Saturday, June 18, 2005

Determining the Reasonableness of an Upward Departure in a Fraud Case

The Sixth Circuit's decision in U.S. v. Meeker (here) involves an upward departure by the district court for a fraudulent scheme by an investment adviser who took advantage of long-time clients.  Meeker had operated a tax service when he began soliciting clients to invest in conservative securities, gathering approximately $5.1 million.  Rather than invest the money, Meeker spent it on gambling, some bad investments, and an attempt to keep his business afloat -- as described by Meeker, he began to "rob Peter to pay Paul."  Meeker eventually entered a guilty plea to mail fraud and interstate transportation of stolen property, and under the Sentencing Guidelines his offense (with a loss of $3.8 million) put his sentence at 51-63 months.  Right before the sentencing, U.S. District Judge David McKeague notified the parties that he planned to consider an upward departure based on the defendant's conduct that threatened the solvency of his victims and caused them great emotional distress.  The judge imposed an 84-month term of imprisonment, based on approximately 30 letters he received from the victims describing the financial ruin Meeker's scheme caused them -- 26 of which were not disclosed to the defendant.

Under the Sixth Circuit's approach to Booker plain error in U.S. v. Barnett, the case will be remanded to the district court for resentencing.  Along the way, the Sixth Circuit discussed whether an upward departure to an 84-month prison term fell outside the range of reasonable sentences -- the new appellate standard of review -- in comparable white collar crime cases.  The court stated:

The sentence imposed by the district court in the present case is also in line with sentences imposed for similar crimes within our circuit. Like Meeker, the defendant in United States v. Benskin, 926 F.2d 562, 563 (6th Cir. 1991), employed a fraudulent investment scheme that "preyed on private citizens, not corporate investors" and resulted in losses of over $3 million. Benskin received a 70-month sentence for mail fraud and a consecutive 60-month sentence for securities fraud. The PSR had recommended a Guidelines range of 27 to 33 months for the latter count, but the court departed upward and sentenced him to 60 months, nearly doubling the Guidelines range. Id. at 564 (sentencing the defendant to a total term of imprisonment of 130 months). Similarly, in United States v. Dobish, 102 F.3d 760 (6th Cir. 1996), the defendant employed a fraudulent investment scheme over a ten-year period to defraud victims, including members of his own family, of over $1 million dollars. The defendant pled guilty to mail fraud, and the PSR set a Guidelines range of 37 to 46 months in prison. Id. at 761-62. Finding that the defendant had inflicted "nonmonetary harm and serious psychological injury" in "jeopardizing the victims’ solvency," the court departed upward four offense levels and sentenced the defendant to 60 months—the maximum sentence he could receive under the statute that he was charged with violating. Id. at 762.

Comparable sentences have been imposed by other circuits under similar circumstances. See, e.g., United States v. Jarvis , 258 F.3d 235, 240 (3d Cir. 2001) (upholding an upward departure under § 2F1.1, Application Note 11 where the defendant’s "victims will be forced to live their retirement years in destitution"); United States v. Hogan, 121 F.3d 370, 373 (8th Cir. 1997) (affirming the district court’s upward departure where the defendant’s victims "were at or near retirement age, relying on small, fixed incomes in conjunction with their investments"). In contrast, Meeker does not cite any authority for his claim that the sentence he received was excessive. The district court may therefore wish to consider a similar upward departure on remand, with the knowledge that such a sentence is unlikely to run afoul of Booker’s reasonableness requirement. Booker, 125 S. Ct. at 766 (setting forth a "‘reasonableness’ standard of review" for sentences imposed under the advisory Guidelines system).

If ever there was a case in which a Booker  remand appears to be an exercise in futility, this is the one.  The judge departed upward to impose a higher sentence, and there is little likelihood that he would give a lower sentence having been freed from the mandatory nature of the Sentencing Guidelines -- there would appear to be a chance that he might go even higher.  Except . . . there's always a kicker, and the interesting one here relates to the agreement in the Senate that avoided the so-called "nuclear option" to get appellate court nominees approved.  Among those whose nominations had been blocked by the fillibuster threat was none other than U.S. District Judge David McKeague, and he has since been approved by a 96-0 vote on June 9 (roll call vote here).  The Judge was sworn in as a member of the Sixth Circuit on June 13, so depending on who Meeker draws on the U.S. District Court for the Western District of Michigan, he may have a shot at a lower sentence.  For example, Chief Judge Bell has been known to go a little bit on the light side in white collar cases (see the decision in U.S. v. Crouse, 145 F.3d 786 (6th Cir. 1998)). Then again, will a district court judge want to lower a sentence imposed by a colleague on the same court who has been elevated to the court of appeals?  (ph)

                                                                                                

UPDATE (6/20): Peter Goldberger pointed out to me that Judge McKeague may sit by designation on the Booker resentencing consideration, in which case I think Meeker's chances of getting a lower sentence, as the old saying goes, are between slim and none, and Slim just left town.  Then again, it's worth a try.

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