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• Bitmex: Inadequate Anti-Money Laundering Program (2021) - Bitmex, an offshore cryptocurrency derivatives exchange has been the subject of federal investigations.  Its founders have been charged with violating the Bank Secrecy Act (BSA) and conspiring to violate the BSA by willfully failing to establish an adequate anti-money laundering program.  
• DEA Shutting Down Illegal Distribution of Oxycodone By Doctors (2020) - An outline of the recent efforts by the DEA to shut down doctors who write inappropriate and/or illegal prescriptions for controlled substances.  "Pill Mills" are facing increased scrutiny and have been targeted for prosecution.  The penalties for such criminal conduct are extraordinary.  
• An Analysis: SEC 2020 Financial Fraud Actions (2020) - An overview of the SEC prosecutions for the year 2020.  
• U.S. DOJ's Cyber-Digital Task Force Issues Crypto Guidance (2020) - The various kinds of cryptocurrencies are discussed and the methods used by prosecutors to prosecute these crimes are outlined.  
• Third Circuit Vacates Sentence of Former Vanguard Employee Accused of Money Laundering, Mail Fraud, and Tax Evasion (2020) - The Third Circuit rejected a longstanding practice of compounding all of the enhancements for money laundering and mail/wire fraud conviction into one sentencing guideline.  The Third Circuit held that an abuse of trust enhancement can only be applied to the money laundering guidelines if the abuse of trust related to the money laundering conviction.  Otherwise, the guidelines for the mail/wire fraud must be calculated separately from the money laundering guidelines.  
• 2019 – WHITE COLLAR CASES REVIEWED (2020) - FEDERAL HEALTH CARE FRAUD – “PILL MILLS,” MEDICARE “ANTI-KICKBACK” FRAUDS This year, the U.S. Department of Justice brought charges against numerous doctors and health care professionals alleging illegal distribution of millions of opioids through “pill mill” clinics and the writing of prescriptions which the government deemed not to be “medically necessary.” Often the physicians were employed by various pain management clinics. In a case filed in the federal court in the Eastern District of Pennsylvania, the government also charged an office manager and physician’s assistants with conspiracy to operate a drug premises and illegal distribution of controlled substances. United States v. Nikpovar-Fard, et al, Crim. No. 18-10.In addition, the government continued to target corporate health care fraud involving fraudulent telemedicine companies and the solicitation of illegal kickbacks and bribes from health care suppliers in exchange for the referral of Medicare beneficiaries for medically unnecessary durable medical equipment and other testing. Owners of durable medical equipment companies (DME’s) as well as telemedicine company owners, doctors and genetic testing companies have been charged with violations of the Medicare Anti-Kickback statutes. These prosecutions were led and coordinated by the Health Care Fraud Unit of the Criminal Division’s Fraud Section in conjunction with its Medicare Fraud Strike Force (MFSF), as well as the U.S. Attorney’s Offices around the country. The MFSF is a partnership among the Criminal Division, U.S. Attorney’s Offices, the FBI and U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG). In addition, IRS-Criminal Investigations (IRS-CI), Department of Defense-Defense Criminal Investigative (DoD-DCIS), Food and Drug Administration-Office of Inspector General (FDA-OIG), U.S. Postal Service-Office of Inspector General (USPS-OIG), the Medicaid Fraud Control Unit and other federal and state law enforcement agencies participate in the operations. CONSPIRACY, SECURITIES FRAUD, WIRE FRAUD, MONEY LAUNDERING A New York federal jury acquitted Privinest group executive Jean Boustani of conspiracy to commit securities fraud, wire fraud, and money laundering (FCPA) in connection with an alleged fraud and kickback scheme involving $2 billion in Mozambican government-backed loans for maritime projects. The government alleged that Boustani and others diverted over $200 million from the loan funds for bribes and kickbacks to Credit Suisse bankers and Mozambican government officials to ensure the projects went forward. Ultimately, over $700 million in loan payments were defaulted on. Boustani took the stand and admitted to bribery but denied defrauding investors. United States v. Boustani, Crim. No. 18-00681 (E.D.N.Y.) A major issue for the jury was whether the case was properly brought in the United States, as Boustani, a Lebanese citizen, had never set foot in the U.S. before he was arrested. The jurors later said that the issue came down to one of venue and that they could not find a nexus to New York. SECURITIES FRAUD, WIRE FRAUD, CONSPIRACY A Brooklyn federal jury acquitted three former executives at hedge fund Platinum Partners on charges of defrauding investors by concealing cash flow problems at their funds. Later, following their convictions of securities fraud, conspiracy to commit securities fraud, and conspiracy to commit wire fraud, in connection with Black Elk Offshore Operations LLC, the trial judge acquitted David Levy, co-chief investment officer, granting Levy’s Rule 29 motion on the grounds that the prosecution failed to prove the requisite criminal intent and that the government’s evidence was “too speculative,” and granted co-founder Mark Nordlicht’s Motion for New Trial. United States v. Nordlicht, Crim. No. 16-00640 (E.D.N.Y.)CONSPIRACY, WIRE FRAUD AFFECTING A FINANCIAL INSTITUTION In United States v. Bogucki, Crim. No. 18-00021 (N.D. CA), Bogucki was charged with one count of conspiracy to commit wire fraud affecting a financial institution, in violation of 18 U.S.C. § 1349, and six counts of wire fraud affecting a financial institution, in violation of 18 U.S.C. §§ 1343 and 2. The trial Judge granted a Rule 29, acquitting the defendant of all charges, stating: ‘Here, the government has pursued a criminal prosecution on the basis of conduct that violated no clear rule or regulation, was not prohibited by the agreements between the parties, and indeed was consistent with the parties’ understanding of the arms-length relationship in which they operated.’ This case is extremely significant in that the government is increasingly attempting to criminalize American business transactions where no rules or regulations govern the business conduct and by manufacturing duties of trust that do not exist. The trial judge, recognizing this, granted the motion for acquittal.
• USA v. Huberfeld: conspiracy to Commit Wire Fraud (2020) - Second Circuit finds that trial judge improperly applied commercial bribery guidelines in a wire fraud case.
• Obstruction of Justice Enhancement U.S.S.G. Section 3C1.1 (2020) - Failure to produce documents, producing false documents or misleading investigators, even though the investigators are not state or federal officials, can have serious ramifications and can support federal sentencing enhancements.  
• PHARMACIST'S STATEMENTS NOT SUPPRESSED – EXPERT OPINION AS TO BEST MEDICAL PRACTICES ALLOWED (2019) - The Third Circuit’s decision in United States v. Ludwikowski, Crim. No. 18-1881, really underscores the importance of seeking the advice of counsel before ever speaking to the government or any law enforcement officer. In this case, Ludwikowski was receiving extortionate threats relating to his pharmacy and while reporting these threats, he inculpated himself. He was subsequently prosecuted for drug distribution and a government expert testified at trial that the drugs were dispensed “outside the usual course of professional practice.” He was convicted by a jury, sentenced to 180 months imprisonment. The Third Circuit affirmed the conviction. This case involves a pharmacist who owned two independent pharmacies in New Jersey that engaged in an extensive business filling oxycodone prescriptions. After telling two customers that he could no longer fill their prescriptions, Ludwikowski starting receiving a series of threatening text messages threatening him and his family. Worried about the extortionate threats, he contacted his uncle, a New York FBI agent, who in turn called the FBI’s Trenton office. The Trenton FBI agent learned of an open local investigation into Ludwikowski’s pharmacy and arranged for Ludwikowski to be interviewed at a local police station. Subsequently, Ludwikowski drove to the police station and was interviewed from around 10:15am to 5:30pm, without being given any Miranda warnings. His statements were later used to prosecute him for drug distribution. On appeal, he argued that his interrogation statements should have been excluded because his Miranda rights were violated. The Third Circuit engaged in a multi-step analysis before concluding that no Miranda warnings were necessary. First, the Third Circuit considered the question of whether Ludwikowski was in custody. The Court considered the following factors with respect to this question: (1) “the circumstances surrounding the interrogation;” (2)“whether ‘a reasonable person [would] have felt that he or she was not at liberty to terminate the interrogation and leave;’” and (3) “whether the relevant environment presents the same inherently coercive pressures as the type of station house questioning at issue in Miranda.” Slip Opinion at p. 11 (citations omitted). In considering the “circumstances surrounding the interrogation,” the Third Circuit found relevant the fact that Ludwikowski chose to go to the station for interrogation for the purpose of solving the extortion and that he, therefore, knew that he would be questioned regarding his involvement. The Court also focused on the fact that there were never more than two questioners in the room, no one blocked his exit and that the meeting was “businesslike.” Next, in considering whether “a reasonable person [would] have felt that he or she was not at liberty to terminate the interrogation and leave,” the Third Circuit found that the following factors were evidentiary on this question: “the interview’s location, physical surroundings, and duration: whether he voluntarily participated: whether he was physically restrained; whether other coercive tactics were used, such as hostile tones of voice or the display of weapons; and whether the interviewee was released when the questioning was over.” Slip Opinion at pp. 12-13, citing Yarborough, 541 U.S.at 663; United States v. Willaman, 437 F. 354, 359-60 (3d Cir. 2006). Also relevant was ”whether the questioner believed the interviewee was guilty; whether the interviewee was specifically told he was not under arrest; and whether he agreed to meet knowing that he would be questioned about a criminal offense. Id. at 13. The Third Circuit concluded that Ludikowski was not in custody, for a number of reasons. First, he was “not physically restrained.” Id. Rather, “he went to the station to discuss the extortion because he feared for his family’s safety,” and not because he felt “obligated to come to… the questioning.” Id. Also relevant was the fact that he left on his own volition, in his own car – i.e. unhindered release after questioning, and the fact that Ludwikowski knew that he would be questioned about the reasons behind the extortionate threats and his own possible criminal activities at the pharmacy. Other factors that weighed in favor of a determination that a person is in custody were considered by the Third Circuit, but found factually not persuasive in Ludwikowski’s case. The fact that he was interviewed at the station house, while tending to implicate the pressures associated with custodial interrogation, was found in this case not to be applicable because Ludwikowski made arrangements to go to the station house voluntarily and the interview room door, though closed, was not locked. The second factor that weighs in favor of a finding of being in custody is that the officers told Ludwikowski that they suspected him of criminal wrongdoing – i.e. filling fraudulent prescriptions. The Third Circuit found that telling a person that they are a suspect can “create the kind of atmosphere of significant restraint that trigger Miranda.” Slip Opinion at p. 14. (Citations omitted). Nonetheless , the Court excused this factor because the officers were also trying to get to the bottom of the extortion that Ludwikowski had come to report. Finally, the last factor that the Court considered was the length of the interrogation – active interrogation for four hours and total time at the station seven hours. Again, the Third Circuit found a way around this factor by finding the circumstances not coercive because he had his phone, was allowed to go to the bathroom and that he looked relaxed. For all of these reasons, the Third Circuit concluded that the District Court did not err in finding that ta reasonable person in Ludwikowski’s situation would have felt free to go. Finally, the Third Circuit bolstered its conclusion by emphasizing that Ludwikowski went to the police station for the purpose of “simultaneously” trying “to get help and conceal his own wrongdoing.” Id. at 17. Therefore, the Court stated that this decision is limited to the facts of this case where “the defendant was the victim of one crime and the perpetrator of another, intertwined crime.” Id. at 18. Although the Court stated that “[o]ur analysis would have no bearing on a case lacking these facts,” in reality, the damage is done, in my view, for future cases. In yet another blow to the defense, the Third Circuit went on to find no plain error in the admission of expert testimony about New Jersey pharmacy regulations, best practices and the expert’s personal practices. Unfortunately, his counsel did not object at trial. Acknowledging Ludwikowski’s argument that “an expert may ‘not testify as to the governing law of the case,’” the Third Circuit found that despite the likelihood that they would rule similarly to their sister Circuits in finding that the standard should be an objective one, not defined by the expert’s personal habits, the demanding plain-error standard was not met here.
• BANK FRAUD CONVICTIONS REVERSED (2019) - The Sixth Circuit’s in United States v. Banyan, reversed the defendants’ bank fraud convictions. The reason: the government didn’t show the defendants got any money from a bank. The court held: “…the government charged the defendants with the wrong crimes.” The defendants were a homebuilder and a mortgage broker. The builder fell into financial distress, and the two submitted a number of fraudulent mortgage applications to two different mortgage companies, which were wholly-owned subsidiaries of two different banks, Sun Trust and Fifth Third. Subsequently, the defendants were charged with bank fraud in violation of 18 U.S.C. § 1344(1) and (2) and conspiracy to commit bank fraud in violation of 18 U.S.C. § 1349. A jury found them guilty; the government did prove the defendants fraudulent conduct in submitting false mortgage applications to obtain loans. The defense argued that neither of the mortgage companies had deposits that were federally insured, and, therefore, neither was a “financial institution,” which is the type of entity to which sections 1344 and 1349 apply. The court labeled as “nearly frivolous” the government’s argument that the mortgage companies should be considered banks “because each of them is a wholly owned subsidiary of a bank” for two reasons. One was that “a basic tenet of American corporate law” that a corporation (the mortgage companies) and their shareholders (the banks) are “distinct entities.” The second reason was Congress' pains to define “precisely” the term “financial institutions” as “institutions that hold federally insured deposits – which the defrauded mortgage companies undisputedly did not.” The government argued that the parent banks “owned” the funds that the mortgage companies provided to the defendants, because the banks owned those companies. As to the first element of § 1344(2), the government argued that “the jury could reasonably infer . . . that the funds obtained from the mortgage companies belonged to the parent banks[,]” because any losses incurred by the mortgage companies would “flow directly up” to the banks. Gov’t Br. at 24. The Circuit court rejected this argument, citing United States v. Bennett, 621 F.3d 1131, 1136 (9th Cir. 2010): “[I]t almost goes without saying that a parent corporation does not own the assets of its wholly owned subsidiary by virtue of that relationship alone.” The government also argued that the banks had “custody or control of” the mortgage companies’ funds, 18 U.S.C. § 1344(2), because “the jury could reasonably assume that a parent company has some ‘duty’ to protect the funds of its wholly owned subsidiary and, moreover, has the ‘power or authority to guide or manage’ those funds.” Gov’t Br. 28. The government offered no evidence to support this argument. The Circuit Court held that this argument is merely a rehash of the government’s argument that the court should disregard the separate corporate forms of the mortgage companies and the parent banks. The Circuit court further held that that argument disregards the statutory text that the Supreme Court so carefully interpreted in Loughrin v. United States, 573 U.S. 351, 355 (2014). That text requires the government to prove the defendant’s “intent to obtain bank property,” 573 U.S. at 355 (emphasis added), not merely to diminish its value. Accord Bennett, 621 F.3d at 1138 (holding that the same argument “fail[s] to appreciate the distinction between the act of misapplying funds belonging to a financial institution and the act of diminishing the value of a financial institution’s assets”). Similarly, the Circuit Court held that §1344(1) requires the government to prove that a defendant specifically “intend[ed] to ‘defraud a financial institution[,]’”Loughrin, 573 U.S. at 357 (quoting § 1344(1)), as opposed to a mortgage company. To prove fraud under § 1344(1), in contrast, the government at a minimum needed to prove that the defendants intended to “cause[] a federally insured bank to transfer funds under its possession and control.” United States v. Everett, 270 F.3d 986, 991 (6th Cir. 2001). The Circuit Court also found that the government failed to prove that the defendants sought to obtain bank property by means of” a misrepresentation . 18 U.S.C. §1344(2): “That element of § 1344(2) limits the provision’s scope to “frauds in which a false statement will naturally reach [a federally insured] bank (or a custodian of the bank’s property). Loughrin, 573 U.S. at 365 n.8.” The court reasoned that the mortgage companies were not custodians of the bank’s property because they did not fund the subject loans and that on the evidence presented at trial, there was no evidence that the misrepresentations on the subject loan applications ever reached the ears of anyone at the parent banks.
• DRUG QUANTITY PROOF / EVIDENCE AT SENTENCING (2019) - In United States v. Rowe, No. 18-1192 (Apr. 2, 2019), the Third Circuit vacated the defendant's conviction for distribution and possession with intent to distribute 1,000 grams of heroin because the government failed to prove that he distributed or possessed 1000 grams or more in a single unit, instead relying on evidence of multiple smaller distributions and possessions during the indictment period. The Court also vacated the defendant's sentence because the evidence presented at sentencing was unreliable. On remand, the Court instructed that the district court should enter a judgment of conviction for possession with intent to distribute 100 grams of heroin and resentence the defendant without the government being permitted to introduce additional evidence on drug quantity. The defendant was charged with distribution and possession with intent to distribute 1,000 grams of heroin in violation of 21 U.S.C. § 841(a)(1) and (b)(1)(A). Under § 841(b)(1)(A)(i), an offense involving 1,000 grams or more of heroin is punishable by 10 years to life, whereas under § 841(b)(1)(B)(i), an offense involving 100 grams or more of heroin is punishable by 5 to 40 years. Because the weight involved in the crime increases the statutory penalty, it is an element of the offense that must be proved to a jury beyond a reasonable doubt. Here, the defendant conceded to distributing heroin, but claimed he had only distributed 200 grams, so the trial focused on the precise quantity involved in the crime.To prove its case at trial, the government relied on three key pieces of evidence and testimony: (1) a confidential informant who said that over the course of several months the defendant sold him over 1,000 grams of heroin in small amounts, and who also said he saw the defendant with numbered packages and a ledger of drug sales, (2) a DEA special agent who used his experience to analyze the defendant's drug ledger and to explain that a dealer who sells 200 grams of heroin likely has access to multi-kilogram quantities, and (3) the defendant's drug ledger. In his closing argument, the prosecutor argued, based on the evidence of multiple distributions, that the government presented sufficient evidence to prove the 1000 gram drug weight based upon figures in the defendant’s drug ledger and the confidential informant’s testimony. At the close of trial, the district court instructed the jury that it had to decide "whether the government had proved beyond a reasonable doubt that [the defendant] distributed 1 kilogram or more of heroin." The jury had the option of returning a conviction on the 1,000 gram charge, and also to return a verdict on a lesser-included 1000 gram charge. It ultimately returned a guilty verdict for both drug weights.At sentencing, the district court relied on a pre-sentence report calculating a total drug weight of at least 10 kilograms of heroin, resulting in a base offense level of 34 under U.S.S.G. § 2D1.1(c)(3). This determination was based on a statement the defendant was alleged to have made at the time of his arrest, yet evidence of that statement had been excluded at trial and the government presented no evidence regarding the statement at sentencing. Despite Rowe’s objection, the Court adopted the pre-sentence investigation report without change and imposed a within-Guidelines sentence of 151 months’ imprisonment followed by five years’ supervised release.On appeal, the defendant argued that there was not sufficient evidence to support his conviction for distributing or possessing with intent to distribute 1,000 grams of heroin because there was no evidence of a single transaction involving over 1,000 grams, and that the district court was wrong to rely on the drug calculation in the PSR. The Court agreed with both arguments.First, the Court held that the evidence was insufficient to support the 1,000 gram verdict because "the Government did not present evidence of a single distribution involving 1,000 grams or more of heroin." Instead, "the prosecutor mistakenly believed that distribution of 1,000 grams could be proven by combining several distributions that, in total, involved 1,000 grams of heroin." The Court rejected the government's argument that the evidence was still sufficient to support a conviction for possession with intent to distribute 1,000 grams, explaining that "possession of 1,000 grams of heroin begins when a defendant has the power and intention to exercise dominion and control over all 1,000 grams, and ends when his possession is interrupted by a complete dispossession or by a reduction of that quantity to less than 1,000 grams." The Court observed that while the evidence showed that the defendant had distributed a total of 1,000 grams of heroin over the course of several months, it did not establish that he ever possessed or distributed 1,000 grams at any one time. The Court therefore vacated the 1,000 gram conviction and remanded for the district court to enter judgment solely on the 100 gram verdict.Second, the Court held that the government should not be permitted to develop the record on the drug weight issue at sentencing. The Third Circuit further found that the district court had erred in relying on the PSR's drug calculation, which incorporated an alleged admission by the defendant for which the government had never presented any evidence. Because the government typically gets only one opportunity to present evidence at sentencing, absent a compelling reason otherwise, the Court instructed that "the government will not be permitted to introduce additional evidence regarding drug quantity" at resentencing.Read as originally posted on "Federal Defender Third Circuit Blog".
• SUMMARY OF FIRST STEP ACT (2019) - On December 22, 2018, President Trump signed the First Step Act, a prison and sentencing reform bill. Below is a brief summary of some of the provisions. It should be noted that most of the provisions are not retroactive. Modifies Certain Mandatory Minimum Sentences Under 21 U.S.C. §841, when a defendant is convicted of a new drug offense, the mandatory minimum after two prior convictions for a serious drug felony or a serious violent felony will be 25 years instead of life. In addition, serious drug felonies and serious violent felonies will count only if they occurred within the past 15 years. Where a defendant is convicted of a new drug offense, the mandatory minimum after one prior conviction for a serious drug felony or a serious violent felony will be 15 years instead of 20 years. The same 15-year time period for prior serious drug or serious violent felonies will apply. Broadens of Existing Safety Valve Provisions Gives judges broader discretion to sentence some non-violent cooperating drug offenders below the mandatory minimum sentence. It would apply to cooperating offenders with up to four criminal history points (excluding any points that result from a 1-point offense). It would not apply to offenders with a prior 3-point offense or a 2- point violent offense. Adjusts Good Time Credit Calculation Prisoners receive 54 days of good time credit per year, not 47 days, for following prison rules. This change to good time credit would be retroactive. Requires BOP to Put Lower-Risk, Lower-Needs People in Home Confinement Applies to the full amount of time permitted under current law (10 percent of the person’s sentence or 6 months, whichever is less). Requires the BOP to Place Prisoners Within 500 Miles of Home Refers to driving miles, no air miles, if security classification and bed space allow it. Reforms the BOP’s Compassionate Release Process For prisoners facing “extraordinary and compelling” circumstances, including: Allowing prisoners to appeal denials of compassionate release to federal courts after all other BOP remedies have been exhausted or at least 30 days have passed since the request was submitted Requiring annual data reporting on BOP’s use of compassionate release Creating an expedited timeline for BOP consideration of compassionate release requests of terminally ill prisoners Permitting family members, lawyers, and BOP staff to help prisoners file compassionate release requests Requiring better notice to BOP staff and prisoners of when compassionate release is available and how to ask for it Authorizes $50 million in Funding Funding provided per year for 5 years for rehabilitative programs in federal prisoners. Gives Incentives to Prisoners For those who cannot earn time credits for completing rehabilitative programs, incentives include: Up to 510 phone minutes per month (which prisoners must pay for) Additional time for visits, determined by the warden Additional time using the BOP’s email system (which prisoners must pay for) Transfer to a prison closer to the person’s home, if the warden approves Increased commissary spending limits and product offerings Consideration for transfer to preferred housing units Requires BOP to Help People Get Government Identification Assist with obtaining cards and birth certificates before they leave prison. Reauthorizes an Elderly Prisoner Early Release Pilot Program From the Second Chance Act of 2007, allowing elderly and elderly terminally ill prisoners to be released from prison early if they are at least 60 years old, have served 2/3 of their sentences, and meet all of the other requirements. Bans Shackling of Pregnant Women in Federal Prisons and Jails Expands Federal Prison Industries Requires BOP to Expand Programs More Quickly Putting them in place for all eligible prisoners within three years of the bill’s passage. Previous versions of the bill had a longer phase-in of up to 6 years. During this phase-in period, prisoners closest to release get priority for being placed in programs. After the phase-in period, medium- and higher-risk prisoners are given priority to be placed in programs, while jobs are prioritized for minimum- and low-risk prisoners. Incentives for Participating in Recidivist Reducing Programs Focuses time credit incentives on lower-risk prisoners who are unlikely to reoffend: Minimum- and low-risk prisoners earn 15 days of credits for each 30 days of programming or jobs completed and can “cash in” these credits if they have maintained their risk level for two assessment periods (i.e., 2 years) and the warden does not object in writing to the redemption of their credits Medium- and high-risk prisoners earn 10 days of credits for each 30 days of programming or jobs completed, and cannot “cash in” these credits unless they first reduce their risk levels to minimum or low. Medium- and high-risk prisoners may also petition to redeem their credits, and those petitions can be granted if the warden approves and finds that the prisoner is not likely to reoffend and is not danger to public safety   Earned time credits are not real time off the person’s sentence. Credits may be cashed in only for more time in a halfway house or on home confinement. Once a person is in a halfway house or on home confinement, they can be sent back to prison if they violate the conditions of their confinement. The BOP’s model recidivism-reducing program is the residential drug abuse program (RDAP), which awards completing prisoners a one-year sentence reduction. Excludes many prisoners from earning time credits, including: Manufacturing or distributing drugs, with death or serious bodily injury resulting from the use of those drugs (21 U.S.C. § 841(b)(1)(A), (B), or (C)) Armed Career Criminal Act (18 U.S.C. § 924(e)) Assault with intent to commit murder (18 U.S.C. § 113(a)(1)) Influencing, impeding, retaliating against a federal officer by injuring a family member, except for a threat (18 U.S.C. § 115) Biological weapons (18 U.S.C., chapter 10) Chemical weapons (18 U.S.C., chapter 11B) Assassination, kidnaping, or assault of a congressional, cabinet, or Supreme Court member (18 U.S.C. § 351) Gathering, transmitting, losing defense information (18 U.S.C. § 793) Gathering or delivering defense information to aid a foreign government (18 U.S.C. § 794) Explosives or dangerous articles (chapter 39, U.S. Code, except for § 836 offenses involving transportation of fireworks into a state that prohibits their sale or use) Distribution of information relating to weapons of mass destruction (18 U.S.C. § 842(p)) Use of fire or explosive (18 U.S.C. § 844(f)(3), (h), or (i)) Computer fraud (18 U.S.C. § 1030(a)(1)) Murder under 18 U.S.C., chapter 51, except for manslaughter (18 U.S.C. § 1112), attempt to commit manslaughter (18 U.S.C. § 1113), misconduct or neglect of ship officers (18 U.S.C. § 1115), protection against HIV (18 U.S.C. § 1122) Kidnaping (18 U.S.C., chapter 55) Human trafficking and slavery (18 U.S.C., chapter 77), except for sections 1592 through 1596 Assault, kidnaping, or assassination of president or presidential staff (18 U.S.C. § 1751) Intentionally killing or attempting to kill an unborn child (18 U.S.C. § 1841(a)(2)(C)) Terrorist attacks against railways or mass transportation systems (18 U.S.C. § 1992) Bank robbery resulting in death (18 U.S.C. § 2113(e)) Robberies or burglaries involving drugs, which result in death (18 U.S.C. § 2118(c)(2)) Carjacking that results in death (18 U.S.C. § 2119(3)) Sabotage (18 U.S.C., chapter 105, except for § 2152) Sexual abuse (18 U.S.C., chapter 109A, except for those convicted under any provision of § 2244 other than subsection (c)) Sexual exploitation of children (18 U.S.C. § 2251) Selling or buying children (18 U.S.C. § 2251A) Receipt or distribution of child pornography (18 U.S.C. § 2252(a)(1), (2), or (3)) Second or subsequent conviction for possession, distribution, or sale of child pornography (18 U.S.C. § 2252A(a)(1) through (6)) Producing child pornography for importation (18 U.S.C. § 2260) Transportation of explosive, biological, radioactive, chemical, or nuclear materials (18 U.S.C. § 2283) Transportation of terrorists (18 U.S.C. § 2284) Destroying a vessel or port, if it involved substantial risk of death or serious bodily injury (18 U.S.C. § 2291) Terrorism (18 U.S.C. chapter 113B) Torture (18 U.S.C. § 2340A) Treason (18 U.S.C. § 2381) Recruiting or using child soldiers (18 U.S.C. § 2442) Developing or producing nuclear material (42 U.S.C. § 2077(b))\ Atomic weapons offenses (42 U.S.C. § 2122) Atomic energy license violations (42 U.S.C. § 2131) Communication or receipt of restricted atomic data (42 U.S.C. § 2274, 2275) Sabotage of nuclear facilities or fuel (42 U.S.C. § 2284) Damaging or destroying a pipeline facility, if the conduct involved a substantial risk of death or serious bodily injury (49 U.S.C. § 60123(b)) Illegal reentry of certain removed aliens listed in 8 U.S.C. § 1326(b)(1) or (2) (e.g., the person has a prior conviction for a felony, an aggravated felony, or 3 or more misdemeanor drug or person crimes) Export violations (50 U.S.C. App. 2401 et seq.) International Emergency Economic Powers Act (50 U.S.C. § 1705) Disclosing identities of undercover agents, informants, sources (50 U.S.C. § 3121) A conviction for: An offense listed in 18 U.S.C. § 3559(c)(2)(F) (murder, manslaughter, voluntary manslaughter, assault with intent to commit murder, assault with intent to commit rape, aggravated sexual abuse, sexual abuse, abusive sexual contact, kidnaping, aircraft piracy, robbery, carjacking, extortion, arson, firearm use, firearm possession during a drug offense or crime of violence, and attempt, conspiracy, or solicitation to commit any of these offenses) AND The person was sentenced to a year or more in prison for this conviction, AND: The person has a prior state or federal conviction for murder, voluntary manslaughter, assault with intent to commit murder, aggravated sexual abuse, sexual abuse, abusive sexual contact, kidnaping, carjacking, arson, or terrorism, for which the person served a year or more in prison. District of Columbia offenders housed in federal prisons State offenders housed in federal prisons People serving life sentences Noncitizens facing deportation or removal from the U.S. Even though these offenders would not be eligible to earn time credits or be released onto prerelease custody, they would be eligible to receive other incentives for completing programming, such as increased visiting time with families, more minutes for phone calls, more commissary privileges, or transfer to a different prison. The full text of the act can be found at: https://www.congress.gov/115/bills/s756/BILLS--115s756enr.pdf
• SUPREME COURT HOLDS THAT GUILTY PLEA DOES NOT BAR LEGAL CHALLENGE TO CONSTITUTIONALITY OF STATUTE OF CONVICTION ON APPEAL (2018) - The Supreme Court recently held that a guilty plea does not bar a federal criminal defendant from challenging the constitutionality of the statute of conviction on direct appeal. In Class v. United States, No. 16-424, _U.S._, 2018 WL 987347 (February 2018), the petitioner, Rodney Class pled guilty to possession of a firearm on U. S. Capitol grounds, in violation of 40 U. S. C. §5104(e). A written plea agreement set forth the terms of Class’ guilty plea, including several categories of rights that he agreed to waive, but it was silent as to the right to challenge on direct appeal the constitutionality of the statute of conviction. After conducting a hearing pursuant to Rule 11(b) of the Federal Rules of Criminal Procedure, the District Court accepted Class’ guilty plea and sentenced him. Class then sought to raise his constitutional claims on direct appeal in which he challenged the Government’s power to criminalize his (admitted) conduct, thereby calling into question the Government’s power to “constitutionally prosecute” him. The Court of Appeals held that Class could not do so because, by pleading guilty, he had waived his constitutional claims. Petitioner, Class, argued that the Supreme Court should apply the precedent set in Blackledge v. Perry and Menna v. New York to his case by holding that a guilty plea does not preclude a constitutional challenge. Respondent, the United States, sought to persuade the Court to adopt a narrow view of what is loosely known as the Menna-Blackledge doctrine. The United States argued that unless the plea agreement expressly preserves defendant’s right to challenge the constitutionality of the convicting statute, the defendant expressly waives this constitutional claim by pleading guilty. The Government conceded that the written plea agreement in this case did not contain the waiver that its argument relied upon. However, Justice Breyer, writing for the majority, effectively reaffirmed and extended the Menna-Blackledge doctrine, which holds that “a plea of guilty to a charge does not waive a claim that—judged on its face— the charge is one which the State may not constitutionally prosecute.”[1] Of particular importance was the fact that challenging the constitutionality of a convicting statute does not contradict or dispute the terms of the indictment or the written plea agreement. In light of the fact that circuit courts have been divided on the issue, the Supreme Court clarified the appellate rights of criminal defendants who have pled guilty and subsequently want to challenge the constitutionality of their statute of conviction. The court noted the narrowness of its holding, as it reaffirmed that a guilty plea does implicitly waive some claims, including some constitutional claims. Although this case will not have far-reaching consequences as there are often no constitutional grounds upon which to challenge the statute of conviction, this case is significant for the defense.[1] United States v. Broce, 488 U. S. 563, 575 (quoting Menna, supra, at 63, n. 2). Pp. 3–7.
• OBSTRUCTION OF JUSTICE ENHANCEMENT UNDER U.S. SENTENCING GUIDELINE §3C1.1 (2018) - The Eighth Circuit in United States v. Parker, 2017 WL 400282 (8th Cir. 2017) held that conduct that occurred after the offense of conviction and after the trial does not constitute obstruction of justice. Bender, a defendant, was charged with conspiracy to possess firearms. Bender was a member of One-Nine, a Minnesota gang, that was in a feud with the Taliban, a rival gang. Another member of the gang, Black, was convicted of illegally possessing a firearm and conspiring to illegally possess firearms. The conviction was partly based on the testimony of two other gang members. The day after Black’s conviction, the Bender (Black’s codefendant) called a friend from prison by using a borrowed telephone identification code. Bender instructed his friend to send e-mails to two individuals in the Rush City Correctional Facility, the location where the witnesses were housed. The e-mails that Bender sent were to notify everyone that the witnesses had testified and should be injured in retaliation. One of the e-mails was intercepted by prison staff and the other e-mail reached its intended recipient and was later found in his belongings. Bender’s action of sending these two e-mails garnered him a new charge for conspiracy to retaliate against government witnesses. At the defendant’s sentencing, the district court calculated a Sentencing Guidelines range of 210 to 262 months. In order to set this range, the court grouped the Bender’s two sentences, the firearm conspiracy charge and conspiracy to retaliate against government witnesses charge, and selected the range provided by the conviction with the highest Guidelines range. The lower court applied a two-level enhancement for obstruction of justice, to which the defendant objected. On appeal, Bender argued that the obstruction of justice enhancement did not apply to his case. The Eighth Circuit reversed, citing United States v. Galaviz, 687 F.3d 1042 (8th Cir. 2012). Even though the defendant did not bring Galaviz to the district court’s attention, the Eighth Circuit noted that it controlled in this case and vacated the defendant’s sentence. The Eighth Circuit explained that even though the defendant conspired against witnesses in Black’s trial, the government was unable to establish that Bender believed that the witnesses would be used against him during sentencing and they were not actually used against him at all. The Eighth Circuit noted that the retaliation occurred the trials of both Black and Bender (codefendants) had concluded and therefore, Bender’s actions were not “intended to obstruct justice on the instant offense of conviction.” The court concluded that the defendant was properly prosecuted for retaliating against government witnesses, but the retaliation occurred after he and his codefendants had all been found guilty. Therefore, the obstruction-of-justice should not have applied when calculating defendant’s Guidelines range regarding his previously pleaded charge. This case is significant because it establishes that conduct occurring after the offense of conviction may not be used to justify an obstruction of justice enhancement under U.S.S.G. §3C1.1 where the government cannot prove that it had any affect upon sentencing.
• HONEYCUTT DECISION BY SUPREME COURT: MAJOR VICTORY FOR THE DEFENSE IN CRIMINAL FORFEITURE (2017) - The Supreme Court has just made an important step towards protecting defendants in criminal forfeiture. In Honeycutt v. United States, No 16-142 (June 5, 2017), the Court held that a defendant may not be held jointly and severally liable for property that his co-conspirators derived from the crime but that the defendant did not acquire.. This means that if a defendant did not actually obtain proceeds from a crime, he cannot be ordered to forfeit the proceeds of a crime just because he was part of a conspiracy. In Honeycutt, Terry Honeycutt was a salaried employee at a store owned by his brother. He started noticing an increase in the number of “edgy looking” people purchasing Polar Pure, an iodine-based water purification product, so he called the local police. The police confirmed Terry’s suspicion that Polar Pure was being used to make methamphetamine and that he shouldn’t sell it if he felt uncomfortable. The store owned by his brother was the only place that sold Polar Pure in the area, and the Honeycutt brothers were the only ones who sold it. The Drug Enforcement Agency began investigating the brothers and a grand jury soon indicted both brothers. Terry’s brother pled guilty, and Terry went to trial. Terry was indicted on 11 of the 14 counts with which he was charged. The government tried to forfeit $70,000 from Terry. The jury did not order any forfeiture of the proceeds of the sales, because it found that because Terry was a salaried employee he did not reap the proceeds of the conspiracy. Terry opposed any forfeiture, arguing that he had not received, or “obtained” even “indirectly” any of the profits from the unlawful drug sales. The government conceded that Terry didn’t receive any of the profits, but argued that he should be liable because other federal appellate courts have held that co-conspirators can be ordered to forfeit assets they had not obtained under a “joint and several liability” theory – the theory that conspirators can be liable for the foreseeable crimes of their co-conspirators. On appeal, the U.S. Court of Appeals for the Sixth Circuit reversed in part and found that the doctrine of joint and several liability applied to co-conspirators for the purpose of forfeiture of the proceeds of drug sales. The Supreme Court reversed the Court of Appeals holding that a defendant is not required to forfeit money generated by the co-conspirator that he himself never received, solely because of his membership in a conspiracy. The Supreme Court held that forfeiture pursuant to the Comprehensive Forfeiture Act of 1984, 21 U.S.C. §853(a)(1), is limited to property the defendant himself actually acquired. The government must now individualize its assessment of forfeitable property based upon the amount each defendant obtained. This ruling is a major change and a huge blow to the government’s ability to forfeit a criminal defendant’s property. What remains to be seen is whether the principles enunciated by the Supreme Court in this case will also apply to restitution. Certainly, from this day forth, defense counsel should argue that the same principles apply to restitution.
• SENTENCING ENHANCEMENT FOR NUMBER OF VICTIMS PERMISSIBLE FOR IDENTITY THEFT CONVICTION EVEN IF VICTIMS DID NOT SUFFER FINANCIAL LOSS (2017) - The Tenth Circuit recently found it was permissible to add a sentencing enhancement based on the number of victims, even if not all of those victims had suffered financial loss. In United States v. Gonzales, No 16-2022 (10th Cir. 2016), defendant Gonazales pleaded guilty to four counts of mail fraud, one count of conspiracy to commit mail fraud, and one count of aggravated identity theft. Defendant and co-defendant had registered fake companies with unemployment agencies in Texas, Colorado, and New Mexico, and paid unemployment taxes for them, listing real people, along with their actual social security numbers and other personal information, as employees of the companies. They then submitted unemployment benefit claims on behalf of the persons whose identities they stole. The unemployment agencies mailed the debit cards to post office boxes rented by the two co-defendants, who then used the cards for their personal spending. Defendant Gonzales’ Pre-Sentence Report recommended a four level sentence enhancement pursuant to §2B.1(b)(2)(B) because the number of victims exceeded 50. The Report calculated that there were 107 victims. It calculated this number by interpreting victim to mean “any individual whose means of identification was used unlawfully or without authority.” Defendant Gonzales objected, arguing that the victims were only the three state agencies because they were the only ones who suffered financial losses. The district court rejected this argument and adopted the Report’s recommendation for a sentencing enhancement. It then departed downward for a final sentence of 111 months. On appeal, defendant argued that the trial court had erred in calculating his sentence by including in its assessment of the number of victims those whose identities had been stolen even though they suffered no financial loss. He asserted that the sentencing judge could not apply the sentencing enhancement because of a note in the sentencing guidelines, which concerned crimes of aggravated identity theft. The note provides: if a sentence under this guideline is imposed in conjunction with a sentence for any underlying offense, do not apply any specific offense characteristic for the transfer, possession, or use of a means of identification when determining the sentence for the underlying offense. The defendant read this note to mean that his sentence could not count the persons whose identities were stolen because counting them would be a prohibited application of a “special offense characteristic for the transfer, possession, or use of means of identification.” The Tenth Circuit disagreed, finding that this argument was already foreclosed by circuit precedent, specifically United States v. Manatau, 647 F.3d 1048 (10th Cir. 2011). The court also pointed out that every other circuit to rule on this issue had permitted the enhancement. Thus, defendant’s sentence was affirmed.