[Federal Register Volume 60, Number 152 (Tuesday, August 8, 1995)]
[Rules and Regulations]
[Pages 40270-40271]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-19311]



=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF JUSTICE

Parole Commission

28 CFR Part 2


Paroling, Recommitting, and Supervising Federal Prisoners: Fraud 
Offenses That Involve Multiple Millions of Dollars in Losses

AGENCY: United States Parole Commission.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The U.S. Parole Commission is establishing a dollar amount 
range of $1 million to $5 million for Category Six fraud offenses in 
the paroling policy guidelines at 28 CFR 2.20. Frauds that cause losses 
of over $5 million will be rated Category Seven. At the present time, 
the Category Six offense severity rating is assigned to all frauds 
exceeding $1 million. In some cases, decisions above the Category Six 
guidelines are found warranted because the dollar losses greatly exceed 
those associated with ordinary cases of theft/forgery/fraud that are 
rated Category Six. The conversion of the open-ended dollar criterion 
for Category Six offenses into a range of $1 million to $5 million will 
provide the Commission with an appropriate benchmark to determine when 
dollar amount losses are so excessive as to require the offender to 
serve more prison time than indicated by the guidelines. This will 
permit increased consistency in the Commission's decisionmaking.

EFFECTIVE DATE: October 2, 1995.

FOR FURTHER INFORMATION CONTACT: Pamela A. Posch, Office of General 
Counsel, 5550 Friendship Blvd., Chevy Chase, Maryland 20815. Telephone 
(301) 492-5959.

SUPPLEMENTARY INFORMATION: Public comment was solicited by publication 
of a proposed rule at 60 FR 18379 (April 11, 1995). Some public comment 
argued that the guidelines of the U.S. Sentencing Commission are 
significantly less severe for theft, forgery, and fraud offenses 
committed on or after November 1, 1987. (The U.S. Parole Commission's 
jurisdiction is limited to offenders whose crimes were committed prior 
to November 1, 1987. See Section 235 of the Sentencing Reform Act of 
1984, which appears as an Editorial Note to 18 U.S.C. 3551.) According 
to this comment, the revision of the guidelines is a step in the right 
direction, but has the effect of creating two classes of accountability 
from the same government, because significantly larger dollar amounts 
would be required for the sentencing guidelines to match those of the 
U.S. Parole Commission.
    The Commission has compared the operation of its guidelines for 
theft, forgery, and fraud cases with those of the U.S. Sentencing 
Commission, as applied in actual practice. The conclusion is that the 
guideline ranges are, contrary to the public comment, roughly 
equivalent. This is because the parole guideline ranges are determined 
solely by reference to the dollar amount, whereas the sentencing 
guidelines begin with dollar amount but require upward adjustments for 
such typical aggravating factors (in large-scale white collar crimes) 
as ``organizer or leader'', multiple victims, multiple counts, and 
refusal to accept responsibility. Frauds that cause losses of $1 
million or more usually involve some degree of organizational 
leadership, multiplicity of schemes and victims, efforts to deny 
responsibility, etc., sufficient to produce several upward adjustments. 
In this manner, the total offense level produces a guideline range, in 
most cases, equal to or greater than the parole guidelines. For 
example, a conviction-offense fraud of $750,000 with upward adjustments 
reflecting persistent fraudulent investment schemes by an unrepentant 
first offender can produce a sentencing guideline range of 46-57 
months, which is greater than the corresponding parole guideline, even 
if the Parole Commission includes additional losses exceeding $1 
million (40-52 months).
    Accordingly, the Commission decided to adopt its original proposal 
to set a range of $1 million to $5 million for Category Six offenses, 
and to rate fraud offenses exceeding $5 million in Category Seven.
    The Commission intends that the practical effect of this guideline 
revision will be to preclude decisions above the Category Six 
guidelines when the relevant dollar amount does not exceed $5 million, 
except when non-monetary factors in aggravation (e.g., unusually 
vulnerable victims) warrant a decision above the guideline range in 
individual cases. The Category Seven rating will, for the most part, 
include cases in which above-guideline decisions would otherwise have 
been expected.
    Finally, the Commission decided to adopt conforming amendments to 
the other offense examples listed in the guidelines that are rated by 
dollar amount (i.e., property destruction, counterfeit currency, 
antitrust offenses, insider trading, tax evasion, and currency 
offenses).

Implementation

    The revised guidelines will be applied at any initial parole 
hearing or revocation hearing conducted on or after the effective date 
set forth above. The revised guideline will also be applied 
retroactively to prisoners who were given parole or reparole decisions 
prior to that effective date, at the next statutory interim hearing 
conducted pursuant to 28 CFR 2.14, provided that application of the 
revised guideline results in a decision more favorable to the prisoner. 
For example, at a statutory interim hearing, a prisoner who was 
continued above the Category Six guidelines for a $4 million fraud 
offense could argue for a release date within the Category Six 
guidelines if he can show that no other factor continues to justify a 
departure from the guideline range.

Executive Order 12866 and Regulatory Flexibility Statement

    The U.S. Parole Commission has determined that this proposed rule 
is not a significant regulatory action for the purposes of Executive 
Order 12866, and the proposed rule has, accordingly, 

[[Page 40271]]
not been reviewed by the Office of Management and Budget. The proposed 
rule, if adopted, will not have a significant economic impact upon a 
substantial number of small entities, within the meaning of the 
regulatory flexibility act, 5 U.S.C. 605(b).

List of Subjects in 28 CFR Part 2

    Administrative practice and procedure, probation and parole, 
prisoners.

The Final Rule

    Accordingly, the Parole Commission adopts the following amendments 
to 28 CFR part 2:

PART 2--[AMENDED]

    1. The authority citation for 28 CFR part 2 continues to read as 
follows:

    Authority: 18 U.S.C. 4203(a)(1) and 4204(a)(6).

    2. 28 CFR part 2, Sec. 2.20, Chapter 3, Subchapter A, Paragraph 303 
(Property Destruction Other Than as Listed Above) is amended by 
deleting subparagraph (b); redesignating subparagraphs (c) through (g) 
as subparagraphs (d) through (h) respectively; and by adding new 
subparagraphs (b) and (c) to read as follows:
* * * * *
    (b) if damage of more than $5,000,000 is caused, grade as 
Category Seven;
    (c) if damage of more than $1,000,000 but not more than 
$5,000,000 is caused, grade as Category Six;
* * * * *
    3. 28 CFR part 2, Sec. 2.20, Chapter 3, Subchapter D, Paragraph 331 
(Theft, Forgery, Fraud, Trafficking in Stolen Property, Interstate 
Transportation of Stolen Property, Receiving Stolen Property,* 
Embezzlement, and Related Offenses) is amended to delete subparagraph 
(a); to redesignate subparagraphs (b) through (g) as subparagraphs (c) 
through (h) respectively; and to add new subparagraphs (a) and (b) to 
read as follows:
* * * * *
    (a) If the value of the property * is more than $5,000,000, 
grade as Category Seven;
    (b) If the value of the property * is more than $1,000,000 but 
not more than $5,000,000, grade as Category Six;
* * * * *
    4. 28 CFR part 2, Sec. 2.20, Chapter 3, Subchapter E, Paragraph 341 
(Passing or Possession of Counterfeit Currency or Other Medium of 
Exchange*), is amended to delete subparagraph (a); to redesignate 
subparagraphs (b) through (e) as subparagraphs (c) through (f) 
respectively; and to add new subparagraphs (a) and (b) as follows:
* * * * *
    (a) If the face value of the currency or other medium of 
exchange is more than $5,000,000, grade as Category Seven;
    (b) If the face value of the currency or other medium of 
exchange is more than $1,000,000 but not more than $5,000,000, grade 
as Category Six;
* * * * *
    5. 28 CFR part 2, Sec. 2.20, Chapter 3, Subchapter F, Paragraph 363 
(Insider Trading), is amended to delete subparagraph (a); to 
redesignate subparagraphs (b) through (f) as subparagraphs (c) through 
(g) respectively; and to add new subparagraphs (a) and (b) to read as 
follows:
* * * * *
    (a) If the estimated economic impact is more than $5,000,000, 
grade as Category Seven;
    (b) If the estimated economic impact is more than $1,000,000 but 
not more than $5,000,000, grade as Category Six;
* * * * *
    6. 28 CFR part 2, Sec. 2.20, Chapter 5, Subchapter A, Paragraph 501 
(Tax Evasion), is amended to delete subparagraph (a); to redesignate 
subparagraphs (b) through (f) as subparagraphs (c) through (g) 
respectively; and to add new subparagraphs (a) and (b) as follows:
* * * * *
    (a) If the amount of tax evaded or evasion attempted is more 
than $5,000,000, grade as Category Seven;
    (b) If the amount of tax evaded or evasion attempted is more 
than $1,000,000 but not more than $5,000,000, grade as Category Six;
* * * * *
    7. 28 CFR part 2, Sec. 2.20, Chapter 11, Subchapter G, Paragraph 
1161 (Reports on Monetary Instrument Transactions), is amended to 
delete subparagraph (a); to redesignate subparagraphs (b) through (d) 
as subparagraphs (c) through (e) respectively; and to add new 
subparagraphs (a) and (b) to read as follows:
* * * * *
    (a) If extremely large scale (e.g., the estimated gross amount 
of currency involved is more than $5,000,000), grade as Category 
Seven;
    (b) If very large scale (e.g., the estimated gross amount of 
currency involved is more than $1,000,000 but not more than 
$5,000,000), grade as Category Six;
* * * * *
    Dated: July 26, 1995.
Edward F. Reilly, Jr.,
Chairman, U.S. Parole Commission.
[FR Doc. 95-19311 Filed 8-7-95; 8:45 am]
BILLING CODE 4410-01-P