Securities Regulation Daily Courts wrestle with compassionate release in shadow of COVID-19
Monday, April 20, 2020

Courts wrestle with compassionate release in shadow of COVID-19

By Lene Powell, J.D.

In the context of the current pandemic, strict compliance with administrative exhaustion requirements for compassionate release requests is more important than ever, a district court found.

An elderly, ailing prisoner serving time for securities fraud could not bypass administrative exhaustion requirements in attempting to avoid the risk of contracting the COVID-19 virus in the prison setting. Acknowledging that some district courts have decided the issue differently, the court concluded that it could only consider a request for compassionate release after Bureau of Prison appeal processes had run their course. As a result, the defendant was required to wait out a 30-day period before the court could consider his motion for sentence reduction (U.S. v. Petrossi, April 14, 2020, Conner, C.).

Securities fraud sentence. 79-year old Louis Petrossi was sentenced in 2018 to serve over eight years in prison for securities fraud in connection with the ForceField market manipulation scheme. Petrossi’s serious health issues, including leukemia, pneumonia, pleural effusions, and a potentially cancerous lung nodule, was considered a major mitigating factor in sentencing. The sentence was affirmed on appeal to the Third Circuit.

Request for compassionate release. In March 2020, the court received a request from Petrossi’s family asking the court to immediately release Petrossi to home confinement, given his age and health condition and his family’s fear that the COVID-19 outbreak might reach the prison in which he is incarcerated.

As a threshold matter, the court explained that only the Bureau of Prisons has authority to release a prisoner to home confinement. Therefore, the court instead construed the motion as a request for sentence reduction and compassionate release under 18 U.S.C. § 3582(c)(1)(A) and appointed the Federal Public Defender. Petrossi then requested compassionate release from the prison warden, who replied that a response would be given within 30 days.

A defendant may move the court directly for compassionate release if the defendant has either:

  1. Fully exhausted all administrative rights to appeal a failure of the Bureau of Prisons to bring a motion on the defendant’s behalf; or
  2. Awaited the lapse of 30 days from the receipt of such a request by the warden.

Petrossi had not fully exhausted administrative appeals and 30 days had not yet passed. Nonetheless, Petrossi asked the court to waive the timing requirement and decide his motion now "due to the urgency of the COVID-19 pandemic." The government disputed whether a sentence reduction was warranted and contended that statutory exhaustion rules are not subject to equitable exemptions.

Wait it out. The court concluded that the administrative exhaustion requirement was not waivable because it was a statutory exhaustion provision, not a judge-made exhaustion doctrine. Interpreting Supreme Court precedent, the court determined that there was no room to create a judicial exception.

Petrossi urged the court to follow rulings by district courts in New York and Connecticut that have nonetheless waived the 30-day waiting period due to the current pandemic. The court declined to do so. The court noted that one ruling’s broad statement about excusing even statutory exhaustion requirements was merely dicta. Also, other district courts had concluded that Section 3582(c)(1)(A)’s statutory exhaustion requirement could not be judicially excused, including at least one in the Third Circuit.

In addition, the Third Circuit very recently indicated a disinclination to waive exhaustion requirements in the context of COVID-19 requests for compassionate release. It declined to remand to the district court a compassionate release motion filed with the court of appeals, finding that remand would be futile given the defendant’s failure to exhaust. Finding that failure to comply with the exhaustion requirement presented a "glaring roadblock" to relief under Section 3582(c)(1)(A), the Third Circuit panel wrote:

Given BOP’s shared desire for a safe and healthy prison environment, we conclude that strict compliance with § 3582(c)(1)(A)’s exhaustion requirement takes on added—and critical—importance.

Accordingly, the court declined Petrossi’s request to entertain his unexhausted motion for compassionate release. The court held his motion in abeyance until April 27, 2020, when the 30-day statutory exhaustion window was scheduled to close.

This is case No. 1:17-CR-192.

MainStory: TopStory Enforcement FraudManipulation PennsylvaniaNews

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