Dec 04

ABA Task Force Proposes Significant Change to Fraud Guidelines

When the U.S. Sentencing Commission adopted the original Sentencing Guidelines in 1987, it sought to ensure that white collar offenders faced “short but definite period[s] of confinement.” U.S. Sentencing Commission, Fifteen Years of Guidelines Sentencing: An Assessment of How Well the Criminal Justice System is Achieving the Goals of Sentencing Reform, at 56 (Nov. 2004). However, over the last twenty-five years the Commission has abandoned its original goal of ensuring short sentences and – without any empirical basis – steadily increased the prison terms for economic crimes. See United States v. Gupta, 904 F. Supp. 2d 349, 350 (S.D.N.Y. 2012) (recognizing that fraud Guidelines “appear to be more the product of speculation . . . than of any rigorous methodology”). As a result, first-time, non-violent offenders convicted of economic crimes will often face Guidelines’ ranges equivalent to those of serious violent offenders. Compare USSG § 2B1.1 (2012) (total offense level of 32 considering a base offense level of 6 and loss amount of $100 million) with USSG § 2A1.3 (offense level of 29 for voluntary manslaughter); USSG § 2A2.1 (offense level of 33 for assault with intent to murder); USSG § 2A3.1 (offense level of 30 for criminal sexual abuse); USSG § 2A4.1 (offense level of 32 for kidnapping or abduction); USSG § 2A6.2 (offense level of 18 for domestic violence). See also Ellen C. Brotman, “Make Probation a Real Option at Sentencing,” Federal Sentencing Reporter, Vol. 23, No. 4, pp. 257-260 (April 1, 2011) (noting the “harshness” of the Sentencing Table as a result of, inter alia, the Commission’s failure to consider probation when setting the ranges).

Thankfully, according to its priorities adopted for the 2014–2015 amendment cycle, the Commission intends to consider changes to the Guidelines for economic crimes. And in light of this, the American Bar Association Criminal Justice Section Task Force on the Reform of Federal Sentencing for Economic Crimes – a group composed of judges, practitioners, professors, and observers from the DOJ and Federal Defenders – recently released for the Commission’s consideration a final report containing what is intended to be “a free-standing substitution in the Guidelines Manual for the existing Guideline Section 2B1.1.”

In short, the report proposes a base offense level between six (6) and eight (8) which would be altered by three (3) specific offense characteristics: loss, culpability and victim impact. As to those specific offense characteristics, the report suggests:

  • A loss table that only includes six (6) levels of loss, which would increase the base offense level by a minimum of four (4) levels (for offenses where the loss exceeds $20,000) and a maximum of fourteen (14) levels (for offenses where the loss exceeds $50,000,000);
  • A multi-tiered “culpability” table, where three (3) to ten (10) levels can be subtracted or added depending on the defendant’s level of culpability, as determined by an array of factors, including: the defendant’s motive, the defendant’s personal gain, the degree to which the offense and the defendant’s contribution was sophisticated or organized, the duration of the offense, extenuating circumstances, whether the defendant initiated the offense or merely joined in conduct initiated by others, and whether the defendant took steps to mitigate the harm from the offense; and
  • The inclusion of a “victim impact” table, which would allow for the addition of zero (0), two (2), four (4), or six (6) levels where the impact upon the victim is categorized as minimal, low, moderate, or high, respectively.

The report also contains a unique proposal to cap the offense level at ten (10) for non-serious offenses by first-time offenders. According to the commentary, in determining whether the offense is non-serious the district court should consider (1) the offense as a whole, and (2) the defendant’s individual contribution to the offense.

In its notes, the Task Force indicates that the specified offense levels are “tentative,” and were only included in light of current statutory requirements. Indeed, the Task Force recommends the Commission place less emphasis on “arithmetic calculations” – as considerations such as culpability and victim impact are not easily quantifiable – and instead provide the judiciary with greater sentencing authority.

It will be interesting to see the Commission’s response to the Task Force’s proposal. In the meantime, though, practitioners should consider calculating their clients’ Guidelines ranges using the proposed model and advocate for that calculation in their clients’ sentencing memos. This will invariably result in a total offense level that is lower than that proposed by the government and/or set forth in pre-sentence investigation report, and it may be persuasive in securing a downward variance from the sentencing court. See, e.g., United States v. Robert Rivernider, et al., Sentencing Transcript at 208-212 (D. Conn. Dec. 18, 2013), available at (where government sought 324-405 months incarceration and the PSR recommended 262-327 months, the Court sentenced the defendant at 144 months using the guidance of the Task Force’s draft proposal).

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