NEW SUPREME COURT UPDATE: SENTENCING GUIDELINES
The birthing process was protracted, ugly, and unprincipled. But the baby doesnât look as bad as expected. And it may do OK unless itâs strangled in its crib by Congress or abused by the judiciary.
Stuart Taylor, Jr., How to End Interbranch Warfare on Criminal Sentencing,
National Journal, National Journal Group, Inc. Monday, Jan. 24, 2005.
Thatâs one expertâs take on the recent Supreme Court decision. In United States v. Booker, 2005 U.S. LEXIS 628 (2005), the United States Supreme Court held that Blakely v. Washington, a 2004 U.S. Supreme Court decision, applied to the federal criminal sentencing guidelines, and that the Sixth Amendment prevented judges from finding facts that exposed a criminal defendant to increased prison time. A different majority struck down the provision of the Sentencing Reform Act that made the federal criminal sentencing guidelines mandatory, and explained that the guidelines were now to be considered advisory.
So what does all of this mean? Itâs still too early to tell how the federal courts will interpret and apply Booker. Criminal defense lawyers and prosecutors from Dallas to Detroit are watching this drama continue to unfold. The courts will probably still perform some sort of guideline calculation, and they will consider the guideline range, but they will also be required to consider the other federal criminal sentencing factors contained in Title 18, United States Code, Section 3553, which states, in relevant part, that the court shall impose a sentence sufficient, but not greater than necessary.
In reaching this determination, the federal district courts shall consider: the nature and circumstances of the offense and the history and characteristics of the defendant, the seriousness of the offense, the promotion of respect for the law, deterrence, the protection of the public from further crimes of the defendant, the medical and educational needs, the kinds of sentencing available, the need to provide restitution to any victims of the offense, and the need to avoid unwarranted sentence disparities among defendants with similar records who have been found guilty of similar conduct.
Bottom line: Federal Judges have regained at least some of the discretion that the Sentencing Guidelines took away from them. In my opinion, thatâs a good thing.
Listed below is an example of how at least one federal district judge is using the discretionary sentencing power resurrected by the Booker decision. Enjoy.
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
UNITED STATES OF AMERICA,
v. Case No. 04-CR-31
On January 14, 2005, two days after the Supreme Court decided United States v. Booker, I had occasion to sentence defendant Mark Ranum, a loan officer convicted of misapplying bank funds. In order to impose sentence on Ranum, I had to carefully consider Bookerâs directives to district courts. In this memorandum, I explain how I understand Booker and why I sentenced defendant Ranum to a year and a day in prison.
I. PRINCIPLES OF SENTENCING POST-BOOKER
In Booker, the Supreme Court held that Blakely v. Washington applied to the federal sentencing guidelines, and that the Sixth Amendmentâs jury trial guarantee prevented judges from finding facts that exposed a defendant to increased prison time. As a remedy, a different majority of the Court excised the provision of the Sentencing Reform Act that made the guidelines mandatory, 18 U.S.C. Â§ 3553(b). The remedial majority held that district courts must still consider the guideline range, 18 U.S.C. Â§ 3553(a)(4) & (5), but must also consider the other directives set forth in Â§ 3553(a). Thus, under Booker, courts must treat the guidelines as just one of a number of sentencing factors.
Section 3553(a) requires courts to âimpose a sentence sufficient, but not greater than necessary, to comply with the purposes set forth in paragraph 2.â? Section 3553(a)(2) states that such purposes are:
(A) to reflect the seriousness of the offense, to promote respect for the law, and to provide just punishment for the offense;
(B) to afford adequate deterrence to criminal conduct;
(C) to protect the public from further crimes of the defendant; and
(D) to provide the defendant with needed educational or vocational training, medical care, or other correctional treatment in the most effective manner.
Section 3553(a) further directs sentencing courts to consider (1) the nature and circumstances of the offense and the history and characteristics of the defendant; (3) the kinds of sentences available; (6) the need to avoid unwanted sentencing disparities among defendants with similar records who have been found guilty of similar conduct; and (7) the need to provide restitution to any victims of the offense.
The directives of Booker and Â§ 3553(a) make clear that courts may no longer uncritically apply the guidelines and, as one court suggested, âonly depart . . . in unusual cases for clearly identified and persuasive reasons.â? United States v. Wilson, Case No. 2:03-CR-0082, 2005 L 78552, at *1 (D. Utah Jan. 13, 2005). The approach espoused in Wilson is consistent with the holdings of the merits majority in Booker rejecting mandatory guideline sentences based on judicial fact-finding and the remedial majority in Booker directing courts to consider all of the Â§ 3353(a) factors, many of which the guidelines either reject or ignore. For example, under Â§ 3553(a)(1) a sentencing court must consider the âhistory and characteristics of the defendant.â? But under the guidelines, courts are generally forbidden to consider the defendantâs age, U.S.S.G. Â§ 5H1.1, his education and vocational skills, Â§5H1.2, his mental and emotional condition, Â§5H1.3, his physical condition including drug or alcohol dependence, Â§5H1.4, his employment record, Â§5H1.5, his family ties and responsibilities, Â§5H1.6, his socio-economic status, Â§5H1.10, his civic and military contributions, Â§5H1.11, and his lack of guidance as a youth, Â§5H1.12. The guidelinesâ prohibition of considering these factors cannot be squared with the Â§3553(a)(1) requirement that the court evaluate the âhistory and characteristicsâ? of the defendant. The only aspect of a defendantâs history that the guidelines permit courts to consider is criminal history. Thus, in cases in which a defendantâs history and character are positive, consideration of all of the Â§3553(a) factors might call for a sentence outside the guideline range.
Further, Â§3553(a)(2)(D) requires a sentencing court to evaluate the need to provide the defendant with education, training, treatment or medical care in the most effective manner. This directive might conflict with the guidelines, which in most cases offer only prison. See U.S.S.G. Â§5C1.1 (describing limited circumstances in which court can impose sentence other than imprisonment). In some cases, a defendantâs educational, treatment or medical needs may be better served by a sentence which permits the offender to remain in the community.
In addition, Â§3553(a)(7) directs courts to consider âthe need to provide restitution to any victims of the offense.â? In many cases, imposing a sentence of no or only a short period of imprisonment will best accomplish this goal by allowing the defendant to work and pay back the victim. The guidelines do not account for this. In fact, the mandatory guideline regimes forbid departures to facilitate restitution. United States v. Seacott, 15 F.3d 1380, 1388-89 (7th Cir. 1994).
Finally, in some cases the guidelines will clash with Â§3553(a)âs primary directive: to âimpose a sentence sufficient, but not greater than necessary to comply with the purposesâ? of sentencing.  In sum, in every case, courts must now consider all of the Â§3553(a) factors, not just the guidelines. And where the guidelines conflict with other factors set forth in Â§3553(a) courts will have to resolve the conflicts.
Some have suggested that due to the Commissionâs expertise and experience over developed over the years it is appropriate to afford their work âheavy weight.â? Wilson, 2005 WL 78552, at *1. I agree that courts must in all cases seriously consider the guidelines. The Commission has collected a great deal of data over the years and studied sentencing practices. Thus, courts not imposing sentences within the advisory guideline range should provide an explanation for their decision. But in so doing courts should not follow the old âdepartureâ? methodology. The guidelines are not binding, and courts need not justify a sentence outside of them by citing factors that take the case outside the âheartland.â? Rather, courts are fee to disagree, in individual cases and in the exercise of discretion, with the actual range proposed by the guidelines, so long as that the ultimate sentence is reasonable and carefully supported by reasons tied to the Â§3553(a) factors.
Sentencing will be harder now than it was a few months ago. District courts cannot just add up figures and pick a number within a narrow range. Rather, they must consider all of the applicable factors, listen carefully to defense and government counsel, and sentence the person before them as an individual. Booker is not as an invitation to do business as unusual.
In the present case, after carefully considering all of the evidence and applying all of the Â§3553(a) factors, I declined to follow the guidelines and instead imposed a sentence which was sufficient, but not greater than necessary, to satisfy the purposes of sentencing.
II. APPLICATION OF PRINCIPLES
Defendant Ranum held the position of senior loan officer at State Financial Bank. His duties included managing a commercial loan portfolio and evaluating loan applications. He was able to make secured loans of up to $300,000 on his own authority, but had to obtain the approval of the bankâs credit committee for loans over that amount. He also had to report to the committee any loan he made in excess of $150,000.
In April of 2000, Barry Craig and Ralph Diehl approached defendant seeking to obtain financing for a business that would operate a cruise ship on the Great Lakes. Craig and Diehl had arranged to lease a ship from a Greek shipping company, Attica, and needed a letter of credit and other funds to start the business and take possession of the ship. After reviewing their business plan and obtaining their personal guarantees and those of several of their relatives, as well as a guarantee from the business â âGreat Lakes Cruisesâ? (âGLCâ?) â defendant agreed to extend credit. He had no prior relationship with Craig or Diehl.
On April 5, 2000, defendant issued a âstandby letter of creditâ?in the amount of $190,000. Subsequently, he twice increased the amount of the letter by $190,000, making the bankâs total obligation $570,000. The purpose of the letter was to ensure that GLC fulfilled its obligations to Attica under the lease agreement. Defendant did not report issuing the letter of credit to the credit committee or obtain its approval. On October 25, 2000, defendant loaned GLC $100,000 to cover a cash payment that it owed Attica. He did not report or obtain approval for this loan although in aggregation with the letter of credit he had exceeded his lending authority to GLC. On November 17, 2000, defendant issued a second letter of credit, this time in the amount of $340,000, which in January 2001 he increased to $580,000. This letter, coupled with the previous $100,000 payment, was needed to enable GLC to take possession of the ship. Again, defendant did not report or obtain approval for the letter. Finally, on March 9, 2001, defendant loaned GLC $154,000 to make necessary modifications on the ship and again did not report the loan.
Early on, GLC appeared to have a promising future, receiving reserve bookings worth about $3,000,000. On April 21, 2001, GLC repaid the October 2000 loan of $100,000. However, when the time came for GLC to bring the ship from Greece to the Great Lakes, GLC did not have the $580,000 needed to take possession. Rather than have Attica draw on the second letter of credit, defendant authorized a loan to GLC of $580,000. Prior to doing so, he approached the credit committee and advised it that the loan was âcash collateralizedâ? and thus ârisk free.â? Although defendant hoped and expected that GLC would have sufficient cash reserves to collateralize the loan, it did not, in fact, have such reserves at the time. Thus, his statement to the committee was false. Based on defendantâs statement, the committee approved the loan, and in May 2001, defendant wired the funds to Greece. On June 1, 2001, the second letter of credit (in the amount of $580,000) expired.
GLC began offering cruises in June 2001. However, it began experiencing cash flow problems and found it could not make the $300,000 lease payment due. Rather than permitting Attica to draw on the first letter of credit, defendant agreed to authorize a loan of $300,000 to Craig personally to cover the payment. Defendant immediately wired the money to Greece. Considered in isolation, defendant had the authority to make this loan. However, because he made the loan to an individual who had personally guaranteed GLCâs obligations, the loan did not comply with bank policy.
GLCâs chance to be successful ended soon after its ship began to cruise the Great Lakes. On or about June 24, 2001, the Centers for Disease Control (âCDCâ?) boarded the ship, found it unfit and issued a no-sail order. The order generated substantial adverse publicity and as a result many persons who had reserved bookings cancelled them. GLC was forced to cancel its planned cruises for the remainder of the cruise season, and its business failed. Aside from the $100,000 loan that GLC repaid in April 2000, the bank lost all of the money defendant loaned to GLC and Craig. Its total loss was $1,134,000.  With the business collapsing and the bankâs funds in jeopardy, defendant retained the law firm of Kirkland and Ellis to try to protect the bank. Initially, he did not advise the bank that he had retained Kirkland and Ellis or how much credit he had extended to GLC and Craig. At the prodding of the firm, defendant eventually disclosed what he had done. In August 2001, the bank fired defendant.
In February 2004, the government charged defendant in a three count indictment. Count one charged him with misapplication of bank funds by a bank officer pertaining to the $580,000 loan, count two charged him with making a false statement in connection with a loan application (his statement to the credit committee concerning the same loan), and count three charged him with misapplication of bank funds pertaining to the $300,000 loan to Craig. Defendant went to trial, at which he admitted exceeding his loan authority and misleading his employer but denied that he intended to harm or defraud the bank. The jury convicted him on all three counts. Prior to defendantâs trial, the Supreme Court issued its decision in Blakely, casting serious doubt on the status of the guidelines. However, the government did not seek jury findings as to any sentencing enhancements under the guidelines. Thus, defendant argued that he could not constitutionally be sentenced under the guidelines. Two days before sentencing, the Court decided Booker. Based on Booker, I determined the guideline range in the usual manner and then considered the range along with the other factors set forth in Â§ 3553(a).
I determined that the applicable offense level was 21 (base level 6, U.S.S.G. Â§ 2F1.1(a) (2000), plus 11 for amount of loss, Â§ 2F1.1(b)(1)(L), plus 2 for more than minimal planning, Â§ 2F1.1(b)(2)(A), plus 2 for abuse of a position of trust, Â§ 3B1.3  and the criminal history category was 1, creating an imprisonment range of 37-46 months. The government argued that I should impose a sentence consistent with that range. The defense argued for a period of home confinement. I rejected both recommendations and imposed a sentence of one year and a day.
I determined that the factors set forth in Â§ 3553(a) fell into three general categories: the nature of the offense, the history and character of the defendant, and the needs of the public and the victims of the offense. I analyzed each category and in so doing considered the specific statutory factors under Â§ 3553(a), including the advisory guidelines.
First, I considered the nature of the offense. The offense was serious for several reasons, the primary one being the amount of the loss. In addition, defendant made repeated loans outside of his authority over an extended period of time, abusing his employerâs trust. When things started to go badly, defendant was not honest with his employer, recklessly loaned GLC more money and attempted to conceal what he had done.
However, defendantâs culpability was mitigated in that he did not act for personal gain or for improper personal gain of another. Under Â§ 3553(a) and the decisions of the Supreme Court, a sentencing court may properly consider a defendantâs motive. Wisconsin v. Mitchell, 508 U.S. 476, 485 (1993) (stating that âthe defendantâs motive for committing the offense is one important factorâ?). In the present case, defendant did not know Craig and Diehl before he lent them money, and he had no personal stake in making the loans. Nor did he intend to harm the bank. On the contrary, he wanted GLC to succeed so that it could repay the loans. When the loans went bad, defendant made attempts to protect the bank. Further, it was by no means a foregone conclusion that GLC would fail. If the ship that GLC leased from Attica had met appropriate standards, GLC might well have been able to repay the loans in full. The evidence presented at trial showed that GLCâs venture as a promising one and generated substantial early bookings. GLC failed primarily because of the inadequacy of the ship it obtained from Attica. Thus, although the offense was a serious one, I found some of the circumstances surrounding it to be unusual.
Defendantâs offense level under the advisory guidelines was largely the product of the loss amount. One of the primary limitations of the guidelines, particularly in white-collar cases, is their mechanical correlation between loss and offense level. For example, the guidelines treat a person who steals $100,000 to finance a lavish lifestyle the same as someone who steals the same amount to pay for an operation for a sick child. It is true that, as the government argued in the present case, from the victimâs perspective the loss is the same no matter why it occurred. But from the standpoint of personal culpability, there is a significant difference. See United States v. Emmenegger, 329 F. Supp. 2d 416, 427-28 )S.D.N.Y. 2004) (âWere less emphasis placed on the overly-rigid loss table, the identification of different types of fraud or theft offenses of greater or lesser moral culpability or danger to society would perhaps assume greater significance in assessing the seriousness of different frauds.â?). In the present case, defendant did not act for personal gain. He made loans outside his authority and was reckless with his employerâs money. But that is not the same as stealing it. Thus, due to the nature of the case, I found the guideline range, which depended so heavily on the loss amount, greater than necessary.
I then considered the second general category â the history and character of defendant. The factors in this category weighed heavily in defendantâs favor. He is fifty years old, had no prior record, a solid employment history, and is a devoted family man. He has two children, one of whom is still in school. Prior to his recent marriage, he was a single father who did an excellent job of raising two daughters. He also provides care and support for his elderly parents. His father suffers from Alzheimerâs disease and is particularly dependent on defendant â defendant is one of the few people he still recognizes. Defendantâs mother is also elderly and suffers from depression. I concluded that defendantâs absence would have a profoundly adverse impact on both his children and his parents. Defendant himself suffers from serious health problems, including diabetes and sleep apnea. In addition, numerous friends and business associates wrote letters attesting to defendantâs good character. Of particular interest were letters from defendantâs former boss and a former co-worker from State Financial Bank. Both spoke highly of defendant.
I also noted that defendantâs conviction had significant collateral effects on him. After his termination by State Financial Bank, defendant obtained a good job at Anchor Bank. As a result of the conviction he lost that job and will be unable to work in banking again.
Under all of the circumstances, I concluded that defendant is not a danger to society and is highly unlikely to reoffend.
Finally, I considered the needs of the public and the victim. Because the case was so unusual, I doubted whether a prison sentence would have much value as a deterrent. Loan officers will generally follow band rules because their jobs depend on it. As previously stated, I also concluded that the public did not need to be protected from defendant. As for the victim, the bank, defendantâs ability to make restitution would be enhanced if he was not incarcerated for an overly long time.
Nevertheless, in order to promote respect for the law and in recognition of the significant loss to the bank, I concluded that defendant had to be confined for a significant period of time. However, I concluded that the sentence called for by the guidelines, 37-46 months, was much greater than necessary to satisfy the purposed of sentencing set forth in Â§ 3553(a). The range does not properly account for defendantâs absence of interest in personal gain, for the fact that GLC could have easily have succeeded, for defendantâs otherwise outstanding character and for the significant benefits to family members resulting from his presence. Instead, I imposed a sentence of twelve months and one day, followed by five years of supervised release. This sentence was sufficient to promote respect for the law and account for defendantâs serious abuse of trust over an extended period of time.
Dated at Milwaukee, Wisconsin, this ____ day of January, 2005.
Office: (214) 871-1112
David Cell: (214) 538-6629