News & Publications
The True Bill, Hope for Federal White Collar Defendants By W. James Payne
October 29, 2014


October 27, 2014

By W. James Payne

Published by: The True Bill, North Carolina Bar Association

Incarceration: a real likelihood for federal white collar defendants. White collar criminal defense attorneys who practice in federal court are well-aware of this potential; United States Sentencing Guideline (U.S.S.G.) §2B1.1 makes it so. Recent movement in the federal system, however, leaves open the hope of less draconian sentences for white collar defendants. While prison is always taken by counsel as a possibility in criminal defense, the application of §2B1.1 to a “typical” white collar defendant can be traumatic, because prison becomes a reality rather than a theoretical possibility. This article will serve to alert counsel of the Old North State that an effort to bring relief is underway in the form of a “task force” of the American Bar Association.

More often than not the white collar defendant has never faced the thought of a conviction, much less the prospect of incarceration.  U.S.S.G. §2B1.1, however, quickly places a defendant in jeopardy of incarceration. First of all, this Guideline applies to the multitude of fraud prosecutions that continually make the news and typify white collar defendants.  Why?  Well, the “Introductory Commentary” to §2B1.1 makes that clear: “These sections address basic forms of property offenses: theft, embezzlement, fraud, forgery…” When one then contemplates the “typical” white collar offense (bank fraud, mortgage fraud, money laundering, even crop insurance fraud), the applicability of §2B1.1 becomes clear. Even the former governor of the State of Virginia, recently convicted on corruption and bribery charges, will face the reach of this Guideline section.

The next logical subject of inquiry is how this particular sentencing provision puts the white collar defendant at clear risk of incarceration.1 The Guidelines call for higher sentences as the financial amount involved increases. The calculus makes logical sense – a person who steals $100 should face a stiffer penalty than the one who steals only $10. A defendant facing a federal judge at sentencing is staring prison right in the face if the “loss” amount exceeds a mere $30,000.00. Such a defendant would face a prison sentence between 10 months to 16 months.  Although recent United States Supreme Court decisions provide the sentencing court now some discretion the prospect of prison remains a stark reality. This article alluded to the conviction of former governor of Virginia, Bob McDonnell.  Consider that the federal government contends the amount of bribery involved was at least $165,000.00. Mr. McDonnell’s lawyer faces, right out of the gate, a minimum sentence in excess of four (4) years for his client.

If you have only a passing acquaintance with the white collar criminal defense world, you may be surprised at such results. You may wonder how men and women, who otherwise have lived decent and honorable lives, go to prison on such a calculation. You would not be alone.  Newsweek, for instance published an article entitled “Nonsensical Sentences for White Collar Criminals” in June of this year. Part of the answer, and this author acknowledges the editorial comment here, lies in the over-criminalization of practically all aspects of our lives. Part of the answer also lies in the erosion of judicial discretion through the United States Sentencing Guidelines and the formerly-mandatory nature of those Guidelines. Congress long ago saw fit, in this author’s opinion, wrongly, to strip away from federal judges the inherent judicial authority to issue a sentence that a judge determined in his or her discretion to be appropriate.2  

To address this issue, The American Bar Association’s Criminal Justice Section has formed a “Task Force on the Reform of Federal Sentencing for Economic Crimes.” The mission of this Task Force is “…to identify the areas of weakness in the existing Federal Sentencing Guidelines for economic crimes, particularly those involving high loss amounts, but also to draft and propose specific changes to those guidelines to remedy those weaknesses.”3 Many great minds are on this Task Force. For instance, the Chair is Mr. Stephen Saltzburg, George Washington University School of Law. The Honorable Jed Rakoff, U.S. District Court, Southern District of New York, The Honorable Gerard Lynch, U.S. Court of Appeals for the Second Circuit, and The Honorable John Gleeson, U.S. District Court, Eastern District of New York are among the members. North Carolina is even contributing to this monumental effort with the membership of Duke University Law School professor, Sara Sun Beale.  That Task Force has issued proposed draft amendments4 to §2B1.1, hoping to inspire public debate and input, and, ultimately persuade the United States Sentencing Commission to amend the Guidelines.

Language in the proposal that is very encouraging for white collar criminal defense attorneys is the following: “…a sentence other than imprisonment is generally appropriate.”  (See §2B1.1(d) of the proposed draft.)5  While, admittedly, this language has a number of conditions, such as no prior record and a crime that is “not otherwise serious”, its prominent position in the Guideline calculation signals a welcome acknowledgment that for the “typical” white collar defendant, a sentence of imprisonment just does not fit the goals of punishment.6  The fact that the proposed language builds in an expectation for defendants who will have never encountered the criminal justice system is a tacit nod of the head to the argument that the current “throw away the key” structure of the “fraud guidelines” is simply out of all proportion.

Our hypothetical defendant of a $30,000.00 loss under the new proposal would start out at a much lower risk of imprisonment. That defendant would face an initial sentencing range of six (6) to 12 months, and the court would have discretion to satisfy any incarceration by “home detention.” Mr. McDonnell, at $165,000.00, would possibly start out at an exposure of 33 to 41 months (still a substantial sentence). We use the term “initial” and “possibly” because the new Guideline proposal has other factors to weigh, such as “culpability” and “victim impact,” the discussion of which stretches beyond the scope of this discussion. What is significant here, however, is the dramatic alteration of the “loss amounts” and the encoded acknowledgement that incarceration is the exception and not the rule.

Mr. Payne received his B.S. in Government from Campbell University and his J.D. from Campbell University School of Law in North Carolina. Practicing law since 1984, he has concentrated his efforts and attention to practicing only Criminal Defense. Native to North Carolina, Mr. Payne has been local to the Shallotte and Wilmington, North Carolina areas since 1988. Mr. Payne spent 30 years serving in the United States Marine Corps Reserves, five of which as a military judge, and retired as a Colonel.

1    Preliminarily, the reader should know that this article does not purport to conduct 
      an in-depth tutorial on federal sentencing guidelines.
2     North Carolina, of course, has done much the same with Structured Sentencing.
4     Id.
5     Id.
6    Congress codified the goals of punishment by what federal criminal practitioners 
      call “3553 factors” at 18 U.S.C. §3553.