Categories & Search

Court Orders Jacobson Remand to Determine Reasonableness of $10 Million Fine

In United States v. Zukerman, No. 17-948 (2d Cir. Feb. 6, 2018) (ALK, RAK, RSP) (summary order), the appellant, Morris Zukerman, challenged the substantive and procedural reasonableness of his sentence, which was imposed following his pleading guilty for tax evasion and obstruction of the IRS, see 26 U.S.C. §§ 7201, 7212(a).  While Zukerman’s plea agreement contained a stipulated fine range of $25,000 to $250,000, the district court (Torres, J.) imposed a fine of $10 million.  Given that tax fraud defendants are typically required to resolve their civil tax liabilities in parallel proceedings, it is unusual for such a large fine to be imposed in this type of case.  After acknowledging that fine calculations are typically committed to the discretion of the sentencing judge, the Second Circuit held that Judge Torres’ comments at the sentencing hearing and in the written statement of reasons did not provide the panel with a sufficient basis to determine how she reached the $10 million fine amount.  Rather than try to guess what considerations went into this calculation, the Court ordered a so-called “Jacobson remand”—wherein it remands “partial jurisdiction to the district court to supplement the record on a discrete factual or legal issue while retaining jurisdiction over the original appeal”—and directed the district court to “elaborate on its rationale for imposing a fine greater than those typically imposed in tax prosecutions.”

The Zukerman order is noteworthy not simply because it shows an efficient judicial tool in action—the Jacobson remand—but also because it is part of a broader trend in which the Circuit is paying closer attention to the substantive and procedural reasonableness of criminal fines in white collar cases.  We saw this last year in a case involving the operation of an unlawful money remitting business, where the district court imposed a fine higher than the range provided for in the Sentencing Guidelines without considering whether the defendant had the ability to pay the imposed fine.  See United States v. Marmilev, 14-4738 (2d Cir. Mar. 7, 2017).  It also is another reminder that variances from the Guidelines with respect to the non-incarceratory aspects of sentencing are also subject to judicial review.  The Court recently made this same point in the context of a sentence of supervised release, where the district court imposed a life sentence of supervised release without sufficient explanation for why this above-the-range sentence was consistent with the goals of supervised release.  See United States v. Burden, 860 F.3d 45 (2d Cir. 2017); see generally United States v. Cavera, 550 F.3d 180, 189 (2d Cir. 2008) (holding that review of an above-the-range term of imprisonment requires that the Circuit “ensure that the justification is sufficiently compelling to support the degree of the variance”).  It will be interesting to see what happens on remand:  will the district court explain its reasons for the fine or perhaps impose a different, reduced fine?

-By Clinton Morrison and Harry Sandick