On July 9, 2014, the U.S. Court of Appeals for the Second Circuit issued a significant sentencing decision in United States v. Park. In doing so, the appellate court handed the United States a rare, albeit hollow sentencing victory by vacating a probationary sentence. The facts of the case are rather unique. The defendant, Young Park, entered a guilty plea to one count of willfully filing a false corporate tax return in violation of 26 U.S.C. § 7206(1). The tax loss in the plea agreement was $133,601. Given Park’s prior conviction for conspiracy to commit mail fraud, his advisory Guidelines range yielded a recommended term of incarceration.

The defendant appeared before the district court for sentencing on October 11, 2013, during the two-week government shut-down. At sentencing, the district court made the following statements:

Look, I would not put this person in jail if not for the fact that he spent …eight months in jail and he comes out and he commits another crime years later…I have a hard time swallowing that.

However, the district court expressed significant concern with the costs of incarceration. Speaking directly to the prosecutor, the judge said:

One of the things that…I think concern me and my colleagues, especially when we get these messages from the administrative offices in Washington about cutting costs, terminating the employment of parole officers and probation officers; to what extent, given the economic dynamics in the country today, should the federal court Judge consider the economics of things in terms of sentencing to save the government needed money. Do you think that’s a factor that’s worthy of consideration today?… I will have to come to work without getting paid. Do you think that’s something that a Judge should consider, yes or no?

Over the prosecutor’s objections, the district court judge answered the question in the affirmative:

I’m going to say that I would probably give a period of incarceration if not for the financial pressures that the Court has, the court system and the government has. Especially low-level federal employees at the present time. And we really can’t afford the luxury of paying another $28,000 to keep this person in jail under the circumstances and I encourage you to appeal.

The Court then expressly reaffirmed that its decision not to impose a sentence of incarceration was based solely on the government shut-down, asserting:

I’m making the record that I am not going to put him in jail only because of the economic plight that we are facing today….If we have to resentence him, we will later.

The Court, varying from the advisory Guidelines range of 15 to 21 months, then imposed a sentence of three years’ probation which included six months of home confinement.

The government took the district court up on its suggestion and appealed. The Second Circuit in a detailed per curiam opinion took the uncommon step of reversing the district court on two separate bases – procedural error and substantive error. However, the government’s victory may just be fleeting as the Second Circuit provided the district court with sufficient guidance to impose a probationary sentence again if it so desires on remand.

Procedural Unreasonableness

The Second Circuit found that the district court committed procedural error by failing to consider the six factors set forth in 18 U.S.C. § 3553(a). The appellate court explained the role of a district court generally. First, the district court needs to properly compute the advisory Guidelines range for a criminal defendant. Second, after computing the advisory Guidelines range, the district court must consider the factors set forth in Section 3553(a). In this case, the Second Circuit found that the district court committed procedural error because the only factor that the district court considered was the cost of the government and the “economic problems” allegedly caused by the “government shut-down.” The Second Circuit took umbrage with the district court statement “if we have to resentence him, we will later.” It also noted that the district court stated that it would consider all of the Section 3553(a) factors on a remand. As such, the Second Circuit concluded that by failing to consider the Section 3553(a) factors, the trial court committed procedural error.

The Second Circuit also concluded that the district court committed procedural error by considering the cost of incarceration. The Second Circuit noted that 18 U.S.C. § 3553(a) sets forth the factors that any district court should consider when it imposes a fine in a criminal case. Section 3572(a) states: “in determining whether to impose a fine…the court shall consider, in addition to the factors set forth in § 3553(a)…the expected cost of the government of any imprisonment.” As such, the Second Circuit found that a district court cannot consider the cost of imprisonment when deciding a defendant’s term of imprisonment.

Park had argued that Section 3553(a) does not prohibit a district court from considering the cost of incarceration as an additional factor. However, the Second Circuit found that it was not going to “expand relevant sentencing considerations beyond those [already] enumerated in § 3553(a).” The Second Circuit further found that “[p]ermitting consideration of cost as an additional factor would be particularly inappropriate in view of ‘the express conclusion of cost of imprisonment as a consideration’ ” in a different sentencing statute.

In sum, the Second Circuit found that by failing to consider all of the Section 3553(a) factors and by considering a factor outside of Section 3553(a), the district court committed procedural error.

Substantive Unreasonableness

The Second Circuit could have reversed the decision solely on procedural unreasonableness but it did not stop there. It proceeded to reverse the sentence on substantive unreasonableness grounds as well. It explained that “[a]ppellate review of whether a sentence is truly exceptional within the scheme of federal sentencing law is no more based on an algorithm or calculus than is the decision of a district court judge to impose that particular sentence in the first place.” The Second Circuit added: “ ‘Reasonableness’ is inherently a concept of flexible meaning generally lacking precise boundaries” and “it cannot be precisely explained.” In short, this is what the term “abusive-discretion” means. In a footnote, the Second Circuit explained how a judge should view abusive discretion by quoting a former Chief Judge:

I know of no formula in this kind of case except to live with the record until one breathes it, to gain what one can from similar cases, to brood over the consequences, and, finally, if one’s sense of rawness becomes blunted over time, affirm. But if the redness remains after days and weeks, take a big breath and reverse.

In the final analysis, the Second Circuit concluded: “in determining whether a sentence shocks the judicial consensus or as otherwise insupportable, we use our lodestar the parsimony clause of 18 U.S.C. § 3553(a), which directs a sentence in court impose a sentence sufficient but not greater than necessary[,] to comply with the factors set forth in 18 U.S.C. § 3553(a)(2) – namely retribution, deterrence, and incapacitation.” This panel no doubt had that chafing redness.

In this case, the appellate court found that with respect to the factors set forth in § 3553(a)(2), the district court failed to articulate a sufficient justification for the sentence. The Second Circuit cited to a Guidelines’ advisory note that discussed the limited number of criminal tax prosecutions relative to the likely high frequency of undetected violations, leading to a need for general deterrence. The appellate court further explained the “heightened need” for a term of incarceration because of Park’s prior conviction for financial crimes noting that he had already served eight months in prison for fraud. The Second Circuit was particularly concerned by the district court’s comment that “but for” the government shut-down, it would have imposed a term of incarceration. The Second Circuit quoted the district court as saying “I have a ‘hard time swallowing’ that Park spent eight months in jail and he comes out, and he commits another crime years later.” Based on all of this, the Second Circuit, concluded that the decision to impose a probationary term was unreasonable. In sum, the government shut-down did not create a “blank check for the district court to impose whatever sentence suited its fancy.” As such, the probationary sentence was substantively unreasonable.

Guidance for remand

Despite this favorable outcome for the government, its victory may be pyrrhic. The Second Circuit’s decision was based almost entirely on the district court’s findings at the October 2013 hearing. It was “the district court’s view that, if the government were not shut-down, a term of incarceration would have been needed to satisfy” 18 U.S.C. § 3553(a)(2). In making this statement, the Second Circuit gave a not so subtle wink and a nod to the district court judge. The appellate panel added: “We thus do not foreclose the possibility that the imposition of a probationary sentence on remand, after appropriate consideration of the § 3553(a) factors thus far left unaddressed, could be substantively reasonable as well.” (emphasis in original).

Even after a resounding victorious appeal, the district court is still free to impose a term of probation.