Wednesday, February 26, 2014

Unwarranted Sentencing Disparities Among Defendants With Similar Records Who Have Been Found Guilty Of Similar Conduct

Juan Prado was a mildly corrupt Chicago cop who pled guilty to taking bribes from tow truck operators in order to funnel business their way. At sentencing he argued for a downward variance based on several factors, including the downward variance received by James Wodnicki, an allegedly similarly situated Chicago cop who was sentenced in a related case. The sentencing court ruled, incorrectly, that Seventh Circuit precedent only allowed it to consider nationwide sentencing disparities under 18 U.S.C. Section 3553 (a)(6). It refused to consider any arguments, from either the prosecution or defense, based on Wodnicki's downward variance, and sentenced Prado to a within-Guidelines prison term of 42 months. Last week, in United States v. Prado, the Seventh Circuit reversed, since the sentencing court was unaware that it could consider Wodnicki's sentence in applying 3553 (a)(6), and since the Seventh Circuit thought this may have affected Prado's sentence. The opinion reaffirms two important points, to wit--that sentencing disparities can be considered on both individual and global levels, and that within-Guidelines sentences can be reversed when based on erroneous assumptions. Interestingly, Prado did not raise this specific ground of error until the case reached the appellate court, but the government failed to argue Prado's waiver on appeal. Ergo, the waived waiver doctrine applied.

(wisenberg)

February 26, 2014 in Judicial Opinions, Sentencing | Permalink | Comments (0) | TrackBack (0)

Tuesday, February 11, 2014

Why Didn't Martoma Cooperate? And Is It Too Late?

To the surprise of nobody I know, Mathew Martoma, the former SAC Capital portfolio manager, was convicted of insider trading last Thursday by a Southern District of New York jury.  The evidence at trial was very strong.  It demonstrated that Martoma had befriended two doctors advising two drug companies on the trial of an experimental drug, received confidential information from them about the disappointing result of the drug trial prior to the public announcement, and then had a 20-minute telephone conversation with Steven A. Cohen, the SAC chair, a day or so before Cohen ordered that SAC's positions in these companies be sold off.  The purported monetary benefit to SAC, in gains and avoidance of loss, of the trades resulting from the inside information is about $275 million, suggesting that Martoma receive a sentence of over 15 years under the primarily amount-driven Sentencing Guidelines (although I expect the actual sentence will be considerably less).

Cohen is white-collar Public Enemy No. 1 to the Department of Justice, at least in its most productive white-collar office, the U.S. Attorney's Office for the Southern District.  That office has already brought monumental parallel criminal and civil cases against SAC, receiving a settlement of $1.8 billion, about a fifth of Cohen's reported personal net worth, but it has apparently not garnered sufficient evidence against Cohen to give it confidence that an indictment will lead to his conviction.  It had granted a total "walk" -- a non-prosecution agreement -- to the two doctors whose testimony it felt it needed to convict Martoma, unusually lenient concessions by an office that almost always requires substantial (and often insubstantial) white-collar wrongdoers seeking a cooperation deal to plead to a felony.  As an FBI agent told one of the doctor/co-conspirators, the doctors and Martoma were "grains of sand;" the government was after Cohen.

In an article in the New York Times last Friday, James B. Stewart, an excellent writer whose analyses I almost always agree with, asked a question many lawyers, including myself, have asked:  why didn't Martoma cooperate with the government and give up Cohen in exchange for leniency?  Mr. Stewart's answer was essentially that Martoma was unmarketable to the government because he would have been destroyed on cross-examination by revelation of his years-ago doctoring his Harvard Law School grades to attempt to secure a federal judicial clerkship and covering up that falsification by other document tampering and lying.  Mr. Stewart quotes one lawyer as saying Martoma would be made "mincemeat" after defense cross-examination, another as saying he would be "toast," and a third as saying that without solid corroborating evidence, "his testimony would be of little use."  See here

I strongly disagree with Mr. Stewart and his three sources.  The prosecution, I believe, would have welcomed Mr. Martoma to the government team in a New York minute -- assuming Martoma would have been able to provide believable testimony that Mr. Cohen was made aware of the inside information in that 20-minute conversation.  When one is really hungry -- and the Department of Justice is really hungry for Steven A. Cohen -- one will eat the only food available, even if it's "mincemeat" and "toast."  And there is certainly no moral question here; the government gave Sammy "the Bull" Gravano, a multiple murderer, a virtual pass to induce him to testify against John Gotti.  Given the seemingly irrefutable direct, circumstantial and background evidence (including, specifically, the phone call, the fact that Cohen ordered the trades and reaped the benefit, and generally, whatever evidence from the civil and criminal cases against SAC is admissible against Cohen), testimony by Martoma to the effect he told Cohen, even indirectly or unspecifically, about the information he received from the doctors would, I believe, have most likely led to Cohen's indictment.

I have no idea why Martoma did not choose to cooperate, if, as I believe, he had the opportunity.  "Cooperation," as it is euphemistically called, would require from Martoma a plea of guilty and, very likely in view of the amount of money involved, a not insubstantial prison term (although many years less than he will likely receive after his conviction by trial).  Perhaps Martoma, who put on a spirited if unconvincing defense after being caught altering his law school transcript, is just a fighter who does not easily surrender or, some would say, "face reality," even if the result of such surrender would be a comparatively short jail sentence.  (In a way, that choice is refreshing, reminding me of the days defense lawyers defended more than pleaded and/or cooperated.)  Perhaps Martoma felt cooperation, a condition of which is generally full admission of all prior crimes and bad acts, would reveal other wrongs and lead to financial losses by him and his family beyond those he faces in this case.  Perhaps he felt loyalty -- which it has been demonstrated is a somewhat uncommon trait among those charged with insider trading -- to Cohen, who has reportedly paid his legal fees and treated him well financially (and perhaps Martoma hopes will continue to do so), or perhaps to others he would have to implicate.

And perhaps -- perhaps -- the truth is that in his conversation with Cohen, he did not tell Cohen either because of caution while talking on a telephone, a deliberate effort to conceal  from Cohen direct inside information, or another reason, and he is honest enough not to fudge the truth to please the eager prosecutors, as some cooperators do.  In such a case his truthful testimony would have been unhelpful to prosecutors bent on charging Cohen.  That neutral testimony or information, if proffered, which the skeptical prosecutors would find difficult to believe, would at best get him ice in this very cold wintertime.  Lastly, however unlikely, perhaps Martoma believed or still believes he is, or conceivably actually is, innocent.

In any case, it is not necessarily too late for Martoma to change his mind and get a benefit from cooperation.  The government would, I believe, be willing to alter favorably its sentencing recommendation if Martoma provides information or testimony leading to or supporting the prosecution of Cohen.  Indeed, I believe the government would ordinarily jump at a trade of evidence against Cohen for a recommendation of leniency (or less harshness), even if Martoma is now even less attractive as a witness than before he was convicted (although far more attractive than if he had testified as to his innocence).  However, the five-year statute of limitations for the July 2008 criminal activity in this matter has apparently run, and an indictment for substantive insider trading against Cohen for these trades is very probably time-barred. 

To be sure, federal prosecutors have attempted -- not always successfully (see United States v. Grimm; see here) -- imaginative solutions to statute of limitations problems.  And, if the government can prove that Cohen had committed even a minor insider trading conspiratorial act within the past five years (and there are other potential cooperators, like recently-convicted SAC manager Michael Steinberg, out there), the broad conspiracy statutes might well allow Martoma's potential testimony, however dated, to support a far-ranging conspiracy charge (since the statute of limitations for conspiracy is satisfied by a single overt act within the statutory period).  In such a case, Martoma may yet get some considerable benefit from cooperating, however belatedly it came about.

 (goldman)

February 11, 2014 in Current Affairs, Defense Counsel, Fraud, Insider Trading, News, Prosecutions, Prosecutors, Securities, Sentencing | Permalink | Comments (0) | TrackBack (0)

Tuesday, January 28, 2014

Supreme Court Narrowly Defines Term "Result From"

The degree of causation necessary to impose legal blame is an interesting philosophical, policy and, of course, legal issue.  It is an issue that probably arises more often in tort than criminal cases, but is nonetheless important in criminal law in several areas, including sentencing considerations.

In Burrage v. United States, ___ U.S. ___ (12-7515, January 27, 2014), the Supreme Court considered the meaning of the term "result from" in a case where the district court imposed a 20-year mandatory minimum sentence upon a defendant for the sale of one gram of heroin since a buyer's death had "result[ed] from" the use of the heroin as one of several drugs he consumed that contributed to the death.

Burrage was convicted of distribution of narcotics to Banka, who died after imbibing the heroin and several other drugs.  Medical experts at trial could not rule out that Banka might have died from using the other drugs even if he had not taken the heroin, but opined that the heroin use was a contributing factor to his death.

The district court declined to accept the defense contention that the statutory term "result from" required a "but-for" standard.  Instead, it construed the phrase to mean that the drug sold had only to be a "contributing cause" of the death and so charged the jury.  The Eighth Circuit affirmed.

In a unanimous opinion, written by Justice Scalia (who has authored some of the most innovative and pro-defense decisions by the Court in recent years), the Court reversed, ruling that the term "result from" should be construed in its "ordinary meaning" to require a "but-for" standard of causation -- that the harm would not have resulted "but for" the defendant's conduct.  It was, therefore, the Court found, not enough for the trier of fact to find that the drug transfer was merely a "contributing factor" to the death.  The opinion discussed the Model Penal Code, the Restatement of Torts, baseball, and the rule of lenity, as well as the Court's recent restrictive reading of the term "because of" in discrimination cases, a discussion which triggered a special concurrence by Justice Ginsberg (which she apparently would not have felt the need to write "but for" that discussion).

The government, not untypically, made a doomsday argument that defining "result from" as the Court did would "unduly limit criminal liability" and "cannot be reconciled with sound policy."  The Court disagreed, doubting that the opinion would prove to be a "policy disaster."

Although very unlikely to be a "disaster," the opinion may have ramifications beyond drug cases.  The issue of what consequences resulted from the defendant's conduct arises frequently in homicide and assault cases, and also occasionally in white-collar cases, for instance in determining the amount of loss or harm for sentencing purposes.  At the least, it appears that in federal criminal law the term "result from" now will have a more narrow meaning than previously.

 (goldman)

January 28, 2014 in Judicial Opinions, Sentencing | Permalink | Comments (0) | TrackBack (0)

Sunday, November 3, 2013

History of the Fraud Guidelines

Amy Baron-Evans, Sentencing Resource Counsel, Federal Public and Community Defenders, alerted me to a wonderful site that provides the history of the amendments to the Fraud Guidelines.  It is located here.

(esp)

November 3, 2013 in Sentencing | Permalink | Comments (0) | TrackBack (0)

Tuesday, October 29, 2013

Former Congressman Rick Renzi Sentenced to 36 Months

USA Today has this story. Here is the interesting part, at least to federal sentencing aficionados. Renzi took the government to trial. Judge David Bury calculated Renzi's U.S. Sentencing Guidelines range at 97-121 months. (The government asked for a 9-12 year sentence.) Judge Bury downwardly varied to 36 months. This is striking, and yet another example of the Guidelines losing their luster in white collar cases. Under the law the Guidelines must be considered, but in an increasing number of cases they are being considered and ignored or discounted.

(wisenberg)

October 29, 2013 in Corruption, Prosecutions, Sentencing | Permalink | Comments (0) | TrackBack (0)

Wednesday, October 16, 2013

Sauce For The Goose: Seventh Circuit Affirms Upward Variance In Embezzlement Case

Last Friday, in United States v. Brown, the Seventh Circuit upheld an upward variance from the calculated U.S. Sentencing Guidelines range of 21-27 months to 60 months. Appellant, the office manager, bookkeeper, and accountant for a small family business, embezzled several hundred thousand dollars over a twenty year period.

"Before imposing sentence the district court thoroughly
examined the sentencing factors listed in 18 U.S.C. § 3553(a),
placing special emphasis on the sophisticated nature of
Brown’s embezzlement scheme, its long duration, and the deep
breach of trust that his conduct entailed. The judge accepted
the results of the Walker family’s internal audit and explained
that the loss—more than $600,000—was significant for a small
business."

Like so many appellate decisions affirming upward variances, the Brown opinion has wonderful language describing the sentencing court's broad discretion to impose sentences outside the recommended Guidelines range. The federal criminal defense bar has reaped enormous rewards from the post-Gall/Kimbrough deference to district court sentencing determinations, but with these gains come occasional losses. The Brown affirmance is a good example of the latter phenomenon.

After the sentencing hearing, in conjunction with a technical amendment to the judgment, the district court entered a written Statement of Reasons that purported to upwardly adjust the Guidelines range to 41-51 months. The 60 month sentence remained unchanged. The Seventh Circuit treated this Statement of Reasons as a nullity, since Brown had already filed a notice of appeal, stripping the district court of jurisdiction, and since the written Statement of Reasons was so clearly at odds with the district court's oral pronouncements during sentencing. This odd procedural move by the sentencing court appears to have been an after-the-fact effort to bolster its upward variance. The Seventh Circuit made clear, between the lines, that such gyrations are unnecessary.

(wisenberg)

October 16, 2013 in Sentencing | Permalink | Comments (0) | TrackBack (0)

Tuesday, October 15, 2013

Federal Trial Courts Can Require Sworn Allocutions

In what appears to be a case of nationwide first impression, the Third Circuit ruled today that federal district courts may require a defendant's sentencing allocution to be sworn, without violating Federal Rule of Criminal Procedure 32 or the U.S. Constitution. The textual Rule 32 discussion seems particularly weak as the rule itself nowhere requires the allocution to be sworn. The case is United States v. Ward. The opinion is here.

(wisenberg)

October 15, 2013 in Judicial Opinions, Sentencing | Permalink | Comments (0) | TrackBack (0)

Tuesday, October 8, 2013

Defense Should Be Careful About Statute Of Limitations Waivers

The statute of limitations, I used to think, was designed to allow a wrongdoer who is not arrested for a period of years to have a certain sense of repose to be able to go on with his life without fear of arrest for that wrongdoing.  Recent legislative and prosecutorial activity in extending statutes of limitations in areas such as child sex crimes and sex crimes where DNA of the otherwise-unidentified perpetrator has been preserved has undermined this rationale.  Further, the use of conspiracy statutes in federal prosecutions also allows prosecutors to effectively punish defendants for acts committed beyond the ordinary statute of limitations as part of a conspiracy that continues into a period within the statutory limit.

White-collar prosecutors often view the statute of limitations, generally five years from the date of occurrence of the crime, as the period which they have to prepare a case to secure an indictment.  Courts rarely, if ever, dismiss a case for a delay in indictment if the indictment is returned within the statutory period even if the defendant can demonstrate that the delay was due solely to prosecutorial lassitude and that the defendant has been prejudiced by loss of witnesses, dimming of witnesses' memories, and other factors that hamper her right to present a defense.  And arguments at sentencing that the defendant has led a blameless but fearful life for the many years the prosecution took to indict him generally fall on deaf ears.

Occasionally, prosecutors find they are unable to prepare to their satisfaction cases within the statute of limitations period and ask defense counsel to agree to extend the limit.  Unless there is a possibility that additional time would afford a defense lawyer a realistic possibility of dissuading the prosecutor from indicting or of securing a favorable pre-indictment plea disposition, there is rarely a good reason for a defense lawyer to agree to such an extension.  Yet, defense lawyers frequently acquiesce to the prosecutor's request.

Some years ago, in a matter involving a series of allegedly false billings to the government, a federal prosecutor asked me to agree on behalf of my client to extend the statute of limitations.  In response to my question why he sought an extension, the prosecutor said, quite frankly, that he had been too busy with other matters to bring the matter before a grand jury and that some (but not all) of the charges would soon be time-barred.  I asked him why I, on behalf of the defendant, should therefore consent to a waiver of the statute.  He responded that if I did not consent to the extension, he would charge my client as part of a massive conspiracy to defraud the United States in order to include the false billings on the expired dates (but not as separate charges).  I told him that I would not agree.

A few days later, I received a letter from the prosecutor, thanking me for agreeing to an extension of the statute of limitations and including a waiver form to be signed by my client and me.  Concerned that a failure to protest might be construed at a later time by a judge as an acquiescence to the prosecutor's request for an extension, especially if the prosecutor (or a successor) contended that I had agreed orally, I fired off a letter expressing my surprise at the letter and reiterating that I did not and would not consent to an extension.  (I do not know whether the prosecutor's letter was prepared prior to our conversation in the expectation that I would consent and then sent in error, or was sent in the hope that I would change my mind or execute it without paying attention.)  The client was never indicted.

As this case illustrates, it is my belief that defense lawyers too readily consent to prosecutors' requests to extend the statute of limitations.  Although I personally am generally agreeable to consenting to an extension of time because an adversary is busy and needs more time to prepare papers, when such consideration clearly is to the detriment of a client, I believe a lawyer should not extend such professional courtesy, even if she fears she would be marked by the prosecutor's office as an attorney who deserves no personal consideration.  Effective advocacy should generally trump civility. 

I therefore note with interest that Reed Brodsky, the defense lawyer for Paul J. Konigsberg, a targeted long-time accountant for and close associate of Bernard Madoff, reportedly had refused to consent to an extension of the limitations period on behalf of his client.  See here.  I do not know what reasons, if any, the prosecution gave for its request and what reasons Brodsky had to refuse the request.  I do know that a trial of some of Mr. Madoff's former employees, which is expected to go beyond the statute of limitations cutoff date, began this week.  Of course, in the event any or all of those employees are convicted (or even not convicted), they might well then agree to cooperate with the authorities against Mr. Konigsberg.

If any of those defendants are available to testify against Mr. Konigsberg, the prosecutor will certainly be able to use them as witnesses.  The prosecutor should not, however, properly be able to use the grand jury subpoena power or the grand jury itself to obtain their testimony or other additional evidence to prosecute Mr. Konigsberg for the crimes for which he was charged since a grand jury cannot be used to gain evidence for already-indicted cases or for additional Madoff-related crimes since they are time-barred.  To be sure, at times prosecutors do secure additional evidence for use in a pending case when they conduct a grand jury investigation with a view toward indicting additional defendants or prosecuting not-yet-charged crimes against an already-indicted defendant.  That is unlikely here.

(goldman)

October 8, 2013 in Defense Counsel, Grand Jury, Prosecutors, Sentencing, Statutes | Permalink | Comments (0) | TrackBack (0)

Friday, September 20, 2013

ABA Proposal to Modify 2B1.1 - Fraud Guideline

The U.S. Sentencing Commission held a conference that examined 2B1.1 - the Fraud Guideline.  A proposal offered from the ABA Task Force on the Reform of Federal Sentencing for Economic Crimes was one topic of discussion. (See ABA Task Force Report Download USSC Presentation 9-17-13).   This proposal, presented by James E. Felman, came with several caveats, most importantly that the existing statutory structural framework would remain in effect, although their "Prinicples of Consensus" presented weaknesses to this framework.

The ABA Proposal focuses on three key specific offense characteristics - loss, culpability, and victim impact.  But unlike the existing 2B1.1 guideline, levels of culpability would play a significant role in determining the sentence. Although loss continued to remain a component in determining a sentence under this proposal, the sentence  would not be a function of a mathematical computation that was basically driven by the amount of loss.   The proposal appeared to be a framework for discussion, as opposed to an in-depth description as to exactly how it would operate.  And although it left open many questions, it offered a strong base for starting a conversation that would move the sentencing guidelines away from being predominantly loss-focused and also away from including "intended loss."  The proposal also appeared to provide the judiciary with more influence in the sentence received, something that might not be as appealing to the government.  

 (esp)

September 20, 2013 in Sentencing | Permalink | Comments (0) | TrackBack (0)

Wednesday, August 28, 2013

Judicial Oversight of Corporate Pleas -Protection of the Public Interest

United States v. Orthofix, Inc was an important decision for several reasons. First, the Memorandum  Opinion issued by Judge Young (D. Mass), on July 26, 2013, takes a turn in what typically happens when there is a corporate plea arrangement.   Second, the judge explains at length policy considerations for sentencing corporations.  The case also raises questions for the future of corporate plea agreements.  

This decision involves two cases involving corporate pleas where the court rejected the pleas.  The court notes the importance of considering the "public interest" in accepting pleas. Hon. Young states:

"Just as the Court must take account of the public interest when it exercises its discretion to fashion its own sentence, so too the Court must take account of the public interest when called upon to review a sentencing recommendation attached to a plea bargain."

The court considers the history behind plea bargains and contract law and notes the problem of considering it as a prosecution-defense relationship as opposed to a triadic relationship. Hon. Young states, that "this Court makes no attempt to question the policy choices of executive administrative agencies; it merely seeks to ensure that the sentence imposed upon Orthofix fosters (1) the protection of the public, (2) specific and general deterence, and (3) respect for the law."

The court states that "[o]rganizational criminals pose greater concerns than natural persons for two important reasons."  One of the concerns raised in the case of Orthofix, by the court, was that the plea of five years failed to impose the Corporate Integrity Agreement as part of the probation.

This Memorandum decision raises other interesting questions that were not discussed here, and perhaps not relevant to these matters. But one has to wonder whether courts should also be examining plea agreements that place undue pressure on corporations and individuals to plea because the risk of going to trial is too severe? In a post-Arthur Andersen world do corporations have the choice of risking a trial or is the necessity  of entering a plea too great to avoid the repercussions of an indictment and possible conviction? Should oversight of pleas go beyond the sentencing aspect to also scrutinze the bargaining position of the parties and the fairness of the general bargain?

See also Doug Berman's Sentencing Law & Policy Blog here, Jef Feeley & Janelle Lawrence, Bloomberg's,  Orthofix’s Settlement of Medicare Probe Rejected by Judge

(esp)

August 28, 2013 in Arthur Andersen, Deferred Prosecution Agreements, Judicial Opinions, Prosecutions, Sentencing | Permalink | Comments (0) | TrackBack (0)

Thursday, August 15, 2013

Sentencing - Sandi Jackson and Jesse Jackson Jr.

The BLT Blog provides background here.

The government asked for 4 years and the defense wanted a much lower amount for Jesse Jackson Jr. The court entered a sentence of 2 1/2 years (30 months) for Jesse Jackson Jr. and 1 year (12 months) for his wife, Sandi Jackson.  See Ann E. Marimow and Rachel Weiner, Washington Post, Jesse L. Jackson Jr. sentenced to 30 months in prison 

The Chicago Tribune reports (here) that Jesse Jackson Jr. will serve his sentence first, followed by Sandi Jackson.  

It is good to see courts accommodating the sentences of a husband and wife to account for what may be best for their children.  We have seen this done in the past, for example in the case of Lea and Andy Fastow (see here).  

 (esp)

August 15, 2013 in Sentencing | Permalink | Comments (0) | TrackBack (0)

Friday, June 21, 2013

Jeff Skilling Sentence Reduced To 14 Years

by: Solomon L. Wisenberg

Judge Lake effectively ratified the deal struck months ago by federal prosecutors and the former Enron CEO. The agreement called for a sentence of from 14 to 17.5 years. Skilling agreed to stop fighting his conviction and to hand over restitution funds to the victims. He obviously gets credit for time already served. WSJ has the story here.

(wisenberg)

June 21, 2013 in Arthur Andersen, Enron, Prosecutions, Prosecutors, Sentencing | Permalink | Comments (0) | TrackBack (0)

Tuesday, January 8, 2013

Decision by Tagliabue in NFL "Bounty" Cases May Be Instructive in Criminal Sentencing

by: Lawrence S. Goldman

One of the many things that has bothered me about the criminal justice system is that there are no "grays."  Everything is either criminal or non-criminal.  Conduct that on one day is legally acceptable, even if perhaps sharp and unwholesome, on the next day will, if a penal statute goes into effect, be criminal and punishable by years in prison.

This fair-to-foul scenario is particularly troublesome in certain areas of white-collar law.  On day one, for instance, conduct which exploits "loopholes" in the tax law may go from widely-practiced and legally-tolerated "tax avoidance" to now-prohibited and severely punishable "tax evasion."  When this change from acceptable to criminal occurs by statute, there at least is some public notice and warning to potential wrongdoers, although such notice obviously never reaches many persons.  When, however, the law, or potential law, changes overnight by an unpredictable or unexpected court decision or an indictment based on a novel theory of prosecution, the sudden changes to what is considered prosecutable is even more problematical. 

I do not have any easy solution to this problem.  We cannot expect the government to send out a hundred million notices that new criminal laws have been enacted (although we do, for instance, require financial institutions to notify all of their credit card customers of interest rate changes).  Nor, of course, if such notices were sent, can we reasonably expect a hundred million people to read or understand them.  Additionally, we do not want to prohibit prosecutors from imaginative use of legally permissible tactics to prosecute what is apparently morally wrong and harmful.

We should, however, in the sentencing area recognize that it is essentially unfair to punish a defendant as seriously for conduct that had previously been generally accepted or tolerated than for conduct clearly known at the time of the offense to be criminal.  Under this theory, for instance, Michael Milken could reasonably be prosecuted, as he was in the late '80s, for essentially "parking" stock, an arguably "civil" violation never before prosecuted criminally, but could not reasonably be sentenced, as he was initially, to ten years in jail (later reduced upon a Rule 35 motion).

I have on a few occasions argued to a sentencing judge that she should give a less severe sentence because the defendant's conduct was at the time he committed it not widely known to be criminal or generally was not prosecuted.  I have never been successful, at least to the extent a judge explicitly agreed (of course, judges often do not explicate their reasoning).  I am aware of no case in which a court explicitly granted a departure or variance on these grounds (although there may well be some).  Nor am I aware of any Sentencing Guidelines consideration of this issue.

The decision by arbitrator Paul Tagliabue in the National Football League's New Orleans Saints "bounty" case (In the Matter of New Orleans Saints Pay-for-Performance/Bounty, December 11, 2012) is interesting and relevant.  See here.  See also here.  Tagliabue, the former National Football League commissioner and a lawyer, affirmed the findings of misconduct made by Commissioner Roger Goodell but vacated the disciplinary sanction for the four players involved, suspensions of from four games to one year.  Tagliabue based his vacation on sanctions essentially on two grounds:  first, that the players' actions were encouraged by the coaches and other officials of the Saints, and, second, that professional football had previously treated such conduct gently, if not tolerating it.  Tagliabue strongly suggested that when an existing "negative culture" is addressed by strict prohibitions, the penalties for violations should be phased in.

I do not expect federal sentences to be "phased in" so that, for instance, a violation of a new law within two years of enactment be punishable by a sentence of up to two years, and thereafter by up to five, although I do not think such an idea is entirely far-fetched.  I do hope, however, that in appropriate cases judges consider adjusting sentences downward when the conviction is based on new law or a new application of existing law, especially when the change caused a sudden prohibition of generally acceptable behavior in the prevailing culture, even a negative culture.  Mr. Tagliabue's opinion will not, of course, be considered precedential in the criminal law, but application of its reasoning in certain criminal cases may be appropriate.

(goldman) 

Related Article - Tagliabue tosses out player penalties in bounty case

January 8, 2013 in Sentencing, Sports | Permalink | Comments (0) | TrackBack (0)

Friday, October 26, 2012

ABA Fall Institute - Sentencing Panel

This panel was moderated by James Felman (Kynes, Markman & Felman, P.A.). The opening panelist, Hon. Ketanji Brown Jackson, Vice-Chair, U.S. Sentencing Commission, spoke about the 2012 Guideline Amendments which go into effect soon if Congress does not modify the changes.  Some of these changes are in the white collar crime arena. Specifically, there are modifications to certain frauds – insider trading, mortgage fraud, securities fraud, and financial institution fraud.  Many of these changes regard the determinations of loss.  In some instances the commission changed the application notes.The speaker also noted that the Sentencing Commission is in a multi-year study of economic crimes. (proposed amendments can be found here)

Providing a congressional perspective was Bobby Vassar (Chief Minority Counsel, Subcommittee Crime, Terrorism, and Homeland Security, U.S. House of Representatives) who reminded us that no one gets defeated in an election by being tough on crime.  Providing an executive perspective was Michael Rotker, Criminal Appellate Division, U.S. Department of Justice. From the defense side was Amy Baron Evans, Federal Defenders Sentencing Resource Counsel.

Two individuals provided international perspectives: Clarisse Moreno (Kynes, Markman & Felman, P.A.) and Stephan Terblanche (University of South Africa, Pretoria, South Africa).   Ms Moreno noted that in France if you get two years or less, very rarely will you serve prison time. Absent it being a human rights violation, in Norway the maximum penalty is 21 years. Ms. Moreno also noted that the recidivism rate is low in Norway. Stephan Terblanche noted that where movies and other items from the U.S. are looked at elsewhere, the sentencing guidelines do not export very well. Having the international perspective offered by these speakers was particularly fascinating and offered a welcomed dimension to this sentencing discussion.   

(esp)

October 26, 2012 in Conferences, Sentencing | Permalink | Comments (0) | TrackBack (0)

Wednesday, October 24, 2012

Rajat Gupta's Sentencing: Practice Notes

by: Solomon L. Wisenberg

The sentencing is today at 2:00 PM Southern District of New York Time. (And is there really any other time in the Universe?)

As I noted on Monday, Gupta's Guidelines Range, according to the Government and the Probation Office, is 97-121 months.That's a Level 30. Gupta's attorneys put Gupta's Guidelines Range at 41-51 months. That's a Level 22. The different calculations are based on different views of the gain and/or loss realized and/or caused by Gupta. Gupta's attorneys are seeking a downward variance and asking for probation, with rigorous community service in Rwanda. Serving a sentence in Rwanda is not as strange as it may sound on first hearing. After all, criminal defendants in Louisiana regularly do time in Angola.

But seriously, lawyers and germs, there is a practice pointer in here somewhere. Practitioners naturally strive to obtain the lowest possible Guidelines Range as a jumping off point for the downward variance. It is psychologically easier for a judge to impose a probationary sentence when the Guidelines Range is low to begin with. It is legally easier as well, because the greater the variance from the Guidelines, the greater the judicially articulated justification must be.

But too many lawyers push the envelope in their Guidelines arguments, thereby risking appellate reversal on procedural grounds. This is a particular danger when the judge is already favorably disposed toward the defendant and looking for ways to help him. Failure to correctly calculate the Guidelines is a clear procedural error. (Some of the federal circuits try to get around Booker, Gall, and Kimbrough by setting up rigorous procedural tests. The Fourth Circuit is the most notorious outlier in this regard.) Lawyers must be on guard against the possibly pyrrhic and costly victory of an incorrectly calculated Guideline range, followed by probation. One solution is to have the court rule on alternative theories. "This is the Guidelines Range. These are my reasons for downward variance. Even if the Guidelines Range was really at X, as the Government argues, I would still depart to Y for the same and/or these additional reasons." If the judge already likes your client, getting him or her to do this is often an easy task.

Of course, Judge Rakoff needs no instructions in this regard. One of our ablest and sharpest jurists, and a leading Guidelines critic, he will attempt to correctly calculate the Guidelines Range in an intellectually honest manner and will downwardly (or upwardly) vary as he damn well sees fit, with ample articulation.

(wisenberg)

October 24, 2012 in Fraud, Insider Trading, Prosecutions, SEC, Securities, Sentencing | Permalink | Comments (1) | TrackBack (0)

Monday, October 22, 2012

Some Thoughts on the Impending Gupta Sentence

by: Lawrence S. Goldman

As my colleague Solomon Wisenberg wrote, see here, former Goldman Sachs director Rajat K. Gupta is scheduled to be sentenced this Wednesday, October 24, by Judge Jed S. Rakoff of the Southern District of New York upon his conviction of insider trading and conspiracy.

The sentencing decision in this case is a particularly difficult one.  On the one hand, Gupta is (or was) a man of exceedingly high repute who has done extraordinary good works, as attested to in sentencing letters by Bill Gates and Kofi Annan, and, if sentencing were based on an evaluation of the defendant's entire life, even considering the serious blemish of this case, Gupta might well deserve commendation and not punishment.

On the other hand, the crime for which Gupta was convicted, albeit arguably aberrational, was a brazen and egregious breach of the faith which was placed in him precisely because of his outstanding reputation.  Indeed, while Gupta's motivation appears not to have been greed or personal gain, a factor that ordinarily would suggest leniency, one may conclude that his crimes resulted from an arrogance of power and privilege and the belief that as a "master of the universe" he was above the law.

Gupta, having gone to trial and expected to appeal (challenging the same wiretap that is a subject of the appeal by Raj Rajaratnam discussed by my other colleague, Ellen S. Podgor, see here), is at somewhat of a disadvantage.  Since any statements he may make discussing his motivation or showing remorse could probably be used as admissions in a potential new trial, he did not admit wrongdoing or demonstrate remorse, factors viewed favorably by most sentencing judges.  Although I strongly doubt that Judge Rakoff will "punish" Gupta for going to trial, as some judges do, the judge will be unable to consider any understandable and perhaps sympathetic motivation or any remorse, if either exists, as a mitigating circumstance.

As often happens, both sides have made extreme sentencing requests.  The government asks for a sentence of 97 to 121 months, what it claims is the appropriate sentencing guidelines range.  The defense is seeking probation with community service in Rwanda, supported by a request from a Rwandan governmental official, or alternatively New York.  At first blush, the request for community service in Rwanda struck me as either a "Hail Mary" hope, an accommodation to a client or family who are unwilling to accept reality, or a deliberately lowball request in the expectation of a middle ground sentence.  On further consideration, however, I believe that a sentence of, say, two years performing "community service" in Rwanda while living in spartan conditions (a modest one-room apartment, cooking his own meals, not having servants, etc.), might not be inappropriate.  Rather than wasting Gupta's enormous talents and intellect in prison, such a sentence would enable him to provide considerable benefit to society.  Indeed, such a sentence would probably be much more onerous for Gupta than confinement in a federal minimum security camp.  To be sure, there is a serious question whether such community service could be suitably monitored.

Of course, Judge Rakoff, however independent, fearless and innovative as he is, will not sentence Gupta in a vacuum.  He will no doubt consider sentences that he and other judges have meted out to lesser-known defendants in other insider trading cases and how his sentence will appear to the public in terms of deterrence and equal justice.  Gupta should not buy his plane ticket yet.

 (goldman)

October 22, 2012 in Insider Trading, Prosecutions, Sentencing | Permalink | Comments (0) | TrackBack (0)

Rajat Gupta Sentencing Materials

by: Solomon L. Wisenberg

Rajat Gupta is scheduled to be sentenced by Judge Jed Rakoff on Wednesday. The  Rajat Gupta Sentencing Memo filed last week by his attorneys is an outstanding work of its kind, and the Government's Sentencing Memo in U.S. v. Gupta is also quite good.

Gupta's Guidelines Range, according to the Government and the Probation Office, is 97-121 months. Gupta's attorneys, led by Gary Naftalis, put Gupta's Guidelines Range at 41-51 months. The different calculations appear to be based entirely on different views of the gain and/or loss realized and/or caused by Gupta. Key issues are whether Judge Rakoff should include the acquitted conduct in the loss calculations (which he is allowed but not required to do)  and whether the gain should be confined to Gupta and his co-conspirators, as opposed to other investors. Gupta's attorneys are arguing for probation, with a condition of rigorous community service in New York or Rwanda.

My guess is that, however he gets there, Judge Rakoff will impose a prison sentence of 3 to 6 years. The judge is a well-known critic of the Guidelines and Gupta has apparently led a life of extraordinary kindness and good works. On the other hand, Gupta is an enormously wealthy member of the financial elite to whom much has been given. He stands convicted of insider trading, which everybody on Wall Street knows is illegal. This was not a case in which ambiguous admitted conduct did or did not violate the outer edges of the insider trading laws. This was a case in which Gupta either tipped clearly confidential, proprietary inside information or he didn't. The jury has ruled that he did, at least with respect to four of the six charged counts. Judge Rakoff must and will accept that verdict. I believe that Judge Rakoff will see it as his judicial duty to send, through Gupta's sentence, a message of general deterrence.

(wisenberg)

October 22, 2012 in Fraud, Prosecutions, Prosecutors, Securities, Sentencing | Permalink | Comments (0) | TrackBack (0)

Tuesday, August 28, 2012

Prosecutorial Overcharging is Not "Regular"

In an editorial published July 16, 2012 entitled "Trial Judge To Appeals Court:  Review Me" (see here), the New York Times, in the wake of Judge John Kane's opinion discussed here last week (see here), rightly criticized standard plea waivers in federal court, especially those that preclude appeals based on attorney ineffectiveness or prosecutorial misconduct.  The editorial, however, in alleging that in order to induce pleas     "[p]rosecutors regularly overcharge defendants with a more serious crime than what actually occurred" was largely off-the-mark, as Paul J. Fishman, the respected United States Attorney for the District of New Jersey, claimed in a letter to the Times published on July 26, 2012 (see here).

Federal prosecutors do not, in my view, "regularly" overcharge defendants "with a more serious crime than what actually occurred," at least in white-collar cases (although they often pile on unnecessary if legally justifiable multiple charges).  As Mr. Fishman noted, DOJ has directed prosecutors to charge only provable crimes, and in my experience that directive is generally followed.  In many districts, notably with respect to white collar cases the Southern District of New York, guilty pleas are to the indicted charges or top count, and rarely only to less serious counts.  Since defendants are unlikely to plead guilty to unprovable charges, that practice indicates that the charging decisions are consistent with the law and the facts.

Indeed, there is little incentive for prosecutors to overcharge in order to induce pleas since defense lawyers are aware that the Sentencing Guidelines suggest that the sentencing judge should in any case consider all relevant conduct committed by the defendant, no matter to what crime the defendant has pleaded, and prevailing statutes (and often a conviction of multiple charges) virtually always provide the courts more than ample sentencing leeway.  Unlike many state statutory schemes, most federal statutes in the white collar area -- mail and wire fraud, for instance -- are generic and not scaled by degrees according to the amounts of money involved, such as state statutes concerning grand larceny in different degrees.  The Sentencing Guidelines levels, but not the statutory crimes, are determined primarily by the dollar loss figure.

This is not to say that most defendants do not face considerable institutional pressure to plead guilty (and, if possible, "cooperate" with the prosecution).  Defendants, depending on from which direction one looks, are either "punished" for going to trial or "rewarded" for pleading guilty by the Guidelines provisions for a near-automatic two or three level decrease for pleading (acceptance of responsibility, U.S.S.G. 3E1.1) and a near-automatic two level increase for a convicted defendant who has testified in her defense (obstruction of justice, U.S.S.G. 3C1.1).  Additionally, a defendant who pleads guilty usually receives a more generous interpretation of the Guidelines by the prosecutor, probation officer and the court, and a lessened fervor from the prosecution and more lenient attitude by the judge.  And, of course, the sweet carrot of a U.S.S.G. 5K1.1 letter for those who cooperate with the government is often, perhaps too often, the difference between a severe sentence and a lenient one.

(goldman)

August 28, 2012 in Legal Ethics, Obstruction, Prosecutors, Sentencing | Permalink | Comments (1) | TrackBack (0)

Thursday, August 23, 2012

Government Takes Harsher Position After Judge Rejects Plea Bargain Because of Appellate Waiver

Professor Douglas Berman, in his excellent blog, Sentencing Law and Policy, quoting a Denver Post article, writes that after a federal judge rejected a plea agreement urged by both parties because it included a standard appellate waiver, the prosecutor came back with a harsher offer, albeit one without an appellate waiver, which the defendant accepted.  See here and here.

Senior District Judge John Kane of Colorado refused to accept a deal involving Timothy Vanderwerff, a defendant accused of child pornography, because of the waiver provision.  That deal provided that the government would seek no more than 12 years in prison and the defendant seek no less than five.  The judge said that "indiscriminate acceptance of appellate waivers undermines the ability of appellate courts to ensure the constitutional validity of convictions and to maintain consistency and reasonableness in sentencing decisions."

In court papers Vanderwerff's attorney, federal public defender Edward Harris (who worked with me years ago) wrote that the prosecutors refused to agree to the same sentencing position deal without the appeal waiver and instead took a much harsher position.

One possible lesson from this case is that well-meaning judges, reacting to the government's increasing efforts to expand the terms of plea agreements to limit a defendant's ability to appeal and appellate courts' ability to review, might actually do harm to the individual defendant before them in rejecting a bargained-for agreement.  Another possible lesson is that the government does not take kindly to judges interfering with its de facto power to set plea bargaining parameters and may demonstrate its displeasure by treating even acquiescent defendants more harshly when the judge rejects a plea deal it has offered.

Whether the defendant will ultimately suffer is unclear, because the court now, presumably subject to appeal by either side (as well as any applicable mandatory minimums), has the ultimate power to set the defendant's sentence and may well choose to sentence him under the posture both sides agreed upon in the original plea bargain.

(goldman)

August 23, 2012 in Judicial Opinions, Prosecutors, Sentencing | Permalink | Comments (0) | TrackBack (0)

Thursday, July 19, 2012

Hon. Beryl Howell Interprets Southern Union Co.

The Supreme Court, in Southern Union Co. held that "where a fine is so insubstantial that the underlying offense is considered 'petty' the Sixth Amendment right of jury trial is not triggered and no Apprendi issue arises."  But the Court then went on to say that "not all fines are insubstantial, and not all offenses punishable by fines are petty."  The final ruling was that "Apprendi applies to the imposition of criminal fines."  (see here)

Today a district court interpreted that decision with the Hon. Beryl A. Howell penning the decision in United States v. Sanford LTD & James Pogue. The court looked at whether "evidence of monetary proceeds is either permitted or required to be presented to the jury."  So the court needed to examine Southern Union and also the Alternative Fines Act, 18 U.S.C. s 3571(d) and determine whether gross revenues offered by the government should be admitted under the Fed. R. Evid. Rules 402 and 403.    

The district court starts by noting that motive is admissible evidence and that the "relevance is not substantially outweighed by a danger of unfair prejudice."  That said, the court goes a step further holding "that the government's proposed specific measure of monetary proceeds ($24,045,930.79 in gross revenues) may not be admitted, standing alone, to establish the 'gross gain' that Sanford 'derive[d]...from' the charged offenses under 18 U.S.C. s 3571(d)."  The court stated, "[t]he government may not admit that specific monetary figure except to the extent, and only if, necessary for the jury to establish or calculate the appropriate measure of 'gross gain' 'derive[d] ...from' the charged offense, which the Court defines" later in its opinion.

It is here that things get particularly interesting.  Hon. Howell notes the ambiguity in the term "gross"  monetary amount. Being a master of the sentencing guidelines, Hon. Howell points out how the guidelines provide guidance on the meaning of "gross gain." She provides a wonderful lesson on the legislative history, even referencing the Model Penal Code. She notes how there are conflicting opinions on what constitutes gross gains. (nice law review topic for a student looking for the jurisdictional split for his or her student note). In the end she defines "gross gain" to mean "any additional before-tax profit to the defendant that derives from the relevant conduct of the offense."

But she also notes the importance of the term "derived from" and "concludes that the term ...requires that the government prove that a given monetary amount (either a gain or a loss) was proximately caused by the conduct of the charged offense in order to qualify as a 'gross gain' under s 3571(d)."

The court noted that it "requires additional information before deciding whether allowing the government to seek a fine under s 3571(d) would 'unduly complicate or prolong' the trial."

Hats off here to Attorney Greg Linsin of Blank Rome who raised this issue.

(esp) (w/ a hat tip to Irwin Schwartz).

July 19, 2012 in Sentencing | Permalink | Comments (0) | TrackBack (0)