Case o' The Week: Till the Guidelines Do Us Part - Hymas and Burden of Proof at Sentencing
In a successful marriage, couples share everything.
(Except relevant conduct loss amounts). United States v. Hymas, 2014 WL 1319543 (9th Cir. Mar. 25, 2015), decision available here.
Players: Decision by Judge Clifton, joined by Judges M. Smith and Hurwitz.
Facts: Aaron and his wife Tiffany co-owned housing businesses. Id. at *1. They submitted fraudulent mortgage loan applications, and ultimately pled guilty to wire fraud. Id. Aaron was on some mortgage applications, Tiffany was on others. Id.
The PSR for Aaron tallied the loss at $3.6 million, and included lender loss amounts for dismissed counts. Id. That loss amount increased the guideline range by eighteen levels. Id. at *2. Aaron objected to the loss amount and the burden of proof: a three day evidentiary hearing followed. Id. The court rejected Aaron’s argument that the clear and convincing standard of proof should apply, and used the preponderance standard. Id. Using that standard, the court agreed with the PSR’s guideline calculation (though it ultimately imposed a sentence roughly half of the guideline range). Id.
Issue(s): “Aaron appeals his sentence of 24 months’ imprisonment, contending that facts found by the district court should have been subject to the clear and convincing standard of proof rather than the preponderance of the evidence standard that the district court applied, because of the disproportionate impact of those facts on the sentence that was imposed.” Id. at *1.
Held: “The sentence imposed by the district court was not entirely based on the loan that was the subject of conviction . . . . The district court also used losses from other loans to calculate Aaron’s total offense level, increasing the total offense level by an additional 8 levels. Based on the principles articulated above, the clear and convincing standard of proof should have been applied to determine the amount of the losses from the other loans.” Id. at *4. “Inclusion of the losses from the other loans ultimately resulted in an increase of 8 offense levels, from 10 (based on the loss from the Count Four loan by itself) to 18. This additional 8-level increase more than doubled the Guidelines imprisonment range. Under our precedents, we conclude that the district court should have employed a heightened clear and convincing standard of proof with regard to the losses from other loans.” Id. at *4.
Of Note: Aaron did not win on his challenge to his count of conviction. Id. at *3. Because those losses “stemmed from conduct for which Aaron was convicted,” it “alleviat[ed] the due process concerns discussed above.” Id. That’s a key point --Aaron did not plead guilty to the dismissed counts that bumped up his loss, and he did not plead guilty to conspiracy. Id. at *5. Judge Clifton distinguishes precedent that did not require “clear and convincing” evidence when defendants had a chance to fully contest conspiracy charges at trial. Id.
Fair to guess that if Aaron had pled guilty to conspiracy to commit wire fraud with his wife, the loss amounts for these other counts would have only required the lower preponderance standard. Beware of conspiracy, in fraud plea agreements. Admitting that apparently innocuous charge (compared to substantive wire fraud allegations) may ultimately cost you the valuable “clear and convincing” standard at sentencing.
How to Use: The government argued that the court’s decision to use the wrong standard was harmless, because the court ultimately varied down from 41 to 24 months. Id. at *5. Judge Clifton has none of it: in the Ninth, get the Guidelines right first “and use that recommendation as the ‘starting point and initial benchmark.” Id. at *6. The Court thus concludes the error wasn’t harmless, and remands the matter to district court. Id. Another useful case for the proposition that a below-Guideline sentence doesn’t immunize a district court from review: if the Guideline benchmark is wrong, even a sentence well below that benchmark can be taken up.
For Further Reading: Mandatory minimum sentences are a terrible idea. We know it, judges know it, and two Supreme Court Justices know it. Last week Justices Kennedy and Breyer told a House Appropriations Committee that “the idea of total incarceration just isn’t working.” See Wall Street Journal article here.
Image of the split wedding cake from http://i.telegraph.co.uk/multimedia/archive/00647/news-graphics-2007-_647104a.jpg
Steven Kalar, Federal Public Defender N.D. Cal. Website at www.ndcalfpd.org