## Facts

- Richard P. Adelson, a senior executive at Impath, Inc., a public company providing cancer-diagnosis testing services, was charged in a superseding indictment with conspiracy, securities fraud, false SEC filings, and proxy-solicitation offenses.
- The alleged accounting fraud overstated Impath’s financial results and maintained an artificially inflated stock price from about late 1999 to mid-2003.
- The scheme was developed and carried out primarily by accounting executives and employees under pressure from the CEO to maintain strong reported results.
- After a two-week trial, the jury convicted Adelson of conspiracy, securities fraud, and three false-filing counts tied to the second half of 2002, and acquitted him of counts tied to earlier periods.
- The sentencing court treated the split verdict as showing Adelson joined the conspiracy relatively late, becoming aware of the fraud toward its end and choosing to conceal and continue it rather than expose it.
- When the irregularities were disclosed, Impath’s stock price dropped sharply and shareholder losses were estimated at roughly $260 million.
- Under the Sentencing Guidelines, the loss-based enhancements drove the calculation to an offense level of 46, which corresponded to a recommended range of life imprisonment.
- Several accounting participants who had designed the fraud cooperated after disclosure and received substantially reduced sentences.

## Issues

1. After *Booker*, how should a court weigh the advisory Sentencing Guidelines against the 18 U.S.C. § 3553(a) factors when the Guidelines (driven largely by loss) recommend life imprisonment for a white-collar defendant?
2. Whether a large downward variance is warranted when the loss figure produces a Guidelines range that materially overstates the defendant’s relative culpability and risks unwarranted disparities.

## Decision

- The court concluded the Guidelines calculation yielded a sentence that was patently unreasonable on these facts and that greater weight should be given to § 3553(a).
- The court imposed approximately 42 months’ imprisonment (about three and a half years), rather than a life sentence recommended by the Guidelines.
- The court treated proportionality and avoidance of unwarranted disparities—particularly in relation to cooperating co-conspirators who originated the scheme—as supporting the variance.
- The court also considered Adelson’s history and characteristics, including strong character submissions, as relevant to an individualized sentence.

## Legal Principles

- Post-*Booker*, the Sentencing Guidelines are advisory; the controlling directive is § 3553(a)’s requirement that the sentence be sufficient, but not greater than necessary, to serve the purposes of sentencing.
- A court may vary substantially from a Guidelines range where rigid application produces a result that does not reasonably reflect the defendant’s actual culpability.
- In large fraud cases, loss-driven enhancements can dominate the calculation and may overstate culpability, requiring careful consideration of role, timing of entry, and other individualized factors.
- § 3553(a)(6) supports adjusting a sentence to reduce unwarranted disparities among defendants with comparable culpability, including disparities created by cooperation outcomes.

## Conclusion

Applying § 3553(a) in a post-*Booker* framework, the court rejected a loss-driven Guidelines life recommendation as excessive for a defendant who joined late and was not an architect of the scheme, and imposed a 42-month sentence to better reflect individualized culpability, proportionality, and deterrence.


United States v. Adelson, 441 F. Supp. 2d 506 (S.D.N.Y. 2006)