landed him in prison for 12 years.

Kluger was a lawyer (NYU Law) who worked on mergers and acquisitions of publicly traded companies at prestigious law firms, including Wilson Sonsini Goodrich & Rosati PC. He then passed that confidential information on to a middle man (Kenneth Robinson), who then passed it on to a trader, Garrett Bauer. The scheme worked for 17 years because there was no direct communication between Kluger, the source, and Bauer, the trader. In fact, the two had only met once at the beginning of their illegal trading. The Securities and Exchange Commission had suspicions of Bauer’s trading activities but could never tie him to a source for the information. However, when Bauer backed out of the trading scheme in 2010, Robinson and Kluger continued … that was when the SEC and the FBI pulled everything together. As David Voreacos (Bloomberg) noted in his excellent profile of Kluger, the scheme succeeded for so long because of its simplicity, the discipline of its limited number of people and its essential amoral nature.

The basis of Kluger’s appeal was that Bauer was supposed to buy only small number of shares, to avoid detection from authorities, and then the three would equally share in the profits. However, Bauer, unknown to Kluger, was trading large blocks of shares for his own benefit, resulting in millions in profits. Whereas Kluger believed that the profits were just around $2 million (a little of $600k each), the total profits from the information he provided to the conspiracy approached $37 million with Bauer receiving the majority of the money. Kluger was sentenced by Judge Haydan according to the Federal Sentencing Guideline based on the amount of the total gain and not the amount he personally realized from the trades. His guideline range at sentencing was 11-14 years … so 12 seemed fair to the judge.

The 3rd Circuit agreed with Judge Hayden, stating that Kluger, “… truly was a career criminal.” Upon being notified of the decision, U.S. Attorney Paul J. Fishman (District of New Jersey) released a statement, “We argued at sentencing that a severe penalty was appropriate for one of the longest running insider trading schemes ever prosecuted, and are gratified the Court of Appeals saw it the same way.”

Kenneth Robinson, who recruited Bauer and hatched the initial plan with Kluger, did not appeal his prison term of 27 months. Robinson was the first to cooperate with authorities and recorded conversations with both Bauer and Kluger, which sealed their fate. Note to file; It pays to cooperate early.

The full panel opinion in US v. Kluger, No. 12-2701 (3d Cir. July 9, 2013) (available here) runs 48 pages, and this paragraph from the start of the opinion provides an effective accounting of the sentencing issues raised (and ultimately rejected) on appeal:

On June 13, 2012, Kluger filed a timely appeal, raising the following arguments.  First, he challenges the District Court's calculation of his sentencing guidelines range.  Second, he contends that the Court procedurally erred in imposing the sentence on him by (1) improperly denying him an evidentiary hearing prior to his sentencing; (2) failing to resolve his objections to the presentence investigation report; and (3) not ordering discovery of materials that the govern ment turned over to the probation department for use in preparing the presentence report.  Finally, he contends that the District Court imposed a procedurally and substantively unreasonable sentence

July 9, 2013 in Booker in the Circuits, Procedure and Proof at Sentencing, Sentences Reconsidered, White-collar sentencing | Permalink | Comments (1) | TrackBack

Wednesday, July 03, 2013

"China threatens death penalty for serious polluters"

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

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

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

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

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

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

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

Tuesday, July 02, 2013

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

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

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

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

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

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

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

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

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

Related posts:

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

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

Second Circuit finds (lengthy?) insider trading sentences reasonable

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

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

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

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

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

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

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

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

Monday, July 01, 2013

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

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

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

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

So what am I worried about in this case?

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

What should they call it? Butter & Bud.

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

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

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

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

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

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

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

Related posts:

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

Friday, June 21, 2013

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

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

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

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

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

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

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

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

Thursday, June 20, 2013

"White-Collar Sentences Get a Fresh Look"

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

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

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

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

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

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

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

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

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

Wednesday, June 19, 2013

Guest post with more thoughtful perspectives on Peugh

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

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

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

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

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

Recent related posts:

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

Saturday, May 11, 2013

Taking note of some notable federal tax sentences

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

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

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

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

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

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

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

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

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

Wednesday, May 08, 2013

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

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

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

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

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

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

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

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

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

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

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

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

Download Skilling Sentencing Agreement final.cfv

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

Tuesday, May 07, 2013

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

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

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

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

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

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

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

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

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

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

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

Related post:

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

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

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

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

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

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

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

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

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

Monday, May 06, 2013

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Wednesday, May 01, 2013

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

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

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

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

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

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

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

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

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

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

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

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

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

Tuesday, April 30, 2013

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

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

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

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

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

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

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

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