Probation
sentence vacated
White
collar criminal must go to prison
By
David Ziemer
david.ziemer@wislawjournal.com
April
16, 2007
| What
the court held Case:
U.S. v. Sriram, Nos. 05-2752 & 05-2802. Issue:
Is a probation-only sentence reasonable for a white collar crime involving at
least $1.4 million in actual losses? Holding:
No. A large-scale
fraud requires a substantial penalty. |
The
Seventh Circuit on April 9 vacated yet another probation-only sentence given to
a white collar criminal.
Krishnaswami
Sriram pleaded guilty in federal court to health care fraud and tax fraud, admitting
that he received substantial payments for fraudulent Medicare claims, estimated
in the presentence report to be between $5 million and $10 million, and defrauding
the government of more than $550,000 in income tax.
After
a 13-day sentencing hearing, the district court imposed a sentence of five years
probation, plus restitution of $1,258.
The
government appealed, and the court of appeals reversed, in a decision by Judge
Richard A. Posner.
The
court concluded that the district court erred in two ways: underestimating the
fraud “by at least a factor of a thousand”; and imposing a sentence
“that would have been unreasonable even if his calculation of the loss had
been defensible.”
The
court cited numerous examples of why the calculated loss was too low: Sriram billed
for more than 24 hours in a day, on 401 days; he billed for services performed
on days when he was out of the country; and he billed for services performed on
patients who had died before the services were allegedly rendered.
The
court acknowledged that an exact calculation of the loss was impossible to come
by. Nevertheless, the court found that, at a minimum, he defrauded Medicare of
$1.4 million.
Turning
to the sentence, the court noted that, even if $1,258 was the amount of loss,
the guideline range would be 24 to 30 months in prison. At $1.4 million, it would
be 78 to 97 months (under the guidelines in effect at the time of the sentencing).
The
district court imposed a below-guideline sentence based on the following mitigating
factors: the defendant was “chronically inept as a businessman”; the
prosecution had been protracted; the government had violated the doctrine of Brady
v. Maryland, 373 U.S. 83 (1963); the defendant had spent a great deal of money
on his legal defense; and the prosecution had stigmatized him and might cause
him to lose his medical license.
However,
the court of appeals concluded that only the loss of the medical license was clearly
an appropriate factor, and of the others, only the stigma was even arguably appropriate.
Citing
U.S. v. Repking, 467 F.3d 1091, 1096 (7th Cir. 2006), the court added that, even
these considerations justified only a “limited” reduction.
Addressing
other factors, the court concluded, “that a defendant spends heavily on lawyers
is not a mitigating factor. It would not only encourage overspending; it would
be double counting, since the pricier the lawyer that a defendant hires, the less
likely he is to be convicted and given a long sentence.”
Turning
to the Brady argument, the court wrote, “The Brady claim hovers on the border
of cloud-cuckooland.”
Accordingly,
the court reversed the sentence, and remanded for resentencing, emphasizing again
that any loss estimate lower than $1.4 million would be error, warranting another
reversal.
The
court concluded, “The defendant committed fraud on a large scale and should
be punished accordingly.”
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David
Ziemer can be reached by email.
