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Michael Cohen and Plea Agreements

https://www.zmolaw.com/news/wp-content/uploads/2018/08/Screen-Shot-2018-08-31-at-3.19.38-PM-300x214.pngWhen Michael Cohen signed his plea agreement last Tuesday at the Southern District of New York, he was affixing his signature to one of the most important documents in recent memory: a sworn admission that he conspired with the president of the United States to violate a federal law to get him elected. But the document Cohen signed was in many ways pure boilerplate, the same language used in hundreds of pleas in the Southern District every year. Our office represents a lot of defendants in the Southern District and many of those cases end in plea deals like the one Michael Cohen received. So here is a quick primer on what the plea agreement means.

First, even though there is an agreement, no one knows what Cohen’s sentence will be. He is out on bail and he is probably hoping never to see the inside of a prison cell. There are sentencing considerations set forth in the agreement (much more on those below), but they do not bind the judge. Unlike in state court, federal defendants almost always plead guilty without knowing what their punishment will be.

Second, the document Cohen signed is not a cooperation agreement. A cooperation agreement is an agreement where the defendant promises to plead guilty and cooperate fully with the government, providing information and making himself available whenever prosecutors want to speak to him (in federal practice, we use the term “government” to mean the prosecutors). In return, the prosecutors promise to file a “5K motion” — a letter that allows the sentencing judge to avoid any applicable mandatory minimum sentence and may urge the judge to sentence below the sentencing Guidelines. In Cohen’s case, there is no mandatory minimum, so the 5K motion will not be as significant as it would be in, say, a drug trafficking case. When a mandatory minimum is charged, and the defendant is convicted (either by guilty plea or after trial), the only way to avoid the minimum sentence is by getting the government to file a 5K letter. In other words, because the crimes that Cohen was charged with do not carry a mandatory minimum, Cohen can still cooperate and get the full benefit he would have received with a cooperation agreement, but with fewer obligations. He might very well be cooperating, just without an agreement. If he is, he is putting his trust in the office prosecuting him. Seven government attorneys were listed on the plea agreement. He is trusting them to urge the judge to lower his sentence if he is helpful to the government. That’s fine, as long as everyone gets along as they work together to build a case against the president of the United States.

Third, Michael Cohen’s plea agreement contains some unusual language regarding the application of the U.S. Sentencing Guidelines. The Guidelines govern federal sentencing but, since 2005, they are merely advisory and do not bind judges to impose any particular sentence. Nonetheless, the Guidelines must be accurately calculated and serve as a starting point for the judge’s thinking at sentencing. So they are important, but not all-important.

Cohen’s agreement contains two Guidelines calculations. In the Southern District (unlike the Eastern District and other prosecutors’ offices around the country), plea agreements typically contain a stipulation about the correct Guidelines to apply. This avoids a fight later about loss amounts, drug quantities, or other factors that can affect the Guidelines. In other districts, prosecutors just give an estimate of the Guidelines calculation (known locally as a “Pimentel” calculation or a separate Pimentel letter, after a Second Circuit case urging prosecutors to provide defendants with the government’s Guidelines calculation) and the parties can dispute the correct Guidelines at sentencing.

Here, Cohen and the government agreed to every aspect of the Guidelines except a technical one, which, the agreement states, would change the sentence by one level, or about six months. The disagreement centers on whether the tax fraud counts “group” with the bank and campaign finance fraud counts or whether they should be treated separately for sentencing purposes. Cohen pled guilty to three separate categories of crimes. Counts One through Five charged five years worth of evading personal taxes, mostly by failing to report income from various sources such as loans to taxi operators. Count Six charges making false statements to a bank in connection with obtaining a loan. Counts Seven and Eight charge illegal campaign contributions. Under the government’s view, all eight of the counts should be treated as causing a single, cumulative economic harm of $1.5 to $3.5 million. Under the defendant’s view, which is not spelled out in detail in the agreement, it appears that Cohen intends to argue to Judge Pauley that the tax counts should be treated separately. It is not at all clear how that can reduce the Guidelines level, but the plea agreement says it does. In most cases, grouping counts together benefits the defendant by treating separate charges as only one crime under the Guidelines. It is possible that Cohen’s attorneys used different, lower, numbers in the individual calculations where the government used a single, aggregate higher number, but for that analysis to stick the government would likely have to agree to the separate lower numbers. In any event, the defendant calculates his offense level as 23 and the government calculates it at 24. The parties agreed that whatever Judge Pauley decides between these two options will be final and not subject to appeal. Because Cohen has no prior criminal record, these levels translate to advisory Guidelines ranges of either 51-63 months based on the government’s calculation or 46-57 months based on Cohen’s calculation.

But that’s just the advisory range. Judge Pauley has discretion to give Cohen more or less time. If Cohen helps the government, that would be a factor that Judge Pauley would take into account, especially if the government files a 5K letter, with or without an agreement. Another scenario is that Judge Pauley could sentence Cohen to prison time and he could try to reduce his sentence by cooperating after he is sentenced under Rule 35 of the Federal Rules of Criminal Procedure.

At the end of the day, federal plea agreements are complicated. The interplay between federal statutes, mandatory minimums, cooperation, the Sentencing Guidelines, and other sentencing factors can lead to unexpected results. There is almost never any certainty when a person pleads guilty in federal court about what will happen at sentencing. While our office much prefers trials, sometimes a plea is in a federal defendant’s best interests. If you are considering taking a federal plea, make sure you understand it. If you don’t, speak to your lawyer before signing the deal or entering a plea.