Monday, September 13, 2010

DOJ Seeks Sentencing Enhancement

The starting point in calculating a criminal fine for an FCPA anti-bribery violation is Section 2C1.1 of the U.S. Sentencing Guidelines (see here).

By way of example, see here (pg. 8) for how this section was used to determine the "total offense level" in the Alliance One plea agreement, here (pg. 6) for how this section was used to determine the base fine in the Technip deferred prosecution agreement.

Over the summer, the DOJ submitted its required report "commenting on the operation of the sentencing guidelines, suggesting changes in the guidelines that appear to be warranted, and otherwise assessing the [U.S. Sentencing] Commission's work."

In the June 28th letter (see here) from Jonathan Wroblewski (Director, Office of Policy and Legislation) to The Honorable William Sessions III of the Commission, Wroblewski states (see p. 5, footnote 4) the DOJ's belief that changes are needed to 2C1.1 to address crimes that occur overseas.

Specifically, Wroblewski stated that the Commission ought to add an enhancement in 2C1.1 - similar to the one found in 2B1.1 - that increases penalties for defendants who "increase the prosecutorial expenses associated with detection and investigation by committing a substantial part of their offense outside of the United States."

The enhancement found in 2B1.1(b)(9)(B) (see here) that the DOJ wants added to 2C1.1 offenses states: "If ... (B) a substantial part of a fraudulent scheme was committed from outside the United States; ... increase by 2 levels. If the resulting offense level is less than level 12, increase to level 12."

Although Wroblewski's letter does not specifically mention the FCPA, the starting point for calculating FCPA fines is 2C1.1, thus the enhancement DOJ seeks would increase base fine amounts in DOJ FCPA enforcement actions.

As applied to FCPA enforcement, such an enhancement would be ironic given that the DOJ routinely assesses fines significantly below even the floor suggested by the Sentencing Guidelines.

For instance, in the recent Universal Corp. enforcement actions (see here) the fine was 30% below the bottom of the sentencing guidelines range; in the recent Technip enforcement action (see here) the fine was 25% below the bottom of the sentencing guidelines range; and in the recent Snamprogetti enforcement action (see here) the fine was 20% below the bottom of the sentencing guidelines range.

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