For defense lawyers focused on the merits, the intricacies of calculating the U.S. Sentencing Guidelines’ offense level are often a complicated afterthought, put off, like tax returns, as long as possible before the day of reckoning. But given the dominant impact of the loss amount in calculating sentences for white-collar defendants, particularly where loss is measured by the magnitude of a stock price drop, early analysis may provide some important strategic benefits.

While now only advisory, the Sentencing Guidelines still carry significant weight. Courts are required to calculate them correctly prior to sentencing, and according to the U.S. Sentencing Commission, more than 80 percent of sentences still fall within the guidelines range or are otherwise government-sponsored (e.g., USSG §5K1.1). For white-collar defendants, the guidelines present a number of potential enhancements, but by far the most significant is the amount of loss, which can add decades to a sentence. See USSG §2B1.1 (2010). For an officer or director, a loss of $20 million can double the guidelines calculation, compared to a $2 million loss for the same conduct, from 70 to 87 months’ imprisonment to 135 to 168. With a $100 million loss, that same defendant would be subject to a calculation of 210 to 262 months. On the other hand, if the government cannot meet its burden of proving loss, he could be eligible for 8 to 14 months of home confinement.

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