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Seventh Circuit White Collar Litigation Update – July 2018

Fraud Loss Tables Upheld as Reasonable 
United States v. Moose, No. 16-3536 (June 27, 2018)

Defendant pleaded guilty to an investment fraud scheme.  As is typically the case, defendant’s guidelines sentence was primarily determined based on the calculated dollar “loss” to his victims.  What’s interesting about this case is not how that loss was calculated, but that defendant challenged the loss tables themselves.  He argued that the guidelines enhancements for fraud loss amounts are “inherently unreasonable.”  Defendant specifically challenged the “lack of any empirical data” to prove that the graduated enhancements under the loss tables actually deter white collar criminals.

However, as the Court held, deterrence is not the only, and perhaps not even the primary, goal of sentencing.  The retributive purposes of punishment are equally important and themselves support the guidelines’ graduated enhancements for loss.  Moreover, because the loss tables are rationally based on the Sentencing Commission’s “institutional experience,” they do not need “robust empirical support” to survive scrutiny.

NCAA Defeats Players’ Antitrust Challenge for “Year-in-Residency” Requirement
Deppe v. National Collegiate Athletic Association, No. 17-1711 (June 25, 2018)

When a Division I student-athlete wishes to transfer to another school, he can do so.  But for a year afterward, that student cannot also be an athlete.  The NCAA bars him from participating in his sport under what has been called the “year-in-residency” requirement.  This class action brought on behalf of Division I football players alleged an antitrust violation under Section 1 of the Sherman Act.  The players claimed that the residency requirement unreasonably restrained the ability of universities to compete for each other’s players.  

The complaint was dismissed on the pleadings, and the Court affirmed the dismissal on appeal.  The Court held that because the year-in-residency rule is an eligibility requirement, it is presumptively pro-competitive.  In particular, the Court found it important that without the rule, college athletes could effectively be traded (presumably, self-traded) year-to-year, or even in the middle of a season, which would “risk severing the athletic and academic aspects of college sports.”  Rules like the residency requirement, according to the Court, are designed to preserve the “amateur character of college athletics,” and thus don’t run afoul of the Sherman Act.

Cell Phone Location Warrant Requirement under Carpenter in not Retroactive
United States v. Thomas, No. 17-1002 (July 26, 2018)

The Supreme Court recently held in Carpenter v. United States, 137 S. Ct. 2206 (2018), that a warrant is required for the government to obtain a subscriber’s cell phone location data from his wireless carrier.  In Thomas, the government obtained the defendant’s historical location data without a warrant.  Thomas was tried and convicted prior to Carpenter, and his counsel never sought to suppress that evidence based on the lack of a warrant.  He nevertheless sought to assert the issue on appeal.

The Court rejected his belated challenge, finding no good cause existed for the failure to raise the issue before or during his trial.  The fact that Carpenter had not yet been decided by the Supreme Court, or that a circuit split existed on the question, did not constitute sufficient cause for his counsel’s failure to raise the issue earlier.  In reaching that decision, the Court also implicitly held that the Carpenter decision should not be applied retroactively.

Appellate Waiver in Plea Agreement Covers Restitution
United States v. Perillo, No. 17-3436 (July 30, 2018)

In exchange for the government’s concessions on charges and guidelines calculations, Perillo agreed as part of his guilty plea to waive his right to appeal his sentence and conviction under certain circumstances. The standard language in the Southern District of Indiana’s agreement provides that the defendant waives his “right to appeal the sentence” as long as he is sentenced within or below the advisory guideline range as determined by the district court. Notwithstanding that provision, defendant sought to appeal the amount of his restitution, arguing that restitution was not part of “the sentence” and was not explicitly referenced in the waiver.

The Court disagreed and dismissed the appeal. Because the defendant was not given an above-guideline sentence, the terms of the waiver precluded appeal of any aspect of the sentence, not just the term of incarceration. Restitution is a part of the sentence, so the fact that it was not specifically mentioned in the waiver did not matter.

This article was first published in the July 2018 issue of the Seventh Circuit White Collar Litigation Update on the 7th Circuit Bar Association’s website.

Loeb & Loeb partner Corey Rubenstein authors this monthly newsletter containing helpful summaries and practice pointers for key Seventh Circuit Court opinions involving civil and criminal white collar matters.