Monday, May 07, 2012

Sentence for Executive’s Bid Rigging, Price Fixing Upheld

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The U.S. Court of Appeals in St. Louis has upheld a 48-month prison sentence imposed on a former ready-mix concrete executive who pleaded guilty to participating in separate bid rigging and price fixing conspiracies with three different companies in northern Iowa.

The prison sentence was not substantively unreasonable, even though it was well above the U.S. Sentencing Guidelines range of 21 to 27 months. A fine of nearly $830,000 also was upheld.

The appellate court concluded that the district court considered appropriate factors in varying from the guidelines and adequately explained its prison sentence and fine.

The district court gave two permissible reasons for varying from the guidelines: (1) a policy disagreement with the antitrust guidelines and (2) the defendant’s lack of remorse. The district court believed that, while the antitrust guidelines and the fraud guidelines attacked a similar societal harm, the antitrust guidelines were too lenient. The district court gave cogent reasons for its policy disagreement by comparing the guidelines for antitrust offenses to the guidelines for fraud, and then using the alternate calculation under the fraud guidelines.

The district court also tied its policy disagreement to the specific facts involved in the defendant’s case, the appellate court explained. According to the district court, the primary reason that the U.S. Sentencing Commission gave for increasing the levels of antitrust violations less drastically than levels of fraud cases depending on the relative amount of loss or volume of commerce involved was that, with respect to antitrust violations, the level of markup may tend to decline with the volume of commerce involved. However, the defendant’s prices for concrete did not decrease as the volume of sales increased.

The appellate court rejected at the outset the defendant’s contention that the district court abused its discretion by not accepting his initial binding plea agreement under Rule 11(c)(1)(C) of the Federal Rules of Criminal Procedure. The binding agreement, if accepted by the district court, called for the defendant to serve a sentence of 19 months and pay a fine of $100,000. However, the district court never rejected the earlier agreement. It merely deferred the decision until after reviewing the presentence report.

The defendant chose to change his plea agreement after the district court said that there was “a less than 10 percent chance” that it would accept the plea.

The new plea agreement did not preserve the defendant’s right to challenge the district court’s nonacceptance of the binding pleas agreement, and the defendant did not claim that his decision to enter the nonbinding plea agreement was unknowing or involuntary. Nor did the defendant challenge the factual basis for the plea.

The defendant’s decision to enter a nonbinding plea agreement under Rule 11 (c)(1)(b) waived the right to complain on appeal about the district court’s nonacceptance of the earlier binding plea agreement entered into with the Justice Department.

A dissent argued that the district court lacked authority to set aside the guidelines sentencing range for antitrust offenses in favor or the alternate calculation using the guidelines for offenders convicted of fraud.

The decision is U.S. v. VandeBrake, 2012-1 Trade Cases ¶77,880.

No comments: