Schmitz pleaded guilty to one count of mail fraud affecting a financial institution, in violation of 18 U.S.C. § 1341 for convincing a series of financial institutions and others to lend him money, ostensibly to invest in real estate development, by telling these institutions that he was the beneficiary of a multi-million dollar trust fund whose assets were available as collateral for the loans. In fact, there was no trust and no trust assets. The District Court for the Northern District of Illinois, Eastern Division sentenced him to serve 84 months in prison, a term slightly below the low end of the sentencing range advised by the Sentencing Guidelines.
He argued two district court errors on appeal: (1) a procedural error, when it failed to address his contention that “factor creep” in the Guidelines inflated beyond reason the sentencing range for white collar frauds, and particularly for someone of his age and health; and (2) the Court relied on an erroneous understanding of the timespan of the fraud to which he pleaded guilty.
The Court of Appeals affirmed on both grounds. First, finding the District Court was not obligated to explicitly address his argument that it should have abandoned the fraud guideline in determining his sentence, because the Sentencing Commission had neglected its institutional role and had allowed factor creep to substantially increase the penalties for fraud offenses without empirical data to suggest that harsher penalties were necessary. The Court of Appeals held ”[o]nce “Booker unbound the sentencing judges from the guidelines,” United States v. Aguilar-Huerta , 576 F.3d 365, 366 (7th Cir. 2009) (coll. cases), they became empowered to substitute their own views as to the appropriate sentence for a particular crime (and defendant) for the penal theories that inform the pertinent provisions of the Guidelines, see id. at 366-67 (coll. cases); see United States v. Corner , 598 F.3d 411, 414-15 (7th Cir. 2010) (en banc)….But because an argument like Schmitz’s is a blanket challenge to the guideline rather than one tailored to his unique characteristics and circumstances, it is not one that the district judge must explicitly address. See United States v. Ramirez, 675 F.3d 634, 640 (7th Cir. 2011) (per curiam); Garthus, 652 F.3d at 721; Moreno-Padilla, 602 F.3d at 814; United States v. Pape, 601 F.3d 743, 749 (7th Cir. 2010); Aguilar-Huerta, 576 F.3d at 367-68.” The Court found his age and health were not atypical for a 60-year old and could be readily treated in prison.
Regarding Schmitz’ second argument, the Court found the District Court’s remark about Schmitz’ shrouded employment status since 1996 was a mere slip of the tongue. Finding “…what the judge meant to say was that since 1996, Schmitz’s life had been given over to deception and fraud —a pattern that included the charged offense but was not limited to it. That is a reasonable inference given the inability to pin down what precisely Schmitz was doing, how much money he was earning, and where that money was coming from. The judge’s use of the term “fraud scheme” was merely an unfortunate slip of the tongue.”