This Is Not Fine: Circuit Vacates Fine Imposed on Unable-to-Pay Defendant, Citing Lack of Reasoning or Evidence for Judge’s Sentence

by Patterson Belknap Webb & Tyler LLP

In a summary order issued March 7, 2017, United States v. Marmilev, 14-4738 (Leval, Calabresi, and Carney), the Circuit vacated and remanded the portion of the defendant’s sentence imposing a $250,000 fine after the defendant pled guilty for charges including conspiracy to operate an unlicensed money transmitting business.  From the Court’s procedural history, it’s fair to say that the fine assessed by the district court seemed to come out of the blue for all involved parties:  the presentence report (PSR) had cited the defendant’s inability to pay and recommended against a fine; the Government did not request that a fine be imposed; and the district court did not question the PSR’s recommendation or indicate prior to sentencing that it was considering a fine.  Yet not only did the district court order the defendant to pay a fine, but the fine it imposed was well in excess of the Guidelines range of $17,500-$175,000.

Given the anomalous nature of the fine, even the Government consented to vacating it and remanding the case to the district court to provide a statement of reasons; however, the Government opposed the defendant’s request to reopen inquiry into his inability to pay.  The panel sided with the defendant, finding the Government’s position to be unduly harsh under the circumstances.  Because the PSR’s inability to pay determination, based on information the defendant provided to the probation office, was not contested by the Government or the district court, the defendant “[h]ad no reason to burden the court by demanding an evidentiary hearing on a matter that reasonably appeared to be settled” and “thus had no reasonable opportunity, as a practical matter, to present evidence of his inability to pay to the court.”  The panel deemed particularly germane the Circuit’s prior decision in United States v. Elfgeeh, 515 F.3d 100 (2d Cir. 2008), which similarly found plain error in the imposition of an above-Guidelines fine when the PSR had found the defendant unable to pay, and the district court had neither made findings on ability to pay nor permitted the defendant to present evidence thereon.  Therefore, even though the defendant had not challenged the fine below, the panel determined the imposition of the fine clear error.  It vacated the fine and remanded for the district court to reconsider whether to impose a fine – and if so, to state its reasons for doing so – and with a direction to permit the defendant to present evidence on his inability to pay.

This decision yields several important takeaways for sentencing involving the imposition of a fine.  First, the Circuit may defer to the PSR’s finding of a defendant’s inability to pay when the finding is undisputed and uncontroverted by any evidence.  Second, a district court must state its reasons for imposing a particular fine as clearly as if it were sentencing a defendant to a particular period of incarceration.  In other words, a sentence is more than just the term of imprisonment – the fine and the supervised release term must also be justified by the district court’s statements at sentencing.  Third, an above-Guidelines fine may be subject the same sort of increased scrutiny on appeal that an above-Guidelines prison sentence receives.  See, e.g., United States v. Cavera, 550 F.3d 180, 189 (2d Cir. 2008) (stating that review of an above-the-range term of imprisonment requires that the Circuit “ensure that the justification is sufficiently compelling to support the degree of the variance”).  Lastly, when a fine is at odds with an unchallenged, unable-to-pay PSR finding, unexplained by the district court, and above the Guidelines range, it is primed to be vacated.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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