Thursday, December 1st, 2016

The Unusual Nature of the Guidelines’ Fraud Loss Enhancements Is a Ground for Downward Variance

In an opinion written by Judge Newman, the Second Circuit today vacated the defendants’ sentences of 30 and 21 months, respectively, for food stamp fraud for the district court to consider imposing non-guideline sentences on the ground that the defendants’ Guidelines ranges were significantly increased by the loss enhancements, an unusual feature of the Guideline scheme. United States v. Algahaim, No. 15-2024(L)(2d Cir. Dec. 1 2016). The sentences here were “driven by the loss amount,” which increased the offense level from a 6-month base to levels 18 and 16 respectively. Slip op. at 9. The Court held: “Where the Commission has assigned a rather low base offense level to a crime and then increased it significantly by a loss enhancement, that combination of circumstances entitles a sentencing judge to consider a non-Guidelines sentence.” Id. at 11.

The Court acknowledged that the Commission had the authority to use loss amount as the “predominant determination” of the offense level for monetary offenses, but noted that it could have approached this type of offense quite differently. For example, the Court explained, the Commission could have instead selected a base offense level that “realistically reflected the seriousness of a typical fraud offense” with “adjustments up or down to reflect especially large or small amounts of loss.” Id. at 10. The Court noted that the Commission’s loss determinant approach is “unknown to other sentencing systems” and reasoned that “its unusualness is a circumstance that a sentencing court is entitled to consider.” Id.

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