Sunday, October 21, 2012

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

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


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