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)

Big Dig Sentence Decision

The First Circuit affirmed the sentences of Robert Prosperi and Gregory Stevenson. The government appealed the sentences following their convictions for mail fraud, highway project fraud and conspiracy to defraud the government. "Both appellees were employees of Aggregate Industries NE, Inc. ('Aggregate'), a subcontractor that provided concrete for Boston's Central Artery/Tunnel project, popularly known as the 'Big Dig.'"  The judge calculated the sentence under the guidelines as 87-108 months and then gave the defendants 6 months of home monitoring, 3 years probation, and 1,000 hours of community service. 

The appellate court found the sentences met the reasonableness standard. The First Circuit stated: 

Although the degree to which the sentences vary from the GSR gives us pause, the district court's explanation ultimately supports the reasonableness of the sentences imposed.  The district court emphasized that its finding on the loss amount caused by the crimes, the most significant factor in determining the GSR, was imprecise and did not fairly reflect the defendants' culpability.  Hence it would not permit the loss estimate to unduly drive its sentencing decision.  Relatedly, it found that there was insufficient evidence to conclude that the defendants' conduct made the Big Dig unsafe in any way or that the defendants profited from the offenses.  The court then supplemented these critical findings with consideration of the individual circumstances of the defendants and concluded that probationary sentences were appropriate.  We cannot say that it abused its discretion in doing so.

The judges ended this thoughtful opinion with:

In this case, the district court carefully explained its sentencing decisions.  Most significantly, the court explained why the estimated loss amount was an unfair proxy for culpability, and why it should not drive the sentencing process.  Importantly, it also found that there was insufficient evidence to conclude that the defendants' conduct compromised the structural integrity of the Big Dig, or that they sought to enrich themselves.  Coupled with the individual circumstances of the defendants, these findings provided a "plausible explanation [for the sentences], and the overall result is defensible."  Innarelli, 524 F.3d at 292.

It is nice to see judges looking at the individuals and not sentencing by the numbers.

See also Doug Bermans, Sentencing Law & Policy here

(esp)

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

Thursday, June 28, 2012

Haley, Madoff, JP Morgan Situations Show Need for Greater Regulation

Today's New York Times was a virtual treasure trove of white collar crime stories.  Among them were the following:

"South Carolina House Panel to Hear Ethics Complaints Against Governor" (see here) - South Carolina Governor Nikki Haley is facing a legislative hearing on whether she acted unethically during her term in the legislature when she was paid $110,000 annually as a fundraiser for a hospital whose legislative goals she advocated.  Knowing nothing about South Carolina legislative ethics rules or criminal law, I do not venture to opine whether the Governor did anything improper.  However, the broad facts here are strikingly close to a series of cases in New York in which a hospital CEO, a state senator and a state assemblyman all were convicted and went to prison.  See here.  It seems to me there should be a restriction against a legislator working for an entity, at least in a loosely-defined job such as consultant or fundraiser, and advocating or supporting favorable legislation for that entity.

                                 *                    *                    * 

"Madoff's Brother Sets Plea Deal in Ponzi Case" (see here) - Peter B. Madoff, the brother of Bernard Madoff and the No. 2 man at Bernard L. Madoff Investment Securities, will reportedly plead guilty tomorrow to falsifying documents, lying to regulators and filing false tax returns.  Peter Madoff reportedly served as the nominal compliance officer of his brother's wholly-owned securities firm and apparently exercised little or no oversight of the firm's operations, thereby providing his brother the freedom to steal billions.

Placing an investment firm's proprietor's brother as compliance officer is akin to asking the fox to guard the henhouse.  It seems there should be, if there is not, a law, rule or regulation prohibiting a close relative, like a spouse, parent, child or sibling, from being the responsible compliance officer in a substantial investment firm owned entirely (as here) or largely by one's relative.

                               *                    *                    * 

"JP Morgan Trading Loss May Reach $9 Billion" (see here) - The amount of JP Morgan's trading losses from its London office could be as much as $9 billion -- four and one-half times as much as the company announced originally.  While JP Morgan has in view of its considerable profits downplayed the magnitude of the loss, which its chief executive officer Jamie Dimon estimated in May could possibly be as much as $4 billion, obviously a $9 billion loss takes a much greater bite out of the firm's profitability, and conceivably may even raise some questions as to the firm's viability.

We now know, in the wake of bailouts and government support, that the federal government is both the de facto and de jure insurer of major banking institutions.  One might ask whether a government insurer, like a private insurance company, should not be able to set specific rules to curb risky activities which might trigger the insurer's support.  To update Congressman Barney Frank, there are now nine billion more reasons for increased governmental regulation.

                                 *                    *                    * 

Like many other white collar defense lawyers, I am strongly against overcriminalization.  On the other hand, I am equally strongly against underregulation.  One of the principal reasons I favor greater and clearer rules and regulations is to give potential white-collar offenders reasonable notice of what is criminal and what is not, and not leave that decision, as frequently happens now, to a federal prosecutor's interpretation of the amorphous fraud laws.

A significant portion of the white-collar defendants I have represented in the last forty years, including many of those who were convicted, have actually believed that their actions were not criminal.  In some cases, this was simply because they lacked a moral compass.  In the financial world, where the primary, and often sole, goal is to take other people's money away from them, many people do not consider whether what they do is morally right or wrong, or are so amoral that they are incapable of making that distinction.  Tighter regulation will at least tell them what is prohibited and what is not.

(goldman)

June 28, 2012 in Current Affairs, Fraud, News, Prosecutors, Sentencing | Permalink | Comments (0) | TrackBack (0)

Thursday, June 21, 2012

Southern Union Co. - Apprendi Applies to Fines - But Will it Matter?

The Supreme Court issued an opinion in Southern Union Co. v. United StatesThe company was convicted of a RCRA violation, which carries a penalty of a fine of not more than $50,000 for each day that there is a violation. Justice Sotomayor, writing the opinion for the Court, considered whether juries need to decide the fine given, in order to comply with the Court's prior decisions in Apprendi and Blakely that "reserves to juries the determination of any fact, other than the fact of a prior conviction, that increases a criminal defendant's maximum potential sentence."

The Court 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."  And it applied here.

A dissent by Justice Breyer, that was joined by Justices Kennedy and Alito, argued that "the Sixth Amendment permits a sentencing judge to determine sentencing facts - facts that are not elements of the crime but are relevant only to the amount of the fine the judge will impose." They believed that the Court's position would "lead to increased problems of unfairness in the administration of our criminal justice system."  They discuss the existing high rate of plea agreements in the case.

The real question here is whether this decision will matter. As noted by the dissent, 97% of federal convictions result from guilty plea.  But what went unnoticed is that very few companies - the object of many fines - go to trial.  Often these cases are resolved with non-prosecution and deferred prosecution agreements.  So will it really make any difference that juries can determine these fines, when the corporation in a post Arthur Andersen LLP world will seldom be going to trial.

(esp)

June 21, 2012 in Judicial Opinions, Sentencing | Permalink | Comments (1) | TrackBack (0)

Sunday, June 3, 2012

Federal Sentencing Guidelines Conference - Fraud Panel

The recent federal sentencing guideline conference had a panel moderated by Professor Doug Berman (Ohio State) on fraud/theft - it was part two for this conference on the topic of the fraud/theft sentencing guidelines. The panelists were: Harry Chernoff (AUSA Southern District of NY); Lisa Mathewson (Law Offices of Lisa A. Mathewson); Tracy A. Miner (Mintz Levin Cohn Ferris Glovsky & Popeo).

Harry Chernoff emphasized his belief that who the judge is can make a difference in the sentence received in a fraud/theft case. Lisa Mathewson noted how "loss is an imperfect" statement of culpability. Tracy A. Miner suggested that one needs to "look at the motivation of the particular individual." In this regard there was discussion how a corporation may be getting a pass because of a deferred prosecution.

Looking at 2B1.1 and how to assess "gain or loss," Lisa Mathewson reminded listeners that when the loss is "0" that is a number that can and should be used. Tracy Miner noted that prosecutors are trained to increase the loss figure. In this regard it was noted that loss in some cases can end up as 360 to life, because there are so many potential aggravators. It was noted that is important to look at lack of gain as a mitigating factor that warrants a move downward.

It was noted how courts set the bar extremely low in what will be considered "sophisticated means." Tracy Miner noted that computers being used should not make the conduct sophisticated, as even kindergarten students use computers these days.

 

Some panelists noted that one needs to look at what was the real conduct and whether it being increased just because this was conduct highlighted in recent days. Tracy Miner reminded listeners to try and convince the government of the benefits of the defendant’s conduct. For example, there may be good collateral consequences such as did special education kids benefit and will there be severe consequences if the loss is placed very high.

The end of the panel discussion looked at commission considerations on the horizon and one position taken by some was that the commission should look at the whole guideline as opposed to just tweaking parts.

 (esp)

June 3, 2012 in Conferences, Sentencing | Permalink | Comments (0) | TrackBack (0)

Wednesday, May 23, 2012

Ethics Resource Center Report on Sentencing Guidelines

A Blue-Ribbon Report calls for changes to sentencing guidelines implementation. They advocate for "more consistent promotion and recognition of compliance and ethics programs by the U.S. enforcement community" as this "would incentivize businesses to invest more fully in self policing efforts against corporate crime." The Advisory Group on this report is most impressive with folks like Mancy Higgins (VP and Chief Ethics & Compliance Officer for Bechtel), Michael E. Horowitz who served on the group prior to being appointed Justice Department's (DOJ) Inspector General; former Deputy Attorney General Paul NcNulty who joined Baker & McKenzie LLP in 2007; Hon. Diana E. Murphy of the United States Court of Appeals for the Eighth Circuit; Michael Oxley, former Congressman and Chairman of the House Financial Services Committee; and Former Deputy Attorney General Larry Thompson, who retired as senior vice president of government affairs, general counsel, and secretary for PepsiCo.  Others who are part of this independent advisory group are equally as impressive.

(esp)

May 23, 2012 in Sentencing, Think Tank Reports | Permalink | Comments (0) | TrackBack (0)

Thursday, May 10, 2012

United States v. Rubashkin

The white collar crime blog, for two years (see here and here), has given the collar for the case most needing review to the case of Sholom Rubashkin.  The case has an incredible gathering now from a spectrum of individuals and groups across political and ideological views.  The Petition for Cert is here and background on the case is here. Here are some of the interesting updates on this case -

Washington Legal Foundation - Urges High Court to Review Unreasonably Harsh Sentence for Small-Business Owner

Amici Brief for Justice Fellowship & Criminal Law & Sentencing Professors and Lawyers  - Download 11-1203 amici brief  (a wonderful brief authored by David Deitch and Alain Jeff Ifrah that points out the jurisdiction split among Circuits and why it is important for Appellate "judges to state on the record that they have considered each non-frivolous argument for variance under the factors listed in Section 3553(a)" and how and why each such argument affected the sentence imposed.

Amicus Brief of the Association of Professional Responsibility Lawyers (APRL) - Download APRL Amicus Brief in Rubashkin (a strong brief written by W. William Hodes that provides the importance of this case from the perspective of "an independent national organization of lawyers and legal scholars whose practices and areas of academic inquiry are concentrated in all aspects of the law of lawyering." The brief focuses on the jurisdiction split regarding Rule 33 of the Federal Rules of Criminal procedure. The brief also points out important ethics issues that warrant review in this case.)

Hopefully, someone is listening. 

(esp)

May 10, 2012 in Fraud, Judicial Opinions, News, Prosecutions, Sentencing | Permalink | Comments (1) | TrackBack (0)

Monday, April 30, 2012

High Anti-trust Sentence Affirmed in Split Decision

In United States v. VandeBrake, (opinion- Download 111390P) the Eighth Circuit in a 2-1 opinion affirmed a 48-month sentence in an anti-trust case. The trial court had "varied upward from the advisory guidelines range based primarily upon VandeBrake's lack of remorse and the court's policy disagreement with United States Sentencing Guidelines Manual (U.S.S.G.) § 2R1.1."  The trial court rejected, after giving notice to the parties, a binding plea agreement which called for a sentence of 19 months.  Defendant-appellant argued that imposing "the longest sentence ever imposed in an antitrust case" was unwarranted here in comparison to the other case that received this same high sentence. The Appellate court affirmed the decision, but there's a concurring opinion and also a dissent. 

The concurring opinion "disassociate[s itself] from the district court's comments about economic success and status, race, heritage, and religion."  Chief Judge Riley writes - "I consider those comments inappropriate and not a proper reason for supporting any sentence."

The dissent by Circuit Judge Beam states in the opening paragraph - "even a multi-millionaire businessman has the right to be sentenced under the rule of law, especially rules recently put in place by the Supreme Court. Rich persons, poor persons and persons at all other economic strata should expect no less."  The dissent states "the sentencing court's bald assumption that it has deferential discretion to substantially vary from all guidelines on policy grounds is reversible error."  Judge Beam states:

"My research reveals that there were only a few hundred offenders sentenced for committing antitrust violations between FYs 1996 and 2011. The statistics also demonstrate that, over a period of 15 years, VandeBrake was the only antitrust offender sentenced above the guidelines range. Indeed, out of some 230 offenders The preliminary data for FY 2011 indicates that one antitrust offender was sentenced above the guidelines via an upward variance. Since VandeBrake was sentenced under § 2R1.1 since FY 1997, 83 were sentenced within the guidelines range and 146 were sentenced below the guidelines range. Similarly, since FY 1996, of the 288 offenders sentenced with an antitrust violation being the "primary offense," 95 were sentenced within the guidelines range and 192 were sentenced below the guidelines range." (Footnotes omitted)

Will DOJ join defense counsel on the same side in sending this case higher? They should. As noted here, Professor Berman looks at another white collar case with a high sentence.  He states "I would bet a whole lot of money that on appeal federal prosecutors will defend this extremely long white-collar sentence as reasonable even though it surely does appear out of line with the sentences given to similar defendants convicted of similar crimes."  As "ministers of justice" DOJ should support the defense if they are to continue their argument that sentences in white collar cases should remain within the guidelines.

(esp)

April 30, 2012 in Judicial Opinions, Sentencing | Permalink | Comments (0) | TrackBack (0)

Sunday, April 29, 2012

35 Years For Conviction Related to Ponzi Scheme

Michael Pollick, Sarasota Herald Tribune, Marian Morgan sentenced to 35 years in prison

(esp)(hat tip to Linda Friedman Ramirez)

April 29, 2012 in Fraud, Sentencing | Permalink | Comments (0) | TrackBack (0)

Saturday, March 3, 2012

2012 ABA White Collar Crime Conference- Back to Basics - Sentencing

The opening session of the ABA Annual White Collar Crime program was a back to basics sentencing program. This program was moderated by Jodi L. Avergun (Cadwalader) who did a wonderful job walking the panel participants through the basics of white collar sentencing. She noted that many feel the sentences in white collar cases have no relation to the actual crime charged and in this regard she noted that Congress, this year, directed the Commission to review some of the white collar crime sentences.

Eric A. Tirschwell (Kramer, Levin, Naftalis & Frankel LLP) provided a historical background on the development of the sentencing guidelines, from mandatory to advisory guidelines, with a specific focus on the fraud guidelines. He covered key cases like Booker, Gall, Kimbrough, and Rita and also the 3553 factors that play a focal part of the sentencing framework. Moving specifically to white collar cases, he explained the basics of the fraud table found in 2B1.1 of the guidelines and talked about several recent white collar cases like two of my favorites, Parris and Adelson. Tischwell noted that it is important to calculate the guidelines range as low as possible, argue for a variance, and maybe for a departure as well, explain why the sentence is "sufficient but not greater than necessary" (SBNGN) to satisfy sentencing purposes.

For anyone who has never heard a presentation by Hon. Beryl A. Howell, (U.S. District Court, District of Columbia) it’s a must do. She always comes with incredible statistics and information. This time was no different. Hon. Howell looked at what the Sentencing Commission is doing and what are the trends that we are seeing. She focused on three areas: 1) what is actually happening with white collar crime defendants around the country 2) why statistics are important 3) what is coming next.

She started by doing something that most folks providing statistics on white collar crime fail to do – she defined what would be included within this term. Then she presented some fascinating statistics. Of particular note is that white collar sentences are going up (average in 2007 was18 months; pre-2011 shows 24 months). This is not surprising since the average guideline minimum has also increased (average in 2007 was 23 months; pre-2011 shows 31 months). Yes, the number of white collar cases being sentenced within the guidelines has decreased (68.2% in 2007 and pre-2011 it’s 47.7%), but it is also important to note that the government sponsored below guidelines range has increased (13.7 in 2007 and pre-2011 it’s 22.9%). Judges sentencing above the guidelines went up slightly (2.2% in 2007 and pre-2011 it’s 2.4%) Some statistics on the plea to trial numbers were also provided by Hon. Howell. The preliminary 2011 cases showed that 93.5 % of the cases had a plea and 6.5 % went to trial. The average sentence for pleas in white collar cases was 21 months and those that went to trial had an average sentence of 62 months. But it should be noted that the average guideline minimum for plea cases was 29 months and it was 111 months for the cases that went to trial.

Andrew C. Lourie (Kobre & Kim) offered tips for sentencing. He stressed the importance of putting important points in on sentencing memo.

Edward C. Nucci (U.S. Attorneys' Office, Southern District of Florida) presented the prosecution perspective (of course not speaking on behalf of the government). He stressed the importance of post-Booker variances. He noted how a prosecutor can want to work out as much as possible prior to the actual hearing.

Karen A. Popp (Sidley Austin), the final speaker spoke about chapter eight of the guidelines -organizations. She stressed the importance of having an effective compliance program, and not just a paper program.

This was an incredible opening to the white collar crime conference. More blog posts will follow.

(esp)(blogging from Miami, Florida)

March 3, 2012 in Conferences, Sentencing | Permalink | Comments (0) | TrackBack (0)

Friday, January 13, 2012

Inside Trader Brownstein Receives 366-Day Sentence

Former Denver hedge-fund operator Drew "Bo" Brownstein, about whose case we wrote (see here), was sentenced Wednesday to a prison term of one year and one day following his plea of guilty to insider trading charges.  Brownstein had received confidential information from his friend Drew Peterson concerning a pending purchase of Mariner Energy by Apache Corp. and used that information to reap about $2.5 million in profits for himself and his asset management firm.  Drew Peterson, who has pleaded guilty but has not yet been sentenced, received the information from his father, H. Clayton Peterson, a Mariner director, and personally netted about $150,000 from it.  The older Peterson also pleaded guilty, and received a probationary sentence.

The sentence of 366 days was between the 46-month high under the applicable Sentencing Guidelines range and the probationary sentence requested by defense counsel and above the six-month sentence suggested by the probation officer.  The one-year and one-day sentence will allow Brownstein to earn "good time" of 47 days.  Under federal law, good time is permitted only for a sentence of more than one year.  18 U.S.C. 3624(b).

(goldman)

January 13, 2012 in Insider Trading, Securities, Sentencing | Permalink | Comments (0) | TrackBack (0)

Wednesday, December 7, 2011

Blago - Commentary on Sentencing

As noted by co-blogger Solomon Wisenberg here, former Illinois Governor Rod Blagojevich received a sentence of 14 years.(see also FBI Press Release here). He is not the first governor from Illinois to be convicted and sentenced.  History includes Otto Kerner (sentenced to three years), Dan Walker (sentenced to seven years - crimes unrelated to his office), and George Ryan (sentenced to 6 1/2 years). (see here)  Two questions to ask here: 1) Are white collar sentences really getting lower? 2) Would his sentence be so high if he had quietly plead?

(esp)

December 7, 2011 in Celebrities, Sentencing | Permalink | Comments (1) | TrackBack (0)

Tuesday, November 29, 2011

Supreme Court Accepts Criminal Environmental Case - Does Apprendi Apply to Fines

The U.S. Supreme Court accepted cert in the case of Southern Union Co. v. United States. The question presented is "whether the Fifth and Sixth Amendment principles that this Court established in Apprendi v. New Jersey, 530 U.S. 466 (2000), and its progeny, apply to the imposition of criminal fines."

Southern Union was convicted under RCRA following a jury trial. The First Circuit Court of Appeals examined whether under Apprendi it was proper that a judge, and not a jury, "determined the facts as to the number of days of violation under a schedule of fines," and held that "Apprendi does not apply to the imposition of statutorily prescribed fines." 

With huge fines being levied in white collar cases, this issue is an important one not only in the environmental context, but also in other areas. In the Southern Unioncase, the "district court imposed a $6 million fine and a $12 million 'community service obligation.'" The government argued that Apprendi does not apply to criminal fines  citing to the Supreme Court's decision in Oregon v. Ice. But with white collar fines becoming exorbitant numbers, it raises an interesting issue that will likely be an important case to follow in the Court.

(esp)

November 29, 2011 in Sentencing | Permalink | Comments (0) | TrackBack (0)

Friday, November 18, 2011

Fourth Circuit Affirms 100 Year Sentence

The Fourth Circuit issued an unpublished opinion affirming Defendant Okun’s convictions and 100 year sentence. U.S. Attorney, Neil H. MacBride, states regarding this opinion:

"Financial fraudsters make calculated, rational decisions, and the threat of spending as much as 100 years in prison can begin to change corporate culture and behavior. Today’s opinion confirms that it is just for fraudsters who rob the life savings of their victims to spend the rest of their lives – or at least a big chunk of it – behind bars."

Interestingly the court notes in its opinion that the defendant operated a "Ponziesque" scheme, resulting in losses in excess of $125 million dollars." The court notes that the defendant's conviction on twenty-three counts resulted in a sentence of "1200 months' imprisonment, a sentence 3600 months below the advisory Guidelines sentence."

Some may argue that judges are issuing below guidelines sentences in white collar cases. But this case demonstrates the absurdity of issuing guideline sentences. Do you know anyone who has lived 400 years? Is that reasonable?

(esp)(blogging from Washington, D.C.)

November 18, 2011 in Judicial Opinions, Sentencing | Permalink | Comments (1) | TrackBack (0)

Wednesday, November 16, 2011

"Baseless Disparities"?

Assistant Attorney General Lanny A. Breuer, in a recent speech to the American Lawyer/National Law Journal Summit spoke about what he considers disparities in sentencing. He stated:

"One area – though by no means the only one – in which we have seen significant disparities in sentencing in the last several years is financial fraud.    With increasing frequency, federal judges have been sentencing fraud offenders – especially offenders involved in high-loss fraud cases – inconsistently.   For example, a defendant in one district may be sentenced to one or two years in prison for causing hundreds of millions of dollars in losses, while a defendant in another district is sentenced to ten or 20 years in prison for causing much smaller losses."

Of course there are differences. Sentences should not be based solely on the crime or amount of loss involved.And yes, there are disaparities - there are disparities in the charging practices of prosecutors.  Lest us forget - we sentence people, not numbers, and people are different.

See also Mike Scarcella, BLT Blog, DOJ's Lanny Breuer Addresses Sentencing Disparities 

(esp)

November 16, 2011 in Prosecutors, Sentencing | Permalink | Comments (2) | TrackBack (0)

Thursday, October 27, 2011

Kevin Ring Alleged Government Sought False Testimony

A few months ago I wrote that "the widespread prosecutorial (and judicial) practice of giving favorable treatment . . . to those who cooperate with the government by informing, taping and/or testifying has had in many ways a pernicious effect on the criminal justice system, particularly in the white-collar area." See here.

The case of Kevin Ring, discussed last month by blog editor Ellen S. Podgor, see here, illustrates at least two detrimental effects: the harsh sentences sought by the government (and sometimes imposed by judges) against those who choose not to cooperate, especially those who exercise their right to trial, and the great pressure on potential cooperators to falsely implicate others in order to lessen their own sentences. Ms. Podgor briefly addressed the first in her blog. In this blog, I discuss the second.

Ring was the sole defendant to go to trial of the twenty indicted in the Abramoff lobbying scandal. He did so after he had thirteen proffer sessions with the government, but could not reach an acceptable plea and/or cooperation agreement. After a hung jury, at a retrial he was convicted of conspiracy, honest services wire fraud, and paying an illegal gratuity by providing meals and sports and concert tickets for political favors. He was sentenced by D.C. District Judge Ellen Segal Huvelle to twenty months yesterday, October 26.

In a sentencing letter, Ring (the editor of a book entitled Scalia Dissents, Writings of the Supreme Court's Wittiest) claimed that the government position on sentencing, which initially was for a sentence in the Guideline range of 17 to 22 years, and in other areas was retaliation for his failure to falsely implicate his friend and mentor, former Congressman John Doolittle, whose wife had been employed by Abramoff in an allegedly do-little job. He wrote, "[T]he prosecutors made it clear what I needed to say to get a deal. The prosecutors wanted me to say that Congressman Doolittle took official acts to help my clients because I gave him a stream of things of value, and if I had stopped giving him some things, he would have stopped taking official acts (or, at least, taken fewer acts). Saying these things would be a flat-out lie."

Further, he said, "It became clear at a certain point that since I was not willing to incriminate Congressman Doolittle and others that I was going to pay a heavy price. Despite my consistent statements about my relationship with Congressman Doolittle's office, the government eventually asked me to say things that were totally at odds with what I had told them." (Doolittle, interestingly, submitted a letter to Judge Huvelle seeking leniency for Ring.)

The government, as expected, denied Ring's accusation "categorically and unequivocally." "Ring's insinuation that the government was pressuring him to lie in order to implicate Congressman Doolittle seems particularly far-fetched," the prosecutors wrote. "To be clear, the government did no such thing."

I do not venture to assert who is now telling the truth -- Ring or the prosecutors. I do not know whether the prosecutors asked Ring to testify to a version of the facts they knew to be untrue, or even to a version they believed to be true which in fact was not. I do believe, however, that Ring's accusation is not as "far-fetched" as the government claims.

Prosecutors and agents not infrequently are married to the most sinister version of the facts. As Edward Bennett Williams once noted, when prosecutors look at windows, they do not see the view outside, but the dirt on the windowpanes. Although there are a few "rotten apples" among federal and state prosecutors who actually suborn perjury by urging cooperators (or other witnesses) to testify to facts the prosecutors know to be false, most prosecutors who put pressure on cooperators (or other witnesses) to implicate others are earnest, honorable lawyers acting in the good faith belief that the cooperator is holding back and that the version the prosecutors are pushing is what they believe actually happened. In effect, they intend to "suborn truth," that is, put heavy pressure on the cooperator to relate what the prosecutors actually believe is the truth.

To be sure, often the prosecutors are right: the cooperators are indeed protecting a colleague or friend or are minimizing the scope of their own wrongdoing. Often, however, the prosecutors are wrong: the witness is telling the truth and the whole truth.

The pressure on a potential cooperator who cannot truthfully testify as the prosecutors want (as Ring claims he was) is enormous. The potential cooperator is aware that unless the cooperator changes the story to conform with the prosecutors' version, the cooperator will be denied the coveted 5k1.1 "cooperation" letter which will very likely reduce (or perhaps even eliminate) a prison sentence. Some succumb to the prosecutors' importuning and falsely accuse another, and eventually testify perjuriously at trial (but, of course, are not prosecuted) and help convict innocent, or perhaps not so innocent, people. Some refuse to lie and the prosecutors, sometimes grudgingly, accept their story. Some refuse to lie (as Ring alleges he did) and suffer the consequences of not receiving a 5k1.1 letter, a favorable plea agreement and a lenient government posture on sentencing and other issues, and perhaps, as Ring has alleged, vindictive and harsh prosecutorial contentions.

It is unusual that a defendant in sentencing papers accuses the government of urging him to lie. Many defendants in the position Ring alleges he was choose at sentencing not to aggressively criticize the prosecutors out of fear of antagonizing them or the sentencing judges, who frequently tend to be hostile to allegations of prosecutorial overreaching, or perhaps because it has little direct relevance to sentencing. Indeed, Ring's able lawyers, Andrew T. Wise and Timothy P. O'Toole of Miller and Chevalier, apparently did not highlight this argument.

The issue of decent prosecutors pressuring cooperators to change their stories so as to provide testimony which falsely implicates innocent people, which Ring claims would have happened had he not resisted the prosecutorial pressure, is an important one, especially in white-collar cases.

It is an issue that has not had much exposure, primarily since white-collar defense lawyers who represent cooperators in their dealings with prosecutorial agencies (as almost every white-collar defense lawyer does) are hesitant personally or ethically to publicize it. It demands serious attention.

(goldman)

October 27, 2011 in Prosecutors, Sentencing | Permalink | Comments (0) | TrackBack (0)

Friday, October 21, 2011

Yesterday in Fraud

In an otherwise unremarkable bank and mail fraud affirmance, the Fifth Circuit reminds us that losses cannot be included as relevant conduct unless they are bottomed on criminal and/or fraudulent behavior. The appellant in U.S. v. Bernegger (loss must be criminally derived to count as relevant conduct), obtained two grants of $250K each from the State of Mississippi, which secured a first lien on the underlying collateral. Appellant later pledged the same collateral to other entities, but there was literally no evidence indicating that the original grants were procured through fraud. Nevertheless, the probation officer included the grants in the PSR's loss calculation and the trial court accepted the figure. The Fifth Circut also reiterates that "bare assertions" in a PSR are not, standing alone, evidence. This particular error did not affect appellant's Guidelines range, but did result in a reduced restitution award. The panel consisted of Judges Wiener. Clement, and Elrod. Opinion by the Dutchman.

(wisenberg)

October 21, 2011 in Fraud, Sentencing | Permalink | Comments (2) | TrackBack (0)

Thursday, October 13, 2011

Rajaratnam Receives Eleven Year Sentence

Hedge fund billionaire Raj Rajaratnam was sentenced today to an 11-year prison sentence, reportedly the longest sentence ever for insider trading, by Southern District of New York Judge Richard J. Holwell. The sentence was below the approximately 19- to 24-year sentence requested by the government and above the approximately six to eight years requested by the defense.

The Southern District United States Attorney's Office has focused its guns on insider trading offenses, bringing 52 cases in the last two years, 49 of which have resulted in convictions. U.S. Attorney Preet Bharara, who has called insider trading on Wall Street "rampant," has claimed that harsh insider trading sentences are a deterrent because they "convince rational business people that the risk is not worth it." Indeed, since an individual's decision whether to cross the line to trade on confidential information is often based on the individual's benefit v. risk analysis, insider trading may well be one of the relatively few areas of criminality where harsh sentences do actually serve as a deterrent. The Rajaratnam case, which involved a pattern of seeking inside information from tipsters and trading on it for millions of dollars in profits, and cases like it, should be distinguished from those cases which involve a single instance of insider trading based on a casual tip where the decision to trade is not so deliberate and therefore not so deterrable.

The 11-year sentence given to Rajaratnam is the second double-digit insider trading sentence imposed in the Southern District in the past few weeks. A few weeks ago, Judge Richard Sullivan sentenced Zvi Goffer, a former trader at Rajaratnam's firm, Galleon Group, to a 10-year term. While Rajaratnam's criminal involvement was of far greater magnitude than Goffer's, Rajaratnam had serious medical problems and a considerable history of good works, which may well have led to a lesser sentence than he would have received otherwise. Of course, some judges sentence more severely, or more leniently, than others.

(goldman)

October 13, 2011 in Insider Trading, Sentencing | Permalink | Comments (0) | TrackBack (0)