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Deconstructing the Federal Fraud Guidelines

We advocate for just sentences for our clients convicted of crimes. One way sentences can be unfair in the federal system is that they can be based on provisions in the United States Sentencing Guidelines which are themselves fundamentally flawed because they were promulgated without regard to national experience or empirical data. Lawyers need to “deconstruct” these guidelines for sentencing judges, showing where they came from and why they are inappropriate. Some courts have come out and criticized the guidelines covering narcotics and child pornography, calling them “born broken” and “eccentric.” What about Section 2B1.1, the economic crimes guidelines that govern white collar cases?

A new concurrence by Judge Stefan Underhill sitting by designation in the Second Circuit Court of Appeals deconstructs the fraud guidelines, describing how they came to be and why they are so unfair, especially in high-loss cases.  As described by Judge Underhill, sentences for fraud have been increased three times: first in response to the savings-and-loan crisis, then as part of a consolidation of economic crimes, and most recently in response to Sarbanes-Oxley which itself was a response to corporate mega-scandals.  “The history of bracket inflation directed by Congress renders the loss guideline fundamentally flawed, especially as loss amounts climb.” Judge Underhill writes. “The higher the loss amount, the more distorted is the guideline’s advice to sentencing judges.”

In advocating for lower sentences for clients over the past few years, we have been asking judges to deconstruct guidelines in cases involving drugs, fraud and child pornography — the majority of the federal docket. Many sentencing courts get it, dramatically departing from the guidelines in appropriate cases. The Second Circuit adopted the deconstruction approach for child pornography offenses in the Dorvee case. Judge Underhill’s opinion, albeit a concurrence, takes the appeals court one step closer to appreciating the systematic irrationality of the guidelines applicable in white collar cases.