$1734. Executing a Fraudulent Scheme " (a) Offense.--A person is guilty of an offense if "(1) having devised a scheme or artifice "(A) to defraud; or - - "(B) to obtain property of another by means of a false or fraudulent pretense, representation, or promise; he engages in conduct with intent to execute such scheme or artifice; or "(2) he transfers, or receives anything of value for, a right to participate in a pyramid sales scheme, or receives compensation from a pyramid sales scheme. "(b) Definitions.--As used in this section "(1) 'anything of value' does not include "(A) payment made for sales demonstration equipment; (B) material furnished on a non-profit basis for use in making sales and not for resale; "(C) time or effort spent in pursuit of sales or recruiting activities; or "(D) payment having an aggregate value of $100 or less when calculated on an annual basis; "(2) 'compensation' includes payment based on a sale or distribution made to a person who is a participant in a pyramid sales scheme or who, upon such payment, obtains the right to become a participant, but does not include payment based on a retail sale to an ultimate consumer; "(3) 'conduct' includes a failure to state a fact necessary to avoid making a statement misleading; misleading or, if the offense involves the solicitation of property on behalf of another person, the failure to disclose the true name and identity of the person; "(4) 'pyramid sales scheme' means a plan or operation, whether or not involving the sale or distribution of property, that includes a means of increasing participation in the plan or operation under which a participant, upon payment of anything of value, obtains a right to receive compensation- "(A) for his introduction of another person into participation in such plan or operation; or "(B) for such other person's introduction of another person into participation in such plan or operation; and "(5) 'sale or distribution' includes a lease, rental, or consignment. "(c) Defense Precluded. --It is not a defense to a prosecution under subsection (a) (2) that "(1) the plan or operation limits the number of persons who may participate, or imposes conditions with respect to the eligibility of participants; or "(2) upon payment of anything of value a participant obtains, in addition to the right to receive compensation as described in subsection (b) (2), any other property. At the July, 1980, meeting of the Judicial Conference of the Eighth Circuit, the judges of the circuit engaged in extensive discussion of the sentencing provisions of S. 1722 and H.R. 6915, the pending Senate and House bills that would reform the federal criminal code. Several aspects of the sentencing provisions have caused considerable concern among our district and circuit judges. It is not practical in this letter, however, to go into detail about each of the problem areas. They have been pointed out to the Senate and House Judiciary Committees, and alternative provisions have been suggested, by judges who have testified at the several hearings that have been held on the subject of criminal code reform. Now that the bills have passed through the hearing stage and are ready for floor debate, we offer these observations, all of which have been previously voiced to both Judiciary Committees: (1) The sentencing provisions of the bills call for a substantial reallocation of the sentencing function. Under the present state of the law, if an offender is to be incarcerated, the amount of time he will serve in prison will be determined by the prosecutor, who, by choosing the statute under which the offender is to be charged, determines the maximum prison sentence that can be imposed; the sentencing judge, who determines the maximum time to be served and sets the earliest parole eligibility date; and the Parole Commission, which determines at what moment, between the earliest statutory parole eligibility date and the maximum term set by the sentencing judge, the offender is to be released. S. 1722 would abolish the Parole Commission and, through the utilization of Sentencing Commission Guidelines, would substantially curtail the sentencing options now available to the sentencing judge. Consequently, the discretion now exercised by the Parole Commission and much of that now exercised by sentencing judges would be transferred to the prosecutor. Lo The prosecutor already plays a considerable role in the decision as to how long an offender may be incarcerated; the prosecutor selects a statute on which to base the charge and, thus, establishes the maximum possible term of imprisonment, and through the plea bargaining process, he may fashion the sentence actually handed down. Under S. 1722, the prosecutor, having preindictment notice of the precise sentencing guidelines that would apply to the putative defendant would control the sentencing judge's exercise of the very narrow discretion alloted him under the bill, could be confident of obtaining a particular sentence. He would simply choose a charge that would produce the desired sentence. We question the wisdom of placing that kind of discretion in the typical Assistant United States Attorney whether or not his exercise of that discretion is supervised personally by the United States Attorney. (2) The perceived inequities in the treatment of those convicted of street crimes, as compared with white collar offenses, will not, in our view, be corrected by either of the proposed bills. Nor will there be any alleviation of the racial inequities thought to exist under present law. Given the reallocation of the sentencing function so that its exercise rests principally with the prosecutor and given criteria, especially under S. 1722, to be utilized in "categorizing" offenses and offenders, we think the probabilities are that fewer white collar offenders and more of the disadvantaged will go to prison. Recently, the General Accounting Office made a study of prosecutorial disparity as it relates to sentencing disparity and an in-depth study of the Parole Commission is now underway. The results of this latest study considered in the light of the earlier study and the problem posed by the two criminal code revision bills, will no doubt warrant the consideration of new alternatives in sentencing reform. With this in mind, the judges of the Eighth Circuit, by a vote of 45-to-1, urged that passage of the sentencing provisions of S. 1722 and H.R. 6915 be deferred. Sincerely yours, Donald P. Lay. |