Tuesday, May 9, 2006

5K1.1 Decision In HealthSouth Related Case

According to the Eleventh Circuit in the case of U.S. v. McVay, a 5K1.1 motion filed by the government does not give a district judge a unlimited license to depart. 

McVay, the former "Chief Financial Officer and Senior Vice-President, and Trreasurer of HealthSouth Corporation" plead guilty to conspiracy to commit wire and securities fraud.  The offense level was a 29, but the district court departed to an 8 when the government filed a 5K1.1 motion. The government appealed. The appellate court states that:

" After careful review of the record and the parties' briefs and oral arguments, we conclude the district court reversibly erred by downwardly departing so sharply, based on substantial assistance, virtually without explanation, and on a wholly improper basis."

The appellate court stated that "despite McVay's cooperation, a 'substantial term of imprisonment is required' given the seriousness of McVay's crimes."

One has to wonder several things here: 

1) Would the government have pursued the appeal of this case if Richard Scrushy had been convicted? As noted by co-blogger Peter Henning, it probably would not have made a difference in that the appeal was started before the trial.

2) Can a court still depart substantially as long as they provide a clear indication that it does not consider the crime to be as serious as contended by the government and no improper factors are used in determining the sentence?

3) According to the appellate tribunal the alleged loss in this case was $400 million, but was this a proper way to compute the loss in light of the Olis decision in the Fifth Circuit?

4) Does this case restore some power to the government to play a hand in sentencing even when they ask a court to depart premised on substantial assistance?

What is perhaps the most telling aspect of this decision is that appellate tribunals will in fact review sentences.  This is an important step to assuring that discretion is monitored.  It is also a strong argument as to why the legislature does not have to intercede post-Booker  to control courts - - the appellate courts are doing just fine on their own.

Decision here.

(esp) (w/ a hat tip to Alex Coolman)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2006/05/5k11_interpreta.html

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