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Third Circuit widens circuit split on guilt-assuming hypotheticals; reaffirms breadth of Rule 404(b) in fraud cases

In affirming a mail fraud conviction, the Third Circuit has held in a 2-1 decision that guilt-assuming hypothetical questions may sometimes be asked of defense character witnesses, widening an existing circuit split on this issue. The Court also approved the admission of a substantial amount of other-bad-acts evidence to prove intent, thereby reaffirming the broad reach of Rule 404(b) in fraud cases.

The case, United States v. Kellogg, No. 05-1893, involved allegations that the owner of a water testing laboratory defrauded his customers by reporting to them that certain analyses were performed using one particular EPA methodology when, in fact, a different EPA methodology had been used. Intent to defraud was the principal issue at trial, with the defendant maintaining that any reporting errors as to the methodology used were accidental. Substantial evidence supported the defendant's claim, including a lack of motive arising from the near-identical scope and cost of the two methodol…

3d Circuit reverses probationary sentences in fraud case

In United States v. Ali, (3d Cir. Nov. 27, 2007), the Third Circuit reversed probationary sentences in a fraud case, in which defendants Faridah Ali and Lakiha Spicer obtained federal money allocated to a community college to fund an adult education program. The Third Circuit held that the district court erred in its initial Guidelines calculation, that it relied on inappropriate factors for the downward departures, and that the resulting sentences were unreasonable, and thus vacated the sentences and remanded for resentencing.

The Third Circuit determined that the district court erred under step one of the sentencing process, the Guidelines calculation, because it rejected a preponderance standard for the loss calculation in favor of a reasonable doubt standard in Ali’s case and, further, failed to specify an estimate of the loss amount. The district court ultimately assessed a 15-21 month Guideline range (level 14, category I) for Ali, whereas Probation had calculated a 41-51 month r…

Admissibility of Co-conspirators Statements

In United States v. Weaver, No. 04-3888 (3d Cir. November 7, 2007), the Court of Appeals reversed the district court’s grant of the Defendant Weaver’s motion in limine precluding the Government from introducing a recorded telephone conversation between an alleged co-conspirator and her sister wherein the co-conspirator made statements implicating Weaver in a fraud scheme. The district court granted the motion, without having held a hearing, finding that the statements made by the co-conspirator were not in furtherance of the conspiracy and seemed to "constitute derogatory opinions having no conceivable value." The Court of Appeals rejected those conclusions and found the statements to be admissible under Federal Rule of Evidence 801(d)(2)(E).

Dolores Weaver was the director of an educational program at the Community College of Philadelphia (CCP). She was alleged to have been involved in a scheme with Faridah Ali, the assistant director of the Sister Clara Mohammed School wher…

Jury Instructions in Religious Tax Protestors' Case Constructively Amended Indictment

United States v. McKee, No. 05-3297 (Oct. 29, 2007), involved the prosecution of three members of the Reformed Israel of Yaweh ("RIY") religious sect, which opposes the payment of taxes to support war. Two of the defendants were owners of a small carpentry and home renovation business, and the third was the wife of one of the defendants. The Third Circuit vacated the defendants’ convictions for failing to pay employment taxes because the jury instructions constructively amended the indictment. The indictment charged the defendants with preparing, signing, and causing the filing of false employment tax returns. The instructions listed several examples of conduct sufficient to establish the charged conspiracy, including falsifying records and failing to report wages to an accountant. Although the government introduced evidence that the defendants falsified books and records and withheld information from the company’s accountant, this conduct was never charged in the indictment…

Rule of Lenity Applied to Definition of "Antique Firearm" in Unregistered Shotgun Case

In United States v. Introcaso, __ F.3d __, 2007 WL 3104382 (filed October 25, 2007), the Court reversed the defendant’s conviction for possessing an unregistered firearm – a 19th-century shotgun that had been hanging in his living room, holding that the definition of "antique firearm" under the statute, 26 U.S.C. § 5845(g), is ambiguous and applying the rule of lenity in favor of the defendant.

The parties agreed that the shotgun was manufactured before 1898, and also agreed that its measurements met the statutory requirements for a firearm. The case turned on the language in the definition exempting firearms "using fixed ammunition manufactured in or before 1898, for which ammunition is no longer manufactured in the United States and is not readily available in the ordinary channels of commercial trade." The government argued that although the 18.2-millimeter shot made for guns like the defendant’s is no longer available, the gun could fire 12-gauge shotgun shells,…

Adverse Fourth Amendment Holdings -- Frisk Justified, "Plain Feel Doctrine" Applied

In United States v. Yamba, __ F.3d __, 2007 WL 3054387 (filed October 22, 2007), the Court issued two Fourth Amendment holdings adverse to the defendant. Yamba was tried and convicted for wire fraud, based on evidence including several pieces of paper with what appeared to be credit card numbers written on them. These papers were discovered on his person during an inventory search at the police station following his arrest for possession of marijuana. He had moved to suppress the papers on two grounds: First, that the police were not justified in conducting the frisk that led to the discovery of the marijuana; and second, that the search that led to discovery of the marijuana went beyond a Terry "frisk" because the officer manipulated the bags of marijuana in Yamba’s pocket.

The Court held that the stop was justified because Yamba was sitting in a van that was parked in an odd and obstructive manner; the driver of the van was holding a pocket knife; Yamba and the other passen…

Denial of Rehearing En Banc in United States v. Ricks

The Third Circuit recently denied the petition for rehearing en banc in United States v. Marc Ricks, No. 05-4833 (denial filed October 22, 2007), the recent case in which the Court vacated the sentences of two brothers because the district court, in setting their sentences, disagreed with the advisory Sentencing Guidelines regarding the crack/powder differential. Judge Ambro dissented, calling Ricks contrary to Rita and Gunter. Of course, as Judge Ambro notes, "the Supreme Court is on the cusp of deciding the very issue Ricks presents – the effect of the crack/powder cocaine differential in sentencing under a now-advisory scheme," in Kimbrough v. United States, which was argued earlier this month.

Rule 35(a)’s Time Limits on Correcting Sentencing Error Held to Be Jurisdictional

The defendant in United States v. Higgs, No. 06-3738 (filed October 4, 2007), was sentenced January 5, 2005, one week before the Supreme Court decided United States v. Booker,543 U.S. 220 (2005) , on June 12, 2005. His judgment was not entered until June 14, 2005. On that same day, rather than filing a direct appeal to the Third Circuit, the defense counsel moved for a reduction of his sentence under Rule 35(a), noting in an attached affidavit that Booker made the guidelines advisory.
Rule 35(a) provides, "Correcting Clear Error. Within 7 days after sentencing, the court may correct a sentence that resulted from arithmetical, technical, or other clear error."
On January 24, 2005, the District Court conducted a telephone conference on the motion, at which Higgs was not present. The court set forth reasons explaining why the originally imposed 156 month sentence was reasonable in light of Booker. No briefs had been filed by defense counsel, no hearing was held, and again, the de…

Police Failed To Scrupulously Honor Defendant's Fifth Amendment Right/Defendant's Silence Inadmissible As Adoptive Admission

In United States v. Lafferty, No. 06-1901 (3d Cir. September 28, 2007), the Third Circuit reversed the district court’s order denying Amy Lafferty’s suppression motion, which challenged statements that she and an alleged confederate made during a custodial interrogation.

Facts: An ATF agent contacted Lafferty and David Mitchell, her boyfriend, to arrange an interview about a burglary. Lafferty and Mitchell agreed to go to the police station. Upon arrival, the police placed Lafferty and Mitchell in different interrogation rooms for questioning. In Lafferty’s room, the ATF agent produced an ATF Waiver of Right To Remain Silent and of Right To Advice of Counsel form, and Lafferty signed both sections of the form. The agent questioned Lafferty for four hours, but she did not respond to most of the questions. When she did respond, she denied any involvement. Eventually, Lafferty asked to go home, but her interrogation continued for fifteen minutes. She agreed, however, to return within two …

District Court's Failure to Provide Notice of Above Advisory Guideline Sentence Does Not Constitute Due Process Violation

In United States v. Ausburn, No. 06-2250 (3d Cir. September 10, 2007), the Third Circuit held that a district court’s failure to provide notice of its intention to impose a sentence above the advisory guideline range (in this case more than double the high end of the guideline range) does not violate due process. However, the Court also held that the district court’s failure to provide a sufficient statement of reasons explaining the significant upward variance rendered the sentence unreasonable. The sentence, therefore, was vacated and the matter remanded for re-sentencing.

Ausburn was a police detective who, in his capacity as such, came into contact with a fourteen year old girl whose family permitted a relationship between the two for Ausburn to act as a "role model" and "positive influence" in the girl’s life. The relationship soon turned sexual and lasted nearly two years. When Ausburn was promoted to chief of police, e-mails referring to the relationship were…

United States v. Kikumura is Overruled

In United States v. Fisher, No. 06-1795 (3d Cir. September 10, 2007), a split panel of the Court of Appeals reversed its prior decision in United States v. Kikumura, 918 F.2d 1084 (3d Cir. 1990), which held that the facts supporting a massive upward departure must be demonstrated by clear and convincing evidence rather than the lesser preponderance of the evidence standard applicable to the majority of sentencing enhancements. The Court in Fisher held that application of the reasoning in Kikumura went hand-in-hand with the mandatary nature of the guidelines and that since the guidelines were rendered merely advisory by the Supreme Court in United States v. Booker, the concerns raised in Kikumura "were put to rest." Judge Rendell filed a concurring opinion wherein she indicated that while she agreed that Fisher’s sentence should be affirmed, she also believed that due process could, in certain circumstances, require a heightened standard of proof to support a significant sent…

Pennsylvania Conviction for Simple Assault Does Not Constitute a Crime of Violence

In United States v. Otero, No. 05-3739 (3d Cir. September 12, 2007), the Court of Appeals for the Third held that a Pennsylvania conviction for simple assault [18 Pa. Cons.Stat.Ann. § 2701(a)] does not constitute a crime of violence for purposes of the 16-level enhancement contained in U.S.S.G. § 2L1.2(b)(1)(A), applicable to a defendant who was "previously deported ... after a conviction for a felony that is a crime of violence." The issue came before the Court in the context of a 2255 petition filed by Otero alleging that his counsel was ineffective for failing to object to the enhancement.

Otero pled guilty to one count of illegal re-entry into the United States by an alien previously deported following a conviction for an aggravated felony in violation of 8 U.S.C. §§ 1326(a) and (b)(2). The Presentence Report recommended a 16-level increase to his offense level pursuant to U.S.S.G. § 2L1.2(b)(1)(A) based on a prior Pennsylvania conviction for simple assault. Counsel did n…

Application of Enhancement for "Pattern of Activity" Affirmed, Finding Prior Conduct Neither Too Remote in Time nor Too Different in Kind

In United States v. Olfano, No. 06-2988 (3d Cir. Sept. 20, 2007), the panel unanimously affirmed a 188-month sentence on a conviction for receipt of child pornography by computer, rejecting Olfano’s arguments that the sentence was unreasonable because the District Court improperly included in its sentencing guideline calculation a five-level enhancement for pattern-of-activity, under U.S.S.G. § 2G2.2(b)(4) [now designated as U.S.S.G. § 2G2.2(b)(5)].

Olfano had pleaded guilty to receipt of child pornography by computer, in violation of 18 U.S.C. § 2252(a)(2). In calculating the advisory sentencing guideline range, the District Court included the five-level enhancement in U.S.S.G. § 2G2.2(b)(4) [now U.S.S.G. § 2G2.2(b)(5)], for engaging "in a pattern of activity involving the sexual abuse or exploitation of a minor." The two incidents that supported the "pattern of activity" enhancement involved sexual touching of a minor; one incident occurred 15 years earlier, the o…

Confessions Obtained During Delay in Presentment Admissible if Voluntary under Section 3501(c) / Court May Not Delegate Restitution Payment

In U.S. v. Corley, (No. 04-4716) (Aug. 31, 2007), the Third Circuit held that under §3501(c), confessions taken outside of the six-hour “safe harbor” window may only be excluded if involuntary.

Corley was arrested at approximately 8:00 in the morning. Because the arrest involved an altercation, he was taken to a hospital at 11:45 a.m. By 3:30 p.m., he was taken to FBI offices for interrogation. At 5:07 p.m., he signed a waiver of rights form and confessed to a robbery. When asked to write his confession, Corley indicated that he was tired and asked if they could finish the next day. They resumed at 10:30 the next morning and Corley signed a written statement. At 1:30 p.m. on the second day, he was brought before a federal magistrate judge. Corley later filed a motion to suppress the statements pursuant to Federal Rule of Criminal Procedure 5(a) due to unnecessary delay in presentment. The motion was denied and Corley was convicted following a jury trial. At sentencing, the di…

Kemp Convictions for Honest Services Fraud Upheld - Court Did Not Abuse Discretion in Dismissing Juror

In US v. Kemp, (Nos. 05-3477/05-3561/05-4623/05-4717/05-4846) (August 27, 2007), the Third Circuit affirmed the convictions of all defendants, finding (1) sufficient evidence to support conviction for honest services fraud; (2) jury instructions on honest services fraud, bribery and aiding and abetting were proper; (3) a variance between conspiracy charge in the indictment and government’s case at trail did not substantially prejudice defendants; (4) other act evidence and co-conspirator statements were properly admitted; and (5) district court acted within its discretion in dismissing juror.

Kemp, (former Treasurer of Philadelphia) and others were charged in a 63 count indictment surrounding a charged conspiracy to commit honest services fraud in which payments and gifts were given to Kemp in exchange for preferential treatment in decision-making. In brief, the Third Circuit found as follows.

First, the Circuit found that Kemp’s use of his office to provide lists of bondholders and …

Downward Variance Reversed, Held Procedurally and Substantively Unreasonable

In United States v. Goff, No. 05-5524 (3d Cir. Aug. 30, 2007), the panel unanimously held both procedurally and substantively unreasonable a four-month below-guideline sentence in a possession of child pornography case.

As part of a wider investigation into an international child pornography enterprise, Goff’s home was searched and two computer hard drives were seized. A few images were found on one of the drives, but the other contained hundreds of images in the “deleted” file. Goff pleaded guilty to a single count information charging possession of at least 3 images of child pornography. Included in the PSR, and apparently adopted by the DCT at sentencing was a Guideline range of 37 to 40 months, which included 5-level increase in the offense level for possession of more than 600 images (§2G2.4(b)(5)(1)).

Defense counsel sought a variance from the guidelines arguing that they were substantially in excess of that warranted by the offense, given all but a few pictures had been delete…

“Downward Departure” from Guideline Sentence must fall Below Guideline Range

In United States v. Floyd, No. 06-1513, (3d Cir. Aug. 27, 2007), the Third Circuit held that a “departure” from a Guideline sentence means a sentence below the bottom of the Guideline range rather than below a predetermined sentence within that range.

In 2004, Floyd was indicted on various counts arising from a conspiracy to distribute at least 50 grams of crack cocaine and 5 kilograms of cocaine powder. Pursuant to a plea agreement, Floyd pleaded guilty to one count of traveling interstate or causing others to travel interstate to facilitate drug trafficking, which carried a maximum sentence of 60 months in prison. 18 U.S.C. § 1952(a)(3). In exchange for pleading guilty, the government agreed to dismiss the remaining charges and to request a downward departure based on Floyd's substantial assistance with the government's prosecution of her co-defendants. At the first sentencing, the government did not move for a downward departure because, in the government's view, dis…

Court reverses below-guidelines sentence as substantively unreasonable

In its 2-1 decision in United States v. Tomko, Case No. 05-4997, the Third Circuit vacated a probation-only sentence for tax evasion as substantively unreasonable. Judge Fisher wrote for the majority. Judge Smith wrote a forceful dissent.

Facts: Tomko, a construction company owner, built a large, well-appointed new home for himself. He asked the subcontractors who were working on the house to falsify their invoices so that it would look like their work on his house was really done on projects for his construction company. He then paid for the work through his construction company and had the company write off the work from its taxes as a business expense. Tomko did not report the company’s paying for his home as income on his tax returns. He subsequently pleaded guilty to one count of tax evasion in violation of 26 U.S.C. § 7201, and stipulated to a tax deficiency of $228,557.

After correctly calculating Tomko’s offense level (13), criminal history category (I), and advisory Guidelines …

Third Circuit affirms convictions and sentence in bank fraud/money laundering conspiracy

On August 20, 2007, the Third Circuit ordered published its July 31, 2007, opinion in United States v. Greenridge, Case No. 05-4887, which concerned a bank fraud and money laundering conspiracy. The conspiracy involved stealing corporate checks, falsifying the payee names thereon, and depositing the checks in business and personal accounts to make the funds appear legitimate. The defendants raised a variety of issues challenging their convictions, and one of the defendants challenged his sentence as unreasonable.

The Third Circuit affirmed the district court on all of the issues. It held that the district court (1) properly refused to instruct the jury on a variance between the indictment (which alleged a single conspiracy among the defendants on each count) and the proof at trial (which defendants said instead showed a conspiracy per defendant per count); (2) did not abuse its discretion by admitting evidence of a defendant’s prior crime to impeach the credibility of an out-of-court s…

Restitution Requirements Under Section 3664(f)(2) Are Satisfied Without Express Findings

In United States v. Lessner, the 3C addressed and rejected a number of sentencing challenges and held, inter alia, that sentencing courts need not make explicit findings on the record in support of a restitution order, so long as the record evidences the court’s consideration of the statutory factors.

Defendant, a procurement contracting officer for a federal agency, pled guilty to all 21 counts of an indictment charging her with wire fraud, defense procurement fraud, destruction of records in a federal investigation, and destruction and removal of property to prevent seizure. The district court denied defendant’s request for a downward departure based on diminished capacity, and calculated an advisory range of 51 to 63 months, based on an offense level of 24 and criminal history category of I. The offense level reflected the court’s assessment of a 2-level enhancement for obstruction of justice and its denial of a downward adjustment for acceptance of responsibility. The court imposed…

“Guidelines-centric” approach “reasonable and effective” where sentence was reduced by downward departure

In United States v. Hankerson, No. 06-3291 (3d Cir. 7/31/07), the Third Circuit rejected as meritless appellant’s reasonableness and ineffective assistance of counsel challenges to his 121-month sentence. That sentence reflected a downward departure based on overstatement of criminal history from the career offender-enhanced advisory guideline range of 188 to 235 months.

The Court deemed the sentence procedurally reasonable in that the district court first correctly calculated the guidelines, then considered defendant’s requests for downward departures, and then meaningfully considered the § 3553(a) factors. In ruling the sentence substantively reasonable as well, the Court noted the district court’s granting of a downward departure and its consideration of defendant’s personal history and circumstances. Taking into account its "deferential posture" toward sentencing decisions and the Supreme Court’s instruction in Rita that a within-guidelines sentence is more likely to be r…

100:1 Crack/powder ratio: Cannot replace ratio, but can vary from GL based on case-specific reasons

In US v. Ricks, Nos. 05-4832, 4833 (3d Cir. 7/20/07), the Circuit followed its prior decision in US v. Gunter, 462 F.3d 237 (3d Cir. 2006), in ruling that although a district court can consider the 100:1 crack/powder differential in the guidelines and find the differential is "too vast," it may not categorically reject the ratio and substitute its own. Instead, in varying from the guideline range for crack cocaine, the court must give reasons for why the ratio is too harsh "when applied to the defendant." In doing so, the district court may draw on the reports of the Sentencing Commission finding that the 100:1 ratio treats crack offenses too severely.

On its surface, the Ricks decision may seem very straightforward: The district court judge found that the 100:1 ratio was too severe, based on the reports of the Sentencing Commission, and it sentenced instead based on the 20:1 ratio that the Sentencing Commission recommended. The 3rd Circuit then decided Gunter, hold…

Illegal re-entry: Date offense commences for GL purposes

In US v. Hernandez-Gonzalez, Nos. 06-1998 & 2130 (3d Cir. 7/19/07), the Circuit held that for purposes of calculating the Guidelines criminal history score, the offense of being an alien "found in" the United States following deportation commences on the date the alien entered the US, not the date he/she was actually found in the US by authorities.

Defendant, an alien from Mexico, was convicted of five minor offenses from 1990 to 1992. In 1994 he was convicted of an aggravated felony, and after serving his sentence he was deported to Mexico in 1998. He then re-entered the US illegally sometime in 1999. He was ultimately "found in" the US by authorities in March, 2005. The district court did not count the five offenses from 1990 to 1992 in the criminal history score because they were all more than 10 years prior to his being found in the US in 2005. The government appealed, arguing that for Guidelines criminal history purposes, USSG 4A1.2, the offense should be d…

District Court's Reliance on Unsworn Police Report to Impose Sentence 82 Months Longer Than Government's Recommendation Upheld

In United States v. Leekins, No. 05-1658 (3d Cir. June 29, 2007), the Third Circuit affirmed a sentence at the bottom of the guideline range, rejecting the appellant’s arguments that he was improperly sentenced on the basis of judge-found facts and unsworn statements in a police report. Leekins pleaded guilty to possession of a firearm by a convicted felon in violation of 18 U.S.C. § 922(g) pursuant to a plea agreement wherein he agreed that he was subject to the armed career criminal sentencing enhancement. The government agreed to recommend imposition of the 15-year mandatory minimum sentence. The district court did not follow the government’s recommendation. At sentencing, the district court adopted the presentence report’s finding that Leekins possessed or used a firearm in connection with a crime of violence—namely, attempted murder. This upward adjustment resulted in a guideline range of 262-327 months, and the district court sentenced Leekins to 262 months. With little analysis…

Independent Contractors With No Control Over Federal Funds Are "Agents" Under Section 666 and Prosecutors' Vouching Deemed Harmless Error

In United States v. Vitillo, No.05-4330 (3d Cir. June 25, 2007), the Third Circuit affirmed the conviction of John Vitillo and two of his companies on several counts of theft and conspiracy in violation of 18 U.S.C. § 666, which prohibits theft from organizations and government agencies that receive more than $10,000 in federal funds. The Court rejected Vitillo’s argument that he was not an "agent" for purposes of § 666 because he did not have control over the federal funds. It explained that, according to the statutory definition, an "agent" is "merely a person with authority to act on behalf of the organization receiving federal funds," which can include independent contractors.

During the government’s investigation of Vitillo’s billing practices, the two AUSAs who later served as trial counsel accompanied the FBI agents who executed a search warrant at the defendant’s office. These prosecutors were also present during the FBI’s subsequent interrogation …

Rita's impact in the 3rd Circuit

In Rita v. U.S., 2007 WL 1772146, the Supreme Court ruled that the circuits "may," for purposes of appellate review only, apply a "presumption of reasonableness" to sentences within the Guidelines range. But the Court placed so many limits on this presumption, and went on at such length to stress the discretion district courts have at sentencing, that ultimately Rita is a very good decision that emphasizes that the guidelines are truly "advisory."

The key points from Rita:

1) The sentencing court has broad discretion in sentencing, and sentences will be reviewed deferentially for "abuse of discretion" as they were under Koon.
Rita, 2007 WL 1772146, *9 ("appellate ‘reasonableness’ review merely asks whether the trial court abused its discretion").
2) The district courts may not apply any presumption of reasonableness to the Sentencing Guidelines range.
Rita, at *9 ("We repeat that the presumption before us is an appellate presumption. .…

In possession of child pornography case, the Third Circuit rejects certain special conditions of supervised release.

In United States v. Voelker , No. 05-2858, (3d Cir. June 5, 2007), Voelker pled guilty to possessing child pornography in violation of 18 U.S.C. §2252(a)(2). The court imposed a supervised release term of life. On appeal, he challenged three special conditions: (1) The defendant is prohibited from access to any computer equipment or any on-line computer service at any location, including employment or education. This includes, but is not limited to, any internet service provider, bulletin board system or any other public or private computer network; (2) The defendant shall not possess any materials, including pictures, photographs, books, writings, drawings, videos or video games, depicting and/or describing sexually explicit conduct as defined at Title 18 of the United States Code, Section 2256(2); and (3) The defendant shall not associate with children under the age of eighteen except in the presence of a responsible adult who is aware of the nature of the defendant’s background and…