Sentencing Law and Policy

Ninth Circuit panel rules that Elizabeth Holmes cannot stay out on bail while her appeal is pending

As reported in this new AP article, "Theranos CEO Elizabeth Holmes appears to be soon bound for prison after an appeals court Tuesday rejected her bid to remain free while she tries to overturn her conviction in a blood-testing hoax that brought her fleeting fame and fortune." Here is more:

The Ninth Circuit Court of Appeals ruling comes nearly three weeks after Holmes deployed a last-minute legal maneuver to delay the start of her 11-year prison sentence.  She had been previously ordered to surrender to authorities on April 27 by U.S. District Judge Edward Davila, who sentenced her in November.

Davila will now set a new date for Holmes, 39, to leave her current home in the San Diego area and report to prison. The punishment will separate Holmes from her current partner, William “Billy” Evans, their 1-year-old son, William, and 3-month-old daughter, Invicta.  Holmes’ pregnancy with Invicta — Latin for “invincible,” or “undefeated” — began after a jury convicted her on four counts of fraud and conspiracy in January 2022.

Davila has recommended that Holmes serve her sentence at a women’s prison in Bryan, Texas.  It hasn’t been disclosed whether the federal Bureau of Prisons accepted Davila’s recommendation or assigned Holmes to another facility.

Holmes’ former lover and top lieutenant at Theranos, Ramesh “Sunny’ Balwani, began a nearly 13-year prison sentence in April after being convicted on 12 counts of fraud and conspiracy last July in a separate trial.  Balwani, 57, was incarcerated in a Southern California prison after losing a similar effort to remain free on bail while appealing his conviction....

Holmes’s lawyers have been fighting her conviction on grounds of alleged mistakes and misconduct that occurred during her trial.  They have also contended errors and abuses that biased the jury were so egregious that she should be allowed to stay out of prison while the appeal unfolds — a request that has now been rebuffed by both Davila and the Ninth Circuit Court of Appeals.

Some prior related posts:

• Elizabeth Holmes convicted on 4 of 11 fraud charges ... but now can be sentenced on all and more 
• Making the case, because "upper-class offenders ... might be even more reprehensible," for a severe sentence for Elizabeth Holmes 
• Sentencing memos paint very different pictures of Elizabeth Holmes 
• Federal judge imposes (within guideline) sentence of 135 months on Theranos founder Elizabeth Holmes 
• Sentencing judge recommended prison camp for Elizabeth Holmes to serve her sentence 
• Citing prior "attempt to flee the country," feds urging that Elizabeth Holmes start her prison sentence in April
• Federal judge denies Elizabeth Holmes motion to remain free pending her appeal of fraud convictions 

SCOTUS unanimously reverses two federal fraud convictions based on novel theories

The Supreme Court this morning handed down two notable wins for federal fraud defendants, rejecting two theories of federal prosecution endorced by lower court in Ciminelli v. US, No. 21-1170 (S. Ct. May 11, 2023) (available here) and Percoco v. US, No. 21-1158 (S. Ct. May 11, 2023) (available here). Here is how the opinion for the Court in Ciminelli authored by Justice Thomas gets started:

In this case, we must decide whether the Second Circuit’s longstanding “right to control” theory of fraud describes a valid basis for liability under the federal wire fraud statute, which criminalizes the use of interstate wires for “any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises.” 18 U.S.C. § 1343.  Under the right-to-control theory, a defendant is guilty of wire fraud if he schemes to deprive the victim of “potentially valuable economic information” “necessary to make discretionary economic decisions.” United States v. Percoco, 13 F.4th 158, 170 (CA2 2021) (internal quotation marks omitted). Petitioner Louis Ciminelli was charged with, tried for, and convicted of wire fraud under this theory. And the Second Circuit affirmed his convictions on that same basis.

We have held, however, that the federal fraud statutes criminalize only schemes to deprive people of traditional property interests. Cleveland v. United States, 531 U.S. 12, 24 (2000). Because “potentially valuable economic in-formation” “necessary to make discretionary economic decisions” is not a traditional property interest, we now hold that the right-to-control theory is not a valid basis for liability under §1343. Accordingly, we reverse the Second Circuit’s judgment.

Here is how the opinion for the Court in Percoco authored by Justice Alito gets started:

In this case, we consider whether a private citizen with influence over government decision-making can be convicted for wire fraud on the theory that he or she deprived the public of its “intangible right of honest services.” 18 U.S.C. §§ 1343, 1346. Petitioner Joseph Percoco was charged with conspiring to commit honest-services wire fraud during a period of time that included an eight-month interval between two stints as a top aide to the Governor of New York. Percoco was convicted of this offense based on instructions that required the jury to determine whether he had a “special relationship” with the government and had “dominated and controlled” government business. 2 App. 511. We conclude that this is not the proper test for determining whether a private person may be convicted of honest-services fraud, and we therefore reverse and remand for further proceedings.

Though federal criminal law and white-collar folks are going to want to review these (relatively shourt) opinions closely, everyone should take the time to check out Justice Gorsuch's concurrence in Percoco. It was joined by Justice Thomas and here are some brief highlights from its start and closing:

The Court holds that the jury instructions in this case were “too vague.” Ante, at 10.  I agree.  But to my mind, the problem runs deeper than that because no set of instructions could have made things any better.  To this day, no one knows what “honest-services fraud” encompasses.  And the Constitution’s promise of due process does not tolerate that kind of uncertainty in our laws—especially when criminal sanctions loom. “Vague laws” impermissibly “hand off the legislature’s responsibility for defining criminal behavior to unelected prosecutors and judges, and they leave people with no sure way to know what consequences will attach to their conduct.”  United States v. Davis, 588 U.S. ___, ___ (2019) (slip op., at 1)....

The difficulty here stems from the statute and the lower court decisions that inspired it.  I have no doubt that if all nine Justices put our heads together, we could rewrite § 1346 to provide fair notice and minimize the risk of uneven enforcement.  I have no doubt, too, that we could find a hook for any such rule somewhere in the morass of pre-McNally lower-court case law.  Maybe, too, that is the path we are on, effectively writing this law bit by bit in decisions spanning decades with the help of prosecutors and lower courts who present us with one option after another.  But that is not a path the Constitution tolerates.  Under our system of separated powers, the Legislative Branch must do the hard work of writing federal criminal laws.  Congress cannot give the Judiciary uncut marble with instructions to chip away all that does not resemble David.  See United States v. Reese, 92 U.S. 214, 221 (1876) (“It would certainly be dangerous if the legislature could set a net large enough to catch all possible offenders, and leave it to the courts to step inside and say who could be rightfully detained, and who should be set at large”); United States v. Wiltberger, 5 Wheat. 76, 95 (1820) (Marshall, C. J.) (“It is the legislature, not the Court, which is to define a crime, and ordain its punishment”).

Doubtless, Congress had high and worthy intentions when it enacted § 1346.  But it must do more than invoke an aspirational phrase and leave it to prosecutors and judges to make things up as they go along.  The Legislature must identify the conduct it wishes to prohibit.  And its prohibition must be knowable in advance — not a lesson to be learned by individuals only when the prosecutor comes calling or the judge debuts a novel charging instruction. Perhaps Congress will someday set things right by revising §1346 to provide the clarity it desperately needs.  Until then, this Court should decline further invitations to invent rather than interpret this law.

First Circuit panel reverses fraud convictions for two Varsity Blues defendants

As reported in this New York Times piece, "a federal appeals court overturned the fraud and conspiracy convictions on Wednesday of two parents found guilty of participating in a far-reaching bribery scheme, known as Operation Varsity Blues, which ensnared dozens of wealthy parents who falsified their children’s credentials to gain admission to prestigious universities across the country."  Here is more:

A three-judge panel of the U.S. Court of Appeals for the First Circuit in Massachusetts found that the lower court had made crucial missteps in the trial of Gamal Abdelaziz, a former casino executive, and John Wilson, a private equity financier.  The court, however, upheld Mr. Wilson’s conviction on tax fraud.

The appeals court made its decision largely on two technical legal grounds.  First, it ruled that the lower court judge wrongly instructed the jury that admissions slots constituted property.  “We do not say the defendants’ conduct is at all desirable,” the decision said.  But the appellate judges faulted the government for being too broad in its argument, to the point where “embellishments in a kindergarten application could constitute property fraud proscribed by federal law.”

The court also found that the government had failed to prove that the two men agreed to engage in a conspiracy with other parents, who were, like them, the clients of William Singer, known as Rick, a college admissions consultant to the rich, the mastermind of the admissions scheme.  The conspiracy charges allowed the government to introduce evidence related to other parents’ wrongdoing, creating the risk of bias against the defendants, the judges said in a 156-page decision....

The victory in the appellate court was striking because Mr. Wilson and Mr. Abdelaziz were the first to take their chances in front of a jury.  Dozens of other wealthy parents, including some celebrities, pleaded guilty, making it seem as if the prosecutions were ironclad.  The investigation became a symbol of how wealthy, prestige-obsessed parents had turned elite universities into brand-name commodities.

“Almost everybody pleaded guilty, so the government’s legal theories weren’t really tested until this case was decided,” Joshua Sharp, the lawyer who argued the case for Mr. Abdelaziz, said on Wednesday.

While Mr. Abdelaziz and Mr. Wilson found the weak spots in the government’s case, parents who pleaded guilty are unlikely to be able to challenge their convictions on similar grounds, legal experts said.

Mr. Abdelaziz was accused of paying $300,000 in 2018 to have his daughter admitted to the University of Southern California as a top-ranked basketball recruit even though she did not make the varsity team in high school.  Mr. Wilson was accused of paying $220,000 in 2014 to have his son admitted as a water polo recruit at U.S.C., even though prosecutors said he was not good enough to compete at the university.

Mr. Wilson was also accused of agreeing to pay $1.5 million in 2018 to have his twin daughters, who were good students, admitted to Harvard and Stanford as recruited athletes.

They were tried together in the fall of 2021; Mr. Wilson was later sentenced to 15 months in prison, and Mr. Abdelaziz to a year and a day. Their lawyers argued that the men thought they were making legitimate donations to the university. They said they trusted Mr. Singer, as their college consultant, to guide them.

The investigation ensnared more than 50 people, including the actresses Felicity Huffman and Lori Loughlin; Ms. Loughlin’s husband, Mossimo Giannulli, a fashion designer; and coaches and exam administrators, among others. Mr. Singer agreed to cooperate with the government and pleaded guilty in 2019 to conspiracy charges. He was sentenced in January to three and a half years in prison.

The full 156-page opinion of the First Circuit panel is available at this link.

In Ninth Circuit appeal, Elizabeth Holmes challenges convictions and also seeks resentencing

As reported in this new Insider piece, former Theranos CEO Elizabeth Holmes has filed an appeal of her conviction and sentence in the Ninth Circuit.  Here are the basics:

Holmes was convicted on four counts and sentenced last November to 11.25 years in prison, with three years of supervision following her release.  Holmes, 39, is due to begin her sentence on April 27 after a judge last week denied her request to remain free while she appeals her conviction.  At the time her punishment was handed down, Holmes told the court, through tears, that she was "devastated by my failings" and "felt deep pain for what people went through because I failed them."

But in the brief filed Monday with the US Court of Appeals for the 9th Circuit, Holmes's attorneys claim her original trial was flawed, producing an "unjust" conviction and a "severe" prison sentence.  They argue that she was unjustly barred from citing Balwani's testimony in her own defense....

Holmes's defense team also argued that testimony from Theranos' former lab director, Dr. Adam Rosendorff — that the company's technology was "uniquely problematic" — improperly influenced the court, citing the fact that Rosendorff was not cross-examined and questioned about failings in other labs at which he worked.

For those reasons, the court "should reverse the conviction and remand for a new trial or, alternatively, remand for resentencing," Holmes's lawyers wrote.

The full Holmes brief to the Ninth Circuit is available at this link. The last dozen or so pages of the brief develops the sentencing argument, and here is how this part of the brief begins:

At sentencing, the district court applied a 26-level Guidelines enhancement, adding more than 10 years to what otherwise would have been a 0-7 month range.  It did so by making factual findings about the number of victims and the amount of loss by a mere preponderance of the evidence, based in large part on extra-record and untested evidence such as government interview memoranda.  That was error: under this Court’s precedent, the court needed to find the facts supporting its severe enhancement by clear-and-convincing evidence.  The result of this error is an excessive 135-month term of imprisonment.  That is 27 months higher than what the Probation Office recommended, for a woman who — unlike other white-collar defendants — neither sought nor gained any profit from the purported loss and was trying to improve patient health.  At a minimum, this Court should remand for resentencing.

(FWIW: I think the first sentence means to say "a 0-6 month range.")

Some prior related posts:

• Elizabeth Holmes convicted on 4 of 11 fraud charges ... but now can be sentenced on all and more 
• Making the case, because "upper-class offenders ... might be even more reprehensible," for a severe sentence for Elizabeth Holmes 
• Sentencing memos paint very different pictures of Elizabeth Holmes 
• Federal judge imposes (within guideline) sentence of 135 months on Theranos founder Elizabeth Holmes 
• Sentencing judge recommended prison camp for Elizabeth Holmes to serve her sentence 
• Citing prior "attempt to flee the country," feds urging that Elizabeth Holmes start her prison sentence in April
• Federal judge denies Elizabeth Holmes motion to remain free pending her appeal of fraud convictions 

Federal judge denies Elizabeth Holmes motion to remain free pending her appeal of fraud convictions

As reported in this new Bloomberg piece, "Elizabeth Holmes must report to prison as scheduled later this month, a judge ruled, rejecting her request to remain free on bail as she appeals her fraud conviction."  Here is more:

The decision Monday by US District Judge Edward Davila in San Jose, California, is likely his last in the case which he’s handled since Holmes was indicted in 2018. Davila presided over the Theranos Inc. founder’s four-month trial in 2021 and sentenced her in November to serve 11 1/4 years of incarceration for deceiving investors in her blood-testing startup.

Legal experts said Holmes’s bid to remain free during an appeals process that might take two years was a long shot. She’s expected to make one final request for bail from the San Francisco-based federal appeals court, which she has also asked to overturn her conviction.

Davila ruled that even if Holmes won an appeals court ruling overturning his decisions to allow evidence challenging the accuracy and reliability of Theranos’s technology, she had deceived investors in so many different ways that such a decision isn’t likely to require a reversal or new trial on all the fraud counts she was convicted of. “Whether the jury heard more or less evidence that tended to show the accuracy and reliability of Theranos technology does not diminish the evidence the jury heard of other misrepresentations Ms. Holmes had made to investors,” he wrote.

To justify her request for bail, Holmes said she has two young children, continues to work on new inventions, and has raised “substantial questions” of law or facts in her appeal that could win her a new trial. At a hearing last month, Davila was most interested in an argument prosecutors made that there’s a risk Holmes might try to flee, based on a one-way plane ticket to Mexico that was purchased while she was on trial....

“Booking international travel plans for a criminal defendant in anticipation of a complete defense victory is a bold move, and the failure to promptly cancel those plans after a guilty verdict is a perilously careless oversight,” Davila said of the plane ticket. The incident invited “greater scrutiny” of Holmes, he wrote, adding that he concluded the purchase “while ill-advised, was not an attempt to flee the country.”...

Davila previously denied a request for bail pending appeal sought by Ramesh “Sunny” Balwani, the former president of Theranos and Holmes’s ex-boyfriend who was sentenced to 13 years in prison for his fraud conviction. The appeals court upheld Davila’s decision.

This latest ruling in US v. Holmes, which runs 11 pages, can be found at this link.

Some prior related posts:

• Elizabeth Holmes convicted on 4 of 11 fraud charges ... but now can be sentenced on all and more 
• Making the case, because "upper-class offenders ... might be even more reprehensible," for a severe sentence for Elizabeth Holmes 
• Might any victims of Theranos fraud urge leniency at sentencing for Elizabeth Holmes?
• Sentencing memos paint very different pictures of Elizabeth Holmes 
• Federal judge imposes (within guideline) sentence of 135 months on Theranos founder Elizabeth Holmes 
• Sentencing judge recommended prison camp for Elizabeth Holmes to serve her sentence 
• Citing prior "attempt to flee the country," feds urging that Elizabeth Holmes start her prison sentence in April

When are character letters NOT helpful in a fraud sentencing? When they are fraudulent.

In various posts in this space and elsewhere, one sometimes sees debates over the impact and import of submitting an array of character letters on behalf of a defendant facing sentencing.  I sense that, generally speaking, judges find these kinds of letters helpful, and they can often lead to better sentencing outcomes if well developed and effectively presented.  But, this news story from a federal sentencing this week in Pittsburgh provide a distinct view of these matters:

As far as character letters go, Randy Frasinelli submitted the best.  They came from corporate executives, nonprofit groups and an Ivy league university.  There’s one from the bishop of the Diocese of Pittsburgh.  And another from Leadership Pittsburgh.

There’s even one from former Allegheny County Executive Jim Roddey. Well, it was supposed to be from him.  But, if it was, Roddey spelled his own name wrong — twice.  According to the federal government, all of the letters are fake.

Frasinelli, 66, of Scott, pleaded guilty to bank fraud and money laundering in federal court in August after investigators said that he fraudulently obtained $3.8 million in covid-19 Paycheck Protection Program loans during the pandemic.  They said he used the money to buy artwork, luxury vehicles and firearms...

In its case, the government laid out a complex scheme through which Frasinelli applied for the loans in the names of four separate companies and then submitted falsified tax records and payroll records.  Although he was already facing federal charges — and was out on bond — prosecutors said, Frasinelli applied for another fraudulent loan a month after his arrest seeking another half-million dollars.

Now, the U.S. Attorney’s office is accusing him of falsifying his own character letters to be used to mitigate his sentence.  He is scheduled to be sentenced on Wednesday by U.S. District Judge W. Scott Hardy. Whether the sentencing will occur, however, is up in the air.  Frasinelli’s defense attorney — the third he’s had in his federal case — on Saturday filed a motion to withdraw from representing him.

The sentencing did go forward yesterday, and here is another local press piece detailing how things transpired:

A Scott businessman who bilked the government out of nearly $4 million in COVID-19 relief funds, tried to do it again while out on bond and then forged character letters praising himself to present to a judge will spend 6.5 years in federal prison, the judge ruled Wednesday.

U.S. District Judge W. Scott Hardy chastised Randy Frasinelli, 66, before he issued the sentence, which will be followed by five years of supervised release. He said Frasinelli’s forged letters had eroded the court’s trust in him....

Frasinelli, as part of his plea, took responsibility for his actions. That acceptance of responsibility lowered the sentencing range with which Judge Hardy had to work.  As part of the [pre]-sentencing report sent to the judge, Frasinelli included letters from his children and other family members, along with 14 from other non-family members praising him as a businessman and person.  The letters were signed by politicians and business leaders.

In a filing last week, the U.S. Attorney’s Office wrote they’d discovered at least 13 of the 14 letters from non-family members were forgeries.  Attorneys said Frasinelli’s forged letters should negate any special considerations in relation to his sentencing.... The forged letters, attorneys wrote, should negate any reduction Frasinelli was set to receive for accepting responsibility.  Rather than the sentence of 63 to 78 months that prosecutors agreed to recommend, they said the judge should instead consider the non-mitigated range of 78 to 97 months.

For those not great at base-12 math, the 6.5 years of imprisonment imposed here amounts to 78 months, and so the top of the original guideline range calculated in this case as well as the bottom of the new range suggested by prosecutors. I suppose only the judge knows what sentence he might have given absent the forged letters, but I know this case is a useful reminder that sentencing determinations will often reflect post-offense-conduct behaviors both bad and good.

An interesting (and dubitante) SCOTUS argument in Dubin

I flagged in this post from last November the Supreme Court's cert grant in Dubin v. United States, which concerns the reach of the federal criminal law that adds a mandatory two-year prison term for using another person’s identity in the process of committing another crime.  That statute, 18 U.S.C. § 1028A, is titled "Aggravated identity theft," but the statutory language would seem to cover a whole lot more conduct than what most think of as identify theft.  In fact, the government seem to be claiming that waiter who adds for himself an unauthorized $1 tip when swiping a patron's credit card would be guilty of credit card fraud and an additional two-year mandatory prison term under § 1028A.  

This matter was argued before the Supreme Court yesterday and the lengthy argument had all sorts of interesting elements.  (The transcript, running over 100 pages, is available here; the audio is available here.)  As detailed in the pieces linked below, it seems nearly all the Justices believe there have to be some limiting principles for application of this statute.  But while the Justices seem to generally doubt the government's broad statutory reading, it is unclear what part of the statutory text may provide real limits and on what terms.  Stay tuned:

From Bloomberg Law, "Justices Appear Ready to Limit Breadth of Identity Theft Law"

From the New York Times, "Supreme Court Seems Skeptical of Broad Sweep of Identity Theft Law"

From SCOTUSblog, "Justices lean toward narrow reading of aggravated identity theft"

From Security Boulevard, "Supreme Court: Does BIlling Fraud Violate Federal ID Theft Statutes?"

Notable 5-4 SCOTUS split in ruling to limit civil penalties of Bank Secrecy Act

Certain types of Supreme Court cases involve issues that can make it relatively easy to predict how nearly every Supreme Court Justice will vote.  But so-called "white-collar" cases are often not the predictable type, and today's Supreme Court ruling in Bittner v. United States, No. 21-1195 (Feb. 28, 2023) (available here), is a notable example of this reality.  The case involved the proper accounting for civil penalties for non-willful violations of the Bank Secrecy Act, and the individual prevails against the federal government through this notable voting pattern: 

GORSUCH, J., announced the judgment of the Court, and delivered the opinion of the Court except as to Part II–C. JACKSON, J., joined that opinion in full, and ROBERTS, C. J., and ALITO and KAVANAUGH, JJ., joined except for Part II–C. BARRETT, J., filed a dissenting opinion, in which THOMAS, SOTOMAYOR, and KAGAN, JJ., joined.

Criminal justice fans should be a bit disappointed by the decision by three Justices to not join Part II-C of Justice Gorsuch's opinion. That section has these notable things to say about the rule of lenity:

Under the rule of lenity, this Court has long held, statutes imposing penalties are to be “construed strictly” against the government and in favor of individuals.  Commissioner v. Acker, 361 U.S. 87, 91 (1959)....

The rule of lenity is not shackled to the Internal Revenue Code or any other chapter of federal statutory law. Instead, as Acker acknowledged, “[t]he law is settled that penal statutes are to be construed strictly,” and an individual “is not to be subjected to a penalty unless the words of the statute plainly impose it.” 361 U. S., at 91 (internal quotation marks omitted and emphasis added).  Notably, too, Acker cited to and relied on cases applying this same principle to penalty provisions under a wide array of statutes, including the Communications Act of 1934, a bankruptcy law, and the National Banking Act.  See ibid....

[T]he rule exists in part to protect the Due Process Clause’s promise that “a fair warning should be given to the world in language that the common world will understand, of what the law intends to do if a certain line is passed.” McBoyle v. United States, 283 U.S. 25, 27 (1931).

If this section of the Bittner opinion carried the Court, I suspect this case might end up cited in more than a few criminal statutory interpretation cases. Maybe it still will be, but I suspect this ruling will end up of more interest to bankers than to criminal lawyers.

Federal judge imposes (within guideline) sentence of 155 months on former Theranos COO Ramesh "Sunny" Balwani

Last month, as blogged here, US District Judge Edward Davila sentenced Theranos founder Elizabeth Holmes to a (within guideline) prison term of 135 months.  Today brought sentencing for former Theranos COO Ramesh “Sunny” Balwani, and this TechCrunch account provides these highlights of the process and outcome:

The former COO of disgraced blood testing startup Theranos, Ramesh “Sunny” Balwani was sentenced to 155 months, or about 13 years, in prison, and three years of probation. After a three-month trial, Balwani was found guilty on all 12 criminal charges, ranging from defrauding patients and investors to conspiring to commit fraud. Theranos CEO Elizabeth Holmes was convicted on four of these charges and was sentenced to 11.25 years in prison last month.

Despite the disparate outcomes from the two separate juries in two individual trials, Judge Ed Davila calculated Holmes’ and Balwani’s sentencing ranges to be exactly the same: 135 to 168 months, or 11.25 to 14 years. In both cases, prosecutor Jeff Schenk countered by asking for 15 years.

Balwani’s lawyers attempted to argue that he should get a more lenient sentence than Holmes, as he was not CEO. “He’s not Ms. Holmes. He did not pursue fame and fortune,” said Balwani’s attorney Jeffrey Coopersmith.

Judge Davila even noted that the court saw another side of Balwani when they were told about his charitable giving, some of which occurred after Theranos. Yet Balwani still received a severe sentence of 13 years....

Unlike the jury at Holmes’ trial, the jury at Balwani’s trial held him accountable for defrauding patients, not just investors.

Before the former COO’s sentencing hearing, Balwani’s lawyers filed 40 objections to the probation office’s pre-sentence investigation report, according to tweets from Law 360 reporter Dorothy Atkins, who was present at the hearing. Judge Davila, who also presided over Holmes’ trial, said that only four of those objections were substantive.

“Usually sentencing hearings are morbid regardless of the crime — like watching a car crash where you watch families and lives being destroyed in real time,” Atkins tweeted from the court room. “This one feels more like an accounting class.”

It would certainly not be unprecedented if Balwani decides to appeal this ruling. After Holmes’ own sentencing, the former Theranos CEO told a California federal judge that she would appeal her conviction. She then asked to stay out of custody while her appeal is under consideration, also citing that she is currently pregnant with her second child. As it stands, Holmes’ surrender date is April 27, while Balwani will report to prison on March 15.

Third Circuit panel rules federal fraud guideline enhancements for "loss" do not properly include "intended loss"

I am grateful to a whole bunch of folks who made sure I did not miss the notable ruling by a Third Circuit panel today in US v. Banks, No. 21-5762 (3d Cir. Nov. 30, 2022) (available here).  Banks is yet another case involving another circuit finding notable guideline commentary problematic and inapplicable in the wake of recent Supreme Court administrative law rulings.  Here is how the Banks opinion starts and some key passages within (footnotes omitted):

A jury convicted Frederick Banks of wire fraud, and the District Court sentenced him to 104 months’ imprisonment and three years’ supervised release. On appeal, Banks argues that the District Court erred in three ways, by (1) denying his constitutionally protected right to self-representation, (2) applying the loss enhancement to the fraud guideline in the United States Sentencing Guidelines because there was no “actual loss,” and (3) imposing certain special conditions of supervised release.  We conclude that the loss enhancement in the Guideline’s application notes impermissibly expands the word “loss” to include both intended loss and actual loss. Thus, the District Court erred when it applied the loss enhancement because Banks’s crimes caused no actual loss. We will, therefore, affirm the judgment of the District Court except on the issue of loss enhancement; we will remand this case to the District Court for it to determine loss and to resentence Banks....

Next, we turn to Banks’s argument that the District Court erroneously applied the intended-loss enhancement to his sentence when the victim suffered $0 in actual losses. The application of the intended-loss enhancement hinges on the meaning of the term “loss” as used in Guideline § 2B1.1. Because the United States Sentencing Commission has interpreted “loss” in its commentary, the weight afforded to that commentary may affect the meaning of “loss.”...

Our review of common dictionary definitions of “loss” point to an ordinary meaning of “actual loss.” None of these definitions suggest an ordinary understanding that “loss” means “intended loss.”  To be sure, in context, “loss” could mean pecuniary or non-pecuniary loss and could mean actual or intended loss.55 We need not decide, however, whether one clear meaning of the word “loss” emerges broadly, covering every application of the word.  Rather, we must decide whether, in the context of a sentence enhancement for basic economic offenses, the ordinary meaning of the word “loss” is the loss the victim actually suffered.  We conclude it is.

Because the commentary expands the definition of “loss” by explaining that generally “loss is the greater of actual loss or intended loss,” we accord the commentary no weight. Banks is thus entitled to be resentenced without the 12-point intended-loss enhancement in § 2B1.1. 

Previewing SCOTUS arguments on reach of federal public-corruption laws

The Supreme Court starts a new round of oral arguments this Monday, beginning with a pair of political corruption cases, Ciminelli v. United States and Percoco v. United States.  SCOTUSblog has these previews of the coming arguments:

"A sharp business deal or a federal crime? Justices will review what counts as fraud in government contracting."

"Former aide to Andrew Cuomo wants court to narrow scope of federal bribery law"

In addition, here are a few media previews:

From The Buffalo News, "Supreme Court to hear Ciminelli, Percoco appeals – and decide shape of federal corruption laws"

From Reuters, "U.S. Supreme Court to weigh Cuomo-era New York corruption cases"

From the Wall Street Journal, "The Supreme Court Gets a Fraud Test: The Justices hear two major cases on prosecutorial overreach."

Sentencing judge recommended prison camp for Elizabeth Holmes to serve her sentence

As reported in this new press piece, "District Judge Edward Davila has proposed sentencing Theranos founder Elizabeth Holmes to a federal prison camp in Texas, according to court filings." Here is more:

“The Court finds that family visitation enhances rehabilitation,” Davila wrote in the filing, according to Bloomberg, which summarized the terms of Holmes’ sentencing.

The prison camp is located in Bryan, Texas, and was proposed as an alternative to Holmes serving her 11-year 3-month sentence at a California prison.  There’s a few prison camps like this one across the country that typically have a low security-to-inmate ratio, dormitory housing, and a work program. “...compared to other places in the prison system, this place is heaven.  If you have to go it’s a good place to go.” Alan Ellis, a criminal defense lawyer, told Bloomberg.

Keri Axel, a criminal defense attorney told Yahoo! Finance that it is common for non-violent offenders like Holmes to serve out their time at minimum security facilities.  “Sometimes they’re called ‘Camp Fed’ because they have a little bit more amenities, and they’re a little nicer places,” she said, adding the caveat, “they’re not great places. No one wants to be there.”

Although the judge has recommended the prison camp for Holmes’ incarceration, the U.S. Bureau of Prisons will make the final decision.  Holmes was sentenced to 11 years and three months in prison on November 18 after she was found guilty of defrauding Theranos investors out of millions of dollars as part of her failed blood-testing startup.  She was also sentenced to three years of supervision after her release.

Prior related posts:

• Elizabeth Holmes convicted on 4 of 11 fraud charges ... but now can be sentenced on all and more 
• Making the case, because "upper-class offenders ... might be even more reprehensible," for a severe sentence for Elizabeth Holmes 
• Might any victims of Theranos fraud urge leniency at sentencing for Elizabeth Holmes?
• Elizabeth Holmes' federal sentencing ready to go forward after her new trial motion is denied 
• Sentencing memos paint very different pictures of Elizabeth Holmes 
• Any final thoughts on today's federal sentencing of Elizabeth Holmes?
• Federal judge imposes (within guideline) sentence of 135 months on Theranos founder Elizabeth Holmes 

Federal judge imposes (within guideline) sentence of 135 months on Theranos founder Elizabeth Holmes

After a lengthy sentencing hearing (and a favorable guideline calculation), Theranos founder Elizabeth Holmes heard US District Judge Edward Davila sentence her to 135 months in federal prison this afternoon.  (That's 11 years and three months for those not accustomed to math in base 12.) 

Why such a quirky number?  Apparently Judge Davila concluded the total loss in share value properly attributed to Holmes's fraud was $121 million, which was an integral finding to support his calculation that her guidelines range was 135-168 months. (The feds, some may recall, calculated her guideline range to be life.)

Here is the lede of the Wall Street Journal's coverage of the sentence: "Elizabeth Holmes, the founder of Theranos Inc. convicted of fraud, was sentenced to 135 months, or 11.25 years, in prison, capping the extraordinary downfall of a one-time Silicon Valley wunderkind."

Prior related posts:

• Elizabeth Holmes convicted on 4 of 11 fraud charges ... but now can be sentenced on all and more 
• Making the case, because "upper-class offenders ... might be even more reprehensible," for a severe sentence for Elizabeth Holmes 
• Might any victims of Theranos fraud urge leniency at sentencing for Elizabeth Holmes?
• Elizabeth Holmes' federal sentencing ready to go forward after her new trial motion is denied 
• Sentencing memos paint very different pictures of Elizabeth Holmes 
• Any final thoughts on today's federal sentencing of Elizabeth Holmes?

Any final thoughts on today's federal sentencing of Elizabeth Holmes?

As I write this post, the federal sentencing of the Theranos founder Elizabeth Holmes is scheduled to begin after she was found guilty of four of 11 charges of fraud at a jury trial this past January. I have to go teach my 1L Crim law class in a few minutes, so I might be slow to report the outcome if the sentencing is quick.  But I can here seek any pre- (or post-)sentencing final thoughts, aided by this New York Times lengthy preview piece (which, as I note below, has some technical errors).  Here are excerpts:

Senator Cory Booker, Democrat of New Jersey, recently praised Elizabeth Holmes’s thoughtful focus and “determination to make a difference.”  The actress Ricki Noel Lander said Ms. Holmes was “a trustworthy friend and a genuinely lovely person.”  And Channing Robertson, who was a professor of chemical engineering at Stanford University, commended Ms. Holmes for her “compassion for others.”

Their comments were part of a cache of more than 100 letters that were filed over the last week to a federal judge in San Jose, Calif., in an effort to reduce the punishment for Ms. Holmes, the founder of the failed blood testing start-up Theranos. In January, she was convicted of four counts of defrauding investors about Theranos’s technology and business dealings. She is scheduled to be sentenced for those crimes on Friday.

Ms. Holmes, 38, faces a maximum of 20 years in prison, according to federal sentencing guidelines for wire fraud. Her lawyers have requested 18 months of house arrest, while prosecutors have asked for 15 years of imprisonment.  The probation officer in Ms. Holmes’s case has recommended a sentence of nine years.

The decision lies with Judge Edward J. Davila of U.S. District Court for the Northern District of California, who oversaw Ms. Holmes’s trial last year. In addition to the letters from her supporters asking for leniency, he is set to take into account lengthy memos filed by her lawyers and prosecutors, and will consider whether Ms. Holmes has accepted responsibility for her actions.

Most notably, Judge Davila must weigh the message that Ms. Holmes’s sentence sends to the world. Her high-profile case came to symbolize the excesses and hubris of Silicon Valley companies that often play fast and loose with the law. Theranos raised $945 million from investors, valuing the company at $9 billion, on the claim that its technology could accurately run many tests on a single drop of blood. But the technology never worked as promised.

Few tech executives are ever found guilty of fraud. So a lighter sentence for Ms. Holmes could send the wrong signal to the industry, legal experts said. “This is a case with more deterrence potential than most,” said Andrew George, a white-collar defense lawyer at Baker Botts. “Judge Davila will be sensitive to any impression that this person of privilege got a slap on the wrist.”...

Since Ms. Holmes was convicted, other high profile start-up founders have also come under scrutiny, prompting further debates over start-up ethics. Trevor Milton, the founder of the electric vehicle start-up Nikola, was convicted last month on charges of lying about his company’s technology. Sam Bankman-Fried, the founder of the cryptocurrency exchange FTX, is under numerous investigations after his company suddenly collapsed into bankruptcy last week....

Prosecutors said in court filings that significant prison time for her would send a message to other entrepreneurs who stretched the truth. A long sentence would not only “deter future start-up fraud schemes” but also “rebuild the trust investors must have when funding innovators,” they wrote.

I am pretty sure that each of Holmes' four fraud convictions carry a 20-year maximum sentence, so technically she faces a maximum of 80 years in prison.  In addition, I believe "according to federal sentencing guidelines" calculations put forward by the prosecution, the guidelines actually call for a life sentence (which is not formally possible, though the 80-year max would be essentially a functional life sentence).  That all said, I am sticking to my 10-year sentence as the betting line over/under, though I am thinking I might be inclined to take the over.

Prior related posts:

• Elizabeth Holmes convicted on 4 of 11 fraud charges ... but now can be sentenced on all and more 
• Making the case, because "upper-class offenders ... might be even more reprehensible," for a severe sentence for Elizabeth Holmes 
• Might any victims of Theranos fraud urge leniency at sentencing for Elizabeth Holmes?
• Elizabeth Holmes' federal sentencing ready to go forward after her new trial motion is denied 
• Sentencing memos paint very different pictures of Elizabeth Holmes 

Sentencing memos paint very different pictures of Elizabeth Holmes

Two Reuters articles and ledes highlight the very different portraites of Elizabeth Holmes drawn in recent sentencing filings:

"Elizabeth Holmes seeks to avoid prison for Theranos fraud":

Elizabeth Holmes urged a U.S. judge not to send her to prison, as the founder of Theranos Inc prepares to be sentenced next week for defrauding investors in the blood testing startup. In a Thursday night court filing, lawyers for Holmes asked that she receive 18 months of home confinement, followed by community service, at her Nov. 18 sentencing before U.S. District Judge Edward Davila in San Jose, California.

The lawyers said prison time was unnecessary to deter future wrongdoing, calling Holmes, 38, a "singular human with much to give" and not the robotic, emotionless "caricature" seen by the public and media. "No defendant should be made a martyr to public passion," the lawyers wrote. "We ask that the court consider, as it must, the real person, the real company and the complex circumstances surrounding the offense."

"U.S. seeks 15 years for Elizabeth Holmes over Theranos fraud":

Theranos founder Elizabeth Holmes should spend 15 years in prison and pay $800 million in restitution to investors defrauded in the blood testing start-up, U.S. prosecutors recommended late on Friday.  The Department of Justice recommendation, made in a court filing, came as Holmes prepares to be sentenced next week.

"Considering the extensiveness of Holmes' fraud... the sentencing of 180 months' imprisonment would reflect the seriousness of the offenses, provide for just punishment for the offenses, and deter Holmes and others," the prosecutors said.

The sentencing filings in this high-profile case are, unsurprisingly, quite entextensive ensice.  Holmes sentencing memorandum runs 82 pages, is available at this link, and here is part of its "preminary statement":

Section 3553(a) requires the Court to fashion a sentence “sufficient, but not greater than necessary,” to serve the purposes of sentencing.  If a period of confinement is necessary, the defense suggests that a term of eighteen months or less, with a subsequent supervised release period that requires community service, will amply meet that charge. But the defense believes that home confinement with a requirement that Ms. Holmes continue her current service work is sufficient.  We acknowledge that this may seem a tall order given the public perception of this case — especially when Ms. Holmes is viewed as the caricature, not the person; when the company is viewed as a house of cards, not as the ambitious, inventive, and indisputably valuable enterprise it was; and when the media vitriol for Ms. Holmes is taken into account.  But the Court’s difficult task is to look beyond those surface-level views when it fashions its sentence.  In doing so, we ask that the Court consider, as it must, the real person, the real company and the complex circumstances surrounding the offense conduct, and the important principle that “no defendant should be made a martyr to public passion.” United States v. Gupta, 904 F. Supp. 2d 349, 355 (S.D.N.Y. 2012) (Rakoff, J.).  As discussed in more detail in the pages that follow, this is a unique case and this defendant is a singular human with much to give.

The Government's sentencing memorandum runs 46 pages, is available at this link, and here is part of its "introduction":

The Sentencing Guidelines appropriately recognize that Holmes’ crimes were extraordinarily serious, among the most substantial white collar offenses Silicon Valley or any other District has seen.  According to the Presentence Investigation Report (“PSR”), they yield a recommended custodial sentence beyond the statutory maximum.  The factors set forth in 18 U.S.C. § 3553 — notably the nature and circumstances of the offense, the need for the sentence to reflect the seriousness of the offense and promote respect for the law, and the need for both specific deterrence and general deterrence — demand a significant custodial sentence.  With these factors in mind, the government respectfully recommends a sentence of 180 months in custody.  The Court should also order Holmes to serve a three-year term of supervised release, pay full restitution to her investors (including Walgreens and Safeway), and pay the required special assessment for each count.

I think I'd put the over/under for this sentencing at around 10 years of imprisonment, but I could readily imagine a judge going much higher or much lower.

Prior related posts:

• Elizabeth Holmes convicted on 4 of 11 fraud charges ... but now can be sentenced on all and more 
• Making the case, because "upper-class offenders ... might be even more reprehensible," for a severe sentence for Elizabeth Holmes 
• Might any victims of Theranos fraud urge leniency at sentencing for Elizabeth Holmes?
• Elizabeth Holmes' federal sentencing ready to go forward after her new trial motion is denied 

Elizabeth Holmes' federal sentencing ready to go forward after her new trial motion is denied

As detailed in this AP article, headlined "Bid for new trial fails, Elizabeth Holmes awaits sentencing," a high-prfole federal sentencing is now on track for later this month.  Here are the basics:

A federal judge rejected a bid for a new trial for disgraced Theranos CEO Elizabeth Holmes after concluding a key prosecution witness’s recent remorseful attempt to contact her wasn’t enough to award her another chance to avoid a potential prison sentence for defrauding investors at her blood-testing company.

The ruling issued late Monday by U.S. District Judge Edward Davila is the latest setback for Holmes, a former Silicon Valley star who once boasted an estimated net worth of $4.5 billion but is now facing up to 20 years in prison that would separate her from her 1-year-old son.

In the latest twist in a Silicon Valley soap opera, Holmes appeared to be pregnant when she showed up for an Oct. 17 hearing about her request for a new trial....

Davila has scheduled Nov. 18 as the day he will sentence Holmes, 38, for four felony counts of investor fraud and engaging in a conspiracy with [Rawesh “Sunny”] Balwani.  Earlier Monday, Davila postponed Balwani’s sentencing for his conviction on 12 counts of investor and patient fraud from Nov. 15 to Dec. 7.

I plan to wait until we see the formal sentencing submissions from the parties before even trying to make any predictions as to what kind of prison term Holmes might get.  But I welcome others' predictions in the comments as we gear up for what should be an interesting (and unpredicatable) sentencing proceeding.  

Prior related posts:

• Elizabeth Holmes convicted on 4 of 11 fraud charges ... but now can be sentenced on all and more 
• Making the case, because "upper-class offenders ... might be even more reprehensible," for a severe sentence for Elizabeth Holmes 
• Might any victims of Theranos fraud urge leniency at sentencing for Elizabeth Holmes?

Federal judge sentences Steve Bannon to 4 months of imprisonment for contempt of Congress

As reported in this USA Today piece, "Trump White House strategist Steve Bannon was sentenced to four months in prison Friday, three months after his conviction on contempt of Congress charges for defying a subpoena from the special House committee investigating the Jan. 6, 2021 Capitol attack." Here is a bit more:

The Justice Department had sought a six month prison term for Bannon and recommended that he pay a maximum fine of $200,000 for "his sustained, bad-faith."... While Bannon initially refused to comply with the panel's summons, citing a claim of executive privilege, prosecutors said Monday that the Trump operative's actions were "aimed at undermining the Committee’s efforts to investigate an historic attack on government."

Bannon's attorneys argued that a sentence of probation was more appropriate. "The legal challenges advanced by Mr. Bannon were not meritless or frivolous and were aimed at protecting his constitutional rights," attorney Evan Corcoran argued in court documents. "For these reasons, the fact that Mr. Bannon chose to put the Government to its burden at trial should not preclude him from receiving a reduction to his offense level based on acceptance of responsibility."

Prior related posts:

• Should "pardoned conduct" be part of Steve Bannon's sentencing after his convictions for contempt of Congress? 
• Feds urging six months' imprisonment and $200,000 fined for Steve Bannon as punishment following his convictions for criminal contempt of Congress 

Lots and lots of note in big SCOTUS order list at close of Term for the ages

I suspect I am not the only one fatigued from the historic Supreme Court Term that was concluded today (and I only pay really close attention to the Court's criminal docket).  But criminal justice fans may want to find some energy to review this morning's final order list, which includes lots of note.

For starters, the the order list begins with more than a few GVRs based on all the big cases of the last week including Concepcion and Ruan and Castro-Huerta.

Then, SCOTUS granted cert on three new cases, including these two criminal ones involving fraud convictions under federal law: Percoco v. US and Ciminelli v. US.

And, last but not least, the Court has a long series of statements about the denial of cert.  To cover them all, I can borrow from How Appealing's helpful posting:

In Grzegorczyk v. United States, No. 21–5967, Justice Brett M. Kavanaugh issued an opinion, in which Chief Justice John G. Roberts, Jr., and Justices Clarence Thomas, Samuel A. Alito, Jr., and Amy Coney Barrett joined, respecting the denial of certiorari. And Justice Sonia Sotomayor issued a dissent, in which Justices Stephen G. Breyer, Elena Kagan, and Neil M. Gorsuch joined, from the denial of a grant, vacate, and remand order.

In Storey v. Lumpkin, No. 21–6674, Justice Sotomayor issued an opinion respecting the denial of certiorari.

In Canales v. Lumpkin, No. 20–7065, Justice Sotomayor issued a dissent from the denial of certiorari.

In Ramirez v. Guadarrama, No. 21–778, Justice Sotomayor issued a dissent, in which Justices Breyer and Kagan joined, from the denial of certiorari.

In Cope v. Cogdill, No. 21–783, Justice Sotomayor issued a dissent from the denial of certiorari.

In Dr. A. v. Hochul, No. 21–1143, Justice Thomas issued a dissent, in which Justices Alito and Gorsuch joined, from the denial of certiorari.

And in Hill v. Shoop. No. 21–6428, Justice Sotomayor issued a dissent, in which Justices Breyer and Kagan joined, from the denial of certiorari.

I hope to find time before too long to review all of of these statement and later comment on those that strike me as particularly notable.  Readers are, of course, encouraged to flag in the comments items of particular interest.

Notable coverage of supposed "new breed" of prison consultants

I have been following the federal criminal justice system for the better part of 30 years, and throughout there have always been various types of experts who seek to help defendants with sentence mitigation and preparation for prison (especially in the white-collar universe where greater resources are available to pay for these kinds of services).  Still, every now and again, the press seems eager to make much of the phenomenon of so-called "prison consultants" as, for example, in a 2020 Town & Country  piece, "Inside the World of Prison Consultants Who Prepare White Collar Criminals to Do Time." 

The New York Times has long been keen on the prison consultant beat as evidenced by older articles like a 2009 piece headlined "Consultants Are Providing High-Profile Inmates a Game Plan for Coping" and a 2012 piece headlined "Making Crime Pay."  This week, the Gray Lady has this very long piece in this genre appearing in its magazine under this full headline "Want to Do Less Time? A Prison Consultant Might Be Able to Help. For a price, a new breed of fixer is teaching convicts how to reduce their sentence, get placed in a better facility — and make the most of their months behind bars."  Though I am not sure why prison consultants are now described as a "new breed of fixer," I am sure this lengthy article is still worth a full read.  Here are excerpts: 

After a prominent felon is sentenced, a spate of stories often appear about these backstage fixers for the wealthy, consultants who can help get a client into prisons that one might prefer — say, a prison that has superior schooling or CrossFit-level gyms or lenient furlough policies or better-paying jobs or other refined specialties.  The federal prison in Otisville, N.Y., for example, is also known as “federal Jewish heaven” because of its good kosher food (decent gefilte fish, they say, and the rugelach’s not bad).  When those Varsity Blues parents were busted for paying backdoor operatives to engineer their kids’ college admissions, it was also reported that many hired prison consultants to game out the aftermath.

[Justin] Paperny’s business is a natural market outgrowth of a continuing and profound shift in America’s judicial system.  Almost everyone facing charges is forced to plead guilty (or face an angry prosecutor who will take you to trial).  In 2021, 98.3 percent of federal cases ended up as plea bargains.  It’s arguable that in our era of procedural dramas and endless “Law & Order” reruns, speedy and public trials are more common on television than in real-life courthouses.  What people like [Hugo] Mejia have to deal with as they await sentencing is a lot of logistics.

The idea of a prison consultant might conjure an image of an insider broker or fixer, but they’re really more like an SAT tutor — someone who understands test logic and the nuances of unwritten rules. Yet prison consulting also involves dealing with a desolate human being who has lost almost everything — friends, family, money, reputation — and done it in such a way that no one gives a damn.  So they’re also a paid-for best friend, plying their clients with Tony Robbins-style motivational insights, occasionally mixed with powerful sessions about the nature of guilt and shame....

On television, the journey to prison is nearly instantaneous: a jump cut to a slamming cell door. But in the real world, it’s a set of steps, routine bureaucratic actions that involve interviews, numerous forms to complete and dates with officials. A lawyer is your legal guide to staying out of prison, but once that becomes inevitable, a prison consultant is there to chaperone you through the bureaucracies that will eventually land you in your new home, easing your entry into incarceration — and sometimes even returning you to the outside, utterly changed....

One of the first things Paperny advises a client like Mejia to do is to stop [minimizing the offense], especially before sentencing.  You pleaded guilty already.  You did it.  Own it — because the vamping will almost certainly annoy any judge or civil servant who hears it, and you’ll wind up with a much longer sentence.  That’s arguably the most crucial piece of advice that Paperny provides to his clients, for the simple reason that when you’re going to prison, you have to formally tell your story to all kinds of people.

The storytelling officially begins a few weeks after a guilty plea (or a conviction by trial) in a sit-down interview with a law-enforcement officer whose specialty is writing up a pre-sentencing report, which will be given to the presiding judge.  The descriptions of the crime come largely from the plea agreement, which is, naturally, centered on the proposition that you are a heinous criminal and a moral fugitive.  Think of a Wikipedia biography that tells the story of the worst moment of your life, with everything else about you salted away in footnotes.  This is what the sentencing judge will read before deciding precisely how long you will be confined — and it’s a story that will follow you throughout your stay with the state.

“They call the pre-sentencing report the Bible in prison, because it is one of the first things a case manager or counselor will rely upon,” Paperny said. “It will influence early release, your half-house time, your bunk, your job and so on.”

Another federal judge gives Michael Avenatti another below-guideline sentence, as he gets now 48 months for defrauding Stormy Daniels

In what is becoming almost a summer tradition, disgraced lawyer Michael Avenatti was sentenced by a federal judge below the federal sentencing guidelines today.  Sentencing fans may recall that last July Avenetti got a way-below-guideline 30-month sentence for extorting Nike (details here).  Today was judgment day for defrauding Stormy Daniels, as Reuters reports and as excerpted here:

Michael Avenatti, the brash California lawyer who took on then-President Donald Trump, was sentenced on Thursday to four years in prison for defrauding his best-known former client, the porn actress Stormy Daniels.  A federal jury convicted Avenatti in February of wire fraud and aggravated identity theft after a two-week trial, agreeing with prosecutors that he embezzled nearly $300,000 in book proceeds intended for Daniels.

U.S. District Judge Jesse Furman imposed the sentence in federal court in Manhattan, calling Avenatti's conduct "brazen and egregious."  But he said guidelines calling for Avenatti, 51, to serve a sentence of five or six years were "unreasonable," in part due to Avenatti's prior successful legal career.

Avenatti, who appeared in court wearing prison garb and ankle shackles, recounted a string of legal victories he had secured for clients he called "underdogs," and disputed prosecutors' assertion that he took on Daniels as a client to gain a national platform for himself.  "No one else had the guts to take her case," Avenatti said before Furman handed down his sentence, speaking from the courtroom lectern with a U.S. marshal standing beside him.  "I believed we could take down a sitting U.S. president who was the biggest threat to our democracy in modern times."

Daniels, whose given name is Stephanie Clifford, is known for receiving $130,000 from Trump's former lawyer Michael Cohen, in exchange for remaining quiet before the 2016 presidential election about sexual encounters she says she had with Trump, which he has denied.

Avenatti vowed to appeal the guilty verdict in the Daniels case.... He had already been serving a 2-1/2-year sentence stemming from his 2020 federal conviction for trying to extort millions of dollars from Nike Inc. He has appealed that conviction.

Eighteen months of the Daniels sentence will run concurrent with the Nike sentence, meaning Avenatti faces a combined five years in prison. He is still charged in California with stealing millions of dollars from other clients.

Prosecutors had recommended that Avenatti receive a "substantial" prison term in the Daniels case, including a mandatory two-year term for identity theft. Avenatti, who represented himself during the trial, proposed a three-year sentence, with one year running concurrent with his Nike sentence.

Helping to spread a federal sentencing "message" for a "corruption superspreader"

I always find it is interesting when judges in relatively low-profile cases talk about "sending a message" at sentencing, and I suppose I should try to make a habit of helping judges spread the messages they hope to be sending.  To that end, here I will flag this recent sentencing story out of Chicago headlined "‘You were a corruption superspreader’: Judge sentences ex-state Rep. Luis Arroyo to 57 months in prison in bribery case involving sweepstakes machine bill."  Here are excerpts:

Saying he needed to send a message on the cost of public corruption, a federal judge on Wednesday sentenced former state Rep. Luis Arroyo to nearly five years in federal prison for trying to bribe a state senator to help with legislation expanding the shadowy world of sweepstakes gambling machines.

Rejecting a defense plea for probation, U.S. District Judge Steven Seeger railed against Arroyo’s “dirty” conduct, saying in a lengthy speech that he sold out an already corruption-weary public and committed a “frontal assault on the very idea of representative government.”

“You were a corruption superspreader,” Seeger said near the end of a nearly four-hour hearing at the Dirksen U.S. Courthouse.  “The public did not get what they deserved.  They voted for an honest representative, and what they got was a corrupt politician.”

Arroyo’s lawyers had maintained that a prison sentence for the longtime Chicago Democrat would do nothing to stop the state’s seemingly intractable corruption problem and would be akin to “draining Lake Michigan with a spoon.”

But the judge took particular umbrage with attempts to downplay what Arroyo did, and at one point asked defense attorney Michael Gillespie specifically about the spoon comment.  “What does that mean?” the judge asked.  ”What am I supposed to do with that?”  As Gillespie fumbled for an answer, Seeger interrupted in a stern voice: “Maybe judges need a bigger spoon.”

Arroyo, 67, entered a blind guilty plea in November to one count of honest services fraud, a move that came without an agreement with prosecutors on what sentencing recommendations should be made to the judge.  The 57-month term imposed by Seeger was above the four years in prison recommended by prosecutors on Wednesday....

Arroyo resigned his seat shortly after he was arrested in 2019 on the bribery charges. A superseding indictment later added new wire and mail fraud charges against Arroyo and also charged James T. Weiss with bribery, wire fraud, mail fraud and lying to the FBI....

The case centers on the largely uncharted world of sweepstakes machines, sometimes called “gray machines,” for which Arroyo was moonlighting as a lobbyist.  The machines allow customers to put in money, receive a coupon to redeem for merchandise online and then play electronic games like slot machines.... According to the 15-page indictment, Weiss paid bribes to Arroyo beginning in November 2018 in exchange for Arroyo’s promotion of legislation beneficial to Weiss’ company, Collage LLC, which specialized in the sweepstakes machines....

In his remarks, Seeger said it was clear that Arroyo was a devoted family man and “a pillar of his community,” but chastised him repeatedly for trying to downplay the severity of his corrupt acts. The judge also noted that while there was no evidence of any other crimes committed in the wiretapped conversations, Arroyo certainly knew the language of corruption and seemed to be “in familiar territory.”

“I need to make sure that the message gets out that public corruption isn’t worth it,” Seeger said. “For whatever reason, that message isn’t getting through.”

Seriously considering resentencing in high-profile Cleveland corruption case (while seriously enjoying rewatching puppet trial parody)

Though the initial federal sentencing of former Cleveland area county commissioner Jimmy Dimora took place a decade ago, I still recall that Dimora received one of the longest prison terms ever given for political corruption.  My 2012 post about his sentencing to 28 years in federal prison provides some background on the case, and it notes that his attorneys then argued Dimora should get less prison time due to his ailing physical condition and age.  Fast forward a decade, and this local story highlights that what's old is new again in federal sentencing for Dimora.  The article is headlined "Ex-Cuyahoga County Commissioner Jimmy Dimora’s health is failing; attorney asks for release from prison at re-sentencing," and here are excerpts:

Disgraced former Cuyahoga County Commissioner Jimmy Dimora’s health is failing, and his defense attorney asked a judge to consider releasing him from prison when Dimora is re-sentenced on corruption charges next month. Attorney Philip Kushner urged U.S. District Judge Sara Lioi to have leniency for Dimora, according to a court filing last week. Lioi must re-sentence Dimora after the judge overturned convictions on two of Dimora’s 32 charges in one of the largest corruption cases in Ohio history.

Dimora, who will turn 67 in June, has a long list of medical issues that Kushner said should result in Lioi giving Dimora significantly less prison time than the original 28-year sentence. He was convicted of engineering a pay-to-play scandal that led to an overhaul of county government in 2012. “During his 10 years of incarceration, his health has deteriorated,” Kushner wrote in the filing....

Dimora’s cohort and co-defendant, former county Auditor Frank Russo, died last month. His death came about two years after he was released from prison, in part, because of his failing health and the coronavirus pandemic.

Kushner argued for a significantly lesser sentence or release for Dimora based on his age, health and the steep punishment Lioi doled out in 2012. Dimora, he wrote, suffers from a heart defect, an intestinal disorder and an inner-ear equilibrium disease. He needs knee-replacement surgery. He suffered a stroke in prison, is diabetic and uses a wheelchair, according to the filing. Dimora contracted COVID-19 twice in prison, including once in which he became “very ill,” according to Kushner. Dimora is currently serving time in the Federal Medical Center Devens in Massachusetts, which houses seriously ill inmates.

Kushner also argued that similar felons typically serve far less time, somewhere between 12 and 15 years, not the 28 that Dimora is serving.

The 6th U.S. Circuit Court of Appeals ordered Lioi to re-examine the case in the wake of a 2016 U.S. Supreme Court decision in which the justices clarified the definition of an “official act” taken by a public official in a bribery case. The ruling meant that Lioi’s instructions to the jury were outdated and incorrect.  Lioi in March overturned two convictions that focused on contractor Nicholas Zavarella, who built an outdoor kitchen and retaining wall at Dimora’s home for free....

Federal prosecutors are expected to file their own sentencing memorandum with Lioi in the days before the hearing June 8.

Whether Dimora receives a significantly reduced federal sentence is a serious matter, perhaps even literally deadly serious for him.  But Dimora's name and his high-profile case reminded me of a not-quite-so-serious aspect of his trial.  Specifically, as this 2012 NBC News piece detailed, one news station's local coverage of the Dimora trial itself made national and international news:

It's courtroom drama crossed with "Sesame Street," as a television station barred from using cameras during a high-profile corruption trial covers the highlights with a nightly puppet show. It stars a talking squirrel "reporter" who provides the play-by-play in an exaggerated, "you won't believe this" tone.

"It's a satirical look at the trial and, again, I think we have it appropriately placed at the end of the newscast," WOIO news director Dan Salamone said Thursday. He said the puppets are in addition to the station's regular coverage of the Akron federal trial of ex-Cuyahoga County Commissioner Jimmy Dimora, the longtime Democratic power broker in Cleveland. "It's not intended in any way to replace any of the serious coverage of the trial," Salamone said.

Especially on a Monday afternoon when everyone could surely use a bit of levity, I highly recommend watching at least the first few segments of "The Puppet's Court":

• Dimora Trial: Puppet's Court Day 1
• Dimora Trial: Puppet's Court Day 2
• Dimora Trial: Puppet's Court Day 3
• Dimora Trial: Puppet's Court Day 4

Each of these segments is only about 90 seconds long, though I think there are at least 10 of them if you keep watching. I am so glad they are still on YouTube.

UPDATE FROM JUNE 8, 2022:  This local article reports on the new federal sentencing for Jimmy Dimora. Here is how it starts:

A federal judge on Wednesday shaved five years off former Cuyahoga County Commissioner Jimmy Dimora’s sentence for engineering a pay-to-play style of government that thrived for years. U.S. District Judge Sara Lioi handed down the new sentence during a two-hour hearing in federal court in Akron.  In 2012, Lioi sentenced Dimora to 28 years in prison.

The new sentence means Dimora’s release date is moved up to 2031. He was scheduled to be released in February 2036, a date that had included a four-year reduction for good behavior behind bars.

Interesting example of federal judge rejecting white-collar plea deal as too lenient

A story this week out of Utah provides a reminder that federal judges can still have control over sentencing outcomes even in our plea bbargained justice system of pleas.  The headline of this local article captures the essence of the story: "Judge demands harsh sentence for ex-attorney accused of embezzling millions from Utah clients: Former Salt Lake City attorney Calvin Curtis faced about six years in prison as part of a plea agreement. The judge insisted on more prison time."  Here are some of the details:

A federal judge in Utah tossed out a sentencing proposal Tuesday for former Salt Lake City estate attorney Calvin Curtis, demanding that the man accused of defrauding his clients out of millions receive a harsher prison sentence.

The proposal of about six years in prison had been agreed upon by federal prosecutors and Curtis’ defense attorney ahead of the hearing. U.S. District Judge David Barlow was expected to take it into consideration before imposing a sentence.

Instead, rejecting the proposal altogether, Barlow said that as Curtis allegedly stole $12.7 million from 26 of his clients — all elderly, disabled or incapacitated — over about 13 years, the suspected fraud was “cold-blooded, premeditated and repeated.” Curtis “perverted” the law, Barlow continued, and “enriched himself on the backs of those who needed his help.”

Prosecutors have argued Curtis used that money to fund a “lavish lifestyle,” which included frequent travel, expensive gifts, tickets to basketball and football games, and pricey renovations and mortgage payments on his former mansion home and office on South Temple.  Assistant U.S. attorney Ruth Hackford-Peer said in Tuesday’s hearing that the proposed sentence of 73 months in prison was not a perfect resolution, “but it’s a good one.”

Several of Curtis’ victims attended the hearing, filling the courtroom along with family members and caregivers.... As the victims shared their stories of how devastating it has been to lose money that they would have used for various needs such as food, clothing, medicine and health care, a common refrain was for Barlow to impose the maximum sentence. “I don’t think Calvin is human,” one woman said quietly. “I feel that he’s the devil.”...

When it came time for Barlow to announce a decision, he said the proposed prison sentence — plus a restitution judgment of $12.7 million and supervised release for three years as part of Curtis’ plea agreement — was not harsh enough.  Since Curtis’ crimes were “so heinous,” Barlow said, he should receive a prison sentence at the higher end of the range that is customary in such a case, which is 10 years. The judge added that he is “not convinced” that Curtis — who is charged with wire fraud and money laundering — takes responsibility for his actions or feels remorse.

Barlow asked the attorneys for both sides to negotiate again and come up with a new sentencing proposal. A new hearing date was not immediately set....

Laura Milliken Gray, an attorney for a woman with Alzheimer’s disease from whom Curtis has admitted to embezzling more than $9 million, called Barlow’s decision a “surprise.”  Her client’s daughter-in-law, Sherry McConkey, said she is “excited” at the prospect of Curtis getting more time in prison than expected. But she added that it’s “hard” the case will go on longer, “because I just want it to be over and done with.”

Elizabeth Holmes convicted on 4 of 11 fraud charges ... but now can be sentenced on all and more

The high-profile fraud trial of Theranos founder Elizabeth Holmes resulting in a mixed verdict, but her conviction on four counts each with 20-year maximums means that she now faces up to eight decades in federal prison. And, as regular readers know, her acquittal/non-conviction on various charges do not preclude the federal judge at sentencing from considering evidence associated with those charges.  This short New York Times piece, headlined "What happens next to Elizabeth Holmes," provides some details about what may lie ahead:

Elizabeth Holmes, the founder of the failed blood testing start-up Theranos, now awaits sentencing after being found guilty of four of 11 charges of fraud on Monday.

Ms. Holmes, 37, left the San Jose, Calif., courtroom through a side door after the verdict was read in the case, which was closely scrutinized as a commentary on Silicon Valley. She was found guilty of three counts of wire fraud and one count of conspiracy to commit wire fraud. She was found not guilty on four other counts. The jury was unable to reach a verdict on three counts, which were set aside for later.

After the verdict was read, defense and prosecution lawyers discussed plans for Ms. Holmes’s sentencing, the status of her probation and the fate of the three hung charges. Judge Edward J. Davila of the Northern District of California, who oversaw the case, said he planned to declare a mistrial on those charges, which the government could choose to retry. The parties agreed that Ms. Holmes would not be taken into custody on Monday.

A sentencing date is expected to be set at a hearing on the three hung charges next week. Ms. Holmes can appeal the conviction, her sentence or both. She will also be interviewed by the U.S. Probation Office as it prepares a pre-sentence report....

Each count of wire fraud carries up to 20 years in prison, though Ms. Holmes is unlikely to receive the maximum sentence because she has no prior convictions, said Neama Rahmani, the president of the West Coast Trial Lawyers and a former federal prosecutor.

But he said her sentence was likely to be on the higher end because of the amount of the money involved. Ms. Holmes raised $945 million for Theranos during the start-up’s lifetime and those investments were ultimately wiped out.

Given the amount of loss and other factors likely to lead to upward guideline adjustment, Holmes is sure to face a very high guideline sentencing range (perhaps a range as high as life imprisonment). But her lack of criminal history and other potential mitigating personal factors leads me to expect her to receive a below-guideline sentence. But exactly what that sentence might be (and what the parties will argue for) will be interesting to following in the months ahead.

"How the Economic Loss Guideline Lost its Way, and How to Save It"

I have been overdue in blogging about this recent article which shares the title of this post and was published earlier this year in the Ohio State Journal of Criminal Law.  This piece was authored by Barry Boss and Kara Kapp, and it is still very timely as we think about priority concerns for a new US Sentencing Commission (whenever it gets members).  In addition, the enduring issues discussed in this article could soon become a focal point of a very high-profile sentencing if a jury brings back fraud convictions against Elizabeth Holmes.  Here is this article's introduction:

This Article revisits a stubborn problem that has been explored by commentators repeatedly over the past thirty years, but which remains unresolved to this day.  The economic crimes Guideline, Section 2B1.1 of the United States Sentencing Manual, routinely recommends arbitrary, disproportionate, and often draconian sentences to first-time offenders of economic crimes.  These disproportionate sentences are driven primarily by Section 2B1.1’s current loss table, which has an outsized role in determining the length of an economic crime offender’s sentence.  Moreover, this deep flaw in the Guideline’s design has led many judges to lose confidence entirely in the Guideline’s recommended sentences, leading to a wide disparity of sentences issued to similarly situated economic crime offenders across the country.  Accordingly, this Guideline has failed to address the primary problem it was designed to solve — unwarranted disparities among similarly situated offenders.  Worse still, it not only has failed to prevent such unwarranted disparities, its underlying design actively exacerbates them.  In the wake of the United States Sentencing Commission’s recent launch of its Interactive Data Analyzer in June 2020, the authors have identified new evidence that this pernicious problem continues to persist.

In Part I, we review the history and purposes of the Sentencing Guidelines, generally, and the economic crimes Guideline specifically.  In Part II, we explain how the current version of the economic crimes Guideline operates in practice, the extraordinarily high sentences it recommends in high-loss cases, and the resulting overemphasis on loss that overstates offenders’ culpability.  In Part III, we analyze data made available through the Commission’s Interactive Data Analyzer and discuss our findings.  In Part IV, we offer a series of reforms designed to restore the judiciary’s and practitioners’ respect for this Guideline so that it may serve its animating purpose — to reduce unwarranted sentencing disparities among similarly situated offenders

With two defendants now convicted after trial, how steep might the "trial penalty" be in the Varsity Blues cases?

As reported in this Bloomberg piece, the first jury trial in the Varsity Blues prosecutions ended this afternoon: "Two parents accused of cheating to get their children into elite U.S. universities were found guilty of all charges, in the first trial stemming from a national college admissions scandal that ensnared dozens of families."  Here is more:

Former Wynn Resorts Ltd. executive Gamal Abdelaziz, 64, was convicted Friday of two counts of conspiracy by a Boston jury after prosecutors alleged he paid $300,000 in bribes to get his daughter into the University of Southern California as a purported basketball player.

Private equity investor John B. Wilson, 62, was convicted of conspiracy, bribery, fraud and filing a false tax return after prosecutors alleged he paid more than $1.2 million in bribes to get his son into the University of Southern California and his twin daughters into Stanford and Harvard as star athletes.

After a three-week trial, the jury deliberated for about 11 hours before rendering the verdict. Abdelaziz and Wilson will be sentenced in mid-February. For both men, the most serious charge carries a maximum prison sentence of 20 years.

The verdict is a victory for prosecutors who charged 57 parents, coaches and others for taking part in the alleged scheme, which involved doctoring entrance exam scores, faking athletic prowess and bribery to gain seats at universities. An FBI sting unveiled in March 2019 swept up several prominent figures, including “Desperate Housewives” star Felicity Huffman and former Pimco chief executive Douglas Hodge. The case unfolded as the nation debated questions of privilege and inequality.

Thirty-three of the parents have pleaded guilty, with prison sentences ranging from two weeks to 9 months. Former U.S. attorney for Massachusetts Andrew Lelling, who oversaw the case, said he hoped the dozens of jail sentences would deter would-be scammers. He acknowledged it wouldn’t change what he said was parents’ unhealthy obsession with colleges as brands.

During the trial, prosecutors alleged that both Abdelaziz and Wilson had worked with college counselor William “Rick” Singer, the admitted mastermind of the scheme. The U.S. said both paid Singer to guarantee a “bulletproof” way of getting their kids into elite colleges. Prosecutors called 14 witnesses and showed jurors scores of emails they said was proof both men knew and understood Singer’s plan....

The government never called Singer, who proved a problematic cooperator. He kept some of the money parents paid him, tipped some off about the investigation and erased about 1,500 text messages from his mobile phone. He made notes saying federal agents wanted him to “bend the truth” when drawing the parents out and “retrieve answers that are not accurate.” Lawyers for both defendants assailed Singer as a con man who duped them into believing their funds were legitimate donations going to schools or sports facilities....

Four more parents are due to go on trial next year. One father was pardoned by former president Donald Trump.

I have done numerous posts about some of the defendants who were among the first to plead guilty and received relatively short sentences in this high-profile college admissions scandal (some of those posts are linked below).  I have not closely followed some of the more recent sentencings, but the question in the title of this post highlights why I will have extra interest in how Abdelaziz and Wilson are treated by both the Justice Department and the sentencing judged.  Helpfully, DOJ has assembled here all the cases charged and sentenced in the Varsity Blues investigation.  From a quick scan, it does not appear that DOJ has sought a sentence in any of the plea cases of more than 18 months in prison; the longest imposed sentence has been nine months. 

I would guess that the DOJ sentencing recommendations for Abdelaziz and Wilson will longer than 18 months, but how much?  Does the high-profile nature of this case make it a bit less likely that DOJ will seek to go hard after these defendants, who seem like so many others save for their decision to test the government at a trial?  (The amount of money and number of kids involved in the Wilson case may the the reason DOJ will cite for a longer recommended term.)  In addition to wondering about DOJ recommendation, of course, it will be interesting to see how the sentencing judge decides to follow the requirement in 3553(a)(6) to consider "the need to avoid unwarranted sentence disparities among defendants with similar records who have been found guilty of similar conduct."   It seems we have to wait until 2022 for final answers to these question, but I welcome speculation in the comments.

A few of many prior posts on other defendants in college admissions scandal:

• Mapping out next possible celebrity sentencings in wake of indictment in college admissions scandal 
• Big batch of federal plea deals (with relatively low sentencing ranges) in college admissions scandal
• Federal district judge rejects feds request for significant prison term in first sentencing of college bribery scandal
• Feds recommending incarceration terms from 1 to 15 months for parents involved college bribery scandal 
• Noticing the interesting (but perhaps not too consequential) guidelines "loss" issue lurking in the college bribery cases
• Napa Valley winemaker gets five months of imprisonment, the longest sentence so far in college admissions scandal
• Catching up with another round of sentencings in "Operation Varsity Blues"
• Reviewing the sentencing dynamics as more parents get (minimal) prison time in "Operation Varsity Blues" college admissions scandal 
• Longest prison sentence (six months) imposed in college admission scandal on big-spending dad 
• Nine-month federal prison term (the longest yet) given to former CEO who paid nearly $1 million to benefit four kids in college admission scandal 
• Felicity Huffman sentenced to 14 days in college bribery scandal 
• Via video, Lori Loughlin and her husband get agreed fixed short prison sentences in college admission scandal 

District Judge cites "severe remorse" among reasons to give Michael Avenatti (way-below-guideline) sentence of 30 months in federal prison

This NBC News piece reports that "Michael Avenatti, the brash attorney who had been a leading foe of then-President Donald Trump, was sentenced Thursday to 30 months in prison for a brazen, botched scheme to extort athletic apparel giant Nike out of up to $25 million." Here is more about this high-profile sentencing:

That sentence was much lower than the nine years that was the bottom of the sentencing range suggested by federal guidelines, and not anywhere close to “a substantial” prison term sought by federal prosecutors for the California lawyer.

“I alone have destroyed my career, my relationships and my life. And there is no doubt I need to pay,” Avenatti, 50, tearfully told Manhattan federal court Judge Paul Gardephe before he was sentenced. “I am truly sorry for all of the pain I caused to Mr. Franklin and others,” Avenatti said, referring to his former client Gary Franklin, an amateur basketball coach.

Avenatti’s sentencing came more than three years after he gained widespread fame, and infamy, for his bombastic representation of porn star Stormy Daniels, who received a $130,000 hush money payment from Trump’s then-personal lawyer Michael Cohen before the 2016 presidential election to keep her quiet about claims she had sex with Trump years before he ran for the White House.

Daniels is one of several former Avenatti clients that he is charged with swindling in two other separate federal prosecutions, one of which is due to begin next week in California.

Gardephe said that in the Nike scheme, “Mr. Avenatti’s conduct was outrageous.”  "He hijacked his client’s claims, and he used him to further his own agenda, which was to extort Nike millions of dollars for himself,” said the judge, who also sentenced Avenatti to three years of supervised release for the case, in which Avenatti was convicted at trial last year. “He outright betrayed his client,” Gardephe said....

But Gardephe added that Avenatti deserved a lighter sentence than the range recommended by federal guidelines — from nine years to 11-years and three months — because, the judge said that for the first time in the case, “Mr. Avenatti has expressed what I believe to be severe remorse today.”

The judge also cited the brutal conditions in which Avenatti was kept for several months in a Manhattan federal prison after his 2019 arrest. And Gardephe sharply noted, in justifying the lower-than-recommended sentence, how federal prosecutors did not criminally charge Geragos in spite of what they have said was his active participation with Avenatti in the shakedown.

The judge ordered Avenatti, who remains free on bond, to surrender on Sept. 15 to begin his sentence, which Gardephe recommended be served in at the federal prison camp in Sheridan, Oregon. Avenatti’s lawyers had asked for a sentence of just six months....

At his trial next week, Avenatti is accused of crimes that include defrauding clients out of millions of dollars. One of those clients was a mentally ill paraplegic. Avenatti next year is due back in Manhattan federal court to be tried on charges related to allegedly swindling Daniels, out of $300,000 in proceeds for a book she wrote.

AGAIN: You be the judge: what sentence for Michael Avenatti (and do the guidelines merit any respect)?

UP AGAIN:  I posted this discussion of a notable scheduled sentencing last month just before Michael Avenatti secured a short postponement.  This new Wall Street Journal article, headlined "Michael Avenatti Faces Sentencing for Trying to Extort Millions From Nike," provides an updated review of this high-profile federal sentencing now scheduled for today.  In addition to the prior posting, folks may want to check out the interesting comments from various folks that it generated last month.

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It has been a while since I have done a "you be the sentencing judge" post, but a high-profile fallen lawyer provides juicy grist for this mill.  Specifically, as two recent postings at Law & Crime highlight, Michael Avenatti's upcoming sentencing presents a notable set of facts and arguments for SDNY US District Judge Paul Gardephe:

Michael Avenatti Seeks Light Prison Sentence Because His ‘Epic Fall and Public Shaming’ Are Punishment Enough

Feds Seek ‘Very Substantial’ Prison Term for Disgraced Lawyer Michael Avenatti

Valuably, these two postings include the extended sentencing memoranda filed by the parties in this case, and the second posting summarizes the terms of the sentencing debate (with some of my emphasis added):

Scoffing at the one-time celebrity lawyer’s claim that his “epic fall and public shaming” should be taken into account at sentencing, federal prosecutors urged a judge to deal Michael Avenatti a “very substantial” prison sentence for attempting to extort Nike out of millions of dollars by threatening to expose their corruption scandal.

Quoting the probation office, prosecutors noted that Avenatti “often put himself forth as a champion for the Davids of the world, facing off with those Goliaths who would bully the small, the weak, the victimized.”

“And it was precisely this reputation, and the enormous influence that the defendant wielded on the national stage and across media platforms, that he weaponized,” Assistant U.S. Attorney Matthew Podolsky wrote in a 19-page sentencing brief on Wednesday night. “He used his skills as a lawyer and his power as a media figure not to benefit his client, but instead to threaten harm in an effort to extract millions of dollars from a victim, which, while sophisticated, [Avenatti] believed would be forced into acquiescing secretly to his demands.”

Once a fixture of the cable TV commentary rounds, Avenatti previously depicted his prosecution as another David-versus-Goliath fight, pitting him against the combined might of the Nike corporation and the Trump administration. Southern District of New York prosecutors rejected that, and a federal jury convicted him on all counts in February 2020.

Earlier this month, Avenatti’s defense attorneys Scott A. Srebnick and E. Danya Perry argued that a six-month maximum sentence would be enough for their client. They also said the court could take “judicial notice” that Avenatti’s well-documented “epic fall […] played out in front of the entire world.” Federal prosecutors found that sort of sentence would be far too light, and though they did not propose another number, their sentencing memorandum leaves a few clues into their thinking.

The probation office proposed an eight-year sentence, which dips below the 11.25-to-14-year guideline range.  “While the government, like the probation office, believes that a below-guidelines sentence would be sufficient but not greater than necessary to serve the legitimate purposes of sentencing, the government asks this court to impose a very substantial sentence,” prosecutors wrote....

During the trial, prosecutors played a tape for jurors that they called a picture of extortion. “I’ll go take $10 billion off your client’s market cap,” Avenatti was seen warning attorneys for Nike in the videotape, referring to capitalization. As the jury found, Avenatti had been talking about confidential information he learned about Nike from his former client Gary Franklin, an amateur basketball coach.  Avenatti threatened to expose the embarrassing information relating to the corruption scandal unless the Nike paid $15 million—”not to Franklin, but directly to the [Avenatti] himself,” prosecutors noted. According to the memo, the deal represented 10 times more than Avenatti asked Nike to pay Franklin, and it would have resolved his client’s claims against Nike....

Franklin wrote separately to the U.S. District Judge Paul Gardephe harshly criticizing Avenatti. “Mr. Avenatti quickly abused that trust when he announced on Twitter, without my knowledge and without my consent, that he would be holding a press conference to discuss a scandal at Nike that ‘involved some of the biggest names in college basketball,'” Franklin wrote in a two-page victim impact statement. “I never imagined that Mr. Avenatti would proceed to post on Twitter details of the information I had relayed to him as part of our attorney-client privileged discussions, including the names of the players I coached.

Franklin is not alone among Avenatti’s spurned former clients. Avenatti continues to face another federal prosecution in New York accusing him of defrauding Stormy Daniels in a book deal, plus a case in California alleging tax offenses and other misconduct.

There are so many elements to both the Avenatti crime and his background that may (or many not) be considered important in his upcoming sentencing.  But, as my post title and emphasis seek to highlight, there is seemingly a consensus that the federal sentencing guidelines come nowhere close to recommending a proper sentence.  It is, of course, not especially surprising when a criminal defendant requests a sentence way below the applicable guideline range.  But here, notably, both the probation office and seemingly federal prosecutors also believe a proper sentence should be many years below the bottom of the applicable guideline range.

So I sincerely wonder, dear readers, what sentence you think would be, in the words of the prosecutors, "sufficient but not greater than necessary to serve the legitimate purposes of sentencing"?  Do the guideline merit any respect in this analysis?

Notable NY politician gets furlough from BOP as he is "considered for home confinement"

When I saw the headline of this new New York Post piece, "Sheldon Silver released early on furlough after less than a year in prison," I thought the paper was misusing a term because furloughs from federal prison seem extraordinarily rare. But the story explains it has the right term:

Disgraced former New York Assembly Speaker Sheldon Silver has been sprung from federal prison early on furlough — while he awaits a decision from the agency on whether he can serve out the remainder of his term in home confinement, a report said Tuesday.

Silver — who has served less than a year of his 6 1/2-year sentence — was cut loose from Otisville Prison, in Orange County, New York, and released to his home while awaiting the decision, a source familiar with the matter told the Associated Press.

The 77-year-old crooked former pol was released under DOJ’s expanded powers to grant inmates release amid the coronavirus pandemic, according to the report. In a statement, the Bureau of Prisons said Silver is still “designated” to Otisville Prison, but added that it has the power to transfer inmates to their home on furlough.

“We can share that the Bureau of Prisons (BOP) has authority to transfer inmates to their home on furlough for periods of time while they may continue to be considered for home confinement designation,” a spokesperson said.

The BOP recently notified prosecutors in the Southern District of New York that it was considering cutting Silver loose on home confinement, a spokesperson for the district told The Post. n an email response sent yesterday, the prosecutor’s office — which secured a guilty verdict against Silver for corruption-related crimes during his run as an Albany power broker — stressed that it ardently opposes the move, the spokesperson said.

In a memo last year, former Attorney General Bill Barr gave the director of BOP expanded discretion to release vulnerable inmates from federal lockups amid the pandemic. BOP officials need to take into account a host of factors when determining if an inmate qualifies for home confinement, including “age and vulnerability of the inmate to COVID-19,” according to the memo. In addition, a BOP medical official is supposed to sign off on home confinement releases based on risk factors for a specific inmate, according to the memo....

Silver was sentenced last summer after avoiding lockup for more than five years after he was first convicted. At his sentencing, Judge Valerie Caproni admonished the crooked politician, who was convicted of illegally using his office to benefit two real estate developers in exchange for cash.

“This was corruption pure and simple,” Judge Caproni told the disgraced ex-speaker, whom she had already sentenced twice. “The time, however, has now come for Mr. Silver to pay the piper,” Caproni added.

Because there is always much mystery around the working of the BOP, I have no notion of whether any lower-profile prisoners might get similar treatment.

Great example of clemency leading to more compassion ... in the form of compassionate release thanks to FIRST STEP Act reforms

I am not sure if anyone is trying to make a comprehensive list of the wide array of factors that federal courts have referenced in granting sentence reductions under the (so-called compassionate release) statutory provisions of 18 U.S.C. § 3582(c)(1)(A) ever since the FIRST STEP Act allowed federal courts to directly reduce sentence without awaiting a motion by the Bureau of Prisons.  Thankfully, district and circuit court have consistently recognized that, in the word of the Second Circuit in US v. Brooker, 976 F.3d 228 (2d Cir. 2020), the "First Step Act freed district courts to consider the full slate of extraordinary and compelling reasons that an imprisoned person might bring before them in motions for compassionate release."  And, via this new Law360 article, headlined "Ex-Detroit Mayor Ally Released From Prison Years Early," I saw a new opinion with a particularly notable reason given for such a reduction.  Here  are the basics and context from the article:

A former contractor and co-defendant to ex-Detroit Mayor Kwame Kilpatrick on Thursday was granted compassionate release from prison after serving eight years of a 21-year sentence over a municipal bribery and kickback scheme, with the judge citing health problems and the fact Kilpatrick had his sentence commuted. U.S. District Judge Nancy Edmunds reduced the sentence for Bobby Ferguson, 52, to time served, noting his underlying medical conditions that place him at grave risk were he to contract COVID-19, and the fact that Kilpatrick — the much more culpable defendant in the case — in January was granted a reprieve by former President Donald Trump.

Judge Edmunds said at the time of the original sentencing there were "serious differences" between Ferguson's conduct and that of Kilpatrick — the mastermind of the pay-to-play scheme to exchange city business for bribes and kickbacks.  That Ferguson is left facing a prison term more than twice as long as Kilpatrick served constitutes an "extraordinary and compelling" reason to grant Ferguson compassionate release, she said.  "He was not the driver of the bus; that was Mr. Kilpatrick, where the power resided," Judge Edmunds said.

Michigan federal prosecutors had strongly opposed granting Ferguson compassionate release, calling Kilpatrick's commutation "wrongful" and highlighting Ferguson's earlier convictions for assault and other alleged misdeeds.  The government also disputed that Ferguson's hypertension, diminished lung capacity due to an injury and high cholesterol merited an early release.   The government further argued that Ferguson had not exhausted his administrative remedies with the Bureau of Prisons, since he had only petitioned the prison warden for compassionate release based on his health issues and not the disparity in sentence that resulted from Kilpatrick's release.

However, Judge Edmunds said she was persuaded by other court decisions in finding that so-called "issue exhaustion" is not required for compassionate release. She also noted his prior violent crimes occurred decades ago, and that Ferguson hasn't displayed any such "hotheadedness" while incarcerated.

The full 11-page ruling this case is available at this link, and here is a key passage:

Defendant now faces the prospect of a period of incarceration much longer than a more culpable co-defendant.  At the time of sentencing, the Court noted there were “serious differences” between Defendant’s conduct and that of Mr. Kilpatrick. (ECF No. 493, PgID 16285.)  More specifically, Defendant was not an elected official and had been charged with and convicted of a substantially smaller number of charges. (Id.) The Court therefore concluded that Defendant deserved a shorter sentence than Mr. Kilpatrick and ultimately sentenced Defendant to a term of imprisonment 75% as long as Mr. Kilpatrick’s sentence. That Defendant now faces a period of incarceration more than twice as long as the time Mr. Kilpatrick served is both extraordinary and compelling.  See United States v. Sapp, No. 14-cr-20520, 2020 U.S. Dist. LEXIS 16491, at *5 (E.D. Mich. Jan. 31, 2020) (defining “extraordinary as beyond what is usual, customary, regular, or common” and “a compelling reason as one so great that irreparable harm or injustice would result if the relief is not granted”) (internal quotation marks and citation omitted).

The government argues that avoiding unwarranted sentence disparities, one of the § 3553(a) factors, should not be part of this step of the analysis and that taking this into account would contravene the interest in finality of sentences.  The Sixth Circuit has held, however, consistent with all other circuit courts that have addressed this issue, that district courts have “full discretion” to define extraordinary and compelling reasons. See Jones, 980 F.3d at 1109; see also Brooker, 976 F.3d at 237 (noting that “a district court’s discretion in this area — as in all sentencing matters — is broad”). The only statutory limit on what a court may consider to be extraordinary and compelling is that rehabilitation alone is not sufficient.  See 28 U.S.C. § 994(t).  That particular circumstances may also factor into the Court’s analysis under § 3553(a) has no bearing on whether they can be considered extraordinary and compelling.  And, here, the disparity only arose recently due to the unique circumstance of a co-defendant being granted a Presidential commutation.

While the finality of sentences is an important principle, the compassionate release provision of § 3582(c) “represents Congress’s judgment that the generic interest in finality must give way in certain individual cases and authorizes judges to implement that judgment.”  See United States v. McCoy, 981 F.3d 271, 288 (4th Cir. 2020) (internal quotation marks and citation omitted).  The Court finds this to be an appropriate case in which to do so. Not only has Defendant served a slightly longer term of imprisonment than a more culpable co-defendant, but his motion comes during an unprecedented global pandemic and Defendant has an increased vulnerability to the virus.

Third Circuit panel explores curious loss calculations in federal fraud guidelines

A helpful reader made sure I did not miss the interesting Third Circuit panel ruling this past week in US v. Kirschner, No. 20-1304 (3d Cir. April 22, 2021) (available here), discussing loss calculations under the fraud guidelines. There are lots of element to the Kirschner opinion, but the introduction provides an effective overview:

In 2018, Jonathan Kirschner pleaded guilty to one count of impersonating an officer acting under the authority of the United States and one count of importing counterfeit coins and bars with intent to defraud.  At sentencing, the District Court applied to Kirschner’s sentence three enhancements pursuant to the U.S. Sentencing Guidelines — a 2-level enhancement because Kirschner’s fraud used sophisticated means; another 2-level enhancement because Kirschner abused a position of public trust to facilitate his crimes; and a 22-level enhancement because the “loss” attributable to his scheme was greater than $25 million but less than $65 million, even though it grossed only about one one-thousandth of that.

Kirschner appeals the District Court’s judgment of sentence and challenges the three enhancements it applied.  For the reasons that follow, we will vacate Kirschner’s sentence and remand for resentencing.  While the District Court was well within its discretion to apply the abuse-of-trust and use-of-sophisticated-means enhancements, we conclude it clearly erred in applying the 22-level enhancement for loss, and we cannot say that the error was harmless.

I have always thought the federal fraud guideline deeply misguided due to commentary basing offense severity calculations on the greater of intended or actual loss (and the guideline is also deeply problematic for placing extreme emphasis on "loss" and by only requiring proof by a preponderance).  In this case, a focus on intended loss meant a guy who netted only about $30,000 selling fake goods when caught was sentenced as if he had netted $36 million! 

Ultimately, the panel here concluded intended loss was not subject to the "deeper analysis" needed to justify the district court's calculation.  But, for those following broader debates over the basic validity of guideline commentary, the panel had this interesting aside:

Under a Guidelines comment, a court must ... identify the greater figure, the actual or intended loss, and enhance the defendant’s offense level accordingly.  Only this comment, not the Guidelines’ text, says that defendants can be sentenced based on the losses they intended.  By interpreting “loss” to mean intended loss, it is possible that the commentary “sweeps more broadly than the plain text of the Guideline.”  United States v. Nasir, 982 F.3d 144, 177 (3d Cir. 2020) (en banc) (Bibas, J., concurring).  But Kirschner assumes the comment is correct, and so we will too.

This kind of aside reinforces my sense — or perhaps I should just say my hope — that it is only a matter of time before the US Supreme Court will consider, in some context, the validity of guideline commentary that arguably “sweeps more broadly than the plain text" of the guideline.

Infamous Ponzi schemer Bernie Madoff dies in prison after spending his final dozen years behind bars

As reported in this Fox Business piece, headlined "Bernie Madoff, mastermind of vast Ponzi scheme, dies in federal prison at age 82," an infamous white-collar offender passed away behind bars today.  Here are the basics:

Bernie Madoff, the notorious architect of the biggest investment fraud in U.S. history, has died at age 82.

Madoff was serving a 150-year sentence at the federal medical care center in Butner, North Carolina, where his attorney said he was being treated for terminal kidney failure. Last year, Madoff's attorney filed court papers seeking the 82-year-old's release during the coronavirus pandemic, saying he suffered from end-stage renal disease. The request was denied....

A decades-long force on Wall Street, Madoff shocked the world when he pleaded guilty in 2009 to running a vast Ponzi scheme that prosecutors said swindled thousands out of their life savings. The scheme began in the early 1970s, and by the time Madoff was arrested in December 2008, had defrauded as many as 37,000 people in 136 countries out of up to $65 billion.

His victims included the famous – film director Steven Spielberg, actor Kevin Bacon and Nobel Peace Prize winner Elie Weisel – as well as ordinary investors.

Madoff said he started the fraud, in which he appeared to deliver steady returns to clients, but was actually using money from new investors to pay off existing shareholders, in the 1990s because he felt "compelled" to give investors solid returns despite the recession and weak stock market. (Prosecutors contend he started defrauding investors much earlier)....

Prior to his downfall, Madoff was viewed as a self-made and respected figure among financial professionals as the head of the seemingly successful Bernard L. Madoff Investment Securities firm. He also served as the chairman of the Nasdaq Stock Market in 1990, 1991 and 1993.

In addition to being sentenced to the maximum 150 years in prison, Madoff and his family took a major financial hit: A judge issued a $171 billion forfeiture order in June 2009 requiring the disgraced financier to give up his interests in all property, including real estate, investments, car and boats. Under the arrangement, the government also obtained his wife's interest in all property, including $80 million that she claimed belonged to her, leaving Ruth Maddoff with $2.5 million in assets.

The decline and fall of Madoff also took a toll on his family. The oldest of his two sons, Mark Madoff, died by suicide on the second anniversary of his father's arrest in 2010. His other son, Andrew, died from cancer at age 48 in 2014. Mark Madoff's suicide prompted his mother, Ruth Madoff, to cut off all communications with her husband....

Meanwhile, Madoff's younger brother, who helped run the business, was sentenced to 10 years in prison after pleading guilty to one count of falsifying false records and one count of conspiracy to commit securities fraud. He was released from federal custody last year. "You know there hasn’t been a day in prison that I haven’t felt the guilt for the pain I caused on the victims and for my family," he told The Washington Post in 2020 when his attorney asked for his compassionate release. He said his dying wish was to reconcile with his grandchildren and explain his actions.

I will be interested to see if anyone has anything especially new or interesting to say, circa 2021, about Madoff's crimes and federal punishment.  In addition to linking to some prior posts below, I will be content here to just note that Madoff's lawyer back in June 2009 requested a "prison term of 12 years — just short of an effective life sentence."  Madoff died almost exactly 12 years since the time of that request, though he had served less than 10% of the 150-year prison sentence that Judge Chin gave him back in June 2009.

Some of many prior posts about his initial sentencing:

• "Will Madoff ever leave prison alive?"
• Madoff asking for a 12-year prison sentence
• Feds seeking the max for Bernie Madoff
• "Madoff Mercy: How long should the Ponzi schemer go to prison for?"
• Madoff gets sentenced to max of 150 years in federal prison! 
• A new white-collar benchmark: the main reason the number 150 matters in Madoff 
• Judge Denny Chin and Bernie Madoff talk about a sentence of 150 years

Some prior posts about his request for compassionate release:

• Terminally ill, Bernie Madoff is latest high-profile fraudster to seek compassionate release from federal prison thanks to FIRST STEP Act
• Spirited (but problematic?) advocacy for Bernie Madoff to receive compassionate relief
• "Madoff Wants Leniency. My Dad Received None. Why should the Ponzi scheme king get out to die, when the judges imprisoned my father with just weeks to live?" 
• Federal prosecutors and hundred of victims write in opposition to Bernie Madoff's compassionate release motion
• Bernie Madoff denied federal sentence reduction, but many others receive relief under § 3582(c)(1)(A) on same day

In high-profile sentencing, victim input and collateral consequences push judge away from prison term for misconduct by former FBI attorney

This lengthy Politico piece, headlined "Ex-FBI lawyer spared prison for altering Trump-Russia probe email," reports on an interesting high-profile federal sentencing today in DC.  Here are excerpts, with a bit of commentary to follow:

The only person charged in the Justice Department's investigation into the origins of the probe of former President Donald Trump's 2016 campaign and its ties to Russia was spared prison time for altering an email used to support a surveillance application.  Former FBI attorney Kevin Clinesmith, 38, received the sentence of 12 months probation and 400 hours community service from U.S. District Court Judge James Boasberg Friday during a video hearing.

Clinesmith admitted that in June 2017 he sent an altered email to an FBI agent that indicated a target of court-ordered FBI surveillance, former Trump campaign adviser Carter Page, was "not a source" for the Central Intelligence Agency. The statement, passed along as the FBI was applying for a third extension of surveillance of Page, made Page's actions seem more suspicious by downplaying his past cooperation with the CIA.

Clinesmith insisted that he thought the statement was true at the time and only altered the message to save himself the hassle of procuring another email from the CIA. Prosecutors contested that claim, arguing that the FBI lawyer intended to mislead his colleague, but Boasberg sided with the defense on that point.  "My view of the evidence is that Mr. Clinesmith likely believed that what he said about Mr. Page was true," Boasberg said. "By altering the email, he was saving himself some work and taking an inappropriate shortcut."

While Trump and his GOP allies have suggested that Clinesmith was engaged in a political vendetta against Trump, Boasberg noted that a Justice Department inspector general investigation failed to establish that political considerations played a role in Clinesmith's actions or numerous other errors and omissions that impacted filings with the Foreign Intelligence Surveillance Court....

Clinesmith pleaded guilty last August to a felony false statement charge in a plea deal with John Durham, the prosecutor then-Attorney General William Barr tapped in 2019 to investigate the origins of the Trump-Russia probe. Barr formally designated Durham as a special counsel last fall, in an apparent bid to complicate any attempt by a new administration to shut down Durham's inquiry.

Prosecutors argued that Clinesmith's misconduct was so serious that he deserved between about three and six months in prison. Clinesmith's lawyers asked that he not receive any prison time.  The maximum sentence on the false statement charge is five years in prison, although judges usually sentence in accord with federal guidelines that called for Clinesmith to serve between zero and six months in prison. "The defendant's criminal conduct tarnished and undermined the integrity of the [Foreign Intelligence Surveillance Act] program," Assistant U.S. Attorney Anthony Scarpelli told the court.  "It has lasting effects on DOJ, the FBI, the FISC, the FISA process and trust and confidence United States citizens have in their government...The resulting harm is immeasurable."

Clinesmith's lawyer Justin Shur called his client's actions "inexcusable," but said they were "aberrations" in a life of dedicated public service.  He also said they played a relatively small part in the overall surveillance process and the broader probe. "There were many people involved in these applications and many mistakes that were made," Shur said....

Clinesmith also addressed the court, expressing contrition and describing his career as essentially destroyed by his misconduct and the ensuing prosecution. "I am fully aware of the significance of my actions and the crucial error in judgment I made," the lawyer said. "I let the FBI, the Department of Justice, my colleagues, the public and my family down. I also let myself down.  I will live with the consequences and deeply-held feeling of regret, shame and loss caused by it for the rest of my life."

While prosecutors urged the judge to send Clinesmith to prison to send a message to others in government not to try something similar, Boasberg said he believed that message had already been sent. He noted that Clinesmith has lost his job, may be disbarred and may never be able to work in the national-security field again. "He went from being an obscure government lawyer to standing in the eye of a media hurricane," the judge said. "He's not someone who ever sought the limelight or invited controversy other than by his criminal action here....Anybody who's watched what Mr. Clinesmith has suffered is not someone who would readily act in that fashion."

The 90-minute sentencing hearing also featured an impassioned speech from Page, in which the energy industry analyst complained that his life was also turned upside down by the media firestorm that followed public disclosure that he was a focus of the FBI probe into potential Russian influence on the Trump campaign. "My own personal life has been severely impacted," Page said. "I was frequently harassed on the street and even under the street such as in the Washington metro beneath the courthouse....It was deadly serious. At the time I received many death threats as a 'traitor.'"

However, Page did not ask for imprisonment for Clinesmith. "I hope the defendant can get back to his family as soon as you deem appropriate," the former Trump campaign adviser told the judge. That seem to strike a chord with Boasberg, who mentioned twice during the hearing that Page wasn't seeking prison for the ex-FBI lawyer.

The politics surrounding this case account for why this matter will be covered in many newspapers, but I am drawn to this tale as a notable sentencing story.  Tellingly, while federal prosecutors argued that some prison time was needed, the person victimized by the offense (Carter Page) had the magnanimous and impactful view that the defendant need not serve any prison time.  In addition, the federal district judge here recognized, as should every sentencing judge in every case, that the defendant was already subject to a wide array of significant and persistent collateral consequences which function to punish and deter in ways that transcend a short period in prison.

Heiress involved in NXIVM group gets way-above-guideline sentence

I have not really been following the NXIVM saga at all, but today brought a first federal sentencing case that caught my attention. This local article, headlined "Clare Bronfman receives more than six years for NXIVM crimes Federal judge exceeds sentence prosecutors had been seeking," provides these details:

Heiress Clare Bronfman was sentenced Wednesday to six years and nine months in federal prison for crimes related to her leadership role in NXIVM. She was taken directly into federal custody at the end of the court proceeding.

The sentence was handed down to the 41-year-old daughter of late Seagram's tycoon Edgar Bronfman in a Brooklyn courtroom after several victims related their painful experiences dealing with the well-heeled backer of Keith Raniere’s cult-like organization.

A number of former NXIVM members delivered victim impact statements to Senior U.S. District Judge Nicholas Garaufis. One of those women was Barbara Bouchey, a former girlfriend of Raniere's who faced years of retaliation by NXIVM after she left the group more than a decade ago. She called Garaufis' sentence justice served: “When I heard him say 81 months, I was speechless,” Bouchey said.

Bronfman, who has homes in Clifton Park and Manhattan, was anticipating a sentence of just 21 to 27 months in prison under sentencing guidelines for her guilty plea to conspiracy to conceal and harbor illegal aliens for financial gain, and fraudulent use of identification.

Garaufis had made it clear he was considering an "above guidelines" punishment. Her recently hired attorneys, Ronald S. Sullivan Jr. and Duncan Levin, have asked for three years of probation. Federal prosecutors in Brooklyn’s Eastern District have asked for a five-year prison sentence. Garuafis went beyond both requests. He also levied a $500,000 fine on Bronfman.

Prosecutors said Bronfman, who was in NXIVM alongside her older sister, Sara Bronfman-Igtet, used her wealth to recruit immigrants – usually women – into NXIVM-related groups under the idea that they would get a scholarship or work. But Bronfman instead got a work-force of recruits desperate to earn a living and who were dependent on her and NXIVM to stay in the country.  Prosecutors have said Bronfman helped Raniere target the company’s perceived enemies, which included members of the organization who defected....

Raniere, 60, a longtime Halfmoon resident known in NXIVM as “Vanguard,” was convicted at trial last year of all charges, which included sex trafficking, forced labor conspiracy and racketeering charges that included underlying acts that included child exploitation, possession of child pornography, identity theft, extortion, fraud and other crimes.  He faces the possibility of life in prison at his sentencing on Oct. 27.

This New York Times article reporting on the sentencing notes why this case may end up in the Second Circuit: "Ronald Sullivan, a lawyer for Ms. Bronfman, said he would appeal the sentence, calling it an 'abomination'."

Fifth Circuit panel rejects claims of unconstitutional or unreasonable trial penalty at sentencing

A Fifth Circuit panel ruling today addresses, but ultimately rejects, a white-collar defendant's claim that "her sentence should be vacated because it was the result of an unconstitutional 'trial penalty' — a punishment for choosing to exercise her right to stand trial instead of pleading guilty." US v. Gozes-Wagner, No. 19-20157 (5th Cir. Sept. 28, 2020) (available here).  Because I helped with an amicus brief in the case, I will not comment extensively beyond recommending the opinion be read in full and highlighting these passages (with footnotes and cites removed):

Here, however, Gozes-Wagner and Voronov were ultimately charged with different crimes that carried different statutory maximum sentences.  Although they may have participated similarly in the conspiracy, our job is not to look at their two sentences and decide whether we think Voronov and Gozes-Wagner should have been punished more equally based on their conduct.  Instead, our duty is to determine whether the district court sentenced Gozes-Wagner more harshly than it otherwise would have because she went to trial instead of pleading guilty.  And on this record, we cannot say that it did...

For example, if the district court plainly stated that it was punishing the defendant more severely than it otherwise would because she went to trial, that would clearly amount to a constitutional violation even absent a comparison to others similarly situated to the defendant. But that did not happen here.

We recognize that most — if not all — cases will not be so cut-and-dried, and that a defendant’s constitutional rights may be violated even absent such an explicit statement.  In those cases, it is the comparison to others that necessarily sheds light on whether a constitutional violation occurred.  If the only meaningful difference between defendants was that one went to trial and the others did not, and the trial-standing defendant received a much more severe sentence than the pleading defendants, it could very well be the case that vacatur of the sentence will be required on trial penalty grounds.  But a defendant who cooperates with the Government is not similarly situated to one who refuses to do so.  Nor are defendants similarly situated when they are convicted under different statutes that carry different maximum sentences.  If the case were otherwise, we would be holding that the Constitution mandates that defendants convicted of committing different crimes be sentenced similarly if the conduct underling those convictions is similar.  We see no such mandate in the Constitution or in the Due Process caselaw addressing claims like Gozes-Wagner’s.

I cannot help noting that, though nothing "in the Constitution or in the Due Process caselaw" may speak to sentencing disparities, Congress expressly instructed sentencing judges, in 18 USC 3553(a)(6), to consider "the need to avoid unwarranted sentence disparities among defendants with similar records who have been found guilty of similar conduct."  And the sentencing judge in this case knew that defendant Voronov (who "participated similarly in the conspiracy") faced a 5-year maximum sentence after pleading guilty, but he still gave Gozes-Wagner a sentence of 20 years.  That served as one basis for arguing that this sentence was unreasonable even if not unconstitutional, but the Fifth Circuit panel was ultimately unmoved on reasonableness arguments:

Nothing in the record suggests that the court went out of its way to punish Gozes-Wagner for going to trial. To the contrary, when presented with arguments that she was similarly situated to her co-defendants, the district court correctly pointed out that for various reasons, including the fact that her co-conspirators pleaded guilty to charges carrying lower maximum sentences, she was not similarly situated to them at sentencing. The record does not reflect a clear error of judgment in the district court’s balancing of the § 3553(a) factors.

"Incarceration and the Law: Cases and Materials (Table of Contents and Ch. 1 Excerpt)"

The title of this post is the title of this SSRN posting with a part of the latest new edition of the casebook Incarceration and the Law: Cases and Materials.  Here is the abstract:

This posts a table of contents and much of the first chapter to a fully overhauled, updated, and expanded edition of the leading case book on incarceration.  The case book examines the complex legal regime that defines prisoners’ rights. Mass incarceration in America creates a host of controversies at the crossroads of constitutional liberty, legislation, public policy, and prison management.  It considers those issues from diverse perspectives by presenting an array of materials: Supreme Court and leading lower court caselaw, statutes, litigation materials, professional standards, academic commentary, prisoner writing, and more.  (There is also an associated website, http://incarcerationlaw.com, which offers additional open sources, supplementing the book for those who own it and providing a freestanding repository of materials for those who do not.)

Chapter 1 provides background on American jails and prisons (What’s the difference between a jail and a prison?  What is incarceration supposed to accomplish?  How do prison abolitionists conceptualize and justify their goals?  How did American incarceration develop?)  It provides longitudinal and contemporary statistics.  Finally, it offers narrative and case law background on the development of the modern conception of prisoners’ rights.

Via video, Lori Loughlin and her husband get agreed fixed short prison sentences in college admission scandal

As reported in this CBS News piece, headlined "Lori Loughlin gets 2 months in prison in college admissions scandal. Her husband Mossimo Giannulli will serve 5 months," a high-profile (but low-drama) sentencing took place in federal court yesterday.  Here are the basics:

Actress Lori Loughlin will serve two months in prison and her husband, fashion designer Mossimo Giannulli, will serve five months after the couple pleaded guilty to conspiracy charges in the college admissions scandal. A federal judge on Friday accepted plea deals from the famous couple in a video sentencing hearing.

After initially vowing to fight the charges, Loughlin and Giannulli reversed course after a judge denied their motion to dismiss the case in May. Prosecutors said the couple paid $500,000 to secure their daughters' admission to the University of Southern California by masquerading them as fake athletic recruits.

"I made an awful decision. I went along with a plan to give my daughters an unfair advantage in the college admissions process. In doing so, I ignored my intuition and allowed myself to be swayed from my moral compass," Loughlin said in the video call.

Loughlin, 56, will also pay a $150,000 fine, serve 100 hours of community service, and be under supervised release for two years. Giannulli, 57, is required to pay a fine of $250,000, serve 250 hours of community service, and serve two years of supervised release.

Earlier in the day, Giannulli apologized for the harm his decisions caused his family. "I'm ready to accept the consequences and move forward with the lessons I've learned from this experience," he said. Prior to rendering the sentence, U.S. District Court Judge Nathaniel Gorton ripped into Giannulli for committing a "crime motivated by hubris" that is "defined by wanton arrogance and excessive pride."

In addition to really liking the aesthetic of this "courtroom sketch" of this video sentencing, I reprinted the picture here in order to wonder aloud whether the US Sentencing Commission is keeping track of which sentencings are taking place via video these days and which ones are taking place in person.  Because six months into this pandemic the USSC still has not even reported how many sentencings are taking place, I am not especially optimistic the USSC is collecting, or will anytime soon be reporting, special granular data on COVID-era sentencing realities.  But my hope for the USSC springs eternal.

A few prior posts focused on these defendants:

• US Attorney in college admission scandal makes plain how trial penalty works even for celebrity actresses
• The trial penalty on fine display as parents in college admissions scandal get hit with new federal bribery charges 
• Notable Wall Street Journal commentaries decry injustices highlighted by college admission scandal prosecutions 
• After extended resistance (and likely lots of legal fees), Lori Loughlin and her husband agree to plead guilty in college admission scandal with fixed short prison sentence 

A few of many prior posts on other defendants in college admissions scandal:

• Mapping out next possible celebrity sentencings in wake of indictment in college admissions scandal 
• Big batch of federal plea deals (with relatively low sentencing ranges) in college admissions scandal
• Federal district judge rejects feds request for significant prison term in first sentencing of college bribery scandal
• Feds recommending incarceration terms from 1 to 15 months for parents involved college bribery scandal 
• Noticing the interesting (but perhaps not too consequential) guidelines "loss" issue lurking in the college bribery cases
• Next parent sentenced in college admission scandal gets four months in federal prison
• Next parent up in college admission scandal sentencing also gets four months in federal prison
• BigLaw partner gets one month federal time as latest parent sentenced in college admissions scandal 
• Napa Valley winemaker gets five months of imprisonment, the longest sentence so far in college admissions scandal
• Catching up with another round of sentencings in "Operation Varsity Blues"
• Reviewing the sentencing dynamics as more parents get (minimal) prison time in "Operation Varsity Blues" college admissions scandal 
• Longest prison sentence (six months) imposed in college admission scandal on big-spending dad 
• Nine-month federal prison term (the longest yet) given to former CEO who paid nearly $1 million to benefit four kids in college admission scandal 

What should we make of a "significant decline" in white-collar criminal enforcement during the Trump Administration?

The question in the title of this post is prompted by this new Bloomberg article, headlined "Trump Oversees All-Time Low in White Collar Crime Enforcement," which I find puzzling in many ways.  Here are excerpts:

Donald Trump calls himself the “law and order” president, but when it comes to white collar crime, he has overseen a significant decline in enforcement.  The prosecution of securities fraud, antitrust violations and other such crimes has hit a record low as the pandemic slows the courts, according to one tracking service. But even before the coronavirus, the numbers were falling under the Trump administration.

The average annual number of white collar defendants was down 26% to 30% for Trump’s first three years in office from the average under President Barack Obama, according to data from the Justice Department and Syracuse University, respectively.  The trend also shows up in fines on corporations, which fell 76% from Obama’s last 20 months to Trump’s first 20 months, according to Duke University law professor Brandon Garrett. 

“Mr. Trump sets the tone,” said John Coffee, a professor at Columbia Law School whose new book, “Corporate Crime and Punishment: The Crisis of Underenforcement,” analyzes the decline.  Trump’s Justice Department has even presided over a plunge in deferred-prosecution agreements, Coffee said.  In a DPA, a company is charged with a crime but prosecutors agree to drop the case later if it admits wrongdoing, pays a penalty and makes required reforms.  The administration has also brought fewer white collar racketeering and money-laundering cases, crimes that carry harsher penalties, he said. “All that is an indication that white collar crime is not a priority,” Coffee said....

The Justice Department says it hasn’t eased up at all.  Prosecutors “continue to bring federal charges in white collar and other cases according to facts, the law and the principles of federal prosecution,” said Peter Carr, who was a spokesman for the department’s Criminal Division until moving recently to the Department of Homeland Security. The Department of Justice “can’t vouch for TRAC’s methodology,” Carr said, referring to Syracuse University’s Transactional Records Access Clearinghouse, which monitors trends in federal law enforcement and whose records reflect a decline of about 30% in prosecutions under Trump....

DOJ spokesman Matt Lloyd said the Criminal Division’s Fraud Section, which focuses on white collar crime, “has achieved record numbers of individual and corporate criminal cases and resolutions over the past three years,” including a 59% increase in individuals charged between 2016 and 2019 and a jump of more than a quarter in those convicted.  He didn’t comment specifically on the 26% decline reflected in the data published by the U.S. attorney offices nationwide, which cover a much larger set of white collar prosecutions, but called the Fraud Section’s achievements “a key indicator of the department’s commitment” to the issue.

Prosecutions have been declining for the past decade but have never been so low.  The Justice Department under Trump has shifted its focus from traditional white collar cases, like big securities prosecutions, to immigration and the sort of corporate espionage targeted by the DOJ’s China Initiative, said Robert Anello, a white collar defense lawyer in New York....

The Internal Revenue Service's ... Criminal Investigation division helps send people to prison for crimes such as tax evasion, money laundering and identity theft.  The agency saw a 36% decrease in new criminal investigations from fiscal 2015 to 2019, IRS records show.

One factor in the decline in traditional white collar prosecutions is an important change to what’s known as the Yates memo.  In 2015, under Obama, Deputy Attorney General Sally Yates required companies seeking leniency to help develop evidence against their employees and turn over possible suspects.  In 2018, under Trump, the Justice Department softened the criteria. 

So is there an on-going white-collar crime "crisis"?  How would we know?  Why is it that we now see a whole lot of media reporting increases in shootings in urban areas, but we do not see any media looking at possible increases in securities fraud in suburban areas?  I ask these questions not to be cheeky, but rather to note how much more we generally focus upon and tend to better understand "crime in the streets" rather than "crime in the suites."

"Criminal Deterrence: A Review of the Missing Literature"

The title of this post is the title of this notable new paper authored by Alex Raskolnikov and recently posted to SSRN.  Here is its abstract:

This review of the criminal deterrence literature focuses on the questions that are largely missing from many recent, excellent, comprehensive reviews of that literature, and from the literature itself.  By “missing” I mean, first, questions that criminal deterrence scholars have ignored either completely or to a large extent.  These questions range from fundamental (the distributional analysis of the criminal justice system), to those hidden in plain sight (economic analysis of misdemeanors), to those that are well-know yet mostly overlooked (the role of positive incentives, offender’s mental state, and celerity of punishment).  I also use “missing” to refer to the areas where substantial relevant knowledge exists but is largely disregarded within the criminal deterrence research program.  The empirical analysis of environmental and tax compliance are two stark examples.  Finally, I stretch “missing” to describe topics that have been both studied and reviewed, but where substantial challenges remain.  These include the theoretical explanation for the role of offense history, the proper accounting for the offender’s gains, the estimation of the costs of various crimes, and the cost-benefit analysis of crime-reduction policies.

Among the literature’s missing pieces, several stand out both on their own and because they combine to produce a highly unfortunate result.  First, the literature makes only a minor effort to estimate the cost of crime, and essentially no effort to estimate the cost of white-collar offenses.  Combined with no centralized reporting of white-collar crimes and, therefore, no empirical analysis of them, the literature adds to the impression — not supported by the available evidence — that street crime is a great social problem while white-collar crime is a minor one.  Second, the literature fails to treat misdemeanors (and misdemeanor enforcement) as an independent subject of study.  This creates an impression — also unjustified — that thirteen million or so misdemeanor charges a year — and countless millions of stops, frisks, and interrogations that lead to no charges — all heavily skewed by race and class — are not a major social problem either. Third, the literature is only starting to develop a benefit-cost analysis of various crime-reducing strategies.  This analysis almost exclusively considers measures reflected in the optimal deterrence model and, therefore, internal to the criminal justice system.  This creates an impression — almost surely false — that deterrence is the only means of reducing future crime. Finally, the literature ignores distributional analysis altogether, even though the burdens of crime and the criminal justice system vary dramatically, predictably, and disturbingly by race and income.  By disregarding this variation, the literature may be reinforcing it. 

For all these reasons, the criminal deterrence literature may well be contributing to the overwhelming, singular focus of American society and law enforcement on the forceful deterrence of street crime. Addressing the missing pieces would enrich the literature, expand its appeal and policy-relevance, and enable academics to contribute to the effort of setting the US criminal justice system on the path of long-overdue structural reforms.

Federal judge rules Michael Cohen must be released back into home confinement

As reported in this CNBC piece, a "federal judge on Thursday ordered the release from prison of President Donald Trump’s former lawyer and fixer Michael Cohen by Friday afternoon."  Here is why:

Judge Alvin Hellerstein found that Cohen was sent back to prison on July 10 in retaliation for failing to agree a day earlier to not to publish a book about Trump as one of multiple conditions for serving the remainder of his three-year prison term on home confinement.  Cohen had been furloughed from prison in late May due to concerns about the coronavirus pandemic.  Shortly before being taken into custody he had been posting on social media about his upcoming book, which is going to be critical of Trump.

“I’ve never seen such a clause, in 21 years in being a judge,” Hellerstein said at a Manhattan federal court hearing, where he questioned the condition that Cohen not publish a book while in home confinement.  “How can I take any other inference but that it was retaliatory? “the judge asked at the hearing, which was held in response to Cohen suing to win his re-release from prison.

During the hearing, the judge was highly skeptical to arguments by a federal prosecutor that Cohen was not locked up in retaliation for the book, or that the condition of not writing a book was not sought for a specific reason.  At one point, when another prosecutor tried to come to the aid of the prosecutor who was answering the judge’s questions, Hellerstein angrily cut him off, reminding him of the rule that only one lawyer argued for each side in a case.

Cohen, who has been in quarantine in the prison in Otisville, N.Y., since his arrival there, will be released by 2 p.m. after begin tested for the coronavirus, and will be driven back to his home on Manhattan’s Upper East Side by his son, Hellerstein said. After his release into home confinement, he will be subject to a number of restrictions on his movement and employment and contact with other people.  But the restriction sought by federal Probation officials that he not speak to reporters, post on social media, or publish a book, is likely to be largely gutted.

Cohen’s lawyer and a prosecutor will in coming days negotiate the issue of any restrictions on Cohen dealing with the media.  Hellerstein suggested it would be inappropriate for Cohen to host a press conference in his apartment with a large number of reporters to discus his book while at the same time still serving his criminal sentence....

Hellerstein noted that court filings by both prosecutors and Cohen’s lawyers agree on a key point: that Cohen and his lawyer, after taking issue with at least one of the conditions, about the book, were left in a room along at some time by a Probation officer, and then confronted by Bureau of Prison officials who arrived to take him into custody.  Hellerstein also repeatedly said that Probation officials had not given Cohen a warning that if he did not agree to all the conditions presented to him at a July 9 meeting with his lawyer that he would be sent back to prison.  “Mr. Cohen was never given a chance to say, ‘If this is it, I will sign,’ ” Hellerstein said.

Prior Michael Cohen posts:

• Michael Cohen, Prez Trump's fixer, cuts a plea deal to fix his federal sentence between 46 to 63 months in federal prison
• Prez Trump advocating for a whole new kind of sentencing reform: he says cooperation deals "almost ought to be outlawed. It’s not fair." 
• Michael Cohen, former lawyer to Prez trump, pleads guilty to lying to Congress 
• Michael Cohen makes pitch for "time-served and restitution to the IRS" based largely on his continuing cooperation
• Feds request for Michael Cohen a "substantial term of imprisonment" though with a "modest downward variance" from Guideline range of 51-63 months in prison 
• New letter from Prez Trump's former lawyer, Michael Cohen, seeking sentence modification citing this blog's coronavirus coverage 
• Michael Cohen reportedly among those being moved by feds from prison to home confinement 
• Michael Cohen reportedly really getting released to home confinement now
• Michael Cohen, Prez Trump's former lawyer, sent back to federal prison because he "refused the conditions of his home confinement"

Some notable federal prison comings and goings for high-profile political figures

A (re)sentencing yesterday of a high-profile New York state politician led me to notice a few more stories concerning the ins and outs of federal prison for some notable political figures. Here are headlines, links and a taste of the stories:

Via the New York Post, "Sheldon Silver sentenced to more than 6 years in prison for bribery scheme":

Crooked Albany power broker Sheldon Silver will finally go to prison for his crimes — but not for another month, a judge ruled Monday as she sentenced the former Assembly speaker to 6 1/2 years in federal prison, nearly five years after he was first convicted of corruption.  Judge Valerie Caproni handed down the sentence Monday afternoon in front of Silver, 76, who was ordered to appear in person in the courtroom despite an effort by his lawyers to hold the hearing remotely amid the coronavirus pandemic. “This was corruption pure and simple,” Judge Caproni told the disgraced ex-speaker of the New York state Assembly, whom she had already sentenced twice. “The time, however, has now come for Mr. Silver to pay the piper,” she said before delivering the 78-month sentence and a $1 million fine, which the ruined kingmaker received with a blank expression.

Via the Philadelphia Inquirer, "Former Philly U.S. Rep. Chaka Fattah came home early from prison. Federal officials won’t say why.":

The U.S. Bureau of Prisons has accomplished what former U.S. Rep. Chaka Fattah could not in two appeals.  It sprang the disgraced pol early from lockup. A bureau spokesperson confirms that Fattah, a Philadelphia Democrat sentenced in 2016 to 10 years on corruption charges, returned to the city June 8 from a federal prison near Scranton and will serve the rest of his sentence either in a halfway house or under house arrest. But the bureau refused to say why the former congressman had been released more than five years before the scheduled 2025 date.

Via NBC News, "ACLU, law firm sue to get Michael Cohen released, saying he was sent back to prison over book":

The American Civil Liberties Union and a law firm on Monday filed a legal challenge to the recent imprisonment of Michael Cohen, President Donald Trump's former personal attorney.  The groups argue that Cohen was sent back to prison this month after being released on home confinement in retaliation for his plans to release a negative book about Trump before the November election.  "He is being held in retaliation for his protected speech, including drafting a book manuscript that is critical of the President — and recently making public his intention to publish that book soon, shortly before the upcoming election," lawyers on behalf of Cohen wrote in Monday's lawsuit.

Tongues wagging about Prez Trump using his clemency pen to grant compassionate release to Roger Stone

Unsurprisingly, lots and lots of folks have lots and lots to say about Prez Trump's decision late Friday to commute the prison sentence of Roger Stone (basics covered here).  I will start this post with two quick points and then round up below some of the other copious commentary already making the rounds.

1. Now do more, Mr. Prez: I am pleased Prez Trump has finally delivered, at least for an old friend with dirt on him, on his promise back in March to look at freeing elderly "totally nonviolent" offenders from federal prisons amid the COVID pandemic.  I am being cheeky here, of course, but meaning to make a serious point: the Stone commutation bothers me far less than Prez Trump's failure to use his clemency powers far more — both before and especially since the coronavirus crisis — to release the many federal prisoners who, like Stone, are older, medically vulnerable and present no clear risk to public safety. 

Back in February 2020, Prez Trump coupled some high-profile clemency grants with commutations to three women of color with no political connections (details here).  I sure wish Prez Trump and key advisers — Kushner?  Kushner?  Kushner? — had tried to couple the Stone commutation with clemency relief for just a few other older federal prisoners whose incarceration may prove deadly and serves little public safety purpose.  But it is not too late to make up for lost time: now do more comparable commutations, Mr. Prez!

2. Now do even more, federal judges: As the title of this post is meant to suggest, the Stone clemency strikes me as another form of compassionate release.  The official statement announcing the commutation made much of an "improper investigation," of "overzealous prosecutors" and of "serious questions about the jury" while also stressing that "Mr. Stone would be put at serious medical risk in prison" and that "Roger Stone has already suffered greatly."  These comments suggest Prez Trump concluded, in the words of 18 USC § 3582(c)(1)(A), that there were "extraordinary and compelling reasons warrant[ing] a reduction" in Stone's prison sentence and that such a reduction was consistent with 3553(a)'s purposes of punishment. 

Thanks to the FIRST STEP Act, judges now have authority to grant comparable sentence reductions, and district judges have granted hundreds of compassionate release motions in response to the COVID crisis.  But thousands of compassionate release requests have been denied, many coming from prisoners who are likely even more vulnerable and even more sympathetic than Stone.  In more than a few cases, I have seen judges indicate considerable sympathy for the plight of a vulnerable older inmate, only to refuse release because the movant had not yet served enough time in prison.  But Roger Stone did not serve any prison time, and yet Prez Trump was still moved by his "medical risk" and by the fact he had "already suffered greatly" even before serving a single day in federal prison.  So this commutation should also be a message to federal judges: do more comparable compassionate releases, even if vulnerable offenders have served little or even no prison time.

I could go on, but rather than continue my tongue wagging about the Stone commutation, I will conclude here with a round-up of just a few other notable takes:

From Robert Mueller, "Roger Stone remains a convicted felon, and rightly so."

From Politico, "'Historic corruption': 2 Republican senators denounce Trump's commutation of Stone"

From Brett Tollman and Arthur Rizer, "Romney wrong to attack Trump commutation of Roger Stone prison sentence"

From Jack Goldsmith and Matt Gluck, "Trump’s Aberrant Pardons and Commutations"

From Jonathan Turley, "Why this Roger Stone commutation is not as controversial as some think"

From Jeffrey Tobin, "The Roger Stone Case Shows Why Trump Is Worse Than Nixon"

Is Prez Trump trying to convince himself to have the guts to pardon Roger Stone?

The question in the title of this post was my first thought upon seeing this news piece headlined "Trump tweet fuels speculation of Stone pardon: The tweet came after a judge ruled Stone would report to prison in July."  Here are the details:

President Donald Trump further fueled speculation Saturday morning that he plans to pardon longtime friend and adviser Roger Stone.

After a judge on Friday gave Stone a surrender date of July 14 -- he had sought to report to the Georgia prison on Sept. 3 -- Trump tweeted a story about a petition for the president to pardon Stone as he faces a sentence of 40 months for lying to Congress and misleading investigators on several key elements of their probe into Russian meddling in the 2016 election.

On Saturday, Trump retweeted a message saying "IT’S TIME TO #PardonRogerStone"

This is not the first time a Trump tweet has raised the prospect of a Stone pardon.  Earlier this month, on June 4, the president tweeted that "Roger was a victim of a corrupt and illegal Witch Hunt, one which will go down as the greatest political crime in history.  He can sleep well at night!"

With Stone now seemingly having a hard prison report date in three weeks, Prez Trump is going to have to make a clemency decision sooner rather than later. If Prez Trump is really eager to keep Stone out of prison, I hope he might at least looks to include Stone with some additional meritorious clemency grants as he did back in February when commuted the sentences of sentences of three women along with Rod Blagojevich.

Prior related posts:

• For Roger Stone, federal prosecutors advocate for within-guideline sentence of 7.3 to 9 years in prison ... which Prez Trump calls a "miscarriage of justice!" 
• DOJ now says "sentence of incarceration far less than 87 to 108 months [for Roger Stone] would be reasonable under the circumstances"  
• Would it be improper for a President to write a character letter for a defendant facing federal sentencing?
• Roger Stone case generating some useful reflections on federal sentencing challenges and problems and lessons
• Roger Stone gets 40-month federal prison sentence ... but will he ever actually serve it?
• Is Prez Trump legally unable to grant clemency to Roger Stone? 
• Will Prez Trump use his clemency pen to "rescue" his pal Roger Stone from federal prison? 
• Donald Trump hinting that he will use his clemency powers on behalf of Roger Stone

Bernie Madoff denied federal sentence reduction, but many others receive relief under § 3582(c)(1)(A) on same day

As reported in this Courthouse News Service report, a high-profile federal white-collar prisoners was denied compassionate release yesterday afternoon.  Here are the basics (and a link to the opinion):

Bernie Madoff’s terminal illness will not alter a federal judge’s ruling from just more than a decade ago: The man behind an “extraordinarily evil” Ponzi scheme will die in prison.

“When I sentenced Mr. Madoff in 2009, it was fully my intent that he live out the rest of his life in prison,” Judge Denny Chin, who dealt Madoff’s 150-year sentence before being appointed to the Second Circuit, wrote on Thursday. “His lawyers asked then for a sentence of 12 to 15 to 20 years, specifically with the hope that Mr. Madoff would live to see ‘the light of day.’ I was not persuaded; I did not believe that Mr. Madoff was deserving of that hope. Nothing has happened in the 11 years since to change my thinking."... 

Madoff’s attorney Brandon Sample said his client suffers from end-stage renal disease and other conditions that give him less than 18 months to live.  “Judge Chin recognized today that Madoff’s health is in serious decline and that he is, in fact, terminally ill,” Sample wrote. “Nonetheless, Judge Chin essentially found that because of the nature of Madoff’s crimes — Madoff is beyond redemption. We are disappointed with Judge Chin’s refusal to grant Madoff any compassion.”

The financial criminal will seek clemency from President Donald Trump. “We implore the president to personally consider Madoff’s rapidly declining health,” Sample added....

Letters opposing Madoff’s release showed that [negative victim] sentiment has not ebbed. Prosecutors said that more than 500 victims opposed his release, and only 20 wrote in support.  “I also agree that at age 81, with his declining physical condition, Mr. Madoff probably does not pose a danger to any person or the community,” Chin wrote. “But as the recent victim letters show, many people are still suffering from Mr. Madoff’s actions. I also believe that Mr. Madoff was never truly remorseful, and that he was only sorry that his life as he knew it was collapsing around him. Even at the end, he was trying to send more millions of his ill-gotten gains to family members, friends, and certain employees.”

Madoff is confined to the Federal Medical Center in Butner, North Carolina, which — like many prisons throughout the country — is grappling with the coronavirus.  Neither Madoff’s request nor the ruling mentions the pandemic.

While this 16-page opinion from Judge Chin does not mention COVID, a whole lot of other compassionate release rulings handed down yesterday did.  I figured here it might be useful to highlight a number of the positive rulings from just the same day as this Madoff denial that already appear on Westlaw (and this weekend I will try to compile the more extended list of  positive § 3582(c)(1)(A) rulings from other days):

United States v. McKinney, No. 18-CR-6035L, 2020 WL 2958228 (WDNY June 4, 2020)

United States v. McCall, No. 2:18cr95-MHT, 2020 WL 2992197 (MD Ala. June 4, 2020)

United States v. Burke, No. 4:17-CR-3089, 2020 WL 3000330 (D Neb. June 4, 2020)

United States v. Green, No. TDC-10-0761, 2020 WL 2992855 (D Md. June 4, 2020)

United States v. Rivera-Amaro, No. 1:18-CR-00183 EAW, 2020 WL 3000392 (WDNY June 4, 2020)

I am pretty confident that this list of grants are not all of those that will show up on Westlaw eventually, and I am even more certain that there were a number of federal sentence reductions granted under § 3582(c)(1)(A) yesterday that will not ever show up on Westlaw.  In other words, while high-profile cases like Bernie Madoff will garner headlines, an ever-growing number of federal defendants are garnering sentence reductions thanks to the FIRST STEP Act.

Donald Trump hinting that he will use his clemency powers on behalf of Roger Stone

Last week, as reported here, "Bureau of Prisons spokeswoman Sue Allison told The Associated Press that [Roger] Stone is supposed to surrender to the Bureau of Prisons by June 30" to begin serving his 40-month federal prison sentence.  But, as this new article highlights, a tweet by President Trump this morning suggest that the Prez plans to make sure Stone never has to sleep at a prison facility:

President Donald Trump on Thursday promised his longtime informal political adviser Roger Stone would not serve time in prison, revealing the convicted Republican provocateur “can sleep well at night” and reprising his fiery criticisms of former special counsel Robert Mueller’s probe.

The pledge from the president came on Twitter, after Charlie Kirk, the founder of the conservative group Turning Point USA, wrote Tuesday that Stone “will serve more time in prison than 99% of these rioters destroying America” — referring to the ongoing nationwide protests over the killing of George Floyd, a 46-year-old black man, by a Minneapolis police officer.  “This isn’t justice,” Kirk added. “RT for a full pardon of Roger Stone!”

Trump went on to share that tweet Thursday morning, writing in his own accompanying message: “No.  Roger was a victim of a corrupt and illegal Witch Hunt, one which will go down as the greatest political crime in history.  He can sleep well at night!”

The president’s social media post represents his latest intervention in Stone’s case and comes after Trump and Attorney General William Barr were widely rebuked by congressional Democrats and career Justice Department officials for involving themselves in the federal law enforcement matter just a few months ago.

Federal prosecutors had urged in February that Stone be sent to prison for roughly seven to nine years for impeding congressional and FBI investigations into connections between the Russian government and Trump’s 2016 campaign.

But after Trump blasted the prosecutors’ sentencing recommendation in a tweet as a “horrible and very unfair situation,” the Justice Department submitted a revised filing that offered no specific term for Stone’s sentence and stated that the prosecutors’ initial proposal “could be considered excessive and unwarranted.” The four attorneys who shepherded Stone’s prosecution proceeded either to resign or notify the court that they were stepping off the case.

I have long been assuming (as some prior posts below reveal) that Prez Trump will use his clemency pen to keep Stone from serving prison time.  But I have also long been wondering what form of clemency Prez Trump might use.  He could provide Stone with a full pardon, of course, which would wipe away the conviction and all its consequences.  But he also could just commute his prison sentence (which, folks may recall, is what George W. Bush did for Scooter Libby).  Or, perhaps least controversially, Prez Trump could simply use his clemency power to order Sone's prison sentence to be served through home confinement (which, folks should realize, is comparable to what's happening for a number of federal prisoners in response to COVID-19 concerns).

Prior related posts:

• For Roger Stone, federal prosecutors advocate for within-guideline sentence of 7.3 to 9 years in prison ... which Prez Trump calls a "miscarriage of justice!" 
• DOJ now says "sentence of incarceration far less than 87 to 108 months [for Roger Stone] would be reasonable under the circumstances"  
• Would it be improper for a President to write a character letter for a defendant facing federal sentencing?
• Roger Stone case generating some useful reflections on federal sentencing challenges and problems and lessons
• Roger Stone gets 40-month federal prison sentence ... but will he ever actually serve it?
• Is Prez Trump legally unable to grant clemency to Roger Stone? 
• Will Prez Trump use his clemency pen to "rescue" his pal Roger Stone from federal prison? 

Michael Cohen reportedly really getting released to home confinement now

According to this new AP piece, "President Donald Trump’s longtime personal lawyer and fixer Michael Cohen will be released from federal prison Thursday and is expected to serve the remainder of his sentence at home, a person familiar with the matter told The Associated Press."  Here is more:

Cohen has been serving a federal prison sentence at FCI Otisville in New York after pleading guilty to numerous charges, including campaign finance fraud and lying to Congress.

He will be released on furlough with the expectation that he will transition to home confinement to serve the remainder of his sentence at home, the person said.  Cohen, 53, began serving his sentence last May and was scheduled to be released from prison in November 2021....

Attorney General William Barr ordered the Bureau of Prisons in March and April to increase the use of home confinement and expedite the release of eligible high-risk inmates, beginning at three prisons identified as coronavirus hot spots. Otisville is not one of those facilities.

Cohen was told last month he would be released to serve the rest of his three-year sentence at home in response to concerns about coronavirus. He had told associates he was expecting to be released earlier this month.

The Bureau of Prisons has placed him on furlough as it continues to process a move to home confinement, the person familiar with the matter said.  The agency has the authority to release inmates on furlough for up to 30 days and has been doing so to make sure suitable inmates, who are expected to transition to home confinement, can be moved out of correctional facilities sooner, the person said.

Prior Michael Cohen posts:

• Michael Cohen, Prez Trump's fixer, cuts a plea deal to fix his federal sentence between 46 to 63 months in federal prison
• Prez Trump advocating for a whole new kind of sentencing reform: he says cooperation deals "almost ought to be outlawed. It’s not fair." 
• Michael Cohen, former lawyer to Prez trump, pleads guilty to lying to Congress 
• Michael Cohen makes pitch for "time-served and restitution to the IRS" based largely on his continuing cooperation
• Feds request for Michael Cohen a "substantial term of imprisonment" though with a "modest downward variance" from Guideline range of 51-63 months in prison 
• New letter from Prez Trump's former lawyer, Michael Cohen, seeking sentence modification citing this blog's coronavirus coverage 
• Michael Cohen reportedly among those being moved by feds from prison to home confinement 

SCOTUS unanimously reverses "Bridgegate" convictions as involving conduct not covered by federal property fraud statute

The US Supreme Court handed down a unanimous opinion this morning in Kelly v. United States, No. 18-1059 (S. Ct. May 7, 2020)  (available here), the high-profile political fraud case often called "Bridgegate."  Here is how Justice Kagan's short opinion for the full Court gets started:

For four days in September 2013, traffic ground to a halt in Fort Lee, New Jersey.  The cause was an unannounced realignment of 12 toll lanes leading to the George Washington Bridge, an entryway into Manhattan administered by the Port Authority of New York and New Jersey.  For decades, three of those access lanes had been reserved during morning rush hour for commuters coming from the streets of Fort Lee. But on these four days — with predictable consequences — only a single lane was set aside.  The public officials who ordered that change claimed they were reducing the number of dedicated lanes to conduct a traffic study.  In fact, they did so for a political reason — to punish the mayor of Fort Lee for refusing to support the New Jersey Governor’s reelection bid.

Exposure of their behavior led to the criminal convictions we review here. The Government charged the responsible officials under the federal statutes prohibiting wire fraud and fraud on a federally funded program or entity.  See 18 U.S.C. §§1343, 666(a)(1)(A). Both those laws target fraudulent schemes for obtaining property.  See §1343 (barring fraudulent schemes “for obtaining money or property”); §666(a)(1)(A) (making it a crime to “obtain[] by fraud . . . property”).  The jury convicted the defendants, and the lower courts upheld the verdicts.

The question presented is whether the defendants committed property fraud.  The evidence the jury heard no doubt shows wrongdoing — deception, corruption, abuse of power. But the federal fraud statutes at issue do not criminalize all such conduct.  Under settled precedent, the officials could violate those laws only if an object of their dishonesty was to obtain the Port Authority’s money or property.  The Government contends it was, because the officials sought both to “commandeer” the Bridge’s access lanes and to divert the wage labor of the Port Authority employees used in that effort.  Tr. of Oral Arg. 58.  We disagree.  The realignment of the toll lanes was an exercise of regulatory power — something this Court has already held fails to meet the statutes’ property requirement.  And the employees’ labor was just the incidental cost of that regulation, rather than itself an object of the officials’ scheme.  We therefore reverse the convictions.

Some prior related posts:

• "Bridgegate" now a federal sentencing story after two former New Jersey officials convicted on all federal counts after lengthy jury deliberations
• Is the likely federal sentencing guideline range for "Bridgegate" defendants convicted last week at least 3 to 4 years in federal prison?
• You be the federal sentencing judge: how long a prison term for convicted "Bridgegate" defendants?
• Federal prosecutors seeking 3-year prison terms for "Bridgegate" defendants

US Senator Kennedy writes to AG Barr to urge him to "deny any request for early release" to certain notable fraudsters

As reported in this Hill piece, "Sen. John Kennedy (R-La.) called for Ponzi scheme architects who targeted the elderly, such as Bernie Madoff or Robert Allen Stanford, to remain in jail as some prisoners are being released because of coronavirus fears." Here is more:

In a letter to Attorney General William Barr, Kennedy requested the Federal Bureau of Prisons consider the “financial, emotional and physical devastation” prisoners have caused before permitting their early release. The attorney general had instructed the bureau to consider releasing nonviolent criminals who are at a higher risk of contracting the virus because of age or pre-existing medical conditions. “Releasing either of these individuals, or anyone similarly situated, would be an affront to those affected by their evil schemes, and a complete failure in the administration of justice,” Kennedy said in his letter.

Allen Stanford was convicted in 2012 of 13 felony counts and sentenced to 110 years for running a scheme that impacted 18,000 people. Kennedy wrote that he expects the 70-year-old to apply for early release. Madoff, 81, who ran an even larger investment-fraud scheme than Allen Stanford, has pre-existing health issues and has already requested early release.

“Our efforts should be focused on protecting those who protected us; our parents, grandparents, and military veterans who led crime-free lives,” Kennedy added. “Criminals such as Stanford and Madoff who preyed on the elderly should be the last ones to benefit from the change in circumstances COVID-19 has caused.”

The Louisiana senator also requested the Federal Bureau of Prisons publish information about inmates who are released, including their name, last known address, the prison they were released from, their age and their offense. He also called on state attorneys general to publish the same information.

The two-page letter from Senator Kennedy to AG Barr is available at this link. I find it quite interesting that (a) no other Senators signed on this this letter (though I do not know if others were asked, and (b) that Senator Kennedy decided to focus on this letter on big-time fraudsters like Madoff and Stanford without making mention of any other types of offenders like terrorists or murderers.

Wondering again about pace and number of federal sentencings after another Varsity Blues defendant gets imprisonment term

This AP article, headlined "Mother Sentenced to 7 Months in College Admissions Scam," reports on the high-profile federal sentencing that went forward in Boston by video conference yesterday.  Here are the basics:

A California woman was sentenced Tuesday to seven months in prison for paying bribes to rig her two daughters' college admissions exams and get one of them into Georgetown University as a fake tennis recruit.

In an unusual hearing held via videoconference due to the coronavirus pandemic, the judge rejected Elizabeth Henriquez's bid to avoid prison because of the public health crisis but is allowing her to remain free until at least June 30 in the hopes that the outbreak will have diminished by then. “I have every hope that the coronavirus crisis will abate in a matter of months and that Ms. Henriquez will be able to serve her sentence safely and rebuild her life,” U.S. District Judge Nathaniel Gorton said.

Henriquez and her husband were charged with paying $400,000 in bribes to get their oldest daughter into Georgetown as a bogus tennis recruit in 2016. They also paid bribes to have someone cheat on their daughters' college entrance exams, authorities said. In one instance, the purported proctor sat next to her daughter while she took a test and fed her the answers and then “gloated” with Henriquez and the teen about how they had cheated and gotten away with it, authorities said....

Her husband, Manuel Henriquez, is the founder and former CEO of Hercules Capital, a finance firm in Palo Alto, California. He is scheduled to be sentenced April 8.

Her lawyers had urged the judge to give her home confinement, citing a memo written by Attorney General William Barr who said some nonviolent inmates who are particularly at risk to the virus may be safer at home than behind bars....

Henriquez was sentenced via videoconference to keep people from gathering at the federal courthouse in Boston amid the pandemic. The judge talked to Henriquez and lawyers over video chat while news media and other members of the public listened on the phone. The Boston court and halls of justice across the country have delayed jury trials and moved to video and telephone hearings to keep the criminal justice system moving while people are hunkered in their homes.

Prosecutors had argued in court documents that she deserved more than two years behind bars. Gorton ordered Henriquez to begin serving her prison sentence on June 30 but said he would consider a request to push that back further if necessary.

As I mentioned here a few weeks ago, under normal circumstances 300 federal sentences are imposed every work day, 1500 federal sentences are imposed every work week, 6200 federal sentences are imposed every month in US courts nationwide.  Clearly, some number of federal sentencings are going forward, but I am so very eager to know how many.  I am hoping that before too long, the US Sentencing Commission or the Justice Department will try to provide some real-time data on the administration of federal criminal justice amidst the COVID crisis.

A few prior recent related posts:

• Are federal prosecutors getting any guidance from Main Justice about federal sentencing policy and practice amidst coronoavirus pandemic? 
• "'Complete chaos': How the coronavirus pandemic is upending the criminal justice system"
• Federal Defenders urge Justice Department to take specific immediate steps in response to coronavirus outbreak
• Hundreds of former DOJ officials and federal judges urge Prez Trump to commute sentences and create emergency advisory group to respond to COVID-19 challenges

Federal prosecutors and hundred of victims write in opposition to Bernie Madoff's compassionate release motion

Last month, as noted in this post, Bernie Madoff filed a motion for compassionate release thanks to a provision of federal law modified by the FIRST STEP Act.  This week, filings in response came from federal prosecutors.  This USA Today piece has the filing and reports on it  starting this way:

Federal prosecutors on Wednesday night objected to Ponzi scheme mastermind Bernard Madoff's bid for release from prison, arguing that the reviled and ailing ex-financier should continue serving his 150-year sentence.

Charging that the 81-year-old convict who ran one of history's biggest scams has "demonstrated a wholesale lack of understanding of the seriousness of his crimes and a lack of compassion for his victims," the U.S. Attorney's Office for the Southern District of New York urged a judge to keep him in prison.

"Madoff's crimes were 'extraordinarily evil.' His sentence was appropriately long. It should not be reduced," Assistant U.S. Attorneys Drew Skinner and Louis Pellegrino wrote in the filing to U.S. Circuit Court Judge Denny Chin, who sentenced Madoff more than a decade ago.

I think the first paragraph of the filing is effective:

The Government respectfully submits this memorandum of law in opposition to defendant Bernard L. Madoff’s request for 92% reduction in his sentence.  The nature of Madoff’s crime — unprecedented in scope and magnitude — wholly justified the 150-year sentence this Court imposed and is by itself a sufficient reason to deny Madoff’s motion.  Furthermore, since his sentencing, Madoff has demonstrated a wholesale lack of understanding of the seriousness of his crimes and a lack of compassion for his victims, underscoring that he is undeserving of compassionate release himself.  Finally, the Section 3553(a) factors weigh heavily against his release.

This CNBC piece report on some of the victim letters opposing Madoff's motion. Here is how this article gets started:

Hundreds of victims of Ponzi scheme kingpin Bernie Madoff really don’t want him to get out of prison despite his claim that he is dying. They recently told a judge their reasons in often-heartbreaking letters.

“Our lives, and not just financially, also emotionally, mentally, and physically . . . were Destroyed,” wrote one victim, who noted that her husband lost $850,000 to Madoff.

Another woman wrote, “I lost all my money and my husband of 40 years committed suicide because of his horrific crimes. As far as I am concerned, he should spend the rest of his life in jail,” she wrote to Judge Denny Chin in U.S. District Court in Manhattan.

Releasing Maddoff, a third victim told Chin, “would be to put another knife in the hearts of his victims.”

Those three letters are among the approximately 520 that Madoff victims sent Chin on the heels of Madoff’s court filing last month seeking early release from his 150-year prison sentence because he has terminal kidney disease.

Prior related posts:

• Terminally ill, Bernie Madoff is latest high-profile fraudster to seek compassionate release from federal prison thanks to FIRST STEP Act
• Spirited (but problematic?) advocacy for Bernie Madoff to receive compassionate relief
• "Madoff Wants Leniency. My Dad Received None. Why should the Ponzi scheme king get out to die, when the judges imprisoned my father with just weeks to live?"