Friday, December 7, 2012

Judge Rakoff''s Criticism of the Mechanics of the Sentencing Guidelines (12/7/12)

I am a bit late on this report but it comes from a nontax criminal case of some prominence.  It is United States v. Gupta, 2012 U.S. Dist. LEXIS 154226 (SD NY 10/24/12), here, where a former Goldman Sachs director was sentenced for conviction of one count  of conspiracy and three counts of securities fraud.  Judge Rakoff is yet another in a long line of judges who complain about the numbers approach of the Sentencing Guidelines.  Tax crimes practitioners need to be aware of criticisms of the Guidelines because they maybe able to use them some day.

Here is the opening that all white collar practitioners (including tax crimes practitioners) can appreciate:
Imposing a sentence on a fellow human being is a formidable responsibility. It requires a court to consider, with great care and sensitivity, a large complex of facts, and factors. The notion that this complicated analysis, and moral responsibility, can be reduced to the mechanical adding-up of a small set of numbers artificially assigned to a few arbitrarily-selected variables wars with common sense. Whereas apples and oranges may have but a few salient qualities, human beings in their interactions with society are too complicated to be treated-like commodities, and the attempt to do so can only lead to bizarre results. 
Nowhere is this more obvious than in this very case, where the Sentencing Guidelines assign just 2 points to Mr. Gupta for his abuse of a position of trust -- the very heart of his offense -- yet assign him no fewer than 18 points for the resultant but unpredictable monetary gains made by others, from which Mr. Gupta did not in any direct sense receive one penny.
It may be worth remembering that the Sentencing Guidelines were originally designed to moderate unwarranted disparities in federal sentencing by enacting a set of complicated rules that, it was hypothesized, would cause federal judges to impose for any given crime a sentence approximately equal to what empirical data showed was the average sentence previously imposed by federal judges for that crime. See generally Kimbrough v. United States. 552 U.S. 85, 96, 128 S. Ct. 558, 169 L. Ed. 2d 481 (2007). From almost the outset, however, the Guidelines deviated from this goal. For example, even though a perceived racial disparity in sentencing was one of the evils the Guidelines were designed to combat, in actuality the Guidelines imposed in narcotics sentencing a huge racial disparity that dwarfed any prior such problem. Specifically, the Sentencing Commission, based on limited and faulty data, originally determined that an ounce of crack cocaine should be treated as the equivalent of 100 ounces of powder cocaine for sentencing purposes, even though the two substances were chemically almost identical and, as later studies showed, very similar in their effects. Since, however, 85 percent of crack cocaine offenders were black, while most of those who dealt in powder cocaine were Caucasian or Hispanic, the result of the 100-to-l ratio was to force upon the courts a gross racial disparity in narcotics sentencing. See id. at 97-98. It was only in 2010 that the ratio was changed from 100-to-l to 18-to-l; and even then as much on the basis of conjecture as evidence. See generally Dorsey v. United States, 132 S.Ct. 2321, 2326, 183 L. Ed. 2d 250 (2012). For the Sentencing Commission had no more empirical basis for imposing the ratio of 18-to-l than for earlier imposing the ratio of 100-to-l. In both cases, the numbers were plucked from thin air. 
While this example is drawn from the area of narcotics, the fundamental point is equally applicable to the instant case. Here, as there, the numbers assigned by the Sentencing Commission to various sentencing factors appear to be more the product of speculation, whim, or abstract number-crunching than of any rigorous methodology -- thus maximizing the risk of injustice.
I encourage those interested to read the entire opinion.  It is relatively short and a good read.

Other articles from Doug Berman's Sentencing Law and Policy Blog are:

  • Are criticisms of Rajat Gupta's two-year prison sentence sound or suspect? (10/26/12), here.
  • Rajat Gupta gets 24-month prison term, $5 million fine at sentencing for insider trading (10/24/12), here.

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