As a top federal criminal attorney, I have been asked to explain the application of the Federal Sentencing Guidelines in recent high-profile cases. These cases include those involving the Todd and Julie Chrisley, who were television stars on the reality television series “Chrisley Knows Best,” as well as Elizabeth Holmes, an entrepreneur and founder of the company Theranos, who had convinced investors, doctors, and the public that her company had developed breakthrough blood tests.
In the Chrisley case, the defendants were charged with conspiracy, bank fraud, wire fraud, and tax evasion. In sum, the Indictment alleged that the Chrisleys defrauded a number of banks in obtaining millions of dollars in loans by providing false information, such as personal financial statements containing false information, and fabricated bank statements. The Indictment also charged that the Chrisleys evaded the payment of federal taxes on the monies they earned. The fraud committed by the Chrisley was, in some instances, rather basic and obvious, including cutting and taping or gluing together false documents. The charges against the Chrisley also included cover-up conduct, including taking steps to obstruct the IRS from in its collection efforts and making false statements to federal agents.
The Chrisly case ultimately went to a jury trial and the Chrisleys were convicted on all counts. Somewhat surprisingly, the sentences thereafter handed down by federal district court judge Elanor L. Ross were harsh. Oftentimes, celebrity defendants and defendants of financial means receive relatively light federal sentences that call into question the fairness and uniformity of the federal sentencing process. But, not in the case of the Chrisleys. The judge sentenced Todd Chrisley to a 12-year period of incarceration, and Julie Chrisley to a 7-year period of incarceration. They were also ordered to pay restitution.
Federal sentences are impacted to a great degree by the Federal Sentencing Guidelines. Although the Guidelines are not mandatory, a federal district court judge, as part of the sentencing process, is required to calculate the range of sentence suggested by the Guidelines and consider that range as part of its sentencing determination. The two principal considerations that the Guidelines take into account and calculate are a defendant’s “Criminal History,” as well as what is known as the “Offense Level” corresponding to the criminal offenses charged. A defendant’s criminal history “counts” certain prior criminal convictions, and not others, and assigns points to the criminal convictions that are considered. With regard to the offense level calculation, in a financial fraud case, the offense level often starts at a relatively low number that is often significantly increased or enhanced based upon the “loss amount” – i.e., the actual or intended monetary amount of the fraud. Thus, particularly in the Chrisley case, the loss amount substantially impacts\ed the applicable Guidelines range based on the fact that tens of millions of dollars were at issue.
The federal district court in the Chrisly case, like all federal judges, was also required to thoughtfully and meaningfully consider what are called the “3553 factors,” which essentially amount to any mitigation that their attorneys were able to construct as a basis for the judge to give them a significantly lower sentence than that suggested by the Guidelines. Mitigation can include such things as a defendant’s prior law-abiding life, his/her family circumstances, the cost of incarceration, evidence that the defendant has already been sufficiently specifically deterred from committing further crimes, the non-violent nature of the offenses, as well as numerous other potential arguments in mitigation. The court can also consider letters submitted from those who know the defendant, as well as in-person statements made on behalf of the defendant during the sentencing hearing. It appears that, in the case of the Chrisleys, the judge was influenced in her sentencing decision by the boldness of the Chrisleys’ action, and the use of their celebrity status in furtherance of the crimes. The court also appeared to want to send the message that general deterrence would be furthered (i.e., the impact of the sentence upon others in the community) by lengthy sentences and that the perceived disparity in sentences between those with means and those without means would be obviated.
With regard to the Holmes case, the Indictment in that case charged her with federal crimes in connection with her involvement in two multi-million-dollar schemes to promote Theranos, a private health care and life sciences company based in California. The Indictment alleged that Holmes used advertisements and solicitations to encourage and induce doctors and patients to use Theranos’s blood testing laboratory services, even though she knew that Theranos was incapable of consistently producing accurate and reliable results for certain of its blood tests. The indictment further alleged that Holmes defrauded doctors and patients by making false claims concerning Theranos’s ability to provide accurate, fast, reliable, and cheap blood tests and test results, and by omitting information concerning the limits of and problems with Theranos’s technologies.
The underlying basis for the Indictment alleging federal crimes was wire fraud – in other words, Holmes’ and the company’s use of interstate electronic wires to purchase advertisements intended to induce individuals to purchase Theranos’ blood tests at Walgreens stores in California and Arizona. The Indictment further alleged that Holmes made numerous misrepresentations to potential investors about Theranos’s financial condition and its future prospects. The federal wire fraud statute can be found at 18 U.S.C. § 1349 and 18 U.S.C. § 1343.
After being convicted by the jury on numerous (but not all), Holmes was sentence to 135 months (11 years, 3 months) in federal prison. Again, the extraordinary high loss amount, coupled with the long-running and sophisticated nature of the fraud appeared to have influenced the federal district court’s sentencing decision.
It should be noted that, although federal sentences are often part of a defendant’s appeal, they are difficult to get overturned or remanded on appeal because, in short, the defendant has to convince a federal appellate court that the sentencing judge either erred in its Guidelines calculation, failed to consider an argument made by the defense, or inappropriately considerer a prohibited factor. That said, both the Chrisleys and Holmes will likely attack their sentences as part of their arguments on appeal.
Written by Michael Leonard
Leonard Trial Lawyers
November 25, 2022