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Editor's Observations
Defending the White-Collar Case at Sentencing
Mark D. Harris & Anna G. Kaminska
Accessible Online FREE
Articles
Gall and Kimbrough and Their Relevance to Sentencing in White-Collar Cases
Harry Sandick
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Sentencing High-Loss Corporate Insider Frauds after Booker
Frank O. Bowman III
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Challenging the Guidelines' Loss Table
Gabrielle S. Friedman, Kan M. Nawaday & Daniel M. Gitner
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Is Booker a "Loss" for White-Collar Defendants?
Hector Gonzalez, Matthew D. Ingber & Scott A. Chesin
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Prior Good Works in the Age of Reasonableness
Peter J. Henning
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Measuring "Gain" under the Insider Trading Sentencing Guideline Based on Culpability for the Deception
Alexandra A.E. Shapiro & Nathan H. Seltzer
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An Un-Standard Condition: Restricting Internet Use as a Condition of Supervised Release
Cheryl A. Krause & Luke A.E. Pazicky
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Progress Report: How the Justice Department's 440 Highest-Profile Corporate Fraud Cases Turned Out (reprinted from The American Lawyer)
Emily Barker, Brian Baxter, Alison Frankel & Nate Raymond
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Primary Materials
U.S. Sentencing Commission,
2007 Sourcebook of Federal Sentencing Statistics Tables
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Sentencing Memorandum in United States v. Thomas Coughlin, No. 06-2005
(W.D. Ark. Feb. 1, 2008)
Hon. Robert T. Dawson
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Editor's Observations
Defending the White-Collar Case at Sentencing
Mark D. Harris & Anna G. Kaminska
Two major developments have shaped the current state of white-collar sentencing at the federal level. The first is the advent over the last decade of high-profile, large-scale corporate fraud cases involving some of the country's leading corporations, such as Enron, WorldCom, and ImClone. These cases involved massive losses of a scale never seen before and goaded the Federal Government into taking a hard, aggressive approach to prosecuting and punishing corporate and white-collar crime. Second, a series of landmark Supreme Court cases recast the function of the Federal Sentencing Guidelines and the nature of federal sentencing as a whole. Beginning with its 2005 Booker decision, which rendered the Guidelines advisory rather than mandatory, the Supreme Court has progressively restored much of the sentencing discretion once possessed by district courts, most recently holding that courts may depart from the Guidelines even on the basis of policy disagreements.
ArticlesGall and Kimbrough and Their Relevance to Sentencing in White-Collar Cases
Harry Sandick
In most white-collar cases, the primary factor controlling the length of a sentence is the amount of pecuniary loss caused by the offense. As Harry Sandick explains, the Supreme Court's decisions in Gall and Kimbrough now open the door to sweeping, policy-based challenges to the Guidelines' approach to calculating loss. Just as Kimbrough allowed judges to find that the crack/cocaine Guideline produces unreasonably harsh sentences, and need not be followed because it was not created based on empirical data, so white-collar defendants should be able to argue that the current fraud and tax Guidelines, which were based on certain policy decisions by Congress and the Commission to punish white-collar crime severely, need not be followed. Similarly, the author explains how Gall should support the consideration of certain "soft" factors present in white-collar cases and shift the focus away from loss as a controlling variable.
Sentencing High-Loss Corporate Insider Frauds after Booker
Frank O. Bowman III
The Federal Sentencing Guidelines have for some years prescribed substantial sentences for high-level corporate officials convicted of large frauds. Guidelines sentences for offenders of this type moved higher in 2001 with the passage of the "Economic Crime Package" amendments to the Guidelines, and higher still in the wake of the Sarbanes-Oxley Act of 2002. Professor Frank Bowman delivers a powerful critique of the way the Guidelines analyze and prescribe sentences for these types of offenses. He begins with the position that something is clearly amiss when the Guidelines regularly produce sentencing ranges even for "ordinary" corporate fraud cases that exceed life imprisonment. As the Sentencing Commission's own data confirm, some of those lengthy sentences surpass even those imposed on violent criminals who were also career offenders. More fundamentally, Professor Bowman questions whether the Guidelines' single-minded focus on loss has obscured other important facts about the offense, such as the defendant's mental state in committing the crime.
Challenging the Guidelines' Loss Table
Gabrielle S. Friedman, Kan M. Nawaday & Daniel M. Gitner
The sentencing range for a white-collar offender is heavily influenced by the Guidelines loss table, which assigns a base offense level to a defendant convicted of fraud based on the dollar amount of actual or intended monetary loss. Gabrielle Friedman, Kan Nawaday, and Daniel Gitner argue that recent Supreme Court cases provide ammunition to attack the loss table in several different ways. While the amount of financial harm caused by an offense traditionally has been a primary sentencing factor, Gall and Kimbrough pave the way for challenging sentences that do not adequately account for the defendant's precise level of participation in the fraud and the nature of his or her involvement. Moreover, the authors explain that since the amount of actual or intended loss cannot be as easily calculated as drug type or quantity in most cases, attention should shift from a purely arithmetic calculation under the loss table to an individualized analysis of other factors contributing to loss, such as independent market forces accompanying the revelation of fraud. Application of the loss table without regard to these particular characteristics of the defendant and the crime can lead to unjust results that fail to accurately reflect an individual's culpability.
Is Booker a "Loss" for White-Collar Defendants?
Hector Gonzalez, Matthew D. Ingber & Scott A. Chesin
Hector Gonzalez, Matthew Ingber, and Scott Chesin discuss some of the most important issues surrounding calculations of loss under the Guidelines, with a particular focus on the interplay between the calculation of loss and judges' newfound sentencing discretion after Booker. Despite Booker's status as a constitutional win for defendants, the authors show that loss calculation in the post-Booker era is often a more perilous exercise for defendants than it was before. First, they explain that Booker gave judges more discretion to consider uncharged or acquitted conduct and to find facts based on a low standard of proof. While pre-Booker cases held that an enhanced standard of proof -- beyond a simple preponderance of the evidence -- was necessary when facts found at sentencing would overwhelm the base sentence implicit in the jury's verdict, post-Booker cases have reversed course. These increased procedural protections have been deemed no longer necessary because the Guidelines now do not mandate higher sentences but merely inform the judge's discretion to fashion a proper punishment. Second, the authors posit that defendants may no longer benefit from the required use of earlier Guidelines manuals when more recent versions have increased the available penalties. Some courts have held that because the Ex Post Facto Clause prohibits the retroactive application only of binding laws, it would not bar the use of more stringent loss calculations presented in later manuals that simply advise, but do not require, the judge to impose a particular sentence.
Prior Good Works in the Age of Reasonableness
Peter J. Henning
If Gall and Kimbrough allow for arguments that loss should not play as dominant a role in sentencing white-collar offenders, then other offense and offender factors may carry new weight. Professor Peter Henning examines one such factor that frequently arises in connection with white-collar sentencing: the role of prior good works. Professor Henning cautions that instead of simply focusing on the amount of loss, judges should look beyond the crime to the whole individual and his or her relative means and role in the community. Under the mandatory Guidelines, judges were discouraged from adverting at sentencing to the defendant's public service and similar activities. Prior good works now assume a new role in an advisory sentencing system, and Professor Henning offers several rules of thumb for considering them in white-collar cases.
Measuring "Gain" under the Insider Trading Sentencing Guideline Based on Culpability for the Deception
Alexandra A.E. Shapiro & Nathan H. Seltzer
Alexandra Shapiro and Nathan Seltzer examine the insider trading Guideline, which authorizes an increase to a defendant's base offense level based on the profit or gain flowing from the offense. Courts have interpreted this Guideline, oddly, to require consideration of the total gain that the defendant realizes, even gain caused by unrelated market factors to which the defendant is not linked. The authors argue persuasively that this interpretation flies in the face of the plain meaning of the Guideline and its commentary, not to mention common sense. They also contend that an approach which limits the amount of gain to that caused by the deception is more faithful to the long-established measure of disgorgement of ill-gotten gains in civil insider trading cases, as well as the overall goals of the Sentencing Reform Act.
An Un-Standard Condition: Restricting Internet Use as a Condition of Supervised Release
Cheryl A. Krause & Luke A.E. Pazicky
Now that recent Supreme Court cases have restored a significant degree of sentencing discretion to district courts, these courts are likely to make greater use of the full panoply of sentencing options, especially in white-collar cases. Cheryl Krause and Luke Pazicky consider the arguments for and against one such option: restrictions on Internet access as a condition of supervised release. As they report, district courts have begun to impose on "cybercriminals" (offenders who commit fraud using the Internet) conditions prohibiting them from possessing or using a computer with Internet access without prior approval. The authors examine the extent to which federal courts may impose such restrictions as a condition of supervised release in cybercrime cases, and then present arguments that prosecutors and defense attorneys, respectively, may present with regard to these conditions.
Progress Report: How the Justice Department's 440 Highest-Profile Corporate Fraud Cases Turned Out (reprinted from The American Lawyer)
Emily Barker, Brian Baxter, Alison Frankel & Nate Raymond
In this article, authors from The American Lawyer present a list of significant corporate fraud prosecutions based, in part, on the Corporate Fraud Task Force Web site, which identified about 80 investigations deemed important by the Justice Department. In all, they analyzed 124 corporate fraud investigations, which resulted in 440 indicted white-collar defendants. In comprehensive fashion, they illustrate the overall outcomes of the cases, and offer information about when they were brought, where they were prosecuted, and how the defendants fared in sentencing.
Primary Materials
U.S. Sentencing Commission, 2007 Sourcebook of Federal Sentencing Statistics Tables
Recent data sets from the U.S. Sentencing Commission reflect overall trends in white-collar sentences. The Commission's work compares average sentence lengths by primary offense category (such as embezzlement or fraud), as well as by general crime category (such as drug offenses or economic offenses). Overall, these data show an emerging trend of longer prison terms for white-collar offenders when compared to recent years.
Sentencing Memorandum in United States v. Thomas Coughlin, No. 06-2005
(W.D. Ark. Feb. 1, 2008)
Hon. Robert T. Dawson
The reality of the new sentencing discretion ushered in by Gall and Kimbrough is vividly displayed in the remarkable recent sentencing of Thomas Coughlin, former COO of Wal-Mart Stores, following his guilty plea to wire fraud and tax evasion charges in a case involving a loss of over $400,000. In his sentencing memorandum, Judge Robert Dawson of the Western District of Arkansas declines to impose a sentence of imprisonment and concludes that Coughlin would better serve society by applying his business savvy to help nonprofit organizations as part of his community service requirement than by wasting away in unnecessary confinement. The Coughlin case is a potent reminder that when loss is not the principal driver of white-collar sentences, courts can look beyond the offense alone to craft more individualized sentences that account for the factors in 18 U.S.C. § 3553.
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