## Facts

- Michael Martin, a former senior executive and chief financial officer of HealthSouth Corporation, participated in a multi-year scheme to inflate the company’s reported earnings to meet market expectations.
- HealthSouth was a large, publicly traded company whose stock traded on the New York Stock Exchange; the fraud’s disclosure led to a sharp stock-price collapse and substantial shareholder losses.
- Martin pled guilty to (1) conspiracy to commit securities fraud and mail fraud and to falsify books and records (18 U.S.C. § 371) and (2) falsifying books and records (15 U.S.C. §§ 78m(b)(2)(A), 78m(b)(5), 78ff; 17 C.F.R. § 240.13b2-1; 18 U.S.C. § 2).
- For sentencing, the district court relied on the plea agreement factual basis and the presentence report; Martin withdrew objections to the presentence report.
- The parties agreed the advisory Guidelines range was 108–135 months and that Martin’s cooperation warranted a U.S.S.G. § 5K1.1 substantial-assistance departure.
- In an earlier sentencing, the district court imposed probation; the court of appeals vacated and remanded due to an inadequate record for appellate review.
- On remand, the government recommended a § 5K1.1 departure to 42 months (described as a nine-level departure), but the district court granted a 23-level departure and imposed 7 days’ imprisonment.
- The government appealed, challenging the extent of the departure and the reasonableness of the sentence.

## Issues

1. Whether the district court’s 23-level downward departure under U.S.S.G. § 5K1.1 was reasonable given the nature of Martin’s assistance and the seriousness of the offense.
2. Whether a 7-day custodial sentence for a senior participant in a large-scale securities fraud was reasonable under 18 U.S.C. § 3553(a) and the advisory Guidelines framework.

## Decision

- The Eleventh Circuit vacated the sentence in its entirety and remanded for resentencing.
- The court held the 23-level § 5K1.1 departure and resulting 7-day sentence were unreasonable in light of the offense’s magnitude, Martin’s high-level role, and the § 3553(a) factors.
- The court concluded the district court abused its discretion in weighing substantial assistance and in applying the statutory sentencing factors to justify the extraordinary reduction.

## Legal Principles

- After Booker, appellate review examines the reasonableness of the sentence in light of the advisory Guidelines and the factors in 18 U.S.C. § 3553(a).
- U.S.S.G. § 5K1.1 permits downward departures for substantial assistance, but the extent of the departure must be justified by the assistance and must remain consistent with § 3553(a).
- A sentencing court must account for offense seriousness, just punishment, general deterrence, and avoidance of unwarranted sentencing disparities; cooperation does not permit effectively disregarding these considerations.
- An exceptionally large departure that yields a nominal custodial term for a serious, high-loss financial crime may be substantively unreasonable.

## Conclusion

The Eleventh Circuit vacated a 7-day sentence imposed after a 23-level substantial-assistance departure, holding that the sentence failed to reasonably reflect the seriousness of a major securities-fraud scheme and the core sentencing purposes and constraints set out in § 3553(a).


United States v. Martin, 455 F.3d 1227 (11th Cir. 2006)