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In a recent opinion, the Second Circuit upheld a 57-month sentence that applied a two-level sentencing enhancement for obstruction of justice and rejected a request for a sentencing reduction for acceptance of responsibility where the defendant pled guilty to wire fraud and then submitted falsified documents in support of his request for a below-Guidelines sentence. In United States v. Strange, No. 21-cr-2923 (Pooler, Wesley, Menashi), the Court rejected Steven Strange’s efforts to challenge his sentence on the grounds that his misconduct was unrelated to the facts of his offense. In so ruling, the Court following the analysis offered in a prior summary order; with the adoption of this analysis in a published opinion, it is now law of the Circuit.

Background

From 2014 to 2019, Strange worked as a senior supervisor in the fire extinguisher division of United Technologies Corporation (“UTC”). During that time, UTC operated a matching donation program for its employees whereby it would match up to $25,000 in donations to charitable organizations per employee per year. From 2015 to 2019, Strange operated a scheme whereby he prepared and submitted falsified invoices purporting to show that he and his colleagues had made large donations to a non-existent charitable organization that he controlled. UTC matched those purported donations, which netted Strange approximately $600,000 in matching funds that he used for personal use.[1] Strange was arrested in 2019 for his role in orchestrating and carrying out this scheme, and he pled guilty to one count of wire fraud in violation of 18 U.S.C. § 1343 in 2020.

Strange is Sentenced Using a Higher Range After Submitting False Letters of Support

In advance of sentencing, the government prepared a presentencing memorandum recommending a Guidelines-range sentence of 33 to 41 months. Strange’s memoranda requested a sentence of probation rather than imprisonment, and relied on three letters of support purportedly written by employer, his physician, and his friend. These three letters claimed that Strange’s unique skills were essential to his employer such that the business would not survive his imprisonment, that his health would deteriorate in prison, and that Strange’s kindness and aid to a friend merited clemency.

Strange’s sentencing was continued for months during the Covid-19 pandemic. During that time, the government investigated the three letters Strange submitted and established that Strange had drafted all three without the knowledge or approval of the purported authors. Accordingly, the government sought a two-level sentencing enhancement for obstruction of justice under U.S.S.G. § 3C1.1 and opposed a three-level reduction for acceptance of responsibility under U.S.S.G. § 3E1.1. The district court adopted the government’s recommendations and imposed a sentence of 57 months of incarceration, within the new range of 57 to 71 months imprisonment.

The Court Affirms the Procedural Reasonableness of the Sentence

Strange appealed his sentence on two grounds. First, he argued that the District Court erred in applying the two-level sentencing enhancement because the forged letters he submitted to the District Court were not in furtherance of the crime for which he pled guilty, and in any event were not material to the district court’s sentencing analysis. And second, Strange challenged the denial of his request for a sentencing reduction on the grounds that the lower court failed to consider his acceptance of responsibility.

The Second Circuit rejected these arguments. With respect to Strange’s sentencing enhancement argument, the Second Circuit held that obstructive conduct “relate[s] to” the offense of conviction if it is intended to influence the sentence imposed on that conviction. Finding that Strange submitted the fraudulent letters “to influence the outcome of the adjudication” of his sentencing, the Second Circuit held that the fraudulent letters were “related to” Strange’s wire fraud conviction because they were intended to alter his sentence for that conviction, and were therefore properly the subject of a two-level sentencing enhancement imposed under Section 3C1.1 of the U.S. Sentencing Guidelines.

In so doing, the Second Circuit adopted the reasoning of a 2013 nonprecedential summary decision in United States v. Butters, 513 F. App’x 103 (2d Cir. 2013) that held that “false statements need not be about the offense of conviction” to be obstructive, and confirmed that Butters should be followed as a matter of Circuit law. The Second Circuit held that the district court properly applied the two-level obstruction enhancement because the falsified sentencing submission was aimed at influencing a decision of the court that arose out of the fact of the underlying offense. That Strange’s underlying offense also involved fraudulent statements was just a coincidence. Under the Court’s reasoning, falsified statements submitted to influence the sentencing on, for example, an arson charge would also qualify for the sentencing enhancement for obstruction of justice.

The Second Circuit also rejected Strange’s contention that the fabricated letters were not material to the district court’s sentencing analysis, crediting the district court’s conclusion that “had [it] found the letters to be legitimate, they would have made a difference in the sentence.” Because the letters were material to the lower court’s analysis, the Second Circuit held that the district court properly applied the sentencing enhancement under Section 3C1.1 of the Sentencing Guidelines.

The Second Circuit also rejected Strange’s argument that the district court abused its discretion by failing to consider his acceptance of responsibility. Strange contended that the fact of his guilty plea demonstrated his acceptance of responsibility and merited the application of an offense level reduction for acceptance. The Second Circuit disagreed. Noting that the district court pointed to “the dishonesty exhibited in Strange’s fraudulent submissions and the degree to which the fraudulent submissions mimicked the behavior for which he had been convicted,” the Second Circuit held that the district court properly applied its discretion in declining to find that Strange had accepted responsibility.

Finding all of Strange’s arguments meritless, the Second Circuit upheld the imposition of a 57-month sentence of incarceration, confirming as it did in Butters that obstructive conduct directed at a sentencing court justifiably increases the overall length the of the sentence ultimately imposed.

Commentary

This ruling is not especially surprising and seems to have been issued in a published opinion primarily to elevate the Butters reasoning to law of the Circuit. The Sentencing Guidelines do not only provide for obstruction when the obstruction occurs in the course of the commission of the offense. Application Note 1 to Section 3C1.1 explains that it applies to obstructive conduct that “occurred with respect to the investigation, prosecution, or sentencing of the defendant’s instant offense of conviction.” Submission of false statements at sentencing falls within this broad definition. In addition, Section 3E1.1 explains in Application Note 4 that when a defendant engages in conduct that leads to an enhancement for obstruction of justice, that conduct “ordinarily indicates that the defendant has not accepted responsibility for his criminal conduct,” other than in “extraordinary” cases.

The harshness of the Sentencing Guidelines here means that the defendant’s fraudulent efforts to reduce his sentence led to an increase in his sentence of at least two years and possibly more. While there needs to be a strong deterrent to obstruction of justice, one wonders if a sentence of nearly five years is necessary from a societal perspective to achieve the goals of sentencing in this case.