I’m working on a case with a very talented Atlanta-based criminal defense lawyer. Our clients were accused of and later convicted for fraud involving several businesses. These are a somewhat different type of white collar offense, for some of the crimes are what we call “securities fraud”, meaning fraudulent conduct relating to the offering or sale of what most people call “stocks”. However, our clients are going to be sentenced soon, and we are preparing for the upcoming sentencing hearing. This other attorney and I are running headlong into the extraordinarily unfair sentencing guidelines in these type of federal cases. Although the Guidelines are extremely unfair, we discovered that a lot of federal judges have been extremely critical of these Guidelines and have extensively criticized this approach over approximately the past decade.
First, a little history (those who know me remember that I majored in history and often try and place issues into historical context for better understanding). The Guidelines came into effect in 1987, and were supposed to iron out differences between the sentences issued by different judges. Then, we had the big corporate meltdowns in the early 2000’s, Enron, Worldcom, Arthur Anderson, etc. Congress responded with what is usually called “Sarbanes/Oxley“, a series of laws designed to prevent such corporate high-level shenanigans. All fine and good, from my viewpoint. However, (and here’s the “unfair sentencing guidelines part” coming back), as part of this Sarbanes/Oxley law Congress also told the United States Sentencing Commission to greatly ratchet up the sentences imposed on high-level corporate fraudsters, the kind who led to Enron, Worldcom, Arthur Andersen, etc. Again, fine and good.
The problem, of course, is that the Sentencing Commission created new and extremely punitive Guidelines that are more of a “one-size-fits-all” set of enhancements for most corporate offenders if a case involves securities or stocks. As a respected Senior Judge in New York wrote in the opening lines of his decision in United States v. Parris: “I have sentenced Lennox and Lester Parris today to a term of incarceration of 60 months in the face of an advisory guidelines range of 360 to life. This case represents another example where the guidelines in a securities-fraud prosecution “have so run amok that they are patently absurd on their face,” United States v. Adelson, 441 F. Supp. 2d 506, 515 (S.D.N.Y. 2006), due to the “kind of `piling-on’ of points for which the guidelines have frequently been criticized.” Id. at 510.”
That’s the problem with a Commission that tries to micromanage the sentencing process by imposing “points” for different kinds of conduct. Here’s an example. These new sentencing rules added 4 “levels” (or points) anytime the offense “involved” the securities laws, and the Defendant was an “officer or director” “at the time of the offense.” This 4-level bump applies whether the Defendant was the CEO of a Fortune 500 international entity, or the Secretary of a 2-person company. See what I mean, “one size fits all.”
We have a lot of work to do for this sentencing hearing, but I plan on writing more about this type of federal criminal case and the accompanying sentencing process. Stay tuned!