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."

Third Circuit affirms convictions and sentence in bank fraud/money laundering conspiracy

On August 20, 2007, the Third Circuit ordered published its July 31, 2007, opinion in United States v. Greenridge, Case No. 05-4887, which concerned a bank fraud and money laundering conspiracy. The conspiracy involved stealing corporate checks, falsifying the payee names thereon, and depositing the checks in business and personal accounts to make the funds appear legitimate. The defendants raised a variety of issues challenging their convictions, and one of the defendants challenged his sentence as unreasonable.

The Third Circuit affirmed the district court on all of the issues. It held that the district court (1) properly refused to instruct the jury on a variance between the indictment (which alleged a single conspiracy among the defendants on each count) and the proof at trial (which defendants said instead showed a conspiracy per defendant per count); (2) did not abuse its discretion by admitting evidence of a defendant’s prior crime to impeach the credibility of an out-of-court statement by that defendant pursuant to F.R.E. 806; (3) did not abuse its discretion by allowing the government to admit evidence to impeach a defendant’s testimony by direct contradiction pursuant to F.R.E. 607; (4) properly denied the Rule 29 motions of two defendants, who claimed that the government failed to show their involvement in transactions necessary to support the charges; and (5) imposed a reasonable sentence after giving meaningful consideration to the § 3553(a) factors.

Tuesday, August 21, 2007

Restitution Requirements Under Section 3664(f)(2) Are Satisfied Without Express Findings

In United States v. Lessner, the 3C addressed and rejected a number of sentencing challenges and held, inter alia, that sentencing courts need not make explicit findings on the record in support of a restitution order, so long as the record evidences the court’s consideration of the statutory factors.

Defendant, a procurement contracting officer for a federal agency, pled guilty to all 21 counts of an indictment charging her with wire fraud, defense procurement fraud, destruction of records in a federal investigation, and destruction and removal of property to prevent seizure. The district court denied defendant’s request for a downward departure based on diminished capacity, and calculated an advisory range of 51 to 63 months, based on an offense level of 24 and criminal history category of I. The offense level reflected the court’s assessment of a 2-level enhancement for obstruction of justice and its denial of a downward adjustment for acceptance of responsibility. The court imposed a sentence of 51 months’ imprisonment, 3 years of supervised release, and mandatory restitution of $938,965.59, with a specified payment schedule.

The 3C first considered and rejected defendant’s challenges regarding the sufficiency of the district court’s plea inquiry. In particular, the 3C rejected defendant’s arguments that the factual bases for 3 counts were insufficient. It explained that a court need not be "convinced beyond a reasonable doubt of a defendant’s guilty to accept a plea of guilty; it need only find sufficient evidence in the record as a whole to justify a conclusion of guilt." In making this determination, the court can look to "‘the defendant’s own admissions, the government’s proffer of evidence, the presentence report, or "whatever means is appropriate in a specific case – so long as the factual basis is put on the record."’" In this case, the 3C found the evidence sufficient on all three challenged counts.

The 3C also rejected defendant’s claim that the district court erred in denying her a downward adjustment for acceptance of responsibility. The 3C the continuing nature of defendant’s obstructive conduct, as well as her ongoing denial of certain conduct and her invocation of September 11 and her husband’s heart attack as justification for conduct that began before these events, and concluded that the district court’s decision was not in error.
Defendant also challenged the district court’s imposition of restitution, arguing that it failed to make adequate findings as to her financial circumstances before setting the payment schedule. The 3C held that a district court need not place on the record its consideration of the defendant’s financial resources, projected earnings, and financial obligations. Rather, "[W]here, as here, the record evidences a court’s consideration of the defendant’s financial situation–albeit without express findings–the requirements of § 3664(f)(2) are satisfied."

The 3C rejected defendant’s other sentencing challenges as well, finding that the record reflected the district court’s "meaningful consideration" of the sentencing factors, that the bottom-of-the-range sentence was substantively reasonable, and that the restitution order did not violate the Excessive Fines Clause of the Eighth Amendment.

Wednesday, August 08, 2007

“Guidelines-centric” approach “reasonable and effective” where sentence was reduced by downward departure

In United States v. Hankerson, No. 06-3291 (3d Cir. 7/31/07), the Third Circuit rejected as meritless appellant’s reasonableness and ineffective assistance of counsel challenges to his 121-month sentence. That sentence reflected a downward departure based on overstatement of criminal history from the career offender-enhanced advisory guideline range of 188 to 235 months.

The Court deemed the sentence procedurally reasonable in that the district court first correctly calculated the guidelines, then considered defendant’s requests for downward departures, and then meaningfully considered the § 3553(a) factors. In ruling the sentence substantively reasonable as well, the Court noted the district court’s granting of a downward departure and its consideration of defendant’s personal history and circumstances. Taking into account its "deferential posture" toward sentencing decisions and the Supreme Court’s instruction in Rita that a within-guidelines sentence is more likely to be reasonable than a non-guidelines sentence, the Court said it could not conclude that the district court "acted outside its ‘broad discretion’ in imposing this sentence."

Turning to the ineffective assistance challenge, the Court viewed trial counsel’s approach as both "reasonable and effective." Specifically, with respect to the career offender predicates, while acknowledging Third Circuit precedent on the issue, counsel argued that the two prior offenses should not be treated as related "in the interest of justice." In the alternative, counsel argued, a downward departure was warranted on the basis of overstatement of criminal history. In light of the district court’s granting of a downward departure on this ground, the Court deemed this an effective strategy. The Court also concluded that further development of mitigation evidence would not have produced a different result and that, therefore, appellant could not show the prejudice necessary to prevail on an ineffective assistance claim.

Finally, the Court rejected the claim that trial counsel’s focus was inappropriately "guidelines-centric" after Booker. The Court noted that counsel had presented evidence tailored to the § 3553(a) factors. Moreover, it said, given the integral role the guidelines continue to play in sentencing after Booker, "it was entirely reasonable for defense counsel to focus much of his argument on the guidelines and on his successful argument for a downward departure. . . . As such, counsel’s approach to sentencing was both reasonable and effective, and thus fails the Strickland test for ineffectiveness."