Readers will recall that the original case involved 19 defendants and, in a major decision, the trial judge, Judge Kaplan, smelled a rat in the prosecutors' heavy hand in forcing KPMG to withdraw paying attorneys fees for 13 of the defendants under the guise of the now-discredited Thompson Memorandum. Judge Kaplan called the constitutional foul and dismissed 13 defendants. (Not only was the prosecutor's action constitutionally abusive, Judge Kaplan found the prosecutors economical with the truth about their conduct when the issue surfaced.) The Second Circuit affirmed the dismissal United States v. Stein, 541 F.3d 130 (2d Cir. 2008), here, much to the chagrin of the prosecutors. Those defendants who have never been tried or afforded an opportunity to present a defense are, constitutionally, presumed innocent of the charges the Government made.
At the sentencing in Larson on April 1, it is reported that:
The first thing he [Judge Kaplan] did was to direct the government to submit new factual paragraphs for the PSR’s facts, which he said read like a closing argument for the government if the case had been brought against all 19 defendants and all 19 defendants had been convicted. He pointed out that factual statements concerning the culpability of people who never stood trial was unfair, unwarranted and unnecessary.
The PSR is the Presentence Investigation Report prepared by the Probation Office to assist the sentencing judge in determining an appropriate sentence. In preparing the PSR, the Probation Office has a number of sources, including the parties to the sentencing. Counsel for the parties often try to influence how the facts and various other considerations in the PSR are presented. It is possible that the PSR which Judge Kaplan found offensive was lobbied or influenced, directly or indirectly, by the prosecutors as a way to confirm their tainted claims about the dismissed defendants after the prosecutors were denied the opportunity to pursue them in a forum in which the dismissed defendants could defend against the claims. Judge Kaplan was clearly correct -- not only legally but in a fundamental fairness sense -- in refusing to make the sentencing in Larson an opportunity to cast aspersions on the dismissed defendants.
I take this opportunity to delve just a bit further into the freewheeling nature of the sentencing process that lends itself of the type of gambit reflected in the offending portion of the Larson PSR. Sentencing permits the judge to consider anything that might be relevant to a fair sentencing decision. The sentencing judge finds the facts by a preponderance of the evidence, and may consider evidence “without regard to its admissibility under the rules of evidence applicable at trial, provided that the information has sufficient indicia of reliability to support its probable accuracy.” SG § 6A1.3(a). The sentencing judge may thus consider:
• “Reliable hearsay evidence may be considered.” SG § 6A1.3, Commentary. See also United States v. Martinez, 413 F.3d 239 (2d Cir. 2005) (holding that the Confrontation Clause does not apply to the sentencing hearing and collecting the authority and rejected argument that Crawford and Booker may have changed prior holdings to that effect), cert. denied, 546 U.S. 1117 (2006).
• “Out-of-court declarations by an unidentified informant may be considered where there is good cause for the non-disclosure of the informant’s identity and there is sufficient corroboration by other means.” § 6A1.3, Commentary.
Hence, the sentencing process can afford some considerable temptation to deal with issues other than those directly relevant to the sentencing at hand. Often this is by shoveling into the proceeding some prejudicial fact(s) without the safeguards of the Rules of Evidence. The sentencing judge still has considerable discretion how to treat such evidence, and that is precisely what Judge Kaplan did.
Now, even with this rather loose standard, one has to wonder why the Probation Office felt it necessary to address, directly or indirectly, the potential culpability of the dismissed defendants. Perhaps the Probation Office was trying to suggest to the judge that these parties were part of the large conspiracy imagined and charged by the Government in the superseding indictment in Stein. You will recall that the jury in Larson had rejected that claim and acquitted on the conspiracy charge. But, technically, this does not foreclose consideration of the acquitted conspiracy at sentencing because, even though the jury acquitted (meaning that the Government had not proved the conspiracy beyond a reasonable doubt), the sentencing judge could still find the conspiracy for sentencing by a preponderance of the evidence and make appropriate sentencing decisions accordingly. United States v. Watts, 519 U.S. 148 (1997) (a controversial decision, but still the law). Still, given the other facts and amount of the tax loss without having to use conspiracy to enhance the potential tax loss, any attempt to use the conspiracy for sentencing despite the acquittal would be nothing more than gratuitous. And, at a more fundamental level, Judge Kaplan correctly perceived that, in context, the sentencing process in the Larson case was not an appropriate occasion for the Government to relitigate the failed conspiracy claims.
Finally, even though the Probation Office supposedly makes its PSR independently, the report can be influenced by the parties, as I noted above. The question I ask -- and cannot answer -- is whether perhaps the hand of the Government was a little too pronounced in the portions of the PSR that Judge Kaplan found so offensive. Keep in mind that he said it read like a Government brief against the dismissed defendants, and the Probation Office is supposed to be a neutral and fair observer rather than an advocate for the prosecutors. Of course, Judge Kaplan was rightly outraged. The dismissed defendants thus emerge from the Stein / Larson proceedings with their presumption of innocence fully preserved and with no suggestion that the Government's dismissed claims against them have been fairly tried and proven in any respect.
Caveat: I did represent one of the dismissed defendants in Stein and my representation in this blog may be influenced by that representation. Certainly that perspective makes me applaud Judge Kaplan's fundamental sense of fairness. Beyond that, I think, he just got it right.