U.S. Sentencing Commission Amends Guidelines for White-Collar Fraud Cases

Any day now, the U.S. Sentencing Commission will submit to Congress a set of proposed amendments to the federal sentencing guidelines that it voted to approve three weeks ago. That matters because, in federal court, the guidelines drive most sentences and influence nearly all of them. If Congress doesn’t object to the amendments, they will go effective on November 1. Here’s a copy of the April 9 press release, and here’s a link to the text of the amendments on the Sentencing Commission’s website.

In particular, the proposed amendments will affect the main sentencing guideline that governs white-collar fraud cases. See U.S.S.G. § 2B1.1. Let us count the ways.

First, the amendments will change the definition of a defendant’s “intended loss,” which is important because § 2B1.1 punishes you based on the amount of loss you cause, and it defines “loss” as the greater of the actual loss or the intended loss. Currently, the guideline defines “intended loss” as the monetary harm that “was intended to result from the offense,” but the amendments would define it as the monetary harm that “the defendant purposely sought to inflict.” The aim of the new language is to align your punishment more with your specific intent and mental state.

Second, the amendments will change the way § 2B1.1 accounts for the number of victims. Right now, the guideline punishes you at progressively higher levels if your offense involved ten or more victims, fifty or more victims, or 250 or more victims. The amendments will shift the emphasis away from just the number of victims, which can include people whose losses were negligible, and toward the number of victims who suffered “substantial financial hardship” as a result. With this change, if even one victim suffered substantial financial hardship from the offense, the guideline will punish you for it, and it will punish you at progressively higher levels if you’re deemed to have caused such hardship for five or more victims or 25 or more victims. So what qualifies as substantial financial hardship? The court will decide that based on whether your victims became insolvent, had to file for bankruptcy, lost a big chunk of their savings, or other such factors.

Third, the amendments will revise the enhancement for offenses that involve the so-called use of “sophisticated means.” Right now, you get a bump in your sentence if the court concludes that your offense involved especially complex or intricate conduct. The amended guideline will clarify that this enhancement doesn’t apply unless you personally engaged in or caused the conduct that constituted the sophisticated means.

The proposed amendments include other important or interesting changes. They will affect how the guidelines compute your criminal history and how they assess the scope of your liability for the acts of others. They will adjust the various monetary tables in the guidelines to account for inflation. And they will make changes associated with the reclassification of hydrocodone from a Schedule III to a Schedule II controlled substance.

But the amendments to the fraud guideline have made the biggest splash, even as the defense bar continues to debate and analyze their sweep and significance.

Will they apply retroactively? Here’s a report that suggests the answer may be no.