In the Courts

The government sent three notices to the victims informing them of their right to appear and be heard at scheduled proceedings. All victims who wanted to be heard were heard, but the victims argued that the plea agreement should have been rejected by the district court because BP's fine was too low, the probation conditions were too lenient, and the district court violated the CVRA by failing to notify the victims prior to signing the plea agreement.

The Fifth Circuit denied the victims' requested relief, because a writ of mandamus was not 'appropriate under the circumstances,' despite the court's finding that the district court 'misapplied the law and failed to accord the victims the rights conferred by the CVRA.' Id. at *3. The court of appeals explained that
the district court erred because it accepted the government's motion and issued an order ex parte, in violation of the CVRA, which gives crime victims a ”reasonable right to confer with the attorney for the Government.” Id. (quoting 18 U.S.C. ' 3771(a)(5)). The court explained that in this case, 'the government should have fashioned a reasonable way to inform the victims of the likelihood of criminal charges and to ascertain the victims' views on the possible details of a plea bargain.'

The court rejected the government's argument, which was adopted in the district court's order, that contacting all of the victims was impracticable, because there were fewer than 200 victims. Id. The court also rejected the argument that informing the victims of the plea negotiations would impair the negotiations or prejudice the government if the negotiations were not fruitful. The CVRA, the court explained, gives crime victims the right to confer with prosecutors before a plea agreement is reached. Id. That policy choice was made by Congress, and the district court erred when it overrode the CVRA's requirements.

Eleventh Circuit Vacates and Remands Former Executive's Below-Guideline Sentence

For a second time, the Eleventh Circuit reversed the below-guideline sentence given to Kenneth K. Livesay, the former Assistant Controller and Chief Information Officer of HealthSouth Corporation, for his role in a $1.4 billion fraud scheme at the company. United States v. Livesay, ' F.3d ', No. 06-11303, 2008 WL 1810195 (11th Cir. Apr. 23, 2008). The district court committed procedural error, according to the Eleventh Circuit, because it did not adequately explain its reasons for imposing a downward Booker variance. The sentence was vacated and remanded to the district court for re-sentencing.

The Eleventh Circuit's opinion was guided by the Supreme Court's decision in Gall v. United States, 552 U.S. '-, 128 S. Ct. 586 (2007) which held, in relevant part, that appellate review of sentences includes a procedural and a substantive component. Relying on Gall, the Eleventh Circuit found procedural error in Livesay's second sentence for two primary reasons. First, the court of appeals held that the district court improperly relied on Livesay's diminished role in the conspiracy to support a departure under ' 5K1.1. Livesay, 2008 WL at *9-10. Citing circuit case law, the court explained that the district court could only rely on factors that relate to Livesay's assistance under ' 5K1.1, and that Livesay's role in the conspiracy did not relate to his assistance. Second, the court of appeals rejected the sentence as a Booker variance, because the district court failed to adequately explain its variance on the record, which is necessary to facilitate appellate review. Id. at *10-11.

Business Crimes Hotline was written by Jason Hernandez, Associate Editor of this newsletter, and an associate with Kirkland & Ellis LLP, Washington, DC.

Fifth Circuit Denies Crime Victims' Appeal

The Fifth Circuit Court of Appeals recently held that victims of an explosion at a BP refinery were not entitled to a writ of mandamus, instructing the district court to refuse BP's plea agreement, despite finding that the district court violated the Crime Victims' Rights Act ('CVRA'). In re Dean, ' F.3d ', No. 08-20125, 2008 WL 1960245 (5th Cir. May 7, 2008). While the court of appeals did not grant the victims the remedy they sought, the opinion makes clear that the district court must consider the victims' views on whether it should accept the plea agreement, which the victims say is too lenient.

In re Dean arose out of an explosion at a refinery operated by BP, which killed 15 and injured more than 170. Id. at *1-2. After the explosion, the DOJ investigated possible criminal charges, and plea negotiations commenced immediately. In an ex parte motion, the government informed the court that a plea deal was imminent, that it was not practicable to contact all of the crime's victims, and that notifying the victims could impair the negotiations or prejudice the case if no deal was reached. The district court agreed with the government and issued an ex parte order prohibiting the government from contacting victims prior to reaching a plea agreement, and outlining procedures for notifying the victims after a plea agreement was reached, but before it was entered. The government subsequently filed criminal information under seal and two days later, a plea agreement was reached, which was subsequently made public, along with the information.

The government sent three notices to the victims informing them of their right to appear and be heard at scheduled proceedings. All victims who wanted to be heard were heard, but the victims argued that the plea agreement should have been rejected by the district court because BP's fine was too low, the probation conditions were too lenient, and the district court violated the CVRA by failing to notify the victims prior to signing the plea agreement.

The Fifth Circuit denied the victims' requested relief, because a writ of mandamus was not 'appropriate under the circumstances,' despite the court's finding that the district court 'misapplied the law and failed to accord the victims the rights conferred by the CVRA.' Id. at *3. The court of appeals explained that
the district court erred because it accepted the government's motion and issued an order ex parte, in violation of the CVRA, which gives crime victims a ”reasonable right to confer with the attorney for the Government.” Id. (quoting 18 U.S.C. ' 3771(a)(5)). The court explained that in this case, 'the government should have fashioned a reasonable way to inform the victims of the likelihood of criminal charges and to ascertain the victims' views on the possible details of a plea bargain.'

The court rejected the government's argument, which was adopted in the district court's order, that contacting all of the victims was impracticable, because there were fewer than 200 victims. Id. The court also rejected the argument that informing the victims of the plea negotiations would impair the negotiations or prejudice the government if the negotiations were not fruitful. The CVRA, the court explained, gives crime victims the right to confer with prosecutors before a plea agreement is reached. Id. That policy choice was made by Congress, and the district court erred when it overrode the CVRA's requirements.

Eleventh Circuit Vacates and Remands Former Executive's Below-Guideline Sentence

For a second time, the Eleventh Circuit reversed the below-guideline sentence given to Kenneth K. Livesay, the former Assistant Controller and Chief Information Officer of HealthSouth Corporation, for his role in a $1.4 billion fraud scheme at the company. United States v. Livesay, ' F.3d ', No. 06-11303, 2008 WL 1810195 (11th Cir. Apr. 23, 2008). The district court committed procedural error, according to the Eleventh Circuit, because it did not adequately explain its reasons for imposing a downward Booker variance. The sentence was vacated and remanded to the district court for re-sentencing.

The Eleventh Circuit's opinion was guided by the Supreme Court's decision in Gall v. United States, 552 U.S. '-, 128 S. Ct. 586 (2007) which held, in relevant part, that appellate review of sentences includes a procedural and a substantive component. Relying on Gall, the Eleventh Circuit found procedural error in Livesay's second sentence for two primary reasons. First, the court of appeals held that the district court improperly relied on Livesay's diminished role in the conspiracy to support a departure under ' 5K1.1. Livesay, 2008 WL at *9-10. Citing circuit case law, the court explained that the district court could only rely on factors that relate to Livesay's assistance under ' 5K1.1, and that Livesay's role in the conspiracy did not relate to his assistance. Second, the court of appeals rejected the sentence as a Booker variance, because the district court failed to adequately explain its variance on the record, which is necessary to facilitate appellate review. Id. at *10-11.

Business Crimes Hotline was written by Jason Hernandez, Associate Editor of this newsletter, and an associate with Kirkland & Ellis LLP, Washington, DC.