Criminal Justice Section
Criminal Justice Magazine
Volume 17 Issue 3
Pushing the Guidelines Envelope: When Loss Overstates the Offense
By Michael S. Pasano and Thierry Olivier Desmet
The U.S. Sentencing Guidelines were intended to define a "heartland" of typical cases to which guideline-specified sentences are to apply. ( See U.S. Sentencing Guidelines Manual, ch.1, pt. A, cmt. n.4(b).) The Sentencing Reform Act of 1984 provides, however, that a court may depart from the guidelines if the court "finds that an aggravating or mitigating circumstance exists that was not adequately taken into consideration by the Sentencing Commission in formulating the guidelines and that should result in a sentence different from that described." (18 U.S.C. § 3553(b); See United States v. Gunby, 112 F.3d 1493, 1499 (11th Cir. 1997).) This is particularly true when the loss in a case overstates the severity of a defendant’s culpability.
As the Second Circuit stated: "The legislative history reflects that it was not Congress’ aim to straitjacket a sentencing court, compelling it to impose sentences like a robot inside a guidelines’ glass bubble, and preventing it from exercising discretion, flexibility, or independent judgment." ( United States v. Lara, 905 F.2d 599, 604 (2d Cir. 1990) (relying on S. Rep. No. 225, 98th Cong., 2d Sess. 52, reprinted in 1984 U.S.C.C.A.N. 3182, 3235).) And the district court noted in United States v. Ferrouillet, No. CRIM.A. 96–198, 1997 WL 266627, at *3 (E.D. La. May 20, 1997), "when a court finds an atypical case, one to which a particular guideline linguistically applies but where conduct significantly differs from the norm, the court may consider whether a departure is warranted" (quoting U.S.S.G., ch. 1, pt. A, introductory cmt. n.4(b)). ( See also United States v. Cali, 87 F.3d 571, 580 (1st Cir. 1996) (departure is permitted in unusual or atypical circumstances).)
Whether to depart downward and to what degree are decisions strictly within the trial court’s discretion. ( See Koon v. United States, 518 U.S. 81, 98 (1996).) The downward departure must be reasonable under the specific circumstances of the case. ( See United States v. Sasnett, 925 F.2d 392, 398 (11th Cir. 1991) (citing United States v. Shuman, 902 F.2d 873 (11th Cir. 1990)).) A trial judge cannot categorically exclude any nonprohibited factor from consideration for a downward departure. ( See United States v. Coleman, 138 F.3d 616, 620 (6th Cir. 1998) (district court erred when it refused to consider whether downward departure was warranted based on disparity in Sentencing Guidelines’ treatment of crack cocaine and powder cocaine when coupled with government’s alleged improper targeting and inducement of African-American parolees to commit crack cocaine crimes).)
A different approach
The court in Ferrouillet, supra, took a different approach. It stated that "[i]n examining whether a case falls outside of the heartland, a court should ask what type of case a particular guideline is intended to cover." (1997 WL 266627, at *4.) Such an examination "looks at the legislative history, the guideline commentary, prosecutorial practices, and changes in the types of crimes prosecuted in federal courts. . . . Another aspect of a heartland analysis is a statistical profile of defendants prosecuted under the statute." In essence, the guidelines represent "the usual or ordinary case" for which a departure is "not appropriate."
Ferrouillet was a money laundering case in which the underlying conduct of bribes and illegal campaign contributions was so de minimis dollar-wise to convince the court to grant a downward departure. Courts have recognized that trial courts have the discretion to depart downward in cases where the offense level is pegged to a numerical figure, such as the amount of loss inflicted or the amount of drugs or money involved, and the resulting offense level overstates the seriousness of a defendant’s conduct. ( See 18 U.S.C. § 3553(b); U.S.S.G. § 2F1.1, cmt. n.11; U.S.S.G. § 5K2.0.) This is true regardless of whether the defendant is eligible for a downward adjustment under U.S.S.G. § 3B1.2.
In United States v. Restrepo, 936 F.2d 661 (2d Cir. 1991), the Second Circuit affirmed a downward departure for three money laundering defendants whose criminal activity bore "little relation" to the amount of money laundered. ( Id. at 667.) The three defendants were paid only to load boxes of money at a warehouse. The amount involved in the offense was $18.3 million—the amount of money seized at the warehouse when federal agents raided it. Under these circumstances, the court concluded that there was little or no connection between the quantity of money implicated and the extent of the defendants’ participation in the offense.
In United States v. Dorvil, 784 F. Supp. 849 (S.D. Fla. 1991), the court approved and followed Restrepo. The defendants in Dorvil were convicted of various offenses related to their part in smuggling 237 kilograms of cocaine from Haiti to Miami. Finding that the defendant crewmen were totally unaware of the cargo until after they reached Miami, the court held that the four-point reduction in offense level for minimal participation pursuant to U.S.S.G. § 3B1.2(a) was insufficient given their very limited involvement in the scheme:
Even after [the defendants’] offense level is adjusted for their minimal participation, the applicable level, tethered as it is to cocaine amount, does not adequately reflect the minimal nature of their roles. . . . [W]e conclude that departing on the basis of the defendants’ unusually minimal offense participation is consistent with the goals of the Sentencing Guidelines.
( Id. at 854 (citing U.S.S.G. § 5K2.0 and Restrepo).)
Other courts have also approved Restrepo. In United States v. Stuart, 22 F.3d 76, 83 (3d Cir. 1994), the Third Circuit held that "[w]here application of the Guidelines’ monetary tables bears little or no relationship to the defendant’s role in the offense and greatly magnifies the sentence, the district court should have the discretion to depart downward." Stuart was found guilty of receiving stolen federal property for his part in a scheme to sell stolen U.S. savings bonds valued at $129,000. His role was to carry the bulk of the bonds to the place of the sale and to stay out of sight until signaled to produce them. The Third Circuit noted that, regardless of whether the defendant met the section 3B1.2 requirement for a decrease in offense level, "a nine-level enhancement under these circumstances may well overstate both the degree of Stuart’s criminality and his need to be corrected."
Likewise, the court in United States v. Costello, 16 F. Supp. 2d 36 (D. Mass. 1998), departed downward six points in sentencing two defendants charged with conspiring to steal computer discs, compact discs, and computer software from their employer. After an evidentiary hearing, the court determined that the amount of the loss was nearly $21 million. The judge, however, found that the two defendants received only about 1 percent of the value assigned by the government to the goods, with a third conspirator organizing the theft and keeping the major part of the proceeds. Recognizing that under such circumstances the amount of loss was not, as the guidelines assume, an appropriate proxy for culpability, the court departed downward by six levels. ( See also United States v. Jackson, 798 F. Supp. 556, 557 (D. Minn. 1992) ("The court finds departure is proper because the offense level is extraordinarily exaggerated by the dollar value involved in that the defendant was a minimal cause of the $1.4 million loss.")
The defendant in United States v. Monaco, 23 F.3d 793 (3d Cir. 1994) asserted that a seven-level enhancement based on a loss of more than $120,000 overstated the amount of loss caused by his acts and hence overstated his criminal culpability. The Third Circuit determined that departure based on overstatement of criminality by the loss tables was permissible and found that Monaco’s intent was not to steal money outright from the government, but to expedite a government loan that was to be repaid. In Stuart, supra, the Third Circuit affirmed a loss calculation based on the face value of stolen bonds, but suggested that a departure might be appropriate and remanded because the defendant received little money for his participation in the offense.
In United States v. Broderson, 67 F.3d 452, 458 (2d Cir. 1995), the Second Circuit affirmed a downward departure based on a finding that the defendant did not personally profit from his fraud against the National Aeronautics and Space Administration (NASA). The court noted that the defendant significantly differed from the typical fraud defendant in that he did not set out to mislead NASA. He failed to disclose lower interest rate information to NASA because he wanted to help his employer and because he felt the lower interest rate negotiated was due to his own efforts.
As these decisions illustrate, a sentencing court must examine the particular circumstances surrounding each individual defendant’s participation in the crimes charged. If the guidelines’ assumption that the amount of losses reported in the presentence report as indicative of culpability is contradicted by the facts of the case, the court should depart downward. As the Costello court noted:
The United States Sentencing Commission, Guidelines Manual § 2B1.1 (Nov. 1997), points me first to the value of the loss to the victim, under the general theory that the amount of loss is an appropriate proxy for the gravity of the defendant’s offense. But that is not the end of the analysis. I am obliged to look at the specific facts of the case before me, the human beings involved, the nature of the charges, and the circumstances of the offense to determine whether the factual circumstances I confront are "of a kind or to a degree not adequately taken into account by the Sentencing Commission."
( Costello, 16 F. Supp. 2d at 37 (citing Title 18 U.S.C. § 3553(b)).)
In addition, effective November 1, 1995, the Sentencing Commission added a paragraph to the Commentary of U.S.S.G. § 5K2.0 that authorizes a downward departure based on a combination of factors. "The commission does not foreclose the possibility of an extraordinary case that, because of a combination of such characteristics or circumstances, differs significantly from the ‘heartland’ cases covered by the guidelines in a way that is important to the statutory purposes of sentencing, even though none of the characteristics or circumstances individually distinguishes the case." (U.S.S.G. § 5K2; see also United States v. Cook, 938 F.2d 149, 153 (9th Cir. 1991) (a unique combination of factors may constitute the circumstance that mitigates); United States v. Takai, 941 F.2d 738, 743 (9th Cir. 1991) (factors specifically found by the district court converge to constitute a unique mitigating circumstance); United States v. Pena, 930 F.2d 1486, 1495 (10th Cir. 1991) (combination of two factors justify departure); United States v. Bowser, 941 F.2d 1019, 1024–25 (10th Cir. 1991) (upholding departure on ‘unique combination of factors,’ none of which would have warranted departure independently); United States v. Sklar, 920 F.2d 107, 117 (1st Cir. 1990) (the convergence of factors might be inadequate to warrant departure when taken in isolation, but may in combination suffice to remove a case from the heartland); United States v. Rioux, 97 F.3d 648, 663 (2d Cir. 1996) (upholding downward departure based on physical impairment and charitable acts); United States v. Paradies, 14 F. Supp. 2d 1315, 1321 (N.D. Ga. 1998) (upholding downward departure based on defendant’s poor physical and mental health, service to his country, and community efforts).) ( See also Koon, supra; Broderson, supra.)
However the practitioner approaches U.S.S.G. Chapter 5 and favored, disfavored, and neutral departure grounds, the issue of departure exists in practically every criminal case. Notwithstanding the typical pronouncement in a presentence report that "no grounds for downward departure are identified," the defense lawyer should and must continue to push the trial court’s acceptance of the propriety of a downward departure. "Heartland analysis" is what the astute attorney shapes and argues in his or her favor. At sentencing, the lawyer’s reach should always exceed his or her grasp.
Michael S. Pasano , the vice chair for ClE, is a former federal prosecutor and current partner in the Miami office of Zuckerman Spaeder LLP, where he focuses on white collar criminal defense. Thierry Olivier Desmet is a litigation associate at Zuckerman Spaeder.