Tuesday, August 28, 2007

Court reverses below-guidelines sentence as substantively unreasonable

In its 2-1 decision in United States v. Tomko, Case No. 05-4997, the Third Circuit vacated a probation-only sentence for tax evasion as substantively unreasonable. Judge Fisher wrote for the majority. Judge Smith wrote a forceful dissent.

Facts: Tomko, a construction company owner, built a large, well-appointed new home for himself. He asked the subcontractors who were working on the house to falsify their invoices so that it would look like their work on his house was really done on projects for his construction company. He then paid for the work through his construction company and had the company write off the work from its taxes as a business expense. Tomko did not report the company’s paying for his home as income on his tax returns. He subsequently pleaded guilty to one count of tax evasion in violation of 26 U.S.C. § 7201, and stipulated to a tax deficiency of $228,557.

After correctly calculating Tomko’s offense level (13), criminal history category (I), and advisory Guidelines sentence range (12-18 months incarceration), the district court considered how the sentencing factors of § 3553(a) apply to Tomko. It noted on the one hand that Tomko was an unsympathetic defendant because he was wealthy and could have borne the tax burden. Further, it considered the need for consistency in sentencing. The district court also heard extensive, impassioned argument from the government that sentencing Tomko to anything other than jail time would encourage and embolden other tax cheats, rather than serve the sentencing goal of general deterrence. The district court then weighed against these factors the fact that Tomko’s crime was nonviolent, self-contained, and "victimless." It further considered his participation in charity and volunteer activities, community involvement, acceptance of responsibility, and low likelihood of recidivism. The district court also noted that incarcerating Tomko would have a profoundly negative effect on the welfare of his company and its employees. Taking together all of these factors, the district court found that the goals of sentencing weighed in favor of imposing on Tomko a below-guidelines sentence. It therefore imposed a sentence of 250 hours community service, three years probation (one of which would be house arrest), 28 hours of in-house alcohol abuse treatment, and a $250,000 fine.

Analysis: The majority in Tomko found this sentence substantively unreasonable, and therefore an abuse of the district court’s sentencing discretion. The majority reviewed the sentence by conducting their own "meaningful consideration" of the § 3553(a) factors vis a vis Tomko, the outcome of which it then compared with the district court’s "meaningful consideration." This kind of review, the Court said, was an essential part of appellate review in the post-Booker sentencing world.

As a result of its consideration of the § 3553(a) factors, in which it emphasized heavily the factors set forth in §§ 3553(a)(2)(A)-(B) and (a)(5), the majority found that the weight of policies favoring incarceration for economic crimes and consistency in sentencing, taken together with the circumstances of Tomko’s offense and the need for general deterrence, far outweighed the factors favoring leniency for Tomko. And while the majority was careful to avoid the use of a "proportionality principle" – requiring extraordinary reasons for extraordinary variances – it noted that "closer appellate scrutiny of sentences that deviate from the norm is necessary to prevent the unwarranted disparities that bedeviled the pre-Sentencing Reform Act discretionary sentencing regime and prompted reform."

Judge Smith, writing in dissent, argues that the majority’s approach of conducting its own consideration of the sentencing factors, then comparing its results to the district court’s, leads the majority to three major flaws. The majority’s first mistake was the adoption of a de facto proportionality principle. Consequently, Judge Smith argues, the case should have been held c.a.v. pending the Supreme Court’s decision on whether proportionality principles are permissible in United States v. Gall, No. 06-7949, but the majority did not do so.

The second error is that despite saying that its review is for abuse of discretion, the district court engaged in de novo review of Tomko’s sentence. Judge Smith observes that the district court gave meaningful consideration to all of the § 3553(a) factors, including the seriousness of the offense and the need for general deterrence, and then rendered a sentence based on its appropriate consideration of those factors. He points out that "[i]n no post-Booker case has this Court ever asked a sentencing court to do more than the District Court did here." As a result, he argues, "[t]he majority opinion curtails the deference we accord sentencing courts to impose a reasonable sentence."

Third, Judge Smith states, the majority opinion "provides no guidance for district courts," but instead "confuse[s] district courts as to what circumstances would ever justify a substantial variance, regardless of the validity of the reasons for the variance given by the sentencing court." This, he says, "runs contrary to both the deference formerly granted to sentencing courts, as well as our appellate role of examining the legitimacy of the reasons given by the sentencing court for exercising its decisionmaking discretion."

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