In the Courts

The Eleventh Circuit applied the factors laid out in 18 U.S.C. ' 3553(a)(2) to find that a sentence of no jail time did not adequately “reflect the seriousness of the offense, promote respect for the law, or provide a just punishment.” More importantly, the court determined that one of the main considerations in the Sentencing Guidelines was the deterrence of white-collar criminals. It found that probation-only sentences were unlikely to deter white-collar criminals who could analyze the financial benefits against the risks and easily determine that financial fraud might be worth the risk of no time in prison.

The court also looked to several prior decisions in which it reversed sentences of minimal jail time for HealthSouth executives involved in the same fraud as defendant. In short, the court explained: “We also hold that any sentence of probation would be unreasonable given the magnitude and seriousness of Livesay's criminal conduct” (emphasis in original). The court vacated the sentence and remanded to the District Court for re-sentencing.

Sixth Circuit Affirms Use of Evidence Exclusion

In United States v. Hardy, No. 08-5421 (6th Cir. Nov. 20, 2009), the Sixth Circuit affirmed a district court's exclusion of documents as a sanction for delayed disclosure to the prosecution by defense counsel due to counsel's doubts about their origin and admissibility.

The defendant-appellant, Donna Hardy, was convicted on 12 counts of bank fraud, 18 U.S.C. ' 1344, and five counts of tax evasion, 18 U.S.C. ' 7201, by a jury empanelled by the United States District Court for the Western District of Tennessee. The convictions related to her alleged embezzlement of over $250,000 from her employer, Milan Box Corporation. Hardy, who had controlled the company's accounting and treasury functions without check-issuing authority, defended the charges by claiming that she had loaned the company money during lean years and that the funds paid to her were repayment for the earlier loans.

The documents excluded by the district court were copies of check stubs that Hardy claimed proved the existence of the loans. Hardy had provided them to her counsel a week prior to her trial. Her counsel did not provide the documents to the prosecution at that time, instead serving a subpoena duces tecum on the company for the original stubs on the weekend prior to the trial.

On appeal, Hardy argued that the district court had violated her compulsory process rights as provided in the Sixth Amendment, which states that “in all criminal prosecutions, the accused shall enjoy the right ' to have compulsory process for obtaining witnesses in his favor.” U.S. Const. amend. VI.

The Sixth Circuit rejected this argument, finding that Hardy and her counsel “willfully and purposefully chose not to disclose the documents to the government.” The Sixth Circuit noted that the district court had discretion to exclude evidence when a party failed to comply with Fed. R. Crim. P. 16, which provides that defendants who request and receive disclosure of the government's documents must provide reciprocal discovery ' not limited to the discovery period, upon request, for items: 1) “within the defendant's possession custody, or control;” and 2) that the defendant intends to use in his/her “case-in-chief.” Fed. R. Crim. P. 16(b),(c), and (d)(2)(C).

Eleventh Circuit: Probation-Only Sentence for HealthSouth Executive Unreasonable

The Eleventh Circuit Court of Appeals, in an opinion by Judge Joel F. Dubina, found that the District Court's sentence of Kenneth K. Livesay was unreasonable in light of the factors outlined in 18 U.S.C. ' 3553(a).

This was not the Eleventh Circuit's first review of the defendant's sentence. The court had already remanded the case for further explanation, then reversed the District Court's sentence as unreasonable, then vacated the sentence (after the U.S. Supreme Court remand). After its most recent sentencing hearing, the District Court found that the defendant's offense level was 28, his criminal history category was I, and his Guidelines sentencing range was 78 to 97 months' imprisonment. The government had moved for a downward departure ' under ' 5K1.1 in light of the defendant's substantial cooperation in the prosecution of others ' and recommended a 20-month sentence. The District Court again (for the third time but now with a different judge) imposed a sentence of 60 months of probation and the government (for the third time) appealed.

The Eleventh Circuit applied the factors laid out in 18 U.S.C. ' 3553(a)(2) to find that a sentence of no jail time did not adequately “reflect the seriousness of the offense, promote respect for the law, or provide a just punishment.” More importantly, the court determined that one of the main considerations in the Sentencing Guidelines was the deterrence of white-collar criminals. It found that probation-only sentences were unlikely to deter white-collar criminals who could analyze the financial benefits against the risks and easily determine that financial fraud might be worth the risk of no time in prison.

The court also looked to several prior decisions in which it reversed sentences of minimal jail time for HealthSouth executives involved in the same fraud as defendant. In short, the court explained: “We also hold that any sentence of probation would be unreasonable given the magnitude and seriousness of Livesay's criminal conduct” (emphasis in original). The court vacated the sentence and remanded to the District Court for re-sentencing.

Sixth Circuit Affirms Use of Evidence Exclusion

In United States v. Hardy, No. 08-5421 (6th Cir. Nov. 20, 2009), the Sixth Circuit affirmed a district court's exclusion of documents as a sanction for delayed disclosure to the prosecution by defense counsel due to counsel's doubts about their origin and admissibility.

The defendant-appellant, Donna Hardy, was convicted on 12 counts of bank fraud, 18 U.S.C. ' 1344, and five counts of tax evasion, 18 U.S.C. ' 7201, by a jury empanelled by the United States District Court for the Western District of Tennessee. The convictions related to her alleged embezzlement of over $250,000 from her employer, Milan Box Corporation. Hardy, who had controlled the company's accounting and treasury functions without check-issuing authority, defended the charges by claiming that she had loaned the company money during lean years and that the funds paid to her were repayment for the earlier loans.

The documents excluded by the district court were copies of check stubs that Hardy claimed proved the existence of the loans. Hardy had provided them to her counsel a week prior to her trial. Her counsel did not provide the documents to the prosecution at that time, instead serving a subpoena duces tecum on the company for the original stubs on the weekend prior to the trial.

On appeal, Hardy argued that the district court had violated her compulsory process rights as provided in the Sixth Amendment, which states that “in all criminal prosecutions, the accused shall enjoy the right ' to have compulsory process for obtaining witnesses in his favor.” U.S. Const. amend. VI.

The Sixth Circuit rejected this argument, finding that Hardy and her counsel “willfully and purposefully chose not to disclose the documents to the government.” The Sixth Circuit noted that the district court had discretion to exclude evidence when a party failed to comply with Fed. R. Crim. P. 16, which provides that defendants who request and receive disclosure of the government's documents must provide reciprocal discovery ' not limited to the discovery period, upon request, for items: 1) “within the defendant's possession custody, or control;” and 2) that the defendant intends to use in his/her “case-in-chief.” Fed. R. Crim. P. 16(b),(c), and (d)(2)(C).