September 27, 2011

Retroactivity In The Federal Sentencing Guidelines and The Parol Evidence Rule

One of the hardest things about representing a person charged with a crime in federal court is that the law is often changing. A decision that makes sense based on the law at the time, may not make sense later, if the law moves.

Fortunately, sometimes when the law changes, it changes for the better. And, sometimes when the law changes for the better, a person charged with a crime can benefit from it.

The Sixth Circuit provides a nice example of this in United States v. Cornell Smith.

Mr. Smith was charged with distributing more than a kilogram of crack cocaine. His lawyer negotiated a plea agreement for him under Federal Rule of Criminal Procedure 11(c)(1)(C).

Federal Rule of Criminal Procedure 11(c)(1)(C)

A plea under Rule 11(c)(1)(C) - commonly referred to as "C" plea by those who practice federal criminal law - binds the court at sentencing. Normally, a United States District Judge has complete discretion to impose a sentence up to the statutory maximum, or down to probation if there is no mandatory minimum.*

Under a C plea though, the parties agree either on a specific range or a specific sentence. The sentencing judge then has a choice - she can accept the agreed sentence or reject the plea entirely and the person can go to trial.

Some district court judges routinely reject C pleas because they feel that they encroach on their power too much. Some prosecutors routinely refuse to enter into them because they fear a reaction from the judge.

Mr. Smith's C Plea

Mr. Smith's C plea was to 15 years. Mr. Smith and the prosecutor attached to the plea agreement a sentencing worksheet that said that the guidelines range, as they calculated it, was 168 months to 210 months. Presumably, the guidelines worksheet was there to convince the sentencing court that the C plea should be accepted. In any event, it was a C plea to 15 years.

Trouble Brews

The presentence report, though, found that the guidelines range really should be 210 months to 262 months, because the United States Probation Officer who wrote the presentence report found that a guidelines enhancement applied that the parties thought should not have.**

In response to this calculation, Mr. Smith's attorney wrote to the Probation Officer that:

The Present Report as authored is a firm commitment to the mandatory guidelines. The guidelines are dead. United States v. Booker, 125 S. Ct. 738, 739 2005; United States v. Oliver, 397 F.3d 369 (6th Cir. 2005). [sic] declared the mandatory guidelines unconstitutional. The plea agreement entered into between the United States Attorneys Office [sic] and Defense Counsel was not based on the guidelines and therefore, there is no miscalculation by the attorneys. The plea agreement reached between the attorneys and their clients was based on the fact that a 15 year maximum sentence was sufficient and in the interests of justice. The Presentence Report failed to consider the validity and worthiness of the plea agreement entered into by the parties. The plea agreement was valid and in the interests of justice. Worshiping the dead mandatory guidelines gives honor to the deceased guidelines and gives them more weight and respect than the rulings of the United States Supreme Court and the Sixth Circuit Court of Appeals. The mandatory guidelines should be left in their crypt and not brought above ground level. (emphasis added)

It probably felt good to write.

The Court, in any event, accepted the C plea and sentenced Mr. Smith to 15 years in prison.

The Law Changes

After Mr. Smith was sentenced, the United States Sentencing Commission changed the sentencing guidelines for crack cocaine. The Sentencing Commission decided that the change in the crack guidelines is retroactive.

Normally, once someone is sentenced in a federal court, their case is over, and the sentence cannot be changed. There are a few narrow exceptions to this rule though.

One of them is if the guidelines have changed, and the sentencing commission makes the change retroactive. As 18 U.S.C. § 3582(c)(2) says, such a resentencing can happen

in the case of a defendant who has been sentenced to a term of imprisonment based on a sentencing range that has subsequently been lowered by the Sentencing Commission pursuant to 28 U.S.C. 994(o), upon motion of the defendant or the Director of the Bureau of Prisons, or on its own motion, the court may reduce the term of imprisonment, after considering the factors set forth in section 3553(a) to the extent that they are applicable, if such a reduction is consistent with applicable policy statements issued by the Sentencing Commission.

Though this only happens if the person was originally sentenced based on the sentencing guidelines.

So, for Mr. Smith, the question is whether he was sentenced based on the sentencing range under his C plea.

C pleas And Sentencing Ranges

The Supreme Court very recently held that a C plea does not prevent someone from getting the benefit of a retroactive change in the guidelines under 18 U.S.C. § 3582(c)(2) if the person's sentence was based on the guidelines in Freeman v. United States. So Mr. Smith is eligible for a new sentence if his C plea was based on the guidelines.

There is, though, the problem of his lawyer's statement to the Probation Officer, which expressly said that the sentence was not based on the guidelines, but, rather, on "the interests of justice."

As this case shows, in federal criminal practice, sometimes it's better not to talk about the interests of justice.

The Parol Evidence Rule

Happily, the Sixth Circuit held that when determining whether a C plea is based on the sentencing guidelines, you don't look at parol evidence.

Most criminal defense lawyers choose their practice area so they don't have to think about the parol evidence rule. They'd rather think about parole evidence (get it?).

The Parol Evidence Rule is the rule that when interpreting a contract, like a plea agreement, you don't look at evidence outside of what's in the document.

So, here, the court of appeals looked only at the plea agreement itself, and not at the defense lawyer's statement, and determined that Mr. Smith's plea was based on the sentencing guidelines.

As a result, the Sixth Circuit sent Mr. Smith's case back for resentencing under section 3582.

* This discretion is sometimes overly celebrated among those charged with a crime. Just because a judge can give probation for, say, health care fraud with more than $100 million in losses doesn't mean that the judge will. It's a bit like how I could sell you my car for $100. Sure, I've got the legal ability to do it, but I'm not going to.

** For those not in the know, before sentencing in every federal criminal case, a presentence report is written by a United States Probation Officer. The report contains a calculation of the now advisory sentencing guidelines, as well as a social history of the person being sentenced. And, yes, this is not what you normally think of Probation Officers doing.

September 27, 2011

New York Times Uncovers A Trial Penalty In Federal Cases. Also, the Sun Rises.

Yesterday, the New York Times reported that there is a trial penalty in criminal cases - that is, people accused of a crime spend more time in prison if they go to trial and lose than if they plead guilty.

The Times also reported that federal prosecutors have a lot of power.

September 23, 2011

Mortgage Fraud Is Not Money Laundering, Or, Why Not To Buy A House With A Drug Dealer

It's money laundering week here at the Federal Criminal Appeals Blog. Yesterday, I wrote about Walter Blair, the lawyer who was convicted for performing extra-legal services.

Today, the Third Circuit issued a happier decision (though not for the government) in United States v. Richardson.

The Dream of Home Ownership

Asya Richardson was the fiancé of Alton Coles, a known drug dealer in Philadelphia. Mr. Coles was also something of a renaissance man, promoting a series of nightclub events and running a record label, Take Down Records. The nightclub generated revenue and broke even. Take Down Records was not financially successful.

Ms. Richardson and Mr. Coles wanted to realize the American dream of home ownership. This presented a problem. Ms. Richardson only made $22,800 a year as a customer service representative at Bank of America. Mr. Coles asserted that he made $100,000 a year as the CEO of Take Down Records. Unfortunately, Mr. Coles, like many entrepreneurs, had bad credit.

The solution? Mortgage fraud. The couple decided to put the house in Ms. Richardson's name, and they said in their paperwork that she made more than $110,000 per year.

This allowed the couple to purchase the house together, but place it in Ms. Richardson's name.

Closing Costs

They still needed money for the down payment though. Here's how the court of appeals describes how they funded part of the money they brought to settlement.

The day of settlement was marked by a flurry of banking activity. At 12:08 p.m., a $9,800 cash deposit was made into Coles' and Richardson's joint checking account at PNC Bank. This deposit took place at a PNC branch located in Philadelphia. At 1:12 p.m., Coles made a $9,140 cash deposit into Take Down Records' business account. The funds were later transferred to Coles' personal checking account and used towards the down payment. Half an hour later, at the same bank branch, Coles deposited $9,200 in cash directly into his personal checking account. At 3:33 p.m., Richardson made a $9,200 cash deposit into the couple's joint checking account. This deposit was made at a PNC branch located in Stratford, New Jersey, which was near the location of the settlement. Finally, at 4:00 p.m., Coles made a $6,160 cash deposit into a Wachovia checking account belonging to his son. This deposit, too, occurred at a branch located in Stratford.

The settlement went smoothly and the couple became happy homeowners.

Trouble Brews


shortly after the couple had moved into the new home, a federal grand jury returned an indictment charging Coles with a single count of possession of a firearm by a convicted felon. Three superseding indictments followed charging Coles and others with various drug trafficking and firearms crimes. On March 22, 2006, a fourth superseding indictment was filed charging Coles and Richardson with money laundering, 18 U.S.C. § 1956(a)(1)(B)(i), conspiracy to commit money laundering, 18 U.S.C. § 1956(h), and wire fraud, 18 U.S.C. § 1343.

The couple went to trial, along with others. Mr. Coles was convicted of the drug distribution charges, as well as the money laundering. Ms. Richardson was convicted of money laundering. Both were acquitted of wire fraud.

Ms. Richardson was sentenced to twenty-four months in prison.

The Appeal

On appeal, Ms. Richardson argued that there was not enough evidence to support her conviction for money laundering.

As the Third Circuit explained, to find someone guilty of money laundering, the government has to prove:

  1. an actual or attempted financial transaction;

  2. involving the proceeds of a specified unlawful activity;

  3. knowledge that the transaction involves the proceeds of some unlawful activity; and

  4. knowledge that the transaction was designed in whole or in part to conceal the nature, location, source, ownership, or control of the proceeds of a specified unlawful activity.(internal textual modifications omitted)

Ms. Richardson argued that there was not enough evidence that she knew that the transaction was being used to launder drug money to convict.*

The government countered that the intricate set of deposits on the day of settlement strongly indicated that something was afoot. All the deposits were under $10,000, giving a strong argument that they were made to defeat the reporting requirement that is triggered by a $10,000 deposit.

This, by the way, is itself a crime, prohibited by 31 U.S.C. § 5324, and known as smurfing.**

However, as the court noted, there was precious little showing that Ms. Richardson herself was aware of the pattern of deposits.

The government argued that not having Mr. Coles name on the loan was suspicious. And, the government pointed out, that Ms. Coles lied about her income to get the loan - surely that's suspicious.

In a passage sure to warm the hearts of mortgage brokers everywhere, the court noted,

These circumstances show that Richardson lied about her income and had the property titled in her name, not to hide Coles' involvement (which by then was perfectly obvious), but to get around Coles' bad credit and purchase the house as planned. No jury could have reasonably reached a different conclusion.

(internal citation omitted)

This wasn't money laundering - it was mortgage fraud. With a little more than a year left on her sentence, Ms. Coles conviction was vacated.


* She also argued, based on United States v. Santos, that the money laundering statute only applies to profits from drug dealing, not gross receipts, and that the money here involved gross receipts. The court of appeals rejected that argument.

** And, yes, that's my second Smurf reference in a money laundering post this week. Here's an odd article on how "smurf" is used that doesn't include this NSFW varation.

September 22, 2011

Money Laundering, Obstruction of Justice, And A Full-Service Lawyer

Walter Blair was a full-service lawyer. He received a phone call from a woman who wanted to hire a criminal defense lawyer. The woman's name was Ms. Nicely. Ms. Nicely had a relatively intricate problem.

The Safe Full of Money

As it happened, she was in possession of a safe that contained a substantial amount of money that belonged to Mr. Rankine. Mr. Rankine was a drug-dealer. The money was drug money. Mr. Rankine's girlfriend had been found murdered, and Mr. Rankine was missing.

Ms. Nicely had been receiving threats about the money in the safe and became frightened. Through a referral from a co-worker, Mr. Henry, she contacted Mr. Blair.

They met. Mr. Blair told her to open the safe "by any means necessary" and bring the money to him. She did.



Mr. Blair and Mr. Henry counted the money - there was approximately $170,000. Mr. Blair made up a cover story about a joint investment headed by Mr. Rankine's girlfriend. Since she was no longer living, she couldn't repudiate the story.

Mr. Blair then had his law partner create a corporation to take the money so that Ms. Nicely and Mr. Henry could invest in real estate. This was in 2003 when investing in real estate seemed less like investing in Smurf collectibles.

Mr. Blair also told Mr. Henry and Ms. Nicely that they would need to set aside money to cover the legal fees for two of Mr. Rankine's colleagues who had been arrested and were charged in the U.S. District Court in Richmond Virginia.

The Federal Case In Virginia

Mr. Blair reached out to two Virginia lawyers to represent Mr. Rankine's colleagues. Mr. Blair also retained himself to represent the men. Eventually, he filed a pro hac vice motion in the federal case in Virginia.

(A pro hac vice motion is a motion that lets an attorney practice law in a court that she is not otherwise admitted to practice in for one time only, provided certain conditions are met).

As a part of the pro hac vice motion, Mr. Blair told the court that he had never been disciplined by any bar association. As it happened, that was not entirely accurate - Mr. Blair had previously had his law license suspended in West Virginia for witness tampering.

Things Break Bad

Mr. Blair gave Ms. Nicely a set of things to memorize about how all of these transactions were supposed to have gone down. Sadly, when interviewed by the FBI, Ms. Nicely was not 100% in line with Mr. Blair's instructions. Oh what a tangled web we weave.

Mr. Blair was indicted for money laundering, in violation of 18 U.S.C. § 1956 and § 1957 for his handling of the funds brought into his office. He was charged with obstruction of justice for his false statement in his pro hac vice motion under 18 U.S.C. § 1503. He was also charged with failing to file a tax return.

On appeal, he had two main challenges. The Fourth Circuit gave Mr. Blair a split decision in United States v. Blair.

The Money Laundering Safe Harbor Issue

First, the money laundering statute has a safe harbor provision for criminal defense attorneys who are receiving money from someone to mount a defense. Mr. Blair contended that this safe harbor provision sheltered him from one of the money laundering charges against him.

There's been a lot of attention to this issue lately, particularly since the Eleventh Circuit rejected a government money laundering prosecution in United States v. Velez. The basic rule of the safe harbor provision is that if a person has money that was derived from illegal conduct, and uses that money to pay for a defense attorney, that transfer cannot be the basis of a money laundering conviction. Section 1957(f)(1) recognizes that the Sixth Amendment protection of the right to counsel is more important than criminalizing this behavior.

Here, though, the Fourth Circuit rejected the safe harbor provision's application to Mr. Blair. As Judge Wilkinson said,

Blair used someone else's criminally derived proceeds to bankroll counsel for others.

This, the majority found, exceeds the scope of the safe harbor provision. Though Judge Traxler wrote a forceful dissent arguing that the safe harbor provision should apply.

Obstruction of Justice Challenge

Mr. Blair fared much better on his challenge to the obstruction of justice conviction. The government argued that lying on a pro hac vice motion is obstruction of justice. To do that, the prosecutors had to successfully "establish a nexus between the false statement and the obstruction of the administration of justice." That is, the government had to show that Mr. Blair's false statement "had a natural and probable effect of impeding justice."

The Fourth Circuit found no evidence that Mr. Blair lying about his West Virginia disciplinary troubles caused any problems, or was likely to cause any problems, with anything. Mr. Blair's representation was already a massive conflict of interest - his lie was just icing.

The court of appeals concluded that the government's allegations rested on "mere speculation."

The appellate court, then, vacated Mr. Blair's conviction for obstruction of justice, and remanded for resentencing without that count of conviction.

September 22, 2011

My Guest Post on the ACS Blog on the War on Drugs

Over at the American Constitution Society's blog, I have a guest post on how President Obama has handled the war on drugs.

By way of a teaser, Reason Magazine has an article called "Bummer" which is very critical of President Obama. The post is my take on how Obama has fared - I think he's not a full-on bummer, but he's also not the President I thought he'd be when he was running.


September 21, 2011

Important White-Collar Crime Decision By the Federal District Court in D.C.

Judge Huvelle on the U.S. District Court for the District of Columbia issued an opinion in United States v. Ring that is tremendously important for white-collar practitioners specifically, or people who are interested in sentencing in federal criminal cases more generally. It dodges, in a very nice way, the question of how much of a penalty the government can try to assess on a person accused of a federal crime who decides to go to trial.

The Washington Post has a story, as does Sentencing Law & Policy.

Mr. Ring was accused of being involved in Jack Abramoff’s illegal deeds. Unlike everyone else in the case – indeed, unlike most white-collar defendants – Mr. Ring went to trial. He was convicted.

The government asked the court to impose massively higher sentencing guidelines adjustments than it requested for others who had entered a guilty plea and cooperated with the government. As Judge Huvelle noted,

 As Ring points out, the government now advocates for a Guidelines methodology that it has never asked for before (and that the Court has not previously employed) with respect to calculating the sentences of his co-conspirators.

The increased guidelines were significant.* Mr. Ring argued that they were the result of the government wanting to punish him for making them go to trial.
Defendant’s position is that the government is retaliating against him for exercising his Sixth Amendment right to trial. It is easy to see why such an inference might be justified, since the government’s new methodology for calculating defendant’s offense level (prior to adjustments for role in the offense and obstruction of justice) would result in a Guidelines sentence of between 121 and 151 months—nearly nine years longer than it would otherwise have been. . . . Indeed, the government’s position is that Ring’s total offense level (37) should be the highest of all participants in the conspiracy, despite the fact that Abramoff (whose offense level was 34, not including acceptance of responsibility) and Scanlon (whose offense level was 27, not including acceptance of responsibility) were clearly more culpable.

Mr. Ring asked the court to apply the guidelines that were used for the others in the case, instead of using the higher guidelines the government asked for.

Judge Huvelle was sympathetic,

The notion that an ostensibly objective system of sentencing guidelines can produce such wildly varying results for essentially the same offense conduct is deeply troubling, and indeed, as Ring argues, if the Guidelines are “subject to manipulation” in this fashion, it would mock the very consistency the Guidelines were meant to impose on such elementary concepts as “offense level.”

Judge Huvelle did not find that the government was imposing a trial penalty, though. Instead, she adopted the guidelines applicable to the others through a straightforward guidelines analysis, ultimately concluding that Mr. Ring’s guidelines were in line with the others in the case.

* For the folks who are into the details of the guidelines issues, to summarize so you can see if you want to read the opinion, the main issues are: (1) the application of a bribery cross-reference under § 2C1.7 that would apply the bribery sentencing guidelines under § 2C1.1 instead of the § 2C1.7 Honest Services Fraud guidelines; (2) the “more than one bribe” enhancement under § 2C1.1; (3) loss calculation under § 2C1.1(b)(2); (4) a manager enhancement under § 3B1.1; (5) an obstruction of justice enhancement under §3C1.1; and (6) whether Ring can get acceptance under § 3E1.1 even though he went to trial.

All issues were resolved under the 2003 version of the guidelines, for ex post facto reasons. (and, though I normally like to link to the guidelines sections themselves, I didn't here, because they are only available in pdf).

September 20, 2011

The "Snowstorm" That Wasn't There, or, Why DNA Doesn't Get Collected From Every Misdemeanant On Probation

Mark Twain may have said that the coldest winter he ever spent was a summer in California. Or maybe not. Regardless, the quote suggests itself as the inspiration behind the United States Attorney's Office for the Northern District of California's charging decision in United States v. Baker.

Robert Baker was a passenger in car in a high-speed chase in Northern California. The chase was "speedy" in two senses - in addition to driving fast, there was methamphetamine in the car.

The chase ended badly for the chasee - the police caught up to the car and charged Mr. Baker with conspiracy to possess with intent to distribute methamphetamine.

In the car, the police found only 10 grams of meth. The government charged Mr. Baker, though, with much more, based on the testimony of two police officers who said that Mr. Baker was throwing bags of white powder at their car, which would explode on the windshield and create a "snowstorm" effect for a few seconds.

The government asserted that the white powder was meth, and that the "snowstorm" was caused by a much larger quantity of meth, more than 50 grams, and that Mr. Baker should be punished for having that larger amount of the drug.

Mr. Baker called another officer in his defense, who said he was a part of the chase and saw no "snowstorm." He also produced radio runs from the police that were free of any winter weather reports.

The jury went with Mr. Baker, acquitting him of the felony conspiracy charge and, instead, convicting him of a misdemeanor based on the drugs in the car.

At his sentencing for the misdemeanor, he was placed on probation for three years.

The sentencing judge, as a condition of probation, ordered that Mr. Baker be required to provide DNA to the Attorney General.

Mr. Baker appealed this condition of probation, and asked the Ninth Circuit Court of Appeals to order the destruction of all the DNA he had provided.

A sentencing court can only order that DNA be collected if it has the authority from Congress to enter such an order. The statute is 42 U.S.C. § 14135a.

As it happens, the statute provides no ability for a district court to order DNA collected from someone who is on probation, and, therefore not in custody, and who was only convicted of a misdemeanor.

So, if Mr. Baker had been convicted of a felony, the government could take his DNA for the national DNA database. If he was in jail, even for a little bit, the government could take his DNA for the national DNA database. But with a misdemeanor conviction and probation, Mr. Baker's DNA gets to stay with him.*

The Ninth Circuit reversed, remanded, and ordered all the DNA already collected destroyed.

* Did you know DNA evidence can be faked? Check out this article in the New York Times.

September 19, 2011

Judge Posner on Narcotics Wholesalers and Drug Quantity

I'm a big fan of Judge Richard Posner. As I've mentioned here before, Judge Posner is very bright - and has almost single-handedly revolutionized the role that economics plays in thinking about the law.

I was, therefore, happy to see that Judge Posner authored an opinion for the Seventh Circuit dealing with the relationship between heroin wholesalers and heroin retainers in United States v. Alvarado-Tizoc.

Alvarado-Tizoc dealt with two men who sold wholesale quantities of heroin and fentanyl. As Judge Posner explains,

Fentanyl is a very potent synthetic narcotic, used lawfully as a painkiller and unlawfully as a substitute for heroin. Because of its potency it must be greatly diluted before being consumed; otherwise it will kill. Deaths from overdoses of fentanyl by heroin addicts soared in 2006. Addicts' demand for fentanyl apparently had been augmented by a shortage of high- quality heroin, but it has fallen since 2006, probably because the deaths caused by overdosing on fentanyl induced more intensive efforts by law enforcers to disrupt the supply of the drug.

(Internal citations omitted. In this passage from the opinion, there were so many internal citations it almost drove me to Bryan Garner's position that citations should be in footnotes)

As wholesalers, the men who were sentenced in this case sold the drug to retailers, knowing that it would be diluted - this caused an odd sentencing result. As the court of appeals explained,
The defendants were wholesalers of heroin and fentanyl for illicit use. Their customers, the retail dealers, diluted the fentanyl (which already had been diluted to some extent) that they bought from the defendants in order to make it safer to consume. The dilution produced mixtures that contained less than 1 percent fentanyl, and the retailers sold these mixtures (doses) to their customers. The quantity (as measured by weight) of the greatly diluted fentanyl sold by the retailers was 11 to 16 times the quantity of fentanyl that the defendants had sold them. For sentencing purposes the weight of an illegal drug includes the weight of a mixture containing a controlled substance. U.S.S.G. § 2D1.1(c) n. A and Application Note 1; United States v. Sowemimo, 335 F.3d 567, 574 (7th Cir. 2003); cf. 21 U.S.C. § 841(b). Hence for sentencing purposes the retailers were selling much more fentanyl than their suppliers, who are the defendants in this case.

The sentencing court found that the men who were appealing were in league with the retailers. Because they were necessarily relying on the retailers to sell the fentanyl, the district court reasoned, they were all jointly liable for the retailers quantity of drug distribution. They were all, in the language of the guidelines, engaged in a jointly undertaken criminal activity - akin to being coconspirators, even though that wasn't the charge against them.

Judge Posner thought this would be an odd kind of conspiracy, noting that,

the fact that the buyers diluted the fentanyl they received (and that this was foreseeable to the defendants) no more proved a conspiracy than the fact that a seller of chocolate syrup to a soda fountain knows that the syrup will be mixed with milk or soda to make chocolate milk shakes or chocolate sodas rather than being sold in its original, undiluted form makes the seller a conspirator in the retail sale of adulterated chocolate drinks.

Because a buyer and seller are not, necessarily, in a conspiracy under Seventh Circuit law, the court of appeals rejected the argument that the wholesalers in this case were conspirators with the retailers.

Because there was no jointly undertaken criminal activity, the men who were appealing their case were sentenced using the wrong guidelines range - it should have been calculated using only their drug quantities instead of those of the retailers. Their sentences were reversed and sent back to the district court.

There are two things about this that are striking to me.

First, it is crazy to use the weight of a mixture or substance containing a drug for sentencing purposes, instead of using the amount of the drug itself. Judge Posner, and, apparently, the Seventh Circuit, agrees:

Emphasis on the weight of a defendant's drugs (in this case the weight of the dilute drugs sold by customers of defendants), whether or not they are diluted, has the perverse effect of giving drug dealers an incentive to possess and sell drugs of high purity or potency and makes the length of sentences depend perversely on the weight of the inactive ingredients in the drugs.

Second, this case hangs on Judge Posner's willingness to find that wholesalers and retailers are not engaged in a joint activity. The only way he gets there is by looking at an analogy to the business world, where thinking of a run of the mill soda distributor being in cahoots with a manager of a gas station that has a soda fountain would be unthinkable.

But, if a judge without that economics background looked at this case, the result could have been much different. Many people, and many judges, think of drug dealers as an undifferentiated mass of lawless people. If you don't see differences between different kinds of roles in the web of drug distribution, you can see how it would be easier to lump drug wholesalers and drug retailers into the same kind of conspiracy, without really thinking about their unique roles.

Perhaps this is a perverse argument for much more prosecution of commercial crimes.

September 16, 2011

The Federal Government Asks The Ninth Circuit To Hear The Obama Threats Case En Banc

Earlier, during the summer, I blogged about a Ninth Circuit opinion that vacated a conviction for making racially-motivated threats against President Obama.

As I noted at the end of that post, I am really looking forward to seeing how this gets resolved en banc.

And, apparently, I am now closer to getting to see that. The government has filed a petition for the Ninth Circuit to rehear the case. Politico's Josh Gerstein has detailed coverage and a link to the government's filing.

September 16, 2011

The Ninth Circuit Rejects A Car Search In Mr. Rodger's Neighborhood

In many ways, riding in a car is so much worse for you than, say, walking or riding a bike. When I drive, I know I'm not exercising; I can almost feel my muscles convert to fat. Driving burns gasoline, which is bad for the environment. Cars clog roads.

Other than the massive convenience and the ability to privately listen to bad radio, cars don't have much to recommend them.

Cars are even worse when you realize that driving a car also diminishes your Fourth Amendment rights. If the police have probable cause to think you have some contraband, they normally need a warrant to go in your house. Not so for your car. Because cars can move, the courts don't require a warrant to search a vehicle - mere probable cause is enough.

If you're arrested on the street, the police can search, "incident to arrest," anything you could reasonably be thought to reach while you're being subdued and arrested. If you're arrested in a car, the police can search, incident to your arrest, anything inside the car.

Perhaps this is one reason so few drug dealers on The Wire drive minivans. Or perhaps the lack of minivans on The Wire has more to do with this video.

In any event, given the law on the Fourth Amendment and vehicle searches, United States v. Rodgers, from the Ninth Circuit, is a breath of fresh air.

Mr. Rodgers was pulled over at 3:30 in the morning on the mean streets of Lakewood, Washington. His registration information showed that his car was one color - his car was, in fact, another. He was in a neighborhood known for crime, specifically juvenile prostitution.

The police officer who pulled him over approached the car. He recognized Mr. Rodgers as someone he'd pulled over before. Many times.

The officer also saw a girl who he estimated was about fifteen years old. He asked Mr. Rodgers why he was driving the girl at 3:30 in the morning. Mr. Rodgers said that he was taking her to an apartment building as a favor.

The officer suspected that Mr. Rodger's transportation involved a different kind of favor. He asked the girl for identification. She didn't have any. He asked her name, she gave him one.

The officer ran the name and found that there was an arrest warrant out for the girl. He pulled Mr. Rodgers and the girl out of the car, separately, for questioning. He asked the girl again for identification. She had no purse, and no identification in her pockets.

The officer then decided to search the car, near where the girl was sitting, for her identification.

He searched her seat and the center console. He found crystal meth.

He arrested Mr. Rodgers, then searched the entire car. He found a handgun and other drugs. Mr. Rodgers was charged in federal court with federal gun and drug charges.

He challenged the search of his car, but the district court denied his motion.

He was convicted at a bench trial, and determined to be an armed career criminal under 18 U.S.C. § 924(e)(1).

The Ninth Circuit reversed, finding that the search violated Mr. Rodger's rights.

The court of appeals rejected the government's position that the officer could search Mr. Rodger's car for the girl's identification, saying,

[The officer] did not identify any particular facts or observations that led him to believe [the girl] had identification and that it was inside Rodgers' car. Nor can we find any such facts in the record. There is, for example, no indication that [the officer] saw [the girl] trying to hide anything in the car, that [she] was eyeing anything inside the car, that [she] made any furtive movements, or that any papers or objects appearing to be identification were in plain view. Indeed, the only relevant fact [the officer] offered--that he never saw a purse or bag that might have contained [the girl's] identification--cuts against a finding of probable cause to search the car.

Because there was no probable cause, or other lawful reason, to search the car for the girl's identification, the evidence found had to be suppressed. Everything found after that was fruit of the same illegal search.

September 15, 2011

A Clever Defendant In The Ninth Circuit Wins, Then Loses, Arguing Double Jeopardy

People love a criminal defendant who tries to outwit the system. I suspect it says something profound about the American impulse to root for the underdog.* I've written before (here and here) about federal criminal defendants in the Ninth Circuit who have been rewarded by being clever about their cases.**

And, in United States v. Alvarez-Moreno, defense counsel cleverly navigated his client to an appellate issue.

Mr. Alvarez-Moreno was charged with transporting an alien for profit under 8 U.S.C. S 1324.

Two weeks before he was to start a jury trial, Mr. Alvarez-Moreno and the government agreed that the trial could be a bench trial. The court also agreed. (One odd feature of the federal system is that you can only have a bench trial on a felony if the government, the person who would be on trial, and court all agree under Federal Rule of Criminal Procedure 23.).

Everyone came to this conclusion right before trial. In the last minute push to get rid of a jury and go to the bench trial, no one noticed that Mr. Alvarez-Moreno never waived a jury trial in writing as required by Rule 23.

Mr. Alvarez-Moreno was convicted at the bench trial.

After he was convicted, he filed a "Motion to Set Aside Verdict By Trial Court" because Mr. Alvarez-Moreno did not properly waive his right to a jury trial. There's no question but that Mr. Alvarez-Moreno's conviction would be reversed on appeal if allowed to stand.

The district court treated that motion as a motion for a new trial, which it granted. The court set a new trial date.

Here's where things get interesting.

Mr. Alvarez-Moreno filed a motion to vacate the order for a new trial and dismiss the indictment because double jeopardy had attached. The trial court denied the motion.

Mr. Alvarez-Moreno appealed. (Normally, you can't appeal a criminal case until after sentencing. One of the narrow exceptions is for a violation of double jeopardy - the idea is that the harm in a double jeopardy violation is the second trial, so the appellate court will hear the decision before that harm can take place.)

The Ninth Circuit found that a new trial would violate double jeopardy. Jeopardy attached in the first trial when the judge started hearing evidence. Once jeopardy attaches, a person accused of a crime can only be retried - consistent with double jeopardy - in certain narrow circumstances.

One of those circumstances is if the defendant himself asks for a new trial. The district court construed Mr. Alvarez-Moreno's motion to set aside the verdict as a motion for a new trial. The Ninth Circuit said, basically, no. For that reason, a new trial would violate double jeopardy and the Ninth Circuit vacated the court's order granting one.

The appeals court, however, went a little further, denying Mr. Alvarez-Moreno's win much pleasure. The court of appeals directed the district court, on remand, to deny Mr. Alvarez-Moreno's original motion to set aside the court's verdict.

The Ninth Circuit then laid out Mr. Alvarez-Moreno's options:

If Alvarez-Moreno wants to correct the legal error, he can make a proper motion under Rule 33 for a new trial, or he can appeal the final judgment after he is sentenced; in either event, under the principles discussed earlier, he would have consented to retrial. Alternatively, Alvarez- Moreno may view those two routes as merely prolonging the inevitable, and so may decide that he does not want to undergo the stress of another trial. If so, he is, of course, entirely free to forego any Rule 33 motion or appeal and accept the sentence meted out on the basis of the conviction after it is reinstated upon remand. That sentence would not be void, but voidable, and if the sentence is complied with he could not be punished again for the same offense.

Perhaps cleverness has its limits.


* Though, as Adam Levin rightly reminds us in The Instructions, "anyone can tell his own underdog story. Be wary of underdogs."

** Why does this stuff only happen in the Ninth Circuit? You almost never see a clever defendant appeal come out in a defense-friendly way in, say, the Fourth Circuit.

September 14, 2011

Sex Offenders, Supervised Release, and The Eighth Circuit

As I think I've mentioned here before, Congress really does not like sex offenders. As it happens, neither do a number of federal district court judges.

The Eighth Circuit Court of Appeals recently made it a little harder for sentencing judges to act out of unthinking distaste for sex offenders in United States v. Springston.

A little background on Mr. Springston

Mr. Springston was required to register as a sex offender based on a 1986 conviction for sexual assault. Apparently, the sexual assault did not involve a child.

Mr. Springston had not registered as a sex offender. He was indicted for failing to register as a sex offender under 18 U.S.C. S 2250.

He was convicted and sentenced to three years in prison. The sentencing court also imposed ten years of supervised release on the end of his sentence.

A little background on supervised release

Supervised release, for those not familiar with the federal system, is a lot like what you think of as parole, only significantly less pleasant. A person on supervised release has not gotten out of prison earlier than the end of his sentence, and, if he violates his supervision, is not limited in the amount of additional prison time that he can receive by the remaining term of supervision.

When a person is given a sentence that includes supervised release, the sentencing court also sets conditions of supervision - things the person has to do, or he can be violated. If the person is violated, he can be sent back to prison.

Mr. Springston's supervised release conditions

The sentencing judge imposed three conditions of supervised release that were challenged in his appeal:

  1. He could not have unsupervised contact with a minor

  2. He could not have internet access at his house, or access the internet without the probation officer's supervision

  3. He had to have mental health treatment.

The sentencing court didn't spend a lot of time talking about these conditions. From the opinion, it looks like he just took the internet away from Mr. Springston without much thought (which, when you think about things like this, may not be so bad).

The Eighth Circuit vacated these conditions.

What a district court judge has to do when imposing conditions of supervised release, even for a sex offender

First, the law. Eighteen U.S.C. section 3583(d) requires

that a special condition must be reasonably related to the nature and circumstances of the offense of conviction, the defendant's history and characteristics, the deterrence of criminal conduct, the protection of the public from further crimes of the defendant, and the defendant's educational, vocational, medical, or other correctional needs.

More importantly, a district court judge can't just make stuff up for special conditions, even for sex offenders. Rather,

In fashioning a special condition of supervised release, a court must make an individualized inquiry into the facts and circumstances underlying a case and make sufficient findings on the record so as to ensure that the special condition satisfies the statutory requirements.

The Eighth Circuit finds that that the district court can't just rely on views about sex offenders as a class of people to impose conditions of supervised release

The Eighth Circuit vacated all three challenged conditions.

As to the condition that Mr. Springston not have the internet in his house, the court of appeals observed,

The record . . . is devoid of evidence that Springston has ever used a computer for any purpose.

About the condition that Mr. Springston never be near a child unsupervised - despite that his offense did not involve a child - or that he needed mental health treatment, the district court only explained that

"Mr. Springston's history as a sex offender justifies all of those conditions."

The Eighth Circuit disagreed, and vacated these conditions of supervised release.

A condition of supervised release has to be based on an individualized inquiry about the person being sentenced. Mr. Springston's conditions weren't.

September 13, 2011

The Seventh Circuit Reminds Us That Loss Is Not Equal To Restitition (also, pleading open has benefits).

Tomas Leiskunas, a man who "at 26 years old . . . had a minor criminal history and at least two aliases," was charged with being a straw purchaser in a mortgage fraud scheme in the federal district court in Chicago.

The folks who were engaged in the scam, according to the Seventh Circuit's opinion in United States v. Leiskunas, would take out fake mortgages in Mr. Leiskunas's name* on houses that he was never going to live in. He would attend real estate closings and say that he was going to live in the houses.

That's against the law.

Mr. Leiskunas decided to plead guilty. He declined to accept a plea agreement from the government, deciding, instead, that he would like to plead open. (For prior posts on defendants who have done well on appeals by pleading open, check out this post, this post, or this post).

The biggest effect of an open guilty plea is that there are no agreements about the person's sentencing guidelines. In a fraud case, as in almost any white-collar case, loss amount is the largest question on the table. In Mr. Leiskunas's case, it was also responsible for his win in the Seventh Circuit.**

The starting point for most white-collar sentencing guidelines is section 2B1.1 of the federal sentencing guidelines. The biggest factor driving a white-collar case is normally loss amount.

The guidelines say that the loss amount is the amount of money that is reasonably foreseeable to be lost to the person charged with the crime.

In Mr. Leiskunas's case, the government had a novel and concrete theory of loss.

The total amount loaned in the closings that Mr. Leiskunas participated in was $4,473,161.55.

Because, as you may have noticed, the housing market is not doing well, each house involved in Mr. Leiskunas's case was foreclosed on (that they were a part of a mortgage fraud conspiracy may have been a contributing factor). The total value of money raised at these foreclosure sales was $1,792,000 less than the total amount loaned.

Thus, the government argued, the amount the banks lost must have been the amount that was reasonably foreseeable to Mr. Leiskunas.

The district court adopted the government's calculation of loss without much discussion.

The Seventh Circuit reversed because the district court did not offer an explanation for accepting the government's position.

The appeals court did not opine on the merits of the government's position. It did not note, for example, that there was no way Mr. Leiskunas could have known what the houses would fetch later at a foreclosure sale. The court of appeals did not explain that the amount used as a loss number was the amount of harm actually suffered, which is very different than the amount of harm that Mr. Leiskunas would have been able to predict when he participated in the mortgage fraud. The Seventh Circuit also did not point out that the government's test completely fails to account for the way the guidelines explicitly say that loss amount should be calculated.

Nope, the Seventh Circuit just sent it back for a better explanation.


* Or, if not his actual name, one he would be willing to answer to during a real estate closing.

** Sort of. The Seventh Circuit also reversed on the district court's determination that Mr. Leiskunas did not play a minor role in the mortgage fraud scheme. The district court expressed the belief that the law was that Mr. Leiskunas could not be a minor player if he was essential to the scheme or was involved, in a minor way, a number of times. This was not the law, according to the Seventh Circuit. For more, see USSC S 3B1.2.

September 12, 2011

Dismiss a Case Because of a Speedy Trial Act Violation? Not so fast.

The Speedy Trial Act is an odd thing. Normally, a person charged with a federal crime - be it a white-collar crime or a drug distribution charge - has spent less time looking at the government's evidence than the government. Often, a defendant is going to want more time to prepare for trial than the 70 days provided by the Speedy Trial Act, at 18 U.S.C. 3161. (Though not always, Senator Ted Stevens didn't seek more time and that worked out well for him.)

That said, normally the government wants more time too. And, for that matter, the trial court often wants more time. That's likely less the case in, say, the Eastern District of Virginia, but in a number of federal courts around the country - especially as the pace of judicial confirmations slows - the trial judge is hoping that a trial isn't going to happen 70 days into the case as much as anyone.

As a result, in many cases there winds up being a conspiracy between the government, the court, and, sometimes, the defendant to defeat the Speedy Trial Act.

The Act excludes any time that a motion is pending during the 70 day time. So, normally, the defendant files a motion to suppress evidence, or, quixotically, to dismiss the indictment, and that stops the Speedy Trial Clock.

This gets tricky, however, because if the Speedy Trial Act is not complied with, the Act requires that the indictment gets dismissed - though more on that later. So a defendant both wants to stop the clock, and benefit from the clock not being stopped.

In the Eight Circuit's recent opinion in Bloate v. United States, the court of appeals addressed an interesting Speedy Trial Act issue.

Mr. Bloate was convicted and sentenced to 30 years in prison. He filed a motion to dismiss the indictment under the Speedy Trial Act. It was denied. He appealed, complaining about the Speedy Trial Act. His appeal lost. He went to the United States Supreme Court. The Supreme Court held that the Eighth Circuit should not have denied his Speedy Trial Act claim for the reason it did. The Court remanded for the Eighth Circuit to take a mulligan on the Speedy Trial Question.

Here's the timeline for Speedy Trial Analysis - Mr. Bloate was indicted on August 24. His motions were due on September 13. On September 7, he filed a motion for more time that the court granted the same day. On September 25, Mr. Bloate filed something with the court called a "Waiver of Pretrial Motions" - it indicated that he wasn't going to file any pretrial motions (it was well named).

On October 4, the district court had a hearing, where it asked Mr. Bloate if he understood he could file motions and was deciding not to on purpose - this is, whether the waiver was knowing and voluntary. It was, and nothing happened until the government filed motions on February 23 of the next year, which stopped the clock.

There are more than 70 days between August 24 and February 23.

The Supreme Court looked at this timeline and was called to resolve whether the time Mr. Bloate had to prepare pretrial motions, from when the scheduling order issued on August 24 until the court's hearing on October 4 was excludable. In an opinion by Justice Thomas, the Court concluded that it isn't.*

The Eight Circuit then had the case on remand to see if filing a "Waiver of Pretrial Motions" counts as a pretrial motion. If it does, the time while it was pending would be excluded. The Eighth Circuit walks through a number of reasons why it isn't (in the same way that a waiver of a right to a trial is not a trial). The court of appeals concludes that a "Waiver of Pretrial Motions" is not a pretrial motion.

But, just when you thought Mr. Bloate was going home and avoiding 30 years in prison, the Eighth Circuit directed the district court to decide whether Mr. Bloate's indictment should be dismissed with prejudice or without - basically whether the government could just seek a new indictment to bring charges against Mr. Bloate anew.

What do you think the district court will decide?


* Justice Thomas's originalism has been the subject of a lot of attention lately, thanks largely to Jeffrey Tobin's piece in the New Yorker. This opinion looks like a kind consequence of originalism - you stick with what the words actually mean, even if they make prosecuting people harder.

September 9, 2011

A Federal Judge Dismisses An Indictment On A Pretrial Motion Based On Determination About The Facts In The Case, And All I Do Is Complain

One of the massively frustrating things about federal criminal procedure is that you cannot normally challenge, through a pretrial motion, whether the facts that the government think happened actually violate some criminal law.

By contrast, in a civil case, if I'm suing you, you can file a motion that says my lawsuit should be dismissed. This is a good thing.

For example, suppose I file suit against you and say, in my complaint, "You gave me a banana. That was negligent. The Court should give me 20 million dollars. A jury trial is requested." The very first thing you would do is file a motion that says "Matt said that I was negligent, but didn't say how, other than that I gave him a banana, which is not normally negligent. His law suit should be dismissed."

And, when a judge read that, he, or she, would seriously think about whether to dismiss my lawsuit, before everyone spent thousands of dollars preparing and worrying and yelling at each other on the phone.

In a criminal case, though, this is normally not possible. The government can put in an indictment "Larry gave Susan a banana. He distributed cocaine in violation of 21 U.S.C. S 841 in the District of Columbia." and that will pass muster. If the person charged with the crime tries to file a motion to dismiss, they'll lose - Federal Rule of Criminal Procedure 7 requires just about nothing in the way of factual specificity. On to trial you'll go.*

Sometimes, the government and the defendant agree about what happened for the purposes of a pretrial motion. The government thinks that it was a crime, and the person accused thinks that it wasn't a crime. Normally, there is little way for the person accused to ask the court if the conduct was a crime, before everyone spends a tremendous amount of money, and the person accused of the crime undergoes a tremendous amount of stress. The most reliable way to handle something like this is on a stipulated facts trial, like in the Ninth Circuit's case on racially motivated threats against President Obama. Of course, then the person charged with the crime doesn't get to have a meaningful trial.

Most federal district court judges, in most cases, will not consider a motion to dismiss an indictment if it relies on any assumptions about what the facts of the case are.

Happily, Judge Boasberg on the United States District Court for the District of Columbia,** granted a motion to dismiss a count on an indictment based on a pretrial determination about the facts in the case in United States v. Nitschke.

Judge Boasberg dismissed an indictment where the facts of the case - as set out by pretrial motion which were not objected to by the government - showed that there was no crime.

The opinion defends the normal practice, though, asserting that,

"[i]t would certainly be improper to force the government in the normal case to proffer its evidence pretrial so that the defense might test its sufficiency. That could, for instance, curtail the government's ability to obtain additional evidence or locate additional witnesses."

I just don't understand that point. What would be bad about putting the government's theory of the evidence to the test? If there are additional witnesses the government needs, why is it indicting?

Robust pretrial motions practice in civil cases - dismissing bad lawsuits before they go too far - is a good thing. It saves money, time, and stress.

What's so broken about our civil justice system that it won't work for criminal cases?

* Though perhaps you could file a motion to strike the part about the banana. It's kind of surplus language.

** Yes, this is is strictly speaking not about a federal criminal appeal. Here's to hoping it doesn't undermine the thematic content of this blog too much.