Absence of Proof on Element of the Offense Overcomes Appellate Waiver

United States v. Castro, --- F.3d ----, 2013 WL 69214 (3d Cir. Jan. 08, 2013).  Former Philadelphia Police Department official Castro was indicted in connection with debt collection extortion schemes. Following a trial, a jury convicted Castro on one count of making a material false statement to federal agents (18 U.S.C. § 1001), acquitted him on one count of conspiracy to commit extortion (18 U.S.C. § 894) and hung on eight other counts. Castro then pled guilty to a single count of conspiracy to commit extortion (18 U.S.C. § 1951) and the government dismissed the remaining charges. The plea agreement contained an appellate waiver provision. At sentencing, the district court imposed 18 months imprisonment for the false statements count and 60 months concurrent for his plea for conspiracy to commit extortion.  Castro appealed, arguing that: (1) the false statement conviction should be vacated because when he lied to the FBI, denying he had received any money from the victim in repayment of a lost investment, in fact, he had not received any repayments from the victim because he had instead received money from the FBI in a sting operation, therefore his denial was not "knowing" or "false"; (2) his sentence was procedurally unreasonable because the district court denied the government's motion for the third acceptance of responsibility point under the sentencing guidelines, as the government’s discretion is entitled to deference; and (3) the 60–month sentence is procedurally and substantively unreasonable because the advisory range suggested a sentence of 33 to 41 months, the court did not adequately take into account evidence of his good character and failed to explain why an upward variance was necessary to fulfill the proper purposes of sentencing.

The Circuit first held that although Castro was convicted by a jury of the false statements count before entering into the plea and accepting the waiver, the appellate waiver covered his conviction for making material false statement to federal agents. The Court focused on the language of the waiver, "voluntarily and expressly waives all rights to appeal . . . any other matter relating to this prosecution," finding that this language clearly encompassed the earlier conviction on the false statement charge. The Court also found that the waiver was entered into knowingly.

But moving to the miscarriage of justice analysis, the Court agreed with Castro that he did not make a false statement when he stated that he received no payment from the victim. In evaluating for the first time a claim of miscarriage of justice based on insufficiency, the Court looked to the plain error context for guidance. Under the plain error standard, a "manifest miscarriage of justice" occurs where the record is "devoid of evidence pointing to guilt." Section 1001, the false statement statute, requires the accused knowingly and willfully make a material false statement in a federal matter. Because Castro’s statement that he did not receive any payments from the victim was actually, if unintentionally, true (because it was FBI sting money), the government could not establish that he made a statement that was untrue. The defense of literal truth applies. The Court rejected the government’s suggestion of a "sting operation exception," because there is simply is no exception in the statute. The court concludes that the complete failure of proof on this element meets the miscarriage of justice standard, requiring reversal on the false statements count.

With respect to Castro’s argument that the district court's rejection of the government's motion for the third acceptance point was error, the Court found the issue covered by the appellate waiver and declined to reach the merits. Finally, the Court’s reversal of the false statements count requires remand for resentencing and the Court did not need to otherwise reach the reasonableness of the sentence.