The political campaign season has included plenty of discussion surrounding reforming our criminal justice system, and in particular sentencing for drug offenses. We have not heard much discussion about white-collar criminal sentencing. There is a fair amount of controversy surrounding while collar criminal sentencing as well.
Ever since the Supreme Court’s decision in United States v. Booker, in which the Supreme Court, relegated the US Sentencing Guidelines as advisory, meaning that federal judges were not required by law to follow them, the sentencing of white collar criminals has been subject to greater scrutiny. Federal judges are accused of often imposing sentences below the advisory guideline ranges for white-collar criminals.
Even with these specific concerns as to white collar sentencing, the advisory guideline ranges were modified to address heavy-handed advisory sentencing ranges for white-collar criminals engaged in high-dollar fraud schemes. The US Sentencing Commission modified in the white-collar guidelines relating to fraud, which are keyed to the Loss Table, i.e. the amount of money involved in the fraud scheme. The Sentencing Commission modified the guidelines to reflect a defendant’s real intent in the amount of a scheme, so that a late-comer to a fraud scheme may not be subjected to the entire amount of a fraud and avoid the so-called “piling-on” effect when guideline ranges were calling for life or heavy sentences for white-collar criminals who were not so culpable.
A number of federal judges complained about sentencing guidelines for the high-end, large fraud scheme defendants, and the failure of the guidelines to distinguish between more culpable and less culpable participants.
Many judges have been criticized for giving white-collar criminals lenient sentences. In the absence of cooperation by a defendant, federal judges were imposing below guideline range sentences in approximately 20 percent or one out of every five cases. Policymakers and federal prosecutors continue to complain that white-collar criminals are treated too leniently, especially in comparison to non-violent drug offenders.
The most reliable way for white-collar criminals to avoid or significantly reduce criminal sentences is to cooperate with the government. According to 2015 sentencing data, white-collar criminals who earn a substantial assistance motion from the government, typically receive a sentencing reduction of approximately 70 to 75 percent from the bottom of the sentencing range. In many cases, white-collar criminals who provide substantial assistance to the government will avoid completely a jail sentence.
In the FCPA context, the Justice Department has touted its Pilot Program and the possibility that a company that fully cooperates could earn a reduction of as much as 50 percent from the bottom of the guideline range for a fine, and possibly receive a declination. Consistent with the Yates memorandum, the Justice Department is focusing on increasing prosecution of individual defendants.
When it comes to prosecuting individuals, there already exist significant incentives for defendants to cooperate. Judges are much more likely to impose a lenient sentence and avoid jail time for a defendant that has provided substantial assistance to the government. In some cases, an individual who has the ability to cooperate against others, i.e. is not the most culpable offender in a fraud scheme, has a significant opportunity to earn a reduced sentence and they often take advantage of this opportunity to save their own skin.
Federal judges want to reward cooperating defendants to encourage others to cooperate and assist law enforcement with the investigation and prosecution of other more serious criminals. It is a system that has been going on for years and has resulted in the prosecution of serious criminal organizations and terrorist groups.
Of course, there are huge risks in relying on criminal defendants to build criminal cases to prosecute other defendants since defendants may have a motive to fabricate in order to extricate him or herself from serious punishment. Those risks have to be managed carefully by law enforcement and prosecutors to ensure that criminal cases are strong, corroborated by sufficient independent evidence, and fairly assessed.