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White Collar Case Analysis

The decision is significant in two respects: reemphasizing that the court will not accept probation-only sentences for large-scale white collar criminals; and adding to the list of factors that are not permissible grounds for a below-guideline sentence.

In U.S. v. Wallace, 458 F.3d 606 (7th Cir. 2006), the district court imposed a probation-only sentence, even though the guideline range was 24-30 months imprisonment, and the amount of intended loss from a wire fraud scheme exceeded $400,000. The court of appeals reversed.

The court also cited several decisions from other circuits, vacating probation-only sentences for white collar criminals.

Several months later, in U.S. v. Repking, 467 F.3d 1091 (7th Cir. 2006), the court vacated the one-day prison sentence that a white collar criminal received for a bank fraud involving from $600,000 to $1 million in losses.

In the two cases, the court held that a variety of considerations were impermissible grounds for a below-guideline sentence: charitable works; pre-charge payment of restitution; and that actual loss was far less than intended loss.

To this list can now be added the following: the incurring of significant attorney fees in defending against the charge; misconduct (alleged or otherwise) on the part of the prosecution; protracted prosecution; and the defendant’s “ineptness as a businessman.”

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In this case, the court found there was not even an arguable violation of Brady v. Maryland, 373 U.S. 83 (1963), prompting the court to dismiss the claim as “hover[ing] on the border of cloud-cuckooland.”

However, even if there had been a real violation of Brady, the opinion precludes leniency for the defendant, by opining, “as for governmental misconduct, nothing in section 3553(a) suggests that punishing the government is a proper goal of sentencing; two wrongs don’t make a right.”

The court’s holding that incurring extensive attorney fees is not a permissible ground for a below-guideline sentence is also consistent with the only other courts that have considered the issue.

In U.S. v. Chastain, 84 F.3d 321, 323-24 (9th Cir. 1996), a pre-Booker case, the Ninth Circuit held that this ground did not justify a reduction in the guideline range. More recently, in U.S. v. Vigil, — F.Supp.2d —, 2007 WL654559 (D.N.M., Feb. 13, 2007), the court also held that the defendant’s incurring several hundred thousand dollars in attorney fees does not justify a reduced sentence.

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David Ziemer can be reached by email.

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