Case o' The Week: Too Poor to Pay, High Sentence OK - Rangel, Restitution, and Sentencing

Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi

With thousands of eager marks desperate for relief from foreclosure, this is a wonderful era for modern fraud artists with new spins on old Ponzi schemes.

(Unless, of course, you happen to get caught). United States v. Rangel, 2012 WL 4857207 (9th Cir. Oct. 15, 2012) (ord. amend. & denying reh’g en banc), decision available here.

Players: Decision by Judge Clifton, joined by Judges Farris and Ikuta.

Facts: Rangel defrauded lots of folks of lots of money in a classic Ponzi scheme that included mortgage fraud. Id. at *1-*2. He pleaded guilty to a deal wherein the parties jointly recommended 180 months of custody. Id. at *1.

The district court busted the deal, and then varied upwards to an above-guideline term of 264 months. Id. at *2. The district court gave no notice of its intent to impose a sentence above the guidelines. Id. at *4.

During the sentencing hearing the court “inquired into Rangel’s ability to pay restitution to his victims . . . the court was informed that Rangel was not in a position to pay any restitution toward the victims’ losses.” Id. at *2.   

Issue(s): “Rangel argues that the district court erred in considering his inability to pay restitution to his victims in determining his sentence.” Id. at *5.

Held: “We conclude that the court did not abuse its discretion in considering the serious financial impact Rangel’s crimes had on his victims.” Id. “The district court in this case did not consider Rangel’s inability to pay restitution itself as an aggravating factor in imposing a longer sentence, but focused instead on the impact on the victims of Rangel’s crimes.” Id. at *6. “Consideration of the impact on the victims was appropriate.” Id.

Of Note: This case brings to mind an analogous spin on Acceptance of Responsibility. When we first challenged the Acceptance Guideline, USSG § 3E.1.1, we were assured the approach was constitutional because the guideline didn’t punish for going to trial – it instead rewarded pleas of guilt. (?!?) See generally United States v. Gonzalez, 897 F.2d 1018, 1020 (9th Cir. 1990).

Here, the Ninth assures us that Rangel didn’t receive a higher sentence because he was poor and couldn’t pay back the victims (which would be unconstitutional). Id. at *5. Instead, Rangel received his whopping above-guideline sentence because the lack of restitution had a big impact on the victims – and that factor is fair game for a higher sentence. Id. at *6. 

For those of us who defend indigent clients, Rangel’s distinction is a bit of a head-scratcher –- and a close look at the amended language at the outset of this order doesn’t do much to reassure the reader that Rangel isn't being punished for poverty.

How to Use: Another holding of Rangel is the unsurprising conclusion that no notice is required for an upward variance under § 3553(a) (in contrast to an upward departure from the guidelines). Id. at *4. Beware that you can get blindsided with an above-guideline sentence, with no notice, if a district court is simply careful enough to characterize higher term as a Booker variance instead of an upward departure. (Although, as a matter of general fairness, a district court should voluntarily give notice of an upward variance for the same reasons it is required for an upward departure under Fed. R. Crim. Proc. 32(g)).

                                               

For Further Reading: Rangel was sentenced to whopping twenty-two years in federal custody, even though he had not inflicted any violence on any victim -- over two decades of incarceration for fraud. Id. at *1. While it appears that defense counsel did a yeoman’s effort pitching mitigating arguments, id. at *2, could more mitigation work have lowered this high term? Do capital counsel, with their years of expertise in mitigation work, have lessons to teach us for white collar defense? That’s the thesis of an interesting new piece by Professor Todd Haugh, Can the CEO Learn from the Condemned? The Application of Capital Mitigation Strategies to White Collar Cases, Amer. Univ. L. Rev. Vol. 62, 2012, available here.

Image of Charles Ponzi from http://upload.wikimedia.org/wikipedia/en/0/0e/Ponzi1920.jpg

Steven Kalar, Federal Public Defender N.D. Cal. FPD. Website at www.ndcalfpd.org

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Case o' The Week: No Mahalo for Supervised Release Notice Decision -- Leonard

Quadruple the Probation recommendation, double the high-end of the guideline range, and all with no notice from the sentencing court -- no problem, writes Judge Clifton (left) in the disappointing Leonard decision. United States v. Leonard, __ F.3d __, No. 06-30127, Slip Op. 4425 (9th Cir. Apr. 18, 2007), decision available here.

Players: Hard fought case by AFPD Gerald Needham.

Facts: Leonard, a thorough defendant, blew four out his four conditions of supervised release. Slip Op. at 4428. He didn’t contest the violations, and the P.O recommended six months – towards the low end of the 5-11 month guideline range. Id. Without prior notice, Oregon District Judge Jones sentenced Leonard to twenty-four months – the stat max for the term of supervised release.

Issue: “This case primarily presents the question of whether, following violation by a defendant of conditions of supervised release, a district court may impose a sentence above the advisory range set forth in the Sentencing Guidelines, without giving advance notice of the possibility of a sentence outside the Guidelines range.” Id. at 4427-28.

Held: “We conclude that such advance notice is not required and affirm the sentence imposed in this case.” Id. at 4428.

Of Note: Pick up a Class A misdemeanor with a guideline range of 0-6 months, and a judge has to give notice before departing upwards from the guideline range and giving a seven month sentence. See United States v. Evan-Martinez, 448 F.3d 1163 (9th Cir. 2006) (requiring notice of upward departure post-Booker). Here, though, defendant Leonard got over double the guideline high-end – over a year over the range – and no notice is required? As Judge Clifton concedes, “It can be argued that our holding today is at odds with our recent holding in . . . Evans-Martinez.” Id. at 4431. Yep – seems so.

The opinion (tries to) reconcile Evans-Martinez by explaining supervised release violations are different, but why? Violation guidelines have always been advisory, but so are all the guidelines after Booker. Are supervised release guidelines “super-advisory,” but “normal” guidelines just “normal-advisory?” Just another goofy permutation in the improvised sentencing world post-Booker.

Odd about this case: defendant Leonard had a three year term of supervised release with his original sentence, but got a 24 month “stat-max” violation sentence? Seems a year short of the “true” stat max. I posed this dilemma to the COTW e-mail string and offered an Anchor Steam for the answer: here it is. Section 3583(b)(2) of Title 18 authorizes a three-year term of supervised release for a Class C felony (Section 922(g)(1), felon in possession, is a Class C). Section 3583(e)(3), however, only permits a two-year prison sentence for a revocation of a Class C felony term of supervised release.

This illustrates two points; first, we have an enlightened Bench in the N.D. Cal. -- stat-max supervised release violation sentences are rare, so we don't have much experience with the issue. Second, if you offer the defense bar an Anchor Steam they'll research anything for you, in record time.

How to Use: First, ignore Leonard and preserve due process challenges to (non-noticed) above-guideline supervised release sentences. Rita / Claiborne is coming down any day, and there’s certain to be new spins for sentencing challenges.

Second, use Leonard as a sword when arguing for a below-guideline supervised release sentences. If Chapter Seven guidelines mean so little that they don’t trigger constitutional protections, they’re entitled to no deference from a judge who wants to Do The Right Thing.

Third, bear Leonard in mind for Judge "Max" -- district courts with reputations for high sentences. Here, the poor defendant folded, didn't demand a revocation hearing, admitted the violations, and still got the stat max without prior notice. If that's the way things will go, might as well go through full revocation proceedings, preserve Crawford challenges (yet to be decided by the Supreme Court), demand discovery, take appeals, and make the district court work a little before maxing out a defendant.

For Further Reading: We’ve profiled W. Bush appointee Judge Clifton of Hawaii before, here. He’s not due too much grief for the Leonard opinion – one has to concede that the weight of circuit authority is against notice for above-guideline sentences in supervised release violations. Slip. Op. at 4431. Although Judge Clifton has a civil background, he’s ventured into criminal opinions in the last year or two. While he’s admittedly no Reinhardt, see United States v. Mueller, 463 F.3d 887 (9th Cir. 2006) (Clifton, J.) (reversing probationary sentencing in mand-min child porn case), he’s a considerably better defense draw than some of his Clinton-appointed colleagues, see United States v. Nguyen, 465 F.3d 1128 (9th Cir. 2006) (Clifton, J.) (reversing supervised release violation conviction arising from use of nolo pleas).

Steven Kalar, Senior Litigator N.D. Cal. FPD. Website at http://www.ndcalfpd.org/

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