DOJ Opposed to Fraud Sentencing Reform

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Earlier this spring, the Sentencing Commission conducted hearings on the propriety of reducing the guidelines for fraud cases and generally reevaluating the impact that “loss” should play in setting the base offense level. In response, the U.S. Justice Department has come out broadly against a series of proposals that would cut prison time for white-collar criminals. The department’s views marked a potential setback for the proposals, which defense lawyers had already criticized for being too moderate.

The department objected to a proposal to adjust victim losses for inflation for the first time since 1987. Losses directly influence recommended prison term lengths, and the move would reduce fraud sentences by 26 % on average. The Justice Department also objected to a proposal to shift the emphasis in calculating sentences for stock fraud cases to financial gains instead of investor losses, a change that could reduce the amount of prison time some executives would face. The department’s position came amid continuing debate over whether changes to the guidelines are necessary to address what even some judges have said are overly harsh recommended punishments for fraud offenders.

Fraud offenses constitute the third largest type of federal crime in America, behind only immigration and drugs cases. Over the last decade, average prison sentences for fraud have lengthened three-fold, the commission said. But after the U.S. Supreme Court declared the guidelines advisory in 2005, judges increasingly gave shorter terms than what the commission recommended. In 2012, the average fraud sentence was 22 months, compared to the 29-month minimum recommended, the commission said.

Critics say the data shows many judges view the guidelines as overly-driven by victim losses, at times resulting in potential life sentences in cases like stock frauds with high-dollar amounts.

The commission’s proposals, released in January, were viewed as too moderate by groups like the American Bar Association, which had pushed for broader revision de-emphasizing the influence losses have not just in cases involving the stock market but also for other frauds, such as in mortgages and healthcare. Still, the commission said its proposal to adjust the loss calculations for inflation would itself reduce sentence lengths.

http://www.reuters.com/article/2015/03/12/us-usa-fraud-sentencing-idUSKBN0M82SZ20150312?irpc=932

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