2015 Proposed Amendments To Fraud Sentencing Guidelines: A Good Start

This month marks the 10-year anniversary of United States v. Booker,1 the landmark case that transformed the federal Sentencing Guidelines into advisory sentencing rules. In the years following Booker, observers have recognized that the Sentencing Guidelines for white-collar fraud cases are not working as "guidelines." The Guidelines often recommend sentences that are simply out of step with what most courts are willing to mete out.2 As a result, judges are frequently varying from the sentences recommended by the Guidelines, often substantially.3 This in turn often leads to significant disparities among defendants who have committed similar crimes and who have similar criminal records, a result that judges are instructed to avoid.4

The Guidelines cannot be said to provide useful guidance to district court judges if judges are varying from them at a high frequency and to a significant degree.5 For defendants, a plea offer from the government that is based on an extremely high Guidelines range creates what may be an undue incentive to proceed to trial: it is hard to accept a plea offer of 15 or 20 years. The existence of the high Guidelines range often forces the government to take harsher positions at sentencing than they know will be ordered, further depriving the district court of what might be useful insights about a particular case. In short, the fraud sentencing guidelines are broken. Since judges must give due credence to the Guidelines,6 the sentencing guideline framework needs to be fixed in order for the federal sentencing system to work.

On Jan. 9, 2015, the Sentencing Commission took a small but productive step in the right direction when it promulgated a series of proposed amendments to Section 2B1.1 of the Guidelines, which governs sentencing in fraud cases.7 While the individual impact of these revisions is small, together they amount to a welcome first step—perhaps a down payment on a more substantive revision in the future. A period of notice and comment will now begin, running through March 18, 2015, with a public hearing on the proposed amendments to be held on March 12, 2015. This article briefly reviews the proposed amendments.

1. Inflationary Adjustments. The fraud sentencing guidelines are driven first and foremost by the loss calculations made by the district court. This myopic focus on loss amount has been the subject of criticism.8 The loss table has not been amended since 1987 to take into account inflation, even though $1 in 1991 has the same buying power as $1.74 in 2014.9 The commission has proposed two possible adjustments based on inflation. Each adjustment is based on the Consumer Price Index, but the two proposals employ different rules for rounding.

   The effect of both proposals is to significantly raise the level of loss required for a specific increase in levels. For example, the current Guidelines call for a 14-level increase when the loss amount is more than...