Monday, May 19, 2014

Law Professors Amicus Brief Questioning Guidelines Emphasis on Financial Loss (5/19/14)

Prominent law  professors have filed an amicus brief in a case arguing that the Sentencing Guidelines place too much emphasis on the quantum of financial loss in white collar crimes.  I picked this up from Ellen Podgor, White Collar Sentencing is Not All About Loss (White Collar Crime Prof Blog 5/15/14), here.  The amicus brief is here.  Readers of this blog will recall that tax crimes are just a genre of financial crimes, with tax crimes sentencing being most heavily influenced by the "tax loss."

The following is a cut and paste of the description of the well-known Amici:
4. Amici include:  
a. Prof. Stephen A. Saltzburg. He served as the Attorney General’s ex officio representative on the United States Sentencing Commission in 1989-1990 and is the Chair of the American Bar Association Criminal Justice Section Task Force on the Reform of Federal Sentencing for Economic Crimes.  
b. Gregory R. Miller. He is a former U.S. Attorney for the Northern District of Florida and has served as an assistant U.S. Attorney for both the Middle District of Florida and the Northern District of Florida. He also served as a Judge Advocate in the United States Marine Corps. He has taught numerous workshops and seminars on subjects relating to criminal litigation, and he currently manages the Tallahassee office of Beggs & Lane, RLLP. 
c. Prof. Douglas A. Berman. He teaches at the Ohio State University Moritz College of Law. He is the co-author of a casebook, Sentencing Law and Policy: Cases, Statutes and Guidelines (Aspen 3d ed.), has served as the managing editor of the Federal Sentencing Reporter for more than a decade, and is the sole creator and author of the widely-read and widely-cited blog, Sentencing Law and Policy.  
d. Prof. Jeffrey L. Fisher. He teaches at Stanford Law School, has written and taught federal sentencing law, and has handled United States Supreme Court cases dealing with federal sentencing issues.  
e. Prof. Kate Stith. She served as an Assistant U.S. Attorney in the Southern District of New York, teaches courses at Yale Law School on Sentencing and White Collar Crime, and has written extensively on and testified concerning the federal sentencing guidelines. She is a member of the ABA Task Force that Professor Saltzburg chairs.  
f. Prof. Bruce A. Green. He served as an Assistant U.S. Attorney in the Southern District of New York, teaches at Fordham University Law School and writes in the area of criminal law, and is past Chair of the ABA Criminal Justice Section.  
g. Neal R. Sonnett. He is a former Assistant United States Attorney and Chief of the Criminal Division for the Southern District of Florida. He is a past President of the National Association of Criminal Defense Lawyers and the American Judicature Society, a past Chair of the ABA Criminal Justice Section, and a member of the ABA Criminal Justice Section Task Force on the Reform of Federal Sentencing for Economic Crimes.  
h. Prof. Steven Wisotsky: He teaches separate courses in criminal law, criminal procedure and white collar crimes at Nova Southeastern University Law Center. He has chaired the Appellate Practice Section of the Florida Justice Association and has served as co-chair of the ABA Criminal Justice Section Appellate and Habeas Committee. He is the author of a treatise on appellate practice, PROFESSIONAL JUDGMENT ON APPEAL: BRINGING AND OPPOSING APPEALS (Carolina Academic Press, 2d ed. 2009).
The brief opens with this summary of their argument:
The loss table inevitably drives a court away, and distracts it, from focusing on the important statutory instructions that a sentence must be “sufficient, but not greater than necessary” to comply with the purposes of sentencing set forth in §3553(a)(2). In Guideline calculations, which still serve as the starting point for federal sentencing decisions, the loss table dwarfs all other factors and distorts the assessment and impact of all other sentencing considerations. Yet, there is no reason to believe that Congress intended loss to overwhelm other considerations set forth in the statute. To the contrary, there is every reason to believe that the Guidelines’ emphasis on loss undermines Congress's interest in a fair and balanced sentencing decision.\ 
Amici submit that loss (actual or intended) as calculated according to the Guidelines:  
(1) is simply one aspect of the “nature and circumstances of the offense” and will not reflect or incorporate other more important sentencing factors;  
 (2) frequently will not “reflect the seriousness of the offense” and can often overstate its seriousness;  
 (3) does not help a court decide how “to promote respect for the law” and may undermine respect for the law by producing mechanical sentences based on manufactured and inflated numbers disconnected from the offender's culpability;  
 (4) does not produce “just punishment for the offense” in many cases and may result in advisory Guideline sentencing ranges that are illogical and indefensibly high;  
 (5) poorly addresses the need “to afford adequate deterrence to criminal conduct” and may undermine deterrence by focusing on only one, and not always the most important one, of several possible motivations for criminal acts; 
(6) will often be irrelevant to the goal of “protect[ing] the public from further crimes of the defendant” and may lead to excessive, unjust and unnecessary prison terms for defendants who pose no or little danger to the public;  
 (7) may operate, perversely, to preclude or undermine any needed training or correctional treatment given that prison terms may negate the benefits of training and treatment;  
 (8) may operate, perversely, to preclude or undermine the need “to impose similar punishment on similar offenders” because it can lead to similar Guideline-recommended ranges for offenses involving distinct defendants with disparate motives who produced very different harms to distinct types of individuals and institutions;  
(9) and may hinder the opportunity for victims of economic offenses to receive full restitution by effectively preventing offenders from being able to make restitution payments.  
Simply put, amici believe that the emphasis on loss in modern Guideline calculations cannot be reconciled with the structure and intent of §3553 and necessarily requires district judges to look to other offense factors in order to properly discharge their statutory sentencing obligations. 
Amici here are echoing points made by academics and practitioners in various ways for years. A leading academic has stated that the “rules governing high-end federal white-collar sentences are now completely untethered from both criminal law theory and simple common sense.” Frank Bowman, Sacrificial Felon: Life Sentences For Marquee White-Collar Criminals Don't Make Sense, American Lawyer, Jan. 2007, at 63. Indeed, even former federal prosecutors — and a former general counsel to the FBI — acknowledge that “the current Federal Sentencing Guidelines for fraud and other white-collar offences are too severe” and appear much greater than “necessary to satisfy the traditional sentencing goals of specific and general deterrence — or even retribution.” Andrew Weissmann & Joshua Block, White-Collar Defendants and White-Collar Crimes, 116 Yale L.J. Pocket Part 286 (2007),  
In many cases, federal judges have refused to impose sentences recommended by Guidelines calculations driven by the loss table. Indeed, in most cases involving losses amounts that inflate Guideline ranges, federal judges feel statutorily required, in light of the instructions of Supreme Court’s decisions in United States v. Booker, 543 U.S. 220 (2005), and its progeny, now to sentence white-collar offenders below the guideline range because they readily recognize that the loss table often will result in recommended sentences that are much too high. 
I just recently noticed that, in reaction to the same concern, courts appear to offer more lenient Booker downward variances in tax cases.  See Booker Variances are More Common in Tax Crimes. Why? And Do They Disproportionately Benefit the Rich? (Federal Tax Crimes Blog 5/16/14), here.  The general perceived need for varying from the Guidelines' math so financial loss driven, does not address the issue of whether disproportionate Booker variances for the rich are appropriate.


  1. It seems like selective enforcement when individual taxpayers (i.e., people) are sent to jail for undeclared foreign accounts, while large financial institutions who admit their guilt can pay their way out of more severe penalties such as loss of banking licenses or SEC standing.

  2. There is an important issue to the Credit Suisse settlement that has not gotten much press, apart from one single line in a Bloomberg article: "The firm [Credit Suisse] won’t have to disclose the names of U.S. account holders under terms of the agreement, one person said."

    It is interesting that UBS, which did not plead guilty, was made to turn over some 5,000 names in 2009 when UBS settled with DOJ. And the 106 Category 2 and 3 Swiss banks that have signed on to the global DOJ settlement will also name names. But, apparently (at least according to this "one person") Credit Suisse will not be required to name names.

    At least not as part of the settlement. I suppose that a treaty request for names could follow the settlement at some point in the future.

  3. Asher,

    As I understand it, UBS obtained authorizing Swiss legislation to make its turnover. Credit Suisse did not obtain such legislation. I think that there is a protocol pending, but stalled, in the Senate that would permit the IRS to make group requests by description without specific names.

    But, it looks like the CS plea will not require the turnover of names. I would suspect, however, that CS might give some signals as to the characteristics for making a good group request.

    Jack Townsend

  4. Agreed.

    The problem -- as articulated -- is that more severe consequences can easily ripple out to many, many innocent parties (employees and shareholders, although probably less sympathy for the shareholders who take their risks and, in the final analysis, in theory, could rein in misbehavior).

    But individuals going to jail can have ripple consequences on the innocent. For example, a breadwinner with innocent family that relies upon his income and familial support. And a business run by an individual with employees who will suffer with the temporal loss of the head man. While judges, I suspect, consider these things to some extent, they are not disqualifiers for real jail time.

    Thanks for your comments.

    Jack Townsend


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