Say What You Mean
Better Late Than Never
Bipartisan Drum Beating For Sentencing Reform
SAY WHAT YOU MEAN
Many of our readers are focused on personal legal problems, not the woes faced by big banks. Nevertheless, it’s pretty well known that over the past few years, the government has chased after bankers, accusing them of fraud in the 2008 mortgage crisis.
Most banks settled with the government, paying billions of dollars in fines. But when Bank of America was accused of wire and mail fraud, it did not roll over. Instead, BOA lost at trial and paid a $1.2 billion fine. Last week, the 2nd Circuit reversed, handing down a decision that could have a big impact on federal criminal fraud.
The civil lawsuit accused the bank of signing contracts with federal mortgage agencies promising to sell them only high-quality loans. There was no evidence the bank intended to break its promise when it signed the contract, but later, it sent the agencies loans the bank knew were stinkers, far from what had been promised in the contract. That, the government said, was fraud.
The 2nd Circuit reversed. The Court said that where the allegedly fraudulent statements are the terms in a contract, the government must prove the defendant intended to defraud the victim at the time the contract was signed, not later when the contract was violated (even if the violation was intentional). Merely breaching a contract, without more, is not fraud.
The district court had previously said it would be hyper-technical to make the government prove that BOA intended fraud when the contract was signed – instead of when the breach occurred. The Court of Appeals disagreed: “Far from being “arcane limitations, these principles fall squarely within the core meaning of common-law fraud that neither the federal statutes nor prior decisions disrupted.”
If applied in white-collar cases, this holding could have a substantial impact where the government’s fraud showing relied only on proof that a defendant had willfully violated a previously-signed contract.
United States ex rel. O’Donnell v. Countrywide Home Loans, Inc.,
Case No. 15-496-cv(L) (2nd Circuit, May 23, 2016).
BETTER LATE THAN NEVER
Jermaine Hickman did his time in plain sight every day for six years, yet he somehow became a lost soul to the BOP. That is, until one day in November 2013, when a corrections officer at FMC Rochester walked up and casually said, “Jermaine, you’re going home.”
“Don’t be playing with me,” replied Hickman, who thought he had another six months. The guard wasn’t playing: a few hours later Hickman walked free. In what appears to be one of the most flagrant cases of illegal incarceration in recent federal history, the BOP held Hickman for 13 months beyond his mandatory release date. He later sued, and – only after government lawyers tried to blame Hickman for not having filed a BP-9 (BOP administrative remedy form) to complain to the BOP about its blunder – Uncle Sam settled with him for $175,000.
Publicity over Hickman’s case led the DOJ inspector general’s office to examine why and how often such mistakes occur. In a report released last week, the IG said that from 2009 to 2014, the BOP kept more than 4,300 federal inmates locked up beyond their scheduled release dates, some of them for an extra year or more. The BOP itself admitted to only 157 errors. Unsurprisingly, 152 were late releases and only five were early releases. Three of the late releases and three of the early releases involved an error resulting in more than a year of over- or under-served time by the inmate.
The New York Times said last Tuesday that the findings “are a potential embarrassment for the BOP at a time when the Obama administration has assailed what it says are unfair and unduly harsh sentences for many inmates, particularly minorities and nonviolent offenders.”
Most of the cases led to inmates being held for an additional month or so, but 61 were held for more than that, and three inmates were kept for more than a year beyond their scheduled release.
Dept. of Justice Office of Inspector General, Review of the
Federal Bureau of Prisons’ Untimely Releases of Inmates (May 24, 2016)
We all know guys like Bobby Nerius. They just can’t go along with the program. In Bobby’s case, he was doing a 16-year stretch at a USP – bad enough – but he had to go and make it worse. In one case, he broke a sprinkler head in his cell, flooding the place. In a more celebrated incident, he bit the end off a correctional officer’s finger.
The BOP had him charged with resisting correctional officers and damaging property. He pled guilty to both counts, and was sentenced as a career offender, with some extra points added because biting the finger was considered a crime of violence. At sentencing, Bobby acknowledged that he had faced many disciplinary incidents in prison but, he said, since being charged with the sprinkler and the finger, he had remained “completely incident free at a very high level security institution with very strict conditions.” He was a changed man.
The district court admired his rehabilitation, but noted it followed a “long history with the criminal justice system.” The court rewarded him with a bottom-of-the-Guidelines sentence of 37-46 months.
While Bobby’s appeal was pending, Johnson v. United States was handed down. The Court of Appeals sent the case back because, after Johnson, resisting a corrections officer by finger biting was no longer considered a crime of violence. This time, Bobby’s Guidelines range was 30-37 months. At sentencing, the district court discussed Nerius’s criminal and disciplinary history – including his recent record of good behavior – and found a sentence at the high end of the new guideline range to be reasonable. Bobby got 36 months.
Bobby felt like he had done a lot of work to end up saving one lousy month. He appealed again, this time arguing that his revised sentence raised a presumption of judicial vindictiveness and thereby violated due process. He reasoned that at his initial sentencing, he was given the bottom of the Guideline range, but at his resentencing, he was sentenced near the top of the revised range. There just had to be vindictiveness afoot.
Last week, the 3rd Circuit disagreed with Bobby. The appellate court explained that under North Carolina v. Pearce, 395 U.S. 711 (1969), when a defendant receives a higher sentence after having getting the old one overturned on appeal, it is presumed that the district judge is being vindictive because he or she had been overruled. This presumption of vindictiveness “may be overcome only by objective information in the record justifying the increased sentence.”
The 3rd Circuit explained, however, that the Pearce presumption does not apply when the revised sentence “is less than that originally imposed and there is no evidence of vindictiveness on the part of the sentencing court.” If the presumption does not apply, an appellant must provide “proof of actual vindictiveness” by the sentencing judge at resentencing, a task that’s well nigh impossible.
Under Pearce, the Court of Appeals uses the actual sentence imposed following the appeal as a litmus test: if it is higher than the prior sentence, vindictiveness is presumed. If it is lower, vindictiveness is not presumed. Pearce does not require “the resentencing process to mirror the original proceeding,” that is, for Pearce purposes, the district court need not impose a sentence at the bottom of the revised Guidelines range simply because its original sentence was at the bottom of the then-applicable range.
What’s more, the Court said, Bobby did not show any evidence of actual vindictiveness. The district court explained that Bobby’s criminal history and poor prison disciplinary record – dozens of incident reports between 2005 and 2013 – seriously discounted his two-year record of good behavior.
United States v. Nerius, Case No. 15-3688 (3rd Cir. May 25, 2016)
Norman Shaw ran into a perfect storm of bad luck and even worse judgment. First, he was locked up at a joint that ran an inmate “tip line.” Second, he was carrying around some balls of heroin, and he was not the only inmate to know it. Third, one of the inmates who knew it apparently did not much like Norm, and dropped the dime on him over the tip line.
You can see where this is going. Norm got busted, and was charged with another felony on top of the bank robbery charge that had landed him in federal prison to begin with. And that’s when Norm made his final mistake. He decided to represent himself.
At trial, Norm claimed that when the COs searched him, they violated his 4th Amendment rights. Also, he demanded know who turned him in, and he wanted the right to cross-examine the tipster at trial. The district court turned him down on both arguments.
Last week, the 7th Circuit upheld Norm’s conviction. The Court said that “as a prisoner, Shaw has highly curtailed 4th Amendment protection… A right of privacy in traditional 4th Amendment terms is fundamentally incompatible with the close and continual surveillance of inmates and their cells required to ensure institutional security and internal order.” The Court noted that “under our precedent, Shaw could only claim that the prison personnel violated his constitutional rights if there were a search that somehow invaded his body.” Norm’s search did not do so.
As for Norm’s demand that he get the identity of the anonymous tipster, the Court said the “government has a limited privilege to shield the identity of a confidential informant,” and that privilege is stronger where the person is a “mere tipster” who – as in this case – isn’t part of the crime. In a prison setting, the Court said, the privilege is stronger still, because “without the protection of anonymity, prisoners may never provide tips.”
The privilege is only defeated if a defendant can show the tipster’s identity “is relevant and helpful to his defense or essential to a “fair determination of a cause.” Here, the Court said, Shaw had no “meaningful counter-argument” that he needed the informant’s identity.
United States v. Shaw, Case No. 14-2881 (7th Cir. May 27, 2016)
An Eastern District of New York judge spared defendant Chevelle Nesbeth from prison last week, reasoning that the “collateral consequences” she will face for her drug smuggling felony was sufficient punishment.
Senior Judge Frederic Block noted that there are “nearly 50,000 federal and state statutes and regulations that impose penalties, disabilities, or disadvantages on convicted felons.” In this case, Judge Block wrote that the various side effects of Chevelle’s conviction – such as inability to fulfill her goal of being a school principal – suggested to him that she “has been sufficiently punished, and that jail is not necessary to render a punishment that is sufficient but not greater than necessary to meet the ends of sentencing.”
Chevelle’s Guidelines called for 33-41 months. The judge’s 41-page decision justifying the sentence noted some circuits were stricter about not considering collateral consequences of conviction at sentencing, but the Judge said “happily, I am a creature of the Second Circuit, and its embrace of the impact and significance of the collateral consequences facing a convicted felon as bearing upon a just punishment is the enlightened view.” After listing all of the likely consequences flowing from Chevelle’s conviction, the Court decided that probation punished her enough.
Judge Block said it was for federal and state lawmakers “to determine whether the plethora of post-sentence punishments imposed upon felons is truly warranted, and to take a hard look at whether they do the country more harm than good.” As for the Judge’s courtroom, he observed that defense counsel has an “overarching duty to advocate the defendant’s cause,” and therefore, defense “counsel has … a professional responsibility to timely inform both the court, as well as his client, of the significant collateral consequences facing the defendant as a result of a conviction.”
United States v. Nesbeth, Case No. 1:15-cr-0018 (E.D.N.Y. May 25, 2016)
BIPARTISAN DRUM BEATING FOR SENTENCING REFORM
Two unlikely bedfellows – the president of the conservative action organization FreedomWorks and the director of criminal justice policy at the left-wing Center for American Progress – teamed up last Tuesday to urge the Senate to vote on the Sentencing Reform and Corrections Act (S. 2123). Writing in the Congressional newspaper The Hill, the authors complained that since sentencing reform was introduced last October, “key stakeholders and members of Congress have been discussing and negotiating revisions to this legislation,” but it still has not come up for a vote.
On April 28, lawmakers released a number of revisions to the Act, most of which stripped retroactivity out of the measure and was aimed at increasing support for the bill. Since then, the National District Attorneys Association has thrown its support behind the revised Act, saying it now “strikes the appropriate balance.” Most recently, the International Association of Chiefs of Police and the Major County Sheriffs’ Association endorsed the bill.
Last Tuesday, the Washington Examiner newspaper joined the fray, arguing that conservatives should not fear that sentencing reform will make the illegal immigration problem worse. The paper said, “Conservatives see the world the way it is, following facts and evidence to make sound policy decisions. In this case, the facts and evidence point to why criminal justice reform will succeed at the federal level. The federal government is overdue in taking a step forward for a system that is gravely lagging behind the states and the success they have seen with right-sizing their criminal justice system.”
The future of the bill, however, is far from clear. So far, Senate Majority Leader Mitch McConnell (R-Kentucky) has not scheduled the measure for a vote, and time to do so is rapidly running out. Republican presidential candidate Donald Trump has not staked out a clear position on sentencing, but so far he has taken a strident anti-crime stance and has deplored the early release of many federal prisoners serving terms for drug crimes.
Two weeks ago, Sen. Tom Cotton (R-Arkansas) – a foe of sentence reform – argued that America’s problem is that not enough people are in prison. His assertion, called “banal” and “fatuous” by the conservative magazine Federalist, engendered several responses last week. One from a former Tennessee Assistant District Attorney was an open letter to Cotton, in which she said “you stated last week that the US has an “under-incarceration” problem, and … that many serious, violent offenders are not being caught and their crimes are not being solved. You are correct about this. And you can thank the War on Drugs. Since the War on Drugs began, clearance rates for serious, violent crimes have declined.”
The Federalist article said “Congress would be better able to protect the public from violent, dangerous crime if Cotton would stop defending 30-year-old federal sentencing schemes written by Tip O’Neill and George Mitchell. The chief problem with those schemes is not that they produced ‘mass incarceration’ or ‘under-incarceration,’ but rather, they have resulted in misincarceration. They do not allow federal courts to impose more serious punishments for more serious offenders and lesser penalties for less culpable offenders. Cotton might think one-size-fits-all is the right approach for government-mandated wages, but the consequences for criminal justice are disastrous.”
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