The New Jersey Law Journal contains an article concerning the continuing struggles of federal district courts to come to terms with the discretion which the Supreme Court granted to them in sentencing in U.S. v. Booker, 543 U.S. 220 (2005). The article notes that the courts continue to follow the Guidelines, but that there has been a trend away from strict adherence to the Guidelines.
Statistics show that in 2009, slightly more than one half--56.8 percent--of federal sentences were within the sentencing ranges recommended by the Guidelines--down from 61.7 percent in 2006. However, the percentage of sentences within the recommended Guidelines range varies from district to district--from a low of 27.8 percent for the District of Arizona and 30.8 percent for the District of Vermont to a high of 80.7 percent for the Southern District of Mississippi and 92.3 percent for the District for the Northern Mariana Islands. Nationwide, courts varied downward from the recommended Guidelines ranges in 41.2 percent of cases. Statistics also show that courts were most likely to adhere to advisory Guidelines ranges in drug and burglary cases, and least likely in kidnapping or bribery cases.
The article quotes Professor Douglas Berman of Ohio State University and the author of the influential Sentencing Law and Policy blog, who notes that the Supreme Court has consistently upheld district judges' exercise of their post-Booker sentencing discretion
Thursday, May 6, 2010
Senate Permanent Subcomittee on Investigations Grills Goldman Sachs Execs
Goldman Sachs alleged securities fraud and role in the financial collapse has dominated the news this week, as reported by ABC News, NBC news and Bloomberg. It is difficult to evaluate the evidence against or supporting Goldman at this stage, but Goldman's fortunes were not helped by an inquisitorial and highly publicized hearing by the Senate Permanent Subcommittee on Investigations. The Subcommittee scheduled the hearing less than two weeks after the U.S. Securities and Exchange Commission filed a complaint against Goldman alleging that the firm committed securities fraud.
Goldman officers and employees testified that Goldman was managing its risk on individual transactions, and not betting against the future of the housing market. Six Goldman officers and employees, including its Chief Executive, Lloyd Blankfein, were summoned to testify. Senators asked the witnesses to look through binders of evidence containing internal e-mails and communications.
Goldman defended that the Subcommittee had reached its conclusions before the hearing. The firm also released documents showing that any gains it made from short sales of mortgage backed securities in 2007 were entirely erased by its losses when higher quality mortgages failed in 2008. Goldman's representatives pointed out that the firm had no special advance knowledge that the market would collapse.
The Senators asked Mr. Blankfein if it was morally correct to sell securities to clients while betting against the securities at the same time. Mr. Blankfein promised Goldman would "tighten up" the practices subject to criticism. Michigan Democratic Senator Carl Levin scolded Mr. Blankfein for Goldman selling securities, allegedly described by Goldman's own employees as "crap," and betting against them. Mr. Blankfein told the Committee that it was not Goldman's responsibility to tell its clients how to trade or invest. Blankfein had testified in January before the Financial Crisis Inquiry Commission led by former California Treasurer Phil Angelides.
In an e-mail from November 18, 2007, Blankfein allegedly stated to a colleague that Goldman was making more money from short bets on mortgages than it had lost on its investments in home loans. However, Blankfein also states in the same e-mail that Goldman did not dodge the mortgage crisis, and noted that the crisis was not over. Another document discussed during the hearing was an e-mail between Goldman's Chief Financial Officer, David Viniar, and its President and Chief Operating Officer, Gary Cohn, regarding a profit and loss statement from July 2007 and short sales of stock by Goldman.
Goldman's mortgage chief Dan Sparks admitted in his testimony that Goldman made poor decisions in hindsight.
The Senators frequently interrupted witnesses. Their questioning was also not confined to the allegations of the SEC's complaint. Senator Levin seized on an e-mail between the head of Goldman's mortgage desk, Thomas Montag, and Sparks, in which Montag called a set of mortgage linked investments "one shitty deal." Republican Senator Tom Coburn criticized Goldman for making Goldman bond trader Fabrice Tourre a "whipping boy" and releasing his personal e-mails. In response to Goldman's contention that the Committee had cherry picked its evidence, Senator Levin retorted that the evidence was the "whole bowl of cherries," and reflected the history of what happened.
Tourre also tesfied and asserted his innocence, claiming that he did not mislead any parties in dealings relating to a collateralized debt obligation which he helped to develop. He told the panel that he would defend himself in court against the "false" allegations.
Protestors attending the hearing wore striped prison uniforms and held signs stating "shame" and "Goldman banksters," recalling a term coined by Ferdinand Pecora, an Assistant District Attorney appointed by the Senate to head the Pecora Commission which investigated the causes of the 1929 stock market crash.
Goldman received $10 billion in stimulus money from the federal government following the financial collapse. It repaid the monies with interest eight months later.
It will be interesting to see if the SEC or the Subcommittee--coincidentally the same panel led by Wisconsin Republican Senator Joseph McCarthy in the 1950s--has any more damning evidence up its sleeve. In the meantime, in happier news for Goldman, shares in the company have risen from a low of $152 per share on April 26, to $160 in current trading
Goldman officers and employees testified that Goldman was managing its risk on individual transactions, and not betting against the future of the housing market. Six Goldman officers and employees, including its Chief Executive, Lloyd Blankfein, were summoned to testify. Senators asked the witnesses to look through binders of evidence containing internal e-mails and communications.
Goldman defended that the Subcommittee had reached its conclusions before the hearing. The firm also released documents showing that any gains it made from short sales of mortgage backed securities in 2007 were entirely erased by its losses when higher quality mortgages failed in 2008. Goldman's representatives pointed out that the firm had no special advance knowledge that the market would collapse.
The Senators asked Mr. Blankfein if it was morally correct to sell securities to clients while betting against the securities at the same time. Mr. Blankfein promised Goldman would "tighten up" the practices subject to criticism. Michigan Democratic Senator Carl Levin scolded Mr. Blankfein for Goldman selling securities, allegedly described by Goldman's own employees as "crap," and betting against them. Mr. Blankfein told the Committee that it was not Goldman's responsibility to tell its clients how to trade or invest. Blankfein had testified in January before the Financial Crisis Inquiry Commission led by former California Treasurer Phil Angelides.
In an e-mail from November 18, 2007, Blankfein allegedly stated to a colleague that Goldman was making more money from short bets on mortgages than it had lost on its investments in home loans. However, Blankfein also states in the same e-mail that Goldman did not dodge the mortgage crisis, and noted that the crisis was not over. Another document discussed during the hearing was an e-mail between Goldman's Chief Financial Officer, David Viniar, and its President and Chief Operating Officer, Gary Cohn, regarding a profit and loss statement from July 2007 and short sales of stock by Goldman.
Goldman's mortgage chief Dan Sparks admitted in his testimony that Goldman made poor decisions in hindsight.
The Senators frequently interrupted witnesses. Their questioning was also not confined to the allegations of the SEC's complaint. Senator Levin seized on an e-mail between the head of Goldman's mortgage desk, Thomas Montag, and Sparks, in which Montag called a set of mortgage linked investments "one shitty deal." Republican Senator Tom Coburn criticized Goldman for making Goldman bond trader Fabrice Tourre a "whipping boy" and releasing his personal e-mails. In response to Goldman's contention that the Committee had cherry picked its evidence, Senator Levin retorted that the evidence was the "whole bowl of cherries," and reflected the history of what happened.
Tourre also tesfied and asserted his innocence, claiming that he did not mislead any parties in dealings relating to a collateralized debt obligation which he helped to develop. He told the panel that he would defend himself in court against the "false" allegations.
Protestors attending the hearing wore striped prison uniforms and held signs stating "shame" and "Goldman banksters," recalling a term coined by Ferdinand Pecora, an Assistant District Attorney appointed by the Senate to head the Pecora Commission which investigated the causes of the 1929 stock market crash.
Goldman received $10 billion in stimulus money from the federal government following the financial collapse. It repaid the monies with interest eight months later.
It will be interesting to see if the SEC or the Subcommittee--coincidentally the same panel led by Wisconsin Republican Senator Joseph McCarthy in the 1950s--has any more damning evidence up its sleeve. In the meantime, in happier news for Goldman, shares in the company have risen from a low of $152 per share on April 26, to $160 in current trading
Ponzi and Check Kiting Schemes by Georgia Mortgage Broker Cost Victims $23 Million
According to a press release by the U.S. Attorney's Office for the Northern District of Georgia, Edward William Farley, of Hoschton, Georgia, was sentenced to 25 years imprisonment today in the U.S. District Court for the Northern District of Georgia for causing more than $23 million in losses to mortgage lenders in a real estate investment Ponzi scheme. Walter Julius Herman, of Dunwoody Georgia, was sentenced to over 2 years imprisonment. Farley was also ordered to pay restitution of $24,131,857. He had pled guilty to the charges last November.
Farley, a mortgage broker, operated through the entities Creative Home Search, Southern Land Partners, Georgia Land Group, and Global Mortgage. Farley engaged in same-day flips of properties in Buford, College Park, Conyers, Cumming, Dacula, Grayson, Lawrenceville, Lithonia, Norcross, Marietta, Roswell, Snellville and Suwanee. He paid Hermann, an appraiser, to fraudulently inflate the value of each property by $50,000 to $100,000. He also recruited purchasers to purchase the properties from one of his entities. In the process of flipping the properties, Farley would submit loan applications with false statements.
Farley was also charged with operating a real estate investment/Ponzi scheme through an entity called Alliance Resource Management. Farley falsely represented to investors that Alliance Resource Management was in the business of purchasing residential properties, renovating the properties and selling them at a profit, when in truth Alliance Resource Management had insufficient equity or income to purchase or renovate property. Farley also falsely promised investors that their investments were guaranteed by a first security position in property, a personal guarantee or title insurance, and provided investors with false promissory notes promising interest rates between 14 and 60 percent. In typical Ponzi scheme fashion, Farley paid early investors with investment proceeds from later investors.
Finally, Farley was charged with fraudulently obtaining $1.2 million from Washington Mutual Bank
in a check kiting scheme by transferring funds he did not have among several Alliance Resource Management bank accounts, and withdrawing scheme proceeds before the “insufficient funds” checks were returned.
Farley, a mortgage broker, operated through the entities Creative Home Search, Southern Land Partners, Georgia Land Group, and Global Mortgage. Farley engaged in same-day flips of properties in Buford, College Park, Conyers, Cumming, Dacula, Grayson, Lawrenceville, Lithonia, Norcross, Marietta, Roswell, Snellville and Suwanee. He paid Hermann, an appraiser, to fraudulently inflate the value of each property by $50,000 to $100,000. He also recruited purchasers to purchase the properties from one of his entities. In the process of flipping the properties, Farley would submit loan applications with false statements.
Farley was also charged with operating a real estate investment/Ponzi scheme through an entity called Alliance Resource Management. Farley falsely represented to investors that Alliance Resource Management was in the business of purchasing residential properties, renovating the properties and selling them at a profit, when in truth Alliance Resource Management had insufficient equity or income to purchase or renovate property. Farley also falsely promised investors that their investments were guaranteed by a first security position in property, a personal guarantee or title insurance, and provided investors with false promissory notes promising interest rates between 14 and 60 percent. In typical Ponzi scheme fashion, Farley paid early investors with investment proceeds from later investors.
Finally, Farley was charged with fraudulently obtaining $1.2 million from Washington Mutual Bank
in a check kiting scheme by transferring funds he did not have among several Alliance Resource Management bank accounts, and withdrawing scheme proceeds before the “insufficient funds” checks were returned.
Using a Federal Criminal Defense Lawyer
The Federal Criminal System
The federal criminal system is in many ways like the state system, but it has some very significant differences. One difference is that the typical United States Attorney's office, responsible for prosecuting federal criminal charges, has significantly more time and resources to direct to any given prosecution than would a state prosecutor.
Federal prosecutors also typically have better academic credentials than state prosecutors, and many have a great deal of latitude in selecting the cases they wish to prosecute through the federal courts. Save for crimes which occur on federal land, those cases which fall exclusively to the jurisdiction of a federal prosecutor tend to be of an interstate nature, and are more likely than a state prosecution to be legally and factually complex.
As a result, federal criminal defense tends to involve cases which are more difficult to defend, and the cost of defense is often very high. In each federal jurisdiction there is also a Federal Defender's office, which can provide legal representation to indigent defendants.
Federal Criminal Investigations
If you are contacted by the federal authorities in relation to a criminal investigation, the first thing you must attempt to determine is if you are being contacted as a potential witness or as a suspect. The second thing you must determine is what statements you can safely make to the authorities without potentially falling into a trap, such as being charged with lying to federal agents. Consider for example the case of Martha Stewart, who was acquitted of any direct criminal wrongdoing but spent time in prison for making false statements to federal investigators.
A federal criminal defense lawyer can help you assess the nature and purpose of the investigation, and why you are being approached. While you should expect your lawyer to instruct you to provide honest answers to any questions from the federal authorities, your lawyer may be able to guide you around any potential traps or pitfalls. When appropriate, a federal criminal defense lawyer can be present during any questioning, act as an intermediary between you and the investigating authorities, or advise you to exercise your Fifth Amendment privilege against self-incrimination. If appropriate, a federal criminal defense lawyer may be able to work out a deal where you will cooperate with the investigation, in return for more favorable treatment when the investigation is concluded. In appropriate cases your lawyer may also be able to secure a letter of declination, in which the U.S. attorney formally declines to prosecute you in relation to a particular offense or investigation.
Grand Jury Testimony
When a person receives a subpoena to testify before a grand jury, as with an investigation, it is not always apparent whether the person is being subpoenaed as a witness or as a potential target for indictment. As with an investigation, a federal criminal defense lawyer can help a grand jury witness determine the likely purpose of the subpoena, how to avoid potential traps and pitfalls when providing testimony, or when to "take the fifth". The lawyer may also be able to work out a deal for immunity, or for use immunity (meaning that the testimony provided before the grand jury cannot be used to advance a criminal prosecution against the witness), in relation to the testimony.
Federal Criminal Proceedings
It is helpful during federal criminal proceedings to be represented by a lawyer who is familiar with the federal rules of evidence, federal rules of criminal procedure, trial procedure, and the federal court system in general. The lawyer should also be familiar with federal sentencing procedures, and with the recent Supreme Court rulings which affect sentencing. It helps to have a defense lawyer who is familiar with the U.S. Attorney's office which is handling the case, and ideally some familiarity with the federal investigative agency which spearheaded the investigation.
There is no such thing as a highly qualified federal criminal defense lawyer who dabbles in federal court matters. Lawyers either know federal criminal defense, or they don't. If you are involved in the federal criminal system, make sure your lawyer, or at least one of the lawyers who will be serving on your defense team, has extensive experience with the defense of federal criminal charges. As previously noted, federal criminal defense tends to be very expensive. You will be paying for specialized experience - so make sure you get it.
The federal criminal system is in many ways like the state system, but it has some very significant differences. One difference is that the typical United States Attorney's office, responsible for prosecuting federal criminal charges, has significantly more time and resources to direct to any given prosecution than would a state prosecutor.
Federal prosecutors also typically have better academic credentials than state prosecutors, and many have a great deal of latitude in selecting the cases they wish to prosecute through the federal courts. Save for crimes which occur on federal land, those cases which fall exclusively to the jurisdiction of a federal prosecutor tend to be of an interstate nature, and are more likely than a state prosecution to be legally and factually complex.
As a result, federal criminal defense tends to involve cases which are more difficult to defend, and the cost of defense is often very high. In each federal jurisdiction there is also a Federal Defender's office, which can provide legal representation to indigent defendants.
Federal Criminal Investigations
If you are contacted by the federal authorities in relation to a criminal investigation, the first thing you must attempt to determine is if you are being contacted as a potential witness or as a suspect. The second thing you must determine is what statements you can safely make to the authorities without potentially falling into a trap, such as being charged with lying to federal agents. Consider for example the case of Martha Stewart, who was acquitted of any direct criminal wrongdoing but spent time in prison for making false statements to federal investigators.
A federal criminal defense lawyer can help you assess the nature and purpose of the investigation, and why you are being approached. While you should expect your lawyer to instruct you to provide honest answers to any questions from the federal authorities, your lawyer may be able to guide you around any potential traps or pitfalls. When appropriate, a federal criminal defense lawyer can be present during any questioning, act as an intermediary between you and the investigating authorities, or advise you to exercise your Fifth Amendment privilege against self-incrimination. If appropriate, a federal criminal defense lawyer may be able to work out a deal where you will cooperate with the investigation, in return for more favorable treatment when the investigation is concluded. In appropriate cases your lawyer may also be able to secure a letter of declination, in which the U.S. attorney formally declines to prosecute you in relation to a particular offense or investigation.
Grand Jury Testimony
When a person receives a subpoena to testify before a grand jury, as with an investigation, it is not always apparent whether the person is being subpoenaed as a witness or as a potential target for indictment. As with an investigation, a federal criminal defense lawyer can help a grand jury witness determine the likely purpose of the subpoena, how to avoid potential traps and pitfalls when providing testimony, or when to "take the fifth". The lawyer may also be able to work out a deal for immunity, or for use immunity (meaning that the testimony provided before the grand jury cannot be used to advance a criminal prosecution against the witness), in relation to the testimony.
Federal Criminal Proceedings
It is helpful during federal criminal proceedings to be represented by a lawyer who is familiar with the federal rules of evidence, federal rules of criminal procedure, trial procedure, and the federal court system in general. The lawyer should also be familiar with federal sentencing procedures, and with the recent Supreme Court rulings which affect sentencing. It helps to have a defense lawyer who is familiar with the U.S. Attorney's office which is handling the case, and ideally some familiarity with the federal investigative agency which spearheaded the investigation.
There is no such thing as a highly qualified federal criminal defense lawyer who dabbles in federal court matters. Lawyers either know federal criminal defense, or they don't. If you are involved in the federal criminal system, make sure your lawyer, or at least one of the lawyers who will be serving on your defense team, has extensive experience with the defense of federal criminal charges. As previously noted, federal criminal defense tends to be very expensive. You will be paying for specialized experience - so make sure you get it.
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