May 9, 2012

The Eleventh Circuit On Tax Crimes and Grouping Under the Sentencing Guidelines

Stuart Register ran a business that conducted criminal background checks on people.

He had a number of employees. Employees, of course, have to be paid. To pay them, he used a payroll company - PrimePay. PrimePay withheld taxes from the employees' pay, and told Mr. Register how much he needed to send to the government for those taxes.

Mr. Register did not send money that was withheld to pay taxes.

As you might suspect, that is a federal crime.

Mr. Register also falsified his personal taxes from 2003 until 2006.

That is also a federal crime.

169849_tax.jpgHe was indicted and pled guilty without a plea agreement.

The tax loss - the amount of money the government lost because of the tax crime - for Mr. Register's withholding offense was a little more than $300,000.

The loss for his falsified tax returns was around $115,000.

The question is - should Mr. Register be punished more because he had two separate kinds of tax offenses.

A step back is helpful. Under the federal sentencing guidelines, sometimes, two different offenses "group." And sometimes they don't. Generally, a person being sentenced wants the charges to group.

Intuitively, you can see that if a person robs two banks, those are separate crimes with separate victims. The harm caused by the bank robbery is the fear instilled in the teller, as well as the money taken from the bank.

So, if a person robs a bank on Monday, then on Tuesday robs the same bank again - but with a different teller let's say - you would think there are two separate harms. As a result, you would want the person's sentence to increase based on the second scary thing that happened to the teller.

And the guidelines accommodate that intuition - when there are two separate harms like that the crimes do not group. When things do not group, then each serves to increase the sentence that the sentencing guidelines suggest.

Imagine, though, that the person is just embezzling from the bank. Suppose, let's say, that a teller is slipping money out when counting the receipts. And she does that on Monday and Tuesday. There, the harm is the money being stolen. So, the guidelines count all the money that's taken, and add it together, but do not treat each separate event as something that necessarily should increase the person's sentence - beyond the increase that comes just from more money being added.

For Mr. Register, the question was whether the two tax offenses should group.

The probation officer preparing the presentence report said that they do not group. Both Mr. Register and the government objected, and the probation officer stuck to his or her guns. In response to the joint objection, the probation officer said (with my emphasis added),

The guidelines direct under USSG § 3D1.2 that counts can be grouped together when they involve substantially the same harm. Under subsection (b), counts can be grouped together when they involve the same victim and two or more acts connected by a common criminal objective or common scheme or plan. Under subsection (d) counts can be grouped together when the offense level is determined largely on the basis of the total amount of harm or loss. The defendant has been convicted of 17 counts representing two offenses: Failure to Pay Over Taxes to the [IRS] and Filing Fraudulent Federal Income Tax Returns. During the years 2004 through 2007, the defendant failed to pay over employment taxes to the IRS for his employees. In addition, during the same period, he failed to pay income taxes on his own income and claimed inflated amounts of federal income tax withheld causing the IRS to pay him refunds that he was not entitled to. Although the IRS is the ultimate victim in both endeavors, the probation office views the defendant's criminal behavior as two separate criminal objectives with two separate harms. It does not appear that the defendant committed both acts to specifically defraud the IRS. It does appear that the acts occurred as a result of his lifestyle and/or his personal financial situation. His behavior was not part of a single course of conduct with a single criminal objective.

So, the probation officer concluded that because there was no single course of conduct, there could be no singular harm, even though the one singular entity - the IRS - was out money because of the conduct.

The district court agreed, and sentenced Mr. Register to the high-end of his non-grouped guidelines range - 27 months.

Mr. Register appealed, and the 11th Circuit, in United States v. Register, reversed.

The court of appeals decision tracks closely the language of section 3D1.2 - basically, when the sentencing guidelines range is driven by a loss amount, there is no requirement in the guidelines that the offenses at issue arise out of the same plan or scheme.

So, since there was one victim - the IRS - suffering one harm - the loss of tax revenue - the two different tax crimes group, and Mr. Register goes back for resentencing.

May 8, 2012

The Sixth Circuit Remands For Resentencing Because The Guidelines That Didn't Apply To The Person Being Sentenced Changed

Michael Jackson - no, not that one - pled guilty to dealing crack.

He did so at a particularly odd time in our Nation's history when it comes to crack sentencing.

Mr. Jackson's plea hearing was in June of 2009. The district court judge, wanting to give Mr. Jackson the benefit of what the court was sure would be a new change in our crack sentencing laws - sure that change he could believe in was coming - let Mr. Jackson's sentencing hearing be delayed to see if Congress would change the crack sentencing laws.

The district court waited more than a year. Finally, it could wait no longer.

On July 16, 2010, the district court sentenced Mr. Jackson. In explanation, the judge - who seems like a very nice person - said,

[W]e waited and waited and waited to see if Congress would change the guidelines, or the statutes, with regard to crack versus powder cocaine. My information now indicates that it's a dead issue in Congress and that it's not going to change, at least in the foreseeable future. . . . . I was trying to give you the benefit of any change in the law that might occur, and it doesn't appear that it's going to. For that, I'm sorry . . . .

Less than three weeks later Congress passed the Fair Sentencing Act, changing the law as it applies to crack sentencing. Specifically, the Fair Sentencing Act required new guidelines be issued for crack sentencing. And they were.

1214820_painted_by_numbers___.jpgMr. Jackson's appeal was pending, and the issue he raised in the appeal was whether he should have received the benefit of the new change in the sentencing guidelines for crack cocaine.

The Sixth Circuit reversed and remanded for resentencing under the new crack guidelines in United States v. Jackson on the theory that, basically, it was easier to remand than to require him to file a motion for resentencing under 18 U.S.C. § 3582(c).

If you're familiar with federal sentencing, this makes sense so far. Here's the twilight zone moment - Mr. Jackson was a career offender.

Because Mr. Jackson had at least two prior convictions for violent crimes or drug distribution offenses, he was sentenced under the career offender guidelines in § 4B1.1, and not under the crack guidelines.

That's right - the judge was waiting for a change in the guidelines that didn't apply to Mr. Jackson.

And his lawyer asked for him to be resentenced because there was a change in the guidelines that didn't apply to him.

And the Sixth Circuit reversed and remanded because the guidelines that didn't apply to Mr. Jackson changed after his sentencing.

This may be the only time that a cryptic and underdeveloped record has helped a defendant in an appeal, but the Sixth Circuit noted that

The district court varied downward from the career offender guideline to a sentence it believed was more reasonable based on the crack versus powder disparity -- at least as far as we can tell from the transcript. The court mentioned no other reason that could account for the 38-month downward variance in the ultimate sentence. Jackson's sentence was "based on" the range produced by subtracting three levels from the career offender guideline. The district court rejected the career guideline range in favor of something else. The only "something else" he mentioned at the sentencing hearing was the "untenable" disparity in crack versus powder sentencing. Although we cannot know exactly how the court would have sentenced Jackson had the revised guidelines been in place in July 2010, the court expressed its desire to use the lower range in sentencing Jackson.

The court of appeals then asserted that

If a sentencing judge, having found a defendant to be a career offender, then decides to sentence defendant below the range for career offenders and notes his policy disagreement with the crack cocaine guidelines, ordinary review would say that the sentence was as much "based on" the crack cocaine guidelines as the career offender guidelines.

The Sixth Circuit also said that this result was required by the Supreme Court's recent decision in Freeman v. United States, where the Supreme Court requires that a section 3582(c) proceeding - to modify a sentence based on a retroactive guideline change -

should be available to permit the district court to revisit a prior sentence to whatever extent the sentencing range in question was a relevant part of the analytic framework the judge used to determine the sentence.

Because the district court appeared to consider the crack guidelines as a part of its analytical framework when sentencing Mr. Jackson and those guidelines changed, he'll be resentenced - even though those guidelines didn't apply to him.

Which makes me wonder how attenuated the "analytical framework" has to be. I think I've argued that loss in a fraud case should be calculated with reference to the calculation of drug quantity - is there now an argument that those cases should go back for resentencing when the crack guidelines change?

Maybe I should practice more in the Sixth Circuit.

See also:

Retroactivity In The Federal Sentencing Guidelines and The Parol Evidence Rule

May 3, 2012

The Eighth Circuit Holds That Omaha Police Can't Run Into A Hotel Room Without A Warrant Even When They Just Finished A Very Exciting Chase And Are Proud Of Themselves For Finding The People They Were Looking For

It must be hard for the police to be hot on a chase, then have to slow down to get a warrant.

But, even though the police are excited from being on the trail of a suspected drug mule, the Eighth Circuit held, in United States v. Ramirez, that just because the police are hurrying to get their man, they still have to get a warrant to search his room.

1144233_vacancy.jpgThe Great Omaha Goose Chase

A Greyhound bus traveling across the country stopped in Omaha for a rest break. We don't know how, but the police arrested two men from the bus for having heroin in their shoes. The men flipped quick, and told the police that they were traveling with at least one more man who also had heroin in his shoes.

The police went looking for the third man.

They found some luggage from the bus that no passenger claimed - in one of the bags was a photo ID of a man named Hector Cruz.

The bus driver said he was missing five passengers - the two men who had been arrested and three other men.

The bus company said that the five who were missing all purchased their tickets in cash within a few minutes of each other. And all of them purchased one-way tickets from San Diego to Newark.

The officers set out looking for the other three men.

They called cab companies to see who had picked someone up from the bus station. A cab company led them to a nearby Best Western.

At the Best Western, the police learned that three men - one of whom matched the photo of Hector Cruz - had arrived earlier, but didn't check in. The cops learned the men took a cab to a Comfort Inn.

At the Comfort Inn, the police saw video showing that three men - one of whom matched the photo of Hector Cruz - arrived in a cab, but didn't enter the motel.

Instead, they went to McDonald's. Looking at the video, the police thought the men were walking as though they had heroin in their shoes.

At the McDonald's the police learned that the men asked for a phone book. They called a cab, and took it to an Econo Lodge.

At the Econo Lodge, the desk clerk confirmed that three men checked in and that one of them looked like the man in Hector Cruz's photo ID. They were given room 220.

The Econo Lodge clerk, who I imagine to be a kindly Nebraskan grandmother, embroidering an inspirational saying onto a doily as she talked to the police (perhaps "Everyday is a gift, that's why they call it the present", attributed to Kung Fu Panda 2), gave the police a key card to access room 220.

At Room 220

At Room 220, six police immediately set up to go into the room. It was perhaps two and a half hours since they had been at the bus station. The police established perimeter surveillance. One officer listened at the door and heard nothing.

He inserted the keycard.

It didn't work.

The police officer went to Plan B. He knocked at the door, covered the keyhole, and said (I like to think, in a faux female voice) "housekeeping".

A man came to the door, opened it, saw the police, and tried to close the door.

The police stopped him and forced their way inside.

Once inside, they saw shoes like the ones that the two other men from the bus station were wearing. The kind of shoes that, before, had contained heroin.

The shoes in room 220 also contained heroin.

The Motion To Suppress

One of the men, Ramirez, was arrested. (I assume the others were too, but there's nothing in the opinion about that). His lawyer filed a motion to suppress, because there was no warrant.

The district court in Omaha denied the motion. The court found that exigent circumstances justified the warrantless search.

The police generally do not need a warrant if stopping to get a warrant would give the people they're chasing more time to destroy evidence - like heroin - or hurt someone. So, here, the district court said that the police reasonably though that the drugs were likely to be destroyed if they went to get one.

The district court determined that the police could reasonably fear that the men in the room would destroy evidence because:

1) one of the investigators reasonably believed the men were attempting to elude the officers after they witnessed the officers arrest the two men at the bus stop; 2) the men in room 220 had purchased one-way tickets to Newark, New Jersey, with cash, and were not from Omaha; and 3) after the officers announced their presence, Cruz attempted to shut the door to prevent the officers from entering the room.

The Eighth Circuit

The Eighth Circuit disagreed. First it considered the third point that justified exigency - that the man who came to the door would not let the police in - and rejected it.

Basically, a citizen gets to slam the door on the police (as long as you don't hit the police with the door). Just because a person refuses to let the police into his house does not mean that the police can go in without a warrant. There wouldn't be much of a warrant requirement in the constitution if the rule were different.

when the police knock on a door but the occupants choose not to respond or speak, or maybe even choose to open the door and then close it, or when no one does anything incriminating, the officers must bear the consequences of the method of investigation they've chosen. At that point, if their method fails, "the investigation will have reached a conspicuously low point,' and the occupants 'will have the kind of warning that even the most elaborate security system cannot provide." . . . Accordingly, crediting these officers with conducting a run-of-the-mill attempt to simply knock and gain entry, [the man who opened the door] was under no obligation to allow the officers to enter the premises at that point and was likewise within his bounds in his attempt to close the door. That he did so, without more, does not bolster the claim that it was reasonable to conclude that the destruction of evidence was imminent.

As to the first point justifying exigency - the court of appeals found that there was no reason to think the men knew the police were after them. They'd been in the hotel room for half an hour when the cops showed up. If they were going to flush the heroin because the police were chasing, they probably would have already done it.

On the last point, the court of appeals gave it little discussion, but basically no weight. It's probably too obvious to say that it's unlikely that someone would travel to Omaha with heroin just to flush it in a Nebraska toilet.

And, with that, the heroin was suppressed. Good luck in the future, to Mr. Carlos Ramirez.

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May 2, 2012

Judge Posner, Heraclitus, And The Chicago Mob

It's difficult not to love an opinion that contains this paragraph:

Heraclitus famously said that one never steps into the same river twice. What he meant was that one never steps into the same water; the river is the same, even though its substance is always changing. And so a conspiracy can be the same even if all the acts committed pursuant to it are different, because it is the terms of the agreement rather than the details of implementation that determine its boundaries.

Federal prosecutors love conspiracies more than Oliver Stone. Prove an agreement between A and B to further an illegal end, and you can bring in all sorts of stuff against A that she didn't actually do (B did). And you only have to prove a constructive agreement - not an actual one.

453289_matrioshka_-_nesting_dolls.jpgThe Seventh Circuit, though, in an opinion by Judge Posner in United States v. Schiro, discussed how the Double Jeopardy Clause can throw a curveball into a conspiracy prosecution. Sadly, though, the Double Jeopardy issue did not carry the day for those charged with the federal offense.

As Judge Posner explains,

Double jeopardy can take two forms. One is prosecution for a crime the elements of which overlap the elements of a crime involving the same facts for which the defendant had been prosecuted previously. And in such a case, a case "where the same act or transaction constitutes a violation of two distinct statutory provisions, the test to be applied to determine whether there are two offenses or only one, is whether each provision requires proof of a fact which the other does not." For example, there would be only one offense for purposes of assessing double jeopardy if the second prosecution was for a lesser included offense of the crime for which the defendant had been prosecuted the first time. The other form of double jeopardy is prosecuting a person a second or subsequent time for the same offense, and that can be a difficult determination to make when the offense is conspiracy.

But here, two men were accused of a RICO conspiracy who were previously tried for a RICO conspiracy with each other. So, was the second RICO conspiracy the same conspiracy as the first one, or a separate conspiracy?

Judge Posner suggests this way of teasing the issue out:

A worker at Ford Motor Company's River Rouge Complex is an employee of Ford Motor Company. His agreement to work on the River Rouge assembly line contributes both to the plant's output and to the output of the company as a whole, of which River Rouge's output is simply a part. If Ford produced sawed-off shotguns rather than automobiles, the worker could be prosecuted for conspiring with employees of Ford or employees at the River Rouge plant to produce an illegal weapon, but he could not be prosecuted for two separate conspiracies, because the members and the objectives and the activities of the two conspiracies (conspiracy with employees of Ford, conspiracy with employees at River Rouge) would be identical.

But if after producing sawed-off shotguns in the River Rouge plant an employee who had worked there is promoted into the Ford executive suite in Detroit as a regional manager and while there prepares financial reports designed to conceal from the government Ford's income from the production of illegal weaponry at River Rouge and other Ford plants, he has joined a separate though overlapping conspiracy.

In Mr. Schiro's case, the men were charged with being leaders of a Chicago street gang. There were two levels of hierarchy - street crews and "the Outfit". "The Outfit" ran the street crews, but also directed certain financial decisions and commissioned and carried out the murder of potential informants.

Thus, every street crew member was a member of "the Outfit" but not every member of "the Outfit" was a member of a particular street crew.

If as in our first Ford hypothetical you do street crew business only, you are not working for two different enterprises even though the street crew is a branch; the enterprises are no more different than two nested Russian dolls are. But if you murder, which is Outfit business because it is too sensitive to be left to the street crews, you are working for the Outfit in a respect that is different from your street crew work; you are demonstrating that your agreement to assist the Outfit is broader than and distinct from your agreement to assist your street crew, just as conspiring to assemble shotguns at a plant is different from conspiring to conceal the assembly of shotguns at numerous plants.

Alas, the government's allegations in the recent case and the prior one were separate enough that the two alleged conspiracies were, indeed, separate agreements. And so the double jeopardy challenge failed.

Judge Wood dissented. She started by observing that,

Calabrese and Marcello had each already been convicted and imprisoned for their part in the street crews that lie at the heart of the Outfit's Chicago operation. See United States v. Zizzo, 120 F.3d 1338 (7th Cir. 1997) (Marcello), and ante at 3. Those prosecutions coveredthe period from 1978 to 1992 for Calabrese and from 1979 to 1990 for Marcello. The current prosecution entirely subsumes the span of those conspiracies. I therefore dissent, on that basis only, from the decision to affirm those two convictions.

As she observes,

We must recognize, as have our sister circuits, that a crime family in "a lower level of authority within the hierarchy of organized crime" is still a component of the same crime family. United States v. Langella, 804 F.2d 185, 189 (2d Cir. 1986); see also United States v. Ciancaglini, 858 F.2d 923 (3d Cir. 1988) (concluding that two Philadelphia-based crime families were part of the same enterprise). If the Street Crews were "self-sufficient enterprises that function[] without oversight" from the Outfit, we would have a different case. Langella, 804 F.2d at 189. But as the majority concedes, they are not. The Street Crews were the mob's hands, the Outfit its head. There is no way to divide the two.

Alas. The sweet sorrow of a well-reasoned dissent.

This was not, however, a total loss for the home team. The court of appeals reversed on one happy ground:

The defendants were ordered to pay restitution in conformity with the Mandatory Victims Restitution Act of 1996, 18 U.S.C. § 3663A. The total amount, all of which was for the lost future earnings of 14 of the 18 murder victims whom the defendants were found to have conspired to kill, exceeded $4 million. All but 1 percent of this amount, $44,225.73, was allocated jointly and severally to the four defendants, see United States v. Dokich, 614 F.3d 314, 318 (7th Cir. 2010), other than [one defendant], who was assessed only the 1 percent because he had joined the conspiracy late, in 1999. As all the murders occurred before then, it was improper to assess him any share of the restitution ordered. United States v. Squirrel, 588 F.3d 207, 215-16 (4th Cir. 2009).

Perhaps not the most impressive victory.

See also:

April 26, 2012

The Eleventh Circuit Holds That A District Court Can't Ask Folks Who Have Been Charged With A Crime If They've Talked About A Plea Yet

You've got to feel for federal district judges.

Their caseloads are going up as the Senate refuses to confirm judges to replace those who have left the bench. Justice Scalia doesn't respect them. Their pay hasn't been meaningfully increased in years.

So you could understand why a federal district court judge would want to have fewer trials.

Of course, the easiest way to see a case not go to trial is to see it result in a plea.

But a federal judge isn't allowed to participate in the plea negotiations between the parties (it's in the rules - Federal Rule of Criminal Procedure 11(c)).

What counts as participating in plea negotiations? As it happens, the Eleventh Circuit recently opined on that question in United States v. LaCour.

1213599_pills.jpgMr. LaCour's Internet Drug Emporium

Jude LaCour ran a business called the Jive Network. In an effort to cut down on the spiraling cost of prescription medicines, and how expensive it can be to find a doctor to write a prescription, the Jive Network ran a number of webpages.

Customers of the Jive Network would fill in an online form about their health. They would order drugs that they thought would ameliorate whatever health condition they suffered from.

A doctor would review the web form. The doctor had no ability to change the amount or kind of drug, but the doctor did have to sign off on the prescription. The Jive Network would then issue a prescription in the doctor's name and send out the drugs.

One doctor who worked at the Jive Network filled prescriptions in as little as six seconds.

From 2002 to 2005, the Jive Network had more than $85 million in revenue.

Mr. LaCour's Federal Criminal Case

Mr. LaCour was indicted, along with a few of the doctors who worked for the Jive Network, in a 53 count indictment that accused them of conspiracy to distribute Schedule III and Schedule IV prescriptions without a valid prescription, a few individual counts of distributing drugs without a prescription, and a rack of money laundering charges.

Many folks pled.

The district court judge assigned to the case wanted to make sure that everyone who didn't plead knew that they had the option of trying to negotiate a plea.

During a status conference, the district court asked the government and the lawyers for the people accused of a crime if plea negotiations had happened. The district court specifically talked about whether there's a way to structure a plea so that it would have less affect on the professional licenses of the doctors who were accused.

The district court concluded the conversation by telling everyone that he would be the judge to sentence everyone - apparently some of the cases were assigned to another judge - and that knowing who the judge is would matter a lot to the defendants.

Then, a few weeks later, the district court raised plea possibilities again. As the Eleventh Circuit described it:

The District Court stated, "I want to now address each of the defendants individually and talk about the possibility of other resolutions of this matter other than a trial." The District Court acknowledged that it is "strictly prohibited from attempting to work out any kind of an agreement upon resolution of the case short of a trial." The Court nonetheless went on to note that "[t]his case if there is a conviction requires the Court [to] determine here that defendant fits with respect to the sentencing guidelines." The Court then distributed a chart that, based on the record, may have shown the sentencing guidelines ranges, and it went on to discuss the history of the federal sentencing regime and the applicable law as it stands. In describing the current sentencing regime, the District Court stated that "the Supreme Court has made it pretty clear . . . that we judges have a great deal of discretion in that area."

That last statement is kind of odd. It's sort of like "remember, I'm the guy you want to make sure is happy at the end of the day."

The District Court did state, "Remember, I'm not permitted to engage in plea negotiations, so I'm not suggesting to any defendant that you should consider pleading guilty." The District Court, however, said: "But I am concerned that you understand what the position of the government is if in fact you should want to think about pleading guilty. . . . I'm not interested in the details [of any offer], but I want to be sure that each defendant for whom the government has presented a proposition knows about the proposal." The District Court then asked the government to indicate whether it had presented a proposal to the defendants. The government stated that it did put forward a proposal for each defendant. The District Court then directly asked each individual defendant, including all five appellants, whether they had seen the proposal."

Not more than two weeks later, the trial started.

The court of appeals held that this was over the line. Because "the district court explicitly indicated that it would like the defendants to begin and engage in plea negotiations" it violated the commandment in Rule 11 not to participate in the negotiation.

As most folks know, the Supreme Court recently held that defense counsel can be ineffective in messing up plea negotiations. If the district court had said, instead of what he did here, something like "I just want to make sure everyone's being constitutionally effective - defense counsel, have you talked about plea negotiations" would that violate Rule 11? I suppose we'll have to find out.

Mr. LaCour, as a result, had his sentence reversed and remanded so that he could be resentenced in front of a different judge.

Interestingly, the other folks who the district court encouraged to plead won't be eligible for resentencing because they didn't appeal anything else in connection with their sentences. Deeply unlucky.

April 24, 2012

The Fourth Circuit Sends A Cockfighting Case Back For Retrial Because of Wikipedia

Imagine you were going to a professional meeting. Maybe it's a weeklong off-site skills training for work. Maybe it's an odd kind of a conference in your hometown. You'll be at some strange new location during the day, then go home at night.

1254520_teamwork__1.jpgAt the start of the exercise, people seem interested in you. They ask you a lot about yourself. But then, at some point, you're given a seat and told to just sit, watch, and learn.

Next, the woman who is leading the training reads to you from a list of instructions that she had prepared in advance. You are not allowed to ask questions. Your fellow participants aren't allowed to talk about the instructions.

Some stuff happens - a few people talk to you and they ask questions of other people who answer them. Maybe you read some documents.

After that stuff is done, the person who read to you at the start of the training reads to you again to tell you how to figure out what the people were talking to you about. She gives you a list of instructions, and tells you to go talk to the other participants, but you have to follow the rules she gave you.

Also, she may or may not give you a copy of those rules.

This is, in many ways, the experience of a juror in a federal criminal trial. Jurors are given instructions - which they are presumed to follow closely - only once, and often only orally.

In United States v. Lawson, decided recently by the Fourth Circuit, one of the jurors was eager to understand the elements of the crime he was supposed to figure out if someone was guilty of.

845381_my_fighting_cock_crows.jpgThe government alleged that a number of people, including Scott Lawson, were on trial for violating the animal fighting prohibition of the Animal Welfare Act, 7 U.S.C. § 2156(a). The defendants in this case were accused of cockfighting (or, rather, getting game fowl to fight - the defendants themselves weren't actually fighting. That would have probably not been a federal crime).

The Animal Welfare Act prohibits "sponsoring" a cockfight.

One of the jurors, named Jury 177, after listening to the evidence, was curious. He wasn't sure that he knew what "sponsoring" means.

He did what most folks these days do when they don't know the meaning of a word. He went to Wikipedia and looked up "sponsoring." The jury then found the folks accused of sponsoring cockfights guilty.

Six days after the jury returned the guilty verdict, one of the jurors told a court security officer than Juror 177 had been Googling for justice.

The district court appointed a lawyer for Juror 177, and had a hearing about what happened.

Even though Juror 177 was looking at a criminal contempt charge - and, indeed, was found guilty of contempt and sentenced to a fine and community service - Juror 177 testified that he had searched on the internet to learn what "sponsoring" means and shared what he found with his fellow jurors.

What Juror 177 didn't realize, apparently, is that he was told by the district court judge that he wasn't allowed to consult the internet as a part of his deliberations. The problem this doesn't raise for the Fourth Circuit is that the way we instruct jurors is sort of bizarre as a kind of human interaction, and jurors don't listen to jury instructions. [FN1]

No, instead the Fourth Circuit was troubled by the presence of Wikipedia.

Even though Googling to find the meaning of a word is incredibly common - even Judge Posner does it - the Fourth Circuit held that using Wikipedia was just too unreliable to allow this verdict to stand. [FN2]

As the Fourth Circuit said,

Given the open-access nature of Wikipedia, the danger in relying on a Wikipedia entry is obvious and real. As the "About Wikipedia" material aptly observes, "[a]llowing anyone to edit Wikipedia means that it is more easily vandalized or susceptible to unchecked information." Id. Further, Wikipedia aptly recognizes that it "is written largely by amateurs."Id.

We observe that we are not the first federal court to be troubled by Wikipedia's lack of reliability. See Bing Shun Li v. Holder, 400 F. App'x 854, 857-58 (5th Cir. 2010) (expressing "disapproval of the [immigration judge's] reliance on Wikipedia and [warning] against any improper reliance on it or similarly unreliable internet sources in the future"); Badasa v. Mukasey, 540 F.3d 909, 910-11 (8th Cir. 2008) (criticizing immigration judge's use of Wikipedia and observing that an entry "could be in the middle of a large edit or it could have been recently vandalized"); Crispin v. Christian Audigier, Inc., 717 F. Supp. 2d 965, 977 (C.D. Cal. 2010) (criticizing parties' reliance on Wikipedia); Kole v. Astrue, No. CV 08- 0411, 2010 WL 1338092, at *7 n.3 (D. Idaho Mar. 31, 2010) (admonishing counsel from using Wikipedia as an authority, observing that "Wikipedia is not a reliable source at this level of discourse"); Baldanzi v. WFC Holdings Corp., No. 07-CV-9551, 2010 WL 125999, at *3 n.1 (S.D.N.Y. Jan. 13, 2010) (observing that Wikipedia "touts its own unreliability"); Campbell ex rel. Campbell v. Secretary of Health and Human Servs., 69 Fed. Cl. 775, 781 (Fed. Cl. 2006) (observing dangers inherent in relying on Wikipedia entry).

The case was remanded for a new trial.

So, to summarize: John McCain can use Wikipedia for his speeches. Judge Posner can use Google for his opinions. Jurors cannot use Wikipedia instead of following the jury instructions.

[FN1] - Juror 177 was found in contempt because the court's directions went specifically to him; they weren't of general applicability like in this case. Though this raises a question - how can failing to follow a jury instruction subject someone to contempt? Can a jury be held in contempt en mass when they nullify? Should the trial jury be held in contempt every time the court of appeals reverses for insufficient evidence when the jury convicted? Juror 177 was, presumably, trying in good faith to resolve a Doesn't this seem a little crazy?

[FN2] - To be fair, there is a multi-part test that the court of appeals applied - the unreliability of Wikipedia only went to one part. Though the rest of it is pretty dry.

April 20, 2012

A District Court Cannot Take Away Alcohol And Technology For The Rest Of A Person's Life Without Explaining Why

It's easy to hate people who are found guilty of child pornography charges. People don't like it when other people sexualize children

But, as the Sixth Circuit held in United States v. Inman, a district court still has to give reasons to be mean to them.

Mr. Inman pled guilty to possession of child pornography. He was sentenced to 57 months in prison.

Like anyone else who goes to federal prison, after he is released, he'll be on supervised release - a federal probation officer will supervise him to make sure he's not drifting into further lawlessness.

As a part of his supervised release, he'll have to follow certain conditions. Those conditions, as well as how long he'll be on supervised release, are set by a judge at his sentencing hearing.

In Mr. Inman's case, the government and Mr. Inman's lawyer recommended that he be on supervised release for ten years.

Instead of ten years, the district court, apparently motivated by how gross Mr. Inman's conduct is, sentenced him to a lifetime of supervised release. It didn't explain why.

1231362_sign_no_alcohol.jpgAnd, the district court set a number of conditions that no one asked for, or talked about at Mr. Inman's sentencing hearing - he had to submit to mandatory drug testing; to notify the probation office if he is prescribed any medicine; to provide the probation office with all of his financial information; and he can never drink alcohol again, possess or use a device capable of creating pictures or video, or rent a storage facility or post office box.

What's worse, the district court didn't explain why it was imposing these conditions - it just imposed them.

As the Sixth Circuit explained, these conditions are going to seriously mess him up.

The district court . . . precluded him from using any device capable of creating pictures or video. This special condition effectively prohibits Inman for his lifetime from possessing a cell phone with photo or video capability, a video camera, or any other device capable of creating pictures or videos, even if such devices might be used appropriately in connection with employment or family activities.

So much for getting the new iPhone.

Mr. Inman can never drink alcohol again, according to the district court, even though he doesn't have a problem with alcohol. The Sixth Circuit was troubled by this condition too.

Nothing in the record suggests that Inman has any problem with alcohol or drug dependence; yet, he is now barred from consuming alcohol for life, required to submit to periodic drug testing, and required to keep the probation office informed of any prescription medications in his possession. Supervised release conditions must be tailored to the specific case before the court. Where appropriate, the mandatory condition of drug testing "may be ameliorated or suspended by the court for any individual defendant if the defendant's presentence report or other reliable sentencing information indicates a low risk of future substance abuse by the defendant." 18 U.S.C. § 3563(a)(5). Moreover, the pertinent statute on discretionary conditions does not permit a total ban on alcohol, but allows a court to order the defendant to "refrain from excessive use of alcohol." 18 U.S.C. § 3563(b)(7) (emphasis added). Because Inman appears to present a low risk of future substance abuse, the district court should explain why these conditions of supervised release are warranted.

Finally, the Sixth Circuit thought the requirement that Mr. Inman allow his finances to be inspected by a probation officer was not supported by the record.

Inman also challenges the special condition requiring him to provide the probation office with any requested personal financial information. Inman's crime was not financial in nature. We realize that Inman's finances may give a probation officer insight into whether Inman is involved in illegal conduct, but we cannot approve a requirement that Inman disclose any and all financial information to the probation officer without first reviewing the district court's explanation as to why such a condition is necessary in light of the pertinent sentencing factors.

Based on all of that, the case went back to the district court for resentencing. If a district court is going to take away someone's ability to have an iPhone for life, that court has to do a little bit more explaining.

See also:
Sex Offenders, Supervised Release, and The Eighth Circuit

April 18, 2012

The Ninth Circuit On Expired Credit Cards

Like many Americans, Leslie Onyesoh had a credit card problem. His problem, however, wasn't maxing out her cards or making the minimum payment.

His problem was that when postal inspectors raided his home, they found a spreadsheet containing 500 expired credit card numbers.

One can assume that they were someone else's expired credit card numbers.

Mr. Onyesoh pled guilty to the knowing possession of more than 15 unauthorized access devices, in violation of 18 U.S.C. 1029(a)(3).

1176251_cut_expenses_1.jpgAn unauthorized access device is "any access device that is lost, stolen, expired, revoked, canceled, or obtained with intent to defraud."

The statute further defines "access device" - it includes credit cards - to require that the device must be capable of obtaining "money, goods, services, or any other thing of value." See section 1029(e)(1).

Under the federal sentencing guidelines, if a person is guilty of an economic crime like fraud, or possession of someone else's credit card information, their sentence becomes more severe as the amount of money at stake increases.

How much money is at stake, though, when you're talking about an expired credit card?

At sentencing, the government urged the court to sentence Mr. Onyesoh using a sentencing guidelines calculation that included a loss amount for each credit card on the spreadsheet at $500.

Under a note to the relevant part of the sentencing guidelines, the presumed minimum loss for someone else's credit card is $500 (though presumably it could be higher). It's note 3(F)(i) to guideline 2B1.1.

The question is, do expired credit cards count?

The district court, following the government, said that they do.

The Ninth Circuit, in United States v. Onyesoh, said not so fast.

The court of appeals focused on the requirement in section 1029 that for something to be an access device, it has to be capable of obtaining "money, goods, services, or any other thing of value."

Based on that, the court of appeals held that an expired credit card has to be useable for it to count as an access device. A working credit card, the court said, is clearly useable, and the government doesn't have to put on much evidence to show that a working credit card is an access device. (Though how would the government show it's working? Do they have to run a test charge?)

As the Ninth Circuit explained it,

Here, Defendant's credit card numbers had been expired for some three years, yet the Government argued these numbers required no further proof of usability because the evidence was "overwhelming" Defendant used, or could have used, these numbers. We have care- fully reviewed the record in this case and found no evidence of usability, let alone "overwhelming" evidence. There was no crossover between Defendant's victims and the list of expired numbers, and there was no showing Defendant ever took steps or attempted to use the expired numbers, or that Defendant possessed them before their expiration.

So, with "no evidence" that these credit cards were usable, the Ninth Circuit remanded for resentencing.

Though, if there's no evidence that these expired credit cards were "unauthorized access devices", what did Mr. Onyesoh plead guilty to?

Finally, gentle reader, you may wonder whether Mr. Onyesoh is a man or a woman - Leslie, as you know, can go both ways. According to the BOP, Leslie Onyesoh is a guy. That's the kind of rigorous fact-checking you can rely on here at the Federal Criminal Appeals Blog.

See also:
The Tenth Circuit On Credit Cards, Loss, and the Sentencing Guidelines

April 17, 2012

The D.C. Circuit Holds That Safety Valve Is Still Available Even If A Person Comes To The Truth Late

Jesus Rodriguez took a long time coming to the truth. But in his appeal in United States v. Rodriguez, the D.C. Circuit held that, sometimes, coming to the truth late is coming soon enough.

Mr. Rodriguez was indicted for cocaine distribution. He faced a five-year mandatory minimum.

There Are Two Ways To Get Under A Mandatory Minimum Sentence

There are two ways under a mandatory minimum. One is to cooperate with the government and receive a government motion for a sentence under the minimum under 18 U.S.C. § 3553(e). To do that, means to cooperate with the government in its efforts to put others in prison.

1327707_old_water_valve.jpgThe other option is to meet the requirements for the "safety valve" under section 3553(f). The biggest one - the one that is most often the problem - is the requirement that a person truthfully talk about their role in the offense and disclose to the government everything they know about their own conduct.

As the statute says on this requirement,

not later than the time of the sentencing hearing, the defendant has truthfully provided to the Government all information and evidence the defendant has concerning the offense or offenses that were part of the same course of conduct or of a common scheme or plan, but the fact that the defendant has no relevant or useful other information to provide or that the Government is already aware of the information shall not preclude a determination by the court that the defendant has complied with this requirement.

If a person qualifies for safety valve in a drug case, the person also receives a two-level reduction in her offense level under the sentencing guidelines.

Mr. Rodriguez Walks Half Way To The Truth

Mr. Rodriguez wanted to take advantage of the safety valve statute. He pled guilty and met with agents for the government and talked about his role in the offense. He talked about his drug dealing.

He told them that the guy who drove him to a drug deal was his boss, who was just giving him a ride.

The government didn't believe him about that.

The Safety Valve Hearing

The case went to a hearing on whether Mr. Rodriguez had been honest in his statements to the government. Mr. Rodriguez testified at the hearing that the man who drove him to the drug deal didn't know it was a drug deal.

Two police officers testified that the man who drove Mr. Rodriguez to the drug deal paced behind the car while the deal was happening, and brought $4,000 in cash and a gun to the deal. They also said that the guy Mr. Rodriguez was selling drugs to was told, by Mr. Rodriguez, that his supplier would drive him to the deal.

The district court concluded that Mr. Rodriguez was lying. It continued the sentencing hearing to figure out what to do with that.

Bad Things Happen When You Lie In Federal Court

The government asked for a number of increases in Mr. Rodriguez's offense level because of his false testimony. He was given a two-level increase for obstructing justice. He lost his acceptance of responsibility credit - the reduction in his guidelines based on pleading guilty.

These changes moved his guidelines from 46-57 months to 78-97 months.

Mr. Rodriguez then decided to change his approach. He met with the government again. This time, he told them what everyone agreed was the truth.

He apologized for his prior statement, and said he was sorry he lied.

The Sentencing Hearing

At sentencing, Mr. Rodriguez apologized to the district court for lying.

The district judge sentenced him to 72 months - his guidelines were increased because of his obstruction, and he lost acceptance of responsibility.

What About Safety Valve?

On appeal, Mr. Rodriguez had new counsel. His new lawyers argued that his trial counsel should have asked for a safety valve reduction under the sentencing guidelines, and that he was constitutionally ineffective for not doing so.[FN1]

The D.C. Circuit agreed.

The court of appeals noted that the government conceded at sentencing that Mr. Rodriguez had, eventually, belatedly, been fully truthful with them by the time the sentencing hearing happened.

The court of appeals held that

The fact that Rodriguez waited until the last minute to provide the information or that he was tardy in doing so does not preclude him from obtaining safety-valve relief. The provision does not distinguish between defendants who provide the authorities only with truthful information and those who provide false information before finally telling the truth. (internal quotations omitted)


Familiarity with the Guidelines is a necessity for counsel who seek to give effective representation. When a lawyer fails to raise an applicable provision of the Guidelines, he fails to provide effective assistance. (internal quotations omitted)

Because Mr. Rodriguez was entitled to a two-level reduction for safety valve the case was remanded for resentencing.

[FN1] - Readers from outside of the D.C. area may be surprised to learn that the D.C. Circuit allows a person to raise an ineffective assistance claim on direct appeal if the record establishes the ineffective assistance sufficiently.

See also:

April 13, 2012

Chief Judge Kozinski Celebrates The Diversity Of Computer Misuse

If you're reading this at work, you may be committing a federal crime (depending on where you are reading it, and you're employer's policies about reading the internet). Here's hoping you don't get charged!

If you'd willing to brave the threat of Johnny Law, or you're at home, please read on.

Mr. Nosal Wanted To Start A New Company

David Nosal worked at an executive search firm. He left to start a competitor. He had some of his friends log in to his prior employer's computer to download confidential information about that company's business contacts. He used these contacts to launch his new company.

Importantly, the employees were allowed to log on to the database, but the company had a policy that prohibited them from sharing the company's information.

Mr. Nosal was charged in federal court with violating the Computer Fraud and Abuse Act (the CFAA, for those in the business), 18 U.S.C. § 1030(a)(4). He was also charged with a number of other federal crimes.

Mr. Nosal filed a motion to dismiss the CFAA violation. The district court granted it. The government appealed.

In United States v. Nosal, an en banc Ninth Circuit affirmed, in an opinion by Chief Judge Kozinski.

1362248_businessman_with_the_notebook_3.jpgThe Computer Fraud and Abuse Act

The CFAA criminalizes accessing a computer in a way that "exceeds authorized access." "Exceeds authorized access," in turn, is a defined term in the statute, in subsection (e)(6):

the term "exceeds authorized access" means to access a computer with authorization and to use such access to obtain or alter information in the computer that the accesser is not entitled so to obtain or alter

Mr. Nosal's friends were allowed to access their company's computer. They simply weren't allowed to share the information that they found on the computer outside of the company. Does such conduct exceed the authorized access as the term is used in the CFAA.

Here's how Chief Judge Kozinski framed the issue:

This language can be read either of two ways: First, as Nosal suggests and the district court held, it could refer to someone who's authorized to access only certain data or files but accesses unauthorized data or files--what is colloquially known as "hacking." For example, assume an employee is permitted to access only product information on the company's computer but accesses customer data: He would "exceed[ ] authorized access" if he looks at the customer lists. Second, as the government proposes, the language could refer to someone who has unrestricted physical access to a computer, but is limited in the use to which he can put the information. For example, an employee may be authorized to access customer lists in order to do his job but not to send them to a competitor.

Of course, the way we interpret statutes these days is clear - if the language is unambiguous, you go with that language. If it isn't, you revert to a number of rules about statutory construction.

The Language of the Statute

The government had to argue that the statute is unambiguous - that it only supports a reading that bars both accessing information that a person isn't allowed to access and using any of the accessed information in a way that the person isn't allowed to.

The court, though, found that the statute can plausibly be read to limit just access beyond that allowed - just going onto a part of a database that a person doesn't have permission to be in.

As the court summarized it,

the government argues that [the company]'s computer use policy gives employees certain rights, and when the employees violated that policy, they "exceed[ed] authorized access." But "entitled" in the statutory text refers to how an accesser "obtain[s] or alter[s]" the information, whereas the computer use policy uses "entitled" to limit how the information is used after it is obtained. This is a poor fit with the statutory language. An equally or more sensible reading of "entitled" is as a synonym for "authorized." So read, "exceeds authorized access" would refer to data or files on a computer that one is not authorized to access.

So, phew, the statutory language is ambiguous. Now we can get to the fun stuff (especially when Kozinski is writing).

How Absurd Is The Government's Reading Of The Statute?

Here's the starting point:

If Congress meant to expand the scope of criminal liability to everyone who uses a computer in violation of computer use restrictions -- which may well include everyone who uses a computer -- we would expect it to use language better suited to that purpose.

Chief Judge Kozinski, in a style reminiscent of his opinion on the Stolen Valor Act, celebrates computer misuse.

Minds have wandered since the beginning of time and the computer gives employees new ways to procrastinate, by g-chatting with friends, playing games, shopping or watching sports highlights. Such activities are routinely prohibited by many computer-use policies, although employees are seldom disciplined for occasional use of work computers for personal purposes. Nevertheless, under the broad interpretation of the CFAA, such minor dalliances would become federal crimes. While it's unlikely that you'll be prosecuted for watching Reason.TV on your work computer, you could be. Employers wanting to rid themselves of troublesome employees without following proper procedures could threaten to report them to the FBI unless they quit.

By way of background, the CFAA has a separate provision that criminalizes exceeding authorized access to any computer that's connected to the internet. That provision, subsection (a)(2)(C), doesn't require that the person have any particular intent. So it doesn't have to be in furtherance of any fraudulent or otherwise wrongful activity.

Though as the opinion points out,

This concern persists even if intent to defraud is required. Suppose an employee spends six hours tending his FarmVille stable on his work computer. The employee has full access to his computer and the Internet, but the company has a policy that work computers may be used only for business purposes. The employer should be able to fire the employee, but that's quite different from having him arrested as a federal criminal. Yet, under the government's construction of the statute, the employee "exceeds authorized access" by using the computer for non-work activities. Given that the employee deprives his company of six hours of work a day, an aggressive prosecutor might claim that he's defrauding the company, and thereby violating section 1030(a)(4).

But, assume the intent requirement isn't there and we're dealing with subsection (a)(2)(C). If so,

[b]asing criminal liability on violations of private computer use polices can transform whole categories of otherwise innocuous behavior into federal crimes simply because a computer is involved. Employees who call family members from their work phones will become criminals if they send an email instead. Employees can sneak in the sports section of the New York Times to read at work, but they'd better not visit And sudoku enthusiasts should stick to the printed puzzles, because visiting from their work computers might give them more than enough time to hone their sudoku skills behind bars.

The effect this broad construction of the CFAA has on workplace conduct pales by comparison with its effect on everyone else who uses a computer, smart-phone, iPad, Kindle, Nook, X-box, BluRay player or any other Internet-enabled device. The Internet is a means for communicating via computers: Whenever we access a web page, commence a download, post a message on somebody's Facebook wall, shop on Amazon, bid on eBay, publish a blog, rate a movie on IMDb, read, watch YouTube and do the thousands of other things we routinely do online, we are using one computer to send commands to other computers at remote locations.

I suppose that's one reason to turn the wireless off on your Kindle at work.

It gets worse though,

Our access to those remote computers is governed by a series of private agreements and policies that most people are only dimly aware of and virtually no one reads or under- stands.

For example, it's not widely known that, up until very recently, Google forbade minors from using its services. See Google Terms of Service, effective April 16, 2007--March 1, 2012, §2.3, policies/terms/ archive/20070416 ("You may not use the Services and may not accept the Terms if . . . you are not of legal age to form a binding contract with Google . . . .") (last visited Mar. 4, 2012).9 Adopting the government's interpretation would turn vast numbers of teens and pre-teens into juvenile delinquents-- and their parents and teachers into delinquency contributors.

I suppose I should talk to a criminal defense lawyer before I tell anyone about a Google search I did with my son as a part of his schoolwork (and because we were curious who would win a fight between a shark and an octopus (spoiler alert - the octopus)).

But, the opinion's bottom line is that we're all guilty of stepping over the line - surely this stuff can't be a federal crime?

The Department of Justice's response was familiar - "Trust us". Judge Posner rejected this a few weeks ago. Chief Judge Kozinski does too:

The government assures us that, whatever the scope of the CFAA, it won't prosecute minor violations. But we shouldn't have to live at the mercy of our local prosecutor. Cf. United States v. Stevens, 130 S. Ct. 1577, 1591 (2010) ("We would not uphold an unconstitutional statute merely because the Government promised to use it responsibly."). And it's not clear we can trust the government when a tempting target comes along. Take the case of the mom who posed as a 17- year-old boy and cyber-bullied her daughter's classmate. The Justice Department prosecuted her under 18 U.S.C. §1030(a)(2)(C) for violating MySpace's terms of service, which prohibited lying about identifying information, including age. See United States v. Drew, 259 F.R.D. 449 (C.D. Cal. 2009). Lying on social media websites is common: People shave years off their age, add inches to their height and drop pounds from their weight. The difference between puffery and prosecution may depend on whether you happen to be someone an AUSA has reason to go after.

It's a lovely opinion. I could block quote the whole thing.

The Dissent

The dissent, by Judge Silverman, begins in the most curious way:

This case has nothing to do with playing sudoku, checking email, fibbing on dating sites, or any of the other activities that the majority rightly values.

The majority rightly values "fibbing on dating sites"? It must be hard to be in dissent against a writer like Judge Kozinski, but do you really want to concede the point that way?

In any event, the district court was affirmed, and the case remanded so Mr. Nosal could be prosecuted for the remaining counts.

I should note, for readers in the 11th, 5th, and 7th Circuits, that it appears that your federal circuit courts do not agree with Chief Judge Kozinski's analysis. Apparently, in those parts of the country, you might be prosecuted for using your work computer for nonwork purposes.

Perhaps you should have waited to read this until you get home.

April 12, 2012

A District Court's Statements At A Plea Hearing Can Change The Meaning of A Plea Agreement; Or, Why To Read Junk Mail Carefully

As the Supreme Court reminded us a few weeks ago, most criminal cases end in a plea. United States v. Saferstein, from the Third Circuit, is a stark reminder of how a plea can go sideways, and a lovely example of one feature of federal plea practice - appeal waivers.

GoInternet - They Made Money The New Fashioned Way

Mr. Saferstein was the CEO of GoInternet.

GoInternet may not have had the best business model.

1290864_ethernet_cable.jpgBasically, the folks at GoInternet would cold-call small companies and offer internet services. They'd offer to send the companies a "Welcome packet" for $29.95. Then GoInternet would start charging $29.95 a month through the company's phone bill.

Companies often wouldn't see the charges, since the charges were on their phone bills.

Also, GoInternet wouldn't tell businesses it would charge them monthly, except in the welcome packet's disclosures, which were hard to find.

Also, apparently the welcome packet was designed to look like junk mail, so people would throw it out instead of opening it.

Finally, in my favorite twist, GoInternet didn't hire enough people to be able to process order cancelations. People who tried to cancel were often unable to.

It's like every time a person at GoInternet had an unpleasant call-center experience they thought: "Hey, I can monetize this!"

These sales practices did a great job at generating "customers." By 2003, GoInternet had more than 350,000 businesses signed up. It's annual revenue was more than $49 million.

The FTC Came Calling

The FTC came after GoInternet and Mr. Saferstein. The company and Mr. Safterstein agreed to change it's practices and send a postcard to every customer letting them know that they were being billed by GoInternet.

Mr. Saferstein apparently thought that agreeing to send the postcards was a good idea, because it would solve the problem with the FTC.

The problem with sending these postcards, though, was that then his customers would stop paying his company money for basically no reason.

Mr. Saferstein came up with a better idea. He would agree to send the postcards, then not send them - that way the FTC would go away, and he'd still collect the money from his customers.

He seems to have had a gift for a certain way of thinking.

Mr. Saferstein was charged with mail and wire fraud, conspiracy to commit perjury[FN1], and tax fraud.[FN2]

The Plea Agreement

He reached a plea agreement. He'd plead guilty to one fraud count and two tax counts.[FN3]

The plea agreement had an appeal waiver. In general, a person preserves his right to appeal unless he explicitly waives in it a provision of the plea agreement.

Here's how the Third Circuit described the appeal waiver:

[The plea agreement] contained an appellate waiver provision, which provided that Saferstein "voluntarily and expressly waive[d] all rights to appeal or collaterally attack" his conviction, subject to several exceptions. The waiver was "not intended to bar the assertion of constitutional claims that the relevant case law holds cannot be waived." Further, it provided an exception if the government were to appeal Saferstein's sentence and excepted a small number of enumerated claims that Saferstein would be permitted to raise on appeal: (1) that his sentence exceeded the statutory maximum for that count; (2) that the sentencing judge erroneously departed upward under the Guidelines; or (3) that the sentencing judge imposed an unreasonable sentence above the Guideline range.

At the plea hearing, though, the judge told Mr. Saferstein that the appeal waiver was a little different. Specifically, the district court said that,

the waiver "of course, is not intended to bar you [from] raising constitutional claims, and only the Court can decide whether they are constitutional claims or some other kind of claim."

This is a broader than what was written in the plea agreement.

Because of the massive loss in the case, the district court calculated Mr. Saferstein's offense level under the sentencing guidelines as a 43. With no criminal history, the advisory guidelines range was life.

The district court granted a downward variance though, to 23 years on each count, to run concurrent.

Mr. Saferstein appealed.

The Appeal

The question, of course, is whether he was allowed to appeal in light of the appeal waiver in the plea agreement.

Mr. Saferstein's appeal challenged whether the district court used the correct sentencing guidelines manual. The court used a manual from a date later than the date that Mr. Saferstein committed some of his crimes.

If a law changes to increase a penalty, it can't be used to punish a person for conduct that happened before the law was passed. If it does, that violates the ex post facto clause of the constitution.

Similarly, many circuits have held that using sentencing guidelines that were are more draconian and adopted after a person committed a crime violates the ex post facto clause.

So, based on that, if Mr. Saferstein has preserved his right to appeal constitutional issues, then he can win on appeal and be resentenced.

How Do You Construe An Appellate Waiver In A Plea Agreement?

Under the terms of the plea agreement, Mr. Saferstein had not preserved his right to appeal. As the district court construed the appellate waiver in the plea hearing though, he had a right to bring this appeal.

As the Third Circuit teed up the issue:

As a result [of the district court's statement], Saferstein argues that the agreement he entered into voluntarily and knowingly preserves his right to appeal constitutional claims. The Government contends that this statement is not controlling, since it misrepresents the plain language of the plea agreement, which states that the waiver was "not intended to bar the assertion of constitutional claims that the relevant case law holds cannot be waived." The district court's statement is clearly at odds with the otherwise plain and straightforward language of the agreement. That statement thus created a plausible and tangible ambiguity and seemingly expanded Saferstein's appellate rights.

So, which governs?

The Tenth Circuit has previously looked at this. In lovely language, it wrote that

[L]ogic indicates that if we may rely on the sentencing court‟s statements to eliminate ambiguity prior to accepting a waiver of appellate rights, we must also be prepared to recognize the power of such statements to achieve the opposite effect. If it is reasonable to rely upon the court‟s words for clarification, then we cannot expect a defendant to distinguish and disregard those statements of the court that deviate from the language of a particular provision in a lengthy plea agreement. United States v. Wilken, 498 F.3d 1160, 1168 (10th Cir. 2007).

The government's argument was that a plea agreement is a contract. Normally, parol evidence of a contract - that is evidence outside of the contract itself - can't be used to interpret the contract.

But, a plea agreement, unlike a contract, requires a plea hearing under Rule 11 of the Federal Rules of Criminal Procedure.

Based on that, the court of appeals held,

[P]lea agreements must be construed to protect the defendant as the weaker bargaining party [therefore] we must find that a statement made by the sentencing court during the colloquy can create ambiguity where none exists in the plain text of the plea agreement.

Because there was ambiguity, the Third Circuit construed that ambiguity against the government, and allowed Mr. Saferstein to go forward with his appeal.

So, because of the ex post facto problem, Mr. Saferstein is going back for resentencing.

[FN1] - Mr. Saferstein asked his employees to lie in a court hearing about sending postcards.

[FN2] - Did I forget to mention that Mr. Saferstein didn't report all his income on his tax returns?

[FN3] - If there's an IRS agent assigned, and there's a plea, the government almost always wants the person to plead to a tax count. It's annoying.

April 10, 2012

Ineffective, But Laudable, Counsel

Everyone makes mistakes. Even criminal defense lawyers.

Luis Juarez bought a gun. When he bought the gun, he said that he was a U.S. citizen. The government thought he was lying about that.

Mr. Juarez was charged with violating 18 U.S.C. § 911, which criminalizes making a false statement about being a United States citizen.

(Does Germany have a similar statute? Did Kennedy's "Ich bin ein Berliner" violate it? I suppose not, because being a "Berliner" - whether a resident of Berlin or a jelly donut - is probably not the same as a citizenship claim. Pity.)

A lawyer was appointed to represent him. He reviewed the evidence, and negotiated a guilty plea. Mr. Juarez took the plea and was convicted. He was sentenced to 36 months for lying about being a citizen, and 42 months for reentering the country after a prior deportation following an aggravated felony.

No appeal was taken.

498474_eraser.jpgThen, Mr. Juarez, filed a pro se petition for relief under 28 U.S.C. § 2255. A 2255 allows a person who is serving a federal sentence to challenge his conviction because it violated the constitution. We may start to see more of these as a result of the Supreme Court's recent ineffective assistance cases.

Mr. Juarez's 2255 alleged that his lawyer was ineffective - violating Mr. Juarez's right to counsel - because the lawyer didn't investigate whether Mr. Juarez is a United States citizen.

Mr. Juarez, at the time, had already been deported before. Yet, Mr. Juarez asserted that his mother became a citizen when Mr. Juarez was under the age of 18, that his father was deceased, and that he stayed lawfully in the country until his 18th birthday. If all of that is true, it looks like Mr. Juarez would be a citizen under the derivative citizenship statute, 8 U.S.C. § 1432(a), as it then existed.

A hearing was held on Mr. Juarez's petition. His prior counsel did the honorable thing, and told the truth. He said that he simply didn't think about derivative citizenship. If he knew of it earlier, he "would've made a motion to withdraw the plea."

This is clearly the right thing for Mr. Juarez's lawyer to do. It is remarkable, perhaps, only because it isn't always what lawyers do.

Mark Bennett, over at Defending People, had a post about a lawyer who took a different approach - conspiring with the government to lie about a nonexistent defense strategy. It's shameful.

The point of being a criminal defense lawyer is to try to help your clients. If a lawyer is going to save his own skin on a lie instead of tell the truth to help his client, he should just something else with his time. We all make mistakes. Clients shouldn't suffer as a result.

Despite Mr. Juarez's lawyer's candor, the district court denied the 2255. The Fifth Circuit, in United States v. Juarez, reversed.

If Mr. Juarez were a citizen, it would be a complete defense to the crimes he was accused of. For that reason, and because he had a colorable claim of citizenship, the Fifth Circuit reversed and remanded.

April 5, 2012

Phone Calls From Africa To Kentucky Cannot Be Prosecuted In Virginia, Even If Virginia Is Where You Thought About The Fraud You'd Do On The Phone Call

Former Congressman William Jefferson, a son of New Orleans, will perhaps be best known for having been found with cash - cold, hard, cash - in his freezer.

He was convicted in the United States District Court for the Eastern District of Virginia of eleven charges in connection with a bribery scheme involving his role as a member of Congress and officials in Africa. In a major coup for his lawyer, he was not convicted of the offense involving the cash found in his freezer.

IMG_3793.jpgHe was convicted, alas. And, the Fourth Circuit affirmed 10 of his 11 counts of conviction in United States v. Jefferson.

The one count they reversed on, though, is exceptionally interesting (to me).

Count 10 - Wire Fraud

Count ten of the indictment against Mr. Jefferson alleged that he violated the federal wire fraud statute, 18 U.S.C. § 1343.

This count was based on a telephone call from Africa to Kentucky on July 6, 2005. The government alleged that the call was in furtherance of a scheme that was hatched, in part, in the Eastern District of Virginia.

His lawyers challenged whether there was venue for such a call in the Eastern District of Virginia. After all, the call was started in Africa and accepted in Kentucky. That doesn't look like it affects the folks who live near the federal courthouse in Alexandria.

The district court rejected the venue challenge.

A Bit Of Background on Venue in a Criminal Case

In a criminal case, a person's right to proper venue is Constitutional - it's in article III, section 2, clause 3; "The Trial of all Crimes . . . shall be held in the State where the said Crimes shall have been committed." It's also contained in Federal Rule of Criminal Procedure 18.

For many federal criminal statutes, Congress has expressly said where venue lies. Money laundering, under 18 U.S.C. § 1956 is a good example. Congress has said that a money laundering prosecution can go forward in any jurisdiction where the money laundering transaction happened, or where the illegal act that requires money to be laundered was done (assuming the person accused did the laundering).

But, for many federal statutes, there's no explicit venue provision. Wire fraud, as it happens, is one of those statutes.

In that case, the Supreme Court has said that a person can be prosecuted in the jurisdiction where the conduct that is prohibited by the statute took place.

Venue in a Wire Fraud Case

Simple enough. What's the conduct in wire fraud?

Mr. Jefferson's lawyers argued that the conduct for wire fraud is the making or receiving of the wire. That's what "wire fraud" is about - using a wire.

The government, on the other hand, said that the elements of wire fraud are (1) the use of a wire that is (2) in furtherance of a scheme to defraud. Either one of those elements is an act necessary to complete the offense, argued the government. As a result, the government said that if either happened in the Eastern District of Virginia, the prosecution was proper there.

In fairness to the government, the Seventh Circuit has said basically the same thing in United States v. Pearson, 340 F.3d 459 (7th Cir. 2003).

Thinking Up A Fraud Scheme Is Not Conduct

The Fourth Circuit sided with Mr. Jefferson. It held that,

The scheme to defraud is clearly an essential element, but not an essential conduct element, of wire (or mail) fraud.

Picking up the phone and making a call is an act. Similarly, for mail fraud, putting a letter in a mailbox is an act. But planning a fraud scheme, not so much. Quoting a Second Circuit case, United States v. Ramirez, 420 F.3d 134, 144-45 (2005), the court of appeals held that,

devising a scheme to defraud is not itself conduct at all (although it may be made manifest by conduct), but is simply a plan, intention or state of mind, insufficient in itself to give rise to any kind of criminal sanctions.

Because Mr. Jefferson only had a state of mind in the Eastern District of Virginia, and didn't use the phone there - Count 10 was dismissed for improper venue.

The moral of the story is that you can think about fraud where ever you'd like. Just only answer the phone where you want to face a jury.

April 3, 2012

Do People Convicted of White-Collar Crimes Have The Most To Gain From The Supreme Court's Recent Decisions On Ineffective Assistance Of Counsel?

The Supreme Court recently decided two cases about what a lawyer has to do when representing a client deciding whether to take a guilty plea or go to trial - Lafler v. Cooper and Missouri v. Frye.

These cases hold, basically, that if a defense lawyer messes up when representing a person in connection with a decision to plead guilty, that violates the person's constitutional right to effective assistance of counsel. As a result, the harm that was done by the lawyer's mistake can, and must, be undone. So, a person who was hurt by a lawyer's mistake can challenge what happened to him and possibly have a conviction or sentence undone.

The New York Times took the notable step of issuing an editorial praising the decisions. Lots of folks have commented on the effects of the rulings (like this guest post at Sentencing Law and Policy).

Lafler, I think, will prove the more interesting case. It definitely has the more interesting facts.

594710_shirt_close-up.jpgMr. Cooper's Lawyer's Folly

In Lafler, Mr. Cooper, was charged with assault with intent to murder. The person Mr. Cooper stood accused of assaulting was shot in the lower half of his body.

The government offered Mr. Cooper a plea to lesser charges that would have resulted in a sentence of 51 to 85 months in prison. Mr. Cooper rebuffed these offers based on his lawyer's advice that a person cannot be found guilty of assault with intent to murder if the person is aiming at the lower half of the victim's body.

This singularly bizarre bit of legal "advice" was not accurate - just like it isn't accurate that the police can't arrest a husband and a wife for the same crime.

Yet, Mr. Cooper relied on his lawyer's erroneous "no murder if you're shooting below the waist" maxim and went to trial. He was convicted, and sentenced to a mandatory minimum sentence of 185 to 360 months.

The Supreme Court held that, on these facts, Mr. Cooper was not competently represented by counsel. As a result, in the future, people who went to trial based on a bad assessment of what will happen at trial have a tenable claim of ineffective assistance.

Will The Floodgates Open?

The dissent said that this is going to open a floodgate of litigation, as people who are in prison try to use Lafler (and Frye) to overturn their sentences.

So, I'm trying to think about who will most benefit from this opinion.

I think, most clearly, it would be people who went to trial, when there was a viable plea offer for less time than the person received, and where the person received a significant sentence after trial.

The Court quoted a lovely law review article about the perils of going to trial in this age of plea-bargaining:

The expected post-trial sentence is imposed in only a few percent of cases. It is like the sticker price for cars: only an ignorant, ill-advised consumer would view full price as the norm and anything less a bargain

So, as I read Lafler, a lawyer has an obligation to meaningfully and competently discuss whether to take it. As the Court says,

If a plea bargain has been offered, a defendant has the right to effective assistance of counsel in considering whether to accept it. If that right is denied, prejudice can be shown if loss of the plea opportunity led to a trial resulting in a conviction on more serious charges or the imposition of a more severe sentence.

I think this means that a lawyer advising a person looking at trial or a plea has to tell him, competently, what the strengths and weaknesses of his case, and the government's case, are.

Obviously, there can be some room to wiggle there - if a lawyer says that there's a 35% chance of conviction, when, in fact, there's a 38% chance (assuming anything in a trial could ever be known with such precision), it would be hard to see how that kind of error would require a reversal.

But there's a lot of room to move in a challenge to a person's conviction.

What if, for example, a person's lawyer simply didn't anticipate that a bit of evidence would be significant? The government had, say, an email that was particularly damning. When discussing a plea, the person's lawyer simply didn't mention the effect that this email could have on a jury. It seems that could be close enough to the "no murder if you're shooting below the waist" rule to be worth a challenge.

Who Gets More Serious Sentences After Trial Than On A Plea?

Lafler will confer the most benefit to people who faced the most significant trial penalty.

Thinking just of federal cases, I'm sure there are a lot of candidates for this kind of relief - people who are now facing mandatory minimum sentences that could have been pled around, or enhanced sentences based on prior convictions that wouldn't have been triggered on a plea - but I think one interesting area will be white-collar offenses.

Since Enron, there have been a lot of white-collar prosecutions. And, since the guidelines get crazy when the loss amounts get high, I would think virtually any white-collar case where a person was sentenced near the sentencing guidelines after trial, and where there was a plea offered before trial, would be worth thinking about as a candidate for relief under Lafler.

One additional interesting thing about white-collar cases is that they tend to be the kinds of cases where honest conversations about plea options happen less frequently.

In the average drug case in federal court, there is a frank conversation about whether to plead. Either the client (or his family) is bearing the costs of the representation, or the lawyer is court-appointed. In either case, the economic incentives line up to encourage that conversation.

In white-collar cases where the person accused of the crime is indemnified, the incentives are different. The client isn't paying for his legal fees, and the law firm has an interest in seeing the case go to trial. A frank conversation about whether trial can be won or lost, or whether an acceptable plea can be secured, can be challenging.

Of course, maybe I'm wrong about that. As these convictions get challenged under Lafler, the plea advice that lawyers have been giving, and their advice about what's going to happen at trial, will be getting new scrutiny.

I'm looking forward to seeing how this plays out.

April 2, 2012

You Can Subscribe To The Federal Criminal Appeals Blog By Email

I wanted to briefly let you know that you can subscribe to this blog by email. Then, whenever there's a post, you'll get an email. It's massively efficient.

Just enter your email address, then hit "subscribe":

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If you're one of the folks who gets this blog by email already, and, indeed, are reading this very post by email, you can just forward the email to your friends if you think they'd like to subscribe to the blog.

And, soon, we'll have more exciting news of a defendant winning in federal court.