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Federal Sentencing For Fraud, DOJ, And The Role of Natural Law
Topic: Corporate Criminal Liability
By Professor Mark Osler of the University of St. Thomas School of Law.
Legal Opinion Letter, October 15, 2010, 2 pages
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WLF Legal Opinion Letter

Federal Sentencing For Fraud, DOJ, And The Role Of Natural Law

By Professor Mark Osler
October 15, 2010 (Vol. 19 No. 25)

[T]he first rule of reason is the law of nature.  Hence, every humanly made law has the character of law to the extent that it stems from the law of nature.  On the other hand, if a humanly made law conflicts with the natural law, then it is no longer law; but the corruption of law.

Thomas Aquinas, TREATISE ON LAW, question 90, art. 2.

It appears that the Department of Justice (DOJ) has taken notice of certain federal sentencing guidelines, and concluded that they may be a corruption of law (to use Aquinas' term).  They are correct in this conclusion.

In a report to the United States Sentencing Commission, the DOJ has urged the commission to study a few types of crime for which the "guidelines have lost the backing of a large part of the judiciary."   Specifically, the report (authored by Jonathan Wroblewsi, director of the DOJ's Office of Policy and Legislation), identified child pornography and high-level fraud offenses as among those where the practice of judges has "largely lost its moorings to the sentencing guidelines." 

Like many intra-government messages, it is important to read between the lines of this report.  While some might suppose that what the DOJ seeks is mandatory minimums or more rigid guidelines, the report itself does not say that.  Rather, a fairer reading is that the DOJ seeks a review of the current guidelines for fraud and child pornography, with the hope that the sentencing commission will moderate the guidelines to produce lower guideline sentences that are more in line with what judges are inclined to do.  In seeking this (oh so subtly) they are exactly right, because judges simply do not support high sentences in these areas with sufficient uniformity, and if the guidelines do not match their beliefs they will subvert the system to get to the results they desire.

Federal Sentencing and Disparities in 2010.

Before 2005, the federal sentencing guidelines were mandatory--sentencing judges had to follow them except in certain well-defined circumstances.  However, in that year the Supreme Court decided the case of Booker v. United States, in which the Court struck down the mandatory guidelines as violating the Sixth Amendment jury right and held that the remedy would be to make the guidelines advisory.  In so doing, the Court expressly recognized that advisory guidelines would result in less uniformity.

The Court was correct in its prediction, but with an important caveat.  Since Booker there has been an increase in disparity, but these disparities have been concentrated in a few types of cases (as the DOJ report observed).  Specifically, large rates of disparity have emerged in cases involving crack cocaine, child pornography, and white collar fraud. 

Not surprisingly, these are the areas in which judges often think the guidelines are too harsh.  The Sentencing Commission's own survey of federal judges conducted earlier this year confirms it.  While there was no break-down for high-value fraud (most judges thought the general fraud guidelines were about right), judges did want a number of characteristics often related to white-collar defendants to be seen as a basis to depart or vary from the guidelines.  For example, 65% thought employment record should be a basis to vary, 60% were for more discretion where the defendant has a record of civic, charitable, or public service, 62% felt the same in relation to prior good works, and 74% wanted more freedom to vary where the wrongdoing was voluntarily disclosed.

What we see, then, is that the greatest disparities are in those areas where a judge's own gut takes them in a different direction than the sentencing guidelines.  This gut feeling, or sense of fairness:  In the absence of bare prejudice, we must consider that natural law might be at work.  In cases involving white-collar fraud, judges often observe a disjuncture between the offender and the punishment.  This observation is unstated in the DOJ report, but the truth of it is revealed both in the survey of judges and the ancient wisdom of Aquinas.

What Should Be Done? 

If judges are subverting the guidelines and creating disparities in relation to specific crimes, there are three possible reactions.  One is to do nothing.  A second option is to force the judges to be more uniform in following the present guidelines, either by imposing statutory minimums (which are not subject to the Booker decision) or by somehow returning to a regime of mandatory guidelines.  Third, the guidelines could be adjusted to meet the expectations of sentencing judges, thus lessening unwarranted disparities.

It is the third choice which is best, and which seems to be favored by the DOJ in its report.  The section of that report on mandatory minimums does not urge that additional mandatory minimums be created, but rather recommends more study on the impact of currently existing laws.   In contrast, the report affirmatively calls for "reforms" in the child pornography guidelines that could only be a reduction in the guideline ranges.  While the report acknowledges that the reforms in the fraud area might be more complex, it includes in the list of possible reforms both guideline amendment and statutory reforms. 

Why would the third way, reform of the guidelines, be the best choice for fraud?  In large part, because of the truth in what Aquinas observed--that where the law does not match what is written on the heart of judges, it may be the law that is corrupt, not the judges.  Further, to change the law to be more restrictive would only invite further and more dangerous subversion by judges.

To comprehend that dialectic, consider the instructive history provided by crack cocaine and federal sentencing.  In 1986, exceptionally harsh mandatory minimums were passed establishing that a five year term would be served for possessing only five grams of crack.  Judges chafed under this requirement and subverted it with and without the cooperation of prosecutors.  When the guidelines became advisory in 2005, crack sentencing became a flashpoint of disparity.  In this area, however, the Sentencing Commission (in 2007) and Congress (this year) reacted to these disparities by reducing first the guidelines and then the mandatory minimums to more accurately reflect the view of judges. 

As the DOJ report subtly suggests, the same should be done with white-collar fraud.  Judges should be able to depart from the guidelines more freely in white-collar cases based on characteristics such as a history of good works.  While the latter would not necessarily reduce disparities per se, it would reduce what might be categorized as unwarranted disparities (which is the real concern of 18 U.S.C. sec. 3353(a)), because the point of distinction (those individual characteristics) would be properly recognized in the law.  Further, the fact that such characteristics would be honestly and publicly discussed might have the effect of reducing disparities in an absolute sense as judges build up a body of well-developed cases to look on as they formulate a sentence.

The Cost of Failing to Reform

If the Sentencing Commission ignores the DOJ suggestion to re-calibrate the guidelines to the sense of justice held by judges, it will not end the subversion of the guidelines by those judges.  What is dangerous about that subversion, even when it is driven by a true sense of justice (or natural law, as Aquinas would put it) is that it is largely hidden.  For example, judges may pressure prosecutors to give credit for cooperation with the government where such a break may not be warranted.  This process--hidden subversion by insiders--is antithetical to the proper role of judges in a free society because it keeps us from seeing how the rule of law is being employed.  As we have seen with crack cocaine, we can do better, and we should.

Mark Osler, a former federal prosecutor, is a professor at the University of St. Thomas School of Law.





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