Challenging Sentencing Enhancements in Federal Counterfeiting Cases

Challenging Sentencing Enhancements in Federal Counterfeiting Cases

Counterfeiting cases are on the rise in federal courts across the country. While counterfeiting often seems like a victimless crime, it can have serious consequences for businesses, consumers, and the economy. When defendants are convicted of federal counterfeiting crimes, they may face severe sentencing enhancements that can add years or even decades to their prison terms.

Many federal counterfeiting statutes carry mandatory minimum sentences. For example, 18 U.S.C. § 471 sets a mandatory minimum sentence of 15 years for counterfeiting U.S. currency. Other statutes, like 18 U.S.C. § 2320 for trafficking in counterfeit goods, have tiered mandatory minimums based on the retail value of the infringing items and number of prior convictions. The penalties quickly escalate into decades-long sentences.

In addition to mandatory minimums, the U.S. Sentencing Guidelines provide sentencing enhancements that can drastically increase sentences in counterfeiting cases. Section 2B5.1 of the Guidelines sets the base offense level for counterfeiting crimes and applies increases based on specific offense characteristics. Some of the most common enhancements in counterfeiting cases include:

• Number of Infringing Items – The more items, the greater the enhancement
• Retail Value of Infringing Items – Higher retail value means a higher enhancement
• Production of Counterfeit Items – Making vs. just trafficking
• Possession of Device-Making Equipment – For making counterfeit currency, IDs, etc.
• Role in the Offense – Aggravating role as organizer, leader, manager
• Obstruction of Justice – False testimony, destroying evidence, etc.

These enhancements, especially when stacked on top of mandatory minimums, can result in extreme sentences. For example, a first-time offender convicted of trafficking over $1 million in counterfeit handbags would face a mandatory minimum sentence of 10 years under 18 U.S.C. § 2320. But the Sentencing Guidelines could easily add another 10-20 years through enhancements.

Challenging the Enhancements

Many federal defendants feel that these harsh sentencing enhancements lead to unjust punishments that do not fit the crime. While mandatory minimum sentences are very difficult to challenge, defense attorneys can raise both procedural and substantive challenges to Sentencing Guidelines enhancements.

Procedural Challenges

Procedural challenges focus on whether the sentencing court properly applied the Guidelines. Common arguments include:

• Incorrect calculation of number of infringing items or retail value
• No evidence defendant had aggravating role in offense
• Double counting the same conduct under multiple enhancements

The defense must show that the court made a mistake in applying the enhancements or lacked evidentiary support. This is very fact-specific. For example, in United States v. Milligan, the defendant challenged a sophisticated means enhancement for setting up shell companies to embezzle money. The appeals court rejected this, finding the complex scheme supported the enhancement.^[1]

Substantive Challenges

Substantive challenges dispute whether the enhancement should legally apply at all. The defense argues that the facts do not warrant an enhancement, or that the enhancement is unfairly punitive. Arguments include:

• Conduct was not really “sophisticated means”
• Defendant had minor or minimal role in offense
• Disparity with state court sentences for similar conduct

These challenges try to convince the court to exercise discretion and depart from the Guidelines. However, courts can only disregard enhancements in rare, compelling cases. In United States v. Matheny, the defendant claimed a counterfeit postage stamp enhancement overstated the seriousness of his offense. The appeals court upheld the enhancement, finding no extraordinary circumstances.^[2]

Strategies for Challenging Enhancements

Fighting sentencing enhancements in counterfeiting cases is an uphill battle, but possible strategies include:

• Thoroughly investigate facts related to enhancements pre-trial
• File detailed objections to the Presentence Report disputing enhancements
• Present evidence and expert testimony disputing enhancements
• Reference comparable cases where enhancements were rejected
• Highlight mitigating factors showing enhancements are unjust
• Argue for variances and departures from Guidelines at sentencing
• Appeal improperly applied enhancements or denial of departures

The defense may also try negotiating with prosecutors to limit enhancements or pursue pleas to lesser charges. Any plea deal should pin down the government’s position on enhancements and lock in stipulations.

Judges may be receptive to arguments against enhancements seen as unfair, but their hands are often tied by mandatory minimums and Guidelines. Still, challenging enhancements can help reduce sentences and create grounds for appeal.

Recent Developments

While most courts continue applying enhancements rigidly, some recent cases reflect greater willingness to scrutinize their application:

• In United States v. Leahy, the Third Circuit rejected a sophisticated means enhancement where the defendant’s only “complex” act was lying about his identity.^[3]
• The DOJ’s 2022 sentencing guidance advised prosecutors to carefully consider whether enhancements match the defendant’s conduct.^[4]
• Some courts have rejected enhancements for defendants with minor roles in counterfeiting conspiracies.^[5]

Broader sentencing reforms have also been proposed to rein in enhancements, including the Prosecutorial Remedies and Tools Against Exploitation of Children Today (PROTECT) Act of 2022. While mainly focused on child crimes, it would allow departures from Guidelines for non-production counterfeiting offenses. Such measures indicate growing concerns over harsh sentencing practices.

Conclusion

Challenging sentencing enhancements in federal counterfeiting cases is difficult but raising compelling procedural and substantive arguments may convince courts to limit their application. As sentencing laws and attitudes evolve, enhancements could face greater scrutiny. But for now, defendants must strategically build their best case against enhancements to reduce their exposure to extreme prison sentences.