Friday, September 09, 2011

Fumo Sentencing Errors

In US v. Fumo and Arnao, Nos. 09-3388 & 09-3389 (Aug. 23, 2011) (click on link to see decision), the Third Circuit upheld Fumo's conviction, but reversed the sentences for both Fumo and Arnao, finding a number of sentencing errors.  The holdings of broadest significance were that the district court judge failed to follow the 3-step sentencing process, in particular the 2nd step, in which he was required to identify the new Guidelines range after granting a departure, and that he failed to specify whether he was granting a departure or a variance.

Background:
Fumo and Arnao were charged with multiple counts of fraud, tax evasion and obstruction of justice, arising from "one of the larges political scandals in recent state history."  Fumo was a powerful PA state senator, and Arnao was a Senate employee.  Fumo required Senate employees to attend to his personal needs and political interests, including housekeeping and political fundraising.  He also arranged state contracts for friends and supporters.  In order to conceal his personal use of public funds, he provided false job descriptions and failed to disclose the nature of their work.  He also funneled state money to a non-profit he founded, Citizens Alliance, for which Arnao became the director.  Fumo and Arnao used Citizen Alliance funds for their personal benefit and for political purposes, in violation of its non-profit status.  Fumo also used his position on the board of Independence Seaport Museum to take pleasure cruises on its yachts and to obtain other personal benefits.  When reporters with the Philadelphia Inquirer began investigating, Fumo had his emails deleted, and later "wiped" his computers to prevent forensic analysis. Following a lengthy trial, Judge Buckwalter sentence Fumo to 55 months and Arnao to one year in prison.  Both sentences were substantially below the Guidelines ranges.

Trial issues (Fumo's cross-appeal):
1) Evidence the government presented regarding the state Ethics Act was relevant and properly admitted in light of Fumo's defense that there were no rules or laws that barred use of Senate resources for personal benefit.  The Ethics Act was relevant to show that Fumo was acting to deceive the Senate and that he had fraudulent intent. The judge made clear to the jury that Fumo was not on trial for violating the Ethics Act.
2) Juror's comments on Facebook and Twitter during deliberations did not require reversal because they did not prejudice Fumo, and the postings were vague and "virtually meaningless."  Judge Buckwalter, moreover, provided excellent intructions to the jury, which the Circuit "enthusiastically endorse[d]", focusing on the importance of not consulting websites or blogs or posting case information on social media. 
3) Defense counsel's allegation that another juror learned during trial about Fumo's past overturned conviction was based on a double-hearsay affidavit and did not establish "substantial prejudice."  Opinion sets out 6-factor test for substantial prejudice.

Sentencing Issues (Government's appeal):
1)  Judge miscalculated the amount of loss.  (a) The government made out a prima facie case of $1 million loss due to Fumo arranging for overpayment of Senate employees, and Fumo did not show this estimate was inaccurate.  (b) Judge abused his discretion in not ruling on whether loss should include $150,000 contract awarded to Arnao's husband for no services.  (c)  Judge should have included in loss amount the lost rental value and unnecessary improvements made on a property Fumo induced Citizens Alliance to purchase and furnish for his use.
2) Judge should have applied 2-level enhancement for acting on behalf of a charitable organization USSG 2B1.1(b)(8)(A), based on Fumo's misrepresentation that he was acting on behalf of Citizens Alliance, since Fumo acquired funds from PECO for Citzens Alliance, intending to divert them to his personal use.
3) Judge  should have applied enhancement for use of sophisticated means, USSG 2B1.1(b)(9)(C), since Fumo's use of sham entities to conceal flow of funds to Fumo qualified as sophisticated means.
4)  Judge erred by not calculating the final Guidelines range, in Step 2 of the sentencing process, after granting what the judge initially said was a departure for Fumo's good works.  (The 3-Step sentencing process is: (1) calculate the Guidelines range: (2) address any departure arguments and specify effect on Guidelines range of any departures granted; and (3) impose sentence after consideration of 3553(a) factors and consideration of any arguments for variances.)
5)  Judge erred by failing to make clear whether he had granted a departure or a variance, since he called it both at various times.
6)  Judge correctly included pre-judgement interest in restitution, since this is permitted under the VWPA and is compensatory in nature.
7)  Judge gave a sufficiently thorough explanation for the variance below the Guidelines in Arnao's case to show that he had fully considered the government's arguments and the statutory factors.



Amendment 801 to § 2G2.2(b)(3)(F) is a substantive change to the Guidelines, and does not apply retroactively under § 2255

United States v. Maximus Prophet , 2021 WL 800384 (Mar. 3, 2021),  https://www2.ca3.uscourts.gov/opinarch/183776p.pdf             Prior to...