Game Changer

Game Changer

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With all the brouhaha surrounding the Patriots’ win in Super Bowl XLIX this past February, New England’s Bill Belichick effectively cemented his legacy as a brilliant coach, shrewd general manager and impenitent cheater. According to the official deflate-gate report, the team intentionally underinflated game balls in its victory over the Indianapolis Colts in the AFC Championship Game. Apologists were quick to point out that New England barely needed a football to dismantle the Colts in that contest, and that may very well be true. But, if deflating the balls did not give the Patriots a competitive advantage, one can be fairly certain that it never would have happened in the first place.

People who know more about this subject than me state that an underinflated football is easier to throw and catch, especially in cold weather, and easier to grasp overall. Since 2006, when the National Football League first allowed teams to manage their own game balls, the Patriots have been nearly unbeatable at home, especially in cold weather, and the team’s fumble ratio is nearly half the league average. So, it appears that a couple of PSI inside a pigskin can make a significant difference in a play’s outcome.

In a similar vein, a seemingly minor adjustment to the Federal Sentencing Guidelines can make a tremendous difference in both the offense charged and the penalty assessed.

Federal Sentencing Rules: A Primer

Before proceeding to the meat, a very brief overview of the Federal Sentencing Guidelines may be in order. If you already know everything there is to know about federal criminal law, you have my permission to skip the summary.

The Guidelines are basically a good old x-y graph, like the ones that bedeviled me in high school algebra. Penalty groups are the x axis, and the defendant’s criminal history is the y axis. You identify the correct spot on each axis, draw a line from each location, and the point of intersection is the defendant’s sentence.

The Guidelines were initially mandatory, but the federal courts made them discretionary some years ago. In other words, they are no longer The Bible, but they are essentially Matthew Henry’s Commentary on the Entire Bible.

What Happened?

The proposed amendments apply to a wide array of violent and nonviolent financial crimes, viz, theft, destruction of property, fraud, robbery, burglary, bid-rigging, tax crimes, and price-fixing. There are also amendments to the fine structure. We’ll circle back to that in a minute.

Obviously, the effect is to lessen the severity of a given financial crime. You now have to steal more money to get in more trouble.

Why the Change?

In most cases, tomorrow’s dollar is worth significantly less than today’s dollar. In 1990, a loaf of bread would have set you back about $0.70. Today, it’s more like $2. Not all of that increase is due solely to inflation, but you get the idea. So, the government periodically adjusts financial cutoffs to account for the declining value of those George Washingtons in your pocket, or, perhaps more appropriately, the digits on your debit card balance.

In terms of criminal activity, inflation means that the offense levels, according to the Commission, “reflect, to some degree, a lower degree of harm and culpability than did equivalent amounts when the monetary tables were established or last substantively amended.” In other words, embezzling a million dollars from your boss isn’t as big of a deal as it used to be.

Ditto the fines. A $5,000 fine might have necessitated a payday loan eight or ten years ago, but it is mere pocket change today. Again, according to the Commission, “the fine levels recommended by the guidelines are lower in value than when they were last adjusted, and therefore, do not have the same sentencing impact as a similar fine in the past. Based on its analysis and widespread support for inflationary adjustments expressed in public comment, the Commission concluded that aligning the above monetary tables with modern dollar values is an appropriate step at this time.”

Did the Offense Levels Change?

Over time, inflation becomes what might be considered, “the Grinch that stole Christmas.” Why? Because it heightens the severity of a given level of financial crime. As the Commission thoughtfully explains in its proposal: “[P]revious Commissions engaged in careful examination (and at times, a wholesale rewriting) of the monetary tables and ultimately included monetary and enhancement levels that it considered appropriate at that time.”

As a result, more people are being punished at higher levels. In fact, the Commission estimated that this amendment would free up about 224 additional prison beds at the end of one year, and 956 after five years.

So, in a nutshell, everything went up about 30 percent. A defendant once had to embezzle, steal or otherwise misappropriate $5,000 to be charged with a federal crime. Now, it’s $6,500. That same increase applies all along the ladder. Any amount greater than $10,000 used to mean a four-point increase in the level; now, it’s $15,000.

Here’s the big news that is easy to overlook. Although inflation can be a taxpayer-defendant’s worse nightmare, it can sometimes inure to the benefit of a defendant, especially one who does not have any prior criminal history. How so? After all is said and done, inflationary adjustments actually lower the punishment for a given level of loss. For example, the proposed amendment moves the threshold amount for offense level 18 from $200K to $250K. For defendants with a tax loss between $200K and $250K, this amounts to a reduction of two levels.

What about the Fines?

The proposed changes are far from a “bed of roses” for potential defendants. As discussed above, the proposed adjustments for inflation are not entirely defendant friendly. In the words of one tax scholar, “they increase the fine levels in order to calibrate the effect of inflation.” So, before you start your very own Ponzi scheme because you think you can get away scot-free, realize that the fines went up commensurately. But, in the immortal words of Foghorn Leghorn, there’s somethin’ here that just don’t add up.

The fines went up more than the offense level cutoffs. A $1,000 fine is now $2,000, a $2,000 fine is now $4,000, and a…well, you get the idea. Is there a discrepancy because some bureaucrat punched the wrong key on a calculator? Not likely. Is this the government’s way of squeezing a few more dollars out of an offender? Probably so.

This is not to say that government prosecutors are malefactors who are out to get you. Rather, it is a reminder that the government’s lawyers are not on your side, in any way, shape or form. Defense lawyers already wrestle with a similar issue when it comes to the defendant’s Criminal History Score. A point or two may make no difference as to the offense level, but it may be the dividing line between a maximum- and minimum-security prison.

Although the offense level changes are far from night and day, the fine enhancements could be significant, as penalties that were already stiff just became even worse. The Sentencing Commission is trying to pass off these adjustments as purely ministerial; indeed, federal lawmakers essentially rubber-stamped the amendments. If you’ve been charged with a federal crime, it’s important to partner with an attorney who will look out for you in every possible way, because no one else will perform this service.

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