Recently in Federal Sentencing Category

May 17, 2013

Does A Person Submitting False Medicare Bills Abuse The Trust Of The Doctor Making Money Off Of The False Bills?

Hiring is always hard, especially in a small office.

You have work that needs to be done. You can't do it all. Maybe you're a professional, like a doctor, and some of the work isn't the best use of your time.

So you hire someone to help. Really, how much do you know about a person as the result of a hiring process? Yet, despite that, you give them responsibility over a portion of your business.

And you trust them.

As the First Circuit's case in United States v. Zehrung shows, sometimes that trust is not repaid in the way you expect.

69133_medical_exam_equipment.jpgDawn Zehrung worked in a doctor's office. While the doctor was seeing patients - he had 14,000 patients - she was responsible for sending the office's bills to Medicare, the state of Maine's Medicaid program, and other insurance companies.

She also had unsupervised control of the firm's checkbook, accounts payable, and copays from patients.

In what I suspect the doctor now sees as folly, Ms. Zehrung was paid a bonus if the firm did well.

Shortly after she took over the billing, the firm's monthly revenues went up 33%. The good doctor asked her why they were making so much more money all of a sudden. Ms. Zehrung said she was simply working back accounts receivable.

The doctor accepted this explanation. I'd like to think he drove off in a new sports car after hearing it.

Later, the doctor thought the continued increase was as a result of laser hair removal procedures that they had started doing.

As it happens, Ms. Zehrung was not just working the receivables. And, doubtless there's money to be made in laser hair removal, but that's not how the money in this office was being made.

It was, instead, being made through simple upcoding.

Ms. Zehrung would take the doctor's notes about what had been done, then she would submit bills for procedures that paid more.

Also, she would destroy some of the records that showed what was actually done.

Finally, the doctor was alerted by a nurse who spotted the problem. I'd like to think he was reached by the nurse on his cell phone, while he was sitting beachside drinking something with an umbrella in it.

He asked Ms. Zehrung to explain herself. Eventually, he made a serious of calls that wound up with Ms. Zehrung being arrested, charged, and pleading guilty to healthcare fraud.

At sentencing, there was, apparently, only one disputed issue - whether Ms. Zehrung should be subject to an abuse of position of trust enhancement.

The government said she should - she abused the good doctor's trust. He trusted her and she betrayed that trust.

She said she shouldn't - the enhancement is normally appropriate for folks who have some special skill with discretion, like a lawyer, who abuses the trust that comes with that skill.

It's clear that, say, a bank teller who embezzles is not eligible for an abuse of position of trust enhancement.

So, was Ms. Zehrung's trust anything more than one finds in a run of the mill employee - someone who is trusted to do an important job in a small business?

The district court applied the enhancement. As the court of appeals explained, the court reasoned:

She did the billing with "no supervision," the judge added - "[t]here was no direct oversight, no review," he repeated again - and "she assumed complete financial control within the office." And, the judge suggested, her position made it significantly easier for her to commit the crime charged.

The First Circuit reversed and remanded for more factfinding. These remarks, it concluded, were not enough to explain whether the enhancement was justified.

This case is a nice slalom through the different ways the abuse of position of trust enhancement can apply. And it's a lovely read.

March 14, 2013

If You Transfer Someone's Personal Identity Information, You Don't Necessarily Use It, And They Aren't A Victim Of Your Identity Theft Conspriacy

Erica Hall was an office assistant at an OB/GYN office in Coral Springs, Florida. The job may not have paid well, because Ms. Hall was trying to make some extra cash on the side by selling patient information to some folks who would use it to get fake credit cards.

1385735_sterilisation.jpgMs. Hall was told by the folks the government described as her coconspirators that for every patient's personal information she handed over, she'd be paid $200. If the information was able to be used to create a credit card that could be used, she'd be paid $1000 for that patient information.

Even though Ms. Hall handed over information for between 65 to 141 folks, and that 16 of those people had information that could be used to make fake credit cards, she was only paid $200.

If you can't trust a co-conspirator, who can you trust.

Ms. Hall pled guilty to conspiracy to commit bank fraud, conspiracy to identity theft, and wrongfully obtaining and transferring someone's health information.

When the probation officer wrote her presentence report, she was given a four-level enhancement for the offense involving more than 50 victims.

Ms. Hall objected to the "more than 50 victim" enhancement - she argued that a "victim" for the purposes of the fraud guidelines, is only someone who suffers and actual loss.

The district court didn't agree though. The district court "concluded that the intentional transfer of information in exchange for consideration constituted actual use for the purposes of § 2B1.1(b)(2)(B)."

The Eleventh Circuit, in United States v. Hall, reversed the district court and vacated the sentence based on this application of the number of victims enhancement.

First, as the court of appeals pointed out,

Application Note 4(E) provides that a "'victim' means (i) any victim as defined in Application Note 1; or (ii) any individual whose means of identification was used unlawfully or without authority."

So, when the identity information was transferred, was that a use of the information?

The Eleventh Circuit said no:

When we apply the rules of statutory construction to the enhancement, we disagree with the district court's interpretation. We first consider the plain meaning of the word "used" as elaborated upon in Application Note 4E. As the Supreme Court noted in Bailey, the word "use" means "to convert to one's service," "[t]o employ," "to avail oneself of," and "to carry out a purpose or action by means of." 516 U.S. at 145, 116 S. Ct. at 506. In other words, "use" is the "application or employment of something . . . for the purpose for which it is adapted." Black's Law Dictionary 1681 (9th ed. 2009). "These various definitions of 'use' imply action and implementation." Bailey, 516 U.S. at 145, 116 S. Ct. at 506. On the contrary, the definition of "transfer" is "[t]o convey or remove from one place or one person to another; to pass or hand over from one to another, esp. to change over the possession or control of" and "[t]o sell or give." Black's Law Dictionary 1636. Transfer means something distinctly different than use.

If I transfer my car to you, that doesn't necessarily mean that I use it - I could just sign over the title. So, as the court of appeals found, transferring identity information - as Ms. Hall did - is a separate thing than using identity information - the thing that gets you the enhancement for the number of victims.

And Ms. Hall will go back for resentencing.

March 6, 2013

The Third Circuit Shows How The Sentencing Guidelines For Fraud Are Complicated; Victims and Losses Bamboozle The Government And District Court

The federal sentencing guidelines are probably the most problematic in three areas - fraud, child pornography, and drugs.

Today's case, United States v. Diallo, illustrates two of the big problems with the fraud guidelines. First, they're really complicated - so complicated that federal prosecutors sometimes don't really understand how they work. In this case, the prosecutor at sentencing took a position so clearly inconsistent with the guidelines that the government abandoned it for the appeal.

(An astute reader will notice that this means the district court went along with the federal prosecutor's flawed guidelines understanding. It's a shame, but c'est la guerre.).

Second, the fraud guidelines are driven by what the "intended loss" is. And "loss" for sentencing guidelines purposes is a squishy notion. And squishy notions are bad when you're trying to figure out how much prison time to give someone.

785364_creditcard.jpgCredit Card Problems

Issa Diallo had a problem with credit cards. Sure, like many Americans, he charged more than he should of. Unlike many Americans, he put these charges on cards that weren't issued to him.

He went into a Wegman's (it's a grocery store, for our geographically diverse readers) and bought 26 gift cards with a counterfeit credit card. The next day he came back to do it again and was arrested.

Law enforcement went into his car with a warrant. They found a treasure trove of stolen identity documents:

53 counterfeit credit cards, a counterfeit Louisiana driver's license, 24 gift cards, a Global Positioning System (GPS), a laptop computer, a thumb drive, and a skimming device, which is a hand-held device that copies, stores, and encodes credit card information from a credit card's magnetic strip. A subsequent search by Secret Service agents resulted in the discovery of a second thumb drive and another gift card. Searches of the laptop and thumb drives revealed over 200 compromised Discover, Visa, and MasterCard credit card accounts.

He pled guilty to having counterfeit credit cards under 18 U.S.C. § 1029(a)(3). In the plea, there was no agreement about the number of victims or the amount of the loss. These are, of course, massively important to figuring out the guidelines range under U.S.S.C. § 2B1.1.

What's It Take To Be A Victim?

At sentencing, a Secret Service agent testified that there were credit cards for 51 financial institutions in Mr. Diallo's possession.

There's a four-level guidelines enhancement if there are more than 50 victims.

The government said that meant there were more than 50 victims, so the enhancement for more than 50 victims should apply.

The defense lawyer argued that "victim" for purposes of the number of victims enhancement, means people who actually lost money as a result of Mr. Diallo's criminal conduct.

What's the loss amount?

The Secret Service Agent testified that only $160,000 was actually charged on the cards that Mr. Diallo had. Though when you add up the credit limits for each of the cards, the total amount that could have been charged was $1.6 million.

So, since "loss" for the guidelines purposes means the higher of actual loss or "intended loss" - the amount that a person could reasonably think could have been lost as a result of the office - the government said that Mr. Diallo should have known that the loss could have been $1.6 million.

Mr. Diallo's attorney was able to get the agent to acknowledge that there was no way Mr. Diallo could have known what the credit limit on the cards was absent a subpoena.

The District Court Speaks

These were hotly contested questions. There was testimony and argument. The Third Circuit reports that:

The Court's analysis on these two issues consisted of the following: "The intended loss for credit cards he personally used and the cards he manufactured and provided to others totaled $1.6 million. Over 50 financial institutions were affected by his actions. So obviously it is a very serious offense."

It's not the most satisfying way to grapple with a hotly litigated legal issue.

The Appeal

On appeal, the government - perhaps reading the commentary for the sentencing guidelines that applied to this case relating to the number of victims enhancement for the first time - acknowledged that "victim" means "someone who suffered a loss."

Since not all of the financial institutions had cards that were actually used by Mr. Diallo, there weren't 50 or more companies that were actually harmed. So the government abandoned the "number of victims" argument.

Good on them for admitting their error. Perhaps it would have been better to do that before the sentencing hearing, but better late than never.

Turning to the loss amount issue, the Third Circuit started by setting the stage

This appeal requires us to determine how sentencing courts should calculate what "pecuniary harm was intended to result" from credit card fraud when the fraud's perpetrator did not know the credit limit, which is the potential loss amount from the stolen credit card.

The appellate court reasoned that if the district court had really done a searching analysis and decided that there was a reasoned basis for thinking that Mr. Diallo meant to take the full limit of each card, that could be supported, perhaps, depending on how good the reasoning was.

But that's not what happened here. And the Third Circuit was really not impressed with what the district court did.

from the District Court's statement at sentencing--"The intended loss for credit cards he personally used and the cards he manufactured and provided to others totaled $1.6 million" App. 30-31--we would be speculating as to what evidence or argument was the basis for the District Court's finding that $1.6 million was Diallo's intended loss amount. This type of "speculation 'is inappropriate' in light of the inherently discretionary nature of the sentencing court's decision."

The case was sent back for resentencing.

March 2, 2013

When Counting Bribes For Sentencing Guidelines Purposes, You Only Count The Ones That Actually Happened

Michael Roussel used to be a Captain in the New Orleans Police Department. As you might expect, he was convicted of bribery.

After his conviction at trial, he went to sentencing. The judge determined that an enhancement for receiving more than one bribe was warranted. The Fifth Circuit, in United States v. Rousel, disagreed.

419055_rainy_night_in_the_french_quar.jpgSynergy

Mr. Roussel was friends with Joey Branch. As a result of Mr. Branch's plea and cooperation agreement with the federal government, one suspects that they are no longer friends.

But back in 2008, Mr. Branch was an entrepreneur trying to place private security guards and Mr. Roussel was a police official with deep connections in a police force that has a tradition of officer's moonlighting as private security guards.

There was synergy in their relationship.

Of course, the thing about success is that one naturally wants it to continue and build. What was once an exciting threshold quickly starts to look like a stale plateau. And so it was with Mr. Branch and Mr. Roussel. Soon, they were working together to try to get more business for Mr. Branch's company. And that involved recorded calls to a confidential informant.

The informant worked for an energy company, and part of his job was to hire security guards during natural disasters. Roussel, Branch, and the informant agreed that uncertified, but falsely represented as certified, guards would be hired by the informant's company in exchange for the three splitting the profits and a fake job for the informant's wife.

Mr. Roussel ultimately gave $1,000 to the informant as earnest money of a sort. He and Mr. Branch were arrested soon after that - no other money was made.

Is Each Payment A Separate Bribe?

At sentencing, the district court determined that Mr. Roussel should receive a guidelines enhancement for being involved in multiple bribes.

Here's what the district court said:

[w]hat was intended was a series of actions over a period of time. This contract was to continue for some period of time in the future . . . . It could not be anticipated exactly when they would occur, but whenever there would be a presidentially declared natural catastrophe or emergency and Entergy would be required to immediately beef up its security force, then . . . Gladius, would be called upon to supply security officers, . . . but in any event, it seems to me that that is very different from a one-time agreement to pay a bribe that is then just paid over in installments. This was going to be a series of actions. Effectively another bribe to be paid every time there was another event that occurred.

If you're bribing a public official and tell him that you're going to give him, say $10,000 for selecting your bid for a federal contract, and you pay him in two installments of $5,000, is that one bribe or two? One can see how this could be a hard question.

Here, though, the Fifth Circuit thought it wasn't that tricky - in counting the number of bribes, you don't look at all the stuff that could have happened if the full deal went through. Instead, you look at what actually happened.

Or, as the court of appeals said

Simply put, the government proved the payment of only one bribe--the $1,000 "good faith" money to Dabdoub. The rest was all speculative.

Mr. Roussel is going back for resentencing.

November 13, 2012

The Second Circuit on Fraud, the Federal Sentencing Guidelines, and Mass-Marketing

If Mitt Romney is right that 47% of Americans think of themselves as victims, then the Second Circuit's opinion in United States v. Lacy may be deeply unpopular.

Like Mitt Romney, Kirk Lacey and Omar Henry had a vision for the future.

Unlike Mitt Romney, their vision involved short sales, straw buyers, and a little light mortgage fraud.

Like Mitt Romney, Mr. Lacey and Mr. Henry were not able to see their vision realized.

MTC Real Estate, Inc.

Mr. Lacey and Mr. Henry worked at MTC Real Estate.

MTC would buy houses in a short sale, then find a straw buyer who had no intention of making mortgage payments. That person would buy the house at a price higher than the one MTC bought it for. MTC would make the difference, the straw buyer would default, and the bank that loaned the money was left holding the bag.

1400144_vintage_radio_2.jpgTo find enough straw buyers, MTC advertised on the radio. Straw buyers were promised $50,000 for buying a house. Some of the straw buyers were even paid what they were promised.

It was a simple and deeply illegal business.

Sentencing

Mr. Lacey and Mr. Henry - along with eight others - were charged with conspiracy to commit bank and wire fraud for this real estate plan.

Mr. Lacey and Mr. Henry - unlike the eight others - went to trial. They lost.

The government, at sentencing, asked for a two-level upward enhancement of their guidelines under U.S.S.G. § 2B1.1(b)(2)(A)(ii), which says:

If the offense. . . (ii) was committed through mass-marketing, increase by 2 levels;

Mr. Lacey and Mr. Henry argued that this enhancement shouldn't apply - the radio ads were directed at straw buyers who were not victims. The banks were the victims here, not the straw buyers. In fact, the straw buyers even made $50,000 each. Much of the time.

As the Second Circuit put it,

The district court agreed with the government, noting that "the MTC marketing campaign was critical to the success of the fraud" because the marketing was "how MTC found people with distressed properties that could be exploited." The district court therefore held that although the mass-marketing was not directed at the victims of the fraud (that is, the banks that made the mortgage loans), the mass-marketing was still "relevant conduct" to the offense and so the enhancement should apply.

Mr. Henry was sentenced to a year and a day - allowing him to receive good time credit from the Bureau of Prisons. Mr. Lacey was sentenced to 46 months.

The Second Circuit and Fraud Victims

The Second Circuit reversed finding, basically, that

After a careful reading of the Guidelines and other relevant authority, we hold that the mass-marketing enhancement is properly applied only when the targets of the mass-marketing are also in some way victims of the scheme. Because it is not clear on the current record whether the straw buyers who were the targets of the mass-marketing in this case were in some sense victims, we will remand to the district court for further factfinding.

The court of appeals looked at the language of the mass-marketing enhancement and noted that the offense has to be "committed through mass-marketing."

As at least one other Circuit has recognized, an offense is "committed through mass-marketing" when mass-marketing is used to recruit or deceive victims of the offense, not when mass- marketing targeted at audiences other than victims is used in connection with the fraud in some other, more tangential manner. See United States v. Miller, 588 F3d. 560, 568 (8th Cir. 2009).

So, to the Second Circuit's way of looking at this,

It is not enough that a scheme may be advanced by the use of mass marketing techniques; a scheme is committed through mass-marketing only when the mass marketing is directed toward individuals who will be harmed by the scheme.

Indeed, the language surrounding the enhancement for mass-marketing helped the Second Circuit reach this reading:

All the other subsections of § 2B1.1(b)(2) base enhancements on the number of victims. Indeed, the mass-marketing enhancement is posed as an alternative to the smallest number of victims in an escalating series of adjustments based on rising numbers of victims. The pattern thus strongly suggests that the enhancement scheme is designed to measure the scope of the wrong by the number of victims, and that the use of mass-marketing is relevant even when the number of actual victims is small, because fraudulent mass-marketing creates a large number of potential victims.

So the district court's reasoning was off, and the case has to be remanded.

Possible Defeat from the Jaws of Victory

But, of course, nothing is as simple in the land of federal criminal appeals.

The court went on to say that

If a mortgage fraud scheme predictably results in pecuniary harm to unwitting, deceived straw buyers, the straw buyers have sustained "actual loss" and are therefore "victims" within the meaning of the Guidelines. They are therefore properly considered under the mass-marketing enhancement.

Not content to let a district court judge figure out how to find that the enhancement applies, the Second Circuit went on to explain exactly what the district court would have to look for on remand:

Returning to the facts of the instant case, it is not clear on the present record whether at least some of the consumers who were the targets of mass marketing were in some sense victimized, notwithstanding that the main thrust of the fraud was directed at banks. To the extent that any straw buyer was in on the scheme or received the promised $50,000 payment, such a buyer could not be seen as a victim. But some straw buyers testified that their credit scores were ruined. Others testified that they intended in good faith to purchase the property and pay the mortgage

More happily, the court of appeals described at some length why radio ads may not be mass-marketing under the guidelines definition at all.

A fun time will doubtless be had in the district court on remand as it follows the Second Circuit's instructions to

consider two questions: first, whether the defendants engaged in "mass-marketing" within the meaning of the relevant Guideline, as interpreted by the commentary; and second, if the defendants did engage in "mass-marketing," whether the consumers who were the target of that mass-marketing were also in some sense victims of the overall criminal scheme, i.e., whether they were injured by the scheme.

Also, the court asked the Sentencing Commission to make this stuff clearer.

Also, why does the Second Circuit hyphenate "mass-marketing" but not "factfinding"?

October 25, 2012

D.C. Circuit Tells A District Judge, "You've Got The Power [To Impose A Sentence Lower Than The Guidelines Range]"

Pretty much every federal district judge in the country knows by now that the sentencing guidelines are not mandatory, the guidelines can't be presumed to be accurate, and that federal district court judges have authority to impose a sentence above, below, or within the sentencing guidelines, applying the factors set out in 18 U.S.C. § 3553(a).

1268685_washington_monument.jpgAnd so just about every federal district judge knows that if he or she says she's going to give a guidelines sentence, he or she has to also say it's the sentence that they'd give under § 3553(a).

It's odd, but in federal court it's very important that a judge knows what power he has, which is exemplified in the D.C. Circuit's opinion in United States v. Terrell. If a district judge is going to give a guidelines sentence, he or she has to be clear about whether a lower sentence is even possible.

Mr. Terrell had a crack (conviction) problem. He pled guilty to dealing a bit of crack and went to sentencing.

At sentencing, he asked the judge to give him less time than the sentencing guidelines called for. The guidelines in his case called for a sentence of 210 months on the low side (ok, perhaps it was more than "a bit" of crack).

The judge, though, told Mr. Terrell that he didn't think he could help him out. As the D.C. Circuit summarized it,

the court stated that it would sentence Terrell below the applicable Guidelines range only if it found "compelling reasons" to do so. See, e.g., Tr. 6/27/06, at 4:6-14 ("There would have to be compelling reasons for the Court not [to] impose an advisory guideline sentence."); id. at 7:8, 7:18-20 ("Now, I'm not so sure compelling reasons exist here. . . . [I]f you think there's a basis for the Court to impose something other than an advisory guideline sentence it's going to have to be for compelling reasons."); see also Tr. 8/4/05, at 4:16-18 ("In all likelihood, I'm going to follow the guidelines even though they're advisory. In all likelihood I'm going to do that."). The court explained that it had found "compelling reasons" to deviate from the Guidelines in only two prior sentencings. Tr. 6/27/06, at 4:6-14.

If there's one thing a federal appellate court doesn't like, it's being ignored. Just three months before Mr. Terrell's hearing, the D.C. Circuit had decided, in United States v. Pickett, 475 F.3d 1347, 1353 (D.C. Cir. 2007), that a district court can't decide that the sentencing guidelines are presumptively reasonable - put another way, it can't say that it'll only go below the sentencing guidelines if it has compelling reasons.

For the district court to keep on applying a "compelling reasons" standard was, perhaps, a bit of a snub to the august appellate court.

As the court of appeals put it,

Even after we issued our decision in Pickett, the court indicated that it was continuing to apply its "compelling reasons" approach. See Tr. 3/27/07, at 10:2-3 ("The question becomes why shouldn't the Court impose a [within-Guidelines] sentence of 210 months? . . . I just can't think of any compelling reasons why I should not impose a sentence of 210 months.").

Because the district court was wrong about when it could go below the sentencing guidelines - employing a "compelling reasons" approach after the D.C. Circuit had already said that wasn't the law - the D.C. Circuit remanded because, "the [district] court took too narrow a view of its authority to deviate from the Guidelines"

Mr. Terrell will be resentenced.

October 19, 2012

If You Make A Colorable Argument For A Lower Sentence, A District Court Has To Show That It Considered The Argument, Even If The Crime Is Using MySpace To Try To Have Sex With Underage Girls

Michael Begin was a MySpace user. He used MySpace not so much to keep up with fan information about Twilight, but to make the acquaintance of a fourteen-year-old girl.

Though described as a twenty-year old Marine sniper on his MySpace profile, Mr. Begin was actually a 33 year old man with a history of convictions involving underage girls.

1382778_old_brick_cell_phone.jpgMr. Begin and the fourteen year old talked on MySpace often. Their conversations were sexual in nature. He also used his cell phone to send her two pictures which were perhaps inspired by Congressman Weiner. The girls' mother became concerned. Her daughter told Mr. Begin that she was underage. Mr. Begin was undeterred.

The mother contacted the FBI. An FBI agent took over the girls' MySpace page. In addition to posting praise of Robert Mueller, the FBI Agent, posing as the 14-year-old girl, told Mr. Begin that she is underage.

Mr. Begin was undaunted.

The agent, as the girl, made plans to meet Mr. Begin at a restaurant in Bradford, Pennsylvania.

Mr. Begin showed up carrying a knife, a pair of handcuffs, and a condom. After being Mirandized, he admitted he was meeting the girl to have sex with her.

He pled guilty to a two-count indictment:

Count One charged that Begin violated 18 U.S.C. § 2422(b) by using the internet and a cellular phone to attempt to persuade a minor "to engage in any sexual activity for which any person can be charged with a criminal offense, to wit, statutory sexual assault, in violation of [18 Pa. Cons. Stat. § 3122.1], aggravated indecent assault, in violation of [18 Pa. Cons. Stat. § 3125(a)(8)], and indecent assault[,] in violation of [18 Pa. Cons. Stat. § 3126(a)(8)]." App. 17. Count Two charged that Begin violated 18 U.S.C. § 1470 by using a cellular phone to transfer an obscene image to a minor.

At sentencing, Mr. Begin argued for a variance. As the Third Circuit in United States v. Begin summarized it,

Begin argued that the sentence for his attempt to induce statutory rape under 18 U.S.C. § 2422(b) should not exceed the fifteen-year statutory maximum penalty for actually committing statutory rape within the special maritime and territorial jurisdiction of the United States under 18 U.S.C. § 2243.

The Third Circuit thought this argument was colorable - it was a plausible argument and the district court was, therefore, obligated to talk about it when imposing sentence.

The district court disagreed, and completely ignored the argument when sentencing Mr. Begin to twenty years, double the sentence that he was asking for.

The Third Circuit found that this was not a procedurally kosher way to sentence someone.

Having concluded that Begin's . . . disparity argument has colorable legal merit under § 3553(a)(6), we agree with him that the District Court failed to make a sufficient record to demonstrate its consideration of that argument. Though the Court summarized Begin‟s state-federal disparity argument at the beginning of the sentencing hearing, it did not acknowledge that he had also made a federal-federal disparity argument. The Court asked no questions during defense counsel‟s oral argument in favor of downward variance on this ground and made no comments about the issue following that presentation. Strikingly, the Court did not even specifically rule on Begin‟s request for a variance.

Though, what the Third Circuit gives, it also takes away:

We emphasize that colorable legal merit is distinct from actual merit. There is reason to believe that the predatory nature of Begin‟s conduct and the knife and handcuffs found in his possession distinguish his offense from a run-of-the-mill statutory rape. Indeed, the stiff penalties under § 2422(b) are intended to punish and deter predators who use the reach and anonymity of the internet to perpetrate sex crimes against children. . . . Thus, when we say that Begin‟s claim has colorable legal merit, we mean only that, upon appropriate findings of fact, the District Court would be within its discretion to accept the argument and to factor it into the ultimate sentence.

But Mr. Begin will be going back to the district court for it to make a proper record when imposing sentence. We'll see whether it accepts the Third Circuit's suggestions for how to do that.

September 6, 2012

The Prosecutor And District Court Should Try Really Hard To Make It Seem Like They Don't Hate Cubans When Sending A Cuban To Prison

Giraldo Trujillo-Castillon came to this country from Cuba when he was seventeen.

Like they say, you can take the man out of Cuba, but you can't take the Cuba out of the man. Or so seemed to believe a federal prosecutor and district court judge.

Mr. Trujillo-Castillon was accused of fraud in federal court.

He pled guilty. He went to sentencing.

1212572_cuban_convertible_pesos.jpgAn Anti-Cuba Sentencing Hearing

The government asked for the high-end of the sentencing guidelines range. The request was not made because of Mr. Trujillo-Castillon's conduct, but, rather, because this Assistant United States Attorney doesn't appear to think well of Cubans. As the Seventh Circuit explained,

Pointing to the defendant's admission that he viewed fraud differently than violent crimes, the government argued that "it may be possible to explain his stated attitude because of his Cuban heritage. . . . Maybe there is a different attitude toward private property in Cuba." The government noted Trujillo-Castillon's statement that his only friend in the United States was his wife, and said that "if you play by the rules, if you join us, if you become American, [you] will have many [] friends in the United States." The government then turned to "why people should come to the United States," professing that "if he came here because he thought it would be easy, then I would simply suggest that he and others like him either wise up, or don't come."

Not to be outdone, Mr. Trujillo-Castillon's own lawyer explained that perhaps being Cuban has some downsides - in the sense that you're more likely to commit property crimes. Again, here's how the Seventh Circuit explained what happened:

Defense counsel did not object to this line of argument; instead, he responded in kind. He explained that there is an "attitude" in Cuba that when you steal "you're pulling a Robin Hood type of act." He suggested that many Cuban immigrants have a hard time adjusting to "the American way of life."

It must have been very lonely to be Mr. Trujillo-Castillon.

I feel for the district judge at this point in the hearing.

On one hand, the parties seem to be arguing about whether it's so bad to be Cuban that Mr. Trujillo-Castillon should get a lighter sentence, or whether it's so bad to be Cuban that Mr. Trujillo-Castillon should get a higher sentence.

The judge would naturally feel that it's ok to stay on the "Cubans are bad" train. Except for the fact that it's really creepy to sentence someone based on their nationality. Also it violates their Due Process rights.

Here's how the district court walked the tightrope of animosity toward Cubans:

The court first explained that Trujillo-Castillon's "lifestyle" cannot "be blamed on Cuba." It said that his record was reminiscent of "when the Mariel people came over here and created crime waves all over the place"; "When [Fidel] Castro emptied his prisons, and his psychiatric wards, and Jimmy Carter took them all in." The court continued that, unlike in Cuba, "in America, private property is sacrosanct. It's not the Government's property. . . . And that's the way we live in America. And that's why it's a serious offense when you do this."

The district court then sentenced Mr. Trujillo-Castillo to a sentence seven months above the top of the sentencing guidelines.

The Appeal

Mr. Trujillo-Castillo appealed and the Seventh Circuit remanded the case in United States v. Trujillo-Castillo. The court of appeals started the discussion of the Cuba issue by noting that,

The guidelines make clear that race, sex, national origin, creed, religion, and socio-economic status "are not relevant in the determination of a sentence." U.S.S.G. § 5H1.10; see also 28 U.S.C. § 994(d) ("The Commission shall assure that the guidelines and policy statements are entirely neutral as to the race, sex, national origin, creed, and socioeconomic status of offenders."). A sentencing court's discretion to consider such factors is also constrained by the Constitution. See, e.g., Pepper v. United States, ___ U.S. ___, 131 S. Ct. 1229, 1240 n.8 (2011) ("Of course, sentencing courts' discretion under § 3661 is subject to constitutional constraints").

The standard that the court of appeals articulated is that remand is required when a reasonable observer might think that reliance on a prohibited factor influenced the sentence.

In this case, the Seventh Circuit held,

we think that both the government and the sentencing court crossed the very fine line of demarcation separating presentencing statements regarding a defendant's relationship with a country or its residents who have engaged in similar criminal activity there and statements concerning the race or national origin of the defendant which would violate his due process guarantees.

The court of appeals criticized both the prosecutor and the district court.

The government should have forgone discussing Trujillo-Castillon's national origin in the first place. And although the court did not expressly adopt the government's position, it did nothing to reasonably assure the defendant that his Cuban heritage would not factor into its calculus. See id. Instead, the court exacerbated the problem by comparing the defendant's conduct to the Mariel people who emigrated from Cuba more than thirty years ago. By lumping the defendant in with the Mariel people and expressly contrasting the values held by Americans with people, like the defendant, "who come[] from Cuba," the court arguably made Trujillo-Castillon's national origin a factor at sentencing. A reasonable observer hearing or reading the remarks might certainly think so.

The court of appeals explained that it wasn't sure if the above-the-guidelines sentence was based on Mr. Trujillo-Castillon's Cuban nationality or some other characteristic. The appellate court directed the district court to either resentence him based on some other factor or explain that the court wasn't motivated by an improper dislike for the Cuban people.

Is there any chance the district court is going to say, in effect, "yes, I was impermissibly biased against Cubans, you should get a new lower sentence" on remand?

I'm betting no.

August 21, 2012

A Sad Bank Robber Attracts A Lower Sentence With Honey Than He Would Have With Vinegar

James Wooten was on hard times.

As he later told the police, he was just sick of living in his car and running out of money.

He went into a bank. As the Sixth Circuit in United States v. Wooten, tells it:

[B]ank teller Buddy Mason recalled the circumstances of the September 23 robbery. According to Mason, the robbery began after Wooten walked "casually" into the bank and approached the teller row. Wooten, who was fifty-six years old at the time, wore ordinary clothing and appeared to Mason to be a routine customer. After entering, Wooten strolled over and placed one hand on the counter. According to Mason, Wooten was "not looking around or fidgeting or looking at anything" and his demeanor was "nonchalant." After motioning for Mason to lean in closer, Wooten "kind of whispered and said, I am going to rob you." Mason at first thought Wooten was "joking around." Indeed, Mason recalled that he was "not taking [the robbery] very seriously because [Wooten] was just so nonthreatening." With prompting from Mason, Wooten repeated the statement "I am going to rob you," and Mason again questioned the sincerity of Wooten's request. At that point, Wooten "kind of got a serious look in his face" and said, "I have a gun, I want your money."

1342748_bank.jpgBank Robberies are common enough that banks give their tellers training on how to respond if they get robbed. After Mr. Mason heard from Mr. Wooten that he had a gun, Mr. Mason turned and picked up a stack of bills.

Mr. Wooten took the money and walked out of the bank.

He was caught by the police a few blocks later - that's when he said he robbed a bank because he didn't want to live in his car. He didn't have a gun with him.

At Mr. Wooten's sentencing hearing, the teller - Mr. Mason - said that:

Wooten "was not acting like he was going to hurt me or anybody in the bank." In fact, even though Wooten had told Mason that he had a gun, Mason said he "never felt threatened at all."

Mr. Wooten pled guilty. At sentencing, the fight was whether Mr. Wooten should be subject to a "threat of death" enhancement.

If a person commits a robbery and threatens to kill someone, that's seen as worse under the sentencing guidelines and the person gets an increase under section 2B3.1(b)(2)(F).

The district court applied the enhancement, finding that a reasonable person meeting the meek 50 year old Mr. Wooten, who was reluctantly robbing a bank to escape living in his car, would have to fear for his life.

The Sixth Circuit disagreed.

while the statement "I have a gun" certainly can be enough to support the threat-of-death enhancement--and in the majority of cases it is--the statement is not necessarily enough, especially when contextual circumstances undermine the otherwise threatening nature of the declaration.

This is hopeful for Mr. Wooten - saying that you have a gun does not always mean that you are saying you're going to use it. Sometimes you have to say you have a gun just to get someone to treat your situation like a robbery and give you the money that they're trained to hand over.

Although unusual, one can envision circumstances in which the nature of a robbery makes it objectively unreasonable for a victim of ordinary intelligence to believe that the robber, even if claiming to have a gun, has any intent or ability to carry out a violent act. An offender who walks into a bank waving a banana or what is plainly a toy gun, for instance, would not instill a fear of death in a reasonable person, even if the offender emphatically announced his possession of a gun. Cf. Jennings, 439 F.3d at 611 (surmising "that there could be circumstances that would sufficiently dilute the phrase 'I have a gun' so that it would not qualify as a death threat," such as where "a bank robber claimed to have a gun but brandished what was quite obviously a toy"); Gibson, 155 F.3d at 847 (stating that "I have a gun," constitutes a threat of death unless "unusual mitigating circumstances accompanying this statement could deprive the words of their ordinary and expected meaning" (internal quotation marks omitted)). Because such circumstances would fall short of instilling a fear of death in a reasonable victim of the offense, the threat-of-death enhancement would not be warranted.

The Sixth Circuit reversed and remanded - Mr. Wooten didn't threaten to kill anyone.

August 19, 2012

For Federal Fraud Sentencing Purposes, If You've Defrauded One Wal-Mart, It's The Same As Having Defrauded Them All

I'd like to think that Cedrick Stubblefield has Occupy Wall Street sympathies.

Regardless, the Sixth Circuit's opinion in United States v. Stubblefield shows why - if you're going to commit fraud and be prosecuted in federal court - it's better to defraud several Wal-Marts than to hit a bunch of mom and pop stores.

1379920_mom-_and-_pop_store.jpgDon't Keep Your Drugs Near Evidence of Your Fraud

Mr. Stubblefield was being driven in a rental car near Cleveland, Ohio. The car was pulled over for speeding.

The officer's backup had a drug detection dog. The dog detected drugs in the rental car.

While searching the car, the police happened upon an envelope containing: 10 false driver's licenses with either Mr. Stubblefield's photo or the photo of another gentleman in the car; 20 Chase bank checks payable to the names on the fake Texas licenses; and maps and driving directions to Wal-Mart stores in the greater Dayton and Columbus Ohio areas.

Later, the police searched a bit more diligently in their station and found another, similar envelope containing more fake licenses, checks, and maps of Wal-Marts in greater Cleveland.

Hello Cleveland, indeed.

How Many Wal-Marts Are There?

Mr. Stubblefield was charged with intent to commit aggravated identity theft and possessing five or more identification documents with an intent to commit identity theft.

The government wanted him to accept a sentencing guidelines enhancement for having between 10 and 50 victims of his crime under U.S.S.G. § 2B1.1(b)(2). The government's theory was that these checks were bound for a number of Wal-Mart stores, and that each store was a separate victim.

Mr. Stubblefield pled guilty, preserving his ability to resist the victim enhancement.

The district court agreed with the government that each Wal-Mart is a separate victim for the fraud guidelines. The Sixth Circuit, however, agreed with Mr. Stubblefield.

The question is whether the Wal-Mart corporation is the victim - in which case there is one victim - or whether each individual store is a separate entity capable of separate victimization.

Section 2B1.1(b)(2)
says that:

(Apply the greatest) If the offense- (A) (i) involved 10 or more victims; or (ii) was committed through mass-marketing, increase by 2 levels; (B) involved 50 or more victims, increase by 4 levels; or (C) involved 250 or more victims, increase by 6 levels.

This, of course, punts on what counts as a "victim". Helpfully, Application Note 1 to the fraud guideline clears that up:

Application Note 1 to § 2B1.1 defines victim thus: "any person who sustained any part of the actual loss determined under subsection (b)(1) . . . . 'Person' includes individuals, corporations, companies, associations, firms, partnerships, societies, and joint stock companies."

So, "victims" for the "number of victim enhancement, includes only the entities who suffered an actual loss - not a guidelines loss.

This is a departure from how a lot of the fraud guidelines works. If you try to defraud someone and are prosecuted in federal court, normally the guidelines looked at what you tried to do, not just what you succeeded in doing. But the § 2B1.1(b)(2) number of victims enhancement is a little more restrictive.

Under this understanding, the Sixth Circuit found that Wal-Mart suffers the whole loss:

The evidence adduced at sentencing in the present case establishes that although the individual Wal-Mart stores take an initial, temporary loss, the Wal-Mart corporation ultimately bears the loss from Stubblefield's crimes. Probation Officer Allen Gold, the only person to testify at sentencing who had spoken to representatives of Wal-Mart, testified that the corporation "do[es] reimburse each store, but each store will first take the loss." The PSR that Gold prepared similarly states that "[u]limately, due to accounting practices of the Wal-Mart Corporation and the corporate guarantee to individual stores that payroll checks will be covered, the Corporation reimburses the individual stores for their losses." Because the evidence does not suggest that the reimbursement hinges on any conditions, the stores' loss is necessarily temporary, which is another way of saying that reimbursement is automatic.3 Moreover, the judgment requires Stubblefield to pay his restitution to the corporation rather than the individual stores. These facts support the conclusion that only the corporation suffers an actual loss--i.e., the "pecuniary harm that resulted from the offense," U.S.S.G. § 2B1.1 cmt. n.3(A)(i) (emphasis added). So the only victim is the corporation, and the district court erred in applying an enhancement based on the number of stores affected.

Happily for Mr. Stubblefield, ripping off a string of Wal-Marts is a lot easier on the guidelines than ripping off a string of non-chain stores.

So - if you want to be community-minded (and commit fraud) - shop local, defraud global.

Related Links:

June 12, 2012

The Tenth Circuit Holds That A Federal Sentencing Expert Was Correct That His Own Federal Sentence Was Wrong


Howard Kieffer really liked federal sentencing practice.

He co-counseled in cases in federal district court and some federal circuit courts. He gave presentations on how people who are facing a sentencing hearing can prepare, and he helped people who were going to the Bureau of Prisons position things so that they could make an easier transition.

Mr. Kieffer even ran a website and a listserve for people who were interested in sentencing and the Bureau of Prisons - lots of lawyers contributed.

Sadly, though, as the 10th Circuit, in United States v. Kieffer, noted:

All the while, [Mr. Kieffer] had a secret. He is not and never has been an attorney. He never went to law school, never sat for a bar exam, and never received a license to practice law.

68920_law_education_series_5.jpgGail Shifman

In 2006, at a conference for the National Association of Criminal Defense Lawyers, Mr. Kieffer met Gail Shifman - a criminal defense lawyer in San Francisco. One can imagine that they discussed lawyer stuff - cases and clients and how to work in a broken system.

At some point, though, Ms. Shifman learned that Mr. Kieffer was not a lawyer. She emailed him.

It was a pointed email. Ms. Shifman wrote:

if it is correct that you are not a licensed attorney, then you've directly lied to me on more than one occasion.

Mr. Kieffer's response may not have been as direct. Among other things he wrote:

In short, I am "licensed"--if that is the operative term (and I am not sure that it is) in no state, but I have been admitted (for various purposes) or specially appeared in accord with local rules) in certain (federal) jurisdictions.

I went to Antioch Law School--and graduated.

Somehow, Ms. Shifman was not satisfied with this response. She contacted the FBI.

As the 10th Circuit noted, "this was not the first time the FBI received a complaint about [Mr. Kieffer's] legal escapades."

Colorado

As it happened, Mr. Kieffer came to enter his appearance on behalf of a person charged with a crime in the United States District Court in Colorado. He appeared on the person's behalf at a competency hearing. The person was convicted.

Mr. Kieffer was paid $65,750 for this representation.

He was charged with wire fraud. Mr. Kieffer was convicted in a federal district court in Colorado.

Interestingly, this was also not Mr. Kieffer's first federal conviction.

North Dakota

Flash back to before Mr. Kieffer was convicted in Colorado.

Shortly after his Colorado client's trial, the District of North Dakota had issued a show cause order challenging some of the statements he made in an application for admission to that court.

Mr. Kieffer hired counsel to represent him with the North Dakota order. He admitted that he wasn't a member of any state bar, and that he didn't graduate from Antioch College of Law.

He was convicted in federal court in North Dakota of making a materially false application to the court and sentenced to 51 months.

Back to Colorado

He was then suspended from practicing law in the District of Colorado (which is a little funny when you think about it, since he wasn't a lawyer).

Then came his Colorado conviction and, later, sentencing.

Was North Dakota Any Different?

At sentencing, the court decided that this conduct was separate from his North Dakota conduct. This did not work into Mr. Kieffer's favor. Indeed, it looks like a pretty good approach if the court wanted to make things worse for Mr. Kieffer.

Treating the North Dakota sentence as separate did two things - each of which was challenged on appeal.

First, it meant that his North Dakota conviction counted as a prior conviction for criminal history purposes. Mr. Kieffer pointed out that the government's position was that he had engaged in a continuing scheme - his prior conviction was a part of that scheme.

The government agreed that this was error. The 10th Circuit did too.

More fundamentally, though, was whether Mr. Kieffer's sentence on this offense would run concurrent or consecutive to his North Dakota conviction.

To quote the 10th Circuit:

[Mr. Kieffer] rightly claims that in addition to its erroneous criminal history calculation, the district court erred in manipulating the calculation of his offense level so it could ignore U.S.S.G. § 5G1.3(b) and ostensibly impose a within guideline range sentence on him while running that sentence consecutive to the sentence he received in the District of North Dakota.

Section 5G1.3(b)'s "central aim" is to "ensure no defendant is punished twice for the same crime." Here, the district court counted Mr. Kieffer's related prior conviction as unrelated just to evade § 5G1.3(b). The 10th Circuit said that was incorrect.

Because the district court misapplied section 5G1.3, and miscalculated Mr. Kieffer's criminal history category by, in both cases, treating his North Dakota offense as unrelated, the case was remanded for resentencing.

It's good to see that Mr. Kieffer was vindicated in two ways - he won his appeal, and he showed that he is an expert at federal sentencing law after all.

May 28, 2012

The Sixth Circuit Says That If You Plead Guilty To An Indictment You Don't Plead Guilty To All The Extra Bad Stuff The Government Put In The Indictment


Michael Louchart sold some guns. They were stolen and he knew it.

The feds caught up to him and charged him with conspiracy to steal firearms and with receiving and selling stolen firearms, each of which violated 18 U.S.C. § 922. In the indictment, the government said that Mr. Louchart was involved in the theft of more than 75 firearms.

It's not a coincidence that if a person steals more than 75 firearms they are then eligible for a sentencing enhancement under the sentencing guidelines.

Mr. Louchart didn't like his chances at trial. He entered a plea of guilty to the indictment, without a plea agreement.

1329263_pistol.jpgAt his plea hearing, the district court asked him what he did that made him guilty. Mr. Louchart said:

Well, a couple guys I know of brought me some guns, 13 revolvers and three long guns, and I sold them. And I knew they were stolen.

No one asked M. Louchart how many guns were stolen.

The presentence report assessed an increase in Mr. Louchart's proposed sentencing guidelines range, saying that he pled guilty to an indictment that said his crime involved more than 75 guns.

Mr. Louchart objected - he said he didn't say anything about any 75 guns.

The government put on no evidence of the number of guns, but relied on the fact that Mr. Louchart pled guilty to the indictment and the indictment said there were more than 75 guns.

The district court agreed, and applied the enhancement based on Mr. Louchart having participated in a conspiracy to steal guns with more than 75 guns.

Mr. Louchart appealed to the Sixth Circuit and, in United States v. Louchart, the Sixth Circuit reversed.

While, of course, the government can put on evidence to support a sentencing enhancement, and if it proves that the enhancement applies by a preponderance of the evidence, then an enhancement that a person being sentenced didn't admit to would apply. So admitting the facts supporting an enhancement under the sentencing guidelines isn't required to jack up a person's sentence.

As the court of appeals said,

To the extent that Louchart argues that he can be held accountable at sentencing only for the 17 guns that he admits possessing and selling, the law does not support such a limit. A district court may enhance a sentence based on relevant conduct so long as its factual findings are supported by a preponderance of the evidence and the sentence imposed does not exceed the statutory maximum.

But that's a separate issue.

The question, really, is whether Mr. Louchart admitted the number of guns in the indictment when he admitted that he was guilty of the offense charged there.

And the answer to that question is no.

As the Sixth Circuit explained,

Louchart's guilty plea, however, should not have been treated as an admission of the quantity of firearms stated in the indictment. The quantity of firearms involved was not an element of the offense, and the quantity of firearms alleged in the indictment was not admitted by Louchart at the plea hearing or in a plea agreement. Admission of facts from a guilty plea is limited to elements of the crime charged or those explicitly admitted to by the defendant. The Supreme Court for instance has carefully stated the scope of a guilty plea admission: "a guilty plea is an admission of all the elements of a formal criminal charge." McCarthy v. United Sates, 394 U.S. 459, 466 (1969) (emphasis added). The Supreme Court has also described guilty pleas as "comprehend[ing] all of the factual and legal elements necessary to sustain a binding, final judgment of guilt and a lawful sentence." United States v. Broce, 488 U.S. 563, 569 (1989) (emphasis added). This limited language strongly suggests that a guilty plea does not constitute an admission of facts included in an indictment when those facts were not necessary to sustain a conviction. It follows that these facts cannot be used to increase a defendant's sentence without the district court's first determining that the facts are supported by a preponderance of the evidence.

And, for those who practice outside of the Sixth Circuit, there's a nice survey of cases from around the federal appellate courts on this question.

Because Mr. Louchart didn't admit the number of guns, just that he met the elements, his case was remanded for resentencing.

May 17, 2012

Why It Is Probably Better To Pick Up The Phone of Someone You've Shot Than To Take Their Phone At Gunpoint Then Shoot Them

Someone shot Eric Davis. He wasn't hurt badly, but he was mad.

The next day, someone told him that the man who shot him was near a high school. Mr. Davis went to the high school. He saw Octavious Wilkins, and took Mr. Wilkins as the man who shot him.

Mr. Davis, and friends, approached Mr. Wilkins. They had guns drawn.

Two things happened as a result. Mr. Wilkins was shot, and Mr. Davis wound up with Mr. Wilkins' cell phone.

1046664_cell_phone_in_trouble.jpgWhat isn't clear is how Mr. Davis came to possess Mr. Wilkins' phone.

Maybe Mr. Davis threatened Mr. Wilkins with a gun, and demanded his phone, then shot him as he ran away later.

Maybe Mr. Davis threatened Mr. Wilkins, who ran and was shot, then dropped his phone as a result of being shot.

Regardless of which happened, Mr. Davis was charged in state court in North Carolina with common law robbery. He was charged in the United States District Court for the Eastern District of North Carolina with being a felon in possession of ammunition.

His state case moved faster than his federal case, as so often happens. He entered a no contest plea to the robbery charge - he didn't admit that he did it, just that he wouldn't contest it.

He was sentenced to between 14 and 17 months in prison on the state robbery charge.

He also entered a plea to the federal charge. Because possessing ammunition is clearly more than five times worse than robbing someone, Mr. Davis's sentence in federal court was more than five times longer - 108 months.

In sentencing him, the district court had to decide if his guidelines range would be raised because he used the gun in connection with a robbery.

If he used the gun in connection with a robbery, his range would be 120 months (or, more accurately, it should have been 121-151 months, but the statutory mandatory minimum of ten years means that it is effectively 120 months).

If he used the gun in connection with, say, assault - shooting someone else without necessarily intending to take their stuff - then his range would be 46 to 57 months.

So, if Mr. Davis pointed a gun at Mr. Wilkins, demanded his phone, and took it - then it looks like that's clearly robbery.

If Mr. Davis shot Mr. Williams then picked up his phone when he dropped it, that looks a little more like assault.

The district court tried to avoid this factual question. Instead, it focused on the fact that Mr. Davis was convicted of robbery in state court. The district court was uninterested in the detail that Mr. Davis's conviction was the result of a no contest plea.

The Fourth Circuit, in United States v. Davis, held that the district court should have been more interested in the basis for the plea in state court, saying

we hold that Davis's 'no contest' plea to common law robbery could not alone provide the necessary evidentiary basis to support application of the robbery cross-reference. What is necessary is factfinding regarding Davis's conduct. If Davis is to be sentenced as if he committed, not just the passive, status offense of unlawful possession of a single round of ammunition, but a robbery, the Sentencing Reform Act requires that the sentencing court make the findings necessary to justify such a result.

Ok, fair enough - the district court was wrong to rely on the fact of a conviction based on a no contest plea.

On remand, the district court will have to look at the evidence of what happened - when did Mr. Davis take Mr. Wilkins' phone?

It may be that whatever Mr. Davis did to get possession of Mr. Wilkins' phone is robbery in North Carolina. After canvassing some of the cases, the court of appeals noted that:

we discover that North Carolina law is predictably nuanced in situations where property is taken during or following a violent altercation that is motivated by reasons entirely unconnected to the purloined property itself.

However, resolving this question, the Fourth Circuit determined, was not its job. Rather, the court of appeals observed that

the parties seek to draw us into a nice dispute over the proper interpretation of the North Carolina law of common law robbery. But that is a dispute to be properly resolved by the district court in the first instance, which has not happened here. Even more fundamentally in our judgment, the correct application of the guidelines in this case hinges on factual determinations, which are also for the district court to make.

The case was, therefore, remanded for resentencing.

Funny, though, that the court that sentenced Mr. Davis for the conduct at issue - the North Carolina state court - gave him a sentence so much lower than whichever sentence he winds up with in federal court.

May 16, 2012

A District Judge Can't Sanction A Lawyer For Filing A Motion Even If He Really Hates The Lawyer's Client; Also, a 60-Year Sentence Requires A lot of Explanation

Sometimes, it seems that Congress and the courts are in a race to see who can show that they hate child pornography the most.

Congress imposes draconian mandatory minimums on child pornographers. Federal judges impose bizarre and unsupported conditions of supervised release after the people convicted of child pornography are released from prison.

But one district court judge in Michigan blew the roof off the race to hate child pornographers the most. He maxed out the man convicted of the child porn offenses and, to show he was really tough on these kinds of crimes, he sanctioned the guy's lawyer.

Of course, because you're reading about it here, the Sixth Circuit reversed in United States v. Aleo.

285538_travelling.jpgDo Not Cross A Border With Child Porn On Your Computer

Craig Aleo was under investigation because his paypal account had been used to buy access to child porn webpages. Mr. Aleo did not know he was under investigation.

He and his wife decided to vacation in Canada. They crossed the border and an alert that Mr. Aleo was under investigation for a child porn offense was triggered when Mr. Aleo's passport was scanned. Government agents searched Mr. Aleo.

When you cross a border, the government gets to search your stuff without a warrant (see, e.g., this case).

In his computer, they found child pornography - including one video file of him with his granddaughter.

Mr. Aleo was charged with three child porn offenses and entered a guilty plea.

The District Court's Sentence

At sentencing, Mr. Aleo's guidelines range was 262 months to 327 months. The government advocated for a sentence in the middle of the range - 300 months.

Mr. Aleo's lawyer asked for the statutory mandatory minimum of 180 months, or 15 years.

The district court judge had other ideas. His view was that:

The discretion of the sentencing is up to me. I believe [Aleo] has no remorse, but even if he had remorse, I would not change that sentence because of the despicable act that he did.

More fully, the court said that:

Number one, I think this is perhaps one of the most despicable cases that I have ever been involved in, in 28 years on the bench. I've been thinking about it, thinking about it and I can't think of another case. . . . I've listened to the defendant's attorney argue today and I've listened to the defendant. I've heard not a word of remorse. Not a word. . . .

The Court . . . believes that the sentencing guidelines are totally nonapplicable to this case. There is no human committee, and that's what the sentencing guideline commission is, it's a human committee that tries to equalize a fairness in terms of sentencing. I don't think they ever anticipated that a granddaughter would be involved in this kind of--a victim, in this kind of activity and certainly not a grandfather doing it. There's no way they would have been able to even foresee that. So the guidelines . . . certainly is not a guideline for this kind of case . . . . there's no way that the sentencing guidelines are adequate . . . to punish the defendant for what he has done to the victims and to make this thing right. . . .

The court sentenced him to the statutory maximum of 720 months - or 60 years. Mr. Aleo was in his 60s.

The district court also imposed 5 years of supervised release.

The Sixth Circuit Disagrees About What The Sentencing Commission Has Considered

The Sixth Circuit reversed. As it happens, the district court was wrong about what the sentencing commission has considered. As the court of appeals noted,

we question the district judge's belief that the sentencing guidelines could not have envisioned a crime such as Aleo's. In fact, the Sentencing Guidelines do envision a crime such as Aleo's--Aleo's guidelines calculation included several enhancements that specifically addressed the unique characteristics of his offense. Four levels were added because Aleo produced child pornography with a minor under the age of twelve. Two levels were added because the offense involved the commission of a sexual act or sexual contact. Two levels were added because Aleo was a relative of the minor and the minor was in his custody, care, or supervisory control. Therefore, the guidelines expressly take into account a defendant who creates child pornography using a relative, when the relative was under the age of twelve, under the individual's supervision, and who the defendant sexually touched during the creation of the pornography. The guidelines do not specifically differentiate the grandparent/grandchild relationship from other familial relationships, but neither do they differentiate the parent/child relationship, which, when involved in an offense, seems equally or more deserving of condemnation. The guidelines took into account the very factors that the sentencing judge said that they did not. Therefore, the belief that these factors were not envisioned by the creators of the guidelines is not a compelling justification for the judge's variance from the guidelines range.

The court of appeals was also worried that this sentence was way out of whack with other sentences for these kinds of crimes - folks who had done much worse (read the opinion to see how much worse it can get if you'd like) had received lower sentences. The district court's sentence creates massive disparities in sentencing that it didn't account for.

The sentencing was reversed and remanded.

The District Court Also Punished Mr. Aleo's Lawyer

Mr. Aleo's lawyer, before sentencing, asked the government if it was going to have any witnesses speak at sentencing. Apparently he wanted to be prepared.

The prosecutor said he didn't have to disclose that.

Mr. Aleo's lawyer - Mr. Freeman - filed a motion to compel disclosure, saying that it was necessary to protect his client's due process rights to challenge evidence against him at sentencing.

The district court didn't rule on the motion until sentencing, when he denied it and said that he would address it later in a written order.

And address it he did - the court issued an order directing the parties to brief whether Mr. Freeman should be sanctioned for filing a motion to learn who the witnesses against his client would be at sentencing.

The government opposed such a sanction. Mr. Freeman argued that he was required to file it as a zealous advocate and that it was supported by an article he read. Of the article, the Sixth Circuit noted that,

[T]his article does state that the [Crime Victims Rights Act] requires "[a] victim or alleged victim [to] 'assert' any 'right' [to speak at sentencing] by 'motion.'" Amy Baron-Evans, Rights and Procedures Under the Crime Victims' Rights Act and New Federal Rules of Criminal Procedure, April 30, 2009, at 58, available at http://www.fd.org/docs/select-topics---rules/rules-article-final.pdf?sfvrsn=2. The article also states that "the defendant must be given notice and a full and fair opportunity to respond to any motion asserting a victim's rights. This is necessary to effectuate the defendant's right to due process." Ibid. Baron-Evans is a resource counsel who has served as the National Sentencing Resource Counsel in the Office of Federal Public Defenders for Massachusetts, New Hampshire, and Rhode Island. She was ranked as a Massachusetts Super Lawyer in 2004, 2005, 2006, and 2008.

The district court was unmoved. It held that it had the inherent authority to sanction Mr. Freeman, that the motion was filed in bad faith to intimidate victims, and then the court sanctioned Mr. Freeman $2,000 for filing it.

The Sixth Circuit reversed this too. The court of appeals held that

Even if Freeman's motion was meritless, and even if Freeman should have known this, the court has not given any evidence to support its position that Freeman filed the motion to harass the victim's mother. We may uphold an order of sanctions even without an "express finding of willfulness, bad faith or recklessness," but only if the record sets forth evidence that the party acted in bad faith. Metz, 655 F.3d at 490. The court "must find something more than that a party knowingly pursued a meritless claim or action at any stage of the proceedings." Id. at 489 (internal quotation marks omitted).

The court of appeals then reversed the sanction.

Back to the Same Judge

Mr. Aleo asked to be resentenced by a different judge than the one who gave him the statutory maximum sentence and sanctioned his lawyer for doing his job.

The Sixth Circuit said no to this,

A decision to remand to a different judge is based on considerations of whether the judge on remand is capable of providing a fair and unbiased rehearing of the case, as well as with considerations of efficiency and the preservation of judicial resources. See, e.g., United States v. Faulks, 201 F.3d 208, 209 (3d Cir. 2000); United States v. Garcia-Robles, 640 F.3d 159, 168 (6th Cir. 2011) (considering whether there is "evidence in the record indicating that the district judge will have difficulty conducting de novo sentencing" proceedings.). We trust that Judge Friedman will revisit the matter with a completely open mind at the de novo resentencing that must now take place, Faulks, 201 F.3d at 209, and we thus do not accept Aleo's argument.

Wow, that's going to be some resentencing.

Update: There is a fascinating discussion in the concurrence about whether a federal district judge even has the authority to sanction a lawyer under the court's inherent power. It looks to me like the concurrence has the better position (the opinion of the court dodges the issue), but if you're an inherent-power groupie it's a must-read.

May 10, 2012

The Third Circuit Says It Is Hard To Abuse The Trust of Someone Who Doesn't Trust You, Especially If That Someone Is The IRS

James and Theresa DeMuro owned an engineering company in New Jersey called TAD Associates.

Not unlike yesterday's tax case from the Eleventh Circuit, TAD Associates withheld money for taxes from its employees paychecks. TAD did not send that money along to the IRS.

The IRS approached the DeMuros about this. It was a civil matter at that point - the IRS required the DeMuros to set up a special trust account where they were to put their employees taxes.

1285834_four_hands.jpgThe DeMuros set up the account. The purpose of the account was to hold money that would be paid to the IRS.

The DeMuros, though, took money out of the account to pay for personal expenses. And they closed the account early, and without the permission of the IRS. They also didn't put as much money into the account as the IRS thought they should, though they did spend a massive sum on items for themselves.

They were indicted for conspiracy to defraud the United States, 21 counts of failure to account for and pay employment taxes, and other tax charges.

They were convicted.

At sentencing, the district court applied a sentencing enhancement for abuse of a position of trust, because the DeMuros had signature authority on the trust account and did not handle it in the way that the IRS wanted them to.

Sentencing Guidelines § 3B1.3 says that:

If the defendant abused a position of public or private trust, or used a special skill, in a manner that significantly facilitated the commission or concealment of the offense, increase by 2 levels.

As the Third Circuit explained, in the appeal of the DeMuros sentence, United States v. DeMuro (and conviction - though that part of the appeal didn't go too well), when deciding whether the enhancement for abuse of position of trust is warranted:

we employ a two-step analysis: (1) whether the defendant occupied a position of public or private trust; and (2) whether the defendant abused this position of trust in a way that significantly facilitated the crime.

In turn, the Third Circuit looks at three things in deciding whether the person occupied a position of trust:

[I]n considering whether a position constitutes a position of trust for purposes of § 3B1.3, a court must consider: (1) whether the position allows the defendant to commit a difficult-to-detect wrong; (2) the degree of authority which the position vests defendant vis-a-vis the object of the wrongful act; and (3) whether there has been a reliance on the integrity of the person occupying the position.

So - did the DeMuros have a position of trust with respect to the IRS that let them not pay their taxes.

The court of appeals said they didn't for three reasons. The bottom line, though, is that the DeMuro's position with the IRS wasn't a position of trust; if anything it was a position of lack of trust.

First, the whole point of the trust account was so the IRS could more easily monitor the DeMuros' tax payments. The enhancement is supposed to apply to people who hide behind an account to do a crime - here, the account made it easier, not harder, for their conduct to be detected by the IRS. That's just not a position of trust.

Second, the trust fund was set up to take away discretion by the DeMuros, not add to it.

Third, the IRS set up the trust account because they didn't want to rely on the integrity of the DeMuros.

Because the trust account was set up not to rely on the IRS's trust of the DeMuros but to hedge against the IRS's complete lack of trust, the guidelines enhancement did not apply.

And back to resentencing the case will go.