[Federal Register Volume 60, Number 69 (Tuesday, April 11, 1995)]
[Proposed Rules]
[Pages 18379-18380]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-8913]



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DEPARTMENT OF JUSTICE
28 CFR Part 2


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

AGENCY: Parole Commission.

ACTION: Proposed rule.

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SUMMARY: The U.S. Parole Commission is proposing to establish 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 would be rated Category Seven. At the 
present time, the Category Six offense severity rating is reserved for 
all frauds exceeding $1 million. The proposed guideline revision is 
necessary because of the increased frequency of frauds involving losses 
in multiples of the $1 million threshold for Category Six, and the need 
for an appropriate benchmark to determine the point at which dollar 
amount losses are so excessive as to warrant a decision above the 
Category Six guidelines. The figure of $5 million will provide that 
benchmark.

DATES: Comments must be received by June 12, 1995.

ADDRESSES: Send comments to Office of General Counsel, U.S. Parole 
Commission, 5550 Friendship Blvd., Chevy Chase, Maryland 20815. For 
further information contact: Pamela A. Posch, Office of General 
Counsel. Telephone (301) 492-5959.

SUPPLEMENTARY INFORMATION: As a result of the widespread criminal 
investigations into unlawful practices in the banking and savings and 
loan industries during the 1980's, the U.S. Parole Commission has seen 
a significant increase in prisoners serving sentences for frauds 
greatly exceeding the $1 million threshold established by the 
Commission in 1987 for Category Six offenses. (The guidelines at 28 CFR 
2.20 do not currently provide a fraud guideline higher than Category 
Six.) The Commission has typically responded to such cases by 
determining that, if the dollar loss caused by the fraud exceeded the 
$1 million threshold by significant multiples (e.g., a $15 million 
fraud), a decision above the Category Six guidelines is warranted.
    However, the guidelines have not provided a way for the Commission 
consistently to determine at what point a large-scale fraud is 
significant enough to warrant such a decision. Some frauds involving 
multiples of the $1 million threshold are deemed to be within the 
guidelines, and some are not. The situation has been complicated by the 
fact that plea agreements in large-scale fraud offenses often produce a 
sentence of five years (the maximum for one count of mail fraud), which 
requires release (with good time credits) at 39 months. Such sentences 
preclude the Commission from determining where a parole decision should 
be made in relation to the guideline range of 40-52 months that is 
applicable to the typical first offender who has committed a fraud 
offense involving more than $1 million in losses. This makes it 
difficult for the Commission to achieve a consistent practice that can 
inform its decision-making when the sentence is longer than five years.
    Accordingly, the Commission has decided to establish a dollar range 
of $1 million to $5 million for Category Six offenses, that will be 
followed whenever the sentence is long enough to permit such a 
decision. For fraud offenses exceeding $5 million, the offense will be 
rated Category Seven. Under this rating system, for example, a prisoner 
serving an 8-year sentence for a fraudulent investment scheme that 
caused losses of $2.4 million may expect the Commission to establish a 
release date toward the middle of the 40-52 month guideline range for 
Category Six offenses, if he is a first offender and there are no other 
aggravating or mitigating circumstances. [[Page 18380]] 
    Finally, it is important to emphasize that relevant factors not 
reflected by the dollar amount alone, such as unusually vulnerable 
victims, are always taken into account in reaching a final parole 
decision.

Implementation

    The proposed rule would be applied at any initial parole hearing, 
or revocation hearing, conducted on or after the effective date of the 
final rule adopted by the Commission, if the rule is applicable to the 
prisoner's case. The proposed rule would 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 28 CFR 2.14. For example, at such a statutory interim hearing, 
a prisoner who was continued above the Category Six guidelines for a $5 
million fraud offense, could argue for a release date within the 
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, 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.

    Accordingly, the U.S. Parole Commission proposes the following 
amendment to 28 CFR part 2:

The Proposed Amendment

    (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 D, Paragraph 
331, is proposed to be amended to require a Category Seven rating if 
the value of the property is more than $5,000,000, and to require a 
Category Six offense severity rating if the value of the property is 
more than $1,000,000 but not more than $5,000,000. All other dollar 
ranges and offense severity categories will remain as presently listed.

    Dated: March 31, 1995.
Edward F. Reilly, Jr.,
Chairman, U.S. Parole Commission.
[FR Doc. 95-8913 Filed 4-10-95; 8:45 am]
BILLING CODE 4410-01-P