• Corporate Probation -- What Happens After the Plea
  • February 10, 2004 | Author: Shawn M. Wright
  • Law Firm: Blank Rome LLP - Washington Office
  • In the days leading up to a plea agreement, attorneys for both the government and the defendant spend many hours working through the details of the fine, the language of the charging document and statement of facts and even whether, and what, statements will be made to the press. Since the effective date of Chapter 81 of the United States Sentencing Guidelines, courts are required to place the organizational defendant on probation if one of eight factors, set forth at U.S.S.C. § 8D1.1, exist. When the organizational defendant is pleading to an environmental crime, probation is often mandated if there is a finding that the organization has 50 or more employees and "does not have an effective program to prevent and detect violations of law." U.S.S.G. §8D1.1(a)3.

    An organizational defendant is sentenced to a term of probation pursuant to 18 USC § 3561. The specific terms that are set forth in § 3561(b) are restated at U.S.S.G. § 8D1.3. Under § 8D1.3 there are three listed conditions of probation for organizational defendants:

    • Pursuant to 18 U.S.C. § 3563(a)(1), any sentence of probation shall include the condition that the organization not commit another federal, state, or local crime during the term of probation.2

    • Pursuant to 18 U.S.C. § 3563(a)(2), if a sentence of probation is imposed for a felony, the court shall impose as a condition of probation at least one of the following: (1) restitution, (2) notice to victims of the offense pursuant to 18 US.C. § 3555, or (3) an order requiring the organization to reside, or refrain from residing, in a specified place or area, unless the court finds on the record that extraordinary circumstances exist that would make such condition plainly unreasonable, in which event the court shall impose one or more other conditions set forth in 18 U.S.C. § 3563(b). ...

    • The court may impose other conditions that (1) are reasonably related to the nature and circumstances of the offense or the history and characteristics of the organization; and (2) involve only such deprivations of liberty or property as are necessary to effect the purposes of sentencing.

    Courts are authorized to provide additional conditions of probation and additional Recommended Conditions are set forth at U.S.S.G. §8D1. Typically, in an environmental crime case this section is used as the basis for requiring the development and implementation of a comprehensive environmental compliance plan. Depending upon the wording of the terms and conditions of probation, the failure to meet deadlines set in the compliance plan can expose the defendant to charges that it has violated probation. Great care must be taken when drafting these compliance plans to ensure that both the substantive commitments and deadlines are reasonable and achievable from the client's perspective.

    These are not the only conditions of probation that can be imposed. In some courts, the judge directs the terms and conditions to include standard conditions that are typical when sentencing an individual defendant. One such condition states that the defendant "shall not associate with any person engaged in criminal activity and shall not associate with any person convicted of a felony unless granted permission to do so by the probation officer." This can lead to confusion, and additional litigation, if all parties don't agree as to the scope and impact of these conditions. For example, in one situation the probation officer believed that a condition prohibiting a defendant organization from associating with any person engaged in criminal activities meant that the defendant organization could not do business with any other corporation that had been convicted of a felony. Therefore, it is critical that prior to entry of the plea that all the conditions of probation are reviewed and discussed with the probation office, prosecutor and, if necessary, the court, to avoid problems after the entry of the plea.

    During the course of probation there may be occasions when the probation officer or the prosecutors feel that the organizational defendant has, in fact, violated a condition of probation. The court may revoke a defendant's probation pursuant to 18 U.S.C. § 3565 if it finds the defendant violated a condition of probation any time prior to the expiration of the termination of the probation term.

    However, before the court may exercise this power, the defendant is entitled to a revocation hearing pursuant to Rule 32.1 of the Federal Rules of Criminal Procedure. As a threshold matter, the court must find that there has been a violation of an express or clearly implied condition of probation. See, Douglas v. Bruder, 93 S.Ct. 2199 (1973). The factors the court must consider in evaluating whether to revoke a defendant's probation are set forth in 18 U.S.C. § 3553(a).

    Since the decision to revoke probation lies in the discretion of the court, the defendant must be given the opportunity to show not only that he did not violate the conditions, but also that there was justifiable excuse for any violation or that revocation is not the appropriate disposition. Black v. Romano, 471 U.S. 606. 611 (1985). Ordinarily probation will not be revoked if the defendant proves that his failure to comply was not willful, but rather resulted from factors beyond his control and through no fault of his own. A willful violation, however, is not always required for revocation. Bearden v. Georgia, 103 S.Ct. 2064 (1983).

    Rule 32.1 of the Federal Rules of Criminal Procedure governs probation revocation hearings, which usually take place before the sentencing judge, and are not formal trials or even considered criminal prosecutions. Rule 32.1 requires first that the defendant receive written notice of both the alleged violation and the right to representation by counsel. Written notice of the alleged violations must be served "sufficiently in advance of the scheduled court proceeding, so that the defendant has a reasonable opportunity to prepare." United States v. Sanchez, 225 F. 3d 172, 175 (2d. Cir. 2000). The government has the burden of persuasion, and must show by a preponderance of the evidence that the defendant willfully violated conditions of probation. Morishita v. Myers, 702 F. 2d 207, 210 (10th Cir. 1983). Note that many jurisdictions, including the First, Second, Third, Ninth, and Eleventh Circuits, allow revocation of probation when the court is "reasonably satisfied" that the violation has occurred. See, United States v. Taylor, 931 F. 2d 842 (11th Cir. 1991); United States v. O'Quinn, 689 F.2d 1359 (11th Cir. 1982) (per curiam) (district court need only be "reasonably satisfied" defendant violated conditions of probation); see also, United States v. Czajak, 909 F.2d 20 (1st Cir. 1990); United States v. Lettieri, 910 F.2d 1067 (2d Cir. 1990); United States v. Gordan, 961 F.2d 426 (3d Cir. 1992); United States v. Guadarrama, 742 F.2d 487 (9th Cir. 1984).

    The revocation hearing process begins with the government presenting evidence of the alleged violation, usually through one witness, the probation officer. The probation officer may disclose to both sides and the court all evidence supporting revocation well in advance of the revocation hearing. Fed. R. Crim. P. 32.1 (a)(2)(B). However, the government is not precluded from presenting additional witnesses3 or other forms of evidence, because the Rules of Evidence do not apply. Additionally, the defendant is only entitled to limited constitutional protections. For example, most hearsay evidence is admissible, there is no right to a jury, double jeopardy does not attach, and Fourth and Fifth Amendment and Miranda protections do not fully apply. Due process protections do apply and require that the revocation hearing be conducted according to the principles of fundamental fairness. See, Minnesota v. Murphy, 465 U.S. 420, 435 n. 7 (1984).

    Since the Rules of Evidence do not apply, the revocation hearing process is flexible enough that most courts will consider almost any evidence, including letters, affidavits and other material not usually admissible in a normal adversarial proceeding. Fed. R. Evid. 1101 (d)(3). The defendant then has the opportunity to confront and question any adverse witnesses. But the defendant does not have to specifically request the right to confront adverse witnesses, and the court may not limit the opportunity to question the witnesses against him. Fed.R.Crim.P. 32.1(a)(2)(D). The defendant also has the right to present evidence, through documents and live testimony4 .

    If, after considering the evidence presented and the relevant legal standard, the court finds that there has been a violation of probation, the court has the following options:

    • continue the defendant on probation, with or without extending the term;

    • restrict, modify or enlarge the conditions of probation; or

    • revoke the sentence of probation and re-sentence the organization.

    U.S. Sentencing Guidelines Manual § 8D1.5 (2002).

    Additional discretionary conditions of probation may only be imposed if the condition is reasonably related to the purposes of sentencing set forth in 18 U.S.C. 3553. U.S. v. Stafford, 983 F. 2d 25, 28 (5th Cir. 1993); U.S. v. Lorenzini, 71 F.3d 1489, 1492 (9th Cir. 1995). A discretionary condition may "only involve such deprivations of liberty or property as are reasonably necessary to accomplish the purposes of sentencing." Stafford, 983 F.2d at 28; Lorenzini, 71 F3d at 1492 (citing 18 U.S.C. 3563(b)).

    One simple way that a court can penalize and organizational defendant is by imposing an additional monetary fine. However, if, at the time of sentencing, the defendant organization paid the maximum fine, this option is not available. The government may request that the court order the payment of money and characterize it as a "community service" payment. However, pursuant to U.S.S.C. 8B1.3, community service may be ordered as a term of probation for an organization only "where such community service is reasonably designed to repair the harm caused by the offense." Unless a charitable organization has suffered actual damages from the acts of a corporate defendant, it is not entitled to receive monies. U.S. v. Missouri Valley Construction Company, 741 F.2d 1542 (8th Cir. 1984). The imposition of a monetary penalty, even if labeled "community service," would be tantamount to the imposition of an additional fine unless there is an actual connection to the organization receiving the funds as a result of the probation violation. If the defendant paid the maximum fine at the time of its original sentencing, no additional monetary penalty can be imposed for a probation violation.

    Similarly, if the maximum probationary period of five years was originally imposed, there is no statutory authority for a court to extend the probationary period beyond the statutory maximum period of five years. See 18 U.S.C. § 3564 (a court may extend probation "if less than the maximum authorized term was previously imposed, at any time prior to the expiration or termination of the probation.").

    There is one significant hammer that the courts can use if it is determined that the defendant has engaged in repeated and serious violations of conditions of probation -- namely the appointment of a master or trustee. See U.S.S.G. §8D1.5, Application Note. However, this is a very extreme requirement and the government would need to establish that not only was this discretionary condition necessary to achieve the purposes of sentencing but that it also did not unreasonably deprive the defendant of liberty or property . Stafford, 983 F.2d at 28. To date, there have been no reported decisions where this provision has been utilized in the context of probation revocation.

    Organizational probation is still a relatively new and developing area of the law. Although the U.S.S.G provide very general guideposts, these are subject to interpretation and there is very little case law to guide the practitioner or the courts. Given the contentiousness that often leads up to an organizational plea, it is not surprising that the government and the defense frequently will not agree on how these terms and conditions should be interpreted and applied. The challenges and issues that arise, particularly when a defendant's business operations involve complex regulatory requirements, will exist throughout the entire term of probation.

    1The effective date of Chapter 8 was November 1, 1991.
    2Note that a criminal conviction is not necessary before a court could find the defendant guilty of violating its probation.
    3Rule 26.2 (a) - (d) and (f) applies at a hearing under this Rule. If a party fails to comply with a Rule 26.2 order to produce a witness's statement, the court must not consider the witness's testimony. A witness statement must be produced only if the witness testifies.
    4The government is not precluded from calling the defendant as its witness.