Application Of Sentencing Guidelines In Some Fraud Cases Concerns DOJ

Under the Sentencing Reform Act of 1984, the Criminal Division of the Department of Justice is required to submit to the U.S. Sentencing Commission, at least annually, a report commenting on the operation of the sentencing guidelines, suggesting changes in the guidelines that appear to be warranted, and otherwise assessing the Commission’s work. The DOJ recently submitted such a report – and it contains some interesting information to us here at the Financial Fraud Law blog. 

Among other things, the report states that the guidelines “have lost the respect of a large number of judges” in “some fraud crimes, including certain frauds involving high loss amounts.”
 
The DOJ stated that fraud cases involving sentencing that it characterized as “inconsistent[] and without regard to the federal sentencing guidelines” are: United States v. Ferguson, No. 3:06-cr-00137- CFD (D. Conn.) (imposing sentences ranging from one year and one day to four years on five defendants whose guideline ranges included the possibility of life imprisonment and who were convicted of fraud leading to over $500 million in loss); United States v. Adelson,  441 F. Supp. 2d 506, 512 (S.D.N.Y. 2006) (imposing a 42 month sentence on the former president of a public company convicted of fraud leading to more than $50 million of loss);  United States v. Stinii, No. 07-CR-DO I 13(NG) (E.D.N.Y.) (imposing a 12 year sentence on a former CEO of a public company convicted of fraud leading to more than $100 million in loss and to a guideline range of life imprisonment); United States  v.  Turkcan (E.D. Mo.), (imposing a one year and one day sentence of imprisonment on a defendant who caused approximately $25 million loss); see also United States v. Treadwell, 593 F.3d 990 (9th Cir. 2010) (affirming a 25 year sentence for a Ponzi scheme involving a $40 million loss).
 
The DOJ says it is “concerned” by this development because (i) it leads to unwarranted sentencing disparities; (ii) the existence of these dichotomous regimes will, over time, breed disrespect for the federal courts; and (iii) certainty in sentencing is critical to reducing crime rates further and deterring future criminal conduct, but the current trends are towards less certainty.
 
It will be interesting to see what actions the Commission takes, and when.