Defendant Who Goes to Trial and Loses Properly Receives Higher “Loss” Calculation

June 30, 2014 White Collar Defense & Compliance Blog

It’s old news that, generally speaking, a defendant who rolls the dice by going to trial and losing may well get a more severe sentence than a defendant who pleads guilty and saves the court from conducting a trial. This is not just a function of the former possibly losing the reduction for acceptance of responsibility under U.S.S.G. 3E1.1, but a result of systemic and judicial imperatives which seem intended to force guilty pleas from defendants about whom there is some evidence of guilt.

So, it is often futile to argue at sentencing that your jury-convicted defendant should have his/her sentence reduced under 18 U.S.C. 3553(a)(6) in order to avoid “unwarranted sentencing disparities among defendants with similar records who have been found guilty of similar conduct” where the comparative defendants were adjudged guilty by virture of their own voluntary pleas of guilt. Still, the operation of the Sentencing Guidelines themselves, their arithmetic formula for calculating the “loss” arising from similar conduct by different individuals, should be indifferent to the manner in which the defendant found himself at sentencing. How else to accomplish the “pure real offense system”intended by the Sentencing Commission,which seeks to reduce the power of prosectors to “influence sentences by increasing or decreasing” the charges, as reflected in the policy pronouncements inChapter I, Part A of the Guidelines.

The Ninth Circuit recently threw cold water even on this basic presumption, that the mathematics of loss calculation should be accomplished uniformly, even if courts could find other, discretionary ways to draw distinctions among defendants. In United States v. Popov, 555 Fed. Appx. 671 (9th Cir., Apr. 24, 2014), the defendants were involved in a healthcare fraud scheme by which their clinics billed Medicare for non-existent patient visits and treatments. While defendant-appellant Dr. Prakash, who went to trial and was found guilty, was sentenced based on a “loss” calculation driven by the entirely of the billings to Medicare, the Government had taken different, and lesser, views of the “loss” caused by the scheme as reflected in its plea agreements with cooperators. Prakash made a disparity argument as a result of these inconsistent “loss” calculations, but the appeals court swatted it away in a paragraph. Acknowledging the “dramatic” differences in loss calculation applied to various of the related parties, which led to an enormous, 120-month sentence for Prakash (Judgment, Doc. #743, Oct. 30, 2012), the Ninth Circuit blithely noted that a sentencing disparity based on cooperation is not unreasonable so long as — and here’s the important legal fiction — there is no indication that the defendant who gambled on a trial and lost is being retailiated against for exercising his constitutional right.

In other words, as long as the sentencing judge does not actually announce that he/she is punishing a defendant for going to trial, anything goes in terms of disparity — endorsing not just unequal terms of jail, but literally a different means of calculating the same “loss,” which is the single most important driver of the length of a jail sentence in fraud cases under the Sentencing Guidelines.