Sentencing Disparity in Federal Fraud Cases Growing: Longer Sentences, But Not as Long Everywhere

What are the consequences of committing a federal white collar crime? For years, casual conversation included references to a “slap on the wrist” and short stints in “country club” prisons, where federal inmates reportedly enjoyed leisurely activities, including golf and tennis. Not so. But one thing is clear: the number of Americans who are getting the opportunity to experience the hospitality of the Federal Bureau of Prisons is growing. The number of sentenced federal offenders has more than doubled between FY 1996 and FY 2011. And, the percentage of those offenders who were sentenced to imprisonment grew from 77 percent to 88 percent in the same period. So, with financial crimes a declared high priority for the U.S. Department of Justice, a careful look at sentencing results in fraud cases is in order.

The U.S. Sentencing Commission, in a recent report on the continuing impact of the U.S. Supreme Court’s decision in United States v. Booker, has undertaken substantial analysis of sentencing trends in several categories of federal cases. See http://sentencing.typepad.com/files/part-a—continuing-impact-of-booker-on-federal-sentencing.pdf.

The report reflects that, following the Supreme Court’s decision in Booker, in which the Court held that the sentencing guidelines are not mandatory, federal judges have shown an increasing propensity to vary from the sentencing guideline range. Regional disparities are increasing, and differences between judges within districts are increasing as well. Some judges are weighing the characteristics of the offense and the offender differently than other judges in similar cases. These differences are arguably even more pronounced in fraud cases. The average minimum guideline sentence has increased in the last 15 years, but the average sentence has not increased as dramatically.

Perhaps it is not surprising that the influence of the guidelines has diminished after judges were given more discretion by the Supreme Court. But the degree of variance is not consistent across circuits, and in a system designed to promote national uniformity in sentencing, that is problematic. For example, the Sentencing Commission’s analysis reflects that within the Second Circuit, nongovernment-sponsored below-range sentences in fraud cases occurred more often than within-guideline-range sentences. Yet, this is only true in the Second Circuit, a region recognized for its significant caseload of financial crimes. And, while it is true that average sentences for fraud offenders have increased, primarily due to substantial increases in enhancements for loss amounts in the guidelines, there is a growing divergence between the average guideline minimum and the average sentence imposed in fraud cases in some, but not all, circuits. The Commission’s report reflects that the divergence is markedly more noticeable in the Second Circuit than in the Fourth Circuit. In the First Circuit, the majority of fraud sentences are imposed within the guideline range, but in the Second Circuit that has recently been true in fewer than 40 percent of fraud cases.

At the district level, the Commission’s analysis reflects that government-sponsored below-range sentences are occurring more frequently, but not consistently across districts, nor within certain districts. As a result of these growing disparities, within and across districts, the Commission recommends that Congress enact a more robust appellate review standard, and that appellate courts require a presumption of reasonableness for within-range sentences on appeal and greater justification for sentences substantially outside the guideline range. The Commission also recommends heightened review of sentences based on policy disagreements with the guidelines and a statutory requirement that courts give the guidelines “substantial weight.”

For those who have experienced the swinging pendulum of sentencing policy over the last 30 years, these results and the Commission’s preference for more uniformity will not be surprising. But, for fraud offenders who find themselves facing the prospect of a stint in the “big house,” the trend toward more frequent below-guideline sentences in many districts and circuits will be perceived as a swing in the right direction.