June 2011 Archives

U.S. Sentencing Commission Decides to Apply Fair Sentencing Act Retroactively

June 30, 2011, by The McKellar Law Firm, PLLC

Federal Criminal Defense Attorneys are celebrating a decision by the United States Sentencing Commission will affect the length of sentences being served by thousands of people imprisoned for crack cocaine-related offenses. As discussed previously, under sentencing guidelines enacted in 1986, a person convicted for an offense involving crack cocaine could face significantly longer prison terms than a person caught with the same amount of powder cocaine.

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On August 3, 2010, President Obama signed the Fair Sentencing Act of 2010 ("FSA") into law. The FSA was intended to reduce the dramatic disparity in sentencing between individuals convicted of drug offenses involving crack cocaine compared to powder cocaine.
While critics of the old guidelines applauded the FSA, it was unclear whether these changes in sentencing should be applied retroactively to cases where a defendant had already been charged prior to the FSA taking effect. Courts were divided on the issue. Some courts applied the FSA's guidelines while others did not, leading to widely varying sentences for almost identical offenses.

As reported in the New York Times on June 30th, the Sentencing Commission clarified the situation by voting that the FSA's guidelines should be applied retroactively. The Commission determined that retroactive application of the FSA was the appropriate decision given the inherent unfairness of the previous guidelines. The decision affects approximately 12,000 federal inmates currently incarcerated for crack-related offenses. Those inmates can apply to a judge for a sentencing reduction. If approved, prisoners could see an average sentence reduction of around three years. The Sentencing Commission's decision is not final; Congress can overrule the Commission before the revised policy takes effect on November 1.

Sentencing Judges are Prohibited from Ordering Additional Imprisonment Solely to Allow Defendants to Participate in Drug Treatment Programs

June 21, 2011, by The McKellar Law Firm, PLLC

The United States Supreme Court's decision last week in Tapia v. United States (2011 WL 2369395 (U.S.)) could affect how long a number of criminal offenders spend in prison. Alejandra Tapia was convicted of smuggling unauthorized aliens into the country. The District Court found that the United States Sentencing Guidelines recommended that Tapia be sentenced to 41 to 51 months in prison. At Tapia's sentencing, the judge imposed a 51-month sentence, stating that Tapia could benefit from the Bureau of Prison's Residential Drug Abuse Program ("RDAP"), and that Tapia should spend enough time in prison to qualify for and complete the program.

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Tapia appealed the sentence to the Ninth Circuit Court of Appeals, where she argued that 18 U.S.C. § 3582(a) prohibited lengthening her sentence so that she could participate in RDAP. The Ninth Circuit disagreed with Tapia, but the United States Supreme Court reversed, holding that courts are not permitted to either impose imprisonment or lengthen a prison term in order to promote the offender's rehabilitation. The Supreme Court thus resolved a split among several Courts of Appeals on this issue.

The Supreme Court's decision was based primarily on the language of 18 U.S.C. § 3582(a), part of the Sentencing Reform Act of 1984 ("SRA"). Section 3582(a) states that when courts determine whether to sentence an offender to prison and for how long, the court should "recogniz[e] that imprisonment is not an appropriate means of promoting correction and rehabilitation." The Court also cited a provision related to the Sentencing Guidelines instructing the Sentencing Commission to "'insure that the guidelines reflect the inappropriateness of imposing a sentence to a term of imprisonment for the purpose of rehabilitating the defendant or provide the defendant with needed educational or vocational training, medical care, or other correctional treatment." 28 U.S.C. § 994(k).

The Court found this to be so even though the SRA states that rehabilitation is one of the primary purposes behind sentencing. 18 U.S.C. § 3553(a)(2). The Court distinguished these provisions, finding that while rehabilitation is a purpose of sentencing generally, it is not a factor in determining the appropriateness of imprisonment or the duration of a prison sentence. Congress made clear its determination that imprisonment is not the way to achieve rehabilitation by enacting § 3582(a).

The Court also examined additional evidence of Congressional intent. The opinion notes that there are no provisions in the SRA that give courts the power to order offenders to participate in prison rehabilitation programs; the Bureau of Prisons has complete authority over those decisions. For example, in this case, the trial judge clearly hoped Tapia would participate in RDAP, but she never enrolled.

The Court was careful to state that it approves of lower courts discussing the rehabilitation and education programs that are available to offenders who have been sentenced to prison. What courts may not do is extend the term of imprisonment so that these services are available to offenders who otherwise would not have adequate time to complete such a program.

Florida Sleep Clinics Charged with Violating the False Claims Act

June 16, 2011, by The McKellar Law Firm, PLLC

Earlier this week, a federal criminal Complaint was filed against a Florida sleep clinic and its owner. According to an article in Forbes online magazine, Bay Area Sleep Associates LLC, a Florida-based group, and its owner are facing charges related to violation of the False Claims Act ("FCA") for knowingly making false claims for reimbursement from Medicare and other federal programs. Medicare regulations require that diagnostic testing services, like those available from Bay Area Sleep Associates, be performed by licensed or certified technicians for reimbursement to be available.

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The Complaint specifically alleges that unlicensed sleep technicians were performing sleep tests on patients, that the defendants knew that this unlicensed work violated the reimbursement regulations, yet submitted claims for reimbursement anyway.

The FCA (31 U.S.C § 3729 et seq.) penalizes companies, contractors, and individuals who defraud the government. The FCA provides civil penalties for those who (among other things) make false claims for payments to the government, those who make or use false records relating to a false claim, or receive money or property from the government and deliver less than the full amount to its intended recipient.

The penalties under the FCA can be severe. A civil penalty up to $11,000 may be assessed for each false claim. Treble damages are available to the government as well. The Justice Department has used the FCA to recover an estimated $7.4 billion since January 2009 with approximately $5.8 million of that from cases involving health care fraud. Additionally, a judgment or settlement under the FCA can cause a business or individual to be excluded altogether from federal health care programs such as Medicare and Medicaid. (42 U.S.C. § 1320a-7(b)).

The FCA also provides a tremendous incentive to potential whistleblowers. It permits a whistleblower, referred to as a "Relator," to bring a civil action under the FCA on behalf of the United States. The Relator can receive between 15 and 30 percent of the amount recovered, plus attorney fees and expenses. This case involving Bay Area Sleep Associates case was allegedly initiated by a whistleblower.

Sixth Circuit Courts Are Split on Whether the Fair Sentencing Act Should Be Applied Retroactively

June 10, 2011, by The McKellar Law Firm, PLLC

Federal criminal defense attorneys have argued for years over the seemingly unfair sentencing disparities for crack cocaine compared to powder cocaine in federal drug cases. Critics of sentencing guidelines pointed out that a person could have 100 times as much powder cocaine as a person carrying crack cocaine, yet both could receive the same sentence. The debate was heightened because studies demonstrated that crack cocaine use is more common in African-American communities while powder cocaine use is more common among whites. Thus, critics argued that the sentencing guidelines had a disproportionate and unfair impact on African-American defendants. The Fair Sentencing Act of 2010 ("FSA") is designed to reduce this disparity dramatically.

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A new debate has now emerged: should the new guidelines in the FSA be retroactively applied to people who were charged with a crack-related offense before the FSA became law? If the FSA were retroactively applied to these cases, nearly 13,000 prisoners could be affected. The FSA itself, however, does not state whether Congress intended it to apply to such cases. This has led to a split of opinion among different courts about how to interpret the FSA, resulting in widely varying sentences among defendants.

For example, and as reported in the Times Free Press, two cases illustrate the courts' inconsistency in applying the FSA retroactively. In separate cases, Toney Robinson was facing a 10-year prison sentence and Jackie Campbell a 20-year sentence. Both offenses were crack-related, occurred before the FSA become law, and both of the defendants pled guilty. Robinson was sentenced to three years on the drug charge, yet Campbell was sentenced to the full 20 years. The difference was that the judge in Campbell's case did not interpret the FSA to apply retroactively. Therefore, Campbell was sentenced under the old guidelines. The judge in Robinson's case, however, applied the FSA's new guidelines retroactively, resulting in significantly less jail time.

Both cases are being appealed to the Sixth Circuit Court of Appeals. Meanwhile, other courts are also dealing with the same problems. The First Circuit has upheld retroactive application of the FSA, while the Seventh Circuit has reversed such an interpretation. With so many people's sentences potentially affected by retroactive application of the FSA, defendants will almost certainly ask the Supreme Court to resolve this issue.

Tennessee Woman Sentenced to Federal Prison for Tax Evasion and Wire Fraud

Kingston, Tennessee resident Jessica Potter Stafford, 34, was sentenced today in the Eastern District Court by U.S. District Court Judge Thomas W. Phillips, to serve 27 months in prison and pay restitution of almost $120,000 to the Internal Revenue Service and $111,794.35 to her former employer, Robert McManus. This sentence is a result of Stafford pleading guilty on February 3, 2011, to 10 counts of wire fraud and three counts of income tax fraud.

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According to a press release from the United States Attorney's Office, Stafford was employed as Director of Administration for several businesses owned by Robert McManus. In the course of her employment, she was issued credit cards to be used for the sole purpose of paying expenses relating to her employment duties. Stafford later admitted that from January of 2005, through August of 2008, she used company credit cards to charge more than $200,000 in personal charges at local retail stores. The filed plea agreement states that Stafford then paid for the unauthorized charges with McManus' funds. Stafford admitted that she incurred income that she failed to report on her federal income tax returns for 2006, 2007, and 2008.

As with many economic crimes, the underlying economic fraud (i.e., the wire fraud) was also accompanied by tax related charges. The philosophy of the Government is rather straightforward: if someone steals funds, he/she is not going to report this income on his/her tax return. Failure to report income on a tax return is tax fraud. In other words, the tax fraud charges are like shooting fish in a barrel for the Government if they can prove the non-tax related fraud charge (e.g., wire fraud). In this case with defendant Stafford, according to her plea agreement, she failed to report over $405,000 in income during these years, resulting in additional tax due to the United States of over $119,000.