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White-Collar Sentencing: Life Beyond 60, Couples Count 2x

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By William Peacock, Esq. on May 29, 2013 5:10 PM

White-collar criminals present a unique sentencing challenge. Unlike most thieves, the criminals behind securities fraud and embezzlement are unlikely to become repeat offenders. After all, is a CEO going to be rehired by another company after an Enron-esque scandal?

Then again, whereas a mugger might rob one person, a crooked CEO can, with one conspiracy, harm hundreds of victims. Two cases decided today illustrate the difficulties inherent in white-collar sentencing:

The Elderly Objector

Francis Schmitz is crafty con artist who created a fake multi-million dollar trust fund, and a fake financial services company to manage the fake trust, all for the purposes of collateral to obtain "real estate development" loans from multiple financial institutions.

There was no trust. There was no real estate. There was simply a clever con.

At sentencing, Schmitz argued for a lesser sentence for two reasons: the white-collar guidelines are out of control and 60-year-old Schmitz is way too old for prison.

The first argument, while interesting, failed to sway either court. Sentencing "factor creep" certainly has led to a massive increase in sentence length. In 1987, Schmitz would have faced 24 to 30 months. Today, he faces 87 to 108 months.

Schmitz argued that the lower court judge was required to explicitly address his objections to the guidelines.

The Seventh Circuit disagreed. The district court had implicitly rejected his argument with his lengthy sentence. Furthermore, only arguments involving a defendant's specific facts and circumstances must be addressed explicitly.

Schmitz's other objection was life expectancy. The 60-year-old takes medications for high blood-pressure, high cholesterol, and prostate issues. He contends that given his health issues, a lengthy sentence would deprive him of the last productive years of his life.

Both the district court and the Seventh Circuit observed that these were common conditions for people of his age, easily controlled by medication, and an 84-month sentence would not deprive him of the last usable days of his life, as there is life beyond the mid-sixties.

Broken Hearts and Bank Accounts

In the other white-collar case decided today, Victoria Harris ingratiated herself with elderly clients, becoming a family friend, only to steal $6 million of their money through her brokerage firm.

She objected to her sentence because (1) married people should count as a single victim, (2) she should've been granted a fourth continuance in sentencing, and (3) her sentence was "substantively unreasonable".

Needless to say, none of her arguments worked. Married people, even if they own a joint brokerage account, still have individual rights, ownership, and injury. Two may become one, but they are still both injured.

The continuance argument lacked merit because she had already received three continuances and even if she succeeded in clarifying the exact amount of the losses, the disputed amount ($500k) was negligible.

Finally, as for reasonableness, the lower court gave a lengthy sentence within the guidelines, which was appropriate, despite repayment to the victims, due to the circumstances of the case. Though the elderly victims were repaid, their hearts were still broken.

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