Saturday, April 13, 2013

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

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

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

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

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

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

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

Monday, April 08, 2013

Notable perspective on notable class disparities in federal sentencing

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

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

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

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

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

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

Friday, April 05, 2013

"Sentencing the Why of White Collar Crime"

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

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

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

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

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

Thursday, April 04, 2013

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

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

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

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

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

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

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

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

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

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

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

Saturday, March 16, 2013

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

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

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

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

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

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

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

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

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

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

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

Recent related post:

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

Monday, March 11, 2013

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

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

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

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

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

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

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

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

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

Sunday, March 10, 2013

Upcoming symposium at Gerogetown on "Reducing Corporate Criminality"

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

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

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

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

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

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

Thursday, February 28, 2013

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

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

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

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

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

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

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

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

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

Recent related posts:

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

Thursday, February 21, 2013

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Recent related post:

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

Tuesday, February 19, 2013

Grey Lady has lots of sentencing stories fit to print today

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

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

Monday, February 18, 2013

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Friday, February 15, 2013

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Thursday, February 14, 2013

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

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

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

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

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

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

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

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

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

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

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

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

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

Recent related post on Crundwell case:

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

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

Sunday, February 10, 2013

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Thursday, February 07, 2013

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Thursday, January 31, 2013

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Tuesday, January 29, 2013

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

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

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

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

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

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

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

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

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

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

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

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

Friday, January 11, 2013

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

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

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

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

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

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

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

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

Friday, December 21, 2012

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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