On April 9, 2015, the United States Sentencing Commission (the Commission) voted to recommend changes to its sentencing guidelines in fraud and antitrust cases. According to an official press release, the Commission proposed the changes “to address longstanding concerns that the guidelines do not appropriately account for harm to victims, individual culpability, and the offender’s intent.” This Alert summarizes several of the proposed amendments that would have a significant impact on the sentencing of white collar crimes. The Commission will transmit its proposed amendments to Congress by May 1, and if Congress does not object to the amendments they will go into effect on November 1, 2015. The proposed amendments are available at http://www.ussc.gov/sites/default/files/pdf/amendment-process/reader-friendly-amendments/20150409_PRELIM_RF_Amendments.pdf
Loss Tables Adjusted for Inflation
The Commission has proposed amending the monetary loss tables in the guidelines to adjust for inflation. By increasing the loss thresholds that correspond to higher offense levels, the adjustments could have the impact in many cases of reducing the guidelines-recommended sentence, especially in cases involving large dollar losses. Among the monetary tables that would be adjusted are those in §2B1.1 (Theft and Fraud), 2R1.1 (Antitrust), and §5E1.2 (Fines for Individual Defendants). For §2B1.1, which covers sentencing of some of the most common white collar crimes—mail fraud, wire fraud, and securities fraud—the inflation adjustment proposed by the Commission would mean that the lowest offense level increase would begin at a loss of $6,500 (versus $5,000 today), and the maximum offense level increase would not be triggered until a loss of $550 million (versus $400 million today). Under §2R1.1, which covers sentencing of violations of the Sherman Act, the lowest offense level increase still occurs when the “volume of commerce” attributable to the defendant is $1 million, but many of the intermediate values are adjusted significantly, and the maximum offense level increase would now not be triggered until the “volume of commerce” equals $1.85 billion (versus $1.5 billion today). The US Department of Justice (the DOJ) opposes adjusting victim loss values for inflation on the ground that any resulting decrease in the sentence imposed would be contrary to public interests in strict sentencing. As the Commission notes in its press release, however, many of the monetary values in the guidelines have never been specifically adjusted for inflation since the guidelines were established in 1987.
Mitigating Role Adjustment
The Commission has proposed several amendments that together are designed to provide guidance on when a defendant is eligible for a reduced sentence because he or she played a minor role in an offense relative to the “average participant.” In particular, the Commission proposes adopting an approach taken by the Seventh and Ninth Circuit Courts of Appeals to determining the “average participant” benchmark. Under that approach, a defendant’s relative culpability is generally determined with reference to the defendant’s co-participants, and generally not to “typical” offenders who commit similar crimes. The proposed amendments would also provide a “non-exhaustive list of factors for the court to consider in determining whether to apply a mitigating role adjustment,” and would also provide that a defendant’s “indispensable” role in criminal activity should not preclude a mitigating role adjustment if the defendant is indeed less culpable than the average participant. According to the official press release, the Commission proposed these changes “encourage courts to ensure that the least culpable offenders, such as those who have no proprietary interest in a fraud, receive a sentence commensurate with their own culpability without reducing sentences for leaders and organizers.”
The proposed amendments include several related changes to §2B1.1 related to economic crimes. First, the amendments revise the definition of “intended loss.” Noting disagreement among the federal courts of appeal, the Commission proposes changing the definition to “the pecuniary harm that the defendant purposely sought to inflict.” By this change, the Commission signals its approval for the “subjective” test used in United States v. Manatau, 647 F.3d 1048 (10th Cir. 2011), in which the Tenth Circuit held that the appropriate standard for determining intended loss was not objective foreseeability but “subjective intent to cause the loss.” The DOJ has opposed this amendment and advocated an objective standard for evaluating intended loss. A second proposed change to sentencing of economic crimes under §2B1.1 relates to existing tiered enhancements that increase the severity of a defendant’s sentence based on the number of victims. The Commission has proposed changes that would add “substantial financial hardship” as an important factor in applying the victim enhancement. Currently, §2B1.1 provides for an offense level increase of 2 for offenses involving 10 or more victims or committed through mass-marketing, 4 for offenses involving 50 or more victims, and 6 for offenses involving 250 or more victims. Under the amended victims table, the 2-level enhancement would also apply if the offense “resulted in substantial financial hardship to one or more victims,” the 4-level enhancement would apply only if the offense “resulted in substantial financial hardship to five or more victims,” and the 6-level enhancement would apply only if the offense “resulted in substantial financial hardship to 25 or more victims.” The revised victims table was designed to shift the focus from simply the number of victims, and “ensure that where even one victim suffered a substantial financial harm, the offender would receive an increased sentence.”