Judge Rakoff Pans Sentencing Guidelines, Grants Substantial Variance In Fraud Case
When he appeared before U.S. District Judge Jed Rakoff (S.D.N.Y.) for sentencing on June 14, 2017, Stefan Lumiere, a former analyst and portfolio manager at Visium Capital Management LP, was facing a 97-121-month range of imprisonment under the U.S. Sentencing Guidelines. The advisory range for Lumiere, who was found guilty by a jury for securities fraud and related crimes regarding to the overvaluation of a $480 million health care hedge fund, was largely driven by a loss amount calculated in the tens of millions of dollars.
Lumiere boldly requested a non-custodial sentence. In support of that outcome, Lumiere argued that he had earned no money beyond his $200,000 salary (relatively modest for the market, his position, and the industry) based on the performance of the fund, and thus had not benefited significantly from the conduct. He also noted that he had no role investor communications; accordingly, he had not made the misrepresentations regarding the fund’s value that were at the root of the scheme. Finally, he focused on his positive personal characteristics, including his extensive volunteer work and his dedication to his family. In that vein, Lumiere submitted more than 60 character letters from family, friends, and colleagues.
While Judge Rakoff declined to impose a non-custodial sentence, he varied sharply downward from the Guidelines range. He railed against the punitive nature of the Guidelines in general, and as applied to Lumiere. In this case, as in many, the range they produced bore no relationship to the statutory factors – such as the history and characteristics of the offender, the nature and circumstances of the offense, and the need for just punishment – that the Court was required to apply under 18 U.S.C. § 3553(a). After evaluating all of the evidence in light of the § 3553(a) factors, Judge Rakoff sentenced Lumiere to 15 months’ imprisonment and a $1 million fine.
The outcome demonstrates that effective sentencing advocacy can make a substantial impact in federal court. But perhaps even more important is drawing the right audience, a judge who is willing to approach the U.S. Sentencing Guidelines with rigorous analysis and healthy skepticism in determining whether they produce a just result in the instant case.
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