UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
UNITED STATES OF AMERICA,
BRIEF FOR DEFENDANT-APPELLANT
STATUTES AND RULES
Pursuant to Fed. R. App. P. 28(f) and Circuit Rule 28(a)(5), pertinent statutes, rules, and guidelines are set forth in the addendum to this brief.
The District Court had jurisdiction under 18 U.S.C. § 3231. A notice of appeal having been timely filed, this Court has jurisdiction pursuant to 28 U.S.C. § 1291.
1. Whether the judge erroneously (a) failed to suppress the agent's testimony about incriminating aliases he elicited from the defendant prior to giving him Miranda warnings and (b) barred the defense at trial from bringing out evidence bearing on the reliability of the defendant's admissions.
2. Whether the judge erroneously admitted expert testimony about certain requirements of bankruptcy law and their application to the facts alleged by the Government.
3. Whether the trial judge's instruction that "a person who files for bankruptcy has an affirmative duty to identify all assets" erroneously explained the "false statement" element of bankruptcy fraud and effectively removed that element from the jury's consideration.
4. Whether the sentence should be vacated and resentencing ordered because of judicial errors concerning the defendant's alleged role in the offense, his alleged obstruction of justice, his criminal history, the imposition of his sentences to run consecutively to his Florida sentences, and the imposition of $360,000 in fines.
STATEMENT OF THE CASE
The Proceedings Below
A superseding indictment, filed on September 19, 1992, charged Dennis xxxxxx ("xxxxxx") with conspiracy to commit bankruptcy fraud between May, 1987 and June, 1988 (Count One; 18 U.S.C. §§ 152, 371), bankruptcy fraud in a statement of financial affairs filed on or about May 4, 1987 (Count Two; 18 U.S.C. § 152); bankruptcy fraud in a deposition on or about February 15, 1988 (Count Three); and interstate transportation of three amounts of money allegedly taken by fraud, on or about June 6, 1988 (Counts Four-Six; 18 U.S.C. §§ 2, 2314). The defense motion to suppress statements was denied during trial following the pretrial hearing and the judge's reservation of decision. The trial began on February 18, 1993 and the case was submitted to the jury on March 8, 1993. The verdict of guilty on all counts was rendered on March 11, 1993. xxxxxx was sentenced on July 15, 1993 to concurrent prison terms of 60 months on each of the first three counts and to concurrent terms of 65 months on each of the second three counts, all terms to run consecutively to the 12-year sentences previously imposed by a Florida state court (S. 90). (1) Concurrent three-year terms of supervised release were ordered to follow the prison terms, and the judge ordered restitution totaling $32,094.40 and imposed special assessments totaling $300 and fines totaling $360,000 (S. 91-92).
The Motion to Suppress xxxxxx's Statements as to his Aliases
Before the trial began on February 18, 1993, defense counsel asked the judge for permission to move to suppress xxxxxx's statements during his booking about his aliases, which had apparently been solicited without his waiving his rights (II. 16-17). Counsel admitted she had erroneously overlooked the statements' significance, explaining that the great volume of documents and the number of other litigated issues in the case had resulted in her not recognizing that the aliases, normally admissible as booking information, were incriminatory in the context of this case, "which deals with names and addresses," and that the agent who asked for the aliases knew that they would be incriminatory (II. 16-17).
The prosecutor pointed out, without contradiction, that the defense had received notice of the statements in questions in June, 1992, and he argued at length that the motion should be denied as untimely under Fed. R. Crim. P. 12(b) and (f) (II. 17-19). He also cited Pennsylvania v. Muniz, 496 U.S. 582 (1990), in opposing the motion on the merits (II. 19). The judge did not make a ruling at that time.
Following the swearing of the jurors, the judge excused them for the evening (II. 40). Then she made the following statement to counsel:
I have thought about the question that was raised on behalf of Mr. xxxxxx as far as suppression is concerned, and I have also reviewed Rule 12, and you are absolutely correct. I could -- I could, I guess, consider it waived, but I thought that it might be the better part of valor to at least try to hear the issue. You are going to be given a very limited time frame. . . .
Defense counsel asserted that on May 19, 1992, when FBI Agent John C. Cotter was booking Mr. xxxxxx, he elicited from him two aliases, Mary Ann Evans and Phillip Sullivan, plus incriminatory statements regarding the Bruce Corporation and C&P Telephone, to wit, "that C&P still owes Mr. xxxxxx $200,000, having paid him approximately 2 million consisting of what he describes as fund raising utilizing the '976' lines to fund his various political pursuits" (II. 43-44). The prosecutor then informed the judge that he would not elicit the statement about C&P and would direct the witness not to testify about it, but that he did intend to elicit those two aliases and another Cotter also obtained, Dennis Kaxxxxxx (II. 44-45).
In opposition to the motion, the prosecutor repeated that the defense had ample notice that Cotter had obtained the aliases and that they were relevant, and he argued there was no "good cause" under Rule 12 for the lateness of the motion (II. 46-47). On the merits, he argued again that the Supreme Court in Muniz had exempted routine booking information from Miranda requirements (II. 47-48). He asserted that aliases were merely called for on the fingerprint card, along with other pedigree information (II. 47-48). He also said Cotter had only been the Case Agent since January, 1992, and he had not previously met xxxxxx and therefore needed to make sure the man surrendering was indeed xxxxxx and not a "Dennis xxxxxx look-alike" (II. 48-50).
Defense counsel pointed out that xxxxxx was keeping an appointment to surrender to Cotter and asserted that this and the agent's possession of pictures of him made it unnecessary and inappropriate to ask for other names (II. 52). Cotter took the witness stand and confirmed these facts. He testified that he had arranged the surrender either with defense counsel or with xxxxxx, and that he had seen photographs of him and "did know what he looks like" (II. 53-54). Cotter did not advise xxxxxx of his rights until after taking his fingerprints and obtaining the pedigree information the fingerprint cards called for, including the aliases, which Cotter wrote down (II. 54-56). He had been involved in the investigation of xxxxxx's bankruptcy case and "was aware that he used a number of aliases" (II. 55).
After Cotter advised xxxxxx of his rights, he refused to sign the card waiving them (II. 56). Prior to eliciting the aliases, Cotter did not advise xxxxxx that they could be used against him (II. 57).
Following Cotter's testimony, defense counsel argued that Muniz should not apply to this case, where the aliases were not needed for identification and, known to be incriminatory, should not have been solicited without prior Miranda warnings (II. 60). The prosecutor insisted that despite Cotter's having viewed photographs, it was proper for him to ask about aliases to confirm xxxxxx's identity, and Muniz controlled (II. 61). The judge reserved decision (II. 62).
The judge told the parties the next morning that she was "just not satisfied with how to rule yet," and that afternoon she said,
I have still not finished the research that is necessary for this. I am now looking at
the various circuits. So, it looks like I won't have the answer until Monday. I hope that
won't bother too much the way you planned to proceed. I really regret it, Mr. Roberts [the
prosecutor], but since I gave her the opportunity to do it in this untimely manner, it has
just taken me that much longer, it appears, to try to figure it out.(III. 4, 69)
On February 22, 1993, the judge disposed of the motion as follows:
I reviewed the Pennsylvania v. Muniz case and I'm not sure it is quite on point. It certainly holds what you say it holds, Mr. Roberts, but I'm not sure it holds that an alias as such is admissible.
But after full consideration of that and the holdings that I was able to find in all of the other circuits, because that's what I did, I tried to find out what the other circuits had held on these matters, and some found the matters [sic] admissible and some found the booking material inadmissible.
So, I have decided I shall rule in two ways. First, I shall deny the motion for the first reason that you suggested, Mr. Roberts, its untimeliness, and I shall, just for the record, also deny it on its merits, and it is so ordered.(IV. 3-4)
The Government's Case at Trial
Through the trial testimony of 26 witnesses and 32 generally voluminous exhibits, the Government presented evidence that xxxxxx committed the offenses charged in the indictment by failing to disclose, both in the statement of financial affairs filed with his personal bankruptcy petition and in his deposition before the bankruptcy trustee, certain aliases and addresses he had allegedly used, certain bank accounts he had allegedly controlled, and his alleged involvement in the business of the Bruce Corporation, which was the operation of a profitable "976" telephone line, and other entities. The Government contended that his non-disclosures and alleged obfuscations, some with the confessed assistance of at least one other person, Jackie Tessmer, amounted to knowingly false declarations under the third paragraph of 18 U.S.C. § 152, and warranted his conviction for conspiracy and interstate transportation of fraudulently obtained funds (which were ultimately released by the bankruptcy trustee), as well as for bankruptcy fraud. The key documentary evidence against xxxxxx was contained in Government's Exhibits 1 and 2B, xxxxxx's statement of financial affairs and the transcript of his deposition, which are included in the appendix submitted herewith (A. ). The testimony as to the inaccuracy of his declarations cannot fairly be summarized briefly. The defense generally attacked either the credibility of the Government's witnesses or the Government's inferences from their testimony. The least vulnerable defense target was the Government's expert witness, who claimed no knowledge of the facts.
--The Expert Testimony on Bankruptcy Law
Before the Government presented its expert witness on bankruptcy law, the defense objected to his testimony on several grounds, including its superfluity under Fed. R. Evid. 702, given the anticipated testimony of Bankruptcy Trustee Ross, and the danger that it would be more prejudicial than probative, "because it will basically be supplanting the jury's function and telling them how to decide the case, without any real purpose when we have the facts here and the jury instructions" (IX. 4-7). The prosecutor said that the purpose of the testimony was to explain what bankruptcy is and "to explain the significance of a lot of the information that is sought during the course of the bankruptcy proceedings," which the prosecutor contended would be helpful to lay jurors (IX. 8-9). After an extended voir dire of the witness in the jury's presence, the judge found him qualified as an "expert" (though the jury was not informed of the specific nature of his expertise) and permitted him to give evidentiary testimony (IX. 42).
The witness was Dennis Early, Assistant United States Trustee, a lawyer and a full-time employee of Department of Justice in the United States Trustee's office, which monitors and supervises cases and trustees in the bankruptcy system (IX. 16-17, 38). Even though he had exercised supervisory responsibility over all the thousands of bankruptcy cases filed during the previous four years in Alexandria, Virginia and the District of Columbia, he had never before testified as an expert (IX. 27).
Early asserted that the information supplied in the debtor's statement of financial affairs is "crucial," "It's telling the trustee where to look, where to look for assets, and without that information, oftentimes the trustee has no idea where the assets in the estate are" (IX. 25). Further, he testified, the trustee must "rely a great deal on the debtor's truthfulness" in his financial affairs statement (IX. 45). He said it was important for trustees seeking to identify assets to be given in the statement of financial affairs all the names and addresses used by the debtor in the preceding six years, and that the form's question as to "all prior residences" in that period "doesn't give the debtor any discretion" (IX. 48-50). He gave similar testimony concerning the questions about having "engaged in any business" and about bank accounts "maintained alone or together with any other person," and he testified that a debtor who had written checks on six corporate bank accounts within the two years before a bankruptcy "clearly" should have listed those accounts in his statement of financial affairs (IX. 50-54).
The expert acknowledged that "business" is not defined in the form for the statement of financial affairs (IX. 62). He did not believe the forms were available at the Bankruptcy Court clerk's office; he said they were available in certain bookstores (IX. 65). He opined that the integrity of the process would not be enhanced by having the trustee assist in making sure the answers on the form were full, explaining,
I think it's the debtor that has all that information and it's incumbent upon the debtor to insure that when he or she is filling out these statements, answering these questions that they completely and fully disclose all relevant information and they don't just sort of pick and choose what they're going to put down on these forms.
(IX. 66) The witness allowed that the form's question about "business" did not say it included non-profit organizations, but he gave his opinion that all participation in fund-raising activities for such organizations--even participation in a church bake sale--should be listed in the statement (IX. 71-74). Similarly, he testified that a "plain reading" of the question concerning bank accounts "maintained" calls for listing any account as to which the debtor had signatory power, even if the money in the account is not the debtor's (IX. 75-76). He elaborated,
What I believe is that writing and signing checks is virtually the same thing as having that ability to maintain an account and it's sort of implicit in that word. If you have control over it, you can sign for it, it ought to be listed there.(IX. 77) The witness unequivocally included as an account that should be listed "a company account" on which the debtor had written checks (IX. 81).
The Defense's Case at Trial
The defense presented six witnesses, including two who had testified for the Government. Perhaps the most notable testimony for present purposes was that of John Kemp, a political colleague of xxxxxx, who portrayed the "976" line as the product of xxxxxx's interest in providing information to the public, said xxxxxx participated in but did not run the casual meetings of the "information providers," and described xxxxxx's lifestyle as "anything but extravagant" (XI. 76-86). He averred that the money that came in from C&P Telephone for the "976" line was spent on expanding to lines in other cities, on upgrading equipment, and on advertising (XI. 103-104). And defense counsel argued to the jury that xxxxxx was motivated solely by his social and political concerns, particularly "F.A.C.T.S." (the First Amendment Consumer and Trade Society) that the evidence showed he did not spend money on himself or accumulate assets, and that he could have been used and blamed by people around him who were not disinterested (XIII. 48-78).
The Jury Instructions, Deliberations, and Verdict
As to the second and third "essential elements" of bankruptcy fraud, the judge instructed the jury as follows:
The second essential element is that the defendant Dennis xxxxxx made or caused to be made a false material statement in that bankruptcy proceeding or in relation to that bankruptcy proceeding.
And three, that the defendant Dennis xxxxxx knew that the material statement was false.
Ladies and Gentlemen, the term "false statement" means a statement or an assertion which is known to be untrue when made or when used.
The term false statement can also mean any knowing omission of fact made with intent to deceive or to conceal.
In such regard, a person who files for bankruptcy has an affirmative duty to identify all assets and to answer all questions in any statement of financial affairs or deposition fully, completely and honestly.(XIV. 35-36; emphasis added). (2)Defense counsel had objected to the last paragraph, which was requested by the Government, on the grounds that xxxxxx was not advised in the form for the statement of financial affairs or otherwise that he had such an affirmative duty, and the instruction would effectively create a "strict liability" offense (XII. 86). The Government's request was based on language found in two Bankruptcy Court decisions (XII. 97). The prosecutor opined that the Government would still have to show that xxxxxx knowingly made a false omission (XII. 97-98), but he did not cite any authority for stating the defendant's "affirmative duty" in jury instructions in a criminal case.
The jury began deliberating on Monday, March 8, 1993, at 1:00 p.m. (XIV. 57), and it rendered its verdict on Thursday, March 11, 1993, at 2:50 p.m., finding xxxxxx guilty on all counts (A. ).
The Determinations as to xxxxxx's Offense Level and Criminal History
In response to objections registered by the defense and the Government to the original presentence report, dated April 26, 1993, the probation officer issued a revised report on May 20, 1993. The base offense level for xxxxxx's convictions was found to be six, but the PSR's total adjusted Offense Level was fixed at 19 due to the amount of money involved (seven-level enhancement), the factor of more than minimal planning (two-level enhancement), xxxxxx's alleged role in the offense (two-level enhancement), and his alleged obstruction of justice (two-level enhancement) (PSR at 7, pars. 22-24, 26-28). xxxxxx was found to have a criminal history score of seven points, which placed him in Category IV (Revised Presentence Report ("PSR") at 8-10, pars. 32-39). The Guideline imprisonment range for a Category IV, Offense Level 19 offender would have been 46-57 months. U.S.S.G. § 5A. However, the judge ultimately granted the Government's request that two more offense levels be added for xxxxxx's role in the offense, and the resulting offense level of 21 resulted in a range of 57-71 months. The disputed PSR findings and recommendations and the parties' arguments and the judge's conclusions concerning each of them are set forth in the following discussion.
A. Increase in Offense Level for Role in the Offense
The PSR recommended enhancing xxxxxx's offense level by two levels under U.S.S.G. § 3B1.1(c) because he "was a leader in this offense" (PSR at 7, par. 26). In its addendum, the PSR noted that the Government advocated a four-level increase "in that they believe this offense was 'otherwise extensive'," rendering U.S.S.G. § 3B1.1(a) applicable, and it quoted the Government's assertion that xxxxxx and Tessmer were "participants," and "many outsiders were used during the entire set of offenses"--specifically, attorneys Schwartz, Goldberg, Goldman, and O'Dea, Esther Pohorylo, Bradley Woodward, Michael Spears, Paulette Barrier, and bankruptcy trustee Ross (PSR at 17). The PSR also noted the defense's contention that the offense was not "otherwise extensive" (PSR at 17), and it concluded,
The probation office opines that this offense was a bankruptcy fraud that was not as extensive in scope as larger enterprises which have clearly delineated divisions of responsibility. Although the defendant did use several individuals, an extensive organization was not required to perpetrate the offense. Therefore, we do not believe that this adjustment is applicable.(PSR at 18)
At sentencing, the Government again attacked the two-level enhancement as insufficient. The prosecutor argued that subsection (a) of U.S.S.G. § 3B1.1, which requires a four-level increase "[i]f the defendant was an organizer or leader of a criminal activity that involved five or more participants or was otherwise extensive," should be applied (S. 38-43). The prosecutor contended that Mr. xxxxxx's criminal activity was "otherwise extensive" because it involved "the unknowing and unwitting participation of lots of other people," including the bankruptcy trustee and judge, the lawyers in the bankruptcy proceeding, and C&P Telephone employees who had to process the settlement checks issued (S. 40-41). Defense counsel pointed out that xxxxxx had already received a two-offense-level increase for "more than minimal planning" under U.S.S.G. § 2F1.1(b)(2)(A), and she argued that the scope of the alleged personal bankruptcy fraud, which was not particularly complicated, of long duration, or wide-ranging geographically, and for which only one other person (Tessmer) had been criminally charged, was not "extensive" because it was not comparable to the scope of the activities in the cases relied on by the Government (S. 43-44). The probation officer orally maintained his position that the four-level enhancement under U.S.S.G. § 3B1.1(a) was not appropriate, but the judge said she disagreed with the probation officer, and she added two levels to the PSR's offense level calculation (S. 45-46). The judge did not make specific findings as to the factual bases for applying § 3B1.1(a).
B. Increase in Offense Level for Obstruction of Justice
The PSR recommended an enhancement for obstruction of justice under U.S.S.G. § 3C1.1 (PSR at 6, 7, pars. 18-19, 27). The alleged obstruction was that on May 22, 1992, at the arraignment, while the judge was considering whether to grant unsecured bond, xxxxxx had made "statements that he resided on Highland Lane in Alexandria, Virginia," which the writer labeled "materially false" because
Ms. Esther Pohorylo advised the probation office that the defendant has never lived there and will never be allowed to live there. In addition, she stated that the defendant is always telling people that this is his residence in spite of the fact that it is not his residence. Moreover, according to the government, Eleanor Pohorylo Spencer, who had lived with the defendant for eight of the last ten years, indicated that the defendant had lived at approximately ten different locations and none were the Highland Lane address. . . .
(PSR at 6, par. 19).
The prosecutor asserted at sentencing that the Government had sought imposition of a surety bond because "Mr. xxxxxx had no fixed single address that we could identify for him," and that in response to the judge's questions,
. . . the defendant's comments, it seems to me, taken in whole were aimed at
establishing that he had been a regular resident or had been someone who had actually
resided, more importantly, on this Highland Lane address in Alexandria, Virginia . . .
(S. 30-31). The prosecutor proceeded to read long excerpts from the arraignment transcript and then he argued, "The defendant's comments, it seems to me, were clearly intended to leave the impression that the defendant actually slept at night in this Alexandria Highland Lane address, and that is clearly false" (S. 31-32). In support of his conclusion, the prosecutor cited the statement to the presentence report writer by Esther Pohorylo that is quoted above (S. 32-33). He acknowledged that the Pretrial Services Report had recorded "some confirmation of this address as Mr. xxxxxx's" and that he might still use the address and receive mail there, but he emphasized his contention that xxxxxx had not slept there at night, which he asserted was what the judge was asking xxxxxx about at arraignment (S. 33, 34).
The prosecutor cited United States v. Smaw, 993 F.2d 902 (D.C. Cir. 1993) for the proposition that it did not matter if the Government and the judge were not misled by xxxxxx's statements, because falsehoods only had to be "relevant" to the issue under consideration to be "material" and constitute obstruction of justice (S. 33-35).
Defense counsel argued first that xxxxxx had merely stated at arraignment that his
"official address" had been at the Highland Lane house and that he had indeed
received mail there, which was an important consideration relating to the granting of bond
(S. 35). She pointed out that he had voluntarily surrendered in this case and that he had
always appeared as required in court (S. 35). Also, she noted that attached to the
defense's initial sentencing memorandum was the Pretrial Services Report, filed on the
arraignment date, which contained the following information under the caption,
CURRENT ADDRESS: xxxxx HIGHLAND LANE
ALEXANDRIA, VA 22309
LIVES WITH: COMMON LAW SPOUSE
LENGTH OF RESIDENCE: 10 YEARS OFF/ON
VERIFIED BY COMMON LAW SPOUSE
CURRENT ADDRESS: xxxx BAY DRIVE
MERRICK, NY 11566
LIVES WITH: MOTHER
LENGTH OF RESIDENCE: 30 YEARS OFF/ON
VERIFIED BY COMMON LAW SPOUSE
DC AREA RESIDENT FOR: 2-3 MONTHS STEADILY 16 YEARS OFF/ON
VERIFIED BY COMMON LAW SPOUSE
(S. 35-36; exhibit in Appendix, A. ).
That initial defense sentencing memorandum had relied, inter alia, upon the admonition of U.S.S.G. § 3C1.1, Application Note 1, that "[i]n applying this provision in respect to alleged false testimony or statements by the defendant, such testimony or statements should be evaluated in a light most favorable to the defendant" (A. ). Accordingly, counsel argued at sentencing that the record indicated xxxxxx had tried to be "forthright" at arraignment about his past use of more than one address and that he had not "willfully" misled the court (S. 35-37). (3) In response to the prosecutor's reiteration of the allegation that xxxxxx had created the "clear impression" that he had been sleeping at the Highland Lane address sometimes, when in fact he "never was," defense counsel asserted that "the Government provided no evidence to support that charge" (S. 38).
The judge found the PSR writer's conclusion and the 2-point enhancement "absolutely correct," attributing to xxxxxx an "absolutely false statement to the Court for the express purpose that it was designed" and commenting that she did not think "any argument is necessary on the issue" (S. 38). The judge made no specific findings as to what false statement xxxxxx had made, what evidence had proved it false, how it was material and willful, or what standard of proof was applicable.
C. Addition of Three Criminal History Points
for Florida Conviction for Conduct Including the Bankruptcy Fraud Charged in the Instant
On October 19, 1992, a month after the filing of the final, superseding indictment in the instant case, xxxxxx had been sentenced in state court in Pasco County, Florida to seven concurrent 12-year prison terms for racketeering (two counts) and "sexual performance by a child" (five counts) (PSR at 10, par. 38).
The PSR treated that disposition as a "prior sentence" under U.S.S.G. § 4A1.1(a) and added three points to xxxxxx's criminal history score, placing him in Category IV, rather than Category III (PSR at 10, pars. 38, 39).
Defense counsel argued, among other things, that the racketeering counts in the Florida case were specifically based on the same bankruptcy fraud allegations made in the instant case, meaning that "part of this conduct has been punished through the sentencing in the State of Florida" (S. 23). In response, the prosecutor argued that the Florida case was "very different" from the instant case (S. 24-27). According to the prosecutor, the Florida felony information contained 32 counts: two counts of racketeering, five counts of sexual performance of a minor, and 25 counts of "obscenity" (S. 27). Ignoring xxxxxx's acquittals of the obscenity charges, he continued,
The bankruptcy fraud allegation was buried in one of 72 predicate acts listed in the racketeering counts, and virtually all of the other predicate acts in those racketeering counts had to do with what the case was really about, namely the obscenity allegations and the pornography and prostitution allegations.
With respect to what actually happened at trial, few of the witnesses actually offered evidence that had anything to do with the bankruptcy fraud, and from what I understand, only about four sets of exhibits that were introduced out of 90-some odd exhibits that were introduced in that trial by the government bore upon the applications to C&P, several of the C&P checks, and I think the articles of incorporation of the Bruce Corporation, which we didn't even use here, as well as some tape recordings of conversations that were made surreptitiously with Mr. xxxxxx, again, which we didn't use here. The vast bulk of the remaining evidence that was actually introduced had to do with the gravamen of the offense that they were prosecuting for or offenses that they were prosecuting him for that can fairly be characterized, I think, as obscenity/pornography types of charges.
(S. 27-28) The prosecutor concluded by asserting that there was no "significant double counting in punishment here" and arguing that "completely excluding" the Florida conviction from xxxxxx's criminal history calculation would "significantly underrepresent" his past criminal conduct (S. 28-29).
Defense counsel added to her argument the facts that in the Florida trial, testimony and exhibits were introduced to support the allegations of bankruptcy fraud and the judge instructed the jury on bankruptcy fraud, (S. 29). The judge here, however, simply ruled, "I think it's a proper assignment of points in this case and it will remain" (S. 30). Later, in addressing xxxxxx prior to imposing sentence, the judge said, referring to defense counsel's argument, "You know I have found that argument unavailing, and I want you to know that I certainly cannot and shall not look behind the convictions in the Florida court" (S. 87).
--The Imposition of Sentences Fully Consecutive to 12-year Florida Sentences
Concluding her argument to the judge, defense counsel urged that the prison sentences
in the instant case run concurrently with his 12-year Florida terms because the Florida
case was based in part on the bankruptcy fraud allegations and because the court there had
imposed "a significant amount of time" (S. 52). The prosecutor countered that
under U.S.S.G. § 5G1.3, a consecutive prison term should be imposed (S. 56-57). Without
commenting on the how that Guideline section was to be applied, the judge imposed the
federal prison sentences to run consecutively to the Florida sentences (S. 90).
--The Imposition of Fines Without Basing Them on xxxxxx's Ability to Pay
The PSR included the following two paragraphs:
61. The defendant declined to file a financial report for this office and declined to
sign and release forms that would allow us to obtain information about his financial
records. Therefore, we are unable to ascertain the defendant's ability to pay a fine.
62. The government indicates that the Bruce Corporation earned $912,829.75 from the
"9 Social" telephone line from November 1986 to June 1988. The whereabouts of
the proceeds from this line are unknown.
(PSR at 14) The prosecutor argued at sentencing that absent any evidence that xxxxxx could not pay a "punitive fine," one should be imposed (S. 56-57). Defense counsel argued that the trial evidence did not portray xxxxxx as a person who had sought and achieved self-enrichment, but rather as a person who helped raise money for the political causes, particularly in the area of sexual freedom, in which he was interested (S. 57-58). In colloquy, the judge said she accepted counsel's statement of her view that xxxxxx had no assets, but she asked why he had not so stated to the interviewing probation officer (S. 60). Defense counsel said that the type of financial information sought for the PSR would have put xxxxxx "in the position of incriminating himself" (S. 60).
The judge denied that she was saying that she wanted xxxxxx to fill out the financial information form for the Probation Department, but she remarked, "I'm talking about what is, not what could be" (S. 61). Before imposing a $60,000 fine on each of the six counts of the conviction, the judge only made the following comments pertinent to the issue of Mr. xxxxxx's lack of assets:
And I've heard all of these arguments about, well, you wore second-hand clothes, you didn't have a fancy car. None of that is relevant. Whether you used this money to buy fancy cars, or whether you used this money to buy fancy houses, or whether you used this money to buy Brooks Brothers suits, that's irrelevant. What's relevant here is that you stole, you cheated, you deceived. You committed an egregious fraud upon the federal bankruptcy courts in this country, even listing one of your own corporations as a debtor.
So, you see, why you are here today has nothing to do with your desire for social
change. It has nothing to do with your desire for pure and simple social nudism. It has
nothing to do with your desire to promote social nudism.
SUMMARY OF ARGUMENT
Appellant Dennis xxxxxx seeks reversal of his convictions on several grounds. First, the judge erroneously denied his motion to suppress the admissions about using aliases that the FBI agent elicited before issuing Miranda warnings. Then, in a related trial error, the judge precluded cross-examination of the agent about the lack of warnings before xxxxxx's admissions and his invocation of his right to silence when he later received the warnings. The trial was also rendered unfair by the admission of expert testimony as to the legal requirements of the financial affairs statement for bankruptcy and the judge's charging the jury with the rule, taken out of context from bankrupcy court decisions, that a debtor has an "affirmative duty to disclose all assets."xxxxxx alternatively seeks vacatur of his sentence and a remand for resentencing due to errors relating to his alleged role in the offense, his alleged obstruction of justice, his criminal history, the imposition of sentences consecutive to his Florida sentences, and the imposition of $360,000 in fines.
THE JUDGE ERRONEOUSLY FAILED TO SUPPRESS THE AGENT'S TESTIMONY AS TO INCRIMINATING
ALIASES THAT HE ELICITED FROM THE DEFENDANT PRIOR TO GIVING HIM MIRANDA WARNINGS.
The Standard of Review
Where a defendant has moved to suppress evidence claiming it was obtained in violation of his constitutional rights, the Court generally reviews the District Court's fact findings for clear error and its legal conclusions de novo. United States v. Taylor, 997 F.2d 1551 (D.C. Cir. 1993). In the instant case, the suppression motion was made just before trial, and the prosecutor opposed it as untimely under Fed. R. Crim. P. 12(b). If the judge had declined to entertain the motion then, that decision would be disturbed only for "clear error," in "unusually meritorious" circumstances. United States v. Mitchell, 951 F.2d 1291, 1297 (D.C. Cir. 1991). However, the judge chose to hear both argument and testimony on the motion, and she deliberated on its merits for several days. At that point, the moot issue of the motion's lateness could not reasonably be revived as a basis for denying relief. Accordingly, the judge's ultimate denial of the motion for untimeliness should be disregarded and only her alternative disposition on the merits should be reviewed, applying the usual standards. (4)
A. The case agent's knowledge that xxxxxx had allegedly used aliases made the "routine booking question" exception inapplicable.
In Pennsylvania v. Muniz, 496 U.S. 582, 601 (1990), a plurality of the Supreme Court opined that law enforcement officers should not be required to warn suspects in custody of their Miranda rights (5) before asking routine questions in order to obtain the "biographical data necessary to complete booking or pretrial services." The opinion noted, however, quoting from the brief of amicus United States, that "the police may not ask questions, even during booking, that are designed to elicit incriminatory admissions," and it cited three cases to support that limitation: United States v. Avery, 717 F.2d 1020, 1024-1025 (6th Cir. 1983); United States v. Mata-Abundiz, 717 F.2d 1277, 1280 (9th Cir. 1983); and United States v. Glen-Archila, 677 F.2d 809, 816 n.18 (11th Cir. 1982). In the last case cited, the Eleventh Circuit wrote, "If investigative questions are asked while routine information is being obtained . . . answers to such questions are inadmissible if the suspect has not been read his Miranda rights." Id.
Recently, where an immigration agent omitted Miranda warnings before asking a suspect his true name in order to link him to his incriminating immigration file, the Tenth Circuit held the answer should have been suppressed. United States v. Parra, 2 F.3d 1058, 1068 (10th Cir. 1993). Similarly, in United States v. Gonzalez-Sandoval, 894 F.2d 1043, 1046-1047 (9th Cir. 1990), the court found a Miranda violation in a Border Patrol agent's questions about the suspect's immigration status and place of birth, which were "reasonably likely to inculpate" him. The court recalled it had written previously, "The relationship of the question asked to the crime suspected is highly relevant." Id. at 1046, quoting United States v. Mata-Abundiz, supra, 717 F.2d at 1280. Accord United States v. Pigott, 1994 U.S. Dist. LEXIS 6922, *13 (W.D.N.Y. 1994); Thompson v. United States, 821 F.Supp. 110, 120-121 (W.D.N.Y. 1993).
Here, Cotter had been the Case Agent for almost five months in the investigation of the bankruptcy fraud of which xxxxxx was suspected. Cotter admitted at the suppression hearing that he knew xxxxxx's appearance from photographs, that he had set up the appointment for xxxxxx's voluntary surrender either with him or with his counsel, and that he "was aware that [xxxxxx] used a number of aliases" (II. 53-55). Contrary to the prosecutor's suggestion (II. 50), Cotter evidently was unworried about a "Dennis xxxxxx look-alike". Manifestly, Cotter did not have to ask xxxxxx his aliases for identification purposes. The question seeking aliases was therefore investigative--"reasonably likely to inculpate the subject," Gonzalez-Sandoval, supra, 894 F.2d at 1046--and should have been preceded by Miranda warnings.
Significantly, Cotter acknowledged that xxxxxx refused to waive his rights after being advised of them (II. 56). Thus, it is implausible that xxxxxx would have stated the incriminating aliases in any event. Nor can the admission of the evidence at trial be found harmless beyond a reasonable doubt, as Chapman v. California, 386 U.S. 18, 24 (1967), requires for affirmance despite constitutional error. In Parra, supra, the court found that the testimony of two witnesses that the defendant used an alias was overwhelming evidence of that fact, and hence the failure to suppress the agent's testimony was harmless beyond a reasonable doubt. 894 F.2d at 1046. Here, however, the other witnesses who testified about xxxxxx's use of aliases, Tessmer and Spencer, had reason to exculpate themselves by claiming xxxxxx had used aliases that they themselves might well have used to obtain money. In discussing the subject of aliases in closing argument, the prosecutor led off by relying on his most credible witness, Cotter. He cited Spencer's testimony for corroboration and explanation (XIII. 20). He did not even refer to Tessmer's testimony on this subject. These two witnesses simply did not present overwhelming independent evidence of xxxxxx's use of the aliases in question, which was central to the Government's fraud allegations.
B. The judge erroneously barred the defense at trial from bringing out evidence bearing on the admissions' reliability.
The admission of Cotter's testimony that xxxxxx acknowledged using certain aliases (IV. 47-48) gave rise to a related trial error. Defense counsel was barred from cross-examining Cotter about his failure to issue Miranda warnings before asking about the aliases and about xxxxxx's refusal to waive his rights after he received the Miranda warnings (IV. 49-51, 54-55). Counsel protested that the "Red Book" of pattern jury instructions contained an instruction establishing the relevance of whether statements were made voluntarily, and that she would request that instruction (IV. 49-50). (6) The judge's rationale for the preclusion was, again, that Miranda warnings were not required before "booking questions" (IV. 50-51, 54). As demonstrated above, the judge was mistaken about that. And in any event, the judge failed to see the obvious point that the context in which the pertinent Red Book instruction would be used generally would be a trial, like the instant one, where the defendant's motion to suppress his statements had been denied.
In Crane v. Kentucky, 476 U.S. 683, 691 (1986), the Supreme Court unequivocally declared that trial evidence of the circumstances in which an inculpatory statement was elicited from the defendant "is often highly relevant to its reliability and credibility." The Court held that the Supreme Court of Kentucky had erred in concluding that once a confession had been held voluntary, the defense could not bring out evidence as to its factual context. Id. at 687. Observing that the fundamental right to present a defense is rooted in the Sixth Amendment's Confrontation Clause, as well as elsewhere, the Court admonished that exclusion of evidence bearing on the reliability of an inculpatory statement "deprives a defendant of the basic right to have the prosecutor's case encounter and 'survive the crucible of meaningful adversary testing.'" Id. at 690-691 (citations omitted). Indisputably, whether Miranda warnings were issued is a factor to be considered in weighing the reliability of statements produced by in-custody interrogation. Withrow v. Williams, 113 S.Ct. 1745, 1753-1754 (1993). In preventing defense counsel from bringing out for the jury that xxxxxx was not advised of his rights before being asked about aliases and that after Cotter issued the warnings he remained silent, the judge violated xxxxxx's "basic right" to present a complete defense by challenging the Government's reliance on the aliases.
The restriction was prejudicial. xxxxxx had invoked his privilege not to talk to Cotter as soon as he was advised of it. Considering the excluded testimony, the jury might have concluded xxxxxx's admission of using the aliases was unreliable. As it was, the judge's error in limiting cross-examination gave the jury an unfairly enhanced impression of the reliability of xxxxxx's admission, which was emphasized by the Government, so the error certainly was not harmless beyond a reasonable doubt. xxxxxx's convictions should be reversed and a new trial ordered.
THE JUDGE ERRONEOUSLY ADMITTED EXPERT TESTIMONY AS TO CERTAIN REQUIREMENTS OF
BANKRUPTCY LAW AND THEIR APPLICATION TO THE FACTS ALLEGED HERE BY THE GOVERNMENT.
The Standard of Review
The Court reviews rulings on the admissibility of expert testimony for abuse of discretion. United States v. Boney, 977 F.2d 624, 628 (D.C. Cir. 1992).
The proper functions of both the judge and the jury were tainted by the United States Trustee's expert testimony that the statement of financial affairs required disclosure of information such as that allegedly omitted by Mr. xxxxxx.
Among federal courts that have considered whether experts on legal issues may testify as to the proper resolution of those issues in cases where they have arisen, a consensus has developed that such testimony is inadmissible. In Specht v. Jensen, 853 F.2d 805 (10th Cir. 1988) (en banc), cert. denied, 488 U.S. 1008 (1989), the 10th Circuit surveyed the case law and reversed because the trial judge permitted the plaintiff in a civil rights action to present the expert testimony of a lawyer that in circumstances such as those in question, a search would be illegal. The court accepted the premise that the testimony's helpfulness to the jury is a primary consideration under Fed. R. Evid. 702, but it added,
We must also consider, however, whether the expert encroached upon the trial court's authority to instruct the jury on the law, for it is axiomatic that the judge is the sole arbiter of the law and its applicability.Id. at 807. And in analyzing the advisory notes on Rule 704, the court found a distinction between the testimony on "ultimate facts" permitted by that rule and testimony on "ultimate questions of law," which "is not favored" because "testimony which articulates and applies the relevant law . . . circumvents the jury's decision-making function by telling it how to decide the case." Id. at 808. In United States v. Zipkin, 729 F.2d 384, 386-389 (6th Cir. 1984), the court found reversible error in the admission of testimony by a bankruptcy judge as to requirements of the Bankruptcy Act. Similarly, the Fourth Circuit, in Adalman v. Baker, Watts & Co., 807 F.2d 359, 368-370 (4th Cir. 1986), held that it was proper to exclude the testimony of an expert lawyer on the meaning and applicabilities of the securities laws to the facts at hand. Accord Owen v. Kerr-McGee Corp., 698 F.2d 236, 240 (5th Cir. 1983) (trial judge properly excluded expert testimony, in effect, that plaintiff was contributorily negligent); Loeb v. Hammond, 407 F.2d 779 (7th Cir. 1969) (trial judge properly excluded attorney's testimony on legal significance of documents); Fechter v. Connecticut General Life Ins. Co., 800 F.Supp. 182, 187 n.12 (E.D.Pa. 1992) (legal conclusion excluded); King v. Fox Grocery Co., 642 F.Supp. 288, 291 (W.D.Pa. 1986) (lawyer's expert opinion applying labor law to facts excluded).
Several opinions in this area have relied upon Marx & Co., Inc. v. Diners Club, Inc., 550 F.2d 505, 508 (2d Cir.), cert. denied, 434 U.S. 861 (1977), which reversed because the trial judge permitted an attorney expert to give his opinion about the parties' contractual obligations. The court found the testimony superfluous in light of the judge's exclusive duty to instruct the jury, and it discussed the danger that the jury would improperly consider an expert in a particular branch of the law more authoritative than the judge. The court opined that an expert in securities law might properly testify about such matters as value, pricing, the characteristics of particular securities, and the normality of trading methods, but not about the illegality of a particular trading method or the breach of a contract. 550 F.2d at 510-512.
In the instant case, defense counsel timely objected to the proposed testimony of Dennis Early, a lawyer employed by the Justice Department as Assistant United States Trustee, with responsibility for monitoring and supervising bankruptcy cases (IX. 4-7, 16-17, 38). The judge found Early qualified as an expert by experience, but did not delineate the purpose for which his testimony was being admitted (IX. 42). Early proceeded to testify at length about the disclosure requirements purportedly implicit in the form for a debtor's statement of financial affairs, the document xxxxxx had allegedly completed and filed fraudulently. The witness testified, among other things, that a debtor would not have "any discretion" to omit any prior "residences," that the debtor could not "decide he shouldn't list" a "business" in which he had been "engaged," and that a debtor in the circumstances alleged "clearly" should list the bank accounts in question (IX. 50, 52, 54). He also stated his opinion that the word "business" in one question on the form extends even to the fund-raising activity of non-profit organizations (IX. 71-74), which was devastating to the defense contention that xxxxxx was not guilty because he had no personal interest in the assets of the Bruce Corporation.
In this "expert" testimony, defense counsel's stated fears of gratuitous and unduly prejudicial invasion of the judge's and jury's provinces (IX. 4-7), the very dangers recognized in the above-cited judicial opinions, were realized. The jury was told by a purported expert how to apply the law of bankruptcy to xxxxxx's omissions from the statement of financial affairs, and the only conclusion they could have reached consistent with Early's ostensibly authoritative opinions was that xxxxxx was guilty of bankruptcy fraud and the related charges. Moreover, Early's legal opinions were based on his experience in bankruptcy proceedings and not on any apparent knowledge of the proof required to support a criminal conviction for bankruptcy fraud. Early's inflexible interpretation of the bankruptcy law's disclosure requirements might have indicated the correct disposition of a bankruptcy petition--even by someone who led a frugal, nomadic life, dedicated to social and political causes--but it was not self-evidently a correct analysis under principles of criminal liability. Accordingly, it is clear that xxxxxx was prejudiced by the admission of Early's testimony. For this reason, too, the convictions should be reversed and a new trial ordered.
THE TRIAL JUDGE'S INSTRUCTION THAT "A PERSON WHO FILES FOR BANKRUPTCY HAS AN AFFIRMATIVE DUTY TO IDENTIFY ALL ASSETS" WAS AN ERRONEOUS EXPLANATION OF THE "FALSE STATEMENT" ELEMENT OF BANKRUPTCY FRAUD, AND IT EFFECTIVELY REMOVED THAT ELEMENT FROM THE JURY'S CONSIDERATION.
The Standard of Review
The Court reviews jury instructions de novo. See United States v. Edelin, 996 F.2d 1238, 1242 (D.C. Cir. 1993).
The "affirmative duty" disclosure rule appropriate for bankruptcy cases, where the propriety of a discharge is in issue, was improperly transplanted to this bankruptcy fraud case, where the defendant had no burden of proof.
A judge's instructions may not effectively remove from the jury's consideration a fact required for proof of an offense. In United States v. Gaudin, 986 F.2d 1267, 1271-1273 (9th Cir. 1993), the court found that it was a prejudicial due process violation for the trial judge to instruct the jury, where the defendant was charged with making false statements (18 U.S.C. § 1001), that the defendant's statements were material as a matter of law. Likewise, in United States v. DeSoto, 950 F.2d 626, 632 (10th Cir. 1991), reversible error was found where the defendant denied possessing the firearm that was the subject of the charge and the judge instructed the jury, "The defendant's motive for acquisition of a firearm or ammunition is not material to the issue before you"--the defect being that the jury would probably have interpreted the instruction as assuming that the defendant "acquired" the firearm and "therefore must have knowingly possessed it." See United States v. North, 910 F.2d 843, 892 (D.C. Cir.), withdrawn in part and superseded in part, 920 F.2d 940, cert. denied, 111 S.Ct. 2235 (1991) (erroneous charge that congressional hearing "pending" held harmless beyond a reasonable doubt).
In the instant case, as requested by the prosecutor, the judge included in his instructions on the statutory elements of bankruptcy fraud the following language:
The term false statement can also mean any knowing omission of fact made with intent to deceive or to conceal.
In such regard, a person who files for bankruptcy has an affirmative duty to identify all assets and to answer all questions in any statement of financial affairs or deposition fully, completely and honestly.(XIV. 35-36; emphasis added). Defense counsel had objected that xxxxxx had been given no notice of such an affirmative duty, and that the instruction that he had one in effect made him strictly liable for the omissions from his financial affairs statement and deposition (XII. 86). The objection was well-taken. In this context, operating like the improper assumption of possession in the DeSoto jury charge, the affirmative duty instruction suggested strongly and incorrectly that xxxxxx had not identified all his "assets" and that he could not claim good-faith omission of any of them. Particularly in light of the bankruptcy law expert's testimony that a debtor has no legal option to omit from the financial affairs statement anything the expert testified was required, the jury was likely to understand from the instruction that it must find that xxxxxx had made "false statements" within the meaning of 18 U.S.C. § 152.
The affirmative duty instruction was based on two Bankruptcy Court decisions: In re Braymer, 126 Bankr. 499 (N.D. Tex. 1991), and In re Arcuri, 116 Bankr. 873 (S.D.N.Y. 1990). In Braymer, a discharge was denied where the debtor claimed good-faith omissions from her statement of financial affairs. Two statements in the opinion come closest to the language of the instruction: "A debtor must be scrupulous in giving notice of all assets to which others may make a legitimate claim, and may not avoid questions by failing to disclose the asset even though he or she may think it may be theirs to keep"; and "If a debtor is uncertain as to whether certain property is legally required to be included in the petition, the debtor's duty is to disclose the assets so that the question may be resolved." 126 Bankr. at 502, 503 (citations omitted). The actual language of the instruction here was a paraphrase of the rule stated in Arcuri: "A debtor has an 'affirmative duty' to identify all assets, liabilities and to answer all questions fully and with utmost candor." 116 Bankr. at 879 (citation omitted). Interestingly, in Arcuri, the court noted that the burden had shifted to the debtor to explain his apparent false statements, but it permitted the discharge to stand, finding that the objecting creditor had failed to prove fraud by "clear and convincing evidence." Id. at 884, 886. Thus, the facial rigidity of the affirmative duty rule may be softened in bankruptcy court practice.
These and other decisions concerned solely with the propriety of bankruptcy discharges cannot reasonably and fairly be tapped as sources for criminal jury instructions. It is both unnecessary and misleading to extract an unequivocally worded rule from its legal and procedural context. In the criminal law, burdens of proof are rarely shifted to defendants, and the standard of proof of guilt by the Government is always "beyond a reasonable doubt." The affirmative duty instruction was incompatible with these due process norms, and it must be deemed to have prejudiced the jury in favor of the Government's contentions and against Mr. xxxxxx's good-faith defense. Reversal and a new trial are required.
THE SENTENCE SHOULD BE VACATED AND RESENTENCING ORDERED.
Although imprisonment was not mandatory for the offenses of which xxxxxx was convicted, the judge imposed concurrent prison terms of 60 and 65 months, to run consecutively to the 12-year terms he had recently received in Florida for convictions based in part on the conduct alleged in the instant case. Moreover, although the defense claimed, consistent with the testimony at trial, that xxxxxx possessed no significant assets, the judge imposed $360,000 in fines. These severe punishments, unsupported by adequate judicial fact-finding and legal analysis, cannot stand.
The Standards of Review
The Court reviews a sentencing judge's compliance with the legal requirements of the Sentencing Guidelines de novo. See United States v. Taylor, 997 F.2d 1551 (D.C. Cir. 1993). Factual findings are reviewed for clear error. United States v. Chaikin, 960 F.2d 171 (D.C. Cir. 1992).
A. The judge erroneously increased the offense level for Mr. xxxxxx's role in the offense, contrary to the findings and recommendations of the PSR, without making new findings or stating the basis for her disagreement with the PSR.
Where a defendant disagrees with a finding in a presentence investigation report, the sentencing judge must either make a finding that resolves the dispute or determine that the disputed factor will not be taken into account in the sentencing. Fed. R. Crim. P. 32(c)(3)(D). A fortiori, where a defendant agrees with a PSR's finding and the Government does not, the judge may not properly reject the PSR's position, effectively increasing the length of the defendant's prison sentence, without making an independent finding that resolves the dispute and specifies the reasoning supporting the disposition. Findings are particularly important where judges apply U.S.S.G. § 3B1.1, which provides for three alternative offense-level increases depending on a defendant's role in the offense. As the Sixth Circuit recently wrote in vacating a sentence and remanding where the defendant's Offense Level had been increased under U.S.S.G. § 3B1.1(a), "There are numerous factors which the court is to consider in determining whether a leadership enhancement is appropriate," and thus "it is essential that the court make findings regarding the factors mentioned in the guidelines and state the reasons for its determination." United States v. Odom, 13 F.3d 949, 960 (6th Cir. 1994). See United States v. Guyton, 36 F.3d 655, 661-663 (7th Cir. 1994) (remanding where judge's vague conclusion as to the defendant's control of a conspiracy was not supported by evidence that he controlled four others, and suggesting alternative analyses).
Here, the PSR found xxxxxx should receive no more than the two-level increase required by U.S.S.G. § 3B1.1(c) "[i]f the defendant was an organizer, leader, manager, or supervisor in any criminal activity other than that described in (a) or (b) . . . ." (PSR at 7, par. 26). The Government disputed the PSR's conclusion, arguing in favor of a four-level increase under § 3B1.1(a) for "otherwise extensive" criminal activity involving "many" innocent non-"participants" in the charged personal bankruptcy fraud scheme. Defense counsel duly contested the Government's analysis. And the probation officer who wrote the report maintained, both in the PSR's addendum (PSR at 17-18) and in court (S. 45), that xxxxxx's offense did not entail an "extensive organization." The judge, in merely stating that she was "going to have to disagree" with the probation officer and then adding a two-level increase, failed to make the explicit findings the Guideline and considerations of procedural fairness require to justify the four-level increase.
The Government's position was articulated below, but the judge did not declare her full agreement with the prosecutor's reasoning, and the mere existence of case law supporting the Government's factual and legal analysis does not militate against vacatur of the sentence. In both Odom and Guyton, supra, the appellate courts recognized the possibility that the challenged enhancements could properly be justified. In the instant case, where there were only two criminally liable "participants" in the alleged scheme (xxxxxx and Tessmer), it was necessary for the judge to differentiate between the alternative bases (five or more participants versus otherwise extensive criminal activity) for an increase under § 3B1.1(a). Moreover, one consideration suggested by defense counsel, the fact that xxxxxx had already received a two-level increase for "more than minimal planning" under U.S.S.G. §2F1.1(b)(2)(A) (see S. 44), could lead to the conclusion that the additional increase constituted improper double counting. See, e.g., United States v. Chichy, 1 F.3d 1501, 1505-1507 (6th Cir. 1993) (double counting found); but see, e.g., United States v. Rappaport, 999 F.2d 57, 60-61 (2d Cir. 1993) (leading and planning found to be "disparate aspects of criminal conduct"). Accordingly, the judge's failure to justify her application of § 3B1.1(a) requires vacatur of the sentence and a remand for resentencing.
B. The judge erroneously increased the offense level for Mr. xxxxxx's alleged obstruction of justice without applying the "clear- and-convincing standard" and considering the evidence in the light most favorable to the defendant.
As the defense pointed out below, Application Note 1 to the Commentary on U.S.S.G. § 3C1.1, which requires a two-level increase for "willfully" obstructing justice, admonishes, "In applying this provision in respect to alleged false testimony or statements by the defendant, such testimony or statements should be evaluated in a light most favorable to the defendant." This Court has recently held that the Sentencing Commission apparently meant in this Commentary to hold judges to an evidentiary standard higher than a preponderance of the evidence, and that the appropriate standard is proof by "clear and convincing" evidence. United States v. Montague, No. 93-3191, Slip Op. at 7-11 (D.C. Cir. November 18, 1994). The Court held, additionally, that the application of that standard must be demonstrated in "independent findings" by the judge. Id. at 9.
In the instant case, the judge said she did not think "any argument"--presumably meaning any explanation--was necessary for her conclusion that at arraignment, in reference to his places of residence, xxxxxx had made an "absolutely false statement to the Court for the express purpose for which it was designed" (S. 38). This perfunctory and rather cryptic statement fell far short of the required explicit application of the correct evidentiary standard to all the facts at hand.
The process of weighing evidence under the clear-and-convincing standard, as described in Montague, is very different from that under the preponderance-of-the-evidence standard, which simply involves comparing the heights of "piles" of evidence that are arguably on the defendant's side and arguably on the Government's side. Id. at 8. To reach a proper conclusion that evidence is clear and convincing, a judge must consider whether he or she is "uncertain" as to each item of evidence, and if so, count it in the defendant's favor. Id. In other words, "it is crucial that the judge be clear as to his or her findings and give the benefit of the doubt to the defendant when the judge has no firm conviction." Id. at 10 (emphasis added). And, of course, a judge cannot reasonably reach a "firm conviction" about all relevant evidence without consciously going through this process.
The absence of the required findings here should obviate the need for this Court to rule on the merits of xxxxxx's challenge to the enhancement for obstruction of justice. However, the implications of the Court's decision in United States v. Smaw, 993 F.2d 902 (D.C. Cir. 1993), are worthy of discussion. In Smaw, the defendant wrote "N/A" in the "real estate" section of the financial statement requested by a probation officer in preparation for her sentencing, when actually she and her husband had bought a house with a mortgage held by the seller and, although they had not moved into the house or accrued any equity, they had made some payments to the seller and had begun improving the house. Id. at 903. The sentencing judge did not credit Smaw's claim that she believed she had no interest in the house. Id. at 904. This Court declined to disturb that credibility finding, and it went on to reject Smaw's contention that because she had no equity, her misrepresentation was not "material." The Court observed that Smaw's capacity to make mortgage payments would bear on the assessment of her ability to pay a fine, and also that the market value of the house could not have been determined without a new sale or an appraisal. Finally, the Court concluded, Smaw's interest in the house was a factor for the judge to consider even if it were ultimately to be disregarded, and hence the non-disclosure was "material." Id.
From there, the Court went on to write, "The word 'material' in this context means relevant--not outcome determinative." Id. The prosecutor in the instant case suggested that these words meant that a material falsehood and obstruction of justice could be found even if the Government and the judge were not misled by xxxxxx's statements at arraignment (S. 33-35). But obviously, the facts of Smaw, where it took a subsequent investigation to discover the nondisclosure, do not justify ignoring whether a defendant's statements were actually misleading. Everyone in the courtroom at xxxxxx's arraignment manifestly understood that he was acknowledging his past itinerant lifestyle. It must be concluded, therefore, that the judge's decision to grant unsecured bond was based, not on a misrepresentation by xxxxxx as to where he had spent his nights in the past, but on the judge's opinion, resulting from defense counsel's representation, that xxxxxx would appear in court as required because he would obey the judge's order to "reside" at the Highland Lane address in Alexandria and "remain in the Greater Washington area" unless permitted by the judge to leave it (5/22/92 at 21, 27).
The judge's apparent belief at arraignment that xxxxxx could "reside" at the Alexandria address while free on bond also was not proven at sentencing to have resulted from any deception by xxxxxx. Indeed, the Government at sentencing failed to present evidence that could reasonably have been found clear and convincing that xxxxxx did not stay there as the judge ordered at arraignment. The Pretrial Services report, referred to at arraignment, stated that xxxxxx's "common law spouse," Eleanor Pohorylo Spencer, had verified xxxxxx's past "residence" "off/on" at 8523 Highland Lane. This evidence was not clearly disproved by Esther Pohorylo's having "advised the probation office" after xxxxxx's conviction that he had "never lived there and never will be allowed to live there" (PSR at 6, par. 19). As former titular principal of the Bruce Corporation, Pohorylo had a strong reason to deny that she had a close relationship with xxxxxx, and the judge had no way to assess the credibility of her statement to "the probation office." Moreover, for the head of a household to say merely that her daughter's common law husband has never "lived" or "resided" in her home does not exclude the possibility that he has stayed in it as a visitor--which relatives have been known to do even in the homes of relatives who are less than welcoming--for significant periods of time.
In sum, given the existing record, the increase in xxxxxx's offense level for obstruction of justice was far from inevitable. Vacatur of the sentence and a remand for resentencing are necessitated by the judge's failure to apply the proper standard of proof and make the required independent findings.
C. The judge erroneously added three points to
xxxxxx's criminal history for his Florida sentence of imprisonment, which likely was based
substantially on conduct that was "part of the instant offense."
U.S.S.G. § 4A1.1(a) provides for the addition of three criminal history points for "each prior sentence of imprisonment exceeding one year and one month." The term "prior sentence" is defined in § 4A1.2(a)(1), in pertinent part, as "any sentence previously imposed upon adjudication of guilt . . . for conduct not part of the instant offense" (emphasis added). Application Note 1 to § 4A1.2 states,
. . . . A sentence imposed after the defendant's commencement of the instant offense, but prior to sentencing on the instant offense, is a prior sentence if it was for conduct other than conduct that was part of the instant offense. Conduct that is part of the instant offense means conduct that is relevant conduct to the instant offense under the provisions of § 1B1.3 (Relevant Conduct).
In United States v. Query, 928 F.2d 383, 385-386 (11th Cir. 1991), the Eleventh Circuit found it would have been erroneous for the judge to count in the defendant's criminal history his state sentence based on methamphetamine possession, because his federal conspiracy case, like the state case, involved contemporaneously seized methemphetamine that had been manufactured in the defendant's attic. The court wrote, "As conduct that was part of the instant offense, the acts underlying the state conviction were properly considered by the district court as relevant conduct rather than as a prior sentence." Id. at 386. Accord United States v. Belton, 890 F.2d 9, 11 (7th Cir. 1989) (criminal history could not count California conviction for possession of cocaine that was subject of federal conspiracy charge).
Defense counsel asserted below, and the prosecutor did not dispute, that the Florida information charging xxxxxx specified the instant federal bankruptcy fraud as a predicate act in both of the state racketeering counts, that the state introduced testimony and exhibits at trial to support the bankruptcy fraud allegations, and that the judge instructed the jury on bankruptcy fraud (S. 23, 27-29). The prosecutor below argued that the Florida case was "very different" from the instant case in that the bankruptcy fraud allegations there were insignificant compared to the far more numerous "obscenity" allegations, and he concluded that there was no "significant double counting in punishment here" (S. 27-28). However, the prosecutor's characterization of the Florida case conspicuously ignored the fact that xxxxxx was not convicted of the information's 25 "obscenity" counts. That fact meant the corresponding obscenity allegations in the racketeering counts were probably rejected, which substantially increased the likelihood that the racketeering convictions were based on the allegations of bankruptcy fraud that were at the heart of the instant case.
In ruling on the criminal history dispute at sentencing, the judge made no findings; she simply declared her opinion that the addition of the three criminal history points for the Florida case was "proper" (S. 30). Later, however, she revealed in a comment to Mr. xxxxxx--"I want you to know that I certainly cannot and shall not look behind the convictions in the Florida court" (S. 87)--that she held an erroneous view of her obligations under §§ 4A1.1 and 4A1.2(a)(1). These provisions could not properly have been applied without the judge's looking "behind" the Florida convictions. See United States v. Hicks, 4 F.3d 1358, 1362-1363 (6th Cir. 1993) (sentencing court should have resolved dispute as to whether the state cocaine possession offense was "relevant conduct" with regard to federal weapons possession offense and thus not properly part of criminal history); United States v. Butler, 966 F.2d 559, 564 (10th Cir. 1990) ("proper inquiry" not whether defendant sold drugs and possessed shotgun on same dates, but whether conduct involving drugs, the subject of the state conviction, was "part of the conduct of possessing an unregistered firearm").
The sentence should be vacated and the judge should be ordered to give full consideration to the dispute under §§ 4A1.1 and 4A1.2(a)(1) upon the remand.
D. The judge erroneously imposed sentences fully consecutive to the 12-year Florida sentences, which punished offenses that should have been found "relevant conduct" with regard to the instant case and thus properly should have been taken into account in the determination of the offense level for the instant offenses.
Apparently referring to subsection (c) of U.S.S.G. § 5G1.3, the prosecutor opposed defense counsel's request for imposition of prison sentences concurrent with the 12-year Florida sentences and argued that the sentences "should be imposed to run consecutively" to the Florida sentences (S. 56-57). Without explanation, the judge complied with the prosecutor's request. This response failed to satisfy the requirements of U.S.S.G. § 5G1.3, which reads, in pertinent part:
§ 5G1.3. Imposition of a Sentence on a Defendant Subject to an Undischarged Term of Imprisonment
* * *
(b) If subsection (a) does not apply, and the undischarged term of imprisonment resulted from offense(s) that have been fully taken into account in the determination of the offense level for the instant offense, the sentence for the instant offense shall be imposed to run concurrently to the undischarged term of imprisonment.(c) (Policy Statement) In any other case, the sentence for the instant offense shall be imposed to run consecutively to the prior undischarged term of imprisonment to the extent necessary to achieve a reasonable incremental punishment for the instant offense.
As discussed in the argument immediately preceding this one, the judge should have recognized that the Florida sentences effectively punished xxxxxx for the bankruptcy fraud that was the main focus of the instant case, and the Florida offenses should have been reflected in a relevant conduct finding, rather than in an increase in xxxxxx's criminal history score. If the judge had made the required inquiry and findings in that context, she would also have had to render a different ruling under § 5G1.3.
In United States v. Hicks, 4 F.3d 1358, 1365-1367 (6th Cir. 1993), the Sixth Circuit held the sentencing court had violated both the prior version of § 5G1.3(b) (which called for a combined sentence equal to the punishment that would been imposed for both offenses at once) and § 5G1.3(c) in holding that the defendant's entire federal sentence for weapons possession was to run consecutively to his state sentences for aggravated assault and cocaine possession, the former of which was part of the same course of conduct as the weapons possession. The court observed that it was not enough that the federal sentence run concurrently with the assault sentence, but that the defendant had to be given credit for time already served under that sentence (see U.S.S.G. § 5G1.3 comment. (n.2)), and that the sentencing court was required to "provide a rationale" for its imposition of a sentence under § 5G1.3(c) partially or fully consecutive to the cocaine possession sentence. 4 F.3d at 1366-1367.
Here, likewise, the judge clearly erred in ordering fully consecutive sentences, with no recognition of the overlapping scope of the convictions in Florida and in the District Court. The judge should be instructed on the remand to consider the extent to which the state sentences are based on factors that constitute relevant conduct in the instant case and to be guided by the pertinent provisions and commentary of § 5G1.3.
E. The judge erroneously imposed $360,000 in fines without taking into account xxxxxx's ability to pay such an amount.
In United States v. Anderson, No. 90-3041, Slip Opinion at 50-53 (D.C. Cir. October 18, 1994), this Court found clearly erroneous under U.S.S.G. § 5E1.2(d)(2) the District Court's imposition of a $1,000,000 fine where counsel asserted the defendant's inability to pay and the record contained no evidence that he had such assets. There, the judge acknowledged that she did not know the defendant could pay, but she apparently suspected that he might be able to, so she opted to impose the fines, effectively placing the burden on the defendant to disprove his ability to pay. Id. at 51. This Court rejected the Government's argument on appeal that it was proper to place the burden on the defendant. Id. at 52. The Court made clear that the burden is on the Government to prove a defendant's ability to pay a fine, and it ordered the judge on remand to "reconsider the fine to be imposed in light of the record evidence regarding his ability to pay." Id. at 53.
The same analysis applies in the instant case. The PSR stated that the Government had
reported that the Bruce Corporation had earned over $900,000 from its "976"
line, but that "the whereabouts of the proceeds from this line are unknown."
(PSR at 14, par. 62). And defense counsel asserted xxxxxx's inability to pay (S. 57-58).
Nevertheless, the judge declared it not "relevant" that xxxxxx allegedly lived a
frugal lifestyle and lacked "fancy cars," "fancy houses," and Brooks
Brothers suits; what the judge found exclusively "relevant" were the crimes of
which xxxxxx had been convicted (S. 88-89). Thus, the judge ultimately disregarded
xxxxxx's claimed inability to pay and the lack of proof to the contrary, clearly violating
the intent of § 5E1.2(d)(2). For this additional reason, vacatur of the sentence and a
remand for resentencing are required.
For the reasons stated above, the judgment should be reversed and a new trial ordered; alternatively, the sennce should be vacated and resentencing ordered.
A. J. KRAMER
FEDERAL PUBLIC DEFENDER
Allen E. Burns
Assistant Federal Public Defender
625 Indiana Avenue, N.W. Suite 550
Washington, D.C. 20004
CERTIFICATE AS TO LENGTH OF BRIEF
I HEREBY CERTIFY that the foregoing brief contains no more than the number of words allowed by Circuit Rule 28(d).
Allen E. Burns
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on December 15, 1994, two copies of the foregoing brief for defendant-appellant were served by United States Mail, first-class postage paid, upon the United States Attorney's Office, Att'n: A.U.S.A. John R. Fisher, 555 Fourth Street, N.W., Room 10-435, Washington, D.C. 20001.
Allen E. Burns
1. Roman numerals I through XIV designate trial transcript volumes of cited pages. Additional transcript designations are "5/22/92," for the arraignment, and "S." for the sentencing.
2. This instruction was separate from the instructions on the states of mind required for the alleged offenses (XIV. 41-46), which made no reference to the debtor's "affirmative duty."
3. At arraignment, the judge had initially told defense counsel, referring to the Pretrial Services report, that she did not "know what 10 years off and on means" (5/22/92 at 16). In response to the judge's question how long xxxxxx had "been living continuously in the Greater Washington area and how long does he intend to remain in the Greater Washington area," counsel informed the court that before xxxxxx went to Florida he had lived "in the D.C. area pretty much straight through" (id.). In response to the further questions about where xxxxxx had lived recently, counsel told the judge that xxxxxx had lived in Florida from about May, 1991 until April, 1992 (id. at 17). Addressing the judge's concern that the address information was "inconsistent," counsel explained that xxxxxx had to deal with the Florida court proceedings and that his driver's license still bore the Virginia address (id. at 17-18). Then xxxxxx himself informed the judge he had recently traveled back and forth to Florida but since 1981 had maintained his "official residence," on his driver's license and for income tax purposes, in Virginia (id. at 18). After further discussion, the judge accurately summarized what she had been told, said, "Now, he hasn't been a D.C. Area resident for two or three months steadily based on what you have told me," and asked where he planned to live (id. at 21). Counsel then told the judge that if she ordered xxxxxx to live at the Alexandria address, he would do so (id.).
4. As the circumstances giving rise to the motion were "unusually meritorious," the denial is reviewable for clear error in any event. Mitchell, supra, 951 F.2d at 129. Defense counsel's attribution of the delay to the extraordinary volume of documents
in the case was reasonable, and trial had still not actually begun.
5. See Miranda v. Arizona, 384 U.S. 436 (1966).
6. See Bar Association of the District of Columbia, Criminal Jury Instructions - District of Columbia ("Red Book"), Instr. 2.48 (1993 Edition). The Comment begins, "This instruction should be given when the government seeks to introduce a defendant's statements to the police as substantive evidence." The instruction advises the jury to consider, among other things, whether the defendant made the statement "freely and voluntarily" and "whether the police warned him/her of his/her rights."