Saturday, October 8, 2016
This week in U.S. v. Free, the Third Circuit sent a sentencing case back to the district court for further proceedings, because the sentencing judge appeared to have based his loss calculations on defendant's harm to "the integrity of the judicial process." Free was convicted after a jury trial on bankruptcy fraud charges. The sentencing court found that Free lied and obstructed justice throughout the bankruptcy court proceedings and hid assets totaling over $1 million. But in the end all creditors were paid in full and it appears that Free filed for bankruptcy for reasons unrelated to defrauding his creditors of the funds he owed them. The Third Circuit held that it is improper to base loss calculations on harm to the integrity of the judicial process, as opposed to real harm inflicted on the actual victims of a bankruptcy fraud. The Third Circuit, however, virtually invited the district court to upwardly vary on remand, based on Free's obstructive conduct.