Fall 1994 – Issue 5
Federal Sentencing and Postconviction News
RECENT FAVORABLE CASE LAW
Too many appellate cases reviewing departure issues are written on the mistaken assumption that, to be valid, a departure must be supported by language in the Guideline Manual. The First Circuit has recognized that, under 18 U.S.C. §3553(b), a sentencing court is empowered to depart for any unusual circumstance‹unless the Guidelines explicitly prohibit a departure. The nine bases on which a sentencing court may never depart are race, sex, national origin, creed, religion, socio-economic status, lack of guidance as a youth, drug or alcohol abuse, and economic pressure on a trade or business. U.S.S.G. §5H1.4, §5H1.10, §5H1.12, and §5K2.12. U.S. v. Rivera, 994 F.2d 942 (1st Cir. 1993).
The Second Circuit remanded for resentencing based on the sentencing judge’s statement. Alluding to the defendant’s extraordinary family difficulties, he commented that he “wish[ed] the law permitted me to do something, but it doesn’t.”. The appeals court reasoned that the sentencing court’s remark, coupled with the defendant’s plea agreement not to request a downward departure, may have led the court to conclude erroneously that it lacked the authority on its own to depart downward on this basis under §5K2.1 (p.s.). U.S. v. Ekhator, 17 F.3d 53 (2d Cir. 1994).
In a recent appellate victory for The Law Offices of Alan Ellis, the Eighth Circuit overturned a $2.5 million “committed” fine, based on the district court’s failure to perform the “careful balancing of . . . conflicting factors” as required by §5E1.2(d). Among the factors a court must consider in determining the amount of a fine are the need to impose a fine to create a just punishment, weighed against the defendant’s ability to pay and the burden the fine would place on his family when compared to alternative punishments. The court also held that the statute that authorized a district court to impose “committed” fines (those which require imprisonment until they are paid) was repealed on November 1, 1987, by the Sentencing Reform Act. Finally, although the court found no reversible error on this basis, it authorized the district court on remand to rethink the imprisonment portion of the sentence, based on the fact that it had failed to explain its reasoning at sentencing, as required by 18 U.S.C. §3553(c)(1), for imposing sentence at a particular point within a guideline range that exceeded 24 months. U.S. v. Bauer, ___ F.3d ___, 1994 WL 84156 (8th Cir. 1994).
The Sixth Circuit has held that where a defendant fraudulently obtained bank loans to pay off debts from an earlier uncharged (and unrelated) fraud, the loss to the victims from the earlier fraud was not relevant conduct and, therefore, should not have been included in the offense level calculation. U.S. v. Moored, 997 F.2d 139 (6th Cir. 1993).
In a fraud case, the guideline offense level is driven by the loss to the victims. Where the victims suffer no loss (such as where the fraud is discovered early on), the “intended or probable loss” is used. The Tenth Circuit has held that the “intended or probable loss” can be no greater than what the actual loss would have been had the fraud continued. Thus, in U.S. v. Galbraith, ___ F.3d ___, 1994 WL 92234 (10th Cir. 1994), a sting operation in which the government gave the defendants the opportunity to attempt to defraud a non-existent institutional investor, the court found the loss to be zero. The court reasoned that since the intended victim could never have lost any money, the “intended or probable loss” had to be zero.
Where a defendant fraudulently obtains a loan by misrepresenting information on a loan application, the loss under §2F1.1 is the “expected” or “actual” loss to the lender‹not the amount of the loan. Thus, in U.S. v. Lavoie, ___ F.3d ___, 1994 WL 96636 (6th Cir. 1994), the loss was not the $30,000 loan, but the difference between the unpaid portion of the loan at the time the offense was discovered and the amount of money the lender received from the forced sale of the asset pledged to secure the loan (in this case, $6,000). See also U.S. v. Buckner, 9 F.3d 452 (6th Cir. 1993) (where loan is not secured by an asset, loss is the amount of the loan less the amount repaid before the discovery of the fraud).
Drug quantity does not foreclose a minor role adjustment. The issue is not the amount of drugs included in the defendant’s relevant conduct, but whether the defendant is “less culpable than most other participants.” §3B1.2. U.S. v. Webster, 996 F.2d 209 (9th Cir. 1993).
Obstruction of Justice
Unless a particular guideline specifies otherwise, adjustments to the offense level are determined on the basis of relevant conduct, as defined in §1B1.3. Since the Obstruction of Justice adjustment, §3C1.1 is to be applied only to obstructions “of the instant offense,” the normal relevant conduct analysis does not apply. Using this reasoning, the Tenth Circuit reversed the obstruction adjustment in U.S. v. Levy, 992 F.2d 1081 (10th Cir. 1993), holding that for the enhancement to apply, the obstruction must be related to a count of conviction. The district court erroneously enhanced the defendant’s offense level based on conduct involving charges that were dismissed.
Presentence Investigation Reports
The Fifth Circuit held in U.S. v. Elwood, 999 F.2d 814 (5th Cir. 1993) that district courts may not rely on unsupported recommendations in PSIs to justify upward adjustments. The court rejected the leadership enhancement, which the district court based solely on the recommendation of the PSI. The PSI recited no facts to support its recommendation‹only the unsupported conclusions of the prosecutor and DEA agent.
Quantity of Controlled Substances
Although courts at sentencing may estimate quantities of controlled substances, they must base those estimates on evidence related to a defendant’s relevant conduct. Reversing the sentence in U.S. v. Garcia, 994 F.2d 1499 (10th Cir. 1993), the Tenth Circuit held that it was improper for the district court to estimate the size of several shipments of marijuana from a particular city in Mexico based on an agent’s testimony that, in his experience (not related to the defendant), marijuana shipments from the city in question averaged 60-100 pounds. In a related case, the Tenth Circuit rejected an estimate of drug quantity that was based on an uncorroborated statement by a confidential informant. The agent’s statement that the informant had given reliable information in the past was not “sufficient corroboration by other means” as required by §6A1.3. U.S. v. Ortiz, 993 F.2d 204 (10th Cir. 1993).
Violation of a Plea Agreement
The Fifth Circuit ruled in U.S. v. Wilder, 15 F.3d 1292 (5th Cir. 1994), that the government violated its plea agreement when the court relied on evidence obtained through the defendant’s cooperation to impose an obstruction of justice enhancement. The plea agreement provided that nothing revealed by the defendant as part of his cooperation would be used against him. The court remanded for resentencing without consideration of the obstruction enhancement.
From the Sentencing Commission
The U.S. Sentencing Commission recently submitted to Congress six Guideline amendments that make a number of important changes. Notwithstanding rejection or amendment by Congress, they will become effective on November 1, 1994. 28 U.S.C. 994(p). The following are highlights:
§1B1.3: This amendment to Application Note 2 clarifies that relevant conduct does not include conduct by members of a conspiracy prior to the defendant’s joining it. For example, where a defendant knew, prior to joining the conspiracy, that it distributed two kilograms of cocaine per week it, this cocaine would not be included as relevant conduct.
Same Course of Conduct
§1B1.3(a)(2): Where the Guidelines require the grouping of multiple counts (such as in drug or fraud cases), relevant conduct usually includes offenses that were part of the “same course of conduct as the offense of conviction.” §1B1.3(a)(2). This amendment to Application Note 9(B) clarifies the definition of “same course of conduct” by adding a “regularity” consideration. If this amendment is adopted before a court could find an offense to be part of the “same course of conduct,” it would have to take into account the similarity of the offense with the offense of conviction, the time interval between the offense and the offense of conviction, and whether the offenses were committed with “regularity.” If any one of these elements is missing, “a stronger presence of at least one of the other factors is required.”
Retroactivity of Guideline Amendments
Section 1B1.10(c) (p.s.) (previously called subsection (d)) implements 18 U.S.C.§3582(c)(2), which permits a court to reduce a sentence that is already being served, based on a subsequent reduction in the applicable guidelines. The amendment to §1B1.10(c) clarifies two controversial points in the application of that power. First, under the 1994 amendment, sentence reduction under §1B1.10(c) will be available only when the Commission has assigned a new and lower guideline range (and then only when the amendment in question is listed in §1B1.10(c)), and not merely, for example, when pertinent commentary or application principles have been changed. Second, when calculating the reduced sentence, the court is to substitute only the reduced guideline level, keeping all other portions of the original computation unchanged, and not reconsider other issues or use any other sections of the manual that may have been amended (favorably or unfavorably) in the interim.
Offense Levels for Controlled Substance Cases
§2D1.1(c): The Commission has amended the Drug Quantity Table, deleting Levels 42 and 40. Level 38 will now cover the drug quantities previously included in these levels.
§4B1.1: When a defendant is a “career offender” under the criteria set by this guideline, the offense level is set by the career offender table (where it provides a higher offense level than would otherwise be applicable). This table bases the offense level on the Offense Statutory Maximum. In this clarifying amendment to Application Note 2, the Commission defines this term as the maximum sentence without considering any increases based on a defendant’s prior convictions.
§5G1.2: The Commission has amended the commentary to provide that even where consecutive sentences are mandated by law, terms of supervised release are to run concurrently.
Grounds for Departure
§5K2.0: This amendment makes it clear that an offender characteristic that may not ordinarily be relevant may, nevertheless, form the basis for a departure in unusual cases. The amendment also states that a combination of circumstances may also warrant departure, even where each circumstance standing alone would not.
It is important to remember that before drugs distributed by a conspiracy can be counted as relevant conduct, they must be both reasonably foreseeable and “in furtherance of the jointly undertaken criminal activity.” §1B1.3(a)(1)(B). Too often, appellate courts seem to neglect or misapply this last criterion. I am, therefore, pleased to note that the Fourth Circuit recently upheld a district court’s decision to exclude from a co-conspirator’s relevant conduct cocaine, which, although reasonably foreseeable, was not “in furtherance of [his more limited] jointly undertaken criminal activity.” U.S. v. Banks, 10 F.3d 1044 (4th Cir. 1993).
Lack of Youthful Guidance
The Commission amended §5H1.12 (p.s.) effective November 1, 1992, to provide that a “lack of guidance as a youth” is not a basis for departure. Defendants facing sentencing for offense committed prior to that date should be aware that this basis for departure is still available to them. U.S. v. Clark, 8 F.3d 839 (D.C. Cir. 1993).
Retroactivity of Guideline Amendments
If U.S.S.G §1B1.10 does not list a particular amendment as being retroactive, a defendant generally is not entitled to the benefit of any favorable change unless the amendment is a so-called “clarifying” amendment (generally, commentary by the Commission as to how it intends various guidelines to be applied under certain circumstances). Some of these clarifications have the potential to benefit significantly clients who have already been sentenced. Clarifications, as opposed to §1B1.10 substantive changes, are given retroactive effect under the theory that the clarified version is what the Commission intended all along.
Perhaps the most significant clarification to date with the potential to affect the most defendants already sentenced is the 1992 amendment to the relevant conduct section as it applies to conspiracy cases.
A defendant who would benefit from any of these clarifications is entitled to relief by way of a motion to correct the sentence under 28 U.S.C §2255. “Any sentence based on a guideline application of a sentence which was never intended is a sentence imposed in violation of law.” 18 U.S.C §3553(b). See, for example, U.S. vs. Isabel, 980 F.2d 60 (1st Cir. 1992), wherein the First Circuit held that a 2255 petitioner was entitled to a sentencing hearing because a clarifying amendment on the obstruction guideline that went into effect after he was sentenced established that he should not have been given a two-level obstruction enhancement.