Bloomberg News

Federal Sentencing Guidelines Cut Back by U.S. Supreme Court

January 12, 2005

The U.S. Supreme Court ruled that judges are no longer bound by the federal criminal sentencing guidelines in a decision that may lead to shorter prison terms for some drug traffickers and corporate-fraud defendants.

The justices, ruling 5-4 in two drug cases today, said the guidelines violate the constitutional jury-trial right by forcing judges to increase the range of possible sentences based on their own factual findings. By a separate 5-4 majority, the court said the guidelines will no longer be mandatory for judges and instead will be ``effectively advisory.''

The ruling might give new bargaining power to HealthSouth Corp. founder Richard Scrushy, former Enron Corp. Chairman Kenneth Lay and former Dynegy Inc. executive Jamie Olis. Judges now will have discretion to impose shorter sentences in corporate-fraud cases than what the guidelines had required.

``It probably will create additional leverage for defense counsel in negotiating agreements,'' said B. Todd Jones, a former U.S. attorney in Minnesota who is now a lawyer at Robins Kaplan Miller & Ciresi in Minneapolis. ``They know they have two bites at the apple now'' -- with prosecutors and judges.

The ruling, issued in Washington, also will affect thousands of drug cases. Judges typically base federal drug sentences in part on the quantity and type of drugs involved. The guidelines, adopted in 1987 and modified many times since, govern 64,000 criminal cases a year.

Limited Victory

The victory wasn't a complete one for defendants. The high court opted not to strip judges of the power to increase sentences based on their own factual findings, instead saying only that those increases aren't mandatory.

``This is actually a bittersweet day for criminal defendants,'' said Jon Sands, an Arizona federal public defender and chairman of the Federal Defender Guideline Committee.

Assistant Attorney General Christopher Wray said the Justice Department will urge judges to continue to follow the federal guidelines. The department wants ``fair, tough, uniform, predictable and proportionate sentences,'' Wray said.

Wray said the government will argue that today's decision shouldn't apply retroactively. The Justice Department had urged the court not to overturn the guidelines.

Congress Next

The decision may spur a congressional effort to redraft the guidelines, which were designed to ensure sentencing uniformity.

``Ours, of course, is not the last word,'' Justice Stephen G. Breyer wrote. ``The ball now lies in Congress's court.''

Senate Judiciary Committee Chairman Arlen Specter, a Pennsylvania Republican, said he will study the ruling and then seek ``a sentencing method that will be appropriately tough on career criminals, fair and consistent with constitutional requirements.''

Senator Patrick Leahy of Vermont, the ranking Democrat on the Judiciary Committee, said the court ruling is ``a reasonable remedy'' for now and Congress ``should resist the urge to rush in with quick fixes that would only generate more uncertainty.''

Senator Edward M. Kennedy, a Massachusetts Democrat, said the decision, while disappointing, isn't likely to lead to widespread flouting of the guidelines.

The ruling extends a June 2004 decision, Blakely v. Washington, which cut back a similar sentencing guideline system in Washington state.

Different Majorities

The same five-justice majority from the Blakely decision declared the federal guidelines invalid today. That group consists of Justices John Paul Stevens, Antonin Scalia, Clarence Thomas, Ruth Bader Ginsburg and David H. Souter.

Ginsburg joined a separate majority -- with Chief Justice William H. Rehnquist and Justices Breyer, Anthony M. Kennedy and Sandra Day O'Connor -- in declaring the guidelines advisory.

Breyer wrote for that majority that federal judges, ``while not bound to apply the guidelines, must consult those guidelines and take them into account when sentencing.'' He said federal appeals courts would have power to overturn sentences that are ``unreasonable.''

Stevens, dissenting from that part of the decision, said he would have left the guidelines in place and instead required prosecutors to go to a jury with any factor that was necessary for a sentence increase.

Federal Prosecutors

Federal prosecutors had already begun to follow that practice. The 65-page indictment of Lay and fellow Enron defendants Jeffrey Skilling and Richard Causey, for example, lists a dozen factors that could lead to longer sentences.

``I would simply allow the government to continue doing what it has done since this court handed down Blakely,'' Stevens wrote in his dissent, joined by Souter and Scalia.

The Blakely decision led to disarray in federal courts around the country, as judges struggled to determine whether -- and, if so, how -- the ruling applied to the national sentencing system. Some judges delayed imposing sentences until the Supreme Court weighed in; others issued alternative sentences.

That confusion is likely to continue in the aftermath of the Supreme Court ruling, said Kirby Behre, co-author of the treatise, ``Federal Sentencing for Business Crimes.''

``In the short and perhaps medium term, chaos will reign in federal courthouses as judges decide how to exercise their new- found discretion in sentencing, and prosecutors and defense lawyers argue their positions,'' Behre said.

Causing Confusion

Duke University law professor Erwin Chemerinsky said he and other legal experts are confused by the decision. ``The puzzle is what does it mean to make the guidelines advisory?'' he said.

Behre's co-author, Jeff Ifrah, said most sentences may not be affected by today's ruling as judges consult the guidelines for help. He said he studied 25 instances -- after the high court's Blakely ruling -- in which the judges treated the rules as advisory and found only one that departed from the guidelines. About three-fourths of the 25 cases involved white-collar crimes.

Judges, some of whom chafed openly at the mandatory nature of the guidelines, might be the biggest winners, said Ohio State law professor Douglas Berman, who runs an online journal, or ``weblog,'' on federal sentencing.

``If you poll the federal judiciary, they will like this outcome,'' Berman said.

The federal guidelines grew out of a congressional effort to eliminate sentencing disparities and standardize the punishment for similar crimes committed by similar offenders. In 1984 Congress set up the U.S. Sentencing Commission, an agency in the judicial branch of government that issues binding guidelines on federal judges.

A Starting Point

Under the rules, a convicted defendant's crime served as a starting point, putting him in a range of permissible sentences. Judges then increased the prison term by a specified period if, for example, a gun was fired during the crime.

Other factors, such as acceptance of responsibility for the offense, led to a sentence reduction.

Dynegy's Olis was sentenced to 24 years in prison for his role in a $300 million accounting fraud in 2001. Judge Sim Lake in Houston said he took ``no pleasure'' in imposing the long term, saying he had no choice because the $105 million investor loss wasn't disputed at the trial and Olis was held responsible for the full amount.

Lake will also preside over the upcoming criminal trials of former Enron executives Lay and Skilling.

Adelphia Communications founder John Rigas and his son, Timothy, are awaiting sentencing next month for their July 2004 convictions on fraud and conspiracy charges.

Quattrone Case

Scrushy, whose accounting fraud trial is scheduled to begin Jan. 25 in Birmingham, Alabama, may benefit from the ruling because of the location of his case, said Jacob Frenkel, a former federal prosecutor who is now a partner at Shulman, Rogers, Gandal, Pordy & Ecker in Rockville, Maryland.

``The winner here is Richard Scrushy because the judges in the Northern District of Alabama have shown a propensity to impose light sentences,'' Frenkel said.

Lawyers for former Credit Suisse First Boston Banker Frank Quattrone previously said they will challenge his sentence. Quattrone was sentenced last year to 18 months for obstructing justice as the judge exceeded the 10-to-16-month range recommended by the guidelines. Quattrone spokesman Robert Chlopak declined comment today.

Drug Cases

The two cases resolved today raised similar issues. In one, a Wisconsin jury convicted Freddie J. Booker of possessing and distributing crack cocaine. The jury concluded that Booker had 92.5 grams of crack, an amount that would mean a maximum prison term of 21 years and 10 months.

During sentencing, the trial judge found that Booker had distributed an additional 566 grams and had obstructed justice. The effect was to increase the permissible sentence to a range of 30 years to life. The judge sentenced him to 30 years.

In the other case, a Maine federal judge concluded he could sentence Ducan Fanfan to no more than 6 1/2 years, based on a jury's conclusion that he conspired to distribute cocaine powder.

Prosecutors, saying the case also involved trafficking in crack, sought to put Fanfan in a sentencing range of at least 15 years and eight months. The trial judge said the Blakely ruling barred imposition of the longer sentence.

The cases are U.S. v. Booker, 04-104, and U.S. v. Fanfan, 04-105.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net.

To contact the editor responsible for this story: Glenn Hall at ghall@bloomberg.net.


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