Federal Commission Revises Penalties for Fraud, Economic Crimes

The United States Sentencing Commission has recently sent Congress proposed changes to penalties for several classes of federal crimes, including major changes in recommended penalties for crimes of fraud and theft, and economic crimes, including antitrust or securities violations.

One of Washington’s lesser-known agencies, the United States Sentencing Commission is part of the judicial branch. It was created by the Sentencing Reform Act of 1984 to draw up and regularly review guidelines for sentences for federal crimes, as a way to get greater nationwide consistency in sentencing. Its seven voting members are presidential appointees confirmed by the Senate; at least three are sitting federal judges and no more than four can belong to the same political party.

As part of its duties, the Commission compiles and analyzes data on sentences handed down to persons convicted of federal crimes, and every year it considers and makes recommendations for changes to advisory federal sentencing guidelines. By May 1 each year, the Sentencing Commission sends Congress the changes it recommends; those revisions take effect on November 1, unless disapproved by Congress (which has only happened on two occasions during the 30 years the Sentencing Commission has been in operation).

The recommendations the Sentencing Commission sent to Capitol Hill this year drew substantial comment by legal and advocacy groups, and were not free of controversy. The Justice Department, for example, objected in written comments and at a public hearing to many of the proposed changes for sentencing in federal crimes involving fraud and economic crimes, a major area for the Commission this year.

Sentencing guidelines contain tables suggesting mitigating or aggravating factors that, along with a defendant’s criminal history, are recommended for judges to consider in sentencing specific crimes. Several changes this year, if they become final, might reduce sentences for some persons convicted in fraud or economic crime cases, but raise them for others.

The Commission’s five recommendations in the area included inflation adjustments for the dollar amount of losses factored into such cases (the figures had not been changed since they were first set in 2001). Removing inflationary “bracket creep” from the measure of losses from such crimes could bring average sentence reductions in the neighborhood of 20%.

Another Commission-proposed change would revise the factors used to determine whether defendants qualify for a shorter sentence because they had only a “minimal” or “minor” role in the crime. The revised list of mitigating factors would include how well the defendant understood the structure and scope of the offense, how closely the defendant was involved in planning or organizing the crime, and the extent to which the defendant had the authority to make decisions on the criminal activity. This might bring lighter sentences for small-fry even in big-dollar white-collar crimes.

But another change could mean more prison time for persons convicted of federal fraud or economic crime charges, by redefining the penalty-enhancing factor of the “substantial financial hardship” the offense caused. At present, this is largely based on the number of victims; the Commission wants to focus more on the actual impact on victims — in areas such as insolvency, bankruptcy, or major changes in employment or living arrangements – not exclusively on the number of victims.

In other areas, the Sentencing Commission called for tougher penalties for offenses involving hydrocodone, a prescription narcotic, bringing them in line with those for oxycodone, in view of which the Commission saw as similarities between the two drugs in terms of abuse levels, and potential for addiction or death. Tougher penalties would also be in line with all hydrocodone products being classified as Schedule II controlled substances, following changes made last year by the Drug Enforcement Administration.

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