We all agree that the fraud guidelines are out of touch with reality. U.S. district court judges no longer find credence in the fraud guidelines. According to the most recent sentencing statistics released by the USSC, the average sentence imposed in fraud cases is 51.4% lower than the guideline minimum.
The Fraud Guidelines will be Revised!
In April 2013, the Criminal Justice Section of the American Bar Section created the Task Force on the Reform of Federal Sentencing of Economic Crimes. This awesome Task Force comprised of total geniuses was created to study the current weaknesses with, and to draft and propose reforms to, the Sentencing Guidelines for economic crimes.
The Task Force has proposed a rewrite of the federal “fraud guideline” (USSG 2B1.1). The first draft of this proposal was discussed extensively at the Sentencing Commission’s Economic Crime Symposium in New York in September 2013. Initial reactions from most judges and practitioners (and even a couple commissioners) were very favorable.
The Task Force revised the proposal based on this feedback and released a second draft of its proposal in May 2014. Both drafts of the proposal, along with Jim Felman’s commentary published in the Champion, are available here.
It’s working, Judges are listening!
Defense attorneys and courts are citing and relying upon the proposal in criminal sentencing proceedings. Super exciting!
United States v. Robert Rivernider, et al, Sentencing Transcript at 208-212 (D. Conn. Dec. 18, 2013) (sentencing in which the government was asking for 324-405 months, the PSR recommended 262-327 months, but the Court sentenced the defendant at 144 months under the guidance of the ABA proposal).
In another case, United States v. Jesse C. Litvak, Sentencing Memo of Defendant at 53-56 (D. Conn. June 27, 2014) (asking the Court to be guided by the ABA proposal, which would result in no imprisonment to 6 months under the defense theory or 24-30 months under the government theory, as opposed to the PSR recommendation of 108-135 months) and United States v. Jesse C. Litvak, Reply Sentencing Memo of Defendant at 7-8 (D. Conn. July 8, 2014) (arguing that the ABA proposal is instructive on how loss arbitrarily inflates a defendant’s culpability and sentence). On July 23, 2014, Jesse Litvak was sentenced to two years in prison.
Although the new guidelines proposed by the ABA have not been adopted, at least two district courts have utilized them in federal sentencing proceedings within the past six months. Now that should start a rumble and be mentioned in every sentencing memo for clients facing sentencing for economic crimes!
Even the U.S. Sentencing Commission is Listening!
On January 9, 2014, the USSC published its list of Proposed Amendments seeking comment before the amendments become effective May 1, 2015. Although not a major overhaul, it is a step in the right direction. As noted by defense attorney, Mark Allenbaugh, “The biggest highlight of today’s proposed amendments is some FUNDAMENTAL CHANGES TO THE LOSS TABLE by increasing the loss thresholds, as well as possibly revising the method for calculating loss in securities fraud cases (which is a complete mess right now, even though there are relatively few such cases, I am glad the Commission has chosen to look at these). This is a HUGE step in the right direction (but certainly not enough) to reign in this problematic guideline.”
As usual, I am hopelessly optimistic and see more impactful changes coming down the pike for all economic crimes. Stay tuned!
This has been my first blog, and while it is a little geeky, I hope you found it useful. Let me know what you think — if you have comments or questions, please leave one below.
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