A recent federal court decision reflects a disturbing trend in white collar criminal prosecutions: the tendency of judges to punish defendants who insist on proceeding to trial rather than pleading guilty, particularly those who exercise the right to testify in their own defense and are thereafter convicted. While sentencing judges have historically "rewarded" guilty pleas and penalized defendants electing to go to trial, the decision to further punish a defendant who takes the witness stand and is nonetheless convicted is alarming.

In September 2004, United States District Judge Richard Owen granted the government's motion for an upward departure and sentenced former Silicon Valley investment banker Frank Quattrone to 18 months in prison. The sentencing followed Quattrone's conviction in May 2004 for obstructing grand jury and SEC investigations into how his bank allocated shares of IPO stocks.

The government contended that Quattrone obstructed justice by forwarding an email to subordinates encouraging them to "clean up" their files soon after he learned of the government's investigation. Referring to the bank's document-management policies, Quattrone wrote in his email, "I strongly advise you to follow these procedures." At trial, Quattrone took the stand in his defense, testifying that he did not intend to obstruct justice. Contending that the email was a reminder to colleagues to follow the company's document-retention policy, Quattrone claimed that he was not thinking about ongoing government investigations when he sent the e-mail.

Following his conviction, probation officials recommended that Quattrone serve a split sentence: five months in prison and five months in home detention. Rejecting that recommendation, the government filed a motion for an upward departure, contending that Quattrone committed perjury while testifying at trial. Quattrone's attorneys argued that perjury was not proved before the jury beyond a reasonable doubt and that any such sentencing enhancement was therefore inappropriate under the Supreme Court's ruling in Blakely v. Washington, which held that in the context of a state sentencing scheme, it was unconstitutional to increase a defendant's sentence based upon facts which either had not been proven to the jury beyond a reasonable doubt or admitted by the defendant.

Finding that Quattrone perjured himself while testifying, Judge Owen determined that Quattrone deserved a sentence higher than that called for under the Sentencing Guidelines. Judge Owen concluded that it was "crystal clear" that Quattrone's denial that he intended to obstruct justice was not true, and noted "[i]t is degrading to the administration of justice if this kind of thing goes unremarked." Judge Owen further stated that "[a] defense lawyer runs the risk of this by putting the defendant on the stand. You can avoid the perjury issue by simply not taking the witness stand."

The district court's sentencing decision in this case is significant for a number of reasons. First, the threat of a perjury enhancement if the jury returns a guilty verdict may well chill future criminal defendants from exercising their constitutional rights to testify in their own defense. In some sense, when taking the witness stand, a criminal defendant will almost always deny the government's charges and offer his or her own version of events. If such a denial can give rise to a perjury enhancement, any defendant will be less willing to run the risk of testifying. Judge Owen's ruling in the Quattrone case seems to present a dangerous proposition: if the jury convicts, the defendant is presumed to have committed perjury.

Second, Judge Owen's ruling is notable for its rejection of the Supreme Court's recent ruling in Blakely v. Washington. While Blakely was limited to the Washington state guidelines, a number of federal courts have held that its reasoning applies to the federal Sentencing Guidelines, and the Supreme Court heard two cases presenting that question on October 4, 2004. In Quattrone's case, defense counsel argued that because the jury had not determined that Quattrone committed perjury beyond a reasonable doubt, it was unconstitutional to enhance his sentence based upon the perjury enhancement provided for under the Sentencing Guidelines. Judge Owen rejected that argument, based upon a prior ruling from the United States Court of Appeals for the Second Circuit directing that until the Supreme Court definitely resolves the issue, district courts are to continue applying the Sentencing Guidelines.

While Quattrone's attorneys have vowed to appeal, and Judge Owen's decision to impose a perjury enhancement may ultimately be overturned, the implications of his ruling cannot be ignored. The prospect of an increased sentence based upon a perjury enhancement, while always a possibility, now more than ever looms ominously over all defendants who elect to testify in their own defense. Such an eventuality must be carefully considered by all federal criminal defendants and their counsel in making the crucial decision as to whether to plead guilty or proceed to trial, particularly in complex securities or accounting cases where juries often want to hear the defendant testify.