Kottwitz Revisited: Eleventh Circuit Court of Appeals Vacates Criminal Conviction upon Rehearing, Holding That Jury Should Have Heard Instruction on Reliance on the Advice of an Accountant

December 29, 2010 by Kish & Lietz

In this post in August, we reported that the Eleventh Circuit had held that a trial court abused its discretion in failing to instruct the jury on good faith reliance. In that opinion, the Court vacated convictions on three counts, but affirmed a conspiracy conviction. Last week, in United States v. Kottwitz, the Court decided on rehearing that the “[d]efendants introduced enough circumstantial evidence to warrant an instruction that -- at some pertinent point --[they] may have relied on the accountant’s advice” on the conspiracy count, as well.

Good faith defenses are often significant in white-collar criminal cases. As we have lamented, the government continues to prosecute people on the basis of business decisions that are not intended to break the law. It is imminently important for defense lawyers to convey to the jury that a person acting in good faith cannot be guilty.

To receive a jury instruction in the Eleventh Circuit, a defendant need only show “any foundation in the evidence.” The first Kottwitz opinion, which is still good law inasmuch as it is consistent with this most recent opinion, provides a detailed explanation of when the trial court must instruct the jury on good faith reliance.

The full opinion in Kottwitz I is available here. Kottwitz II is available here.

Federal Sentencing Guidelines Amendments Part VII: Temporary, Emergency Amendment Pursuant to Fair Sentencing Act of 2010

December 23, 2010 by Kish & Lietz

Ed. Note: On November 1, the U.S. Sentencing Commission’s 2010 Amendments to the federal Sentencing Guidelines went into effect, along with a temporary, emergency amendment to implement Section 8 of the Fair Sentencing Act. On the whole, the amendments reflect a reduction in federal criminal sentences and provide the sentencing judge with additional discretion. We have been posting analyses of some of the more important changes to the Guidelines. The Sentencing Commission’s reader-friendly guide to the 2010 amendments is available here.

In this post in August, we summarized the impact of the Fair Sentencing Act of 2010, which reduces the disparity between criminal sentences for crack and powder cocaine from 100-to-1 to 18-to-1 and eliminates the mandatory minimum five-year sentence for simple possession of crack cocaine. The Act also provides for higher sentencing guidelines for all drugs in some cases. This amendment brings about the changes made by the Act.

Specifically, the emergency amendment makes the following changes to the Sentencing Guidelines to implement the Fair Sentencing Act:

* The base offense levels for crack cocaine are set in the Drug Quantity Table so that the statutory minimum penalties correspond to levels 26 and 32. This change implements the Act's application of the five-year mandatory minimum sentence to cases involving at least 28 grams of crack cocaine, compared to the prior 5 grams, and the ten-year mandatory minimum sentence to cases involving at least 280 grams of crack cocaine, compared to the prior 50 grams.

* The amendment establishes a marijuana equivalency for crack cocaine under which 1 gram of crack cocaine is equivalent to 3,571 grams of marijuana and, in the commentary to §2D1.1, deletes the special rules in Note 10(D) for cases involving crack cocaine and one or more other controlled substances.

* §2D1.1 is amended to add a sentence at the end of subsection (a)(5), which is often referred to as the "mitigating role cap". The new provision provides that if the offense level otherwise resulting from subsection (a)(5) is greater than level 32, and the defendant receives the 4-level "minimal participant" reduction in subsection (a) of §3B1.2, the base offense level will be decreased to level 32. Because a 4-level reduction is uncommon, this new provision will have limited impact.

* §2D1.1 is amended to create new specific offense characteristics providing an enhancement of 2 levels if the defendant:
o Used violence, made a credible threat to use violence,or directed the use of violence;
o Bribed, or attempted to bribe, a law enforcement officer to facilitate the commission of the offense;
o Maintained a premises for the purpose of manufacturing or distributing a controlled substance; or
o Receives an aggravating role adjustment and the offense involved any “super-aggravating” factors.

* §2D1.1 is also amended to create a new specific offense characteristic providing a 2-level downward adjustment if the defendant receives the 4-level "minimal participant" reduction and the offense involved three specified factors:
o Motivation by an intimate or familial relationship or by threats or fear to commit the offense when the defendant was otherwise unlikely to commit such an offense;
o No monetary compensation from the illegal purchase, sale, transport, or storage of controlled substances; and
o Minimal knowledge of the scope and structure of the enterprise.

A reader-friendly guide to the temporary amendment is available here.

Goyal Concurring Opinion: Ninth Circuit Chief Judge Opines on Federal Prosecutors Overreaching by Stretching Criminal Law Beyond its Proper Bounds

December 21, 2010 by Kish & Lietz

The Ninth Circuit Court of Appeals issued its opinion in U.S. v. Goyal on December 10th. The case involved the former CFO of Network Associates, Inc., which is better known by its previous name, McAfee. Mr. Goyal was charged in 15 counts with securities fraud, false filings with the SEC, and lying to auditors. The Ninth Circuit held that the government failed to prove materiality on the securities counts and scienter on the lying-to-auditors counts and, thus, reversed the convictions on all counts.

The concurring opinion by Chief Judge Kozinski eloquently describes the reality of many white-collar criminal prosecutions that we see in our federal defense practice. All too often, federal prosecutors go after defendants in prosecutions that would more appropriately be located on the civil docket.

The full opinion in Goyal is available here, but the Chief Judge's concurrence is worth reprinting in full:

This case has consumed an inordinate amount of taxpayer resources, and has no doubt devastated the defendant’s personal and professional life. The defendant’s former employer also paid a price, footing a multimillion dollar bill for the defense. And, in the end, the government couldn’t prove that the defendant engaged in any criminal conduct. This is just one of a string of recent cases in which courts have found that federal prosecutors overreached by trying to stretch criminal law beyond its proper bounds. See Arthur Andersen LLP v. United States, 544 U.S. 696, 705-08 (2005); United States v. Reyes, 577 F.3d 1069, 1078 (9th Cir. 2009); United States v. Brown, 459 F.3d 509, 523-25 (5th Cir. 2006); cf. United States v. Moore, 612 F.3d 698, 703 (D.C. Cir. 2010) (Kavanaugh, J., concurring) (breadth of 18 U.S.C. § 1001 creates risk of prosecutorial abuse).

This is not the way criminal law is supposed to work. Civil law often covers conduct that falls in a gray area of arguable legality. But criminal law should clearly separate conduct that is criminal from conduct that is legal. This is not only because of the dire consequences of a conviction—including disenfranchisement, incarceration and even deportation—but also because criminal law represents the community’s sense of the type of behavior that merits the moral condemnation of society. See United States v. Bass, 404 U.S. 336, 348 (1971) (“[C]riminal punishment usually represents the moral condemnation of the community . . . .”); see also Wade v. United States, 426 F.2d 64, 69 (9th Cir. 1970) (“[T]he declaration that a person is criminally responsible for his actions is a moral judgment of the community . . . .”). When prosecutors have to stretch the law or the evidence to secure a conviction, as they did here, it can hardly be said that such moral judgment is warranted.

Mr. Goyal had the benefit of exceptionally fine advocacy on appeal, so he is spared the punishment for a crime he didn’t commit. But not everyone is so lucky. The government shouldn’t have brought charges unless it had clear evidence of wrongdoing, and the trial judge should have dismissed the case when the prosecution rested and it was clear the evidence could not support a conviction. Although we now vindicate Mr. Goyal, much damage has been done. One can only hope that he and his family will recover from the ordeal. And, perhaps, that the government will be more cautious in the future.

Federal Sentencing Guidelines Amendments Part VI: Remediation Efforts and Reporting Obligations for Effective Compliance and Ethics Programs of Organizations

December 17, 2010 by Kish & Lietz

Ed. Note: On November 1, the U.S. Sentencing Commission’s 2010 Amendments to the federal Sentencing Guidelines went into effect, along with a temporary, emergency amendment to implement Section 8 of the Fair Sentencing Act. On the whole, the amendments reflect a reduction in federal criminal sentences and provide the sentencing judge with additional discretion. We have been posting analyses of some of the more important changes to the Guidelines. The Sentencing Commission’s reader-friendly guide to the 2010 amendments is available here.

This amendment clarifies the remediation efforts required for effective compliance and ethics programs used by organizations. The Guidelines now suggest that defendant organizations should provide restitution and other forms of remediation, self-report, and cooperate with authorities. The organization should also ensure the program is effective, perhaps by including the use of an outside professional advisor.

The amendment also creates a limited exception to the general prohibition against applying a 3-level decrease for having a program when high-level personnel are involved in the offense. The organization may receive the decrease if:

1. The people responsible for the compliance and ethics program have direct reporting obligations to the board;

2. The program detected the offense early;

3. The organization promptly reported the offense to the authorities; and

4. No one with operational responsibility for the compliance and ethics program participated in, condoned, or was willfully ignorant of the offense.

Williams: Eleventh Circuit Holds That Defendant Who Testified to His Innocence at Trial Should Have Received Sentencing Enhancement for Obstruction of Justice and No Reduction for Acceptance of Responsibility

December 14, 2010 by Kish & Lietz

Last week, the Eleventh Circuit Court of Appeals decided United States v. Williams. The Court held that the sentencing judge clearly erred in granting a reduction for acceptance of responsibility and denying an enhancement for obstruction of justice because Mr. Williams testified to his factual innocence at trial after withdrawing his guilty plea.

Following a car chase in Atlanta, Georgia that culminated with Mr. Williams receiving a gun shot to an eye, Williams was charged with assaulting three federal marshals. Williams entered a guilty plea, but withdrew it due to the potential sentence. He then testified at trial that he hadn't known his pursuers in unmarked vehicles were law enforcement officers.

The sentencing judge relied on a presentence report that recommended he receive three points off for acceptance of responsibility. She explained, “I think particularly in this case where he was shot, his ability to have his own trial and tell his story was important. I mean, I consider that an important part of my job, is to provide trials to people who have a story that legitimately needs telling.” Explaining that she would not punish Mr. Williams for exercising his constitutional right to trial, she awarded two points off for acceptance of responsibility. The Eleventh Circuit held that it was “erroneous to award a reduction for acceptance of responsibility when a defendant denies guilt in the face of evidence to the contrary” and Mr. Williams had done exactly that by “admitt[ing] he was guilty initially, but withdr[awing] his plea” and then testifying to his innocence “despite overwhelming evidence to the contrary.”

However, “[t]he district court found that Williams’s testimony did not contradict the testimony of the federal marshals.” In determining whether Mr. Williams had committed perjury, requiring the obstruction of justice enhancement, the sentencing judge “did not find Mr. Tywan Williams’ testimony to be materially different from any of [the three witnesses who were at the scene.]” She also explained: “in light of the fact that this whole incident resulted in him being shot in the head, he, I think, is entitled to some leeway regarding his memory of the sequence of events.” She was unable to make a finding that he committed perjury “based on the testimony that [she] heard in comparison with the other testimony at trial and what [she knew] about this.” Despite the district judge's greater contextual knowledge, the Eleventh Circuit held that “Williams’s testimony that he did not recognize his pursuers as federal marshals is irreconcilable with the record” and, as such, perjury requiring an enhancement for obstruction of justice.

The Eleventh Circuit's opinion is available here.

FEDERAL JUDGE IN ALABAMA GRANTS LAWYER’S REQUEST TO DELAY TRIAL IN LIGHT OF AUBURN’S PARTICIPATION IN BCS TITLE GAME

December 10, 2010 by Carl Lietz

Federal criminal lawyer (and crackerjack fishing guide) Steve Salter sent us a link to a unique story involving a request by a lawyer to delay a federal trial so that he could attend the BCS title game in Arizona. In his request, the lawyer (and Auburn football fan) asked the judge to delay scheduling the federal trial so that he and his family could attend the game. The lawyer also stated that “[s]ince the last National Championship Game for Auburn was 1957 (and I was born in 1965) it is fair to say that this is a once in a life-time opportunity. Without Cam Newton (or Nick Saban as our coach) it is hard to imagine this ever happening again." Along with his filing, the lawyer included a photo of his three young daughters wearing Auburn football jerseys.

United States District Judge Kristi DuBose granted the motion, stating that “[t]he Court has a unique understanding of the predicament of Hartford's lead counsel. See Exhibit A." Exhibit A, which was attached to the judge's order, was a photograph of a young girl in what appears to be an Auburn cheerleader outfit with a stuffed tiger sitting next to her.

When asked about the reference to Nick Saban as the Auburn coach, the lawyer said he was "hedging [his] bets in case the judge was an Alabama fan."

It is nice to see a federal judge accommodate a lawyer’s unique personal situation, and we appreciate Steve Salter, who is a life-long Auburn fan himself, sending us this link. The full story, as reported in the Birmingham News, can be found here.

Federal Sentencing Guidelines Amendments Part V: Hate Crimes

December 9, 2010 by Kish & Lietz

Ed. Note: On November 1, the U.S. Sentencing Commission’s 2010 Amendments to the federal Sentencing Guidelines went into effect, along with a temporary, emergency amendment to implement Section 8 of the Fair Sentencing Act. On the whole, the amendments reflect a reduction in federal criminal sentences and provide the sentencing judge with additional discretion. We are posting analyses of some of the more important changes to the Guidelines. The Sentencing Commission’s reader-friendly guide to the 2010 amendments is available here.

This amendment responds to the Matthew Shepard and James Byrd, Jr. Hate
Crimes Prevention Act
. The Act created a new offense at 18 U.S.C. § 249 for injuring any person because of actual or perceived race, color, religion, national origin, gender, sexual orientation, gender identity, or disability. That offense is now referred to §2H1.1 (Offenses Involving Individual Rights). It also broadened the definition of "hate crime" to include crimes motivated by actual or perceived "gender identity." §3A1.1 (Hate Crime Motivation or Vulnerable Victim) gained an application note to account for the expanded definition.

The Act created a second new offense at 18 U.S.C. § 1389, prohibiting attacks on members of the military, which is now referred to §§2A2.2 (Aggravated Assault), 2A2.3 (Minor Assault), and 2B1.1 (Theft, Property Destruction, and Fraud).

This is the only amendment this year to expand on the sentencing guidelines. Unlike years past, most of the amendments this year reduce the severity of the sentencing guidelines and applicable sentencing ranges. Professor Doug Berman addressed the symbolic importance of this change in direction in this post at the Sentencing Law and Policy Blog. We hope that the future holds a continued focus on revising the guidelines for fairness.

Forey-Quintero: Eleventh Circuit Court of Appeals Holds Defendant Could Be Prosecuted for Being in the US Because His Mother’s Status Did Not Make Him a Derivative Citizen

December 7, 2010 by Kish & Lietz

Last week, the Eleventh Circuit Court of Appeals decided United States v. Forey-Quintero. The Court held that Mr. Forey-Quintero, whose mother became a naturalized U.S. citizen while he was a minor, did not obtain derivative citizenship because he was not a lawful permanent resident before he turned 18.

Mr. Forey-Quintero came to the U.S. on a border crossing card when he was three years old. When he was 9, his mother filed a Petition for Alien Relative for him, but he was accidentally placed on the wrong list for obtaining a visa. When he was 16, his mother was naturalized and he applied for a visa. His application was approved 20 days after his 19th birthday. As such, he resided here permanently as a minor, but was not a “lawful permanent resident.”

Mr. Forey-Quintero later was kicked out of the country, and when he returned to be with his family he was charged with being found in the United States after removal. His attorney, Millie Dunn at the Federal Defenders Program for the Northern District of Georgia, argued that he was a citizen under the derivative citizenship statute. Before 2001, derivative citizenship was governed by Section 321(a) of the Immigration and Nationality Act (INA), which provided that a “child born outside of the United States of alien parents” automatically became a citizen upon the naturalization of the parent having legal custody if the child is or “begins to reside permanently in the United States while under the age of eighteen years.”

The Court held that “reside permanently” requires lawful permanent resident status. In doing so, the court looked to the rules of statutory construction and persuasive authority in similar cases in the Ninth Circuit and Board of Immigration Appeals (BIA). Because this young man had been placed on the wrong list when he was 3 years old, he did not “reside permanently” as a legal resident at the time when his mother became a citizen. As a result, the Courts allowed prosecutors to charge Mr. Forey-Quintero with illegally returning to this country when, if he had been placed on the correct list, he would have had every right to remain here as a derivative citizen.

Criminal defense lawyers must continually challenge both individual statutes and the system in general to help their clients. Although the argument in this case was unsuccessful, we applaud Millie Dunn for her work for Mr. Forey-Quintero.

The Eleventh Circuit’s opinion in this case is available here.

Pepper: United States Supreme Court Will Hear Arguments Next Week Regarding Consideration of Rehabilitation upon Resentencing

December 2, 2010 by Kish & Lietz

Next Monday, the federal Supreme Court will hear arguments in Pepper v. United States. In this fascinating case, the Court will consider whether judges can take a prisoner’s efforts at rehabilitation into consideration when that prisoner is resentenced. This case is interesting both because the government has changed its stance and because of the uncommon circumstance that Mr. Pepper was resentenced to three additional years in prison after four years of freedom.

Mr. Pepper pleaded guilty to conspiracy to distribute methamphetamine and was sentenced to 24 months in prison, although the Sentencing Guidelines range was 97 to 127 months. The government successfully appealed that sentence, but the judge resentenced Mr. Pepper to the same amount of time, in part because of the prisoner’s efforts at rehabilitation following the first sentence. Prosecutors again appealed, arguing that such a consideration was an abuse of discretion. The Eighth Circuit agreed. Upon resentencing by a different judge, Mr. Pepper was ordered to return to prison to serve an additional 41 months.

After successfully appealing Mr. Pepper’s below-guidelines sentence twice, the Department of Justice has switched sides and is supporting Mr. Pepper’s contention on appeal to the Supreme Court that rehabilitation should be taken into account. As reported in this Des Moines Register article, when she was Solicitor General, Justice Kagan sided with Mr. Pepper, arguing that court rules do not prohibit “a court from considering at resentencing a defendant's efforts at rehabilitation undertaken after his initial sentencing.” Rather, a federal law “specifically instructs sentencing courts to consider ‘the history and characteristics of the defendant.’” Justice Kagan will not take part in the Supreme Court’s decision.

The Court appointed a private lawyer as amicus curie to defend the Eighth Circuit’s decision below. The appointment of amici to defend the appellate court’s decision is discussed in this Stanford Law Review note by Brian Goldman, which is summarized here at ScotusBlog.

Briefs and the Eighth Circuit’s decision below are available here.