A federal judicial panel recently adopted new guidelines for sentencing white-collar defendants in fraud cases, in an effort to make punishments more fairly reflect the harm suffered by victims and the intent of offenders to cause harm. The changes approved by the U.S. Sentencing Commission will take effect on Nov. 1, 2015, subject to Congressional approval.
The proposed changes follow years of criticism from defense attorneys and some judges who say federal sentencing guidelines have led to overly severe punishments, potentially reaching life in prison, because they emphasize financial losses such as from falling stock prices. Judges need not follow the guidelines, but must consider them.
"These amendments emphasize substantial financial harms to victims rather than simply the mere number of victims and recognize concerns regarding double-counting and over-emphasis on loss," said Chief Judge Patti Saris of the federal court in Massachusetts, who chairs the commission.
The changes call for "intended" losses to reflect financial harm that defendants "purposely sought to inflict," and give judges greater discretion in factoring actual losses in stocks, bonds or commodities into punishments. They also permit greater punishments when even just one or a few people suffer "substantial financial hardship" from fraud, while current guidelines emphasize the number of victims, even if their losses are small. Another change adjusts fraud losses for inflation for the first time.
Fraud accounts for the third most federal crimes, after immigration and narcotics.