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Timing is Everything: Supreme Court vacates bank fraud sentence under Ex Post Facto Clause
Posted in Litigation

When Marvin Peugh was sentenced for his part in two bank fraud schemes, he argued that under the Federal Sentencing Guidelines in effect at the time of the crime, the proper sentence was no more than 30 to 37 months in prison. The District Court, however, imposed a sentence of 70 months, the recommended sentence under the Federal Sentencing Guidelines in effect at the time of sentencing.

Timing of the crime

Peugh’s bank fraud scheme was limited to 1999 and 2000 and involved making false representations to banks in order to obtain loans and conduct a check kiting scheme. He was tried in the Northern District of Illinois, and a jury found him guilty of five counts of bank fraud. Evidence that the wheels of justice do turn slowly, the indictment was returned in 2008 and the jury returned its verdict in 2010.

At sentencing, the District Court relied upon the 2009 version of the Sentencing Guidelines, the version that was then in effect. The problem? The 2009 Sentencing Guidelines recommended a sentence between 70 and 87 months. In contrast, the 1998 Sentencing Guidelines, which were in effect at the time of the crime, called for a sentence range between 30 and 37 months. Between 1999 and 2009, the Sentencing Commission had made substantial changes to the Guidelines related to bank fraud, which resulted in a significantly longer sentence under the 2009 Guidelines than would have been recommended under the 1999 Guidelines.

The Ex Post Facto Clause

Peugh appealed the sentence to the Court of Appeals for the Seventh Circuit, claiming the District Court’s use of the 2009 Guidelines violated the Ex Post Facto Clause of the U.S. Constitution. In a nutshell, Peugh claimed that the 2009 Sentencing Guidelines, when applied to his crimes, qualified as a “law that change[d] the punishment and inflict[ed] greater punishment, than the law annexed to the crime, when committed,” in violation of the Ex Post Facto Clause. The Court of Appeals disagreed with Peugh and affirmed the sentence of 70 months.

However, in a decision authored by Justice Sotomayor, and joined by Justice Ginsburg, Breyer and Kagan – and in part by Justice Kennedy – the Supreme Court sided with Peugh. Justice Sotomayor explained that the Ex Post Facto Clause was intended to ensure that “individuals have fair warning of applicable laws and guards against vindictive legislative action.” And that is exactly the issue at the center of Peugh’s case. By applying the 2009 Guidelines, instead of the 1999 Guidelines, the District Court imposed a much greater punishment that what would have been imposed if the District Court had applied the Guidelines in effect at the time of the crime.

On June 10, 2013, the Supreme Court vacated Peugh’s sentence and remanded the case, directing the District Court to impose a sentence consistent with the 1999 Sentencing Guidelines.

To learn more about Christie A. Moore and her practice, visit her profile.

  • Partner

    Christie practices in the area of white collar crime defense and complex commercial litigation, representing clients in health care, antitrust, securities, intellectual properties, RICO, and False Claims Act matters. She has ...

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