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Current events from this past week give me some opportunity to discuss a topic about which I have some general professional knowledge, namely the law governing US federal mail and wire fraud. So let's get right to it! There actually manage to be two significant news stories from last week that illustrate certain distinct things to do with federal mail and wire fraud.
And because today's post discusses legal topics, a reminder: While I am an attorney at my day job, I am not your attorney. Nothing in this blog should ever be construed as legal advice or as forming an attorney-client relationship.
1. // First up, Steve Bannon and a number of alleged co-conspirators were arrested on a federal indictment for - among other charges - mail and wire fraud in connection with what started as a GoFundMe scam, purportedly to help the government "build the wall" along the US's southern border. In part to extract the ~$20 million originally raised on GoFundMe for this, to put it lightly, truly bonkers purpose (there appear to be various legal and regulatory complications associated with trying to gift money to the federal government to "build the wall"), defendants allegedly represented that they would not be paid out of the donated funds. Those representations have allegedly been shown to be false. (See paragraphs 19 to 25 of the indictment.)
This story corroborates an unrelated point I recently made when discussing some viral tweets - initiated by at least a few known alt-right agitators - that accused the Minnesota Freedom Fund or "MNFF" (a small local bail fund and beneficiary of an unprecedented-for-them ~$30 million in donations in the days immediately following the killing of George Floyd) of misusing funds due to failing to immediately spend that money in barely two to three weeks.
At that time, there was no real basis for any reasonable actor to believe funds were being misused. It had been barely two or three weeks since the donations came in. MNFF had been operational for at least a few years before 2020, and had always made clear that part of their work was immigration bail, not just bail for defendants arrested on criminal charges. They appear to have been well-known in their own community. They promptly asked for donations to start going elsewhere within the first few days, which I tried to honor when I wrote about my donations. They had already spent six figures on bail by the time the viral tweets accusing them of wrongdoing started going around.
Regardless, the US is a country where GoFundMe or other crowdfunding donation scams occurring conspicuously in the public eye become a likely target for prosecution. The indictment and arrest of Steven Bannon and his alleged coconspirators is certainly evidence of that. Should these defendants be convicted, I'd be willing to bet real money that their sentences will be longer than a year - and probably by a significant margin - unlike the sentences associated with this next story...
2. // Secondly, by now you may also have heard that Lori Laughlin and her husband were sentenced last Friday for their role in the "Operation Varsity Blues" case, as parents who paid someone to facilitate getting their children into college with falsified credentials. Lori Laughlin received two months incarceration, and her husband five months. These are not long sentences by any conceivable standard. They are also fairly "typical" sentences for the parent defendants in this case, for those who have already been sentenced. Nor did the Government typically request significantly longer sentences than each of the parents actually got.
There are so many ways in which the American criminal justice system is both immensely cruel and profoundly unjust. While my professional experience with federal criminal defense is limited, I can at least point to certain background facts relevant to understanding the sentences for the Varsity Blues parent defendants. I have not generally been surprised by the duration of these sentences, including Felicity Huffman's 14-day sentence. There are at least two major reasons for this.
First, is that the real "oomph" of federal mail and wire fraud sentencing comes from "loss amount," in other words, the total amount the defendant stole, potentially also including amounts stolen by close co-conspirators (American criminal law is very into vicarious liability). Identifying loss amount is a complicated question in this case. But before one gets into that, one needs to understand a few things about federal sentencing generally.
Individual judges have fairly broad discretion in federal sentencing, with the only truly absolute constraints I'm aware of coming from statutory maximum sentences set by Congress and, where applicable, statutory minimum sentences (statutory minimums tend to be cruel and unreasonable in practice in almost every instance I've seen). But most judges give considerable weight to the "guidelines" sentence in each case. That guidelines sentence will be a fairly narrow range, and is calculated in accordance with the US Sentencing Commission Handbook, a fairly weighty and somewhat dense and technical 600-plus page document available here as a PDF or here as a webpage.
Each guidelines calculation ultimately boils down - after many steps and factors are taken into account, some of which can be subject to serious legal dispute and form the basis of a potential appeal - to an "offense level" and "criminal history category," the combination of which yields the defendant's "guidelines sentence." The possible guidelines sentences are laid out in the "Sentencing Table" on page 415 of the PDF, or page 407 using the book's internal pagination. For crimes involving theft, including mail and wire fraud, loss amount is a significant factor in the "offense level" calculation, see the table on pages 90 to 91 of the PDF, or pages 82 to 83 using the book's internal pagination.
One conceptual difficulty with the Varsity Blues parents is that they generally didn't steal any money, nor property with an easily quantifiable value. It's not like a spot in a college class can be sold. Which makes identifying loss amount a complicated question. The Varsity Blues parents who have pleaded guilty generally - as part of their plea - consent to the Court using the amount they paid into the conspiracy as the "loss amount" for sentencing. (Articles mentioning this specific point are mostly behind a paywall.) In many cases, these amounts are relatively small, as far as federal mail and wire fraud cases typically go. And because the parents did not actually steal those amounts - these are amounts the parents paid, not took - a Court may possibly feel some reluctance to sentence any of them to the fullest possible range under the guidelines.
Lori Loughlin and her husband paid more than $250,000, which as a loss amount, adds 12 points to the base of 7 for conspiracy to commit mail and wire fraud, a calculation memorialized in her plea agreement. For pleading guilty well before trial, defendants typically get 3 points' deduction for "prompt acceptance of personal responsibility." This brings her offense level back down to 16, and this is also memorialized in the plea agreement. Assuming the lowest criminal history category, her guidelines sentence is then 21 to 27 months' incarceration. But the Government consented to the two and five month sentences that Loughlin and her husband, respectively, ultimately received. Which brings us to a possible second complicating factor.
Second - and this is something I can only speculate about, because while this issue was litigated, the Court decided against the defendants who raised it - but where a defendant did not steal any money or property with an easily quantifiable monetary value, there's a real legal question about whether mail and wire fraud charges can be maintained at all. One of the essential elements of mail and wire fraud is that there was some scheme to defraud to steal actual money or property with monetary value. So perhaps that influences the Government's willingness to consent to two and five month sentences for Laughlin and her husband, where the guidelines still call for 21 to 27 months.
Because the Court has rejected this argument once already, it's impossible to say how much the Court's view of sentencing for any of the Varsity Blues parents might be influenced by this. And the Government obviously does not disclose their reasons for these sentencing recommendations in quite that level of detail. But as someone who has worked on this specific legal issue in a different context, it's a major legal question with a highly uncertain outcome, which makes it a potentially viable basis for appeal, had the parent defendants gone to trial and been convicted.
Where the parent defendants' sentences have typically only been a few months at most, it may not be worth it for any of them to litigate this case through trial and appeal, no matter how meritorious their potential arguments. Loughlin and her husband use biglaw firm Latham & Watkins as their primary counsel, the type of firm where a first-year associate's billing rate alone is probably well over $400/hour. (At my similar first firm I was billed out at ~$375/hour in my first year, and rates have gone up since 2015.)
Individual judges have fairly broad discretion in federal sentencing, with the only truly absolute constraints I'm aware of coming from statutory maximum sentences set by Congress and, where applicable, statutory minimum sentences (statutory minimums tend to be cruel and unreasonable in practice in almost every instance I've seen). But most judges give considerable weight to the "guidelines" sentence in each case. That guidelines sentence will be a fairly narrow range, and is calculated in accordance with the US Sentencing Commission Handbook, a fairly weighty and somewhat dense and technical 600-plus page document available here as a PDF or here as a webpage.
Each guidelines calculation ultimately boils down - after many steps and factors are taken into account, some of which can be subject to serious legal dispute and form the basis of a potential appeal - to an "offense level" and "criminal history category," the combination of which yields the defendant's "guidelines sentence." The possible guidelines sentences are laid out in the "Sentencing Table" on page 415 of the PDF, or page 407 using the book's internal pagination. For crimes involving theft, including mail and wire fraud, loss amount is a significant factor in the "offense level" calculation, see the table on pages 90 to 91 of the PDF, or pages 82 to 83 using the book's internal pagination.
One conceptual difficulty with the Varsity Blues parents is that they generally didn't steal any money, nor property with an easily quantifiable value. It's not like a spot in a college class can be sold. Which makes identifying loss amount a complicated question. The Varsity Blues parents who have pleaded guilty generally - as part of their plea - consent to the Court using the amount they paid into the conspiracy as the "loss amount" for sentencing. (Articles mentioning this specific point are mostly behind a paywall.) In many cases, these amounts are relatively small, as far as federal mail and wire fraud cases typically go. And because the parents did not actually steal those amounts - these are amounts the parents paid, not took - a Court may possibly feel some reluctance to sentence any of them to the fullest possible range under the guidelines.
Lori Loughlin and her husband paid more than $250,000, which as a loss amount, adds 12 points to the base of 7 for conspiracy to commit mail and wire fraud, a calculation memorialized in her plea agreement. For pleading guilty well before trial, defendants typically get 3 points' deduction for "prompt acceptance of personal responsibility." This brings her offense level back down to 16, and this is also memorialized in the plea agreement. Assuming the lowest criminal history category, her guidelines sentence is then 21 to 27 months' incarceration. But the Government consented to the two and five month sentences that Loughlin and her husband, respectively, ultimately received. Which brings us to a possible second complicating factor.
Second - and this is something I can only speculate about, because while this issue was litigated, the Court decided against the defendants who raised it - but where a defendant did not steal any money or property with an easily quantifiable monetary value, there's a real legal question about whether mail and wire fraud charges can be maintained at all. One of the essential elements of mail and wire fraud is that there was some scheme to defraud to steal actual money or property with monetary value. So perhaps that influences the Government's willingness to consent to two and five month sentences for Laughlin and her husband, where the guidelines still call for 21 to 27 months.
Because the Court has rejected this argument once already, it's impossible to say how much the Court's view of sentencing for any of the Varsity Blues parents might be influenced by this. And the Government obviously does not disclose their reasons for these sentencing recommendations in quite that level of detail. But as someone who has worked on this specific legal issue in a different context, it's a major legal question with a highly uncertain outcome, which makes it a potentially viable basis for appeal, had the parent defendants gone to trial and been convicted.
Where the parent defendants' sentences have typically only been a few months at most, it may not be worth it for any of them to litigate this case through trial and appeal, no matter how meritorious their potential arguments. Loughlin and her husband use biglaw firm Latham & Watkins as their primary counsel, the type of firm where a first-year associate's billing rate alone is probably well over $400/hour. (At my similar first firm I was billed out at ~$375/hour in my first year, and rates have gone up since 2015.)
3. // And just to round out a list of stories about not-so-great people of various kinds - though this one has nothing to do with federal mail or wire fraud - I thought this extremely critical Vanity Fair profile of the recently-wed Stephen Miller and Katie Waldman was a great read (archive.is link, if needed). Though what it says about the state of the US government and this presidential administration is a real tragedy, as we already know all too well. I suppose I probably enjoy gossip a bit too much. But well, when two now-infamous people have consistently been pretty terrible to almost everyone around them from high school through adulthood, many of the affected people left in their wake might become eager to share unflattering stories.
What must it be like, to be someone so hateful that large swaths of people from your past - including from your own family, in some instances - are eager to talk to the press about how terrible you are in great detail, to share every possible story casting you in a negative light? Thankfully, I don't think I'll ever know what that's like, or know what it's like to be around or work closely with someone like that.
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