Fifty shades of gray: sentencing trends in major white-collar cases.

• Author: Hewitt, Jillian
• Position: III. Results and Analysis: Sentencing in Major White Collar Cases in S.D.N.Y. B. Departures Become More Frequent as Loss Amount Increases, Largely Due to Changes in the Rate of Government Sponsored Departures through Conclusion, with footnotes and appendix, p. 1043-1071

2. Departures Become More Frequent as Loss Amount Increases, Largely Due to Changes in the Rate of Government-Sponsored. Departures

   This Section considers whether the loss amount attributed to the defendant affects his likelihood of receiving a below-range sentence. As described in Section I.C, the loss table provides for significant enhancements--up to thirty levels--in the defendant's offense level. As the loss amount increases, so does the severity of these enhancements. For example, a defendant who receives a four-level enhancement under the loss table (for a loss amount greater than $10,000) might end up with a sentencing range of six to twelve months instead of zero to six months, whereas one who receives a twenty-four-level enhancement (for a loss amount greater than $50 million)--as Olis did--may receive a sentencing range of fifteen to twenty years instead of ten to sixteen months. (123)

   Moreover, the enhancements might not reflect the defendant's actual culpability or the true seriousness of the offense. Recall that, under the loss table, a defendant who intends--but does not actually cause--a particular amount of loss receives the same enhancement as one who actually causes that amount of loss. Judges might impose non-government-sponsored below-range sentences more often in higher-loss cases, where the loss table provides for severe enhancements. (124) My results demonstrate, however, that below-range sentences are more common in higher-loss cases, but only because the government is more likely to have sponsored a below-range sentence in higher-loss cases. I present and explain these results below, and follow with a discussion of potential explanations.

   To analyze departure rates by loss amount, I analyzed the types of sentences imposed over several different loss categories. I divided sentences into four categories based on loss amount: (1) between $30,001 and $200,000; (2) between $200,001 and $1 million; (3) between $1 million and $20 million; and (4) greater than $20 million. (125)

   Figure 3 depicts data for Guidelines sentences and non-government-sponsored below-range sentences over time and by loss amount. (126) Figure 3 shows that, both before and after Booker, the rate at which judges imposed Guidelines sentences decreased as the loss amount attributed to defendants increased. The findings illustrate another, perhaps more intuitive trend: the percentage of Guidelines sentences imposed in major white-collar cases decreased after Booker regardless of the size of the loss amount. (127)

   Yet Figure 3 shows that the discrepancy in the percentage of Guidelines sentences imposed in relatively high-loss cases versus lower-loss cases is not explained by the rate at which non-government-sponsored below-range sentences are imposed. Although a defendant was much more likely to receive a non-government-sponsored below-range sentence after Booker than before, within each time period, the likelihood that a defendant received such a sentence was not affected by loss amount. Before Booker, a defendant was about as likely to receive a non-government-sponsored below-range sentence in a relatively lower-loss case as he was in a higher-loss case. The same holds true for sentences imposed after Booker. (128) In other words, although defendants were more likely to receive non-Guidelines sentences in high-loss cases, it is not because judges were more likely to grant non-government-sponsored departures.

   Rather, as shown in Figure 4, the rate of government-sponsored below-range sentences explains the change in rates of Guidelines sentences as loss amount increases. Both before and after Booker, the government was markedly more likely to sponsor a below-range sentence based on cooperation in cases with relatively more loss attributed to the defendant than in cases with relatively less loss.

   The government may be more likely to sponsor a below-range sentence in cases with high loss amounts for several reasons. First, cases with extremely high loss amounts could be more complicated, and may involve more defendants, than relatively low-loss cases. So the government might be more likely to need the assistance of one or more defendants, and thus seek cooperation at higher rates. (129) But even assuming that the government is more likely to benefit from the assistance of a cooperator in cases with higher loss amounts, it does not necessarily follow that the statistical chance of a defendant receiving a government-sponsored below-range sentence in those cases should be higher than a defendant's chance of receiving one in a relatively lower-loss case.

   Second, defendants in higher-loss cases may be more likely to have better attorneys, particularly ones who have experience interacting with the U.S. Attorney's Office and who are more effective in securing government-sponsored departures for their clients. (130)

   Third, in higher-loss cases, the government might actually agree--implicitly or explicitly--that the loss table enhancements overstate a defendant's culpability. On this view, the government may be more likely to sponsor a departure based on cooperation in higher-loss cases not because defendants provide substantial assistance at higher rates, but because the government is more likely to consider the Guidelines sentencing ranges in those cases unacceptably high. That is, the government might be filing "false" section 5K1.1 letters-or at least be more liberal in their assessment of who provides "substantial assistance"--in order to ensure that the defendant receives a sentence much shorter than the Guidelines range. (131)

   I find this last explanation exceedingly unlikely. If the government believes the loss table enhancements produce a Guidelines sentencing range that is unreasonable or otherwise unfairly represents the defendant's culpability, the government has several options other than filing a "false" section 5K1.1. First, the prosecutor could engage in "sentencing bargaining" with the defendant, such that the loss amount included in the presentence report--which is produced by the probation officer and relied upon by the judge in determining the Guidelines sentencing range--is lower, thereby resulting in a lower Guidelines range. (132)

   The government could also explicitly or implicitly convey that it supports a non-Guidelines sentence to the judge during sentencing. The policy of the U.S. Attorney's Office for S.D.N.Y. apparently requires an Assistant U.S. Attorney (AUSA) to seek permission from the Chief of the Criminal Division if she wishes to either seek a particular sentence in a given case or request a sentence above or below the Guidelines-calculated range. (133) Based on admittedly anecdotal information, it seems that this specific permission is only infrequently requested, though almost always granted when requested. (134)

   AUSAs might also indicate implicitly to the court--without official permission from their Office--that a below-range sentence is warranted. For example, in United States v. Adelson, (135) the defendant would have received an effective life sentence under the Guidelines due to a twenty-four-point loss table enhancement. While the government argued officially--in accordance with Justice Department policy-that the Guidelines sentence should be imposed, at the sentencing hearing the AUSA "refused to answer the question [of whether the government was asking for a Guidelines sentence] directly":

   The Court: So you want Mr. Adelson to spend the rest of his life in prison. That's your position, yes?

   The Government: Your Honor, I think our position is slightly more nuanced than that.... [W]e respectfully submit that a sentence that is consistent with the terms of the applicable [Guidelines ... [a]nd consistent with other sentences in other similar cases [would be suitable]. We think that by coupling those two together, that would be an appropriate reasonable--

   The Court: So you think I should impose a non-[G]uideline sentence?

   The Government: Your Honor, as the Court is well aware, our policy is that the [Guidelines sentence is--

   The Court: I don't think you can have it both ways. I think you either have to take this position that you seem to be taking in your papers, that this defendant should be sentenced to life imprisonment, or not. I don't think you can wiggle out of that with this what you call "nuanced" equivocation. (136)

   Predictably, judges do not appreciate this kind of hedging by the government. (137) AUSAs act on behalf of the government and should prioritize transparency. (138) This is all to say that, when the government believes the Guidelines range is too high, it has multiple means to secure a below-range sentence other than filing unwarranted section 5K1.1 letters.

   The final potential explanation for the high rate of government-sponsored departures in higher-loss cases turns the presumed causal relationship on its head. Rather than assuming that the government sponsors departures at higher rates because the loss amount in those cases is higher, this explanation suggests that the loss amount may actually be higher because the government sponsored a departure. The U.S. Attorney's Office for S.D.N.Y. appears to require cooperators to pay a "cooperation penalty" by expecting them to reveal, and in most cases plead guilty to, all criminal conduct to receive the benefits of cooperation--regardless of whether that conduct was known to the government prior to the proffer. (139) Moreover, the defendant must disclose the full extent of the charged scheme, including conduct or loss that the government may not have been able to identify or prove. (140) As such, it is possible that government-sponsored below-range sentences are common in very high-loss cases precisely because the loss amount--and thus the Guidelines sentencing range--is "inflated" beyond what it would have been had the defendant not cooperated. This theory is described in more detail in Section III.C, where I...