The Federal Criminal Appeals Blog

Justice Scalia recently made headlines by taking a cheap shot at the ranks of federal district court judges.

As the Associated Press reported (hat tip to Sentencing Law and Policy):

Supreme Court Justice Antonin Scalia says the quality of federal judges has suffered because there are too many of them. Testifying before a Senate committee Wednesday, Scalia blamed Congress for making federal crimes out of too many routine drug cases. In turn, that created a need for more judges.

"Federal judges ain't what they used to be," he said during a rare appearance before the Senate Judiciary Committee. The federal judiciary should be an elite group, said Scalia, who has served on the high court for 25 years. "It's not as elite as it used to be," he said.

He was responding to a question about what he sees as the greatest threat to the independence of judges.

For what it's worth, I go half way with Justice Scalia on this. There are too many federal drug prosecutions, but, from my perspective, the quality of the federal district court bench is still excellent - especially the judges I appear in front of (and who may be (but probably aren't) reading this).

One danger of having too many cases is that it gets hard to look at each case with fresh eyes.

Sentence too many folks on drug crimes, and every person convicted of drug dealing starts to look the same. It's a rare, and good, judge who can treat the 500th drug defendant as an individual in the same way that she did with the first.

Once a judge does, say, 100 sentencing hearings, she can be forgiven, perhaps, for not focusing on the details of each one.

This kind of volume leads to the regrettable sloppiness in the Seventh Circuit's opinion in United States v. Hassebrock.

Mr. Hassebrock earned substantial income from an oil business in 2004. Among other income, he received a taxable settlement of $2.5 million. He neglected, however, to file income tax returns. He was indicted, and, at trial, convicted, of tax evasion and willfully failing to file a tax return.

Tax evasion and failure to file a tax return are odd offenses. While most federal crimes appear in Title 18 of the United States Code, tax offenses are codified in Title 26. Tax evasion is a violation of 26 U.S.C. § 7201 and willful failure to file a tax return is a violation of section 7203.

The difference in which title is the source of the crime changes things in small and subtle ways at sentencing.

In Mr. Hassebrock's case, it changed whether the sentencing court had the power to order Mr. Hassebrock to pay restitution.

To back up, a court can order, as a part of a sentence, a person to pay funds to make his victims whole as restitution. If a person defrauded money, he can be ordered to pay the amount defrauded. If he shot someone, he can be ordered to pay the costs of medical bills, lost wages, and therapy to recover from the injury.

The general restitution statutes, 18 U.S.C. §§ 3663 and 3663A, apply to violations of crimes that appear in Title 18 and drug crimes in Title 21. They do not apply to offenses in Title 26 - that is, they don't apply to tax evasion.

Judges imposing sentence really want to impose restitution. As a practical matter, it makes collecting the taxes that were evaded monumentally easier for the government.

Yet restitution in tax cases is only available in two ways. First, if the person charged with a tax offense pleads guilty, as a condition of a plea agreement he can agree (or be forced to agree) to pay restitution as a part of his sentence. This is authorized by 18 U.S.C. § 3663(a)(3).

Second, if the district court orders that the person be on supervised release, the court can make restitution a condition of that supervised release.

Importantly, a district court cannot make restitution a part of a sentence in federal court.

Given that this blog only addresses cases and issues where the defendant wins, you will not be shocked to learn that the district court in Mr. Hassebrock imposed a restitution order as a part of his sentence.

The government tried to let the sentencing court know it couldn't do it, but the judge, ignoring the government's statement that the court could only impose restitution as a condition of Mr. Hassebrock's post-prison supervised release, imposed restitution as a part of the sentence.

The court directed Mr. Hassebrock to start paying the restitution immediately - while he was serving his 36 month sentence. However, the court doesn't have the power to order him to pay restitution until his prison sentence is over and he is being supervised by the United States Probation Office.

Mr. Hassebrock, to his credit, has apparently starting paying his restitution from prison.

His case was remanded for a new restitution order that starts once he is out of prison.

Preserving an issue for appeal in the middle of trial can be tricky.

The lawyer who represents a person in the trial court normally has to preserve an issue for it to be heard by the court of appeals. If the lawyer doesn't object when something improper happens, the appellate court is not going to be as eager to do something about it.

Yet the trial court lawyer is worrying about so many things that preservation of an appellate issue isn't always the right thing to worry about. It's much better, for example, to have a strong shot at a not guilty verdict than to have an issue that you may be able to win on appeal. And, in trial, there are so many balls to watch, that it may be rational for a lawyer to take his eye off of one of them for a moment. Which can make for a harder appeal.

To make things worse, a trial lawyer doesn't have the same access to the law that a appellate lawyer, or court of appeals judge, has. It's one thing to know the law after hours of research. It's another to have to know it when an issue that you weren't anticipating comes up.

So one can empathize with the lawyer who represented Calvin Brown. His case was recently decided by the Seventh Circuit in United States v. Brown.

Mr. Brown had pled guilty. He and his lawyer were sitting at counsel table* after having made their arguments about what the sentence should be. The district judge was announcing his sentence. He told Mr. Brown how much time he was going to spend in prison.

Then the judge told Mr. Brown that there was a mandatory minimum fine of $300 in his case for each count. Because he pled guilty to four counts, the sentencing court imposed a fine of $1200.

The problem, though, is that there is no mandatory minimum fine that applied to Mr. Brown's case. The sentencing judge was just flat-out wrong.

Mr. Brown's lawyer didn't object. Because he didn't object, the Seventh Circuit said that it reviewed his appeal on a plain error standard.

As an aside, plain error is a harder standard to meet. If a person in an appeal is complaining about what happened in the trial court, they would like the court of appeals to review the decision de novo. De novo review means the court of appeals thinks about the issue on it's own, without reference to how the district court approached it.

Plain error, on the other hand, means that the person who is appealing has to convince the court of appeals that the district court was clearly wrong - it wasn't a close call. If there's a tie in the law, the tie goes against a person who is bringing the appeal.

As the Seventh Circuit explained it, a district court has plainly erred if,

Under plain error review, we must determine "(1) that error occurred; (2) that the error was plain; and (3) that the error affected the defendant's substantial rights."

Mr. Brown argued that the sentencing court was imposing its ruling - he didn't have an opportunity to object.**

The Seventh Circuit would hear none of it. The court of appeals reviewed under plain error.

Happily, though, the appellate court found that making up a mandatory minimum fine that doesn't exist is plain error.

As a result, Mr. Brown's case will be remanded for reconsideration of the fine that the court imposed in this case. Now all he has to worry about is the 292 month sentence he has to serve.

* Presumably. This detail isn't in the opinion, which is to say that I'm making it up.
** It isn't clear from the opinion whether the fine issue came up in the hearing or only in the judgment that issued later. I think it would be odd to have it only in the judgment, and, likely, that would present other problems (that the judgment that the court signs and the announcement of the sentence shouldn't vary too much), but, in any event, Mr. Brown did not object to either.

Tomas Leiskunas, a man who "at 26 years old . . . had a minor criminal history and at least two aliases," was charged with being a straw purchaser in a mortgage fraud scheme in the federal district court in Chicago.

The folks who were engaged in the scam, according to the Seventh Circuit's opinion in United States v. Leiskunas, would take out fake mortgages in Mr. Leiskunas's name* on houses that he was never going to live in. He would attend real estate closings and say that he was going to live in the houses.

That's against the law.

Mr. Leiskunas decided to plead guilty. He declined to accept a plea agreement from the government, deciding, instead, that he would like to plead open. (For prior posts on defendants who have done well on appeals by pleading open, check out this post, this post, or this post).

The biggest effect of an open guilty plea is that there are no agreements about the person's sentencing guidelines. In a fraud case, as in almost any white-collar case, loss amount is the largest question on the table. In Mr. Leiskunas's case, it was also responsible for his win in the Seventh Circuit.**

The starting point for most white-collar sentencing guidelines is section 2B1.1 of the federal sentencing guidelines. The biggest factor driving a white-collar case is normally loss amount.

The guidelines say that the loss amount is the amount of money that is reasonably foreseeable to be lost to the person charged with the crime.

In Mr. Leiskunas's case, the government had a novel and concrete theory of loss.

The total amount loaned in the closings that Mr. Leiskunas participated in was $4,473,161.55.

Because, as you may have noticed, the housing market is not doing well, each house involved in Mr. Leiskunas's case was foreclosed on (that they were a part of a mortgage fraud conspiracy may have been a contributing factor). The total value of money raised at these foreclosure sales was $1,792,000 less than the total amount loaned.

Thus, the government argued, the amount the banks lost must have been the amount that was reasonably foreseeable to Mr. Leiskunas.

The district court adopted the government's calculation of loss without much discussion.

The Seventh Circuit reversed because the district court did not offer an explanation for accepting the government's position.

The appeals court did not opine on the merits of the government's position. It did not note, for example, that there was no way Mr. Leiskunas could have known what the houses would fetch later at a foreclosure sale. The court of appeals did not explain that the amount used as a loss number was the amount of harm actually suffered, which is very different than the amount of harm that Mr. Leiskunas would have been able to predict when he participated in the mortgage fraud. The Seventh Circuit also did not point out that the government's test completely fails to account for the way the guidelines explicitly say that loss amount should be calculated.

Nope, the Seventh Circuit just sent it back for a better explanation.

* Or, if not his actual name, one he would be willing to answer to during a real estate closing.

** Sort of. The Seventh Circuit also reversed on the district court's determination that Mr. Leiskunas did not play a minor role in the mortgage fraud scheme. The district court expressed the belief that the law was that Mr. Leiskunas could not be a minor player if he was essential to the scheme or was involved, in a minor way, a number of times. This was not the law, according to the Seventh Circuit. For more, see USSC S 3B1.2.

As devoted readers will recall, the Ninth Circuit recently rejected a restitution claim by a woman who was depicted in child pornography when she was a child. The Second Circuit just agreed with the Ninth Circuit, in United States v. Aumais. Yet another Circuit jumps on the anti-restitution for child porn victims freight train.

The Second Circuit held that "proximate cause is a deeply rooted principle in both tort and criminal law that Congress did not abrogate" when it created the statute that allows restitution, 18 U.S.C. S 2259. Because the woman seeking restitution couldn't show that the defendant's conduct was a proximate cause of her harm, her restitution award was vacated.

The opinion in Aumais rejects a restitution claim made by the same woman that was at issue in the prior Ninth Circuit case, Kennedy, and for the same reasons.

All of this got me thinking. In both opinions, the woman, "Amy", describes feeling trauma whenever she gets a victim notification from the United States Department of Justice. Why they doesn't DOJ just stop sending notices?

In any event, the Second Circuit now agrees with many others that if the district court is going to charge some one for the financial costs of a crime, the person has to have caused the harm that the court is holding the person responsible for.

Related articles

• Second Circuit panel reverses child porn restitution award to "Amy" (sentencing.typepad.com)

It's odd - most lawyers spend their entire careers fighting about money. Criminal defense lawyers - even white collar criminal defense lawyers - tend to focus much more on prison time or guilt and innocence. We're a rare breed of lawyer; we're lawyers who don't fight about money (most of the time).

There are downsides to not normally focusing on money.

As the Wall Street Journal recently wrote, forfeitures are out of control. The government is taking money from people with minimal process and getting away with it. Apparently, the money that law enforcement collects goes back to law enforcement coffers. This seems not to reduce the abuses of forfeiture.

The Eleventh Circuit's recent opinion in United States v. Singletary shows another problem with failing to focus on the money.

Patrick and Robert Singletary pled guilty to participating in a scheme to commit mortgage fraud with a number of unindicted co-conspirators.

At sentencing, their guidelines ranges were 51 to 63 months and 33 to 43 months. The judge imposed sentences of a year and a day*, and 18 months.

He also imposed restitution of $1 million, and a forfeiture order of $1 million.

The issue on appeal? The restitution amount.

In federal court, restitution is available to pay back people who lost money because of a crime. In Singletary, the court had a hearing to determine how much money people lost.

But the district court said, on the record, that it didn't buy the government's evidence. It just didn't find the government's witnesses credible. So, when the government said that the amount that was lost, which would drive the sentencing guidelines and the restitution amount, was more than $3 million, the district court said no.

Instead, the court held, $1 million seemed about right. Not because the court identified transactions that added up to a round $1 million. Rather, it seems that the sentencing court selected $1 million because it was a nice round number that was less than what the government wanted.

The court used the wrong loss number for both the sentencing guidelines and the amount of restitution. Yet only the restitution part was appealed.

Even though the judge used the wrong loss amount when determining the sentencing guidelines, no one really cared. The Singletaries already received sentences under the bottom of the guidelines.

The only thing that mattered - that arbitrary order to pay $1 million.

* I can hear you wondering, "A year and a day? What an odd sentence length? Why would a judge tack on the extra day?" This is an odd circumstance where more time is actually less time. If the court had imposed a sentence of a year, the person would not have been eligible for good time credit. By adding an additional day, good time credit is possible, which, in the federal system, would be worth about 45 days of reduced sentence.

"Why not just impose a sentence of 10 and a half months?" you may ask.

I don't really have an answer for that.

Related articles

• Eleventh Circuit - Mortgage Fraud Judgment Vacated and Remanded for Re-Sentencing (lawprofessors.typepad.com)

Just because you win, doesn't mean you win something you want.

Gary Dudeck pled guilty to three charges: possessing child pornography, receiving child pornography, and receipt of images depicting minors engaged in sexual activity.*

The district court sentenced him to ten years on each of the three counts, and ran the sentence concurrently.

Mr. Dudeck appealed, and argued that he can't be guilty of all three of these charges.

While there's a lot that double jeopardy doesn't mean, double jeopardy prevents a person from being convicted of the same crime twice.

So, if you commit an assault and an aggravated assault, where an aggravated assault is basically just defined as an assault plus some kind of aggravating factor, at sentencing, the court should dismiss the assault, and only sentence you for the aggravated assault.

Mr. Dudeck argued that receiving child pornography requires possessing child pornography, so that his conviction of possession should be ignored. Otherwise, it would violate double jeopardy.

The Sixth Circuit agreed that receipt of child pornography includes possession of child pornography in his case, United States v. Dudeck. The court remanded because it wasn't clear whether the images that supported the possession count were the same ones that supported the receipt count.

And, if Mr. Dudeck prevails, what does he get? The sentencing court already made clear that the sentence for receipt and possession should be the same. And the court already ran them concurrent to one another.

Mr. Dudeck, if he wins on this argument, as the potential to save himself $100. Every criminal defendant has to pay $100 for every felony count that he or she is convicted of. It's the law.

If Mr. Dudeck's possession conviction is overturned, he saves himself a full one hundred dollars.

* You may wonder what the difference is between receiving child pornography and receiving images depicting minors engaging in sexual activity. Basically, receiving child pornography - pictures involving real children - is a separate crime that receiving images that contain "virtual" children. If the image is real child porn, its receipt is prohibited by 18 U.S.C. S 2252(a)(2). If the image is of a virtual child, receipt is prohibited by 18 U.S.C. S 2252A(a)(2), which relies on a broader definition of child pornography.

Zoraida Pena Canal was like any other live-in nanny, except she worked from 6 a.m. until 10 p.m., wasn't allowed to talk with anyone other than the family she worked for, her employer held her passport, and she wasn't paid for the two years she worked as a nanny.

Her employer, Mabelle Dann, was convicted at trial of document servitude in violation of 18 U.S.C. S 1592, forced labor charges in violation of 18 U.S.C. 1589, and immigration charges. She was sentenced to five years in prison.

As the Ninth Circuit's opinion in United States v Dann, by Judge Gertner of the District of Massachusetts, sitting by designation, starts:

The parties at trial and on appeal present two competing narratives. Dann contends that this case is a not unusual story of the relationship between two women, with all its ups and downs. As a divorced, single mother with three small children, Dann was desperate. She gave Pena Canal the opportunity to come to the United States, and she treated her as a family member. Dann took care of, housed, and fed Pena Canal, and wanted to pay her as soon as she had the chance. Dann hoped to give Pena Canal a room of her own but was unable to do so. The two women had their fights, as all family members do. After Pena Canal left Dann, she discovered that she could obtain a T-Visa and stay in the United States, as long as she testified against Dann. Pena Canal's testimony is tainted by her incentive to lie.

The government in turn portrays a woman who went to great lengths to violate immigration laws so that Pena Canal could work for her. She needed cheap -- or free -- labor, and this was her means of procuring it. Her behavior towards Pena Canal became worse and worse over time, culminating in Pena Canal's working without pay in slave-like conditions, fearful of what would happen if she were to leave.

Dann challenged both the fact of her conviction and the sentence. Both were upheld.

I won't spend much time on the facts, except to note one exchange in the trial testimony where Ms. Dann and Ms. Pena Canal were arguing over whether Ms. Pena Canal was a slave. She wasn't allowed to leave the house, talk to anyone else, and hadn't been paid. To my mind, if you're arguing with your unpaid employees over whether you're a slave holder, you probably are.

The case presents, though, a remarkable restitution issue.

Ms. Dann was ordered to pay significant restitution to Ms. Pena Canal for holding her in slavery and not paying her for two years.

Ms. Dann was owed back child-support from the father of her children. The district court held that this child support debt was properly disgorgeable to Ms. Pena Canal as restitution. The money had already been spent, and was payable to Ms. Dann, the court reasoned, so it is Ms. Dann's money, and is subject to the restitution order.

The Ninth Circuit disagreed. The appeals court held that because child support payments are always the property of the child, provided the child is not yet an adult, they can't be ordered disgorged from the parent in a restitution order.

That much seems reasonable -until you think about it. The child support was, in part, for services provided by Ms. Pena Canal. And Ms. Dann is going to spend five years in prison, where she most certainly won't be supporting the kids with the income that comes in from the back child support.

So, to recap, the State of California will collect the back child support through its child support enforcement mechanisms. The money will not go to Ms. Pena Canal, the woman who did the actual work of parenting. Instead, the child support will go to the woman who is unable to support the children, because she's in a federal prison for five years.

The court recognized this is more than a little odd, and that the district court's order including the child support arrearage in the restitution order does seem equitable. But the court determined that the law is clear,

under California law, a creditor (in this case a crime victim with a restitution order) is not entitled to accrued child support payments owed to a custodial parent of children who have not yet reached the age of majority.

This is a tricky problem. Someone is going to have to watch over and support those kids. Ms. Dann won't be in a position to do it while in prison. If she gets the child support arrearage, and uses it to support the kids while she's not able to, I suspect most people would be comfortable with that.

Though there's no guarantee that's how this will play out.

Joshua Kennedy was flying into Seattle from overseas. Customs searched his laptop and found child pornography on it. The appeal of his conviction was decided today by the Ninth Circuit today in United States v. Kennedy, presenting a really interesting take on the scope of federal restitution -- and the kind of harm that comes from the transportation of child pornography.

As an aside, let's stop there for a second. Did you know that the government can search you at the border (meaning, basically, anywhere Customs has a checkpoint)? Searches of computers at the border are way more common than I suspect most people suspect. Legal challenges are being mounted.

The searches of laptops at the border are invasive. And they don't require probable cause. Customs can search everything on your iPhone anytime you fly back from overseas. They don't need a reason. They can just take your phone and search it. Surely the amount of our personal lives that we keep on our computers and phones counsels in favor of rethinking this rule at some point. Is there a greater threat to national security, or whatever, if I email myself a file from Paris than if I put it on a thumb drive and carry it through Customs?

Anyway, back to the restitution issue.

Mr. Kennedy was convicted of transporting child pornography. The government asked the district court to impose a restitution order, because two of the women who were depicted in the images that were found on his computer. The government submitted evidence that having their earlier abuse viewed by strangers has been very damaging.

Psychologists presented evidence of the harm they'd suffered. One of the women said every time a victim notice came from a US Attorney's office she would have a panic attack (one would hope that she could simply take her name off of the notification list, but I know the federal victim notification laws are complicated).

One woman asked for $3 million. The other asked for $227,000.

The district court gave them $1,000 for each image they were in, basically throwing its hands up on how to figure out what the measure of damages for a situation like this should be.

The Ninth Circuit reversed. The Court noted that to succeed in a claim for restitution, the government has to show that the defendant's conduct was a cause of the harm that was suffered by the victim. So, here, the women seeking money would have to show that Kennedy's possession of their image caused them to be harmed.

The Ninth Circuit said, basically, no way. The women were harmed, to be sure, but Kennedy's possession of the images wasn't known to them -- if he hadn't possessed them, they would have been no better off. That he did possess them rendered them no worse off. So, because his possession didn't change the quantity or quality of harm suffered by the women, Kennedy didn't cause the harm.

It's a compelling theory of causation, I think, and it resolves what was developing into a thorny issue of public policy. Restitution in situations like this have been kind of a hot area in the press lately. This guy seems to have built a whole practice area on it. The New York Times has written about the controversy.

I can't wait to see how long it takes for the Supreme Court to reverse, or Congress to amend the statute.