Federal Criminal Defense Blog : Georgia Federal Criminal Defense Lawyer & Attorney : Gillen Withers & Lake Law Firm : White Collar Crime, RICO, Trial : Atlanta, Savannah, GA

            We received an excellent reader question regarding what factors do Federal courts consider in imposing punishment on corporations or organizations in criminal proceedings. Corporations of course, don’t “go to jail.” The Government does collect its $200 however, since the organization sentencing provisions of the United States Sentencing Guidelines are primarily fine-driven. And while there is a massive body of law concerning factors which must be considered in imposing sentence on individuals, caselaw relating to considerations in imposing punishment on corporations is relatively sparse.

However, areas which courts consider in sentencing corporations or organizations, and conversely areas which corporate criminal counsel may emphasize in order to attempt to mitigate the consequences to their corporate clients, may be discerned from the Guidelines themselves. In many cases, such as relating to acceptance of responsibility and role in the offense, these considerations closely parallel those for individual defendant. The questions facing a corporation at sentencing will boil down to how much will the corporation be made to pay in the form of fines and restitution, and what conditions will be imposed on the corporation.

The relevant portion of the Guidelines is Chapter Eight. Imposing a sentence on a corporation or organization in a Federal criminal case involves a complex determination by the sentencing court. In brief, the court must:

1. Determine whether any restitution, remedial orders or community service should be ordered;

2. Determine the amount of the fine, including determining the corporation’s or organization’s “culpability score”;

3. Determine whether any departures or probation is appropriate.

The Introductory Commentary to Chapter Eight states that it is designed “designed so that the sanctions imposed upon organizations and their agents, taken together, will provide just punishment, adequate deterrence, and incentives for organizations to maintain internal mechanisms for preventing, detecting, and reporting criminal conduct.” U.S.S.G., Ch. 8, Pt. A, Introductory Commentary. The sentencing provisions of Chapter Eight are intended to reflect the general principles that:

First, the court must, whenever practicable, order the organization to remedy any harm caused by the offense. The resources expended to remedy the harm should not be viewed as punishment, but rather as a means of making victims whole for the harm caused.

Second, if the organization operated primarily for a criminal purpose or primarily by criminal means, the fine should be set sufficiently high to divest the organization of all its assets.

Third, the fine range for any other organization should be based on the seriousness of the offense and the culpability of the organization. The seriousness of the offense generally will be reflected by the greatest of the pecuniary gain, the pecuniary loss, or the amount in a guideline offense level fine table. Culpability generally will be determined by six factors that the sentencing court must consider. The four factors that increase the ultimate punishment of an organization are: (i) the involvement in or tolerance of criminal activity; (ii) the prior history of the organization; (iii) the violation of an order; and (iv) the obstruction of justice. The two factors that mitigate the ultimate punishment of an organization are: (i) the existence of an effective compliance and ethics program; and (ii) self-reporting, cooperation, or acceptance of responsibility.

Fourth, probation is an appropriate sentence for an organizational defendant when needed to ensure that another sanction will be fully implemented, or to ensure that steps will be taken within the organization to reduce the likelihood of future criminal conduct.

U.S.S.G., Ch. 8, Pt. A, Introductory Commentary. The provisions are designed to offer “incentives” to corporations or other organizations to police and eliminate criminal conduct through compliance and ethics programs. U.S.S.G., Ch. 8, Pt. A, Introductory Commentary.

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Last month, the U.S. Sentencing Commission issued its 2010 Proposed Amendments to the U.S. Sentencing Guidelines, which may be viewed here, which contain much of interest for both corporate and individual defendants.

In regard to corporations or “organizational" defendants, the Commission has proposed several changes to Chapter Eight of the Guidelines. The Proposed Amendments amend Guideline Section §8B2.1, governing compliance and ethics programs for corporations, by adding language in the Application Notes regarding personnel who must be aware of an organization’s document retention policies and conform to such policies and setting forth “reasonable steps that an organization should take after detection of criminal conduct.” The steps are:

First, the organization should respond appropriately to the criminal conduct. In the event the criminal conduct has an identifiable victim or victims the organization should take reasonable steps to provide restitution and otherwise remedy the harm resulting from the criminal conduct. Other appropriate responses may include self-reporting, cooperation with authorities, and other forms of remediation. Second, to prevent further similar criminal conduct, the organization should assess the compliance and ethics program and make modifications necessary to ensure the program is more effective. The organization may take the additional step of retaining an independent monitor to ensure adequate assessment and implementation of the modifications.

Section 8D1.4, governing conditions for probation for corporations or organizations, is also amended to provide, as conditions of probation, that an organization develop and submit a compliance and ethics program and retain an independent monitor. The amendment further provides that organizations must disclose any material adverse changes in its business or financial condition or prosepects, and any new criminal prosecutions, civil litigation, administrative proceedings, investigations or formal inquiries commenced against the organization.

Last September, the Commission had stated that one of its policy priorities would be to study alternatives to incarceration. Accordingly, the Proposed Amendments increase “Zone B” and “Zone C” of the Guidelines’ Sentencing Table by one level. Defendants with Guidelines calculations falling within Zone B are eligible, instead of a sentence of imprisonment, to have imposed “a sentence of probation that includes a condition or combination of conditions that substitute intermittent confinement, community confinement, or home detention for imprisonment…” pursuant to Section §5C1.1(b)(3).

The Commission has sought comments on its Proposed Amendments. It has also sought comments on potential revisions to certain specific offender characteristics as a basis for downward departure in sentence pursuant to the policy statements in Chapter 5 of the Guidelines, including age; mental and emotional condition; physical condition; military, civic, charitable, or public service, employment-related contributions and record of prior good works; and lack of guidance as a youth. The Commission has stated that it has considered eliminating these statements pursuant to the Supreme Court’s decision in Booker, which mandated that sentencing courts consider a defendant’s “history and characteristics” pursuant to Section 3553(a) in fashioning a reasonable sentence. Under the “old” Guidelines system, such factors were either prohibited or discouraged grounds for a downward departure in sentence.

The Proposed Amendments also take into account the Supreme Court’s landmark holding in United States v. Booker, 543 U.S. 220 (2005) that the Guidelines are advisory, rather than mandatory, by amending the instructions on applying the Guidelines in Section 1B1.1 to provide that, after a sentencing court has determined the proper sentencing range under the Guidelines and considered the factors in 18 U.S.C. § 3553(a), “[t]he court shall then determine the sentence (i.e., a sentence within the guideline range, a departure, or a variance), considering the applicable factors in 18 U.S.C. § 3553(a) taken as a whole.”

The Proposed Amendments expand courts’ authority to impose probation as an alternative to incarceration in certain drug cases in a new proposed Guideline Section 5C1.3 provided that the defendant participates in a substance abuse treatment program and meets certain additional criteria. The Amendments furthermore suggest changes to determining a defendant’s criminal history in terms of the recency of prior offenses. Finally, the Proposed Amendments also recommend so-called “hate crimes” enhancements under Section 3A1.1 which provide for an increase of 3 or more levels to a defendant’s offense level where “the defendant intentionally selected any victim or any property as the object of the offense of conviction because of the actual or perceived race, color, religion, national origin, ethnicity, gender, gender identity, disability, or sexual orientation of any person…”
 

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Of course we knew it was coming, but disbarred Fort Lauderdale attorney Scott Rothstein, architect of a $1.2 billion Ponzi scheme selling phony interests in settlements in employment and civil cases, pled guilty today in the U.S. District Court for the Southern District of Florida to charges of racketeering, fraud and money laundering,

as reported by the Miami Herald

and various other sources. Rothstein was also charged with taking monies from client trust accounts and making unlawful campaign contributions to politicians. Former attorneys and employees of Rothstein's former law firm, Rothstein Rosenfeldt Adler, are currently being investigated for illegal campaign contributions.

Following his surrender to authorities last fall, Rothstein assisted authorities in locating assets. His sentencing hearing has been set for May 6.

 

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Yesterday the Eleventh Circuit affirmed an above guidelines sentence of 270 months for a defendant sentenced in a sting operation that involved the armed robbery of a fictional stash house of cocaine. In United States v. Docampo, No. 09-10698, defendant, John DoCampo was sentenced to a total of 270 months following a trial on a conspiracy to distribute cocaine and firearms possession case. Docampo was sentenced to 210 months for the conspiracy to distribute cocaine charge and 60 months consecutive for the weapons possession charge for a total term of imprisonment of 270 months. Docampo challenged the reasonableness of his sentence because his co-conspirator/co-defendants only received sentences of 228 months and 60 months respectively. The main question in the appeal involved the reasonableness of the sentence imposed. Judge Pryor, writing for the majority, found that “Because the other conspirators either pleaded guilty and agreed to cooperate or were not prosecuted in federal court, we conclude that they are not similarly situated to Docampo and any disparity in sentences is warranted. See 18 U.S.C. § 3553(a)(6).”

Judge Barkett dissented stating that, “a sentencing court’s passing mention that it has considered the 28 U.S.C. § 3553(a) factors without more analysis, as in this case, provides an insufficient basis for appellate review and consequently is procedurally unreasonable.”
 

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      Mindful of the immense benefits that a strong argument for a downward variance at sentencing pursuant to the 18 U.S.C. s 3553(a) factors and U.S. v. Booker, 543 U.S. 220 (2005) may have for a client at sentencing, we keep a lookout for favorable Eleventh Circuit and Georgia federal sentencing decisions as an aid to practitioners. Of note in recent weeks is U.S. v. Eugene, No. 08-16502, 2009 WL 1154869 (11th Cir., April 30, 2009) (per curiam; unpublished), in which the Eleventh Circuit affirmed the defendant's sentence for crack cocaine offenses, id. at *1. The appellant's guideline range was 262 to 327 months under U.S.S.G. § 2D1.1, however the district court granted a downward variance from the sentencing range and sentenced the defendant to 192 months--a considerable variance. Id. The Court of Appeals observed that the district court "cited the 18 U.S.C. § 3553(a) factors and particularly was influenced by [the defendant's] troubled childhood." Id. The Court also affirmed as reasonable a 281 month below-guidelines sentence for a defendant convicted of conspiracy, mail and wire fraud and criminal contempt in U.S. v. MacArthur, No. 08-13020, 2009 WL 1079093, *3 (11th Cir., April 23, 2009) (per curiam; unpublished).

   In Gardner v. U.S., No. 5:06-CR-60 HL, 2009 WL 537506 (M.D.Ga., March 03, 2009), the U.S. District Court for the Middle District of Georgia adopted the findings of the magistrate judge on the defendant's motion to vacate, set aside or correct his sentence for child pornography offenses pursuant to 28 U.S.C. s 2255, which in turn noted that the defendant's attorney "presented a very forceful and successful argument for a downward departure from the Guideline range of sentence, which included arguments of diminished capacity and other sentencing factors made relevant by 18 U.S.C. § 3553(a)," id. at *6. The magistrate judge's report and recommendation related how the defendant's counsel argued very persuasively that the fact that the defendant had been molested as a child had affected the defendant's "ability to understand that his behavior was wrong, his ability to exercise the power of reason or to control his behavior was as significantly impaired as any child that would come before this court." Id. Defense counsel's rhetorical skills paid off, 

Although the Government strenuously objected, and cited tenable authority, the Court considered all the mitigating factors and granted Ms. Hogue's requested downward departure, sentencing Petitioner... upon his conviction of possession of child pornography to a term of only 60 months, when his sentence could defensibly have been 27 months longer.

Id. Proving that no good deed goes unpunished, however, the defendant claimed that Ms. Hogue's assistance was ineffective in his 2255 motion. Id.

 

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            Resuming Federal Criminal Defense Blog’s pledge to keep readers informed regarding substantial decisions in the Eleventh Circuit Court of Appeals (and the Court certainly keeps us busy), we take this opportunity to catch up. Following is a summary of substantial decisions from the end of March through April 8.

“Violent Felonies” Under the Armed Career Criminal Act, 18 U.S.C. § 924: In U.S. v. Townsley, No. 08-13517, 2009 WL 929986, (11th Cir., Apr. 08, 2009) (per curiam; unpublished), the Court reversed the defendant’s conviction, holding that the district court erred in counting the defendant’s three previous convictions for carrying a concealed firearm, in violation of Fla. Stat. § 790.01(2), as “violent felonies” pursuant to the Armed Career Criminal Act (“ACCA”), 18 U.S.C. § 924(e)(1), following its decision U.S. v. Archer, 531 F.3d 1347 (11th Cir. 2008), id. at *3.

Sentence Not “Too Lenient”: The Court affirmed the defendant’s sentence for pedophilia in the published opinion U.S. v. Irey, No. 08-10997, 2009 WL 806860, (11th Cir., Mar. 30, 2009), rejecting the government’s argument that the defendant’s sentence was “too lenient” and therefore unreasonable, id. at *4. Reaffirming earlier holdings that an appellate court must not substitute its judgment for that of the sentencing court, id. at *2 (citing U.S. v. Melvin, 187 F.3d 1316, 1323 (11th Cir.1999); Williams v. U.S., 503 U.S. 193, 204, 112 S.Ct. 1112 (1992)), the opinion, authored by Chief Circuit Judge Edmondson, contains potentially useful language for the practitioner regarding the gravity of punishment and a defendant’s characteristics:

       We appreciate that some people may feel that no sentence would be too harsh for this crime. But that is not the law. And courts never should see the imprisonment in this country of a person for 17-1/2 years as light punishment: although even longer terms of imprisonment can be lawfully imposed in cases, this many years is a substantial portion of a human life-and no serious person should regard it as a trifle.

      Furthermore, when the defendant is 50 at the time the sentence is imposed, the consequences must be seen as severe. Moreover, upon Defendant’s release from imprisonment, he will not be free in the way that most Americans are free. He will be subject to rigorous conditions of supervised release by federal authorities. Given the terms of his sentence, never will Defendant be a truly free man again.

Id. at *4.

Presentence Reports: The Court in U.S. v. Martinez, No. 08-14926, 2009 WL 839093 (11th Cir., Apr. 01, 2009) (per curiam; unpublished) observed that Federal Rule of Criminal Procedure 32(i)(1)(A) requires a district court to verify at sentencing “that the defendant and the defendant’s attorney have read and discussed the presentence report and any addendum to the report,” id. at *2 (quoting Fed.R.Crim.P. 32(i)(1)(A)), while Rule 32(i)(4)(A)(ii) requires the district court to “address the defendant personally… in order to permit the defendant to speak or present any information to mitigate the sentence,” id. (quoting Fed.R.Crim.P. 32(i)(4)(A)(ii)). The Court held that the drafters of Rule 32 “did not intend to impose a requirement that the district court personally address the defendant when inquiring whether he and his attorney have read and discussed the PSI.” Id. (citing U.S. v. Aleman, 832 F.2d 142, 144 (11th Cir. 1987)). The Court also rejected the defendant’s argument that the district court failed to properly address his statement at sentencing that he wished to “go to trial.” Id. at *4.

Government’s Breach of Plea Agreements: “‘Efforts by the Government to provide relevant factual information or to correct misstatements are not tantamount to taking a position on the sentence and will not violate [a] plea agreement.’” U.S. v. Matisas Mesa, No. 08-14134, 08-14130, 2009 WL 868012, *2 (11th Cir., Apr. 02, 2009) (quoting U.S. v. Block, 660 F.2d 1086, 1090-91 (5th Cir. Unit B Nov. 1981)). “‘A prosecutor has a duty to insure that the court has complete and accurate information concerning the defendant...’” Id. (quoting Block, at 1091). Thus, the government’s informing the sentencing court of the defendants’ inconsistent statements in Matisas Mesa, which resulted in the court’s denial of safety-valve treatment pursuant to U.S.S.G. § 5C1.2(a)(5), was held by the Court not to violate the defendants’ plea agreement in which the government agreed to recommend safety-valve treatment. Id.

Booker is a Two-Way Street: In U.S. v. Beasley, No. 08-14977, 2009 WL 905103 (11th Cir., 2009) (per curiam; unpublished), the Eleventh Circuit held that, even if the sentencing court did not use evidence of three uncharged bank robberies in which the defendant was implicated as “relevant conduct” to enhance his sentence pursuant to U.S.S.G. § 1B1.3, “§ 1B1.3 did not limit the court's discretion to consider the robberies under [18 U.S.C.] § 3661 and [18 U.S.C. §] 3553(a),” id. at *2, in departing upward from the Guidelines range, id. at *2.

Hearsay (Not): In U.S. v. Jiminez, No. 08-14192, 2009 WL 921437, (11th Cir., Apr. 07, 2009), the Eleventh Circuit affirmed the defendant’s conviction on various charges concerning manufacture and distribution of marijuana plants, holding in the process that the district court’s admission of testimony by a police detective regarding a statement by a non-testifying witness that the defendant was involved in a marijuana growing operation was not inadmissible hearsay, finding that the statement was not hearsay since it was not admitted to prove the truth of the matter asserted, but only the fact that it was made, pursuant to Federal Rule of Evidence 801(c), id. at *5.

 “National Standard of Care” and “Red Flags” in Prescription Prosecution: When a doctor is prosecuted under the Controlled Substances Act (“CSA”), 21 U.S.C. § 841 for prescribing drugs to patients, he or she must show that they acted in good faith and for a legitimate medical purpose. See U.S. v. Johnston, No. 08-14594, 2009 WL 806740, *4 (11th Cir., Mar. 30, 2009) (per curiam; unpublished) (citing U.S. v. Merrill, 513 F.3d 1293, 1301-02 (11th Cir. 2008)). In Johnston, the district court instructed the jury that it should apply a “national” standard of care in determining whether there was a legitimate medical purpose for the defendant physician’s prescriptions. Id.  The defendant argued on appeal that Florida’s standard of care should govern. Id. The Eleventh Circuit held that the defendant had invited the error by previously arguing that jury must find that she acted “outside the course/scope of professional practice, not in accordance with a standard of medical practice generally recognized and acted in the U.S.” id., in order to convict her, id. (Emphasis in original). The Court affirmed the defendant’s conviction, also holding that admission of testimony from witnesses for the government regarding “red flags” for detecting drug abuse in patients was not plain error and was admissible pursuant to Fed.R.Evid. (“Rule”) 702. Id. at *6.

Fear, Loathing and Interstate Extortion: A feud between German immigrants resulted in charges of conspiracy and extortion in violation of the Hobbs Act, 18 U.S.C. § 1951, and the Travel Act, 18 U.S.C. § 1952, in U.S. v. Bornscheuer, NO. 07-10009, 06-14607, 2009 WL 814587 (11th Cir., Mar. 31, 2009). The Eleventh Circuit affirmed the defendants’ convictions, simultaneously reaffirming its holding in U.S. v. Grassi, 783 F.2d 1572 (11th Cir. 1986) that a component of extortion for the purposes of the Hobbs Act is the victim’s fearful state of mind, and that “fear” is “‘a state of anxious concern, alarm or apprehension of harm and it includes fear of economic loss as well as fear of physical violence.’” Id. at *6 (quoting Grassi, at 1577).

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Our apologies for playing catch-up, but our summary of the primary, meaningful criminal opinions by the Eleventh Circuit will continue this week. Following is a summary of the decisions for the week of March 17, 2009.

In Salazar v. U.S., No. 07-13715, 2009 WL 684772 (11th Cir., Mar. 17, 2009), the Eleventh Circuit reversed the district court’s denial of the defendant’s motion pursuant to 28 U.S.C. § 2255 to vacate his sentence for possessing with the intent to distribute crack cocaine based upon ineffective assistance of counsel, where defendant’s counsel failed to call as witnesses at trial two persons who could have corroborated that the defendant denied possessing any cocaine at the time of his arrest, id. at *2.

The Court affirmed the district court’s denial of a reduction under the safety-valve provision pursuant to U.S.S.G. § 5C1.2 for a defendant convicted of conspiracy to manufacture and possess with intent to distribute marijuana plants in U.S. v. Cruz, No. 08-11625, 2009 WL 684789 (11th Cir., Mar. 17, 2009), observing that the defendant’s refusal to testify at sentencing left the district court with little ability to access his credibility and the defendant had failed to carry his burden, id. at *2.

In U.S. v. Valdex, No. 07-14721, 2009 WL 684751 (11th Cir., Mar. 17, 2009), the Court held that the defendant in a prosecution for health care fraud “invited” any error in calculating the amount of loss under U.S.S.G. § 2B1.1 by urging the trial court to adopt the amount of loss contained in the presentence report, id. at 1. It also held that the trial court did not clearly err in applying a sophisticated means enhancement under U.S.S.G. § 2B1.1(b)(9)(C) where the defendant “recruited beneficiaries and sought out doctors so as to aid in hiding the illegality of his Medicare claims, and converted [a corporation] into a pharmacy through which he continued to defraud Medicare…” Id. The Court also held that the defendant’s sentence was within the Sentencing Guidelines range and therefore substantively reasonable, pursuant to U.S. v. Talley, 431 F.3d 784, 788 (11th Cir. 2005), and that “relevant uncharged or acquitted conduct may be taken into account in sentencing, as long as such conduct is proven by a preponderance of the evidence and the court clearly applied the Guidelines as advisory.” Id. (citing U.S. v. Faust, 456 F.3d 1342, 1347-48 (11th Cir. 2006)).

The Court affirmed the defendant’s above-Guidelines sentence for travel with intent to engage in a sexual act with a juvenile in U.S. v. Smith, No. 08-11665, 2009 WL 693342 (11th Cir., March 18, 2009), noting that the district court could upwardly depart in sentencing the defendant based upon violations of the defendant’s supervised release, pursuant to U.S.S.G. § 7B1.4, comment. (n.3), id. at *2.

            In U.S. v. Whitehead, No. 08-13201, 2009 WL 691184 (11th Cir., Mar. 18, 2009), the Court affirmed the denial of the motion for a sentencing reduction, brought pursuant to 18 U.S.C. § 3582(c)(2) of the defendant, who was convicted of various drug and crack cocaine offenses, holding that the Sentencing Commission’s Amendment 706 to U.S.S.G. § 2D1.1(c) in November 2007, which provided a two-level reduction in base offense levels for certain crack-cocaine offenses, did not affect the guideline ranges of defendants who were sentenced as career offenders under U.S.S.G. § 4B1.1, id. at *3 (citing U.S. v. Moore, 541 F.3d 1323, 1330 (11th Cir. 2008)). The Court also held that the defendant was ineligible for the reduction despite the fact that he had been granted a downward departure pursuant to U.S.S.G. § 4A1.3, observing that “[t]he critical fact… is that the district court used the offense level from the career offender guideline to calculate [the defendant’s] applicable guideline range,” rather than § 2D1.1. Id. at *4.

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Yesterday, Clifford Harris, aka, “Rapper T.I.”, was sentenced in the Northern District of Georgia to a year and a day for being a felon in possession of machine guns, silencers and other weapons, when the district court accepted a binding plea agreement brokered by defense counsel and U.S. Attorney David Nahmias. Although defense counsel should be commended for their outstanding representation of Mr. Harris, this case puts to rest and substantially undermines the goal of equal justice.

When Harris was arrested by ATF Agents in October 2007, Nahmais, in his press release held forth that, “The last place machine guns should be is in the hands of a convicted felon . . . thanks to the good and quick work of the ATF he is now in custody . . .”

By way of background, Harris entered his plea a year ago, and the plea agreement called for, among others things, Harris to perform community service of 1500 hours. The plea agreement noted that the Court could impose a custodial sentence of fifty-seven (57) months to ninety-seven (97) months, if the agreement were violated.

The factual basis attached the plea agreement noted that:

• During September and October of 2007, one of Harris'bodyguards purchased nine (9) firearms for him and that Harris placed some or all in a hidden compartment (which was secured by a biometric lock, which required Harris’s fingerprint to gain access) inside a closet in Harris' bedroom.
• On October 10, 2007, Harris arranged for this same bodyguard to pick up $12,000 in cash from the Defendant’s bank account at SunTrust Bank. The Defendant told the bodyguard to use the cash to buy machine guns for the Defendant.
• On October 10, 2007, the bodyguard purchased three machine guns for the Defendant, and also bought two silencers to deliver to the Defendant, from an undercover ATF agent.
• During the search of Harris’ Range Rover incident to the Defendant's arrest, ATF agents found three firearms.

Rapper T.I., who according to court documents was a twice convicted felon prior to this case, doesn’t seem to me to be the appropriate candidate for someone who should be parading around the nation giving talks to the under privileged youth of America about the perils of guns and drugs in our society. Call me crazy, but a three time convicted felon, who was purchasing machine guns and silencers and whose gun safe had a “biometric” lock on it, just doesn’t strike me as someone’s words that ring true. It would be one thing, if it were a first offense. It would be one thing, if it were a single handgun truly for protection, but this case really does throw out the window the notion of equal justice. In my opinion, the United States Attorney’s Office for the Northern District of Georgia, and particularly, U.S. Attorney David Nahmias, failed in the fair administration of justice.

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Former Alabama Governor Don Siegelman and former HealthSouth CEO Richard Scrushy were convicted of federal funds bribery, honest services conspiracy, honest services mail fraud, racketeering conspiracy, racketeering, honest services wire fraud, obstruction of justice and extortion in the U.S. District Court for the Middle District of Alabama back in 2006. Siegelman has alleged that his prosecution was spurred by the Republican party, especially former White House advisor Karl Rove. Siegelman and Scrushy appealed their convictions.

On March 6, a three judge panel of the Eleventh Circuit issued a per curiamopinion, U.S. v. Siegelman, NO. 07-13163, 2009 WL 564659 (11th Cir., Mar. 06, 2009) (per curiam). The Court began its opinion by acknowledging that the case was an “extraordinary” one, involving corruption at the highest levels of theAlabama government, and straining the resources of both the Alabama and federal governments. Id. at *1. It recited the facts as follows: Siegelman was elected Governor in 1998 and, after his election, established the Alabama Education Lottery Foundation (“Foudation”) to raise money for a ballot initiative to establish a state lottery. Id. at *2. Scrushy had served on the Alabama Certificate of Need (CON) Board, a healthcare regulatory body, by appointment under three previous Governors, but had supported Siegelman’s opponent in the 1998 election. Id. After the election, Nick Bailey, one of Siegelman’s associates, met with Eric Hanson, a lobbyist for HealthSouth, and told Hanson that Scrushy needed to contribute at least $500,000 to the Foundation to “make it right.” Id. Bailey and Mike Martin, former Chief Financial Officer of HealthSouth, testified at trial that Scrushy communicated that he was interested in making the contribution in exchange for the position on the CON Board. Id. at *2, *3. Martin testified that Scrushy instructed him to have HealthSouth’s investment banker, Bill McGahan of UBS, make the contribution, but McGahan balked at doing so, and instead had Integrated Health Services (“IHS”) of Maryland write a $250,000 donation to the Foundation in July of 1999, which Scrushy personally delivered to Siegelman. Id. at *3, *4. Siegelman subsequently contacted the designee Chariman of the CON Board and informed her that Siegelman wanted Scrushy to be Vice-Chair of the CON Board, and the CON Board selected Scrushy for the position. Id. at *4. In March of 2000, Scrushy gave Siegelman another check from HealthSouth for $250,000. Id.

The Court first considered Siegelman’s and Scrushy’s argument that the trial court’s instructions to the jury on bribery, pursuant to 18 U.S.C. § 666, erroneously failed to require the jury to find a quid pro quo, and that the defendants “expressly” agreed to a quid pro quo, in order to convict them.Id. at *6, *7. The Court recognized that the Supreme Court’s decision in McCormick v. United States, 500 U.S. 257 (1991) required more to convict a defendant of bribery than mere proof of a campaign donation followed by an act favorable for the donor. Id. at *7. It noted the Supreme Court’s holding that payments are only criminal if they “‘are made in return for an explicit promise or undertaking by the official to perform or not to perform an official act…’” Id. (emphasis in original) (quoting McCormick, at 273). However, the Court held that an “explicit” promise does not mean an “express” promise, and cited the Supreme Court’s subsequent decision in Evans v. United States, 504 U.S. 255 (1992), which held that the “‘Government need only show that a public official has obtained a payment to which he was not entitled, knowing that the payment was made in return for official acts.’”Id. at *8 (quoting Evans, at 258). “[T]here is no requirement that this agreement be memorialized in a writing, or even, as defendants suggest, be overheard by a third party. Since the agreement is for some specific action or inaction, the agreement must be explicit, but there is no requirement that it be express.” Id. (emphasis in original). On the contrary, an “explicit” agreement may be implied from words and actions. Id. (citing Evans, at 274). The Court also rejected Siegelman’s and Scrushy’s arguments that the evidence was insufficient to support their bribery, conspiracy and honest services mail fraud convictions, noting that Bailey had testified at trial that Siegelman had told him that Scrushy wanted “the CON Board” in exchange for the donation, and that Bailey and Martin had given other testimony which indicated that Scrushy bribed Siegelman, holding that the jury could have inferred that Scrushy and Siegelman agreed to a corrupt quid pro quo from the surrounding circumstances. Id. at *10, *11.

 

 

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            As part of a new, ongoing weekly feature, following are summaries of relevant criminal decisions by the Eleventh Circuit Court of Appeals for the previous week. Only substantive opinions by the Court discussing criminal law will be covered—summary opinions and orders will not be listed.

In U.S. v. Watley, NO. 08-11768, 2009 WL 635185 (11th Cir., Mar. 13, 2009), a prosecution of the defendant for drug and firearm offenses, the Court affirmed the trial court’s admission of evidence of prior controlled drug buys not charged in the indictment, relying on the rule that “‘[e]vidence of criminal activity other than the charged offense is not extrinsic under [Federal Rule of Evidence] 404(b) if it is... necessary to complete the story of the crime, or [ ] inextricably intertwined with the evidence regarding the charged offense,’” id. at *2 (quoting U.S. v. Wright, 392 F.3d 1269, 1276 (11th Cir. 2004)). The Court also held that the district court did not abuse its discretion in refusing to compel disclosure of the identity of a confidential informant to the defense, finding that the CI was not involved in the events underlying the charges against the defendant, and that the CI’s proposed testimony would have harmed, rather than helped, the defendant. Id. at *3.

The Court in U.S. v. Strachan, No. 08-13949, 2009 WL 641225 (11th Cir., Mar. 13, 2009), held that it was not required to dismiss the defendant’s appeal of his sentence for various drug and firearms offenses despite a sentence appeal waiver in the defendant’s plea agreement where the record contained no transcript of the plea hearing and did not indicate that the defendant “clearly understood the consequences of his sentence appeal waiver,” id. at * 2. The Court proceeded to find that the district court did not discuss any of the sentencing factors under 18 U.S.C. § 3553(a) at sentencing and vacated the case and remanded for resentencing, observing that a sentencing court “‘need not make detailed findings with respect to each § 3553(a) factor, but the record must make it clear that it considered them.’” Id. at *2 (quoting U.S. v. Williams, No. 08-11361, at 5-7 (11th Cir. Feb. 9, 2009); U.S. v. Eggersdorf, 126 F.3d 1318, 1322 (11th Cir. 1997)).

Gillen Withers & Lake LLC have several of the most aggressive and successful criminal defense attorneys in Georgia and the Southeast, with national reputations, focusing on  federal and state white collar and corporate criminal litigation. Call Thomas Withers in Savannah (912) 447-8400 or Craig Gillen in Atlanta (404) 842-9700.

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United States Sentencing Guideline § 3B1.3 provides for a 2 level increase in a defendant's offense level "[i]f 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." U.S.S.G. § 3B1.3. The comments to § 3B1.3 further define "public or private" trust as:

 

[A] position of public or private trust characterized by professional or managerial discretion (i.e., substantial discretionary judgment that is ordinarily given considerable deference). Persons holding such positions ordinarily are subject to significantly less supervision than employees whose responsibilities are primarily non-discretionary in nature.

U.S.S.G. § 3B1.3 cmt. n. 1.

The defendant in United States v. Louis, No. 08-10916, 2009 WL 485239 (11th Cir., Feb. 27, 2009), Jacquelin Louis, was a federally-licensed firearms dealer in Orlando, Florida. The Bureau of Alcohol, Tobacco and Firearms decided to test Louis' compliance with federal regulations restricting the sale of firearms to purchasers who are not convicted felons by arranging for a paid informants to contact Lewis, representing that they were convicted felons, and arrange to purchase firearms through straw purchasers. Id. at *1. The ATF conducted several controlled purchases, and Louis was arrested and indicted for two counts of selling a firearm to a convicted felon. Id. at *2. Louis was convicted and, at sentencing, the district court increased his offense level by two for abuse of position of trust pursuant to § 3B1.3, finding that firearms dealers occupied a position of public trust on the alleged ground that the public "trusted" him to prevent criminals from obtaining dangerous weapons. Id. at *2, *7. Louis appealed the enhancement. Id.

 

On review, the Eleventh Circuit recognized that "'[t]he determination of whether a defendant occupied a position of trust is extremely fact sensitive.'” Id. at *3 (citing United States v. Britt, 388 F.3d 1369, 1372 (11th Cir. 2004). It also recognized the importance of discretion on the part of the defendant. Id. at *4. The Court concluded, pursuant to the Guideline, that:

 

Fiduciaries and employees of a public or private agency who exercise considerable discretion are subject to the enhancement. Lower-level, closely supervised employees who exercise little discretion are not. The enhancement also requires that the offender occupy a position of trust in relation to the victim, not another party.

Id.

 

The Court proceeded to rely on the Seventh Circuit's decision in United States v. Podhorn, 549 F.3d 552, 560-61 (7th Cir.2008) to conclude that the mere fact that a firearms dealer is licensed by the federal government does not mean that the dealer occupies a position of public trust under § 3B1.3. Id. at *5, *6. The Court noted that the federal government "does not review or warrant the “professional judgment” of a prospective licensee; to receive a license, an applicant must merely submit an application to the Bureau, supply fingerprints and a photograph, pay a fee, and pass a background check." Id. at *6 (citing § 923(d)(1)). It also noted that the ATF had no discretion to deny an application if the licensee met the statutory requirements, and that firearms dealers exercised no discretion in regard to their compliance with federal law. Id. The Court then reversed Louis' conviction and remanded for resentencing, holding that the district court applied an erroneous legal standard in enhancing his sentence for abuse of position of trust. Id. at *7.

Louis also contains a comprehensive summary of the types of positions for which the Court has upheld or reversed applications of enhancements for abuse of a position of trust. Id. at *4 (citing cases).

 

Gillen Withers & Lake LLC are white collar and corporate criminal defense attorneys with an outstanding reputation and track record, handling cases throughout Georgia and the nation. Call our Atlanta, Georgia, office at (404) 842-9700 or our Savannah, Georgia, office at (912) 447-8400.

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A single gram of "cocaine base," or "crack" cocaine, is equivalent to 50 to 100 grams of cocaine for sentencing purposes, according to U.S. Sentencing Guideline §2D1.1. "Crack" cocaine is typically made by boiling cocaine in water with baking soda.

The Eleventh Circuit held late last week that there was insufficient evidence to uphold Ramon Singleton's sentence for possession with intent to distribute more than 50 grams of cocaine base. See  U.S. v. Singleton, No. 07-13329, 2008 WL 4595272, *2 (11th Cir., October 16, 2008). The reason? An insufficient amount of baking soda. Law enforcement had seized 937.30 net grams of powder cocaine from Singleton's motel room. Id. The Court observed that Singleton would have needed at least four 8 oz. boxes of Arm & Hammer to convert this quantity of powder cocaine into cocaine base. Id. It further noted, however, that "law enforcement officials only recovered one eight-ounce box of baking soda in the motel room, which was clearly not sufficient to convert all of the seized powder into crack cocaine." Id. The Court held that the district court's drug determination was not supported by the evidence, and that the error was not harmless. Id. In so doing, it reaffirmed that "'[a]lthough sentencing may be based on fair, accurate, and conservative estimates of the quantity of drugs attributable to a defendant, sentencing cannot be based on calculations of drug quantities that are merely speculative.'” Id. (quoting U.S. v. Zapata, 139 F.3d 1355, 1359 (11th Cir.1998)).

 

Gillen Withers & Lake LLC are white collar and corporate criminal defense attorneys with an outstanding reputation and track record, handling cases throughout Georgia and the nation. Call our Atlanta, Georgia, office at (404) 842-9700 or our Savannah, Georgia, office at (912) 447-8400.

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Former Georgia State Representative Ron Sailor, Jr., was sentenced last week to 5 years, 3 months imprisonment by United States District Judge Jack T. Camp of the United States District Court for the Northern District of Georgia on charges of money laundering and mail fraud. Sailor was further ordered to forfeit property worth $181,802.24.

Sailor represented District 93, consisting of parts of DeKalb and Rockdale Counties. He originally pled guilty to money laundering charges in March of this year for laundering drug proceeds. Sailor had met with an undercover law enforcement officer posing as a drug dealer and had informed the agent that he was looking for a drug dealer to give him $300,000 which Sailor would launder for a fee. An agent subsequently met with Sailor and provided him with approximately $375,000, and Sailor returned the funds to the agent in the form of checks which falsely stated that they were for consulting work, and which had Sailor's fee deducted. Sailor resigned from the General Assembly following his guilty plea.

Following his plea, Sailor agreed to cooperate with authorities in an unrelated investigation. However, he also attempted to obtain a $250,000 loan by using the Greater New Light
Missionary Baptist Church, on Campbellton Road in Southwest Atlanta, where he was a pastor, as collateral, without the church's permission. Sailor caused the church's corporate registration to be changed to show himself as the Chief Executive Officer, and created a false resolution of the church's Board of Directors authorizing the church to use the property to obtain a loan and Sailor to bind the church to the loan, forging the signature of the church's Secretary on the resolution. Sailor also forged false church by-laws, falsely signing for the Secretary and embossing the by-laws with a fraudulent church seal. Sailor presented the fraudulent documents to Georgia Business Capital Ban, which proceeded to lend Sailor $250,000 with the church's property as collateral. Sailor used $141,386.72of the proceeds to pay his personal expenses. Additional charges were filed against Sailor for this conduct, which Sailor pled guilty to in June of this year.

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Former lobbyist Jack Abramoff was sentenced to 4 years imprisonment yesterday, as reported by the Associated Press. The Abramoff scandal shook Washington and contributed to the Republicans' loss of Congress in the 2006 mid-term elections. Following his arrest, Abramoff cooperated with the FBI in investigating his own corruption and that of others. Abramoff assisted the Justice Department in obtaining corruption convictions against former Republican Representative Bob Ney, former Deputy Interior Secretary J. Steven Griles and several aides.

Abramoff told the court that he was a "broken man," and was not the same person "who happily and arrogantly engaged in a lifestyle of political and business corruption." Abramoff's cooperation with the government spared him what could have been a maximum sentence of 11 years. He also faces criminal proceedings in Florida for a fraudulent casino deal.

 

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Zach Scruggs will be sentenced today at 10:00 a.m. before Judge Biggers. Recall that when this case was first indicted, Zach Scruggs was the number two guy on the indictment, which generally signals the government’s belief that he was number two in culpability. However, just prior to trial, the government dismissed the indictment, and let Zach plead guilty to misprision of a felony – basically taking steps to conceal his knowledge of and the existence of a felony.

The plea agreement for Zach is a rare breed in federal court – a plea where the government recommends a probated sentence. However, that recommendation is not binding on the court.

The thing that is surprising here as I’ve said before in these posts is the defendant’s lack of candor and acceptance of responsibility in entering his plea. I know plenty of judges who would reject Zach’s plea for failing to acknowledge his guilt because here is what Zach said at his guilty plea:

“I ' d like to start out by telling the Court, and the public, that I had no knowledge that Tim  Balducci bribed Judge Lackey in connection with this arbitration order. I didn' t conspire to bribe Judge Lackey in connection with an arbitration order, and I would have stopped it had I known. However, I did have some knowledge that Tim Balducci had a close personal relationship with Judge Lackey, and that he used that personal relationship to have improper ex parte contacts with the judge regarding the order.”

These words ring hollow to me, and I think, Zach loses yardage before his sentencing judge by minimizing his conduct.

Zach’s attorneys filed a sentencing memo today that does a good job of fleshing out the factors that distinguish Zach’s case from that of his former co-defendants. In the sentencing memo, his counsel argues that Zach admitted to “misprision of a felony; that is, he failed to alert authorities and the firm’s registered counsel that Tim Balducci was attempting to personally and improperly influence Judge Lackey through the benefit of his personal relationship with the judge.” Can anyone help me out here - who was this "registered counsel" for the Scruggs firm?

Apparently, the probation office disagreed with the government’s assessment of Zach’s culpability because Zach’s attorneys spend most of the sentencing memo pointing out the factual and legal distinctions in Zach’s plea. They persuasively argue that the government has taken a tiered approach to sentencing with Zach’s conduct being at the low end of that tier. It will be interesting to see how Judge Biggers reacts to the government’s view of Zach’s case and whether he will accept the government’s recommendation of a probated sentence.

Candidly, based on Judge Biggers’ earlier comments regarding this case, I can’t see him deciding that a probated sentence is an appropriate disposition for a case that involves judicial bribery where the underlying case was a dispute involving over twenty million dollars.  Zach's going to have a bad day in court and it will be a sad epilogue to his legal career.

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I had the pleasure of visiting extensively with Tom Freeland over at the Folo Blog this weekend in follow up to the Scruggs sentencing and it was interesting to get the local take on the sentencing.

A transcript of the sentencing hearing is available here.

The government took no real position at sentencing other than to state that any sentence imposed was within the court’s discretion.

John Keker, Scruggs' attorney, to his credit, relied upon his sentencing memorandum submitted to the Court, and really made no extensive comments.

One of the big questions for the general public, is did Scruggs get the benefit of his plea bargain in this case, and the answer to that is a resounding yes. Judge Biggers calculated the sentencing guideline range at 108 to 135 months, but the maximum term of imprisonment for the conspiracy charge Scruggs pleaded to limited his sentencing exposure to 60 months imprisonment. In my view, 60 months was the only sentence Scruggs could fairly receive given the severity of the conduct – judicial bribery in a case where millions were at stake.

I’ve been to more sentencings in federal court, both as a prosecutor and as a defense attorney, than I care to remember, but the judge's comments directed at Scruggs is one of the lengthiest denunciations of a defendant’s conduct that I’ve ever seen.

Interestingly, Judge Biggers stated that he was not considering any of the other crimes evidence regarding the Joey Langston plea, although the jduge did remark that Scruggs "bribed a judge, corrupted a judge, in another case in another court.”  However, the judge said that was probably something Scruggs would have to answer to later.

Judge Biggers noted that this case was really not about so much the amount of money that was given to Judge Lackey of the state court, but that it was about the effect of that bribe, of what the purpose of it was, to corrupt the ruling and the actions of the circuit court. 

Maybe someone else can answer this question, but why was Scruggs so intent on getting this case out of the local court system into an arbitration panel? Wouldn’t a guy named Dickie Scruggs want his people deciding his case?

As has been reported extensively, Judge Biggers commented that he saw how easily and quickly Scruggs entered into the bribery scheme, and it made him think that this, perhaps, was not the first time Scruggs had engaged in bribery because he did it so easily.

The judge also commented that Scruggs had committed a reprehensible crime which is one of the most reprehensible crimes that a lawyer can commit - the corruption of the rule of law which he' s sworn to uphold.

Scruggs’ co-conspirator, and former law partner, Sid Backstrom, received a sentence of 28 months, less than the 30 month maximum sentence that was part of the plea agreement. Judge Biggers remarked that he was impressed with Backstrom’s level of remorse.

I’ve commented on several occasions that the defendants in this case seem obsessed with minimizing their criminal conduct, all the more incredible given the gravity of the offense to which they pleaded guilty – judicial bribery.

So, how much time will Scruggs actually serve? He will serve 85% of the 60 months, which is 51 months. He will spend the last 6 months in a halfway house under Bureau of Prison's pollcy, so Scruggs will do 45 months in a federal prison camp, presumably in Pensacola, Florida.

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The more I’ve reflected on Scruggs’ Sentencing Memo filed on Wednesday, the more incongruous it seems. No doubt Scruggs is ably represented. His counsel has submitted scores of letters lauding the good works Dickie has done over the years; however, recall that the government had filed a notice back in January that they were going to seek to introduce 404(b) evidence of other crimes that Scruggs had committed.

In that notice, the government informed Scruggs that there was another attempt to corruptly influence a judicial proceeding, referring to the search warrant application for the Langston Law Firm and the information, factual basis, and plea colloquy in United States v. Joseph C. Langston, Case No. 1:08CR003. And, the entire fiasco concerning the Rigsby sisters in the false claims case in front of Judge Acker in the Northern District of Alabama, so ably reported by Dave Rossmiller, just points to a way of doing business by Dickie that is disturbing in the extreme.

Much has been written about the fall of Dickie Scruggs. I will not weigh in on that debate, but he certainly held the court and judicial system in low esteem and terribly corrupted the system through which he made an extraordinary living, and through which, he at one time did some good.

However, given the pattern of the corruption of the system, the government can more than counter the letters about Dickie’s good acts. I am thankful that we’ve finally moved away from searching sentencing equality (there is none) in a numeric based sentencing system that was wildly flawed, but I can’t conceive of any way that Judge Biggers gets below 60 months for Mr. Scruggs. A sad epilogue for a meteoric legal career.

I look forward to discussing with Tom Freeland of the Folo Blog his personal observations regarding the sentencing hearing. Tom has done an extraordinary job blogging about this case seasoned with local flavor. And, kudos for Tom in getting access to the sentencing in a shout out to his blog from Judge Biggers in this Order.

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Yesterday, June 25, both Scruggs and the government filed their sentencing memorandum (available here and here). First, maybe it’s just me, but when five lawyers from San Francisco have to sign your sentencing memo and they have collectively included 81 footnotes, then methinks you are on the losing side. 

Continuing a pattern we’ve seen in this case of minimizing any criminal conduct, Scruggs’ lawyers stake out what the case is not about, arguing that:

• During the March 2007 meeting at the Scruggs Law Firm, Scruggs only asked that Balducci “go see Judge Lackey and see if Judge Lackey would be amenable to move the case to arbitration,” and Scruggs specifically cautioned Balducci that “he was not asking [him] for anything illegal.”
•  Both Balducci and Patterson testified that they do not—and did not—think a crime was contemplated at the March 2007 meeting.
• Balducci did not meet with Judge Lackey in March 2007 to bribe him or to offer him any kind of quid pro quo, and Balducci did not intend his offer of the “of counsel” position to Judge Lackey as an incentive or bribe for Judge Lackey to rule in favor of arbitration.
• Between early May and mid-September 2007, Judge Lackey and Balducci were in repeated contact but during that time Balducci never said or suggested that Scruggs would give or offer anything to Judge Lackey in exchange for an order sending the Jones case to arbitration.
• During that same time period, Balducci repeatedly told Judge Lackey that he was not trying to influence Judge Lackey improperly and that Judge Lackey should decide the arbitration motion according to the law.
• It was not Scruggs—or even Balducci—who first proposed a payment in exchange for a favorable ruling on the arbitration motion.
•  Balducci told Judge Lackey three times on September 27, 2007, that Scruggs was not aware of the payment arrangement.

So, what does Scruggs eventually concede he did wrong – “He agreed and conspired to pay a bribe to Judge Lackey, a Mississippi Circuit Court Judge. In furtherance of the conspiracy, Scruggs agreed to and did furnish funds to be paid to Judge Lackey in exchange for a favorable order, and he prepared false paperwork to cover up the existence of the criminal conspiracy.” Memo, p. 27 Well, so, someone in this thing finally admits to some wrongdoing.

Another thing, I find a little offensive about Scruggs’ Sentencing Memo, he ends by imploring the court that there are two innocent people that will bear Scruggs’ punishment – his wife and daughter. While no doubt true, I’ve heard dozens of federal and state court judges reject that argument with the simple admonition that the harm to the family is inflicted by the defendant, not the court.  My guess – Judge Biggers won’t be swayed by this pedestrian argument. He’s heard it and rejected it too many times already.

Scruggs argues that the probation office has incorrectly calculated his sentencing guidelines at the whopping guideline of 168 to 210 months (remember the maximum sentence is 60 months). Bizarrely, Scruggs' well footnoted Memo argues that the actual guideline sentence is 46-57 months, but then later argues he should be sentenced to the lower end of the range of 30-37.

Now, the real battle ground here, is what is the value to Scruggs, or as the government argues, what loss Scruggs intended by the bribe. The government, in written work that is at the very top of the game (although they need to learn some word processing keystrokes in typing “(c)”, as opposed to “©”, which appears at least three times in there papers), argues that the question is really what loss Scruggs intended through the bribery scheme, which the government calculates at millions of dollars, which still brings the sentencing guidelines range in above the statutory maximum sentence of 5 years.

My take, Judge Biggers will sentence Dickie to 60 months – the sentence the government seeks - and be well within his discretion to do so. Backstrom, truly a footnote in this proceeding, who has the benefit of an 11(c)(1)(c) plea, will receive a sentence of half of Scruggs’ sentence, 30 months.

There’s never any victory or jubilation in seeing the demise of someone like Scruggs, who has done good work, but his day of judgment awaits.

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Scruggs co-defendant and former partner, Sidney Backstrom, who plead guilty on March 14, 2008  to the count one conspiracy charge of the Scruggs indictment, is scheduled to be sentenced on June 27, 2008 and has filed his objections to the Presentence Report (PSR).

Now, first, the filing of objections to the PSR is unusual in and of itself. And, I have to say, that the work that went into these objections is less than what I’d expect of someone representing an attorney in a federal criminal case.

The factual basis from Backstrom’s plea alleges that:

• as a member of Scruggs’ Law Firm, he sent a proposed order in the Jones v. Scruggs civil case to Timothy Balducci that was then faxed to Judge Lackey. 
• then, on September 21, 2007 Balducci placed a four minute phone call to the Scruggs Law Firm and discussed the $40,000.00 bribe with Backstrom. 
• On October 18, 2007 Balducci called Backstrom and told him that he had delivered a copy of “those papers we’ve been waiting on” referring to the order obtained by the bribe.
• And, after Balducci was flipped, he wore a body wire against both Backstrom and Zach Scruggs and engaged in a conversation about the order.
• Finally, on November 13, 2007 Balducci and Backstrom engaged in a conversation about the bribery scheme and the benefit of a favorable order for the Scruggs Law Firm.

Backstrom has filed objections to both the factual accuracy of the report and to the sentencing guidelines calculation:

• First, he objects because the probation officer has used $5.3 million benefit to the defendants as the amount of loss pursuant to U.S.S.G. 2B1.1, contending that rather than the 18 level increase that results from the $5.3 million benefit (the amount the PSR claims that Scruggs saved by corruptly bribing Judge Lackey), the appropriate amount for consideration is the amount of the bribe, which would result in an enhancement of only a 6 level increase.
• Second, Backstrom contends that no role in the offense enhancement should apply because he was neither a manager, nor supervisor of criminal conspirators, but rather a “worker who takes on the yeoman task of getting work out.” ¶ 30.

In Backstrom’s plea agreement, the government agreed to recommend a “sentence not to exceed one-half (1/2) of the sentence imposed on his co-defendant, Richard Scruggs, which will not, in any event exceed 30 months incarceration.” If there is an 18 level increase in Backstrom’s guideline range, then any sentence he faces will, according to the sentencing guidelines, wildly exceed 30 months.

More importantly, Backstrom in his objections has continued a bizarre display of disputing the facts which form the basis of his guilty plea. I’m certain that this conduct can’t sit well with the district court. For instance, in his objections, Backstrom says he didn’t draft and email the proposed order that was faxed to Judge Lackey. ¶ 38-39. Then, Backstrom has a lengthy argument that the “credible evidence” shows that the September 21, 2007 phone conversation between Balducci and Backstrom did not occur. ¶ 48.

The importance of these objections is a defendant can lose the benefit of his bargain by denying his guilt. In other words, in federal court, you don’t get to say, I’m guilty, but I didn’t really do anything wrong, which seems pervasive among these defendants. It’ll be interesting to see how both the government and the court react to this sort of shenanigans.

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In Irizarry v. United States, (No. 06-7517), the Petitioner plead guilty in district court to making a threatening interstate communication to his ex-wife in violation of 18 U.S.C. § 875. Although the presentence report recommended a Federal Sentencing Guidelines range of 41-to-51 months in prison, the district court imposed the statutory maximum sentence—60 months in prison and 3 years of supervised release— rejecting the petitioner’s objection that he was entitled to notice that the court was contemplating an upward departure.  The Supreme Court announced that defendants are not entitled to notice of a variance from the guideline sentence prior to sentencing.

The Eleventh Circuit had affirmed the sentence, reasoning that Federal Rule of Criminal Procedure 32(h), which states that “[b]efore the court may depart from the applicable sentencing range on a ground not identified . . . either in the presentence report or in a party’s pre-hearing submission, the court must give the parties reasonable notice that it is contemplating such a departure,” did not apply because the sentence was a variance, not a Guidelines departure.

The Supreme Court affirmed finding that the notice requirement of Rule 32(h) does not extend to a "variance" from the recommended guidelines range. According to the Supreme Court, "The due process concerns that motivated the Court to require notice in a world of mandatory Guidelines no longer provide a basis for this Court to extend the rule set forth in [Burns v. United States, 501 U. S. 129 (1991)], either through an interpretation of Rule 32(h) itself or through Rule 32(i)(1)(C)."

The Court adopted the use of the Eleventh Circuit's term - "variance" - in finding that there is a difference between a mandatory guidelines departure and a variance pursuant to the factors set forth in 18 U.S.C. § 3553. So, departures, the Supreme Courts says, were “a term of art under the Guidelines” and referred only to non-Guidelines sentences imposed under the framework set out in the Guidelines. A "variance" is any factor under section 3553 that may warrant a non-guideline sentence, and the defendant does not have a statutory, or constitutional right to be advised of every variance, although district court’s should be cautious in making certain that defendants have adequate notice.

So, departures are now a deceased creature of the guidelines era.

 

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In affirming the convictions and sentences of Padron for conspiracy to commit mail fraud in violation of 18 U.S.C. § 371 and 4 counts of mail fraud in violation of 18 18 U.S.C. § 1341, the Eleventh Circuit (opinion available here) took up a question not previously addressed in this Circuit – does 28 U.S.C. § 2461(c) authorize criminal forfeiture of specified property in general mail fraud cases. The court noted that Congress enacted 28 U.S.C. § 2461(c), which became effective in August 2000, makes criminal forfeiture available in every case that criminal forfeiture does not reach, but for which civil forfeiture is authorized.

28 U.S.C. § 2461(c), which I had never heard of, provides in pertinent part, that, “If a person is charged in a criminal case with a violation of an Act of Congress for which the civil or criminal forfeiture of property is authorized, the Government may include notice of the forfeiture in the indictment or information pursuant to the Federal Rules of Criminal Procedure. If the defendant is convicted of the offense giving rise to the forfeiture, the court shall order the forfeiture of the property as part of the sentence in the criminal case pursuant to the Federal Rules of Criminal Procedure . . .”

The Eleventh Circuit found that since civil forfeiture was authorized under 18 U.S.C. § 981 for offenses constituting “specified unlawful activity” under 18 U.S.C. § 1956, and mail fraud is defined under section 1956 as a specified unlawful activity, civil forfeiture was authorized. Therefore, since civil forfeiture was authorized, criminal forfeiture for mail fraud convictions was authorized as well.

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In an Opinion (available here) dated March 20, 2008, but released on Monday, May 12, the Eleventh Circuit affirmed the convictions and sentences of Joya Williams, a former Coca Cola employee, and one of her conspirators, Ibrahim Dimson.

After a lengthy factual recitation regarding this case which was prosecuted by the U.S. Attorneys Office in Atlanta and which involved the attempted sale of trade secrets by Williams and others to Pepsi, the Court found no error in the curtailed cross-examination of Williams’ co-conspirator since the cross-examination conducted extensively challenged the co-conspirator’s credibility.

In a more interesting challenge, and one that always seems to get the ear of the appellate courts, the defense contended that the district court improperly instructed the jury on the meaning of reasonable doubt by using an example “which had to do with open-heart surgery the judge had previously undergone.” Although the Eleventh Circuit doesn’t tell us more, the defense contended that the example amounted to unconstitutional burden shifting. When the example was given by the district court, he apparently informed the jury, following objection, to disregard his example, and gave the pattern reasonable doubt charge, which the jury is presumed to follow.

Finally, both Williams and Dimson challenged their sentences contending that the district court placed undue emphasis on one factor, the seriousness of the harm, and less weight on the other 3553 factors. In affirming the above-guideline sentences imposed, the Eleventh Circuit noted that, although U.S. v. Pugh, discussed at an earlier post here, provides that an unjustified reliance on a single 3553 factor might be a “symptom” of an unreasonable sentence, here the trial judge discussed several 3553 factors and the individual weight to be given to any one factor is within the trial judge’s discretion.

Both defendants challenged their sentences, 96 and 60 months respectively, based on the alleged unwarranted disparity with their cooperating co-defendant who received 24 months. The Eleventh Circuit cited the cooperation as a factor that plainly accounted for the different sentence and affirmed.

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   Despite the Eleventh Circuit Court of Appeals' seeming to take district courts to task in other decisions for failure to consider factors under 18 U.S.C. § 3553(a) which tend to favor the government pursuant to Booker, Section 3553(a) mitigating factors which tend to favor the defendant apparently do not have to be considered, as shown by the Court's recent decision in United States v. Brown, No. 05-16128, 2008 WL 1869727 (11th Cir. 2008). Brown was convicted for enticing a minor in interstate commerce for the purpose of engaging in sexual activity and appealed, arguing, inter alia, that the sentencing court failed to consider the unwarranted sentencing disparities between individuals subject to the retroactive application of the Court's decision in United States v. Searcy, 418 F.3d 1193, 1198 (11th Cir.2005) and those who were not, as well as Brown's traumatic childhood and attempts to live a law abiding life. Id. at *15. The Court of Appeals held that the district court did not abuse its discretion in sentencing Brown, quoting its prior decision in United States v. Amedeo, 487 F.3d 823 (11th Cir.2007) for the proposition that a sentencing court "need not discuss each of these factors in either the sentencing hearing or in the sentencing order."

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     Despite the substantial deference granted to sentencing courts pursuant to Gall v. United States, 552 U.S. ----, 128 S.Ct. 586 (2007), the Eleventh Circuit Court of Appeals will still expect unusual sentences to be supported by good reasons in the record. Kenneth K. Livesay was the Assistant Controller and Chief Information Officer of HealthSouth Corporation, who was involved in a conspiracy to inflate HealthSouth's revenues by making false statements on HealthSouth's books and in filings with the Securities and Exchange Commission, which resulted in losses of $1.4 billion to investors after the fraud was discovered and HealthSouth's stock plummeted. Livesay pled guilty to conspiracy to commit wire and securities fraud and falsification of financial information, and the government filed a motion for downward departure pursuant to U.S.S.G. § 5K1.1, based on Livesay's cooperation and substantial assistance.
     Livesay's recommended sentencing level was 28 and the government recommended a three level departure in its 5K1.1 motion to level 25 and a sentence of 60 months imprisonment. The sentencing court, however, apparently harbored considerably more lenient views towards Livesay, and granted the government's motion and departed downward 18 levels to a level 10, and sentenced Livesay to 60 months probation with the first six months to be served on home detention.
     The government appealed, and the Eleventh Circuit vacated and remanded for resentencing. See United States v. Livesay, 484 F.3d 1324, 1325-26 (11th Cir.2007). On resentencing, the government again filed a 5K1.1 motion, but in light of Livesay's continued substantial assistance since the first sentencing, recommended 20 months' imprisonment. The sentencing court again granted the government's motion and again imposed a sentence of 60 months probation with 6 months home detention, finding that Livesays assistance was extraordinary and warranted an extraordinary departure. The Court further stated that, even without the downward departure, it would have made the same variance under United States v. Booker, 543 U.S. 220 (2005) based upon the factors under 18 U.S.C. s 3553(a). Another appeal followed, and the United States Supremen Court eventually remanded to the Eleventh Circuit for reconsideration pursuant to Gall. See Livesay v. United States, --- U.S. ----, 128 S.Ct. 872, 872-73 (2008).
     The Eleventh Circuit noted that a “‘sentencing judge should set forth enough to satisfy the appellate court that he has considered the parties' arguments and has a reasoned basis for exercising his own legal decisionmaking authority.’” United State v. Livesay, No. 06-11303, 2008 WL 1810195 (11th Cir., April 23, 2008) (quoting United States v. Agbai, 497 F.3d 1226, 1230 (11th Cir.2007); quoting Rita v. United States, --- U.S. ---, 127 S.Ct. 2456 (2007)). held that the sentencing court committed procedural  error pursuant to Gall by considering Livesay's repudiation or withdrawal from the conspiracy in determining the extent of the departure pursuant to 5K1.1, since withdrawal is not one of the factors enumerated under 5K1.1. Id. at *9. The Court further held that the sentencing court also committed Gall procedural error by failing to adequately explain its variance from the advisory Sentencing Guidelines range in a way which would allow for meaningful appellate review, noting that the lower court had offered:

[N]o explanation or reasoning of how a sentence of 60 months’ probation (with 6 months' home detention) for an individual who pled guilty to knowingly playing an active and crucial supervisory role in a massive $1.4 billion fraud for at least five years reflected the seriousness of the offense or the nature and circumstances of the crime. The district court did not state or explain in any way why it rejected the government's argument that, notwithstanding Livesay's timely assistance, Livesay should receive “some sentence of significance” in this $1.4 billion fraud scheme because he was a “key player, a significant cog, in the operation of this fraud at HealthSouth for a number of years.”

Id. at *11.

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With sentencing scheduled for Thursday, April 24, Snipes has:

• added another lawyer, his sixth attorney, that, apparently, will be present at sentencing,
• moved to continue sentencing, and,
• all important, has requested the use of a laptop at sentencing!

As noted here, the resolution conference to resolve disputed issues regarding the presentence investigation report was held on Friday, April 11, 2008. By Monday of the following week, April 14, 2008 the government had filed a 36 page sentencing memo arguing that by any stretch of a sentencing calculation, Snipes faces a 36 month term of incarceration.

Snipes counsel’s reaction was to file the following day, a motion to continue sentencing. That motion, filed on tax day, was denied by Judge Hodges the following day.

The government, meanwhile has filed a Motion for Bill of Costs, seeking costs of just over $250,000.00.

Yet to be filed by defense counsel is a sentencing memorandum, fairly standard practice in any case of complexity, particularly, where counsel seeks to argue that the factors set forth in 18 U.S.C. § 3553 provide some ground for departure from the applicable guideline range. My guess, any pleading filed the day before sentencing, is filed a day too late.

So, what does Judge Hodges have to consider the day before sentencing – the presentence report, which will recommend a 36 month sentence and the government’s 36 page sentencing memorandum arguing for a 36 month sentence (is there some cosmic symmetry to the pagination). Mr. Snipes should prepare for 36 months.

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Sentencing for Wesley Snipes is set for April 24, 2008 and he has just dismissed his trial counsel, Robert Bernhoft and his firm. Bernhoft, who, you will recall, was brought into the case, just prior to trial has had notable success against the government in prior IRS cases, and he did a masterful job at trial in this case. The jury acquitted Snipes of the felony charges and convicted him of three misdemeanors. 

Snipes, appearing ecstatic after the verdict, apparently, is ecstatic no longer because Bernhoft filed a motion to withdraw as counsel of record last Tuesday, April 1. Judge Hodges granted that motion the following day, noting that Snipes had instructed the Bernhoft firm to file the motion. Snipes apparently has no clue how bad this lawyer shifting makes him look, but to gain an understanding of the musical chairs at play here, take a gander at the timeline of events:

Trial was originally scheduled for October 22, 2007.

October 3, 2007 just three weeks before trial was scheduled to begin, Bernhoft filed his notice of appearance in the case, along with a Motion for Continuance, which was denied.

October 3, 2007, previous counsel for Snipes, including Daniel Meachum, filed a motion to withdraw as counsel.

October 9, 2007 Bernhoft filed a scathing Motion for Reconsideration alleging a variety of deficiencies in preparation by prior counsel.

That Motion was granted and trial was scheduled for January, 2008.

January 11, 2008, Meachum filed a notice of appearance and was back in the case.

February 1, 2008, the jury acquitted Snipes of the felony tax counts, but convicted him on three misdemeanor tax offenses.

March 28, 2008 two new counsel filed motions indicating that they were appearing as counsel for Snipes.

April 1, 2008 Judge Hodges granted those motions.

April 1, 2008, exactly three weeks before sentencing Bernhoft and his firm filed a Motion to Withdraw as counsel of record.

April 2, 2008 Judge Hodges granted the Bernhoft firm's motion to withdraw.

In an earlier post, I had posited that Snipes’ acquittal on the more serious felony charges was a pyrrhic victory since all of his relevant conduct would be taken into account at sentencing. My prediction then and now is that Snipes will receive a  sentence toward the upper end of the statutory maximum sentence of three years.

Snipes is still left with several lawyers, but Bernhoft did a magnificent job at trial. That Snipes has again dismissed his lead counsel just prior to sentencing is now an established pattern, which, quite frankly, looks bad, and my guess is, doesn't sit well with the Court. 

This set of musical chairs as sentencing approaches has the look of desperation. April 24 will be an unpleasant day for Mr. Snipes, no matter his machinations with counsel.

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One of my hopes in creating this blog is that we will be able to collectively raise the bar for federal criminal defense practitioners by sharing pleadings and discussing developments in the law. One of the most important developments in federal criminal practice in recent years has been the retroactive application of the new crack cocaine amendments. As I have posted before, this retroactive application is a start at correcting one of the most serious injustices in our criminal justice system that has resulted in crack cocaine sentences that have simply been racially discriminatory by any fair minded standard.

Now that we have this new weapon, the question arises as to how this retroactive application will in practice work.  I understand that Federal Defender offices, CJA Panel Representatives and CJA Resource Counsel are working with the Courts, U.S. Attorneys Offices and Probation Offices to attempt to develop plans for identifying clients to whom the new guidelines will apply.

So, what is the effect of the revision and what can we do? The Sentencing Commission amended the Drug Quantity Table in § 2D1.1 so that crack quantities triggering the five- and ten-year mandatory minimums are assigned base offense levels two levels lower than before.

The Commission similarly adjusted the drug threshold quantities with the net result being that for crack offenses, base offense levels across the board are two levels lower than they were before the amendment. See 72 Fed. Reg. 28,558, 28,571-73; U.S.S.G. App. C, Supp. Amend. 706; U.S.S.G. § 2D1.1 (2007).

For a reader friendly version of how to calculate the guidelines for your client, see the Federal Defender Memorandum here. Also, for those of us in the trenches, here is an excellent motion also available on the Federal Defender website that sets forth in exquisite detail the parameters of sentencing in this new scheme. Finally, as set forth here, counsel should press for the appointment of counsel for eligible defendants. See United States v. DeMott, 513 F.3d 55 (2nd Cir. 2008)(“District court violated Day’s right to be present at resentencing, his right to counsel at resentencing, and his right to notice that the court intended to impose an adverse non-Guidelines sentence”).

We hope that this post is of some assistance to the many of you in the trenches, who in doing this work, will be pressing for some measure of corrective justice for their clients. Thanks to the Federal Defender program for providing excellent guidance in this emerging area of the law.

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Continuing to troll the waters post-Kimbrough, the Eleventh Circuit reconsidered its earlier rejection of the defendant’s crack v. powder claim in U.S. v. Stratton, No.06-10080 (Eleventh Cir. Mar. 13, 2008). The Eleventh Circuit stated that it was reconsidering its earlier rejection of Stratton’s claim that the crack/powder sentencing disparity may be a factor in determining reasonableness. The case was remanded to the district court for the limited purpose of permitting the district court to consider the 3553 factors in light of Kimbrough. There is some hope for sentencing sanity in crack cases.

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Effective March 3, 2008, the crack v. powder sentencing disparity was reduced from the previously ridiculous 100 to 1 and it is predicted that as many as 20,000 federal inmates will ultimately be affected.

Senator Biden (D-Delaware), Chairman of the Senate Judiciaty Committee, has introduced The Drug Sentencing Reform and Kingpin Trafficking Act of 2007, which would impose a 1 to 1 ratio for crack/powder cocaine. The Committee held hearings last month and even Senator Sessions of Alabama came out in favor of the 20 to 1 ratio.  These promising developments herald the end of one of the sentencing guidelines greatest injustices which have wrought harm to our system of justice for decades.

Professor Berman here has done great good work in attacking this injustice. A copy of the Sentencing Commission's Order form for district court's to use is available here.

 

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In United States v. Pugh, No. 07-10183, 2008 WL 253040, *9, *12 (11th Cir., January 31, 2008), the Eleventh Circuit in a careful analysis ruled that a child pornographer would not get a probationary sentence.  This decision could be summed up as follows: this guy is not getting probation.

Relying on its decisions in United States v. Martin, 455 F.3d 1227 (11th Cir.2006) and United States v. McBride, No. 06-16544, 2007 WL 4555205, at *3 (11th Cir. Dec.28, 2007) and the Supreme Court’s instruction in Booker and Gall to consider the § 3553(a) factors and the “totality of the circumstances,” has greatly reduced the discretion granted to sentencing courts by holding that a sentence may be “substantively unreasonable” where it is (1) grounded on one of the § 3553(a) factors, (2) relies on “impermissible” factors, or (3) fails to consider other “relevant” or “pertinent” § 3553(a) factors. Most importantly, “the district court must give some weight to the factors in a manner that is at least loosely commensurate with their importance to the case, and in a way that “achieve[s] the purposes of sentencing stated in § 3553(a).” Id. *21. Ergo—appellate courts can still second-guess a sentencing court and reverse where they disagree with the lower court regarding the factors or grounds considered in imposing sentence, or the weight given to any particular factor or ground. The Court rephrased the standard of review set forth in Gall, holding that remand is appropriate where the Court is “left with the definite and firm conviction that the district court committed a clear error of judgment in weighing the § 3553(a) factors by arriving at a sentence that lies outside the range of reasonable sentences dictated by the facts of the case.” Id. at *9. It referred to the failure to consider particular grounds or factors, or to give such grounds or factors the appropriate weight, as determined by the appellate court, as “symptoms” of an unreasonable sentence. Id. at *12.

Admittedly, Pugh was extremely bad case for examining reasonable variances from the Guidelines range under Gall—Pugh plead guilty to possessing extremely graphic images of child pornography, and the sentencing court varied downward from an advisory Guidelines range of 97 to 120 months to a non-custodial sentence based on the fact that Pugh had no significant criminal history, that his possession of child pornography was “passive,” that he had reported his receipt of child pornography, that he was not a pedophile, that he was addicted to adult pornography and not child pornography, and that he had entered into treatment. Id. at *5. However, the Eleventh Circuit, in reversing the sentence imposed by the district court as substantively unreasonable, further took the opportunity to minimize the importance of § 3553(a) factors heavily relied upon by defendants, namely “the nature and circumstances of the offense and the history and characteristics of the defendant,” pursuant to 18 U.S.C. § 3553(a)(1), while critiquing the failure of the sentence imposed by the district court to account for other § 3553(a) factors which would support a sentence within the range recommended by the Guidelines and by the government. Id. at *12-*18.

A warning in the wake of Pugh: failure to consider sentencing factors which the Court of Appeals would consider important, or to give those factors the weight which the Court of Appeals would, could be “symptoms” of a Pugh reversal.

Finally, for an excellent discussion of the effect of Gall and Kimbrough in future sentencings check out this new blog from Ohio State University.

 

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The Eleventh Circuit’s decision in United States v. Pugh, No. 07-10183, 2008 WL 253040 (11th Cir., January 31, 2008) is interestingly at odds with the result in its decision in United States v. McBride, 511 F.3d 1293, 1296 (11th Cir. 2007), decided about a month before Pugh.

In McBride, in which the Court of Appeals affirmed the district court’s downward departure from a recommended Sentencing Guidelines range of 151 to 188 months to impose an 84-month sentence on the defendant, who pled guilty to distributing child pornography, because the defendant’s father had been murdered, the defendant had been physically and sexually abused as a child, suffered from various health problems and had enrolled in a sexual treatment program.

Although the Court did not cite Gall, it rejected the government’s argument on appeal that “although the district court discussed many of the [18 U.S.C.] § 3553(a) factors, it failed to give proper weight to some while overemphasizing others,” id. at 1297, holding that the Court:

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Despite the apparent limitation in Pugh, No. 07-10183 (11th Cir. Jan. 31, 2008) of a sentencing courts' discretion to grant downward variances from the ranges recommended by the United States Sentencing Guidelines, we are happy to note that the Eleventh Circuit Court of Appeals continues to affirm downward variances in deference to sentencing courts’ determinations (albeit if only through unpublished opinions).

• In United States v. Anderson, the defendant pled guilty to one count of insider trading from which the defendant profited approximately $135,000. No. 07-11848, 2008 WL 525669, *1 (11th Cir., Feb. 28, 2008) (per curiam) (unpublished). Anderson promptly repaid the monies he had earned, and the sentencing court sentenced him to 3 years probation, despite the Guidelines’ and the government’s recommendation of a sentence from 18 to 24 months. Id. The government appealed, and the Eleventh Circuit vacated Anderson’s sentence, concluding that the sentence was unsupported by “extraordinary circumstances.” Id.
• Then, in the wake of Gall v. U.S., 128 S.Ct. 586 (2007), the Court granted Anderson’s petition for rehearing, reversed itself, and affirmed the probationary sentence imposed by the district court, which was based not only upon Anderson’s disgorgement of the profits of his trading, but also, under 18 U.S.C. § 3553(a), “[i]n recognition of the limitations on Anderson’s marketability and employment, the district court reasonably imposed a probationary sentence and home confinement to ‘allow [him] to continue working.’” Id. at *3.
• Anderson is an encouraging sign from the Court of Appeals for practitioners with clients with relatively less severe charges but with persuasive facts and circumstances on the 3553(a) side.

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