News

WMHW Alert: Substantial Changes May be Coming to Key White-Collar Sentencing Guidelines

By John Keller, Hunter Pearl and Paige Shayne

Takeaways

• The United States Sentencing Commission has proposed changes to the federal sentencing guidelines, including a simplified loss calculation table, inflation adjustments for loss tiers, a redefinition of “sophisticated means,” formalized rewards for rehabilitation efforts, accounting for non-economic harm, and greater access to alternative sentencing.
• Although the federal guidelines are not mandatory, they influence judges’ decisions on recommended prison terms for people convicted of federal crimes, taking into account factors such as the nature of the offense and criminal history.
• If adopted, the amendments would generally result in shorter prison terms for most white-collar defendants and would expand eligibility for alternative forms of punishment.

Changes to Loss Calculations

When a defendant is convicted of an economic crime, the sentencing guidelines propose offense level enhancements based on the amount of monetary loss—which can be measured by actual loss, intended loss, or the perpetrator’s gain resulting from the crime.  These and other enhancements create a total offense level, which corresponds to a recommended prison sentence.  A greater monetary loss will generally correspond to a longer prison sentence.

Currently, the proposed offense level enhancement is determined by a loss table consisting of 16 tiers.  Each tier adds two points to the offense level.  For example, if a defendant is found to have created $250,000–$549,999 of economic loss, he or she would receive a 12-point enhancement, but if that defendant were found to have created $550,000–$1,499,999 in economic loss, he or she would receive a 14-point enhancement.

The proposed amendments would simplify the loss table by cutting the number of loss tiers in half.  If a defendant’s loss amount falls into an eliminated tier, their case would move into the next lower loss category, which means fewer added points and, therefore, a shorter guideline sentence.  To take the previous example, any loss between $250,000 and $1,499,999 would receive only a 12-point enhancement.

Inflation Adjustment

The Commission also proposed updating the loss table for inflation, which would be the first inflation adjustment since 2015.  Inflation has increased significantly in the last decade, so this adjustment would bring many defendants into a lower loss tier and thus a shorter recommended prison term.

The Commission is also considering an automatic mechanism to make regular inflation adjustments in the future, such as a modification that takes effect every year or tying the loss table’s monetary values to economic indicators such as buying power.

Sophisticated Means

The Commission is also considering changing the “sophisticated means,” enhancement, which refers to especially complex or intricate conduct taken to commit or conceal a crime, like using fictitious entities or offshore accounts to conceal transactions.  Critics have long argued that sophisticated means is applied arbitrarily, creating sentencing enhancements for certain economic crimes when defendants use methods that, due to technological progress, are increasingly typical.

One potential amendment would narrow the definition of “sophisticated means” to “committing or concealing an offense with a greater level of complexity than typical for an offense of that nature,” excluding defendants that use modern but commonplace technology.  Another proposal would tackle the arbitrariness in the opposite direction, expanding the scope of the sophisticated means enhancement—which is currently limited to a select number of economic crimes, such as fraud and money laundering—to all crimes in the guidelines.

Rehabilitation

The Commission is evaluating ways to reward defendants who show meaningful and voluntary rehabilitative efforts before sentencing, such as paying restitution, doing volunteer work, seeking substance abuse or gambling treatment, and completing educational programs.  Currently, the guidelines do not factor pre-sentencing rehabilitation into the recommendations, although some judges will recognize such efforts through sentencing variances.

One proposal would simply formalize the rewards for defendants that voluntarily show rehabilitation efforts, recommending downward sentencing modifications based on a number of factors benefiting defendants, victims, and the community.  Another proposal, protecting against insincere efforts designed to affect sentencing, would reserve downward modifications for defendants showing a sustained commitment to rehabilitation that goes beyond typical actions.

Non-Economic Harm

Currently, the guidelines for economic crimes measure impact in terms of economic loss, reserving non-economic impact for judges’ determinations under 18 U.S.C. § 3553(a).  The Commission has proposed changes to the guidelines that would account for non-economic impact, both negative and positive.

One proposal would consider “physical harm, psychological harm, emotional trauma, harm to reputation or credit rating, and invasion of privacy interests.”  These sorts of harms are typically present in white-collar convictions and could result in longer prison sentences.

But the Commission is also considering factoring in non-economic mitigating circumstances, such as whether defendants were motivated by “an intimate or familial relationship,” were subject to threats, or were “unusually vulnerable” to persuasion due to mental or physical condition.  The guidelines may also consider whether defendants ceased the illegal conduct on their own or self-reported the conduct prior to the initiation of an investigation.

Alternative Sentencing

The guidelines may also increase the availability of alternative punishment options, including mixed sentences of probation or home confinement instead of, or as a partial offset to, prison terms.  The Commission is considering amending the sentencing table by significantly expanding zones B and C, which cover mixed sentences, all the way up to an offense level 29.  This would allow judges to provide mixed sentences to certain defendants who previously would have only been eligible for significant prison terms.

Conclusion

If adopted, the proposed amendments would have a substantial mitigating impact on the guidelines that most frequently drive white-collar sentences, providing additional options for advocacy for counsel.

The Commission accepted comments on the initial tranche of proposed amendments through February 10 and is accepting comments on the second tranche of amendments through March 18.  A public hearing on all the proposed amendments took place on February 17, and another public hearing will take place March 9.

The United States Sentencing Commission typically votes to formally adopt amendments to the federal sentencing guidelines by April of each year, with a deadline to submit approved changes to Congress by May 1. Approved changes would take effect on November 1, 2026.