The recent sentencing last Friday, March 9, 2018, of former pharmaceutical chief executive and self-promoting bad boy, Martin Shkreli, was notable for several reasons.
I. INTRODUCTION – U.S. v. SHKRELI
Certainly, the always defiant and provocative Shkreli did himself no favors in his repeated taunts of federal prosecutors based in the Eastern District of New York, headquartered in Brooklyn. Specifically, Shkreli pushed a sensitive button by deriding Eastern District prosecutors as “junior varsity” in comparison to their more sophisticated Southern District brethren, even going so far as to use an f-bomb when he scornfully denied he would ever cooperate with federal authorities by saying “F--- the feds,” among other similar gems. Both mainstream and social media outlets contained tons of coverage over the spectacle of Shkreli, who eventually had his bond revoked over perceived threats to Secretary Hillary Clinton, finally attempting to show contrition at his actual sentencing and the efforts of his white collar criminal defense lawyer, Benjamin Brafman, who went to extraordinary lengths in trying to humanize his often despicable seeming client.
Beneath the din of the sexy details and antics surrounding the investigation, trial, and the sentencing hearing, however, lies a more fundamental question regarding the continuing utility, and even the vitality, of the Federal Sentencing Guidelines.
II. THE FEDERAL SENTENCING GUIDELINES OF 1987
As many readers no doubt are generally aware, the United States courts have been operating under a sentencing regime (once) dominated by the Federal Sentencing Guidelines since 1987. These “Guidelines,” in their first 18 or so years of existence, operated as more or less sentencing rules or regulations rather than guidelines. The idea, in general terms, is for the offense or offenses for which a particular defendant has been convicted to be put into a formula based upon the type of offense, the type of victims that may have been damaged, the extent of damage to the victims, and the financial loss or attempted loss. After plugging all of those factors in, including the defendant's criminal history, or lack of it, the process was theoretically designed to produce more or less similar sentences no matter whether a defendant was sentenced in the Southern District of New York, the Northern District of California, or the Middle District of Alabama.
III. THE IMPACT OF THE 2005 DECISION OF UNITED STATES V. BOOKER
The Guidelines inspired much concern and outrage: many federal judges and most of the Defense Bar despise the Guidelines, but some federal judges and most federal prosecutors seem to love them. That all changed in early 2005 when the United States Supreme Court decided the case of United States v. Booker, 543 U.S. 220 (2005) in which the Supreme Court held that the Guidelines were actually advisory and not mandatory. Although it took a while for the ramifications and reverberations of the Booker decision to make their way through the federal circuits, by 2010 not even the relatively conservative Eleventh Circuit could deny that the Booker decision meant what it said and that the Guidelines were, in fact, advisory.
As noted by the Eleventh Circuit in an en banc decision published in 2010, Section 3553(a) of the Federal Criminal Code, Title 18, “plays a critical role” in appellate review of sentences “just as it does in the initial sentencing decision”. United States v. Irey, 612 F.3d 1160, 1184 (11th Cir. 2010) (en banc). Under that code section, the Guidelines are but one factor among many which should be taken into account when imposing a federal sentence.
As Ivey made clear, the Guidelines remained an important component of federal sentencing and indeed are supposed to be one of several factors that a sentencing court considers when imposing sentence under 18 U.S. Code §3553(a), but they were not necessarily a “super factor.”
IV. THE GUIDELINES' INCREASINGLY QUESTIONABLE RELEVANCE
The recent sentencing of the notorious Shkreli, however, takes us to new levels of serious doubt on whether the Guidelines have any real relevance at all, particularly in cases where the offenses are non-violent and involve defendants who have the resources to hire experienced counsel familiar with the treacherous waters of federal sentencing law and practice. In this particular case, the Guidelines sentence initially called for a prison sentence of between 27 years at the low end to 34 years at the high end. This was later recalculated by the sentencing judge, U.S. District Judge Kiyo Matsumoto, to a range of 22-27 years. This recalculation is itself unremarkable as judges frequently adjust a Guidelines sentence upward or downward depending on highly technical arguments that are made by defense lawyers, prosecutors and probation officers at or in the weeks before a sentencing hearing.
What is truly remarkable, however, is that the Government, not the defense, asked for a sentence of 15 – not 22 - years in prison for this defendant, who had gone to trial and then lost, and all the while and even while awaiting sentencing, had been so disparaging of prosecutors, the justice system in general, and his victims. He even had his bail revoked based on a veiled threat he had made against then-presidential candidate, Hillary Clinton, in the lead-up to the 2016 Presidential Election. The key take-away here is this: Prosecutors were not even asking for a “Guidelines sentence at the low end” in a case where the defendant had been as bad as any white collar defendant ever could be.
The defense took the position that an 18-month sentence was appropriate. Ultimately, the Judge sentenced the defendant to seven (7) years in prison and in doing so was harshly critical of the Guidelines themselves and quoted U.S. District Judge Jed Rakoff in doing so, himself a noted harsh critic of the federal Guidelines.
It is possible to view the decision as less a severe setback for the relevance of the overall impact of the Sentencing Guidelines and as more of a sunset on the serious influence of the so-called “loss amount factor.” It is this “loss amount factor,” calculated largely under Guidelines §2B1.1 which tends to drive up the Guidelines offense level and concomitant prison term, in big white collar cases involving large amounts of money or large amounts of victims.
Nonetheless, the implied or direct concession by the Justice Department in this case that the Guidelines Sentence was not even a starting point for its sentencing request in such a serious case with a defendant who is as “despicable” as any could be imagined in a white collar case does send a strong signal that the era of Guidelines sentencing dominance is largely over, an era which was presaged by the 2005 Booker decision.
The impact of this case is really hard to overstate since it stands for a real world example of a situation in which a defendant took the Government to trial, lost at trial, was deemed to have behaved sufficiently badly to have had his bond revoked, and made extremely provocative and defiant statements thumbing his nose in obscene ways at both the court system and the Justice Department and the specific U.S. Attorney's Office bringing the case, but nonetheless received a sentence that was one-third of that which was otherwise called for by application of the Guidelines. Therefore, this particular case and its ultimate sentencing result may cause white collar defendants to be more willing to take the risk of going to trial and forcing the Government to prove its case beyond a reasonable doubt.