While Texas was being pelted by snow and freezing temperatures and rolling blackouts, I decided to catch up on a little light reading related to tax crimes. Who doesn’t like good reading material when the house is pitch black and all you have is the glow from your phone’s display to light up the page? Nevertheless, I came across two recent court decisions—one in Hawaii, one in Ohio—whereby each defendant was serving prison time related to tax crimes and each defendant filed a motion for compassionate release under Section 3582(c)(1)(A) and each defendant invoked the COVID-19 pandemic. Two cases with similar backgrounds/fact situations are always interesting for comparison purposes. In this case, one court granted the defendant’s motion, while the other court denied the defendant’s motion.
Modification of Prison Terms, Generally
With respect to federal crimes, courts should impose sentences that are sufficient (but not greater than necessary) to reflect the seriousness of the offense, to promote respect for the law, and to provide just punishment for the offense.[1] However, under specific circumstances, courts may modify prison sentences as follows:
Modification of an Imposed Term of Imprisonment.—The court may not modify a term of imprisonment once it has been imposed except that—
(1) in any case—
(A) the court, upon motion of the Director of the Bureau of Prisons, or upon motion of the defendant after the defendant has fully exhausted all administrative rights to appeal a failure of the Bureau of Prisons to bring a motion on the defendant’s behalf or the lapse of 30 days from the receipt of such a request by the warden of the defendant’s facility, whichever is earlier, may reduce the term of imprisonment (and may impose a term of probation or supervised release with or without conditions that does not exceed the unserved portion of the original term of imprisonment), after considering the factors set forth in section 3553(a) to the extent that they are applicable, if it finds that—’
(i) extraordinary and compelling reasons warrant such a reduction; or
(ii) the defendant is at least 70 years of age, has served at least 30 years in prison, pursuant to a sentence imposed under section 3559(c), for the offense or offenses for which the defendant is currently imprisoned, and a determination has been made by the Director of the Bureau of Prisons that the defendant is not a danger to the safety of any other person or the community, as provided under section 3142(g);
and that such a reduction is consistent with applicable policy statements issued by the Sentencing Commission; and
(B) the court may modify an imposed term of imprisonment to the extent otherwise expressly permitted by statute or by Rule 35 of the Federal Rules of Criminal Procedure; and
(2) in the case of a defendant who has been sentenced to a term of imprisonment based on a sentencing range that has subsequently been lowered by the Sentencing Commission pursuant to 28 U.S.C. 994(o), upon motion of the defendant or the Director of the Bureau of Prisons, or on its own motion, the court may reduce the term of imprisonment, after considering the factors set forth in section 3553(a) to the extent that they are applicable, if such a reduction is consistent with applicable policy statements issued by the Sentencing Commission.[2]
Further, with respect to the situations described in subsections (c)(1)(A) and (c)(2), courts should consider various factors in modifying a defendant’s prison sentence. Those factors include, in part: the nature of the offense, the history and characteristics of the defendant, the protection of the public from further crimes of the defendant, the kinds of sentences available, and the need to avoid unwarranted sentence disparities among defendants with similar records who have been found guilty of similar conduct.[3]
In the following two cases, the defendants were incarcerated and serving prison sentences related to certain tax crimes. Each defendant moved the respective court (here, the District Court of Hawaii and the District Court of Ohio [Southern District]) for compassionate release under Section 3582(c)(1)(A). Moreover, each defendant invoked the COVID-19 pandemic as part of their respective motions. However, while the District Court of Hawaii granted the defendant’s motion, the District Court of Ohio [Southern District] denied the other defendant’s motion.
United States v. Higa[4]
Defendant Higa was found guilty of conspiracy to commit tax fraud and aiding and assisting in the preparation of a false tax return. On July 1, 2019, Defendant Higa was sentenced, in part, to 40 months imprisonment for the first charge and 36 months imprisonment for the other charge, to run concurrently. On December 4, 2020, Defendant Higa filed his motion to reduce his sentence (compassionate release), citing the COVID-19 pandemic. The district court granted Defendant Higa’s motion based, in part, on Mr. Higa’s medical conditions:
Defendant Higa states he has stage IV kidney cancer that has metastasized in his lungs. The Defendant also suffers from hypertension, atrial fibrillation, anemia, and high cholesterol. The CDC identified cancer as a medical condition that places an individual, regardless of age, at increased risk of severe illness from COVID-19. The CDC also identified hypertension as a medical condition that might place an individual at an increased risk for severe illness should they contract COVID-19.
. . .
Defendant is experiencing deteriorating physical health and is suffering from serious conditions and an advanced illness. The Court finds that Defendant Higa’s medical conditions are a compelling and extraordinary reason for compassionate release.
. . .
Defendant Higa does not appear to be a danger to the community. His release is supported by review of the Section 3553(a) factors.[5]
United States v. McGrath[6]
Defendant McGrath pleaded guilty to one count of willful failure to pay over tax and one count of healthcare fraud. On April 26, 2018, Defendant McGrath was sentenced, in part, to 36 months imprisonment. After beginning her prison sentence, Defendant McGrath escaped from prison, leading to a charge of one count of attempting to escape from custody. She pleaded guilty to this count, resulting in a prison sentence of 12 months, to run concurrently with her 36-month prison term. On March 31, 2020, Defendant McGrath filed a motion for compassionate release due to the COVID-19 pandemic, which the district court denied. Later, Defendant McGrath filed another motion for compassionate release due to the COVID-19 pandemic. The district court denied her motion, in part, for failing to meet the requirements of Section 3582(c)(1)(A):
Before the Court can consider a motion for compassionate release, a defendant must ordinarily satisfy the administrative requirements of § 3582(c)(1)(A). . . . Defendant has not presented any records showing that she submitted a request to the warden to grant her a release prior to [sic] brining this motion. She has attached the warden’s denial of her request for reduction in sentence from April 28, 2020 that corresponded with her first motion for compassionate release, but there is no indication that Defendant submitted a request to the warden to reduce her sentence prior to filing this subsequent motion.
. . .
Even if Defendant satisfied the statute’s administrative requirements, she has not shown extraordinary and compelling reasons justifying her release.
. . .
Defendant engaged in a serious fraud offense and attempted to escape from her duly imposed sentence. An early release therefore would not “promote respect for the law;” “provide just punishment for the offense;” or “afford adequate deterrence to criminal conduct[.]”[7]
Conclusion
Reviewing these two somewhat similar cases, the decisions rendered by the district courts are not that surprising. Based on the facts, Defendant Higa has a severe form of cancer, which subjects him to increased risks related to COVID-19. Those circumstances satisfy the “extraordinary and compelling” reason requirement of Section 3582(c)(1)(A)—a requirement that gives the court full discretion in determining its meaning. In contrast, Defendant McGrath did not overcome the administrative requirement of Section 3582(c)(1)(A) by failing to “exhaust[] all administrative rights to appeal.” Further, the district court noted that even if the defendant were able to satisfy the administrative requirement and “extraordinary and compelling” reason requirement, she would not satisfy a review of the factors outlined in Section 3553(a).
These cases are interesting in another sense. Almost one year later after the initial waves of the COVID-19 pandemic, we are seeing courtroom parties use the COVID-19 pandemic as a reason, excuse, special circumstance, and/or basis for various pleadings and motions. It is interesting to see how courts are dispensing with this issue. With these two cases, it seems apparent that a simple assertion of the pandemic, without support or evidence, will not win the day.
Criminal Tax Defense Attorneys
Freeman Law represents companies, executives, and individuals in regulatory and white-collar government investigations and prosecutions. We employ a proactive approach to defend vigorously and strategically position our clients. White-collar matters often involve parallel regulatory and civil proceedings. Freeman Law can navigate the complexities and collateral consequences of multiple proceedings. And when it comes to the court of public opinion, we employ ethical and strategic tactics to manage publicity. Schedule a consultation or call (214) 984-3000 to discuss your allegations and investigations concerns.
[1] See 18 U.S.C. § 3553(a).
[2] See 18 U.S.C. § 3582(c).
[3] See generally 18 U.S.C. § 3553(a).
[4] United States v. Higa, No. CR 17-00487 HG-02, 2021 WL 400475, at *1 (D. Haw. Feb. 4, 2021).
[5] Id. at *4-5 (internal citations omitted). It should also be noted that the Government conceded that the defendant’s stage IV renal cancer is a medical condition that meets the “compelling and extraordinary reason” requirement of Section 3582(c)(1)(A). Id.
[6] United States v. McGrath, No. 2:17-CR-125, 2021 WL 363548, at *1 (S.D. Ohio Feb. 3, 2021).
[7] Id. at *3-4 (internal citations omitted).
