APPENDIX B AMENDMENT TO AMERICAN BAR ASSOCIATION STANDARDS RELATING TO SENTENCING ALTERNATIVES & PROCEDURES Submitted jointly by Standing Committee on Association Standards for Criminal In lieu of Standard 18-2.8, Organizational Sanctions, submitted in the tentative Standard 18-2.8 Organizational Sanctions (a) Crimes committed by, or on behalf of, organizations present unique problems of prevention and punishment. The interests of society and the need for fairness to the defendant require greater coordination of criminal and civil remedies and greater flexibility in the discretion accorded sentencing authorities to fit the punishment to the crime. Examples of existing sentencing alternatives that deserve such legislative clarification and codification include: (i) Restitution: In principle, an organization should be required to make whole and hold harmless those proximately injured by its proven criminal conduct. Bowever, to achieve a desirable integration with existing civil law remedies, any legislation authorizing imposition of restitution as a sentence in a criminal conviction should be subject to the following limitations: (A) At the sentencing hearing, the defendant should be entitled to assert any substantive defense against any claimant that the defendant could have raised in a civil action for the damages allegedly caused by the crime (except defenses barred under traditional principles of res judicata and collateral estoppel and the defense of the statute of limitations where such statute has expired since the date of the filing of the criminal indictment or information); (B) To prevent double recovery, the defendant should be permitted to set off amounts paid to any claimant pursuant to any such restitution order against any civil judgment obtained by such claimant for losses arising out of the same transaction; (C) The findings in any such sentencing hearing and the fact that restitution was ordered or paid should not be admissible in evidence, ar otherwise given legal weight, in any civil action, except one seeking enforcement of the restitution order; and (D) Recovery in such a proceeding should be limited to verifiable pecuniary losses, including out-of-pocket expenses, sustained by a specific claimant or claimants before the court, the extent of which damages can be efficiently ascertained by the court without a disproportionate burden an its time or recourses. Claimants seeking general, exemplary or punitive damages, or asserting losses which require estimation of lost profits, should be limited to their civil remedies. In determining compensable losses, the court should be entitled to rely upon the findings of special masters appointed by it, subject to subparagraph (b) (ii) below. (ii) Special Fine Schedules: Both because organizations cannot be deterred by the threat of incarceration and because, under existing penalty structures, the cost of compliance with a statute or regulation may sometimes exceed those incident to conviction, it is appropriate to authorize, as an alternative penalty in the case of organizations, the imposition of a fine not greater than the pecuniary gain derived from, or pecuniary loss caused by, the criminal activity of the defendant. Standards to this effect should be developed by the guideline drafting agency. (iii) Disqualification from Office: As a lesser alternative to incarceration. it may be appropriate to disqualify from office in the specific organization officials who have been convicted of crimes in the following limited circumstance (A) where the criminal activity was engaged in by the defendant on behalf of the organization with knowledge of its illegality; and (B) where the crime was repetitive or part of a substantial criminal conspiracy of which the official was aware for a sustained period; or (C) where the crime amounted to a serious breach of trust against the organization, e.g., embezzlement of corporate funds. Any such sanction imposed in such a case should be limited so as not to amount to an effective prohibition an employment, and its duration should be subject to the five and two year time limits specified in Standard 18-2.3 for probation conditions generally. (iv) Notice of Conviction: To implement the goal of restitution and to apprise those injured of their civil remedies, it is appropriate to require a convicted organization to give reasonable notice, by means of publication or advertisement in designated areas, to the class or classes or persons or sector of the public interested in or affected by the conviction. This standard does not apply to the special case of a plea of nolo contendere (see Standard 14-1.1(b)). (v) Continuing Judicial Oversight: Although courts lack the competence or capacity to manage organizations, the preventive goals of the criminal law can in special cases justify a limited period of judicial monitoring of the activities of a convicted organization. Such oversight is best implemented through the use of recognized reporting, record-keeping and auditing controls designed to increase intemal accountabilitye.g., audit committees, improved statt systems for the board of directors, or the use of special counsel but it should not extend to judicial review of the legitimate "business judgment" decisions of the organization's management or its stockholders or delay such decisions. Use of such a special remedy should also be limited by the following principles: (A) as a precondition, the court should find either (1) that the criminal behavior was serious, repetitive and facilitated by inadequate internal accounting or monitoring controls, or (2) that a clear and present danger exists to the public health or safety; (B) the duration of such oversight should not exceed the five and two year time limits specified in Standard 18-2.3 for probation conditions generally; and (C) judicial oversight should not be misused as a means for the disguised imposition of penalties or affirmative duties in excess of those authorized by the legislature. (b) Endorsement of each of the foregoing sanctions is subject to the following conditions: (i) The sanctions described in subsections (a)(i), (ii) and (v) should not be imposed in cases, such as those arising under the antitrust laws or the securities laws, where there are statutory provisions for government or private civil actions for equitable relief or money damages or civil penalties to accomplish the remedial or deterrent purposes of such sanctions; (ii) Such sanctions should only be imposed after a full adversary hearing meeting the requirements of Standard 18-5.4 at which findings of fact will be made on disputed issues and the preponderance of the evidence standard employed as the burden of proof; and (iii) Appellate review of the reasonableness of the penalties and conditions so imposed will be available to the same extent as applies for other sentences generally under these standards. Mr. Chairman and Members of the Subcommittee on the Constitution: My name is Kenneth J. Hodson (Major General, United States Army, retired). I am currently the Vice Chairman of the ABA's Standing Committee on Association Standards for Criminal Justice and I formerly chaired that Committee. My legal background includes service as Judge Advocate General of the United States Army and as Chief Judge of the United States Army's Court of Military Review. I am pleased to appear today as the representative of the American Bar Association and to offer the views of the ABA on bail reform as those views are articulated within the ABA Standards for Criminal Justice. Indeed, The American Bar Association has spent considerable time and energy in the formulation of standards regarding Pretrial Release. this subject is dealt with in a 116-page chapter (Chapter 10) of the ABA Standards for Criminal Justice, second edition, Little, Brown and Company, 1980. To assist the Committee in its deliberations I have attached the Association's black letter Standards on Pretrial Release as an appendix to this testimony. Our thirty-one separate black letter standards on pretrial release deal with the key issues addressed in S.1554. Those key issues are: the elimination of surety bond; danger to the community as a factor in the setting of pretrial release conditions; and, pretrial detention. American Bar Association policy on these issues is as follows: SURETY BOND In First, American Bar Association policy favors the abolition of compensated sureties. Our policy in this regard is unequivocal. Standard 10-5.5 we state "Compensated sureties should be abolished." While we recognize that abolition may require some time, we provide that strict regulation of bail bondsmen govern this area until abolition can be achieved. Our policy favoring the abolition of bail bondsmen relates to one of the central features of S.1554 the elimination of surety bond as a pretrial release condition. Although our Pretrial Release Standards call for the elimination of compensated sureties, we do not recommend the elimination of surety bond as a form of monetary bail. Still, our standard dealing with Release on Monetary Conditions (10-5.4) makes it clear that monetary bond is not a preferred pretrial release device. Specifically our policy states, "Monetary conditions should be set only when it is found that no other conditions on release will reasonably assure the defendant's appearance in court." Moreover, this standard contains an admonition that, "Monetary conditions should not be set to punish or frighten the defendant, placate public opinion, or to prevent anticipated criminal conduct." One other salient feature of Standard 10-5.4 deserves mention and that feature concerns a prerequisite for the setting of monetary bail. In that regard we provide that, "A judicial officer should never set monetary conditions unless the officer first determines, on the basis of proffers by the the prosecution and defense, that there is probable cause to believe that the defendant has committed the charged offense." The bill under consideration by your Committee would eliminate surety bond. In contrast, our Standards on Pretrial Release specifically provide for the continuation of money bail and of the surety bond as alternative forms of pretrial release. Under our standard, when a judicial officer determines that monetary conditions should be set, we provide that judicial officer with a least restrictive range of alternatives to follow. Thus, we provide for: - 2 |