Tuesday, March 3, 2020

Criminal History of Economic Crimes - Sentencing Commission Report

The US Sentencing Commission recently issued a Report of Federal Economic Crime Offenders.  The key findings of this Report (here) are telling, specifically these -          

  • The application of guideline criminal history provisions differed among the different types of economic crime offenders.
  • The extent of prior convictions differed among the different types of economic crime offenders.
    • About half of all federal economic crime offenders had at least one prior conviction in their criminal history.
    • Prior convictions were most common among counterfeit and forgery (71.1%), identity theft (70.4%), credit card fraud (68.7%), and financial institution fraud (68.6%) offenders.
    • Prior convictions were least common among computer-related (29.6%) and government procurement (25.4%) fraud offenders.
  • Federal economic crime offenders did not “specialize” in economic crime.
    • Convictions for prior economic offenses were not the predominant types of prior convictions. 
    • Fourteen percent of federal economic crime offenders had convictions for prior economic offenses only, to the exclusion of other types of convictions. 
    • Convictions for prior “other” offenses, such as DUI and public order, were the predominant types of prior convictions.

Here are my comments on this Report:

  1. 2B1.1 Excludes Many "Shortcut" Offenses Used in White Collar Prosecutions - It is important to note that when focusing on economic crimes, the Sentencing Commission is evaluating crimes sentenced under 2B1.1 of the Guidelines and 2B1.1 does not include many white collar offenses.  For example, it excludes most of the "shortcut" offenses that are used by prosecutors in many white collar cases - crimes such as perjury, false declarations, and obstruction of justice.  Prosecutors will often use these "shortcut" offenses as they are more easily proved than a complicated financial crime.  These "shortcut" crimes typically will be sentenced under 2J1.2 or 2J1.3. It also excludes insider trading, which is not sentenced under 2B1.1, but rather 2B1.4.  Using these other offenses may give prosecutors a sentencing advantage in that unlike 2B1.1 which starts at a base level of 6 or 7, these other offenses start with a 14 base level. 
  2. 2B1.1 Excludes RICO Even Though the Underlying Conduct May Be Fraud - 2B1.1 also excludes those economic crimes that might have been charged as RICO.  Mail fraud and wire fraud are two heavily used predicate acts used under RICO. If charged as just the fraud offense they would be under 2B1.1, but because of RICO they come under a much higher offense category under 2E1.1, with a base level of 19.  Of course with all these offenses, the amount of fraud or other factors may increase or mitigate the sentence.  
  3. More Research is Needed - The Report's showing of such a strong difference in prior offenses dependent upon the type of activity (e.g. identity theft at 70.4% v. government procurement at 25.4%) is very telling.  Might collateral consequences make a difference - one may not be able to commit government procurement repetitively because of government exclusion provisions? Or is the type of offender for these crimes making the difference. Additional research should be conducted to looks beyond the prior crimes to study the offenders themselves.
  4. 2B1.1 as a Category Needs Re-evaluation - Many of the economic crimes are thought of as white collar offenses, but the list of what might be considered white collar may be broader (e.g. regulatory and environmental offenses). It is time to again re-evaluate 2B1.1 and consider the possibility of splitting the offenses being sentenced here to better reflect a correlation of the wide range of criminal history. With judicial discretion now available, this may account for the high number of departures below the guidelines in white collar cases.
  5. Re-evaluate the term White-Collar Crime - In looking at the term "white collar crime" from  its roots of Sutherland's coining the term and use of  socioeconomic status, to its current focus on a violation of specific statutes, does there need to be a closer scrutiny of DOJ charging practices and categorizing criminal activity.  Clearly sentencing premised on socioeconomic status would be improper, but is a better delineation of the offenses needed here. Is the thief who steals credit cards for the commission of fraudulent acts the same as the individual committing government procurement fraud?  Perhaps the activity is the same fraud or theft, but the individual doing these acts seems to have a different criminal history, if any.   
  6. Thank You Sentencing Commission - Most of all, I applaud the Sentencing Commission for conducting this important study and issuing this Report. It is a first step in looking at how best to deter white collar crime. 



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