The United States Sentencing Commission has voted to change the sentencing guidelines for persons convicted of fraud. The proposed changes, which remain subject to congressional approval, are intended to better account for harm to victims, individual culpability, and the offender’s intent.

Three changes proposed by the Commission are especially noteworthy:

  1. Offenders would receive harsher penalties where a victim suffered “substantial financial hardship,” regardless of whether there is only a single victim or just a few. The guidelines would place greater emphasis on the amount of the loss, rather than the number of victims affected. “Substantial financial hardship” would include cases where the victim became insolvent, filed for bankruptcy, or made substantial changes to his or her employment or living arrangements, as a result of the fraud.
  2. A non-exhaustive list of factors is offered to help determine whether offenders could be classified as “minor” or “minimal” participants in the offense, and thus eligible for less severe punishment. The degree to which the defendant understood the scope and structure of the criminal activity, the degree to which the defendant participated in planning or organizing the criminal activity, and the degree to which the defendant exercised decision-making authority, are among the possible mitigating factors.
  3. “Intended loss” would be redefined to mean “the pecuniary harm that the defendant purposely sought to inflict.” The revised language would mark a shift from the current definition, “the pecuniary harm that was intended to result from the offense.” This shift would likely create a heightened standard for demonstrating an offender acted with the requisite intent and is intended to better reflect the offender’s culpability.

“We found through comprehensive examination that the fraud guideline provides an anchoring effect in the vast majority of cases, but there were some problem areas, particularly at the high-end of the loss table” said Chief Judge Patti B. Saris of the U.S. District Court for the District of Massachusetts, chair of the Commission, in a news release issued by the Commission. “These amendments emphasize substantial financial harms to victims rather than simply the mere number of victims and recognize concerns regarding double-counting and over-emphasis on loss.”

Once the amendments receive the affirmative vote of four Commissioner, the amendments will be sent to Congress. We will monitor and report new developments.