One effect of President Bush's commutation of Scooter Libby's jail sentence is that non-lawyers among the public have become acquainted with the terms "federal sentencing guidelines" and "pre-sentence report" and the concept of "departure" or "deviation" from the guidelines. This will come in handy for those following the upcoming sentencing of Joe Nacchio. The Government last week filed its Sentencing Memorandum in which it calculated Nacchio's guidelines at 70 to 87 months and asked for the Judge to sentence him at the top end, or 87 months (7 + years.) The Government is also asking the Court to impose a $19 million fine. Joe Nacchio's lawyers have asked the Judge to depart or deviate from the guideline range and impose a lesser sentence :
Mr. Nacchio submits that ... because of extraordinary circumstances concerning the effect that a lengthy period of incarceration will have on the health and potentially even the life expectancy of two of his immediate family members and because of Mr. Nacchio's good works" he should not have to serve the full sentence, according to his court filing.
While the pre-sentence report (PSR) never becomes public, its findings are alluded to in the parties' filings. The Government's sentencing statement, available to those with a court PACER account) includes this paragraph:
While it does not advocate for a downward departure, the PSR identified two "factors that may warrant departure from the advisory guideline range." Those potential factors are the defendant's purported "extraordinary" family responsibilities (governed by Â§ 5H1.6) and history of "prior â€˜good works.'" (governed by Â§ 5H1.11). PSR at Â¶ 199- 200. The defendant bears the burden of proving entitlement to a downward departure. United States v. Sierra-Castillo, 405 F.3d 932, 938 (10th Cir. 2005).
In other words, the pre-sentence report does identify factors that warrant consideration for a lesser sentence for Nacchio. But, as in Libby's case, the probation officer writing the report does not recommend granting the reduction, he or she merely agrees there are some that fit the case enough to merit the Judge's consideration. The personal details of Nacchio's family circumstances are contained in responses each party files to the Presenence report. Those are not made public either. However, the Government, in its statement makes it pretty clear that Joe Nacchio's son David is not doing well:
Here, the defendant fails to meet his burden as the defendant's wife has the time and the resources to take care of other family members. While Dr. Hammer certainly paints an unfortunate picture of David Nacchio's prognosis, it simply does not justify absolving the defendant from his crimes and allowing him to avoid his just punishment. McClatchy, 316 F.3d at 1133 ("sympathy for [defendant's] son cannot justify a reduction in the penalty [defendant] would otherwise be required to suffer for his criminal conduct").
The guideline sentence in insider trading cases is arrived at by a complicated calculation of "the amount of loss" caused by Defendant's crime. The higher the loss, the higher the sentencing guideline range. The Government and Nacchio have vastly differing views of this amount. The Government calculates the loss at between $46 and $52 million, either the gross amount of gain Nacchio realized from his stock sales or that amount less his cost basis in the stock. Nacchio calculates it at $1.8 million, arguing that the sales price was inflated and that the amount should not include fees incurred in selling his stock or the amount of tax that Qwest withheld from him on the transactions. From the Government's Sentencing Statement:
According to the PSR, the defendant argues for a lower "gain"calculation under Â§ 2F1.2. He proposes two alternative calculations: 1) gain is not more than $1.8 million based on a yet to be presented civil damages analysis of the amount the stock was inflated due to the inside information, and 2) the gain is reduced by the amount of income taxes withheld by Qwest when he received the proceeds for the illegal sales.
Again, the PSR is not public. But, Nacchio's lawyers have filed a motion objecting to the forfeiture of funds sought by the Government and in it they argue:
The amount of money "obtained" by Mr. Nacchio did not include the $5.50 per share option price or commission fees that were a direct cost of selling his shares, and were deducted from the amount of money he received from the sale of the securities following the exercise of the options. Nor did the amount "obtained" include over $16 million dollars in taxes that was paid directly by Qwest to the federal government and the states of Colorado and New Jersey prior to Mr. Nacchio obtaining any proceeds of the sales.
The two biggest questions for Judge Nottingham at sentencing will be (1) What is the amount of loss caused by Nacchio's crimes and (2) Should he get a guideline sentence or a lesser sentence? Nacchio will be sentenced on July 27.