By Nate Raymond
LAS VEGAS (Reuters) - A prominent Manhattan judge has called
for federal sentencing guidelines to be revamped, saying their
current emphasis on losses in white-collar crimes has led to
U.S. District Judge Jed Rakoff, a longtime critic of the
sentencing guidelines, told attendees of a Las Vegas legal
conference Thursday that the United States should move away from
its current system of distilling offenses into numbers for
calculating a sentence to one that was more flexible.
"My modest proposal is that they should be scrapped in their
entirety and in their place there should be a non-arithmetic,
multi-factor test," he said.
Rakoff made the remarks during a lunchtime keynote address
at the National Institute on White Collar Crime conference
sponsored by the American Bar Association.
The ABA's white-collar group has recently created a
committee that includes Rakoff as a member to focus on how
white-collar sentencing guidelines should be changed.
The guidelines came into place following the passage of the
Sentencing Reform Act of 1984, which gave birth to the U.S.
Sentencing Commission. The goal at the time was to reduce
discrepancies in sentences.
Rakoff argued that the "fundamental flaw" of the guidelines
is they assume every situation can be distilled into a number
for the purpose of then calculating a sentence. He called the
numbers assigned to various situations "arbitrary."
"The Sentencing Commission to this day has never been able
to articulate why it has two points for this, or four points for
that," he said. "These are just numbers. And yet once they are
placed the whole thing is blessed and said to be rational."
RAKOFF CHOOSES 3-1/2 YEARS, NOT 85
In white-collar cases, Rakoff said, the guidelines have
resulted in an overemphasis on the amount of losses suffered by
the victims, which is the major factor in calculating a
sentence. He said that focus was "kind of nuts" as it ignores
the intent and other factors in the case.
Initially mandatory, the guidelines became non-binding
following the U.S. Supreme Court's 2005 decision in United
States v. Booker. Most judges still issue guideline sentences,
Rakoff said, since it's the easy way.
Rakoff, however, has been known to deviate. In a case he
discussed in his speech, Rakoff in 2006 sentenced Richard
Adelson, the former president of Impath Inc, to 3-1/2 years in
prison for overstating results at the biotech company.
Rakoff had calculated the losses attributable to the
conspiracy as $50 million, which under the guidelines would have
resulted in an 85-year sentence.
"Now that struck me as barbaric, to be frank," he said.
In a 2010 letter to the Sentencing Commission, the U.S.
Department of Justice said the Adelson sentencing and three
other post-Booker sentences were "unacceptable," adding that the
recent financial crisis had demonstrated the need for
significant prison terms for white-collar crimes.
Rakoff said he is not opposed to tough sentences, noting
that in 2009 he sentenced former lawyer Marc Dreier to 20 years
in prison for running a $400 million investment fraud.
Prosecutors had sought 145 years.
But he was concerned with "the irrationality of the
guidelines, particularly in white-collar cases."
"This blind emphasis on the loss calculation to the
exclusion of everything else leads to bizarre results in case
after case after case, Adelson being just one example," he said.
Instead of focusing on numbers, Rakoff said the guidelines
should instead be overhauled for a list of factors judges would
be required to analyze in writing. They could weigh the factors
however they wanted, and the sentences would be subject to a
robust appellate review.
"But it would not result in this irrational and in my view
terribly dangerous situation we have now where certain factors
are just singled out, given artificially inflated numbers and
then imposed directly or indirectly on judges," he said.
A spokeswoman for the U.S. Sentencing Commission declined
comment Friday on Rakoff's remarks. In a report in January, the
commission reaffirmed its view that a "strong and effective"
guidelines system is the best way to achieve the purpose of the
Sentencing Reform Act.
The commission is planning a roundtable meeting on its fraud
guidelines in the fall.
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