Rakoff: Scrap ‘Dangerous’ Sentencing Guidelines
By Jeffrey Benzing | March 11, 2013 12:03 pm

U.S. District Judge Jed S. Rakoff says the U.S. Federal Sentencing Guidelines are irrational and often lead to strict, but unreasoned white-collar sentences.

“Basically, my modest proposal is that they should be scrapped in their entirety,” Rakoff said Thursday, bringing applause from an audience of white-collar lawyers gathered in Las Vegas for an industry conference.

U.S. District Judge Jed S. Rakoff (photo by Jeffrey Benzing)

Rakoff, who has senior status in the Southern District of New York and has tried high profile white-collar cases, said he does not oppose tough sentences – however, he said they should not be based on the current formula.

The U.S. Sentencing Commission was created by the Sentencing Reform Act of 1984, and, Rakoff said, caused white collar sentences to increase in length because of a perception that they were typically too short, and because defendants are often Caucasian and were viewed as being sentenced too lightly when compared to minorities.

Rakoff said, however, that the sentences are based on arbitrary factors with numbers “drawn from nowhere.”

“The sentencing commission to this day — to this day — has never been able to articulate why they have two points for this, or four points for that. These are just numbers, and yet, once they’re in place, the whole thing is blessed and said to be rational.”

Rakoff, who is known for his contrarian views, made his  remarks as a keynote lunch speaker at the 27th Annual National Institute on White Collar Crime, organized by the American Bar Association. In 2011 he rejected a $285 million proposed civil settlement between Securities and Exchange Commission and Citigroup, saying he didn’t have enough information to judge whether the agreement was in the public interest.

Though originally mandatory, the criminal sentencing guidelines have been advisory only since 2005 when the Supreme Court in United States v. Booker ruled that mandatory guidelines violated the Sixth Amendment.

However, Rakoff said most judges in white collar cases don’t deviate from the guidelines. If they do, they deviate only modestly.

The judge also criticized the guidelines because they put power in the hands of prosecutors who can negotiate terms of plea agreements that increase or decrease the amount of loss associated with a fraud.

The guidelines put a great emphasis on the amount of loss when calculating the severity of conduct, and Rakoff said up to 70 percent of the total offense level can be based on the loss calculation, regardless of how relevant it is to the egregiousness of the crime.

“This, I suggest, is kind of nuts,” Rakoff said.

As a federal prosecutor in the Southern District of New York, Rakoff said he worked a case involving a “really evil” defendant who defrauded widows of their life savings, for a total loss of around $100,000. He then worked a case involving a pump-and-dump fraudster who perpetrated a $1 million fraud on around 1,000 “high-roller” victims.

The judge sentenced the pump-and-dump defendant to five years. The other defendant received 15 years, which Rakoff said seemed fair.

Under the guidelines, the perpetrator of the widow fraud would have received just three years, Rakoff said.

Because of the power prosecutors have to negotiate plea agreements, Rakoff said cases also go to trial far less often than before the guidelines were enacted.

This, he said, hurts the justice system.

“Now what we have is a system of criminal justice that occurs almost exclusively behind closed doors,” Rakoff said. “And that is not a good way for a democratic society to handle a matter of such importance.”

The intellectual spark for the enactment of sentencing guidelines was a 1973 book by U.S. District Judge Marvin Frankel, whom Rakoff said wrote with contempt for other judges, characterizing them as lazy, stupid, and uneducated in psychological and social issues.

The judge saw disparities in sentence lengths as “lawless,” said Rakoff, who also characterized the book as witty and brilliant.

Frankel did not suggest the current guidelines system, but rather wanted a sentencing panel that included members with expertise in sociological and psychological issues, as well as current inmates, Rakoff told the crowd.

Later, politicians — including Sen. Edward Kennedy (D-Mass.) criticized sentences of the day as being imbalanced between Caucasian and minority defendants, Rakoff said, and talks of reform began in Congress.

The push for reform led to mandatory guidelines, which Rakoff said failed to improve the fairness of federal sentences.

Rakoff envisions a different solution.

Instead of the current system, he points to multi-factor, non-mathematic civil court tests such as the one U.S. Court of Appeals Judge Henry Friendly devised for trademark cases. Rather than relying on number-based ranges, judges are required to analyze sentencing factors in writing and explain their reasoning on how those factors apply to the facts of a case. The decision, Rakoff said, can then be subject to robust appeal.

Rakoff said that federal judges in criminal cases should be required to weigh certain factors and explain their analyses. This, he said, would ensure that sentences are well-reasoned and based on fair criteria, not a number-based formula.

“It would not result in this irrational and, in my view, terribly dangerous situation…” Rakoff said, “where certain factors are just singled out, given artificially inflated numbers and then imposed directly or indirectly on judges.”

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