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Friday, October 21, 2011

Continuing offense predating Guidelines harshening + continuing offense following Guidelines harshening + U.S.S.G. § 3D1.2 grouping + one book rule...

...equals no ex post facto prohibition on applying harsher Guidelines.

The Third Circuit decided United States v. Siddons, Case No. 10-1350, on October 3, 2011. Mr. Siddons raised four issues on appeal: (1) the district court’s denial of his request to withdraw his guilty plea; (2) the district court’s applying U.S.S.G. § 2B1.1(b)(16)(A) (2008) to increase his offense level by four; (3) the district court’s applying an obstruction of justice enhancement to increase his offense level by two; and (4) the district court’s varying above the Guidelines. The Third Circuit affirmed the district court on all four, and discussed only the second in significant detail. This post follows the Court's lead.

The text of § 2B1.1(b)(16)(A) (2008) was added to the Guidelines in 2003 (and currently resides at § 2B1.1(b)(17)(A)). It enhances a defendant’s offense level by four where the offense involved a violation of securities law and the defendant was, among other things, an investment advisor. Mr. Siddons had been an investment advisor when conduct relevant to his offense – but not the offense conduct itself –started, in 2002, but was no longer one by the time the Guideline went into effect in November, 2003. He argued that the district court erred in two ways when it applied the enhancement: First, by applying the Guideline when his offense conduct didn’t meet the prerequisites, and second, by applying the Guideline when doing so violated the ex post facto clause.

The Third Circuit rejected the first argument out of hand. It held that because his 2002 behavior as an investment advisor was relevant conduct to his offense pursuant to § 1B1.3, it was part of the calculation of his offense level under § 2B1.1. It then rejected the second after a more in-depth discussion of the combined effects of offense grouping under § 3D1.2, the “one book” rule, and the continuing nature of Mr. Siddons’s offenses:

We agree with those Courts of Appeals that have found no ex post facto violation when a court groups continuing, related conduct and applies the Guidelines Manual in effect during the latest-concluded conduct. This is so because the grouping provisions, combined with the one-book rule, place a defendant on notice that a court will sentence him or her under the Guidelines Manual in effect during the commission of his or her last offense in a series of continuous, related offenses . . . . Due to the grouping rules at § 3D1.2(d) and the one-book rule at § 1B1.11, Siddons was on constructive notice that the November 1, 2003 enhancement could apply to his entire scheme, should he continue the conduct after the date of enactment. As the Eighth Circuit aptly stated, “it was not the amendments to the Sentencing Guidelines that disadvantaged [Siddons], it was his election to continue his criminal activity [after the effective date of the enhancements]."

The Third Circuit's position thus is consistent with the views of the Second, Fifth, Sixth, Seventh, Eighth, Tenth, and Eleventh Circuits. So far, only the Ninth has taken a contrary view.

The Sentencing Enhancement Under 18 U.S.C. §3147 Authorizes Courts to Add Up to Ten Years to the Statutory Maximum.

Section 18 U.S.C. §3147(1) provides that if a person is convicted of an offense while under pretrial release, then in addition to the sentence for the underlying felony offense, the person should be sentenced to an additional term of up to 10 years. In United States v. Melvin Lewis, No. 10-4460 (3d Cir. October 18, 2011), the Third Circuit, in a case of first impression, held that §3147 has the effect of increasing the statutory maximum for an underlying offense by up to ten years, and that the sentences must be imposed consecutively.

Appellant Melvin Lewis was tried and convicted on two counts of a three count indictment. Specifically he was convicted of (1) being a felon in possession of ammunition, in violation of 18 U.S.C. §922(g)(1), and (2) committing an offense while on pretrial release, in violation of 18 U.S.C. § 3147(1). He was acquitted of a carjacking charge.

Mr. Lewis’s sentencing range was 140 to 175 months, and he was sentenced to 138 months, 96 for the ammunition offense and 42 months for violating §3147. He challenged the sentence arguing that the statutory maximum for §922(g)(1) was 120 months. The district court interpreted §3147 to authorize a combined sentence that exceeded the statutory maximum for the underlying offense. The Third Circuit agreed, finding that it was the “clear and unambiguous”intent of Congress to impose an extra sentence and that there was no exception to the statute that would prevent the extra time from exceeding the statutory maximum.

Nevertheless, the Third Circuit remanded the case because §3147 is a sentencing enhancement and not a separate crime. While the enhancement must be submitted to the jury, that finding is not a conviction. Therefore, it was plain error to convict Mr. Lewis for violating §3147, as if it were a separate offense.

Bribery Prosecution: Instruction that coercion may bear on intent not required, sentence remanded for failure to consider sentencing disparity

In U.S. v. Herman Friedman, No. 10-2235 (3d Cir., Sept. 28, 2011), the Third Circuit Court of Appeals affirmed Friedman’s conviction for bribery under 18 U.S.C. § 666(a)(2), but vacated and remanded for resentencing based on procedural unreasonableness.

Friedman owned a residential apartment building with 16 rented apartments, but after a routine inspection, a building inspector issued a Notice of Violation because only 15 units were legal. Although Friedman could apply for a variance, he faced a $500 per day penalty while his application was pending. So, Friedman arranged to pay a construction code official $5000 to overlook the violation. Unfortunately for Friedman, the code official, who had been caught taking bribes in an earlier investigation, was an FBI informant.

The Court rejected several defense arguments relating to the conviction; the most significant was an issue of first impression: whether the District Court abused its discretion in rejecting Friedman’s requested proposed jury instruction that coercion bears on the defendant’s state of mind.

Friedman’s proposed jury instruction would have charged the jury that coercion “may bear upon whether the defendant ever formed the intent required to commit the crime of bribery,” even when the defendant was not legally entitled to the act he was paying the official to perform. Friedman conceded that neither Supreme Court nor Third Circuit law (including the Third Circuit Model Jury Instructions) addressed this issue. But Friedman did cite for support the Second Circuit’s decision in United States v. Barash, 365 F.2d 395 (1966).

The Court found Barash inapposite because it found that coercion can bear on the intent required to commit bribery only in limited circumstances, where :“(1) the defendant is paying the official to perform an act to which he is legally entitled; and (2) the official threatens the defendant with ‘serious economic loss’ unless the bribe is paid.” Barash, 365 F.2d at 401-02. In contrast, Friedman’s proposed instruction did not limit the jury’s consideration of coercion to situations where the defendant was legally entitled to the act. The Court further noted that even if Friedman’s jury instruction were proper as a matter of law, the record provided no evidence of coercion.

In vacating and remanding Friedman’s 34-month sentence for resentencing, the Court noted , among other things, that the District Court had not considered explicitly the “unwarranted sentencing disparities” sentencing factor of 18 U.S.C. § 3553(a)(6). In his sentencing memorandum, Friedman noted the sentence of another person convicted of the exact same offense — involving the same $5000 bribe to the same code official — who received a sentence of three-years’ probation.

Summary by Ron Krauss

Thursday, October 20, 2011

Money Laundering - Insufficient Knowledge of Intent to Conceal

United States v. Richardson, – F.3d –, 2011 WL 4430808 (3d Cir. Sept. 23, 2011). Asya Richardson was the fiancee of Alton Coles, the leader of a drug ring responsible for selling large amounts of cocaine and cocaine base in the Philadelphia area between 1998 and 2005. In the summer of 2005, the couple bought a home together. The government charged Richardson with money laundering, under 18 U.S.C. § 1956(a)(1)(B)(1), on the theory that she had participated in the purchase of the home knowing that drug money was being used and with intent to conceal that fact. The court found the evidence insufficient to support her conviction.

Although the government proved that Richardson lied about various aspects of the transaction in the mortgage materials, there was little evidence that she did so for any reason other than to hide the couple’s bad credit. There was also little evidence connecting her to Coles’s suspicious financial transactions related to the house (e.g., structuring deposits for the down payment). Thus, the government could not prove the element that Richardson knew the transaction was designed to conceal the nature, location, source, ownership or control of the proceeds of a specified unlawful activity. In considering Richardson’s various arguments, the Court held that “proceeds” of drug trafficking are gross receipts, not profits, weighing in on a question left open in Supreme Court’s decision in United States v. Santos, 553 U.S. 507 (2008).

Summary by Sarah Gannett