Tuesday, February 22, 2005
Two decisions by the Sixth Circuit issued last week deal with sentencing enhancements in white collar crime cases, most importantly the loss calculation under Section 2B1.1 that affects so many sentences in economic crimes. In U.S. v. McDaniel (here), the defendants were convicted of conspiracy, theft of U.S. mail, and bank fraud related to a scheme to steal checks from the mail, alter the payee, and then cash them. The sentences were enhanced based on the amount of the loss, number of victims (> 50), obstruction of justice (for one defendant), and leadership role in the conspiracy (for the second defendant). The Sixth Circuit held that these enhancements were not based on the jury's guilty verdicts, and therefore violated Booker's Sixth Amendment analysis. More importantly, the court found that the enhanced sentences -- which took the defendants well beyond the base offense level (and resulting sentence) under the Federal Sentencing Guidelines -- constituted plain error. The Sixth Circuit has been inconsistent in applying the plain error standard (see Doug Berman's many thorough discussions on this issue on the Sentencing Law & Policy blog), but this case seems to set forth a clearer standard for white collar cases in which the usual enhancement for amount of the loss can trigger a remand for plain error. Comparing the base offense level for most economic crimes (6 or 8) with the higher sentence after the loss calculation gives a strong plain error argument under both the third and fourth prong's of the Olano test, as the Sixth Circuit recognized. That said, McDaniel also has dicta (what the court called "merely providing advice to the district court to guide its sentencing determination on remand") in which the Sixth Circuit endorsed the sentencing determinations by the district court under the Guidelines. This indicates that the second half of Booker -- the "reasonableness" prong -- may not result in many changes to sentences if the district judges adhere to the Guidelines. The court's analysis is worth reviewing for what it says about the application of the Guidelines in a white collar case in the post-Booker world.
The second decision, U.S. v. Murdock (here), deals with a loss enhancement based on the defendant's plea agreement. In Murdock, the defendant pled guilty to causing another to possess documents with the intent to defraud the U.S. (Section 1002 -- a provision you don't see charged very often), involving an attempt to get the IRS to lift a lien on the defendant's sister's pay check by presenting a $132,000 check to an IRS clerk drawn on a closed bank account. Although the defendant did not admit to a particular loss (actual or intended) in the plea agreement, the agreement did acknowledge that he presented the $132,000 check to the IRS. Based on that admission, the Sixth Circuit found that the judge's loss determination of $132,000, which substantially increased his sentence above the base offense level under the Guidelines, met the Sixth Amendment requirement of Booker. It is interesting to note that there was not a specific loss admission by the defendant, but only a general reference to the amount of the check and the intent to have the IRS lift its levy (which it did not do). Murdock makes it clear that, at least for guilty pleas, the courts will take a broader (or more flexible) approach to what constitutes a sufficient admission to meet Booker's requirement that only a jury's verdict or defendant's admission can be the basis for the sentence. [NB: Murdock also involves a waiver-of-appeal issue, which the defendant won, only to lose on the ultimate sentencing issue.] (ph)