3d Circuit reverses probationary sentences in fraud case

In United States v. Ali, (3d Cir. Nov. 27, 2007), the Third Circuit reversed probationary sentences in a fraud case, in which defendants Faridah Ali and Lakiha Spicer obtained federal money allocated to a community college to fund an adult education program. The Third Circuit held that the district court erred in its initial Guidelines calculation, that it relied on inappropriate factors for the downward departures, and that the resulting sentences were unreasonable, and thus vacated the sentences and remanded for resentencing.

The Third Circuit determined that the district court erred under step one of the sentencing process, the Guidelines calculation, because it rejected a preponderance standard for the loss calculation in favor of a reasonable doubt standard in Ali’s case and, further, failed to specify an estimate of the loss amount. The district court ultimately assessed a 15-21 month Guideline range (level 14, category I) for Ali, whereas Probation had calculated a 41-51 month range (level 22, category I). The Court also rejected the argument that the preponderance standard as applied to the sentencing calculations raised concerns under the Fifth or Sixth Amendments.

With respect to departure determinations under step two, the Third Circuit determined that the district court erred in granting downward departures on the following grounds: (1) good works and community support; (2) lack of initial intent to defraud; (3) Spicer’s minor role; and (4) the "exculpatory no" doctrine in Spicer’s case. The Court also found the district court’s analysis under step three of the sentencing process to be flawed because it was unable to meaningfully consider the recommended Guidelines range as required by § 3553(a)(4), given that its error at step one and its flawed departure analysis in step two tainted step three.