Sentencing Guidelines for United States Courts, 2778-2795 [2012-886]

Agencies

• United States Sentencing Commission

[Federal Register Volume 77, Number 12 (Thursday, January 19, 2012)]
[Notices]
[Pages 2778-2795]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-886]


=======================================================================
-----------------------------------------------------------------------

UNITED STATES SENTENCING COMMISSION


Sentencing Guidelines for United States Courts

AGENCY: United States Sentencing Commission.

ACTION: Notice of proposed amendments to sentencing guidelines, policy 
statements, and commentary. Request for public comment, including 
public comment regarding retroactive application of any of the proposed 
amendments. Notice of public hearing.

-----------------------------------------------------------------------

SUMMARY: Pursuant to section 994(a), (o), and (p) of title 28, United 
States Code, the United States Sentencing Commission is considering 
promulgating certain amendments to the sentencing guidelines, policy 
statements, and commentary. This notice sets forth the proposed 
amendments and, for each proposed amendment, a synopsis of the issues 
addressed by that amendment. This notice also sets forth a number of 
issues for comment, some of which are set forth together with the 
proposed amendments; some of which are set forth independent of any 
proposed amendment; and one of which (regarding retroactive application 
of proposed amendments) is set forth in the SUPPLEMENTARY INFORMATION 
portion of this notice.
    The proposed amendments and issues for comment in this notice are 
as follows: (1) A proposed amendment on fraud and related offenses, 
including (A) An issue for comment in response to the issue of harm to 
the public and financial markets, as raised by each of two directives 
to the Commission in section 1079A of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act, Public Law 111-203; (B) a proposed change 
to Sec.  2B1.4 (Insider Trading) to implement the directive in section 
1079A(a)(1) of that Act, and related issues for comment on insider 
trading, securities fraud, and similar offenses; (C) proposed changes 
to Sec.  2B1.1 (Theft, Property Destruction, and Fraud) regarding 
mortgage fraud offenses to implement the directive in section 
1079A(a)(2) of that Act, and a related issue for comment on mortgage 
fraud and financial institution fraud; and (D) issues for comment on 
the impact of the loss table in Sec.  2B1.1(b)(1) and the victims table 
in Sec.  2B1.1(b)(2) in cases involving relatively large loss amounts; 
(2) a proposed amendment on offenses involving controlled substances 
and chemical precursors, including (A) an issue for comment on offenses 
involving N-Benzylpiperazine (BZP); and (B) a proposed change to Sec.  
2D1.11 (Unlawfully Distributing, Importing, Exporting or Possessing a 
Listed Chemical; Attempt or Conspiracy) that would create a guidelines 
``safety valve'' provision for offenses involving chemical precursors 
that would be analogous to the provision in Sec.  2D1.1 (Unlawful 
Manufacturing, Importing, Exporting, or Trafficking (Including 
Possession with Intent to Commit These Offenses); Attempt or 
Conspiracy); (3) a proposed amendment on human rights offenses, 
including (A) a proposed guideline applicable to human rights offenses; 
(B) proposed changes to Sec.  2L2.1 (Trafficking in a Document Relating 
to Naturalization, Citizenship, or Legal Resident Status, or a United 
States Passport; False Statement in Respect to the Citizenship or 
Immigration Status of Another; Fraudulent Marriage to Assist Alien to 
Evade Immigration Law) and Sec.  2L2.2 (Fraudulently Acquiring 
Documents Relating to Naturalization, Citizenship, or Legal Resident 
Status for Own Use; False Personation or Fraudulent Marriage by Alien 
to Evade Immigration Law; Fraudulently Acquiring or Improperly Using a 
United States Passport) to address cases in which the offense of 
conviction is for immigration or naturalization fraud but the defendant 
had committed a serious human rights offense; and (C) related issues 
for comment on human rights offenses; (4) a proposed amendment to

[[Page 2779]]

Sec.  2L1.2 (Unlawfully Entering or Remaining in the United States) to 
respond to a circuit conflict over application of the term ``sentence 
imposed'' in that guideline when the defendant's original ``sentence 
imposed'' was lengthened after the defendant was deported; (5) a 
proposed amendment presenting options for specifying the types of 
documents that may be considered in determining whether a particular 
prior conviction fits within a particular category of crimes for 
purposes of specific guideline provisions, and related issues for 
comment; (6) a proposed amendment to Sec.  4A1.2 (Definitions and 
Instructions for Computing Criminal History) to respond to an 
application issue regarding when a defendant's prior sentence for 
driving while intoxicated or driving under the influence (and similar 
offenses by whatever name they are known) is counted toward the 
defendant's criminal history score; (7) a proposed amendment to Sec.  
4B1.2 (Definitions of Terms Used in Section 4B1.1) to respond to 
differences among the circuits on when, if at all, burglary of a non-
dwelling qualifies as a crime of violence for purposes of the 
guidelines, and related issues for comment; (8) a proposed amendment to 
Sec.  5G1.2 (Sentencing on Multiple Counts of Conviction) to respond to 
an application issue regarding the applicable guideline range in a case 
in which the defendant is sentenced on multiple counts of conviction, 
at least one of which involves a mandatory minimum sentence that is 
greater than the minimum of the otherwise applicable guideline range; 
(9) a proposed amendment to Sec.  5K2.19 (Post-Sentencing 
Rehabilitative Efforts) to respond to Pepper v. United States, 131 
S.Ct. 1229 (2011), which held, among other things, that a defendant's 
post-sentencing rehabilitative efforts may be considered when the 
defendant is resentenced after appeal; and (10) a proposed amendment in 
response to miscellaneous issues arising from legislation recently 
enacted, including (A) proposed changes to Sec.  2P1.2 (Providing or 
Possessing Contraband in Prison) to respond to the Cell Phone 
Contraband Act of 2010, Public Law 111-225, and (B) proposed changes to 
Appendix A (Statutory Index) to address certain criminal provisions in 
the Prevent All Cigarette Trafficking Act of 2009, Public Law 111-154, 
the Indian Arts and Crafts Amendments Act of 2010, Public Law 111-211, 
the Animal Crush Video Prohibition Act of 2010, Public Law 111-294, and 
certain other statutes, and a related issue for comment.

DATES: (1) Written public comment.--Written public comment regarding 
the proposed amendments and issues for comment set forth in this 
notice, including public comment regarding retroactive application of 
any of the proposed amendments, should be received by the Commission 
not later than March 19, 2012.
    (2) Public hearing.--The Commission plans to hold a public hearing 
regarding the proposed amendments and issues for comment set forth in 
this notice. Further information regarding the public hearing, 
including requirements for testifying and providing written testimony, 
as well as the location, time, and scope of the hearing, will be 
provided by the Commission on its Web site at www.ussc.gov.

ADDRESSES: Public comment should be sent to: United States Sentencing 
Commission, One Columbus Circle NE., Suite 2-500, Washington, DC 20002-
8002, Attention: Public Affairs.

FOR FURTHER INFORMATION CONTACT: Jeanne Doherty, Public Affairs 
Officer, Telephone: (202) 502-4502.

SUPPLEMENTARY INFORMATION: The United States Sentencing Commission is 
an independent agency in the judicial branch of the United States 
Government. The Commission promulgates sentencing guidelines and policy 
statements for federal courts pursuant to 28 U.S.C. 994(a). The 
Commission also periodically reviews and revises previously promulgated 
guidelines pursuant to 28 U.S.C. 994(o) and submits guideline 
amendments to the Congress not later than the first day of May each 
year pursuant to 28 U.S.C. 994(p).
    The proposed amendments in this notice are presented in one of two 
formats. First, some of the amendments are proposed as specific 
revisions to a guideline or commentary. Bracketed text within a 
proposed amendment indicates a heightened interest on the Commission's 
part in comment and suggestions regarding alternative policy choices; 
for example, a proposed enhancement of [2][4][6] levels indicates that 
the Commission is considering, and invites comment on, alternative 
policy choices regarding the appropriate level of enhancement. 
Similarly, bracketed text within a specific offense characteristic or 
application note means that the Commission specifically invites comment 
on whether the proposed provision is appropriate. Second, the 
Commission has highlighted certain issues for comment and invites 
suggestions on how the Commission should respond to those issues.
    The Commission requests public comment regarding whether, pursuant 
to 18 U.S.C. 3582(c)(2) and 28 U.S.C. 994(u), any proposed amendment 
published in this notice should be included in subsection (c) of Sec.  
1B1.10 (Reduction in Term of Imprisonment as a Result of Amended 
Guideline Range (Policy Statement)) as an amendment that may be applied 
retroactively to previously sentenced defendants. The Commission lists 
in Sec.  1B1.10(c) the specific guideline amendments that the court may 
apply retroactively under 18 U.S.C. 3582(c)(2). The background 
commentary to Sec.  1B1.10 lists the purpose of the amendment, the 
magnitude of the change in the guideline range made by the amendment, 
and the difficulty of applying the amendment retroactively to determine 
an amended guideline range under Sec.  1B1.10(b) as among the factors 
the Commission considers in selecting the amendments included in Sec.  
1B1.10(c). To the extent practicable, public comment should address 
each of these factors.
    Additional information pertaining to the proposed amendments 
described in this notice may be accessed through the Commission's Web 
site at www.ussc.gov.

    Authority:  28 U.S.C. 994(a), (o), (p), (x); USSC Rules of 
Practice and Procedure, Rule 4.4.

Patti B. Saris,
Chair.

1. Dodd-Frank/Fraud

    Synopsis of Proposed Amendment: This proposed amendment is a multi-
part amendment that continues the Commission's multi-year review of 
fraud offenses to ensure that the guidelines provide appropriate 
penalties (1) in cases involving securities fraud and similar offenses 
and (2) in cases involving mortgage fraud and financial institution 
fraud.
    Specifically, the proposed amendment implements the two directives 
to the Commission in the Dodd-Frank Wall Street Reform and Consumer 
Protection Act, Public Law 111-203 (the ``Act''). The first directive 
relates to securities fraud and similar offenses, and the second 
directive relates to mortgage fraud and financial institution fraud.
    Each directive requires the Commission to ``review and, if 
appropriate, amend'' the guidelines and policy statements applicable to 
the offenses covered by the directive and consider whether the 
guidelines

[[Page 2780]]

appropriately account for the potential and actual harm to the public 
and the financial markets from those offenses. Each directive also 
requires the Commission to ensure that the guidelines reflect (i) The 
serious nature of the offenses, (ii) the need for deterrence, 
punishment, and prevention, and (iii) the effectiveness of 
incarceration in furthering those objectives.
    Part A responds to the issue of harm to financial markets, which is 
raised by both directives; Part B responds to the directive on 
securities fraud and similar offenses; and Part C responds to the 
directive on mortgage fraud and financial institution fraud.
    The proposed amendment also includes a Part D, which responds to 
concerns suggesting that the impact of the loss table or the victims 
table (or the combined impact of the loss table and the victims table) 
may overstate the culpability of certain offenders in cases sentenced 
under Sec.  2B1.1 that involve relatively large loss amounts.
    The parts are as follows:

(A) Harm to Financial Markets

    Issue for Comment:
    1. The Commission requests comment on whether the Guidelines Manual 
provides penalties that appropriately account for the potential and 
actual harm to the public and the financial markets from the offenses 
covered by the directives. If not, what changes to the Guidelines 
Manual would be appropriate to respond to this requirement in both 
directives?
    Section 2B1.1 contains provisions that address harm to the public 
and the financial markets in various ways, by taking into account the 
amount of the loss, the number of victims, and other factors contained 
in its specific offense characteristics and departure provisions. For 
example, subsection (b)(14) provides an enhancement of either (A) 2 
levels, if the defendant derived more than $1,000,000 in gross receipts 
from one or more financial institutions, or (B) 4 levels, if the 
offense (i) substantially jeopardized the safety and soundness of a 
financial institution, (ii) substantially endangered the solvency or 
financial security of an organization that (I) was a publicly traded 
company or (II) had 1,000 or more employees, or (iii) substantially 
endangered the solvency or financial security of 100 or more victims. 
Subsection (b)(14)(C) provides that the cumulative adjustments from 
(b)(2) and (b)(14)(B) shall not exceed 8 levels, except as provided in 
subdivision (D). Subdivision (D) provides a minimum offense level of 
level 24, if either (A) or (B) applies.
    Should the Commission amend Sec.  2B1.1 to more directly account 
for the potential and actual harms to the public and the financial 
markets? For example, should the Commission provide a new prong in 
Sec.  2B1.1(b)(14) that provides an enhancement of [2][4][6] levels if 
the offense involved a significant disruption of a financial market or 
created a substantial risk of such a disruption? In the alternative, 
should the Commission provide a new upward departure provision in Sec.  
2B1.1 that applies if the offense involved such a disruption or created 
a substantial risk of such a disruption?
    If the Commission were to provide such a provision, what guidance 
should the Commission provide for determining when the provision would 
apply?

(B) Securities Fraud and Similar Offenses

    Synopsis of Proposed Amendment: Section 1079A(a)(1)(A) of the Act 
directs the Commission to ``review and, if appropriate, amend'' the 
guidelines and policy statements applicable to ``persons convicted of 
offenses relating to securities fraud or any other similar provision of 
law, in order to reflect the intent of Congress that penalties for the 
offenses under the guidelines and policy statements appropriately 
account for the potential and actual harm to the public and the 
financial markets from the offenses.''
    In addition, section 1079A(a)(1)(B) of the Act provides that, in 
promulgating any such amendment, the Commission shall--
    (i) Ensure that the guidelines and policy statements, particularly 
section 2B1.1(b)(14) and section 2B1.1(b)(17) (and any successors 
thereto), reflect--
    (I) The serious nature of the offenses described in subparagraph 
(A);
    (II) The need for an effective deterrent and appropriate punishment 
to prevent the offenses; and
    (III) The effectiveness of incarceration in furthering the 
objectives described in subclauses (I) and (II);
    (ii) Consider the extent to which the guidelines appropriately 
account for the potential and actual harm to the public and the 
financial markets resulting from the offenses;
    (iii) Ensure reasonable consistency with other relevant directives 
and guidelines and Federal statutes;
    (iv) Make any necessary conforming changes to guidelines; and
    (v) Ensure that the guidelines adequately meet the purposes of 
sentencing, as set forth in section 3553(a)(2) of title 18, United 
States Code.
    Securities fraud is prosecuted under 18 U.S.C. 1348 (Securities and 
commodities fraud), which makes it unlawful to knowingly execute, or 
attempt to execute, a scheme or artifice (1) to defraud any person in 
connection with a security or (2) to obtain, by means of false or 
fraudulent pretenses, representations, or promises, any money or 
property in connection with the purchase or sale of a security. The 
statutory maximum term of imprisonment for an offense under section 
1348 is 25 years. Offenses under section 1348 are referenced in 
Appendix A (Statutory Index) to Sec.  2B1.1.
    Securities fraud is also prosecuted under 18 U.S.C. 1350 (Failure 
of corporate officers to certify financial reports), violations of the 
provisions of law referred to in 15 U.S.C. 78c(a)(47), and violations 
of the rules, regulations, and orders issued by the Securities and 
Exchange Commission pursuant to those provisions of law. See Sec.  
2B1.1, comment. (n.14(A)). In addition, there are cases in which the 
defendant committed a securities law violation but is prosecuted under 
a general fraud statute. In general, these offenses are likewise 
referenced to Sec.  2B1.1.
    The directive contemplates that the Commission also review offenses 
``under any other similar provision of law''. The Commission has 
received comment indicating that commodities fraud offenses and insider 
trading offenses should be included within the scope of its review.
    The proposed amendment responds to the directive by amending the 
insider trading guideline, Sec.  2B1.4 (Insider Trading), in several 
ways.
    First, it provides a specific offense characteristic that applies 
if the offense involved sophisticated insider trading. The specific 
offense characteristic provides an enhancement of [2] levels and a 
minimum offense level of [12][14].
    Second, it provides a 4-level enhancement that applies if the 
defendant, at the time of the offense, held one of several listed 
positions of trust. This enhancement parallels the enhancement in Sec.  
2B1.1(b)(18).
    Issues for comment are also provided, both on insider trading 
offenses under Sec.  2B1.4 and on securities fraud and similar offenses 
under Sec.  2B1.1.
    Proposed Amendment:
    Section 2B1.4(b) is amended by striking ``Characteristic'' and 
inserting ``Characteristics''; and by inserting after paragraph (1) the 
following:
    ``(2) If the offense involved sophisticated insider trading, 
increase by 2 levels. If the resulting offense level

[[Page 2781]]

is less than level [12][14], increase to level [12][14].
    (3) If, at the time of the offense, the defendant was--
    (A)(i) An officer or a director of a publicly traded company; (ii) 
a registered broker or dealer, or a person associated with a broker or 
dealer; or (iii) an investment adviser, or a person associated with an 
investment adviser; or
    (B)(i) An officer or a director of a futures commission merchant or 
an introducing broker; (ii) a commodities trading advisor; or (iii) a 
commodity pool operator, increase by 4 levels.''.
    The Commentary to Sec. 2B1.4 captioned ``Application Note'' is 
amended in the phrase ``Application Note'' by striking ``Note'' and 
inserting ``Notes''; by redesignating Note 1 as Note 3; in that Note, 
by striking ``Section 3B1.3 (Abuse of Position of Trust or Use of 
Special Skill)'' and inserting ``If subsection (b)(3) applies, do not 
apply Sec. 3B1.3. In any other case, Sec. 3B1.3''; and by striking 
``trust. Examples might include a corporate president or'' and 
inserting ``trust, such as''.
    The Commentary to Sec. 2B1.4 captioned `Application Note' is 
amended by inserting before Note 3 (as so redesignated) the following:
    1. Application of Subsection (b)(2).--For purposes of subsection 
(b)(2), `sophisticated insider trading' means especially complex or 
intricate offense conduct pertaining to the execution or concealment of 
the offense.
    The following is a non-exhaustive list of factors that the court 
shall consider in determining whether subsection (b)(2) applies:
    (A) The number of transactions;
    (B) The dollar value of the transactions;
    (C) The number of securities involved;
    (D) The duration of the offense;
    (E) Whether fictitious entities, corporate shells, or offshore 
financial accounts were used to hide transactions; and
    (F) Whether internal monitoring or auditing systems or compliance 
and ethics program standards or procedures were subverted in an effort 
to prevent the detection of the offense.
    2. Application of Subsection (b)(3).--For purposes of subsection 
(b)(3): `Commodity pool operator' has the meaning given that term in 
section 1a(5) of the Commodity Exchange Act (7 U.S.C. 1a(5)).
    `Commodity trading advisor' has the meaning given that term in 
section 1a(6) of the Commodity Exchange Act (7 U.S.C. 1a(6)).
    `Futures commission merchant' has the meaning given that term in 
section 1a(20) of the Commodity Exchange Act (7 U.S.C. 1a(20)).
    `Introducing broker' has the meaning given that term in section 
1a(23) of the Commodity Exchange Act (7 U.S.C. 1a(23)).
    `Investment adviser' has the meaning given that term in section 
202(a)(11) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
2(a)(11)).
    `Person associated with a broker or dealer' has the meaning given 
that term in section 3(a)(18) of the Securities Exchange Act of 1934 
(15 U.S.C. 78c(a)(18)).
    `Person associated with an investment adviser' has the meaning 
given that term in section 202(a)(17) of the Investment Advisers Act of 
1940 (15 U.S.C. 80b-2(a)(17)).
    `Registered broker or dealer' has the meaning given that term in 
section 3(a)(48) of the Securities Exchange Act of 1934 (15 U.S.C. 
78c(a)(48)).''.
    Issues for Comment:
    1. Insider Trading. The Commission has received public comment 
indicating that some insider trading defendants engage in serious 
offense conduct but nonetheless, because of market forces or other 
factors, do not necessarily realize high gains. The concern has been 
raised that in such cases, Sec. 2B1.4 may not adequately account for 
the seriousness of the conduct and the actual and potential harms to 
individuals and markets, because the guideline uses gain alone as the 
measure of harm.
    Should the Commission provide in Sec. 2B1.4 one or more specific 
offense characteristics that use aggravating factors other than gain to 
account for the seriousness of the conduct and the actual or potential 
harm to individuals and markets? If so, what should the factor or 
factors be? For example, should the Commission provide, as an 
aggravating factor in Sec. 2B1.4, (i) The number of transactions; (ii) 
the dollar value of the transactions; (iii) the number of securities 
involved; or some other factor that distinguishes a defendant who 
engages in multiple instances or higher volumes of insider trading from 
a defendant who does not?
    If the Commission were to provide one or more new specific offense 
characteristics based on such aggravating factors, what level or levels 
of enhancement should the Commission provide, and how should any such 
enhancement interact with the enhancement for gain in Sec. 2B1.4?
    For example, in bid-rigging cases, the guidelines currently provide 
a ``volume of commerce'' enhancement in subsection (b)(2) of Sec. 2R1.1 
(Bid-Rigging, Price-Fixing or Market-Allocation Agreements Among 
Competitors). That enhancement provides a tiered enhancement, ranging 
from 2 levels if the volume of commerce was more than $1,000,000, to 16 
levels if the volume of commerce was more than $1,500,000,000. Should 
the Commission consider an analogous tiered enhancement (e.g., based on 
volume of trading) for insider trading cases in Sec. 2B1.4? If so, what 
guidance should the Commission provide on how the volume of trading is 
to be determined, what volumes of trading should be used for the tiered 
enhancement, and what levels of enhancement should apply to the various 
tiers?
    Similarly, Sec. 2R1.1 provides a special instruction under which 
the fine for an organizational defendant is calculated based on 20 
percent of the volume of commerce, rather than on the pecuniary loss. 
See Sec. 2R1.1(d)(1). Should the Commission consider an analogous 
approach for insider trading cases in Sec. 2B1.4? In particular, should 
the Commission provide a special rule under which the gain enhancement 
in Sec. 2B1.4(b)(1) would use either the gain or an amount equal to 
[20] percent of the volume of trading, whichever is greater?
    2. Calculation of Loss in Sec. 2B1.1. The Commission has received 
comment indicating that determinations of loss in cases under 
Sec. 2B1.1 involving securities fraud and similar offenses are complex 
and a variety of different methods are in use, resulting in application 
issues and possible sentencing disparities. Should the Commission amend 
Sec. 2B1.1 to clarify the method or methods used in determining loss in 
such cases to ensure that the guideline appropriately accounts for the 
potential and actual harm to the public and the financial markets from 
those offenses?
    For example, courts in cases involving securities fraud and similar 
offenses have used--
    (A) A simple rescissory method (under which loss is based upon the 
price that the victim paid for the security and the price of the 
security as it existed after the fraud was disclosed), see, e.g., 
United States v. Grabske, 260 F.Supp.2d 866, 872-73 (N.D. Cal. 2002);
    (B) A modified rescissory method (under which loss is based upon 
the average price of the security during the period that the fraud 
occurred and the average price of the security during a set period 
after the fraud was disclosed to the market), see, e.g., United States 
v. Brown, 595 F.3d 498 (3d Cir. 2010); United States v. Bakhit, 218 
F.Supp.2d 1232 (C.D. Cal. 2002);
    (C) A market capitalization method (under which loss is based upon 
the price of the security shortly before the

[[Page 2782]]

disclosure and the price of the security shortly after the disclosure), 
see, e.g., United States v. Moskowitz, 215 F.3d 265, 272 (2d Cir. 
2000), abrogated on other grounds by Crawford v. Washington, 541 U.S. 
36, 64 (2002); United States v. Peppel, 2011 WL 3608139 (S.D. Ohio 
2011); and
    (D) A market-adjusted method (under which loss is based upon the 
change in value of the security, but excluding changes in value that 
were caused by external market forces), see, e.g., United States v. 
Rutkoske, 506 F.3d 170, 179 (2d Cir. 2007); United States v. Olis, 429 
F.3d 540, 546 (5th Cir. 2005).
    The Commission seeks comment on these four methods of calculating 
loss in cases involving securities fraud and similar offenses, and the 
relative advantages and disadvantages of these methods. The Commission 
also seeks comment on whether there are any other methods of 
calculating loss, other than these four methods, that should be used in 
such cases.
    Should the Commission provide a specific method or methods for use 
by courts in determining loss in cases involving securities fraud and 
similar offenses? If so, which method or methods should the Commission 
provide? Should the method used depend on the type of fraudulent 
scheme, and if so, how?
    In particular, two of the more common types of securities fraud are 
(1) investment fraud, in which victims are fraudulently induced to 
invest in companies or products related to securities (a category that 
includes Ponzi schemes); and (2) market or price manipulation fraud, in 
which the offender seeks to inflate the price of a security through 
various means (a category that includes so-called ``pump and dump'' 
schemes as well as accounting frauds). What method or methods of loss 
calculation should be used for investment fraud, and what method or 
methods should be used for market or price manipulation fraud? Are 
there any other types of securities fraud or similar offenses for which 
the Commission should provide a specific method or methods of loss 
calculation?
    What changes, if any, should the Commission make to the existing 
rules for calculation of loss in cases involving securities fraud or 
similar offenses? For example, the calculation of loss in an investment 
fraud case is covered by Application Note 3(F)(iv) to Sec.  2B1.1, 
which provides:

    Ponzi and Other Fraudulent Investment Schemes.--In a case 
involving a fraudulent investment scheme, such as a Ponzi scheme, 
loss shall not be reduced by the money or the value of the property 
transferred to any individual investor in the scheme in excess of 
that investor's principal investment (i.e., the gain to an 
individual investor in the scheme shall not be used to offset the 
loss to another individual investor in the scheme).

    Should the Commission revise or repeal this application note and 
provide a different rule for investment fraud?
    Should the Commission provide further guidance regarding the 
causation standard to be applied in calculating loss in cases involving 
securities fraud or similar offenses? For example, should the 
Commission provide a loss causation standard similar to the civil loss 
causation standard articulated by the Supreme Court in Dura 
Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336 (2005) (holding that a 
civil securities fraud plaintiff must prove that the plaintiff's 
economic loss was proximately caused by the defendant's 
misrepresentation (or other fraudulent conduct) as opposed to other 
independent market factors)?
    Are there any other changes that the Commission should make 
regarding the determination of loss in cases involving securities fraud 
or similar offenses to ensure that the guidelines appropriately account 
for the potential and actual harm to the public and the financial 
markets from those offenses?
    3. Specific Provisions in Sec.  2B1.1. The directive requires the 
Commission to consider, among other things, the enhancements at Sec.  
2B1.1(b)(15) and (b)(18) (formerly (b)(14) and (b)(17), respectively). 
The Commission seeks comment on whether any changes should be made to 
either or both of these provisions in response to the directive. Should 
the Commission expand the scope or the amounts of the increases 
provided by subsection (b)(15) or (b)(18), or both, to ensure that the 
guidelines appropriately account for the potential and actual harm to 
the public and the financial markets? If so, how?

(C) Mortgage Fraud and Financial Institution Fraud

    Synopsis of Proposed Amendment: This part of the proposed amendment 
responds to the directive in section 1079A(a)(2) of the Act, which 
relates to mortgage fraud and financial institution fraud.
    Specifically, section 1079A(a)(2)(A) of the Act directs the 
Commission to ``review and, if appropriate, amend'' the guidelines and 
policy statements applicable to ``persons convicted of fraud offenses 
relating to financial institutions or federally related mortgage loans 
and any other similar provisions of law, to reflect the intent of 
Congress that the penalties for the offenses under the guidelines and 
policy statements ensure appropriate terms of imprisonment for 
offenders involved in substantial bank frauds or other frauds relating 
to financial institutions.''
    In addition, section 1079A(a)(2)(B) of the Act provides that, in 
promulgating any such amendment, the Commission shall--
    (i) Ensure that the guidelines and policy statements reflect--
    (I) The serious nature of the offenses described in subparagraph 
(A);
    (II) The need for an effective deterrent and appropriate punishment 
to prevent the offenses; and
    (III) The effectiveness of incarceration in furthering the 
objectives described in subclauses (I) and (II);
    (ii) Consider the extent to which the guidelines appropriately 
account for the potential and actual harm to the public and the 
financial markets resulting from the offenses;
    (iii) Ensure reasonable consistency with other relevant directives 
and guidelines and Federal statutes;
    (iv) Make any necessary conforming changes to guidelines; and
    (v) Ensure that the guidelines adequately meet the purposes of 
sentencing, as set forth in section 3553(a)(2) of title 18, United 
States Code.
    With regard to mortgage fraud, the proposed amendment makes two 
changes to Application Note 3 regarding calculation of loss. The first 
change addresses the credit against loss rule and states that, in the 
case of a fraud involving a mortgage loan in which the collateral has 
been disposed of at a foreclosure sale, use the amount recovered from 
the foreclosure sale.
    The second change specifies that, in the case of a fraud involving 
a mortgage loan, reasonably foreseeable pecuniary harm includes the 
reasonably foreseeable administrative costs to the lending institution 
associated with foreclosing on the mortgaged property, provided that 
the lending institution exercised due diligence in the initiation, 
processing, and monitoring of the loan and the disposal of the 
collateral.
    With regard to financial institution fraud more generally, the 
proposed amendment broadens the applicability of Sec.  2B1.1(b)(15)(B), 
which provides an enhancement of 4 levels if the offense involved 
specific types of financial harms (e.g., jeopardizing a financial 
institution or organization). Application Note 12 to Sec.  2B1.1 lists 
factors to be considered in determining whether to apply the 
enhancement in subsection (b)(15)(B) for jeopardizing a financial 
institution or organization. Currently, the court is directed to 
consider whether the financial institution or organization

[[Page 2783]]

suffered one or more listed harms (such as becoming insolvent) as a 
result of the offense. The proposed amendment amends Note 12 to direct 
the court to consider whether one of the listed harms was likely to 
result from the offense but did not result from the offense because of 
federal government intervention.
    Issues for comment are also provided.
    Proposed Amendment:
    The Commentary to Sec.  2B1.1 captioned ``Application Notes'' is 
amended in Note 3(A)(v) by adding at the end the following:

    ``(IV) Fraud Involving a Mortgage Loan.--In the case of a fraud 
involving a mortgage loan, the reasonably foreseeable pecuniary harm 
includes the reasonably foreseeable administrative costs to the 
lending institution associated with foreclosing on the mortgaged 
property, provided that the lending institution exercised due 
diligence in the initiation, processing, and monitoring of the loan 
and the disposal of the collateral.'';

in Note 3(E)(ii) by adding at the end ``In the case of a fraud 
involving a mortgage loan in which the collateral has been disposed of 
at a foreclosure sale, use the amount recovered from the foreclosure 
sale.'';

in Note 12(A) by adding at the end the following:

    ``(v) One or more of the criteria in clauses (i) through (iv) 
was likely to result from the offense but did not result from the 
offense because of federal government intervention.'';

and in Note 12(B)(ii) by inserting at the end the following:

    ``(VII) One or more of the criteria in subclauses (I) through 
(VI) was likely to result from the offense but did not result from 
the offense because of federal government intervention.''.

    Issue for Comment:
    1. The Commission requests comment regarding whether the Guidelines 
Manual provides penalties for mortgage fraud and financial institution 
fraud that appropriately account for the potential and actual harm to 
the public and the financial markets from these offenses and ensure 
appropriate terms of imprisonment for offenders involved in substantial 
bank frauds or other frauds relating to financial institutions and, if 
not, what changes to the Guidelines Manual would be appropriate to 
respond to section 1079A(a)(2) of the Act.
    Bank fraud is prosecuted under 18 U.S.C. 1344 (Bank fraud), which 
makes it unlawful to knowingly execute a scheme or artifice (1) to 
defraud a financial institution or (2) to obtain any of the property of 
a financial institution by means of false or fraudulent pretenses, 
representations, or promises. The statutory maximum term of 
imprisonment for an offense under section 1344 is 30 years. Offenses 
under section 1344 are referenced in Appendix A (Statutory Index) to 
Sec.  2B1.1. Other statutes relating to financial institution fraud or 
mortgage fraud include 18 U.S.C. 215, 656, 657, 1005, 1006, 1010, 1014, 
1029, and 1033. These offenses are likewise generally referenced to 
Sec.  2B1.1.
A. Proposed Provisions
    The proposed amendment would make two changes regarding calculation 
of loss in mortgage fraud cases. The Commission invites comment on 
whether there are other issues involving loss in mortgage fraud cases 
that are not adequately accounted for in the guidelines and, if so, 
what changes should be made to how loss is calculated in mortgage fraud 
cases.
    For example, the first change would specify that in the case of a 
fraud involving a mortgage loan in which the collateral was disposed of 
at a foreclosure sale, use the amount recovered from the foreclosure 
sale. Should the Commission provide an additional special rule for 
determining fair market value if the mortgaged property has not been 
disposed of by the time of sentencing? For example, should the 
Commission provide that, if the mortgaged property has not been 
disposed of by that time, the most recent tax assessment value of the 
mortgaged property shall constitute prima facie evidence of the fair 
market value, i.e., is evidence sufficient to establish the fair market 
value, if not rebutted?
    The proposed amendment would also expand the scope of Sec.  
2B1.1(b)(15) by amending the commentary to provide additional factors 
for the court to consider in determining whether one or more prongs of 
subsection (b)(15) apply. The Commission invites comment on whether it 
should make any further changes to subsection (b)(15), such as by 
expanding its scope or increasing its penalties, or both, to ``ensure 
appropriate terms of imprisonment for offenders involved in substantial 
bank frauds or other frauds relating to financial institutions''. If 
so, what changes to subsection (b)(15) should be made?
B. Mitigating Factors
    Are there mitigating factors in cases involving mortgage fraud or 
financial fraud that are not adequately accounted for in the 
guidelines? If so, how should the Commission amend the Guidelines 
Manual to account for those mitigating factors?

(D) Impact of Loss and Victims Tables in Certain Cases

    Issues for Comment:
    1. The Commission has observed that cases sentenced under Sec.  
2B1.1 involving relatively large loss amounts have relatively high 
rates of below-range sentences (both government sponsored and non-
government sponsored), particularly in the context of securities fraud 
and similar offenses. The Commission also has received public comment 
and reviewed judicial opinions suggesting that the impact of the loss 
table or the victims table (or the combined impact of the loss table 
and the victims table) may overstate the culpability of certain 
offenders in such cases.
    In response to these concerns, the Commission is studying whether 
it should limit the impact of the loss table or the victims table (or 
both) in cases sentenced under Sec.  2B1.1 involving relatively large 
loss amounts and, if so, how it should limit the impact.
    In particular, the Commission seeks comment on whether one or more 
of the following approaches should be adopted:
    (A) Limiting Impact of Loss Table if the Defendant Had Relatively 
Little Gain Relative to the Loss. Should the Commission insert a new 
specific offense characteristic in Sec.  2B1.1 to limit the impact of 
the loss table in cases involving large loss amounts if the defendant 
had relatively little gain relative to the loss? Examples of such a 
provision are the following:

    (Ex. 1) If the defendant's gain resulting from the offense did 
not exceed $10,000, the adjustment from application of subsection 
(b)(1) shall not exceed [14]/[16] levels.
    (Ex. 2) If the defendant's gain resulting from the offense did 
not exceed $25,000, the adjustment from application of subsection 
(b)(1) shall not exceed [16]/[18] levels.
    (Ex. 3) If the defendant's gain resulting from the offense did 
not exceed $70,000, the adjustment from application of subsection 
(b)(1) shall not exceed [18]/[20] levels.

    The maximum gain amount in the examples corresponds to one percent 
of the maximum loss amount. For example, in Example 3, the maximum gain 
amount is $70,000, which corresponds to a maximum loss amount of 
$7,000,000. (A loss amount of $7,000,000, in turn, corresponds to an 
enhancement of 18 levels, while a loss amount of more than $7,000,000 
corresponds to an enhancement of 20 levels.)
    (B) Limiting Impact of Victims Table if No Victims Were 
Substantially Harmed by the Offense. Should the Commission amend the 
victims table in Sec.  2B1.1(b)(2) to limit the impact of the

[[Page 2784]]

victims table if no victims were substantially harmed by the offense? 
For example, should the Commission provide that the 4-level and 6-level 
prongs of the victims table apply only if the offense substantially 
endangered the solvency or financial security of at least one victim?
    (C) Limiting Cumulative Impact of Loss Table and Victims Table. 
Should the Commission limit the cumulative impact of the loss table and 
the victims table? For example, should the Commission provide that, if 
the enhancement under the loss table is [14]-[24] levels, do not apply 
the 4-level or 6-level adjustment under the victims table?
    The Commission seeks comment on these three approaches. The 
Commission also seeks comment on whether it should modify one or more 
of these approaches to take the form of departure provisions rather 
than specific offense characteristics. Finally, the Commission seeks 
comment on any other approaches that would address the impacts of the 
loss table and the victims table in a manner that ensures they are 
consistent with the purposes of sentencing.
    2. If the Commission were to limit the impacts of the loss table or 
the victims table, or both, should the limitation apply in all cases 
sentenced under '2B1.1, or only in a subset of such cases (e.g., only 
in securities fraud cases)?
    3. Many guidelines refer to the loss table in Sec.  2B1.1, such as 
Sec.  2B5.3 (Criminal Infringement of Copyright or Trademark), Sec.  
2C1.2 (Offering, Giving, Soliciting, or Receiving a Gratuity), and 
Sec.  2S1.1 (Laundering of Monetary Instruments; Engaging in Monetary 
Transactions in Property Derived From Unlawful Activity). Other 
guidelines maintain a certain proportionality with the fraud guideline 
even though they do not refer directly to the loss table in Sec.  
2B1.1, such as guidelines that use the tax table in Sec.  2T4.1. If the 
Commission were to limit the impacts of the loss table or the victims 
table, or both, in Sec.  2B1.1, what changes, if any, should the 
Commission make to other guidelines for proportionality?

2. Drugs

    Synopsis of Proposed Amendment: This proposed amendment contains 
two parts, each of which involves drug offenses.
    Part A sets forth detailed issues for comment regarding offenses 
involving N-Benzylpiperazine (BZP) and whether the Commission should 
amend the guidelines applicable to offenses involving BZP, such as by 
providing a specific reference for BZP in the Drug Quantity Table in 
Sec.  2D1.1 (Unlawful Manufacturing, Importing, Exporting, or 
Trafficking (Including Possession with Intent to Commit These 
Offenses); Attempt or Conspiracy). Among other things, the issues for 
comment ask whether the Commission should base the penalties for BZP on 
the penalties for MDMA (Ecstasy), on the penalties for amphetamine, or 
on some other basis.
    Part B sets forth a proposed amendment that would create a ``safety 
valve'' provision in the guideline for chemical precursors, Sec.  
2D1.11 (Unlawfully Distributing, Importing, Exporting or Possessing a 
Listed Chemical; Attempt or Conspiracy), that parallels the ``safety 
valve'' provision in Sec.  2D1.1. The proposed amendment adds a new 
specific offense characteristic at Sec.  2D1.11(b)(6) and a 
corresponding new application note. Under the proposed amendment, 
certain first-time, nonviolent offenders sentenced under the chemical 
precursor guideline, Sec.  2D1.11, would be eligible to receive the 
same 2-level ``safety valve'' reduction (and using the same five 
``safety valve'' criteria) as such offenders are eligible to receive 
under Sec.  2D1.1.
    The two parts are as follows:

(A) BZP

    Issues for Comment:
    1. The Commission seeks comment regarding whether the Commission 
should amend the guidelines applicable to offenses involving BZP, such 
as by providing a specific reference for BZP in the Drug Quantity Table 
in Sec.  2D1.1.
    Offenses involving BZP represent a very small but increasing 
proportion of the federal caseload. Courts have reached different 
conclusions about what the marijuana equivalency for BZP should be, and 
those differences may be resulting in unwarranted sentencing 
disparities. The Commission has received several requests to address 
BZP offenses, including a request from the Second Circuit in United 
States v. Figueroa, 647 F.3d 466 (2d Cir. 2011) (``inasmuch as the 
parties inform us that use of BZP, alone and in combination with other 
substances, to mimic the effects of other narcotics is increasingly 
prominent in certain parts of this Circuit, we direct the Clerk of the 
Court to forward a certified copy of this opinion to the Chairperson 
and Chief Counsel of the United States Sentencing Commission for 
whatever consideration they may deem appropriate'').
    The Guidelines Manual does not provide a specific reference for BZP 
in the Drug Quantity Table in Sec.  2D1.1 and does not provide a 
marijuana equivalency for BZP in the Drug Equivalency Table in 
Application Note 10(D) to Sec.  2D1.1. Accordingly, guideline penalties 
for offenses involving BZP are determined under Application Note 5 to 
Sec.  2D1.1, which directs the court to determine the base offense 
level using the marijuana equivalency of the ``most closely related 
controlled substance'' referenced in the guideline. In determining the 
most closely related substance, the court shall, to the extent 
practicable, consider the following:
    (A) Whether the controlled substance not referenced in this 
guideline has a chemical structure that is substantially similar to a 
controlled substance referenced in this guideline.
    (B) Whether the controlled substance not referenced in this 
guideline has a stimulant, depressant, or hallucinogenic effect on the 
central nervous system that is substantially similar to the stimulant, 
depressant, or hallucinogenic effect on the central nervous system of a 
controlled substance referenced in this guideline.
    (C) Whether a lesser or greater quantity of the controlled 
substance not referenced in this guideline is needed to produce a 
substantially similar effect on the central nervous system as a 
controlled substance referenced in this guideline.
    See Sec.  2D1.1, comment. (n.5).
    District courts have suggested that the substance most closely 
related to BZP may be amphetamine, see United States v. Rose, 722 
F.Supp.2d 1286, 1289 (M.D.Ala. 2010) (``BZP on its own may arguably be 
most similar to amphetamine''), or methylphenidate (Ritalin), see 
United States v. Beckley, 715 F.Supp.2d 743, 748 (E.D.Mich. 2010) 
(stating that, if the issue of BZP alone were before the court, ``it 
would be obliged to conclude that the most closely related controlled 
substance * * * is methylphenidate''). However, the Eighth Circuit has 
upheld a district court's conclusion that BZP is most closely related 
to MDMA. See United States v. Bennett, ---- F.3d ----, 2011 WL 4950051 
(8th Cir. 2011).
A. In General
    The Commission invites general comment on BZP offenses and BZP 
offenders and how these offenses and offenders compare with other drug 
offenses and drug offenders. For example, how is BZP manufactured? How 
is it distributed and marketed? How is it possessed and used? What are 
the characteristics of the offenders involved in these various 
activities? What harms are posed by these activities?

[[Page 2785]]

B. Chemical Structure
    Is the chemical structure of BZP substantially similar to the 
chemical structure of a controlled substance referenced in Sec.  2D1.1? 
If so, to what substance?
C. Effect on Central Nervous System, and Relative Potency
    Is the effect on the central nervous system of BZP a stimulant, 
depressant, or hallucinogenic effect? Is that effect substantially 
similar to the stimulant, depressant, or hallucinogenic effect on the 
central nervous system of a controlled substance referenced in Sec.  
2D1.1? If so, to what substance? Is the quantity of BZP needed to 
produce that effect lesser or greater than the quantity needed of the 
other such substance? If so, what is the difference in relative 
potency?
    The Drug Enforcement Administration has described BZP as a 
stimulant that is 10 to 20 times less potent than amphetamine. See 75 
FR 47451 (August 6, 2010) (``BZP is about 20 times less potent than 
amphetamine in producing [effects similar to amphetamine]. However, in 
subjects with a history of amphetamine dependence, BZP was found to be 
about 10 times less potent than amphetamine.''). The Commission invites 
comment on this description. If this description is accurate, should 
the Commission provide a marijuana equivalency for BZP on this basis, 
e.g., by specifying a marijuana equivalency for BZP equal to one-tenth 
or one-twentieth of the marijuana equivalency for amphetamine? In 
particular, under the Drug Equivalency Table, 1 gram of amphetamine is 
equivalent to 2 kilograms of marijuana. Should the Commission specify a 
marijuana equivalency for BZP such that 1 gram of BZP is equivalent to 
one-tenth or one-twentieth of this, i.e., 200 or 100 grams of 
marijuana? If not, what should the Commission specify as the marijuana 
equivalency for BZP?
    2. There have been cases in which the offense involved BZP in 
combination with another controlled substance (such as MDMA), with non-
controlled substances (such as TFMPP or caffeine), or both, in various 
proportions.
    Courts have recognized that distinctions between BZP alone and BZP 
in combination with other substances may be appropriate. For example, 
the Second Circuit in United States v. Chowdhury, 639 F.3d 583 (2d Cir. 
2011), upheld a determination that BZP in combination with TFMPP is 
most closely related to MDMA, but in United States v. Figueroa, 647 
F.3d 466 (2d Cir. 2011), remanded a determination that BZP alone is 
most closely related to MDMA, finding Chowdhury not applicable and the 
record otherwise insufficient. See id. at 470 (``Although we certainly 
do not foreclose the determination that MDMA is the appropriate 
substitute for BZP alone, in the absence of an evidentiary hearing to 
determine the nature of the mixture, its chemical structure, and its 
intended neurological effects, the record on appeal does not permit us 
to determine whether the proper substitute is amphetamine * * *, MDMA, 
or another substance on the Drug Equivalency Table * * * '').
    Should the guidelines make distinctions between offenses involving 
BZP alone and BZP in combination with other substances? If so, what 
distinctions should be made? Are there particular combinations 
involving BZP that should be specifically accounted for in the 
guidelines and, if so, what are the combinations and how should the 
guidelines account for them?
    What controlled substance or substances are most closely related to 
BZP in combination with these various other substances? What marijuana 
equivalency or equivalencies should be provided for offenses involving 
BZP under these various circumstances?
    The tendency of the courts appears to be to follow an approach 
under which the BZP combination is most closely related to MDMA (but 
possibly at reduced potency). The Commission invites comment on this 
approach. If this approach is appropriate, should the Commission 
provide a marijuana equivalency for BZP combinations on this basis, 
e.g., by specifying a marijuana equivalency for BZP in combination with 
other substances that is equal to the marijuana equivalency for MDMA 
(but possibly at reduced potency)? In particular, under the Drug 
Equivalency Table, 1 gram of MDMA is equivalent to 500 grams of 
marijuana. Should the Commission specify a marijuana equivalency for 
BZP in combination with other substances such that 1 gram of BZP is 
equivalent to 500 grams of marijuana? Or should the Commission specify 
an equivalency lower than 500 grams to account for the possible reduced 
potency?
    3. What, if any, other considerations should the Commission take 
into account in determining how, if at all, the guidelines should be 
amended as they apply to offenses involving BZP?

(B) ``Safety Valve'' Provision in Sec.  2D1.11

    Proposed Amendment:
    Section 2D1.11(b) is amended by adding at the end the following:
    ``(6) If the defendant meets the criteria set forth in subdivisions 
(1)-(5) of subsection (a) of '5C1.2 (Limitation on Applicability of 
Statutory Minimum Sentences in Certain Cases), decrease by 2 levels.''.
    The Commentary to Sec.  2D1.11 captioned ``Application Notes'' is 
amended by adding at the end the following:
    ``9. Applicability of Subsection (b)(6).--The applicability of 
subsection (b)(6) shall be determined without regard to the offense of 
conviction. If subsection (b)(6) applies, Sec.  5C1.2(b) does not 
apply. See Sec.  5C1.2(b)(2) (requiring a minimum offense level of 
level 17 if the `statutorily required minimum sentence is at least five 
years').''.

3. Human Rights

    Synopsis of Proposed Amendment: This proposed two-part amendment is 
a continuation of the Commission's multi-year review to ensure that the 
guidelines provide appropriate guidelines penalties for cases involving 
human rights violations.

A. Human Rights Offenses

    Part A of the proposed amendment addresses cases in which the 
defendant is convicted of an offense that Congress has indicated is a 
``serious human rights offense,'' i.e., an offense under 18 U.S.C. 1091 
(Genocide), 2340A (Torture), 2441 (War crimes), and 2442 (Recruitment 
or use of child soldiers). See 28 U.S.C. 509B(e). Such offenses are 
currently accounted for in the guidelines as follows:

    (1) Genocide. Section 1091 offenses apply to a range of conduct 
committed ``with the specific intent to destroy, in whole or in 
substantial part, a national, ethnic, racial, or religious group''. 
See 18 U.S.C. 1091(a). The range of conduct includes (i) Killing 
members of the group; (ii) causing serious bodily injury to members 
of the group; (iii) causing permanent impairment of the mental 
faculties of members of the group (e.g., by drugs or torture); (iv) 
subjecting the group to conditions of life that are intended to 
cause the physical destruction of the group; (v) imposing measures 
intended to prevent births within the group; and (vi) transferring 
by force children of the group to another group. Id. The statutory 
maximum term of imprisonment is 20 years, or life imprisonment if 
the conduct involved killing and death resulted. See 18 U.S.C. 
1091(b). In addition, section 1091(c) makes it a crime to ``directly 
and publicly incite[] another'' to violate section 1091(a); the 
statutory maximum term of imprisonment for this offense is 5 years. 
See 18 U.S.C. 1091(c). Section 1091 offenses are referenced in 
Appendix A (Statutory Index) to Sec.  2H1.1 (Civil Rights).
    (2) Torture. Section 2340A offenses apply to whoever commits or 
attempts to commit

[[Page 2786]]

torture (as defined in 18 U.S.C. 2340). The statutory maximum term 
of imprisonment is 20 years, or any term of years or life if death 
resulted. See 18 U.S.C. 2340A(a). Section 2340A offenses are 
referenced in Appendix A to Sec. Sec.  2A1.1 (First Degree Murder), 
2A1.2 (Second Degree Murder), 2A2.1 (Assault with Intent to Commit 
Murder; Attempted Murder), 2A2.2 (Aggravated Assault), and 2A4.1 
(Kidnapping, Abduction, Unlawful Restraint).
    (3) War Crimes. Section 2441 offenses apply to a range of 
conduct that constitute a war crime (as defined in 18 U.S.C. 
2441(c)). The range of conduct includes (i) Torture; (ii) cruel or 
inhuman treatment; (iii) performing biological experiments; (iv) 
murder; (v) mutilation or maiming; (vi) intentionally causing 
serious bodily injury; (vii) rape; (viii) sexual assault or abuse; 
and (ix) taking hostages. The statutory maximum term of imprisonment 
is any term of years or life. See 18 U.S.C. 2441(a). Section 2441 
offenses are not referenced in Appendix A.
    (4) Child Soldiers. Section 2442 offenses apply to whoever 
knowingly (1) recruits, enlists, or conscripts a child (i.e., a 
person under 15 years of age) to serve in an armed force or group or 
(2) uses a child to participate actively in hostilities. See 18 
U.S.C. 2442(a). The statutory maximum term of imprisonment is 20 
years, or any term of years or life if death resulted. See 18 U.S.C. 
2442(b). Section 2442 offenses are referenced in Appendix A to Sec.  
2H4.1 (Peonage, Involuntary Servitude, Slave Trade, and Child 
Soldiers).

    The proposed amendment provides two options for cases in which the 
defendant is convicted of such an offense.
    Option 1 establishes a new Chapter Two offense guideline, at Sec.  
2H5.1 (Human Rights). The new offense guideline reflects a 
consolidation into a single guideline of the various base offense 
levels and specific offender characteristics that are involved in the 
guidelines that currently account for these offenses. The new offense 
guideline contains alternative base offense levels of [18] if the 
defendant is convicted of the offense of incitement to genocide (which 
generally has a statutory maximum term of imprisonment of 5 years) and 
[24] otherwise. The guideline also contains enhancements that apply if 
any victim sustained serious bodily injury (2 to 4 levels); if any 
victim was sexually exploited (6 to 10 levels); if any victim was 
abducted, involuntarily detained, or held in a condition of servitude 
(6 to 10 levels); if the number of victims was [10][50] or more (2 
levels); if death resulted; or if the defendant was a public official 
[or military official] or the offense was committed under color of law 
[or color of military authority].
    Option 1 also amends Appendix A (Statutory Index) to reference each 
of these offenses of conviction to the new guideline and makes 
conforming changes to other offense guidelines.
    Option 2 establishes a new Chapter Three adjustment, at Sec.  3A1.5 
(Human Rights), that applies if the defendant [was convicted of]/
[committed] a serious human rights offense. The proposed guideline 
provides an enhancement of [4]-[12] levels and a minimum offense level 
of [24]-[32]. The proposed guideline also requires that the defendant 
be placed in Criminal History Category [V][VI].

B. Immigration and Naturalization Offenses Involving Serious Human 
Rights Offenses

    Part B of the proposed amendment addresses cases in which the 
offense of conviction is for immigration or naturalization fraud but 
the defendant had committed a serious human rights offense. Immigration 
and naturalization frauds are referenced in Appendix A to Sec.  2L2.1 
(Trafficking in a Document Relating to Naturalization, Citizenship, or 
Legal Resident Status, or a United States Passport; False Statement in 
Respect to the Citizenship or Immigration Status of Another; Fraudulent 
Marriage to Assist Alien to Evade Immigration Law) or Sec.  2L2.2 
(Fraudulently Acquiring Documents Relating to Naturalization, 
Citizenship, or Legal Resident Status for Own Use; False Personation or 
Fraudulent Marriage by Alien to Evade Immigration Law; Fraudulently 
Acquiring or Improperly Using a United States Passport), depending on 
the offense of conviction.
    The proposed amendment adds a new specific offense characteristic 
to both guidelines. The new specific offense characteristic provides an 
enhancement of [10]-[18] levels if the offense reflected an effort to 
avoid detection or responsibility for a serious human rights offense.
    Part C of the proposed amendment sets forth issues for comment on 
human rights offenses.
(A) Human Rights Offenses
    Proposed Amendment:
    Option 1:
    Chapter 2, Part H is amended in the heading by adding at the end 
``AND HUMAN RIGHTS''.
    Chapter 2, Part H is amended by adding at the end the following:
    ``5. HUMAN RIGHTS
    Sec.  2H5.1. Human Rights
    (a) Base Offense Level:
    (1) [24], except as provided below;
    (2) [18], if the defendant is convicted of an offense under 18 
U.S.C. Sec.  1091(c).
    (b) Specific Offense Characteristics
    (1) (A) If any victim sustained permanent or life-threatening 
bodily injury, increase by 4 levels; (B) if any victim sustained 
serious bodily injury, increase by 2 levels; or (C) if the degree of 
injury is between that specified in subdivisions (A) and (B), increase 
by 3 levels.
    (2) (A) If any victim was sexually exploited, increase by 6 levels; 
(B) if any such victim had not attained the age of sixteen years, 
increase by 8 levels; or (C) if any such victim had not attained the 
age of twelve years, increase by 10 levels.
    (3) (A) If any victim was abducted, involuntarily detained, or held 
in a condition of servitude, increase by 6 levels; (B) if any such 
victim continued to be so detained or held for at least 30 days, 
increase by 8 levels; or (C) if any such victim continued to be so 
detained or held for at least 180 days, increase by 10 levels.
    (4) If the number of victims described in subdivisions (1) through 
(3) was [10][50] or more, increase by [2][4] levels.
    (5) If death resulted, increase to the greater of:
    (A) 2 plus the offense level as determined above; or
    (B) 2 plus the offense level from the most analogous guideline from 
Chapter Two, Part A, Subpart 1 (Homicide).
    (6) If (A) the defendant was a public official [or military 
official] at the time of the offense; or (B) the offense was committed 
under color of law [or color of military authority], increase by 6 
levels.

Commentary

    Statutory Provisions: 18 U.S.C. 1091, 2340A, 2441, and 2442.
    Application Notes:
    1. Definitions.--For purposes of this guideline--
    Definitions of `serious bodily injury' and `permanent or life-
threatening bodily injury' are found in the Commentary to Sec.  1B1.1 
(Application Instructions). However, for purposes of this guideline, 
'serious bodily injury' means conduct other than criminal sexual abuse, 
which is taken into account in the specific offense characteristic 
under subsection (b)(2).
    `Sexually exploited' includes offenses set forth in 18 U.S.C. 2241-
2244, 2251, and 2421-2423.
    2. Interaction With Sec.  3A1.1 (Hate Crime Motivation or 
Vulnerable Victim).--
    (A) Hate Crime Motivation (Sec.  3A1.1(a)).--If the finder of fact 
at trial or, in the case of a plea of guilty or nolo contendere, the 
court at sentencing determines beyond a reasonable doubt that the 
defendant intentionally selected any victim or any property as the 
object

[[Page 2787]]

of the offense because of the actual or perceived race, color, 
religion, national origin, ethnicity, gender, gender identity, 
disability, or sexual orientation of any person, an additional 3-level 
enhancement from Sec.  3A1.1(a) will apply. An adjustment from Sec.  
3A1.1(a) will not apply, however, if a 6-level adjustment from Sec.  
2H5.1(b)(6) applies.
    (B) Vulnerable Victim (Sec.  3A1.1(b)).--The base offense level 
does not incorporate the possibility that a victim of the offense was a 
vulnerable victim for purposes of Sec.  3A1.1(b). Therefore, an 
adjustment under '3A1.1(b) would apply, for example, in a case in which 
the defendant recruited or used child soldiers (see 18 U.S.C. 2442) or 
transferred by force children of a national, ethnic, racial, or 
religious group (see 18 U.S.C. 1091(a)(5)).
    3. Interaction with Sec.  3A1.3 (Restraint of Victim).--If 
subsection (b)(3) applies, do not apply Sec.  3A1.3 (Restraint of 
Victim).
    4. Interaction With Sec.  3B1.3 (Abuse of Position of Trust or Use 
of Special Skill.--If subsection (b)(6) applies, do not apply Sec.  
3B1.3 (Abuse of Position of Trust or Use of Special Skill).