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April 30, 2008

The loss-culpability connection (or disconnect) in white-collar sentencing

Especially in the federal sentencing system, where the (now advisory) guidelines place so much emphasis on the concept of "loss," the relationship in white-collar sentencing cases between loss amounts and criminal culpability is an extremely important and largely under-examined topic in much of the caselaw and commentary.  Fortunately, a soon-to-be-available new issue of the Federal Sentencing Reporter will be examining these issues at some length.  And, even before this FSR issue becomes available, a new decision from the First Circuit, US v. Innarelli, No. 06-2400 (1st Cir. Apr. 29, 2008) (available here), addresses these matters briefly.  As noted by AL&P, Innarelli covers lots of issues, but this passage struck me as especially notable:

[W]e focus our loss inquiry for purposes of determining a defendant's offense level on the objectively reasonable expectation of a person in his position at the time he perpetrated the fraud, not on his subjective intentions or hopes.  Moreover, as already noted, it is immaterial that many of the victims actually incurred no loss.  As the district court aptly stated, "[l]oss in a fraud case is a yardstick for moral culpability." Where, as here, the defendant reasonably should have expected that loss would result, he can and generally should be punished more severely to account for his greater level of moral culpability, even where the victim has managed to make money in spite of the fraud.

I have no quibble with enhancing a sentence because of a "greater level of moral culpability" reflected in the defendant's "objectively reasonable expectation" of what loss would result from a fraud.  The problem I have is that defendants rarely get the converse sentencing discount when they completely lack a "greater level of moral culpability" but there are large actual loss amounts that were never intended or even objectively reasonable to expect as a result of a questionable and perhaps fraudulent business decision.

April 30, 2008 at 01:29 PM | Permalink


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"defendants rarely get the converse sentencing discount"

Excellent point and, all too often, it seems be true in a variety of sentencing and criminal justice contexts.

Posted by: DEJ | Apr 30, 2008 4:09:08 PM

I don't see why "loss" is so darn important. Killing someone to steal $20 is worse than killing someone to steal $200,000.

And now we're sentencing people for losses that didn't even happen. If a criminal takes his victim as he finds him, why shouldn't that principal work both ways?

Posted by: bruce | Apr 30, 2008 6:04:07 PM

Doug B.:

What do you think of the felony murder rule? Like the rule that is the topic of your post, it is a rule that subjects criminals to harsher punishment when the actual result of their crime is worse than what they had intended.

Posted by: William Jockusch | Apr 30, 2008 11:48:32 PM

I tend to favor the MPC's effort to re-orient felony murder doctrine into an inquiry as to whether the defendant committing the felony acted with extreme recklessness regarding the death. In short, I think mens rea is important in every sentencing setting, though I also think that objective harm is also important in every sentencing setting. The point, as DEJ spotlights, is that often defendants get the worst of both worlds at sentencing.

Posted by: Doug B. | May 1, 2008 4:13:07 AM

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