United States v. Parris

Brothers Lester and Lennox Parris (defendants) were the only directors of Queénch, a publicly traded company that sold a new type of water bottle. Queénch stock was initially trading for approximately $0.18 per share. The Parris brothers published press releases that included false representations about Queénch’s finances and business outlook, and the share price was artificially pumped to up to $0.32 per share. Queénch’s trading volume also spiked from approximately 30,000 shares per day to millions. The Parris brothers signed resolutions as company principals authorizing the issuance of over 28 million new shares to two stock-promotion companies. Those companies sold the shares for almost five million dollars and wired two and a half million dollars to a separate business whose bank account was owned by Lester Parris. The Securities and Exchange Commission began investigating. The Parris brothers were convicted of securities fraud, conspiracy, and witness tampering. The Federal Sentencing Guidelines (the guidelines) provided a sentencing range of 360 months of incarceration to life imprisonment. The district court, in consultation with the government (plaintiff) and defense counsel, compiled a list of sentences in similar cases. The list showed that the severity of losses in white-collar cases strongly correlated to the length of imprisonment in the sentence. If losses were less than $100 million, the sentence was generally less than 10 years. Those responsible for large losses were sentenced to a much longer term of imprisonment. The district court considered this evidence in deciding Lester and Lennox Parris’s sentences.