No jail for Beanie Babies tax fraudster

Judges are starting to speak out about the ridiculous guideline system we have and incarcerating first time non-violent offenders for no reason.  Here's the latest -- a 7th Circuit opinion affirming a non-jail term sentence for the billionaire owner of Beanie Babies in a very large tax fraud case:

Defendant H. Ty Warner, the billionaire creator of Beanie Babies, evaded $5.6 million in U.S. taxes by hiding assets in a Swiss bank account.  He pled guilty to one count of tax evasion, made full restitution, and paid a $53.6 million civil penalty.  The Sentencing Guidelines provided a recommended 46- to 57-month term of imprisonment, but the district judge gave Warner a more lenient sentence: two years’ probation with community service, plus a $100,000 fine and costs.  The government claims his sentence is unreasonable because it does not include a term of incarceration.
In a typical case, we might agree.  But this is not a typical case.  The district judge found Warner’s record of charity and benevolence “overwhelming.”  Indeed, the judge remarked that Warner’s conduct was unprecedented when viewed through the judge’s more-than-three decades on the bench.  In the district court’s opinion, this and other mitigating factors — including the uncharacteristic nature of Warner’s crime, his attempt to disclose his account, his payment of a penalty ten times the size of the tax loss, and the government’s own request for a sentence well below the guidelines range — justified leniency.  District courts enjoy broad discretion to fashion an appropriate, individualized sentence in light of the factors in 18 U.S.C. § 3553(a).  The court here did not abuse its discretion.  Rather, it fully explained and supported its decision and reached an outcome that is reasonable under the unique circumstances of this case.  We therefore affirm Warner’s sentence.

In other news, President Obama is going to see what federal prison is all about -- he's making a visit Oklahoma to see the federal prison there, a first for a sitting President:

President Barack Obama will become the first sitting chief executive to visit a federal prison when he goes to El Reno, Oklahoma, next week to meet with law enforcement officials and inmates as part of the administration’s push for criminal-justice reform.
“Next week, the president will underscore the administration’s focus on the need to reform and improve America’s criminal justice system,” White House press secretary Josh Earnest said during Friday’s news briefing.

Obama will speak to that on Tuesday when he addresses the NAACP conference in Philadelphia before stopping at the medium-security federal facility in Oklahoma on Thursday. According to the Federal Bureau of Prisons, the facility houses 1,301 inmates in all, including 248 at an adjacent minimum-security satellite camp.

Finally, a pro-se litigant won this appeal (via FloridaBulldog.org):

Every day, state prisoners flood Florida’s courts with appeals and pleadings about their cases that they’ve written themselves. Those pro se filings — Latin for “on his own behalf” — rarely get far.
This spring, however, an inmate sex offender serving a life sentence convinced the Fourth District Court of Appeal in West Palm Beach that a Broward judge erred when she failed to order prosecutors to explain potentially serious discrepancies about his Miranda rights warning form.
The state introduced the Miranda form as evidence at Charles D. Williams’ 1998 trial, but Williams contends the document was a fraud and that police forged his signature. For years, Williams and his family filed public records requests seeking to obtain a copy.
“After serving multiple requests to the Broward County Clerk and the State Attorney’s Office over a course of years, his brother finally obtained a copy of a Miranda waiver form,” says the unanimous order by a three-judge appeal panel. “The date on the form produced differed from the date on the form introduced at trial, and the signature on the form produced varied from the petitioner’s signature.”
The panel ordered Broward Circuit Judge Lisa Porter to require prosecutors and the clerk’s office to respond to the “factual issue of whether the form produced is the same as the form introduced at trial.” If the response doesn’t resolve the matter, Porter was instructed to “hold an evidentiary hearing.”
The court issued its mandate to Judge Porter on June 12 after denying a request for reconsideration by Florida Assistant Attorney General Richard Valtunas, who in previous court papers called Williams’ assertions “outlandish allegations of fraud and skullduggery.” The judge had not taken action as of Monday.

Book review Bum Rap by Paul Levine

If you're looking for a fun summer read, pick up Paul Levine's latest novel, Bum Rap. Miamians and those of you in the criminal justice system will enjoy it.

It takes place in Miami and the set-up is the B-girl case, which the blog covered in detail. You'll see lots of familiar places, including the Justice Building. And you'll also see lots of familiar names, including Roy Black and Levine's wife Marcia Silvers. I won't ruin it with all of the Miami references, which are fun to see as you go.

Good stuff!

11th reverses honest services conviction

Jury instructions were the cause in United States v. Aunspaugh:

This is an honest-services fraud case. On one view of the evidence, the defendants participated in a classic kickback scheme. On another view, the scheme involved an egregious conflict of interest but no kickback. Under Skilling v. United States, 561 U.S. 358 (2010), the defendants’ conduct constituted honest- services fraud only on the first view, not the second. Because the jury instructions would have allowed a conviction on either view of the evidence, we vacate the honest-services convictions. We also vacate other convictions that depend on the honest-services convictions. But we uphold convictions for structuring financial transactions not dependent on the honest-services convictions. 

The panel also said this about acceptance at the new sentencing:

We add one other note about sentencing. The Aunspaughs argue that the district court improperly inferred a lack of remorse because they chose not to plead guilty but remained silent instead. They argue that the court’s consideration of these things violated their constitutional rights. See, e.g., United States v. Rodriguez, 959 F.2d 193, 197 (11th Cir. 1992) (noting that a district court may weigh remorse in a defendant’s favor but must not “weigh against the defendant the defendant’s exercise of constitutional or statutory rights”). Because we remand for resentencing, we do not address this issue today. The district court should resentence the defendants without weighing against them their exercise of constitutional rights.

 

Unpublished, yet enbancworthy?

A few months ago we wrote about an Eleventh Circuit unpublished decision affirming a major upward variance for a relatively minor crime (though committed by a defendant with a lengthy criminal history). The panel’s decision not to publish the decision seemed “unusual,” and we suggested that, because it was unpublished, “the likelihood of en banc review is greatly reduced, for there is little reason for the full court to undertake the arduous process of reviewing a decision that doesn’t bind it or lower courts.”

Perhaps that view was overstated. Last week Fifth Circuit Judge Jerry E. Smith, joined by three of his colleagues, dissented from the denial of rehearing en banc of an unpublished decision reversing a district court’s denial of habeas relief. To Judge Smith, the “panel majority’s obvious error cries out for correction.” In his view, the “opinion is enbancworthy because, even though unpublished, it infects our entire habeas jurisprudence.”

The defendant’s lawyers in the Eleventh Circuit case filed a petition for rehearing en banc. Today, however, the petition was denied in a one-line order. It simply wasn’t enbancworthy.

***

In related news, the Eleventh Circuit last week affirmed the conviction and sentence of a former Rothstein Rosenfeldt Adler lawyer for her role in the Ponzi scheme. In affirming her 5-year sentence, Judge Linn, sitting by designation and writing for the court, ended the (unpublished) opinion this way:

The district court’s sentence of 60 months is also substantively reasonable. In this case, had there been no loss, the parties agree that the guidelines suggested a sentence of 8–14 months. The problem for Kitterman is that the guidelines are intended for normal cases and, for a number of reasons, her case is anything but. First, Kitterman impersonated an official of the Florida Bar. Second, as the district court explained, this case will put people on notice that if “they do a fraud, and at the time they do it, they don’t appreciate the consequences of that fraud, there will be consequences if they are apprehended.” Third, while it is perhaps impossible to estimate what value Kitterman ascribed to the Bar complaints, the district court was correct that “it would blatantly be wrong to say [the intended loss] had no value.” Thus, a zero loss here does not, as might normally be the case, suggest that Kitterman’s intent was less pernicious. Fourth, this case is unusual because, as the district court noted, Kitterman was a lawyer and should have appreciated that “what [she was] doing is wrong.” Fifth, Kitterman’s sentence is also justified by the fact that Steven Caputi—who posed as a banker to deceive investors but who also did not know about the Rothstein Ponzi scheme—received a similar sentence of five years. Finally, Kitterman’s sentence is significantly below the total statutory maximum of 60 years imprisonment for the three wire fraud convictions.

Are criminal trials fair?

Judge Kozinski says no way in this really interesting read from the Georgetown Annual Review of Criminal Procedure.  His main points, as summarized by Business Insider:

1. Eyewitnesses are highly reliable

Eyewitnesses are highly unreliable, especially when the witness and perpetrator are of different races, or when witnesses are asked to recall a situation in which they were under the stress of violent crime or catastrophe, Kozinski writes. Mistaken eyewitness testimony was a factor in one-third of all wrongful conviction cases, according to his article.
Jed Rakoff, another well-known federal judge, made the same point in a Washington Post op-ed this year.

2. Fingerprint evidence is foolproof

Kozinski says prints left in the field are often smudged and incomplete — making them difficult to identify. He adds that when tested by more rigorous scientific methods, fingerprint examiners have a significant error rate.
The National Academies of Sciences has also said the work of fingerprint examiners can be flawed. 

3. Other types of forensic evidence are scientifically proven and therefore infallible

Aside from DNA evidence, Kozinski says what is true about fingerprint evidence is doubly true about bloodstain-pattern identification, foot- and tire-print identification, and ballistics.
"Some fields of forensic expertise are built on nothing but guesswork and false common sense," Kozinski writes. 
Recently, the Justice Department exposed major problems with microscopic hair testing in criminal cases. 

4. DNA evidence is infallible

Kozinski says the integrity of DNA evidence is often compromised during the collection, preservation, and testing process, and that DNA examiners are not always competent and honest.
As Mother Jones noted in April, "Real-life crime labs are a total mess."

5. Human memories are reliable

Kozinski, citing a study by cognitive psychologist Elizabeth Loftus, believes the mind not only distorts and embellishes memories, but that external factors affect how memories are recalled and described. 
In an interview with Slate, Loftus acknowledged that we're all capable of fabricating memories. 
"We all have memories that are malleable and susceptible to being contaminated or supplemented in some way," Loftus told Slate. 

6. Confessions are infallible because innocent people never confess

Kozinski has found that innocent people confess surprisingly often, due to a variety of factors including interrogation tactics, Stockholm syndrome, emotional or financial exhaustion, family considerations, and general feeble-mindedness. 
As The New Yorker has reported, police can also produce false confessions by using a certain interrogation technique. 

7. Juries follow instructions

Kozinski claims courts know very little of what juries do when they decide cases. Courts have no way of knowing whether juries follow instructions or even whether they understand them, according to Kozinski. 
"We have no convincing reason to believe that jury instructions in fact constrain jury behavior in all or even most cases," Kozinski writes.

8. Prosecutors play fair

Kozinski believes prosecutors often fail to turn over evidence that could be favorable to the defense, known as exculpatory evidence. In a case called Brady v. Maryland, the Supreme Court ruled that prosecutors have to turn over that evidence. But Kozinski claims there's an "epidemic" of Brady violations in America. 

9. The prosecution is at a substantial disadvantage because it must prove its case beyond a reasonable doubt

In reality, Kozinski writes, the defendant is often at a disadvantage because prosecutors have the chance to argue their case before the defense during a trial.
That's troubling because of psychological evidence showing that "whoever makes the first assertion about something has a large advantage over everyone who denies it later," according to Kozinski.

10. Police are objective in their investigations

Kozinski says police have the opportunity to alter or remove evidence, influence witnesses, extract confessions, and more or less lead an investigation in such a way that they can stack the deck against somebody they believe should be convicted.
"There are countless documented cases where innocent people have spent decades behind bars because the police manipulated or concealed evidence," Kozinski writes. 

11. Guilty pleas are conclusive proof of guilt

Kozinski has found that when a defendant believes an outcome is highly uncertain or stacked against them, they might cave and enter a guilty plea to a lesser charge so that they can still salvage a part of their life.
Judge Jed Rakoff has also lamented the fact that 97% of federal criminal defendants plead guilty if their cases aren't dismissed. 

12. Long sentences deter crime

America has 716 prisoners for every 100,000 people — the most of any country in the world, Kozinski notes. America also has much longer sentences than other countries for comparable crimes. Kozinski points out that a burglary charge in the US warrants an average of 16 months in prison, compared with five months in Canada and seven months in England.
"As with much else in the law, the connection between punishment and deterrence remains mysterious," Kozinski writes. "We make our decisions based on faith."

Meantime, there are a bunch of criminal trials starting this summer, which are expected to last over a month.  One just started before Judge Martinez, so if you are looking for something for your interns to do... send them over to watch a federal trial!