Career Offenders Convicted of Crack Offenses Are Not Eligible for a Sentence Reduction Pursuant to 18 U.S.C. § 3582(c) if the District Court Granted a Downward Departure Under U.S.S.G. § 4A1.3 at Sentencing

In United States v. Flemming, No. 12-1118, the Third Circuit held that crack defendants who were designated as career offenders, but were granted downward departures from their career offender status pursuant to U.S.S.G. § 4A1.3, are not entitled to a sentence reduction under 18 U.S.C. § 3582(c).

Flemming’s crack guideline range was 92 to 115 months imprisonment under U.S.S.G. § 2D1.1. Due to his designation as a career offender under U.S.S.G. § 4B1.1(a), however, his resultant guideline range became 262 to 327 months. The district court found that the career offender guideline overstated Flemming’s criminal history and granted a downward departure pursuant to U.S.S.G. § 4A1.3, finding that the crack guideline range of 92 to 115 months was more appropriate. The court ultimately sentenced Flemming to 175 months - 115 months for the crack offense, and a consecutive 60 month sentence for his 18 U.S.C. § 924(c) conviction. The district court reduced Flemming’s sentence under Amendment 706 to the guidelines, issued in 2007, which lowered the guideline ranges for crack offenses. See United States v. Flemming, 617 F.3d 252, 254-55 (3d Cir. 2010). Flemming was re-sentenced to 137 months - 77 months for the crack offense, and a consecutive 60 month term for the 924(c) conviction. He then moved for a second sentence reduction under Amendment 750 to the Guidelines, which further decreased the guidelines for crack offenses in response to the Fair Sentencing Act of 2010. The district court denied his motion.

The Third Circuit affirmed, holding that the Sentencing Commission’s policy statement § 1B1.10(a)(2)(B), precluding sentence reductions if a defendant’s "applicable guideline range" is not reduced by the amendment, prevented reductions in cases like these. During Flemming’s first appeal, the Third Circuit held that the Guidelines’ definition of "applicable guideline range" was ambiguous, and thus the rule of lenity allowed him to move for his first sentence reduction. Flemming, 617 F.3d at 270. Amendment 759 to the Guidelines, however, added a new definition of "applicable guideline range" in 2010. It is now defined as "the guideline range that corresponds to the offense level and criminal history category determined pursuant to § 1B1.1(a), which is determined before consideration of any departure provision in the Guidelines Manual or any variance."

The Third Circuit reasoned that since the definition states that the applicable guideline range is "determined before consideration of any departure provision in the Guidelines Manual or any variance," it is clear that a § 4A1.3 departure is ignored for purposes of determining a defendant’s applicable guideline range. See U.S.S.G. § 1B1.10 cmt. N. 1(A). Any § 4A1.3 departure is to be calculated after the applicable guideline range is calculated. The Court explained that its reading is supported by the Commission’s stated reason for adding a new definition of "applicable guideline range." The Commission meant to adopt the approach of those Circuit Courts of Appeal that have held that career offenders granted § 4A1.3 departures are not eligible for resentencing. U.S.S.G. app. C., amend. 759. Thus, Flemming was not entitled to a second sentence reduction under 18 U.S.C. § 3582(c).

Issuance of United States Passport Is Not Conclusive Proof Of Citizenship/ No Brady Violation Where Defense Declines Continuance/ No Judicial Estoppel Where Inconsistencies Explained

United States v. Moreno , No. 12-1460 (3d Cir. 7/3/13) concerned a conviction for  false representation of United States citizenship. Ms. Moreno, born in Mexico in 1971, was adopted by  U.S. citizen nine years later. In 1981, New Mexico issued a birth certificate stating that her place of birth was Mexico.  Her conviction for possession with intent to distribute a controlled substance and false imprisonment, led to deportation proceedings, and after the Fifth Circuit affirmed a Board of Immigration Appeals determination that she was not a citizen, she was deported, in 2006, to Mexico.

In 2007, without permission, she returned to the United States and applied for a passport, listing New Mexico as her place of birth. The passport was issued, but seized by the Border Patrol in Texas. The passport was never revoked though. She was detained by ICE, but released pending further investigation.  In 2011, after she asked, DHS told her she was not a citizen.  Later that year, she traveled to the United States Virgin Islands and in response to a question about her citizenship, she gave an immigration officer her New Mexico driver’s license.  She also stated, in response to questions, that she was a U.S. citizen, gave them a certificate of live birth from New Mexico, and a copy of her U.S, passport.  Following inquiries to DHS, Ms. Moreno was arrested for falsely representing herself to be a U.S. citizen in violation of 18 U.S.C. §911. Following a jury trial, she was convicted.

On appeal, Ms. Moreno raised five issues. The first was that the District Court erred in denying her motion for acquittal because the issuance of a passport constituted conclusive proof of citizenship. 22 U.S.C. §2705   provides that a passport is proof of citizenship. However, §2705 provides that the passport is proof of citizenship only if it is issued to a citizen of the United States. Ms. Moreno was never a citizen, so the passport was not proof of citizenship. (A passport can be issued not only to a United States citizen, but to a United States “national,” which includes persons, though not citizens, owe permanent allegiance to the United States. 8 U.S.C. §1101(22) Ms. Moreno did not argue she was a United States national.). The Court noted that some other courts have held that a passport is conclusive proof of citizenship, but it expressly declined to adopt that interpretation.

The next issue Ms Moreno raised was whether the District Court erred by not instructing the jury that the issuance of the passport was conclusive proof of United States citizenship. Given its first ruling, the Court decided that failure to give that instruction was not error.

Ms. Moreno next argued that the government’s disclosure, the day before trial , of documents showing a DHS investigation concluding the passport was valid but calling for further investigation into her citizenship and that deportation should be stayed until her passport was revoked. She claimed this was a Brady violation, but she forewent an offer of a continuance, and an opportunity to cross-examine a government witness about the documents. Because she had sufficient opportunity to use the documents she did not suffer prejudice from the untimely disclosure.

Ms. Moreno’s argument that the District Court unfairly prevented her from introducing and FOIA documents and an FBI report listing her citizenship as “United States.” Because the jury had already heard evidence about government decisions listing her as  United States citizen, the documents were cumulative and would have caused juror confusion. The Court also rejected her argument that the government was judicially estopped from denying that she was a citizen because the passport had not been revoked. Passports issued in error are not automatically revoked, so the government had not asserted inconsistent positions.

Judge Smith dissented, posting that under  22 U.S.C. §2705, the passport should have been treated as conclusive proof of citizenship.

Court Finds Longest Insider-Trading Sentence Ever Imposed Reasonable (and rejects other sentencing challenges)

In United States v. Kluger, No. 12-2701 (July 9, 2013), the Court addressed numerous challenges to Kluger’s mid-range, 144-month sentence, "a term thought to be the longest insider trading sentence ever imposed." Kluger, a law student, and then lawyer for five different securities law firms over the course of his career, was the source of tips for a three-man insider-trading scheme that spanned seventeen-years, "and, so far as is known, constituted the longest such scheme in United States history." The Court rejected Kluger’s complaints about the calculation of his Guidelines range, purported procedural errors in his sentencing, and the procedural and substantive reasonableness of his lengthy term of imprisonment.

Guidelines calculation: Under § 2B1.4, the district court attributed all of the scheme’s monetary gain (nearly $50 million) to Kluger, even though his share of the profits was far less than that of one of his co-defendants. Kluger and both of his co-defendants had agreed to limit their trades in an effort to avoid detection, but one co-defendant had violated the agreement. Kluger therefore argued that, under § 1B1.3(a)(1)(B)’s reasonable foreseeability test, the district court should have reduced the gains attributable to him. Applying United States v. Cespedes, 663 F.3d 685, 689 (3d Cir. 2011), the Court held that the "unless otherwise specified" exception in § 1B1.3(a) required it to look first to the insider trading guideline. There, it found that "[t]he plain language of the commentary’s background unequivocally attributes all of [the co-defendant’s] gains to Kluger because [the co-defendant] was ‘a person[] acting in concert with the defendant,’ as well as one ‘to whom the defendant provided inside information.’" The Court emphasized that this result "reinforc[es] the deterrence message sent to would-be tippers."

Procedural errors: (1) Evidentiary Hearing. The district court did not err in refusing to grant Kluger an evidentiary hearing, since the Rules do not require an evidentiary hearing, and the district court did afford an "extensive sentencing hearing . . . in which the parties addressed the Court." Kluger had not disputed the total gain or that he was the source of the tips, so an evidentiary hearing would not have altered the outcome at sentencing. (2) PSR Objections. Kluger complained that the PSR did not resolve all of his objections, including to the characterization of the scheme and the description of him as the initiator of it. The Court noted that, under Rule 32(g), Probation is not required to do so. Rather, under Rule 32(i), the district court must make a disposition on matters that will affect sentencing, which it did when it made its ruling under §2B1.4. (3) Discovery. Kluger claimed that his due process rights were violated when the government provided materials to Probation that were not provided to him. The Court held that Rule 32 does not provide for broad discovery of presentence materials, and that even if it did, Kluger had done no more than speculate as to the existence of such materials.

Reasonableness of Sentence: (1) Procedural Reasonableness. Kluger argued that the district court only mechanically considered the § 3553(a) factors and failed to consider the "vast disparity" between his sentence, his co-defendants’ sentences, and the sentences of other insider traders. The Court found that the district court engaged in a thorough discussion of the circumstances of the offense and the history and characteristics of the defendant, "such as Kluger’s loving and supportive family, privileged childhood, and the ability of the Bureau of Prisons to manage his poor health during his incarceration." It rejected the disparity argument, as well, citing the facts that Kluger was an attorney, the source of the tips, and that he spent most of his career involved in criminal activity ("he truly was a career criminal"). Unlike one co-defendant, Kluger did not cooperate. Unlike the other, Kluger did not have a history of community service. Compared to other cases, this one was longer, more involved, and more successful. (2) Substantive reasonableness. Noting that Kluger received a within-Guidelines sentence, which is less likely to be unreasonable than one outside the range, the Court concluded, "we cannot say that ‘no reasonable sentencing court’ would have imposed the same sentence . . . ."

Under The Speedy Trial Act, The Trial Clock Remains Tolled In The Time Period Between a Competency Evaluation and a Court's Final Determination of Competency.

    In a matter of first impression, the Third Circuit held that the time statutorily excludable under the Speedy Trial Act (18 U.S.C. §3161(h)(1)(A)) for a competency evaluation extends past the actual examination and continues until the court has made a final determination concerning a defendant’s competency.  U.S. v. Graves, No. 12-2688,  (3d Cir. June 21, 2013)

    Appellant Lee Graves was arraigned on March 2, 2011 on one count of possession of cocaine with intent to distribute, in violation of 18 U.S.C. §841and §846.  At the arraignment hearing, held on March 31, 2011, a magistrate judge ordered a competency evaluation pursuant to 18 U.S.C. §4241(b).   Although the trial had been scheduled to start on June 3, 2011, the Bureau of Prisons (“BOP”) did not complete an evaluation report until June 22, 2011.  The report was mailed on June 28, 2011 and received, at the earliest, by the court on July 7, 2011.  A status hearing was held on September 21, 2011, during which the District Court found Graves competent to stand trial.  At that same hearing, newly-appointed defense counsel moved for a continuance to prepare for trial.      

    A few weeks after that hearing, Graves claimed a Speedy Trial violation.  He argued that more than 70 inexcuable days had passed since his indictment without a trial.  Specifically,  Graves argued that the excludable delay for the competency review ended when the report was sent to the court, while the Government argued that the clock remained tolled until the official ruling on his competency, which did not occur until the status hearing several months later.  The District Court found no violation. 
   
    The Third Circuit affirmed, finding that the language in the Act, relevant to delays for mental competency, contemplated excusing the entire evaluation proceedings, not just the actual examination.  The circuit court explained that the examination and resulting report constituted just one step in the process.  A trial court must still review the report and relevant evidence to determine if a defendant is fit to stand trial.  Also, in reaching this decision, the appellate court noted that the Act does not place a limit on the length of delays for a competency proceeding.  Therefore, the Third Circuit held that the clock remains tolled even after an evaluation report is submitted to the court, until a formal ruling on competency is entered by that court.
   
     Accordingly, the excluded delay included the time period from the day the evaluation was ordered (March 31) until the day the court entered the order finding Graves competent to stand trial (September 21).  Additionally, the Third Circuit also found that a new period of excusable delay began when the defense requested a continuance at the same September status hearing.  Thus, in this case, the only days that counted against the Speedy Trial clock was the period between the March 2 indictment and the March 31 order for a competency evaluation, totaling 28 days.  Therefore, there was no violation of Graves’s rights under the Speedy Trial Act.

Tax Protester’s Conviction for Conspiracy to Defraud the United States Affirmed

In United States v. Donald Turner (a/k/a Don L.Wood), No. 12-1420, (May 1, 2013), the Third Circuit affirmed a sentence of 60 months’ imprisonment and three years of supervised release, in addition to affirming the order for restitution in the amount of $408,043 to the Government. 

Turner was convinced by a jury under 18 U.S.C. § 371 for one count of conspiracy to defraud the United States, and was ordered to pay restitution under 18 U.S.C. § 3663 in addition to his sentencing.  Turner is the author of Tax Free! How the Super Rich Do It!, an instruction manual for “escaping federal and state income taxation” by using common law trust organizations (“colatos”).  Turner was also the former director of First American Research (FAR), a membership organization that was designed to assist members in executing the colato program outlined in Tax Free!.  In 1991 FAR created “Center Company,” a foreign colato, and FAR member Daniel Leveto “sold” his veterinary clinic to Center Company.  Center Company then hired Leveto as general manager to the clinic and Turner as a consultant. Leveto continued to operate his veterinary clinic as he did when he was owner, but paid no taxes on the clinic and had full access to its finances.

In 1993, Turner and Leveto contracted an agreement for Leveto to market and sell copies of Tax Free!.  Two years later, the IRS began a criminal investigation to determine if the “sale” of the veterinary clinic to Center Company and the colato program were valid. Under this investigation, Manuel Gonzalez, an IRS agent, purchased a copy of Tax Free! from Leveto and spoke both in person and over the phone with him.  Leveto later submitted Gonzalez’s name to Turner for membership into FAR, and Turner sent Gonzalez a letter explaining the benefits of joining the organization and spoke with Turner on the phone.  The recordings obtained by Gonzalez during these interactions and documents later seized from Leveto’s residence were the points of contest in this appeal.

Turner appeals the District Court’s decision alleging the Court erred in admitting (1) recorded conversations between his co-conspirator and an undercover Internal Revenue Service agent and (2) foreign bank documents that the IRS took possession of from his co-conspirator’s residence and office.  In addition, Turner argues that the Court also erred in requiring him to pay $408,043 without first investigating his ability to pay that sum.

The Court of Appeals found that the District Court committed no error in allowing the recordings of conversations between Leveto and Gonzalez because a conspiracy clearly existed between Turner and Leveto, making the recordings admissible under Federal Rule of Evidence 801(d)(2)(E).  Second, the Court found that the District Court clearly met its slight burden of proving the authenticity and exceptional guarantees of trustworthiness because Turner has, in no way, identified that the documents, which appear official and contain personal account information, are forged or inaccurate. These documents were also found in Leveto’s personal office and safe in his house, adding to their credibility. Accordingly, the foreign bank statements can be permitted under the residual hearsay exception. Lastly, with regard to the restitution ordered by the District Court, the Court of Appeals found it appropriate to apply the Mandatory Victims Restitution Act (MVRA), which requires that the full amount of restitution be paid without consideration of the defendant’s economic circumstances.

 

Prepared by Law Clerk Brittany Quinn

Defendants Convicted of Crack Offenses Who Received Cooperation Departures Below the Mando are not Barred From Seeking a Sentence Reduction Under Section 3582(c)(2)

In United States v. Savani, Nos. 11-4359/11-4494/12-1034, the Third Circuit held that Amendment 750 to the Sentencing Guidelines superseded United States v. Doe, 564 F.3d 305 (3d Cir. 2009), and allows defendants who were sentenced below their mandatory minimum sentences for substantial assistance to move for a sentence reduction under 18 U.S.C. § 3582(c)(2). The three appellants in Savani were in similar positions. All three were facing mandatory minimum sentences for crack offenses - Savani and Herbert were facing 10 years, and Roe was facing twenty years, due to his prior conviction. All three defendants entered into cooperation plea agreements with the government, and they all received sentences below the mandatory minimums.

After the Fair Sentencing Act ("FSA") was passed in August 2010, the Sentencing Commission amended U.S.S.G. § 2D1.1 by reducing the guidelines to correspond to the18:1 ratio that now triggers mandatory minimum sentences under the FSA. All three defendants filed motions to reduce their sentences under § 3582(c)(2). All three motions were denied by the district courts, citing Doe.

Doe held that the Sentencing Commission’s policy statement § 1B1.10(b)(2)(b), precluding sentence reductions if a defendant’s "applicable guideline range" is not reduced by the amendment, prevented reductions in cases like these. "Applicable guideline range" was not then defined, but the Doe Court ruled that it must mean the starting point for calculation of the sentence - in these cases, the mandatory minimum, not the crack guideline range. Thus, the defendants were ineligible under § 3582(c)(2), because even if their departures were somehow "based on" the now-lower crack guideline range, granting relief would be inconsistent with the Commission’s policy statement.

In 2011, however, when the Commission issued the most recent retroactive crack amendment, it also offered a definition of the term "applicable guideline range." According to Application Note 1(A) to U.S.S.G. § 1B1.10, the"applicable guideline range" is "the guideline range that corresponds to the offense level and criminal history category determined pursuant to U.S.S.G. § 1B1.1(a), which is determined before consideration of any departure provision in the Guidelines Manual or any variance." U.S.S.G. § 1B1.10 cmt. n.1(A).

In a 2-1 decision, the Court determined that this language supersedes Doe, and that the defendants were eligible for relief. The majority reached this decision on rule of lenity grounds. It first examined multiple Guidelines provisions, seeking to clarify the definition and the Commission’s intent, but it concluded that it was unclear whether - in the context of cooperators receiving substantial assistance departures - the definition referred to the guideline range or the mandatory minimum guideline sentence.

Judge Fuentes filed a separate opinion concurring in the result, but expressing the opinion that the plain language of the emergency amendments rendered the appellants eligible for sentence reductions. His opinion relied primarily on an analysis of the language of the definition as compared with the eight-step sentencing process.

The government is considering whether to seek rehearing or to petition for certiorari.  However, in the meantime, the government may not oppose bail for defendants who might otherwise be eligible for immediate release under the amendment.

Congratulations to Sarah Gannett for an amazing job, and special thanks for her help on this post!

Erroneous application of sentencing enhancement is harmless when it had no effect on the sentence

Judge Hardiman opened United States v. Zabielski, No. 11-3288, (April 3, 2013) by noting that since United States v. Booker, 543 U.S. 220 (2005), the Sentencing Guidelines were no longer “diktats.” However, trial judges must still accurately calculate the Guidelines range and correctly rule on departure motions. Though failure to do so will usually result in the Court of Appeals vacating a sentence and remanding for a new sentencing hearing, a sentencing court’s omission in this regard might be so immaterial that the error will be held harmless.  The insignificance of such an error is why Mr. Zabielski’s sentence was left intact.

Mr. Zabielski pled guilty to a bank robbery. He handed a note to a teller demanding $10,000. When the teller asked him what account he wanted to withdraw the funds from, he made clear that he was robbing the bank. One of the clues the teller noticed was a bulge in his jacket that looked like it held a gun or knife; the other was his statement that he was in a hurry.  He made off with $4767.00. Later, he told several people about the robbery, including his mother, who told him to give the money back.  He mailed most of it back from another town.  Still, within two days of the robbery, when interviewed by law enforcement, he lied about his whereabouts at the time of the crime. He was indicted, and pled guilty. Although his motion for a downward departure was denied at first, his allocution persuaded the sentencing court he was remorseful, and he received a thirteen month downward departure, and a sentence of only twenty four (24) months. Mr. Zabielski then appealed. His central claim was that the sentencing court erroneously applied a two level enhancement for threat of death.

Reviewing past cases, the Court found that Mr. Zabielski’s actions during the robbery— the bulge, the command to hurry (“you have two minutes”)— was not clearly a threat of death, as least by pre-Booker precedent. However, as a result of Booker, such enhancements are not as significant as they were before. Therefore, the Court went on to determine whether or not the error was harmless, which in this meant assessing whether or not the enhancement affected the sentence. Enhancements, the Court noted, are meant to highlight some particular set of facts from the crime. Sentencing errors are likely to be harmless when it is clear from the record that when the sentencing court decided to vary from the Guidelines, or even when an enhancement is erroneously applied, the sentencing court understood the facts of a case, grasped their significance, and incorporated them into a just sentence.

In this case, the Court found that the sentencing court demonstrated an awareness of the crime, including Mr. Zabielski’s demeanor, appearance, and statements when he robbed the bank. It appreciated the “context surrounding” Mr. Zabielski’s conduct. There was a thorough analysis of 18 U.S.C. §3553(e) factors, and Mr. Zabielski received a big break. The sentence was one that fell below the range that would have applied without the enhancement. All of this rendered any threat from the imposition of the enhancement harmless. The Court did warn that in the future, absent a statement from a sentencing court that the enhancement had no effect on the imposed sentence, it will be hard to state that any erroneous application was harmless.

Mr. Zabielski also challenged the “substantial reasonableness” of the sentence. He complained of the sentencing court’s reliance on unsubstantiated assumptions about his criminal record, unsubstantiated assumptions about his criminal background, mental health, and drug abuse, and his being sentenced to an increased term of imprisonment to facilitate his rehabilitation. Applying its deferential standard of review, it rejected these claims.  Though the sentencing court made stray and possibly speculative statements about Mr. Zabielski’s supposed drug abuse and mental health problems, the Court found that when viewed in the context of the sentencing court’s entire statement of reasons, those statements were not central to the explanation for the sentence.  Moreover, Mr. Zabielski did not dispute that he used illegal drugs and drank alcohol. Also, Mr. Zabielski had received treatment for mental illness. The sentencing court’s remarks on the subject were in response to his arguments that he would not receive proper treatment for mental illness in prison. Mr. Zabielski’s sentence of twenty-four months for a bank robbery therefore stood.

Photograph of 500,000th error in Major League Baseball from the New York Times.