United States v. Giraudo
2018 U.S. Dist. LEXIS 81019, 2018 WL 2214660 (2018)
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Rule of Law:
For sentencing in a criminal antitrust conspiracy, the 'volume of commerce' includes the full purchase price of all properties affected by the violation in which the defendant acted as a principal, not just the defendant's proportional share or actual profit. A defendant's offense level may also be enhanced for acting as an organizer, leader, or manager of the criminal activity.
Facts:
- Joseph Giraudo and Kevin Cullinane were members of a group known as the 'Big Five,' which orchestrated a conspiracy to rig bids at public foreclosure auctions in San Francisco and San Mateo counties.
- The 'Big Five' conspired with other individuals and groups to suppress the prices of properties by agreeing to refrain from bidding against each other.
- The conspiracy involved making monetary payoffs to competing bidders in exchange for their agreement not to bid.
- The conspiracy also involved non-monetary agreements, such as rotating winning bids among the conspirators.
- Giraudo was viewed by co-conspirators as the 'boss' of the operation, making key decisions, settling disputes, and disciplining those who did not comply with the scheme's rules.
- Cullinane, a member of the 'Big Five,' was responsible for managing the real estate acquired by the group through the bid-rigging scheme and shared equally in the profits on most properties.
- Members of the 'Big Five' would sometimes punish bidders who refused to cooperate by bidding up the prices of properties those bidders sought to acquire.
Procedural Posture:
- Joseph Giraudo and Kevin Cullinane were criminally charged with violations of the Sherman Antitrust Act.
- Both defendants pled guilty in the U.S. District Court for the Northern District of California without entering into plea agreements with the government (an 'open plea').
- In its sentencing memorandum, the government calculated Giraudo's offense level at 18 and Cullinane's at 17 under the U.S. Sentencing Guidelines.
- Giraudo and Cullinane filed sentencing memoranda contesting the government's calculations, arguing their offense levels should be 9 and 12, respectively.
- The District Court held a hearing to resolve the dispute over the appropriate offense level calculation for each defendant.
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Issue:
For sentencing purposes in a criminal antitrust bid-rigging conspiracy, is the 'volume of commerce' under U.S.S.G. § 2R1.1 properly calculated as the total price of all properties affected by the conspiracy in which a defendant participated as a principal, and can a role enhancement apply to a participant who organized and managed the conspiracy?
Opinions:
Majority - Breyer, Charles R.
Yes. For sentencing purposes, the 'volume of commerce' is properly calculated as the total price of all properties affected by the conspiracy in which a defendant participated as a principal, and a role enhancement is appropriate for a defendant who organized and managed the conspiracy. The court reasoned that under U.S.S.G. § 2R1.1(b), a defendant is responsible for the commerce done by his 'principal,' which includes a partnership or joint venture, meaning the full purchase price of a property is attributable to him even if he only held a partial share. The court rejected the defendants' arguments to use alternative measures like payoffs or actual gain, stating that 'volume of commerce' is the guideline's prescribed substitute for calculating damages because actual damages are 'difficult and time consuming to establish.' The court also found the four-level role enhancement for Giraudo was warranted based on overwhelming evidence from co-conspirators that he acted as an organizer and leader, exercising decision-making authority, settling disputes, and controlling others. Similarly, Cullinane's three-level enhancement as a manager was justified by his role in managing the properties and assets acquired by the criminal organization.
Analysis:
This order provides a detailed judicial application of the Sentencing Guidelines in a complex white-collar antitrust case, specifically clarifying the calculation of 'volume of commerce.' It reinforces that courts should broadly construe 'affected' commerce to include the full transaction value of a conspirator's principal, rejecting attempts to limit it to an individual's fractional share or net profit. The decision also affirms that significant role enhancements for being an 'organizer' or 'manager' are not reserved for organized crime syndicates but apply squarely to leaders in sophisticated financial conspiracies. This serves as a strong precedent for prosecutors seeking substantial sentences in bid-rigging cases by demonstrating how to build a record supporting high volume-of-commerce calculations and leadership enhancements.
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