Case o' The Week: A Grand is "Substantial" (in the Ninth) - George and "Substantial financial hardship" guideline enhancement

The Hon. Judge Eric D. Miller

“‘I stole only from those who were already poor’ is not often advanced as an argument in mitigation, and we find it unpersuasive.”

   (Guess how the remaining sentencing issues panned out).

United States v. George, 2020 WL 547383, *4 (9th Cir. Feb. 4, 2020), decision available here.

Players: Decision by Judge Miller, joined by Judges Owens and Ryan Nelson. Hard-fought appeal by former AFD Ben Coleman.  

Facts: Christopher George was found guilty of fraud offenses after trial. His companies “defrauded nearly 5,000 homeowners out of millions of dollars.” Id. at *1. George’s original twenty-year sentence was reversed by Judges Reinhardt, W. Fletcher and Owens. 713 Fed.Appx. 704 (9th Cir. 2018). 

  On remand the district court and government agreed that newer (2015) guidelines should be used. Id. The court then reduced George’s sentence “by just five months, to 235 months.” Id. George appealed again: the case went to the new panel of Judges Miller, Owens and Ryan Nelson. Id.

Issue(s): “[George] focuses on the district court’s application of section 2B1.1(b) (2)(C) of the Guidelines, which provides for a six-level enhancement if the offense ‘resulted in substantial financial hardship to 25 or more victims.” U.S.S.G. § 2B1.1(b)(2)(C)(2016).’” Id. “George argues that the district court erred in finding that 25 or more victims suffered substantial financial hardship. Addressing that argument requires us to examine the meaning of ‘substantial financial hardship,’ a term we have not previously interpreted.” Id. at *2.

Held: “We conclude that section 2B1.1(b)(2) requires the sentencing court to determine whether the victims suffered a loss that was significant in light of their individual financial circumstances.” Id. at *2.

  “The notes reinforce the conclusion that our inquiry must consider how the loss affects the victim. For some victims, a loss of, say, $10,000 might not have any of the listed effects. For others, a much smaller loss might have such effects. The provision thus requires a focus on the victims’ individual circumstances, a focus that is consistent with the Sentencing Commission’s goal in amending section 2B1.1 in 2015 to ‘place greater emphasis on the extent of harm that particular victims suffer.’” Id. (internal quotations and citation omitted).

Of Note: Relying on the Ninth’s 1999 Merino decision (where a $32,000 cleanup was not substantial), George argued on appeal that the $1,000 to $3,000 fees lost by most victims was not “substantial” here. Judge Miller is unpersuaded. The district court found that these victims were on the brink of losing their homes because of mortgage non-payments. For these specific victims, a couple of thousand in fees paid to George’s (fraudulent) loan-modification company was “substantial” -- the district court did not clearly err. Id. at *3.

   Note that this is a whopping +6 offense level bump – a worrisome and expansive reading of “substantial” for fraud cases.    

How to Use: One has to squint hard to see the silver lining in this dark guideline cloud, but there’s a brief tort-ish analysis of interest towards the end of the opinion. The government argued that this enhancement did not require foreseeability – that is, the government argued that there was no requirement that the defendant could foresee that his actions would cause the victim’s “substantial” loss. 

  Judge Miller rejects the government's “but-for causation” argument, and presumes that the Commission meant to include the (higher) proximate cause requirement. Id. at *4. This is a useful interpretation for when the government stretches that causal link to the breaking point.

  (Unfortunately for Mr. George, the Ninth finds that both "but-for" causation and proximate cause were met here: his 19 ½-year sentence stands).

                                               

For Further Reading: Last week Mr. Roger Stone was sentenced to forty months in custody. His sentencing sparked two stories. First, DOJ’s dueling mitigation-memo revealed how much political meddling has undermined the independence of federal prosecutors. 

  The Stone sentencing also, however, illustrated just how unfairly punitive the sentencing guidelines are for all federal defendants. DOJ was right, to recommend a lower sentence than the whopping 7-9 years urged by the line AUSAs. Notably, Judge Amy Berman Jackson agreed with DOJ that the guidelines were too high -- even for this colorful defendant -- in a thoughtful and underreported sentencing decision. The Stone sentencing was a victory for judicial independence in sentencing, and yet another black eye for the increasingly irrelevant sentencing guidelines. 

   Who better to give us insights on both "Stone stories" than a former criminal-division AUSA, who is now a proud, hard-fighting member of a CJA panel?

N.D. Cal. CJA Panel Member Jeffrey Bornstein

 For a very thoughtful op-ed on both stories that weave through the Stone brouhaha, see “Trump’s Meddling is Wrong, but so are Overlong Sentences,” by stalwart NorCal CJA member Jeffrey Bornstein, available here. 

Image of the Honorable Judge Eric D. Miller from https://www.youtube.com/watch?v=nHQYcZ9Kr98

Image of Mr. Jeffrey Borstein from https://rbgg.com/attorneys/partners/jeffrey-l-bornstein/

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

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Case o' The Week: The Ninth Gets Constructive - Davis and Constructive Amendments

  Constructive amendment math: 1+1+9 = 3.

One (grand jury) indicts on a charge, and a second (petit) jury convicts on a different charge  -- add the Ninth, and a (third) petit jury will hear the charge again on remand and retrial.

 United States v. Ricky Davis, 2017 U.S. App. LEXIS 6445, (9th Cir. Feb. 16, 2017), decision available here.

The Honorable Judge Wallace Tashima

Players: Decision by Judge Tashima, joined by Judge Hurwitz and District Judge Adelman. Welcome win for AFPD Peggy Sasso, E.D. Cal. (Fresno).

Facts: Ricky Davis was convicted after trial of, among other things, attempted sex trafficking in violation of 18 USC § 1591(a). Id. at *2. Davis was charged with pimping a minor girl, “knowing or in reckless disregard of the fact that the person had not attained the age of 18 years.” Id. at *5.

  At trial, however, the jury was instructed that it could find Davis guilty if he “had a reasonable opportunity to observe [the minor], and that [the minor] would be caused to engage in a commercial sex act.” Id. at *6. (A valid approach to prove the offense under the statute, but not an allegation charged in the indictment).

Issue(s): “Davis challenges his conviction under § 1591(a) on the ground that the district court's jury instruction constructively amended the indictment.” Id. at *3.

Held: “We . . . conclude that a constructive amendment occurred because the crime charged [in the indictment] was substantially altered at trial, so that it was impossible to know whether the grand jury would have indicted for the crime actually proved . . . . Our holding today is consistent with United States v. Lockhart, 844 F.3d 501 (5th Cir. 2016), the facts of which are indistinguishable from this case. There, the Fifth Circuit observed: By including the language found in § 1591(c), the district court materially modified an essential element of the indictment by transforming the offense with which the indictment charged [the defendant] from one requiring specific mens rea into a strict liability offense. Id. at 515-16 (footnote and citation omitted). We agree.” Id. at *7-*8 (internal quotations and citation omitted).

Of Note: Constructive amendment, or variance? A critical question: constructive amendments usually mean reversals, while mere variances are more likely to be upheld on a “prejudice substantial rights” analysis.

  Judge Tashima explains “An amendment of the indictment occurs when the charging terms of the indictment are altered, either literally or in effect, by the prosecutor or a court after the grand jury has last passed upon them. A variance occurs when the charging terms of the indictment are left unaltered, but the evidence at trial proves facts materially different from those alleged in the indictment.” Id. at *8-*9 (internal quotations and citation omitted).

  Because the jury instruction here “had the effect of alternating the terms of the indictment,” this was a constructive amendment – earning a reversal.

  Davis is clear and accessible discussion on the (sometimes nuanced) issues of constructive amendments and variances – a good resource, for these challenges.

How to Use: Davis received a sentence of 300 months, concurrent, on another count – so why reverse and remand on this count? Because the sentencing package became “unbundled” when this count was reversed --  requiring remand and resentencing or retrial. Id. at *9-*10.

  “Unbundling” is valuable appellate principal, much on the mind of the Johnson litigators of late. Turn to Davis for a useful and recent example of this remand-hook.

                                        

For Further Reading: In February, A.G. Sessions created a “Task Force on Crime Reduction and Public Safety.” On April 5, the Attorney General distributed an “update” on that task force, to the United States Attorneys. See Memo here. Recommendations from the Task Force hit by July 27.

  In related news, A.G. Sessions recently spoke at Nogales and laid out immigration prosecution priorities. See speech here. 

  Busy times ahead.

Image of Judge Tashima from http://civicscontest.wixsite.com/kennedy/single-post/2017/02/02/Student-Civics-Contest-Judges-Recall-Internment-of-Japanese-Americans

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

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Case o' The Week: Ten Too High, in Ninth Eyes - Hardrick and Child Pornography, 404(b), and Sentencing

Hon. Stephen Reinhardt

“I do not profess to know the solution to the problem of how to cure the illness that causes otherwise law-abiding people to engage in the viewing of child pornography. I know only that lengthy sentences such as the one in this case, ten years (and below the guidelines at that) for a first offense, cannot be the answer.”

  United States v. Hardrick, 2014 WL 4358467, *6 (9th Cir. Sept. 4, 2014) (Reinhardt, J., concurring), decision available here.

Players: Decision by Judge Murguia, joined by Judges Reinhardt and Noonan. Notable concurrences by Judges Reinhardt and Noonan.

Facts: Agents i.d.’ed two IP addresses in Hardrick’s home associated with child porn. Id. at *1. Two seized computers each contained child porn videos. Id. Hardrick admitted to agents he used Limewire to download porn, but disclaimed knowingly downloading child porn. Id. He went to trial on two counts of knowing receipt. Id. The district court denied Hardrick’s motion to exclude uncharged child porn videos, finding them admissible under FRE 404(b). Id. Two videos were played to the jury: an agent testified that other vids found on both PCs (not admitted) were child porn. Id. at *2. Hardrick was convicted and sentenced ten years. Id. at *3.

Issue(s): “Harrick challenges the admission at his trial of evidence that he possessed other child pornography videos for which he was not charged.” Id. at *1. “Hardrick argues on appeal (1) that the district court abused its discretion in its balancing of the probative value of the uncharged-video evidence against the danger of unfair prejudice to him, and (2) that the district court erred by giving an insufficient limiting instruction on the 404(b) evidence and by failing to give another limiting instruction sua sponte when the 404(b) evidence was admitted into evidence.” Id. at *3.

Held: “The district court’s determination that the probative value of the 404(b) evidence outweighed the danger of unfair prejudice to Harrick was not an abuse of discretion.” Id. “[T]he district court limited the videos’ prejudicial effect by permitting the case agent to provide only ‘brief commentary’ on the location and file names of the other videos and not permitting the government to show the videos to the jury.” Id. “The district court also gave a limiting instruction at the close of the evidence.” Id. “We conclude that the district court properly exercised its discretion when it admitted the evidence of the uncharged child pornography videos found on Hardrick’s computers.” Id. at *4.

Of Note: Judges Reinhardt and Noonan concur, but write separate concurrences to flag the injustice of a ten-year sentence for someone convicted of receiving and viewing child pornography. See id. at *5 (Reinhardt, J., concurring in opinion, opining that psychological treatment rather than long prison sentences may be better approach); id. at *6 (Noonan, J., concurring in opinion, opining that the gov’t should advertise penalties to advance deterrence).

   These concurring judges are in good company: the Sentencing Commission has flagged child porn sentencing as one of its priorities. For the comments of the Federal Defenders on Child Porn sentencing, see letter here. (“The feedback from the courts continues to be loud and clear that guidelines for child pornography offenses are broken.”)

How to Use: Judge Murguia also rejected a challenge to the sufficiency of the evidence. Id. at *5. A gov’t forensic experts had testified that the child porn was downloaded into different locations on the same computer – something a virus or Trojan horse would be unlikely to do. Id. at *5. Location matters – Hardrick worth a close read when considering forensic defenses to these cases.

                                               

For Further Reading: What’s up with drug resentencing? Well, while the DOJ has received the names of eligible candidates from the Sentencing Commission, Defenders have not (!?!). The Commission will hopefully distribute names to the defense soon. A reminder on timing: no court can take action on a resentencing until Nov. 1, 2014, and no inmate can be released until Nov. 1, 2015. See USSC Press Release here. 

    It has been estimated that roughly 100 ND Cal inmates will be eligible for relief on 11/1/15 – although we’re awaiting final figures. For a helpful summary on retroactivity, see the Commission’s primer here.

Image of the Honorable Judge Reinhardt from http://www.pomona.edu/Magazine/PCMWin04/FSreinhardt.shtml

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

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