PC World

United States v. Oehne, No. 11-2286 (2d Cir. October 25, 2012) (Kearse, Katzmann, CJJ, Gleeson, DJ) (per curiam)

This latest per curiam looks at the pretrial ruling on a motion to suppress, and the long sentence imposed in a child pornography production and distribution case. Finding no error, the circuit affirms.

The suppression issue involved custodial statements.  Oehne claimed that he unequivocally invoked his right to counsel by telling the agents that he had an attorney in a separate, unrelated case. But the circuit reminded that the right to counsel is "offense specific." And, since Oehne never requested counsel at all in the case he was being questioned about, he did not invoke his right to counsel.  Nor did he invoke his right to remain silent by not signing the Miranda waiver form. The record here showed not that he refused to sign it - although even that might not constitute an invocation of the right - but that he was never asked to. In any event, since he later spontaneously spoke with the agents about the investigation, that itself constituted a voluntary waiver of his Miranda rights.

The circuit also found no procedural error in the imposition of the sentence, which was 540 months' imprisonment. Relying on Dorvee, Oehne also argued that the sentence was substantively unreasonable, but the circuit noted important differences between Oehne's case and Dorvee. Oehne sexually abused the victim in this case for two years, starting when she was only eight years old, photographed the abuse and distributed it over the internet. To date, some 3,000 offenders had been found with some of those images. The district court also found that Oehne's conduct was part of a pattern, and that he was insufficiently remorseful. This was accordingly not one of the "run of the mill" cases identified in Dorvee; it was "among the most serious crimes we have."

PC World

United States v. Perez-Frias, No. 10-1401-cr (2d Cir. March 31, 2011) (Jacobs, Calabresi, Lohier, CJJ) (per curiam)

Pedro Ruben Perez-Frias appealed his 42-month, below-Guideline illegal reenty sentence, arguing that it was substantively unreasonable. The circuit affirmed.

His case presented a particularly unsympathetic set of facts. In 1995, Perez-Frias was convicted of a drug-related manslaughter. He was selling marijuana at the time, and told his friends that he was having trouble with a rival dealer. This inspired someone else to kill the rival. Perez-Frias received a 7-to-21-year state sentence, and served about 14 years before being paroled to immigration authorities, who immediately deported him. He returned to the United States in August of 2009 and, two months later, was arrested for possessing marijuana. Within a few months he was in federal custody facing an illegal reentry charge.

Perez-Frias’ primary argument at sentencing was that a Guideline sentence was greater than necessary to satisfy § 3553(a). The sentencing judge disagreed, but granted his request for a four-month reduction to account for the uncredited time that Perez-Frias was in federal custody on a writ. The Guideline range was 46 to 57 months’ imprisonment, and the court imposed a 42-month term.

The circuit began by noting that it is “difficult to find that a below-Guidelines sentence is unreasonable,” although, in context, it seems that the court will find this difficulty only when assessing a defendant’s claim that the sentence is unreasonably high, and not when assessing a prosecutor’s claim that a below-Guideline sentence is unreasonably low. Here, according to the circuit, the district court’s assessment of the nature and circumstances of the offense and the defendant’s history and characteristics supported the sentence it chose.

Perez-Frias challenged the 16-level enhancement that he received for the manslaughter conviction as one not supported by “specific empirical data.” This is a common argument made in illegal reentry cases, and here the court pretty much shot it down. There is “no such flaw in the reentry Guideline.” Rather, the 16-level enhancement was “based on the Commission’s own determination that these increased offense levels are appropriate to reflect the serious nature of these offenses.”

Relatedly, Perez-Frias argued that the 16-level enhancement was unduly harsh because the illegal reentry itself is a non-violent act. The court rejected this, too. The guideline is not unreasonable merely because it produces an offense level that is equal to or greater than that of certain violent crimes.

Finally, Perez-Frias deployed another commonly raised argument: that the lower sentences imposed in “fast-track” districts showed that non-fast-track sentences are longer than necessary to achieve the statutory goals. The circuit disagreed because “defendants in fast-track districts are not similarly situated to defendants in non-fast-track districts.”

Comment

For those with a lot invested in illegal reentry cases - like federal defenders - this is a disturbing opinion, particularly on the issue of the empirical basis for the 16-level bump.

There has been a lot written, much of it quite compelling, that establishes that the Commission’s choice of 16-level bump was, in essence, random, and was not based on any systematic empirical study. And the quoted material that the court relies on here to find otherwise is not really an answer. That material comes from the Commission’s justification for the enhancement, and establishes only that the Commission believed that illegal reentrants with serious past convictions deserved a higher offense level. But it does nothing to explain why the Commission selected 16 levels, and not some lower number, and certain does not in any way show that the number, or even the concern behind it, was the product of a real empirical - or indeed any - investigation.

Others have observed that the 16-level bump seems to have been intended to coordinate with the statutory maximum of twenty years. But under Kimbrough that is an additional reason to give less deference to a determination by the Sentencing Commission. This opinion does not address that aspect of the enhancement at all.

Finally, as for fast-track, there is an issue that the Circuit has had before it many times but has not yet resolved: the claim that the disparity between the sentences imposed in fast-track districts and non-fast track districts is “unwarranted” under 18 U.S.C. § 3553(a)(6). Although the government will likely trot out this case in answer to that argument, in fact, this case does not shut that particular door. Its holding that the fast-track disparity does not render non-fast-track sentences longer than necessary is not a holding that such disparities can never be “unwarranted.”

Deconstruction Project

United States v. Dorvee, No. 09-0648 (2d Cir. May 11, 2010) (Cabranes, Parker, CJJ, Underhill, DJ)

In this first-of-a-kind opinion, the court (1) held that a within Guideline - albeit statutory maximum - sentence was substantively unreasonable and (2) found that an offense Guideline other than the crack Guideline was not the product of the Commission’s traditional empirical role and hence, under Kimbrough, was not entitled to deference.

Background

While chatting online with undercover officers posing as teenage boys, Justin Dorvee sent them computer files containing child pornography. He was arrested when set out to meet one of the boys. A search of his home revealed several thousand still images and more than 100 videos containing child pornography. He ultimately pled guilty to one count of distribution of child pornography.

Under a correct application of U.S.S.G. § 2G2.2, which prescribed a base offense level of 22 plus enhancements for such things as the number and content of the images, he faced a sentencing range of 262 to 327 months’ imprisonment. However, since the statutory maximum sentence was 240 months, 240 months became his Guideline range.

At sentencing, Dorvee introduced medical evidence intended to mitigate that sentence, including evidence that he was a compulsive collector and had serious personality disorders, but was “not a predator” and would respond well to treatment. The court expressed sympathy for him, but still concluded that he was a “pedophile” who would have sex with a younger boy if he could, even if he would not initiate the behavior. After reviewing the statutory factors, the court sentenced Dorvee to 240 months, less six months and fourteen days of uncredited time he had served in state court, for a total sentence of 233 months and sixteen days.

The Appeal

The circuit vacated the sentence, finding it to be both procedurally and substantively unreasonable.

1. Procedural Error

The procedural error was the district court’s apparent view that the Guideline range was still 262 to 327, and not, per U.S.S.G. 5G1.1(a), 240 months, along with its erroneous corollary conclusion that the higher range was the benchmark for any variance.

This error was not harmless - it “carried serious consequences” for Dorvee. If the district court intended to impose a sentence “relatively far below the guideline,” as it said it did, Dorvee “did not receive the benefit of such an intention.” Where “the district court miscalculates the typical sentence at the outset, it cannot properly account for atypical factors and we, in turn, cannot be sure that the court has adequately considered the § 3553(a) factors. That is what appears to have happened here, and constitutes procedural error.”

2. Substantive Error

The court also deviated from its usual practice of refraining from reviewing for substance until the procedural errors have been corrected, and instead “reach[ed] both the procedural and substantive reasonableness of the sentence [since it found] both types of error.”

Here, even accepting the need for punishment and the requirement that it defer substantially to the district court’s judgment, the court found the sentence to be substantively unreasonable.

First, the district court placed unreasonable weight on its assumption - unsupported by the record evidence - that Dorvee was likely to actually sexually assault a child. The district court’s explanation of the need for deterrence also “ignored the parsimony clause,” offering no “clear reason” why the maximum sentence, instead of some lower sentence, was required to deter an offender like Dorvee.

Next, the circuit took issue with the child pornography Guideline itself, calling it “fundamentally different from most” and noting that “unless applied with great care, [it] can lead to unreasonable sentences that are inconsistent with what § 3553 requires.” With this introduction, the court then systematically deconstructed U.S.S.G. § 2G2.2.

It began by noting that the Sentencing Commission “did not use [an] empirical approach in formulating the Guidelines for child pornography.” Rather, it systematically increased the penalties based directions from Congress, even as it “openly opposed these Congressionally directed changes.”

The court went on to agree that the enhancements included in § 2G2.2 “cobbled together through this process routinely result in Guidelines projections near or exceeding the statutory maximum, even in run-of-the-mill cases” because the base offense level has been increased from 13 to 22 and the enhancements “apply in nearly all cases.” As a result, “adherence to the Guidelines results in virtually no distinction between the sentences for defendants like Dorvee, and the sentences for the most dangerous offenders who, for example, distribute child pornography for pecuniary gain and who fall in higher criminal history categories.”

Under Kimbrough, a court “may vary from the Guidelines range based solely on a policy disagreement with the Guidelines, even where that disagreement applies to” many offenders or offenses. “That analysis applies with full force to § 2G2.2.”

The opinion ends with a message to district judges, encouraging them to “take seriously the broad discretion they possess in fashioning sentences under § 2G2.2 ... bearing in mind that they are dealing with an eccentric Guideline of highly unusual provenance which, unless carefully applied, can easily generate unreasonable results.”

A Matter of Substance

United States v. Rigas, No. 08-3485-cr (2d Cir. October 5, 2009) (Feinberg, Winter, Cabranes, CJJ)

When we last heard about the Rigas père et fils - former senior officers at Adelphia Communications who were convicted of conspiracy, securities, wire and bank fraud - the circuit affirmed the majority of their convictions, but reversed a single count of bank fraud for insufficient evidence. United States v. Rigas, 490 F.3d 208 (2d Cir. 2007). Probably because the court remanded the case for resentencing, the 2007 opinion did not address the defendants’ long prison sentences: twenty years for the father and fifteen for the son, where the Guideline recommendation for each was life.

This case is the appeal from the remand. The decision covers little new ground, but provides very helpful guidance from the court on the standard it applies when reviewing a sentence for substantive reasonableness.

To get there, however, the court fist had to consider whether the district court correctly handled the resentencing. Under circuit precedent, where a conviction on one or more counts is overturned on appeal, the circuit’s “default rule” is that the case should be remanded for a de novo resentencing. Here, the district court viewed this rule as too “mechanical,” and instead treated the reversal of a single count of this multi-count indictment as a “sentencing error,” not a “conviction error.” It therefore conducted only a limited resentencing. Even so, however, the court reduced each defendant’s sentence by three years and noted that, alternatively, it would have done the same at a de novo resentencing.

The circuit held that the district court’s treatment of the remand was error. When any part of a conviction has been overturned on appeal “a district court ... is required to resentence de novo [and] must reconsider the sentences imposed on each count.” Here, however, the error was harmless, in light of the district court’s alternative ruling.

The court then turned to the substantive reasonableness of the resulting sentences. The court’s last decision to discuss meaningfully this issue, the en banc in Cavera, left us with a standard that was fairly amorphous. “[W]e will set aside a district court’s substantive determination only in exceptional cases where the trial court’s decision cannot be located within the range of permissible decisions.”

Here, the court gave some more structure to that language. First, it insisted, as it has before, that substantive reasonableness review is not a “rubber stamp.” It then likened the standard for substantive reasonableness to similar standards that apply in other situations: the “manifest-injustice” standard for granting Rule 33 motions and the “shocks-the-conscience” standard for intentional torts by state actors. All three standards are deferential to district courts and provide relief “only in the proverbial ‘rare case.’” They are also “highly contextual,” which means that they “do not permit easy repetition in successive cases." And, finally, they are “dependent on the informed intuition of the appellate panel that applies these standards.” All told, these standards provide a “backstop for those few cases that, although procedurally correct, would nonetheless damage the administration of justice because the sentence imposed was shockingly high, shockingly low, or otherwise unsupportable as a matter of law.”

Under these principles, the court had “no trouble” concluding that the Rigas’ sentences were substantively reasonable. The court noted that stiff Guideline sentences for white collar crimes reflect Congress’ judgment as to the appropriate national policy for such crimes. Moreover, the Rigas’ crimes were specifically intended to create a false picture of profitability at Adelphia, even for professional analysts, and were motivated by the defendants’ personal financial circumstances and outright greed.

Take It To The Banc

United States v. Cavera, No. 05-4591-cr (2d Cir. December 4, 2008) (en banc)

Gerard Cavera pled guilty to participating in a scheme in which guns were purchased in the South then transported to New York City for sale. At sentencing, the district court imposed a sentence six months longer than the top of the Guideline range, and an above-Guideline fine, based on two “location specific” concerns. The court held that firearms offenses are more dangerous in densely populated urban environments and that the need for deterrence was greater because New York’s strict gun laws made it one of the few places where gun-running was profitable.

On Cavera’s appeal, a panel of the court vacated the sentence as procedurally unreasonable (the case was blogged here twice, most recently in October 2007 under the title Location, Location, Location). The circuit then took up the case en banc. Although the court divided deeply on some issues, the majority vacated the panel opinion and affirmed the sentence.

The Deterrence Theory

The en banc majority opinion, written by Judge Calabresi, agreed that the district court’s deterrence rationale was a valid basis for an upward variance.

There is “no special reason to think that reliance on a locality-based categorical factor is - without more - suspect.” And, the “existence and enforcement of strict local gun laws in a particular jurisdiction is likely to make the cost of getting a gun in that jurisdiction higher than in a jurisdiction with lax anti-gun laws.” This, in turn, increases “the profits to be had from trafficking guns into the strong-enforcement jurisdiction.” The penalty thus needs to be “correspondingly higher to achieve the same amount of deterrence.” The majority cited “considerable” empirical support for this position, although it noted that, “[l]ike any economic theory,” the point was not without controversy. Nevertheless it was not an abuse of discretion for the district court to rely on this type of reasoning.

Judge Straub dissented, and was joined by Judges Cardamone, Sotomayor and Pooler. Judge Straub argued that it was error for the district court to conclude that, “as a general matter,” greater deterrence was necessary because gun trafficking is more profitable in New York than elsewhere, although there would have been no error if the district court had found that Cavera himself had been motivated by such greater profits.

More importantly, the dissenters disagreed that, as a factual matter, gun trafficking was more profitable in New York. Their review of the information relied on by the district court pointed to no such conclusion.

Judge Sotomayor wrote a separate dissent, joined by the other dissenters, that made this same point, describing the district court’s deterrence reasoning as “unsubstantiated and unconvincing,” since it was based on a single law review article that “hypothesized - without the benefit of data - that gun trafficking might be more profitable in areas with strict gun laws.” This opinion also points out that the majority should not have relied on data and economic theories not referenced by the district court. This “shifts the appellate court’s role from reviewing the lower court’s sentencing rationale to crafting it.”

The Dangerousness Theory

The members of the court had an even wider range of views on the district court’s conclusion that firearms offenses are more dangerous in densely populated urban areas. The court did not rule on the issue.

As summarized in the majority opinion, “some of us would hold that the district court, in its wide discretion, permissibly relied on a determination that trafficking guns into an urban area is likely to create more harm than the national average offense envisaged by the Guidelines. Others would hold that the district court erred to the extent that it based the sentence on the notion that guns are more dangerous in metropolitan areas. Still others are unsure whether reference to such broad, nonspecific geographical and demographic factors is appropriate in the context of this case.”

Other Interesting Tidbits

The majority opinion has a lot of other interesting, if more general, material that is worth looking at.

1. En Banc procedure

This opinion gives nice explanation of the court’s view of the en banc procedure itself, a procedure that the court uses “sparingly.” It notes that when the members of the court are in “substantial agreement,” an en banc opinion “gives us the opportunity to speak somewhat more broadly, for the purpose of giving guidance to district courts in this Circuit and to future panels.” It also notes that when the members of the court “possess significantly differing views on a particular issue,” it is “often wise to avoid speaking as an en banc Court unless the point is one that is strictly necessary to decide the case.” This is interesting, as it might explain the infrequency of en banc rehearing in this circuit.

Most importantly, however, Judge Calabresi’s majority opinion seems to have abandoned, sub silentio, the circuit’s annoying practice of using the phrase “in banc” instead “en banc.”

2. Substantive Reasonableness

The majority opinion changes the court’s standard for substantive sentencing review, even though the court did not review Cavera’s sentence substantively. From now on, the court will “set aside a district court’s substantive determination only in exceptional cases where the trial court’s decision cannot be located within the range of permissible decisions ... . To the extent that our prior cases may be read to imply a more searching form of substantive review, we today depart from that understanding.”

The opinion also describes the substantive review process in detail. First, the court takes into account “the totality of the circumstances, giving due deference to the sentencing judge’s exercise of discretion, and bearing in mind the institutional advantages of district courts.” The Guideline range is not presumptively reasonable, while a non-Guideline sentence is not presumptively unreasonable, and there need not be “extraordinary” circumstances to justify one.

Substantive review is also informed by 18 U.S.C. § 3661, which provides that there is “no limitation” on the information about the defendant that a court can consider “for the purpose of imposing an appropriate sentence.” Section 3661 is not a “blank check” for district courts, however. A appellate court will consider “whether a factor relied on by a sentencing court can bear the weight assigned to it” under the totality of the circumstances of the case.

The court recognizes that a district court may vary from the Guidelines based solely on a policy disagreement, even where that disagreement applies to a wide class of offenders or offenses. Variances from the Guidelines will “attract greatest respect” on appeal when the judge finds that the case is outside the “heartland,” while a finding that a Guideline sentence does not properly satisfy § 3553(a) in a “mine-run case” will be subject to “closer review.”

The question of when a sentence merits “closer review,” however, is still evolving. “More will have to be fleshed out as issues present themselves.”

3. Procedural Reasonableness

Procedural review entails, in very large part, considering the district court’s explanation for the sentence. An adequate explanation is a “precondition for meaningful appellate review.” The explanation must satisfy the reviewing court that the district court “has considered the parties’ arguments and that it has a reasoned basis for exercising its own legal decisionmaking authority.”

A district judge imposing a non-Guideline sentence “should say why she is doing so” and should “bear[] in mind that a major [variance]... should be supported by a more significant justification than a minor one.” However, once the appellate court is “sure” that the sentence “resulted from the reasoned exercise of discretion, we must defer heavily to the expertise of district judges.”

Such deference might well “result in substantial variation among district courts,” but this is a “necessary cost” of the Booker remedy. In its recent cases, “the Supreme Court has made clear its view that disparities in sentences imposed by different district judges are more likely to reflect justified differences than are those arising from difference of opinion among appellate panels.”

Allocution Lessons

United States v. Gonzalez, No. 07-4824-cr (2d Cir. June 11, 2008) (Newman, Walker, Pooler, CJJ)

In this case, the circuit sets out the procedure that a district court should follow when it realizes that it has sentenced a defendant without first giving him an opportunity to allocute. It also criticizes the imposition of the statutory maximum sentence.

1. Facts

Gonzalez admitted that he violated his supervised release by possessing marijuana. At a sentencing hearing, Judge Conti, visiting from the Northern District of California, heard from the probation officer, who reported that Gonzalez was released from prison in November of 2006. He was sent from there to immigration custody, and released by immigration about two weeks later. Although the officer sent him three notices, Gonzalez never reported to probation. The officer later learned that Gonzalez had been convicted of two petty offenses after his release.

With respect to the failure to appear, defense counsel explained that, after his release, Gonzalez reported to an immigration officer, but did not report to probation because he did not understand that he was supposed to report to two separate agencies. Judge Conti, who did not comment on this explanation, sentenced Gonzalez to the statutory maximum - twenty-four months - without giving Gonzalez an opportunity to speak, and without advising him of his right to appeal.

Later that day, the judge re-called the case and advised Gonzalez of his right to appeal. When it was pointed out that the judge also forgot to allocute Gonzalez before sentencing, Judge Conti told him: “[Y]ou have the right to say anything to the Court you want to and it may very well be that there are occasions when the Court changes its mind.” Gonzalez told the court that he had a substance abuse problem, and the judge recommended treatment “during [his] incarceration.”

2. The Lack of an Allocution

The court of appeals held that Judge Conti’s method of dealing with the lack of a presentence allocution rendered the sentence procedurally unreasonable. “The appropriate response to an omission of presentence allocution implicates due regard for the appearance of fairness.” Thus, the “preferable course” for remedying such a denial is for the district judge “to vacate the sentence, accord the right of allocution, and sentence anew.” Since this procedure did not occur here, the correct remedy was to vacate the sentence and order a new sentencing in conformity with Rules 32 and 32.1.

The court established this procedure in the exercise of it supervisory powers to oversee the administration of justice within federal courts. In doing so, it also noted that the noncompliance with the allocution right here was not harmless error.

3. Substantive Reasonableness

Judge Conti’s reasons for maxing Gonzalez were both brief and bizarre. He said that (1) neither Gonzalez nor society would benefit from his being supervised by the probation department, (2) supervision had done Gonzalez no good - even though Gonzalez had never been actively supervised - and (3) Gonzalez knew what he was doing - even though counsel had just explained to the judge that Gonzalez was confused as to his reporting requirements.

The appellate court strongly suggested that, on the existing record, the twenty-four month sentence, which was more than twice the ten-month guideline maximum, was unreasonable. But since it was remanding anyway, it just noted that the “brevity of the reasons” for the sentence “hampered” appellate review of its length.

Fraud Man Out

United States v. Cutler, No. 05-2516(L) (2d Cir. March 17, 2008) (Jacobs, Kearse, Pooler, CJJ)

In this case, the government successfully appealed the exceptionally lenient sentences that Judge Preska imposed on two defendants convicted of a multi-million dollar fraud. The circuit found that the sentences were both procedurally and substantively unreasonable, and remanded the case for resentencing.

Facts

James Cutler was the CFO of a holding company that owned hotels; Sanford Freedman was its general counsel. Together, they helped the company and its principals cheat a number of banks out of more than $100 million. In very brief, the scheme worked like this:

In the 1990's, the holding company restructured its debt, and its principals executed deficiency notes that made them personally liable for those debts. Around the same time, they sold key assets of their company to another company for stock worth more than $100 million. Although they therefore had sufficient resources to meet the deficiency notes, they instead decided to invest that money in another venture, and to trick their creditors into settling for less than the balances due. They hid their assets, then approached the creditors and claimed that they did not have the resources to pay the notes. They also threatened to declare bankruptcy if the creditors did not enter into repayment agreements.

During these negotiations, defendant Freeman repeatedly made false claims about the principals’ supposed financial distress, even while completing paperwork for their new venture that indicated that each was worth more than $30 million. Freeman also assisted in creating a sham foreign investor whom he held out as willing to purchase the principals’ debts from the banks for pennies on the dollar. Cutler’s role was to appease those creditors who were unconvinced by Freeman’s representations by sending them false financial statements.

In the end, the banks capitulated, and lost $106 million, the difference between the balances on the notes and the amount they sold them for.

After a jury trial, Freedman was convicted of bank fraud and conspiracy to commit bank fraud, making false statements to banks, and perjury (for testifying falsely in a related bankruptcy proceeding). Cutler was likewise convicted of bank fraud and conspiracy, false statements, and several counts relating to a $29 million tax fraud (he helped the company’s principals hide their income).

The Sentencings

Cutler

Cutler’s Guideline range was 78-97 months. He moved for a downward departure under Application Note 10 to § 2F1.1, arguing that the loss overstated the seriousness of the offense, and under § 5H1.6, claiming extraordinary family circumstances.

The district court granted the motions, and went down by 15 levels. It knocked off 6 levels on its finding that the loss overstated the seriousness of Cutler’s role (although the court had refused to grant a role reduction under § 3B1.2), conduct and offense. The court also granted a 9-level departure for family circumstances in light of his children’s economic circumstances. These departures brought Cutler from level 28 to level 13, with a range of 12 to 18 months’ imprisonment.

Turning to the statutory considerations, the court again cited Cutler’s lower level of culpability with respect to the bank frauds (but not the tax fraud), the fact that he received “little, if any” direct compensation from the scheme, the need to provide restitution, and his family obligations. She sentenced him to one year and one day in prison. This was within the departure-generated Guideline range, but the judge also indicated that she would give the same sentence under the statute.

Freedman

Freedman did even better. His Guideline range was 103 to 135. The court found that the loss overstated his culpability, and downwardly departed. It also granted a family circumstances departure because of his relationships with his mother-in-law and elderly, mentally retarded brother, and a § 5H1.4 departure due to his age (he was 69) and physical condition. In doing so, the court rejected the BOP’s repeated assurances that it could provide Freedman with adequate care.

The court did not fix an ultimate Guideline range. Instead, it relied solely on § 3553(a). Citing the departure grounds noted above, and the “humiliation” and loss of livelihood associated with Freeman’s prosecution, Judge Preska sentenced him to 3 years of probation.

The Circuit’s Ruling

The circuit identified numerous problems with the district court’s approach, and vacated both sentences.

With respect to Cutler, the circuit first rejected the notion that the loss amount overstated his role or level of culpability. Under § 1B1.3, Cutler was properly held accountable for all of the losses caused by him and his confederates. Here, the $106 million in actual loss was not just foreseeable, it was the explicit goal of the scheme. As far as the circuit was concerned, Judge Preska “misinterpreted the Guidelines,” made “an error of law,” and “clearly erred,” all at the same time. The circuit also noted that the Application Note 10 departure applies in cases where the loss figure is driven by intended loss, not actual loss. The circuit seemed deeply offended that the Cutler's sentence was within the range that would apply to a $70,000 loss. It held that the “implicit finding that a fraud causing losses of more than $100,000,000 is no more serious than one causing losses of little more than $70,000” did not comply with § 3553(a)(2)(A)’s requirement of “just” punishment.

The court next rejected the district court’s finding that Cutler received only a small gain from the scheme. It first held that this is not a ground for a downward departure but also noted that, in any event, the $1.3 million that Cutler pocketed hardly constituted “little, if any, personal gain.”

The court next rejected the district court’s stated view that this type of fraud did not warrant a long sentence because, since imprisonment is itself a deterrent in white collar offenses, the length of the sentence is immaterial. Some of Cutler’s convictions related to tax fraud, and that there is a Guideline policy statement for tax cases that directly contradicts this view. While a court can disagree with a Guideline-based policy consideration, it has to give a sufficient reason for the disagreement, which the court here did not do.

The court was particularly skeptical of the family circumstances departure. Cutler’s children lived with his ex-wife and, while they would likely suffer hardship without his financial support, this case was not outside the “mainstream of family hardships.” More importantly, the circuit believed that there was evidence that Cutler would still be able to support his children while incarcerated if he wanted to. It turns out that he had used some of the proceeds from the scheme to purchase assets that he placed in his second wife’s name, out of reach of his ex-wife and the children: “That Cutler chose to put [assets] into his new wife’s name to provide for her, rather than leaving it in his own name to provide for his children, may be an exceptional circumstance, but it is surely not one that authorizes a downward departure.”

Finally, the court rejected the district court’s seemingly excessive reliance on the need for restitution, out of concern that this would “imply that virtually all defendants who are required to pay restitution in amounts exceeding their net worth should receive short prison terms.”

The circuit had similar qualms about Freedman’s sentence. First, it faulted the district court’s refusal to consider an obstruction of justice enhancement based on Freeman’s initial false statements to IRS investigators. Next, as with Cutler, the court disagreed with the district court’s belief that the loss amount overstated Freedman’s culpability, particularly given Freedman’s “pervasive” participation in the scheme, and his “multi-million-dollar” compensation. On this point, the circuit found a “clearly erroneous assessment of the evidence in the record as to the nature and pervasiveness of [Freedman’s] actions and his substantial financial interest in the success of the frauds.”

The appellate court also rejected the district court’s view that, given Freedman’s humiliation and disbarment, probation would be “just punishment for the offense.” Those consequences - not even “punishment,” in reality - were “hardly unusual,” and thus the district court’s reasoning risked creating unwarranted sentencing disparities.

As with Cutler, the court rejected the family circumstances departure. The disabled brother lived in an assisted living center, and they did not interact frequently in person. Moreover, there was another sibling nearby to help manage the brother’s affairs.

Lastly, the court rejected the downward departure based on Freedman’s age and health, concluding that the district judge made clearly erroneous assessments both of Freedman’s actual condition and of the BOP’s ability to care for him. “[W]e see no support in the record for the district court’s finding that the BOP could not or would not provide that care.”

In the end, for both defendants, given “the procedural errors, the clear factual errors, and the misinterpretations of the § 3553(a) factors” the lenient sentences here were “substantively unreasonable and constituted an abuse of discretion.”

In a short concurrence, Judge Pooler noted that, while she agreed that a remand was necessary, she believed that it was premature to conduct substantive reasonableness review because the lower court had not yet imposed a “procedurally adequate sentence.” Under Judge Pooler’s method, the district court should first be given an opportunity to correct the procedural errors. That sentence, if appealed, would then be subject to review for substantive reasonableness.

Comment

Is this the end of leniency in this circuit? It does not seem so. At least based on the facts as presented by the circuit, these two guys were particularly bad candidates for short sentences. Their conduct was unusually brazen, its consequences unusually serious, and their arguments for mitigation did not come close to outweighing the seriousness of the offense. Even under this decision, then, there is clearly still room for short prison sentences, or even probation, in white collar cases, where the equities genuinely support it.

Have You Hugged A Sex Offender Lately?

United States v. Juwa, No. 06-2716-cr (2d Cir. November 28, 2007) (Walker, Calabresi, Sack, CJJ)

United States v. Baker, No. 05-4693-cr (2d Cir. November 16, 2007) (Summary Order)


The circuit has. Twice, but only once in a published opinion. In Juwa, the court found that a 90-month sentence was procedurally unreasonable because it might have been based on unsubstantiated pending state court charges.

Juwa pled guilty to possessing child pornography, and faced a 24 to 30 month range. At the time of his federal sentencing he was charged in state court with sexually abusing his nephew on multiple occasions, and had worked out a plea agreement under which he would plead to a single count in exchange for a 5-year sentence that would be concurrent to his federal sentence.

At his federal sentencing, however, the district court went way above the agreed-upon range “based on the information before” it about the state case. The court knew that Juwa had not yet pled guilty in the state case but, taking that case into account, sentenced him to 90 months’ imprisonment. The court described this as an upward departure and also imposed it, in the alternative, as a non-guideline sentence.

At times during the sentencing the district judge seemed to recognize that Juwa had agreed to plead to only one count in the state, but the judge also made statements suggesting a finding that Juwa had acted on multiple occasions. In addition, the written judgment noted that Juwa would be pleading guilty in the state to “molesting his nephew for 3 years.”

The circuit reversed. It concluded, at least on this record, that it would have been “improper” for the district court to base the federal sentence on charged conduct alone, a violation of the due process right to be sentenced based on accurate information. Here, apart from the indictment in the state case, there was nothing to establish that Juwa committed any acts other than the one that he had agreed to plead to. The indictment alone could not establish any other facts, even by a preponderance of the evidence. “[A]t sentencing, an indictment or charge within an indictment, standing alone and without independent substantiation, cannot be the basis upon which a criminal punishment is imposed. Some additional information, whether testimonial or documentary, is needed to provide evidentiary support.”

Here, because there was “uncertainty both from the sentencing transcript and the written order” about whether, and to what extent, the sentencing enhancement was based on the court’s assumption that Juwa had engaged in multiple instances of abuse, it remanded the case for clarification.

In Baker, a summary order, the court, remarkably, vacated a within-guideline sentence as unreasonable, an apparent first in this district.

Baker faced a 108-month guideline minimum for transporting child pornography, and that was the sentence he got. He had argued strenuously for a below-guideline sentence, but the district court made it clear “from the outset that it would only consider a sentence within” the range. It did not say why a 9-year guideline sentence was appropriate, nor did it say why a the 5-year mandatory minimum sentence was not. Moreover, the court did not specifically respond to any of Baker’s arguments for a lower sentence, arguments that the circuit found so compelling that the district court, “at the very least,” should have explained why it was rejecting as them as the basis for a non-guideline sentence. Most significantly, the also court concluded that the district court’s statement that it had considered all of the 3553(a) factors was not enough, because it was obvious that the court really had not done so.

The mystery of Baker is whether the court viewed the sentence as substantively unreasonable, or procedurally unreasonable, or both. The disposition of the case - remanding to the district court to provide reasons for the sentence - suggests that this was a procedural unreasonableness case. But the cases the court cites as the basis for the remand, Sindima, and Rattoballi, are substantive unreasonableness cases. Curious, aint’ it?

Follow The Bouncing Anders

United States v. Whitley, Docket No. 05-3359-cr (2d Cir. September 17, 2007) (Straub, Pooler, Parker, CJJ) (per curiam)

Once – or rather twice - again, in these consolidated appeals, the Circuit has bounced Anders briefs. Here the court was dissatisfied with the briefs’ treatment of the reasonableness of the sentence. One “merely recite[d] the legal standard for procedural reasonableness and desribe[d] the sentencing process” but did not analyze either the procedural or substantive reasonableness of the sentence itself. The other made conclusory statements about the reasonableness of the sentence but did not analyze the district court’s sentencing determinations or the sentence itself.

After reviewing the purposes of Anders briefs, the court held that such briefs must include a discussion of both the substantive and procedural reasonableness of the sentence, reminding the bar that there is no presumption of reasonableness for Guidelines sentences in this Circuit.

What is the lesson here? It will be a whole heck of a lot easier if appellate counsel avoids filing an Anders brief. Try not to do so unless the client got the sentence he asked for, or the mandatory minimum, or the appeal was waived by a plea agreement.