Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca3-05-03879/USCOURTS-ca3-05-03879-0/pdf.json

Parties Involved:
Franklin C. Brown
Appellant
United States of America
Appellee

Document Text:

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

 

Nos. 04-4164, 05-3879, 08-1569

 

UNITED STATES OF AMERICA

v.

FRANKLIN C. BROWN,

Appellant

 

On Appeal from the United States District Court

for the Middle District of Pennsylvania

(D.C. Criminal No. 02-cr-00146-2)

Honorable Sylvia H. Rambo, District Judge

 

Argued December 16, 2009

 

BEFORE: SLOVITER, JORDAN, and

GREENBERG, Circuit Judges

(Filed: February 23, 2010)

 

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2

Nathan Dershowitz (argued)

Amy Adelson

Dershowitz, Eiger & Adelson

220 Fifth Ave., suite 300

New York, NY 10001

Peter Goldberger (argued)

Pamela A. Wilk

50 Rittenhouse Place

Ardmore, PA 19003-2276

 Attorneys for Appellant

Martin C. Carlson

United States Attorney

Kim Douglas Daniel (argued)

Assistant United States Attorney

228 Walnut Street, P.O. Box 11754

220 Federal Building and Courthouse

Harrisburg, PA 17108-0000

 Attorneys for Appellee

 

OPINION OF THE COURT

 

GREENBERG, Circuit Judge

I. INTRODUCTION........................................................3

II. BACKGROUND..........................................................4

III. JURISDICTION...........................................................8

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3

IV. DISCUSSION...............................................................8

A. The Rule 33 Motion.............................................9

1. The Receipt of the Noonan Tapes..........9

2. Allen’s Preliminary Report...................12

3. The Evidence at Trial...........................13

4. Owen’s Report......................................15

5. The Motion under the All-Writs Act....16

6. The Initial Motion for a New Trial.......18

7. The Renewed Motion for a New Trial..19

8. The District Court Did Not Abuse its

Discretion.............................................26

B. The Pre-Trial Suppression Motion..................33

C. The Plea Agreement........................................39

1. The Terms of the Agreement................40

2. Judge Rambo’s Letter...........................41

3. The Chambers Meeting........................42

4. Application of Rule 11(c)(1)................45

5. Abuse of Discretion Standard...............50

D. The Sentence....................................................54

1. The Sentencing Proceedings.................55

2. Post-Booker Sentencing 

Requirements........................................60

3. Unreasonableness of Sentence..............61

V. CONCLUSION...........................................................63

I. INTRODUCTION

 This matter comes on before this Court on Franklin

Brown’s consolidated appeals from: (1) a judgment of

conviction and sentence entered by the District Court on

October 15, 2004, reflecting the sentence the Court imposed

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4

on October 14, 2004; (2) an order denying Brown’s motion

for a new trial entered by the District Court on August 10,

2005; and (3) an order denying Brown’s renewed motion for a

new trial or for dismissal of the indictment entered by the

District Court on February 22, 2008. For the reasons that

follow, we will affirm the judgment of conviction and the

orders denying Brown’s motion for a new trial or dismissal of

the indictment, but will remand the case for Brown’s

resentencing in light of United States v. Booker, 543 U.S.

220, 125 S.Ct. 738 (2005). 

II. BACKGROUND

Brown worked for the Rite Aid Corporation, the

operator of a chain of retail drug stores, for more than 30

years, eventually rising to become one of its top executive

officers, before resigning in 2000. From 1995 until 1999,

while Brown was serving as Rite Aid’s Chief Legal Counsel

and then as a Vice Chairman of its Board of Directors, Martin

Grass was Rite Aid’s Chief Executive Officer. Under Grass’s

leadership, Rite Aid aggressively expanded its operations by

acquiring and building hundreds of drugstores throughout the

United States. This expansion seemingly was rewarded with

soaring profits, and Rite Aid’s stock price rose by more than

300% between the date that Grass assumed control of the

company and the beginning of 1999. 

Troubles within Rite Aid surfaced, however, when it

released a statement in March 1999 revealing significantly

lower than expected earnings and higher than expected

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Rite Aid did not restate its earnings for fiscal year 1997. 

1

5

expenses, resulting in its stock losing more than half of its

value in a single day. After the value of Rite Aid stock

continued to slide over the next several months, the Rite Aid

Board of Directors on October 18, 1999, issued a press release

announcing that Grass was resigning as CEO and that Rite

Aid intended to restate its income negatively for fiscal years

1997-1999. Rite Aid’s new leadership then launched an

internal investigation that culminated on July 11, 2000, in a

restatement of income of more than one billion dollars for

fiscal years 1998, 1999, and the first quarter of fiscal year

2000. When Rite Aid made the July 11, 2000 restatement it 1

was the largest restatement of corporate income in United

States history.

The Rite Aid problems naturally triggered public

investigations. Thus, the Securities & Exchange Commission

commenced a civil probe into Rite Aid’s accounting practices

and the Federal Bureau of Investigation, in conjunction with

the United States Attorney’s Office for the Middle District of

Pennsylvania, launched a criminal investigation. FBI agent

George Delaney and Assistant United States Attorney

(“AUSA”) Kim Douglas Daniel led the criminal investigation.

As the criminal investigation progressed, Brown

retained counsel and notified the government of this

representation. On February 12, 2001, AUSA Daniel

contacted Brown’s counsel and arranged a meeting between

government representatives and Brown for April 4, 2001. On

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March 28, 2001, AUSA Daniel faxed Brown’s counsel an

agenda letter setting forth the topics to be discussed at the

April 4 meeting. Brown, however, became unwilling to meet

with the government, a change in position that led Brown’s

counsel on or about March 30, 2001, to inform AUSA Daniel

that Brown would not consent to participate in the interview.

During the time that the government was

communicating with Brown, it also was in contact with

Timothy Noonan, Rite Aid’s President and Chief Operating

Officer during Grass’s tenure as CEO. Noonan informed the

government that, in response to Brown’s request, he had

agreed to meet Brown on March 13, 2001. Noonan agreed to

act as a confidential informant for the government and

surreptitiously record his conversation with Brown. Agent

Delaney instructed Noonan to steer the conversation towards

the topics listed in the agenda letter that AUSA Daniel had

sent to Brown’s counsel. Noonan attached a hidden

microphone to his body, met with Brown as planned, and

recorded their conversation. Pursuant to Noonan’s request,

Brown and Noonan met again on March 30, 2001, and

Noonan again recorded their conversation. In order to focus

the conversation on topics related to the government’s

investigation, Noonan brought a letter addressed to Noonan’s

counsel signed by AUSA Daniel to the March 30 meeting.

The government created the letter solely for use at that

meeting and it purported to set forth a discussion agenda for

an upcoming meeting between Noonan and the government.

This fictitious letter listed topics of discussion similar to those

in the letter that AUSA Daniel had sent to Brown on March

28, 2001. 

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7

Noonan also recorded conversations with Brown on

April 1, 2001, April 27, 2001, and May 21, 2001, as well as

his conversation with Grass and Brown on May 2, 2001.

Furthermore, an FBI surveillance team made video tape

recordings of each of Noonan’s conversations with Brown

during this period except for that on April 27.

On June 21, 2002, a grand jury in the Middle District

of Pennsylvania returned a multi-count indictment against

Grass, Brown, Franklyn Bergonzi, and Eric Sorkin arising

from the Rite Aid investigation. Bergonzi and Sorkin,

respectively, had served as Rite Aid’s Chief Financial Officer

and Vice President in Charge of Pharma Purchasing. The

indictment charged Brown with numerous counts of

conspiracy, fraud, making false statements to the SEC,

obstruction of justice, and witness tampering. 

Brown was convicted at an ensuing jury trial of

conspiracy to commit accounting fraud, filing false statements

with the SEC, conspiracy to obstruct justice, obstruction of

grand jury proceedings, obstruction of government agency

proceedings, and witness tampering. In particular, the jury

found that Brown had conspired to inflate Rite Aid’s reported

earnings for fiscal year 1999, had conspired to create

backdated severance letters awarding Brown and other

executives millions of dollars in compensation, and had

interfered with the government’s investigation of Rite Aid in

a variety of ways. The District Court sentenced Brown to ten

years in prison followed by two years of supervised release.

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Grass, Bergonzi, and Sorkin were not tried as they all pleaded

2

guilty to certain charges pursuant to agreements with the

government.

8

Brown has surrendered to the Bureau of Prisons and presently

is incarcerated.2

III. JURISDICTION

The District Court had jurisdiction over this federal

criminal action pursuant to 18 U.S.C. § 3231, and we have

jurisdiction to review the judgment of conviction and sentence

pursuant to 28 U.S.C. § 1291 and 18 U.S.C. § 3742. 

IV. DISCUSSION

On this appeal, Brown puts forward a panoply of

reasons that he claims require us either to dismiss his

indictment, grant him a new trial, or remand his case to the

District Court for resentencing though, interestingly, he does

not suggest that the evidence at the trial was insufficient to

support his convictions. Specifically, Brown maintains that

the District Court: (1) abused its discretion when it denied his

Rule 33 motion based on newly discovered evidence; (2)

improperly denied his pre-trial suppression motion; (3)

abused its discretion and committed plain error by interfering

in the plea negotiation process; and (4) abused its sentencing

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The District Court painstakingly set forth the technical details 3

with respect to the recordings’ authenticity in its comprehensive

opinion denying Brown’s renewed motion for a new trial.

See United States v. Brown, No. 1:02-CR-00146-2, 2008 WL

510126 (M.D. Pa. Feb. 22, 2008). We do not restate those

details except as necessary for our determination of whether the

District Court’s denial of Brown’s motion challenging the

recordings constituted an abuse of discretion.

9

discretion in a variety of ways. We address each contention

in turn.

A. The Rule 33 Motion 

Brown first argues that we should dismiss his

indictment or grant him a new trial because forensic evidence

suggests that the government tampered with the audio and

video tape recordings of Brown’s conversations with Noonan

prior to disclosing those recordings to Brown and presenting

the altered recordings as evidence at his trial.3

1. The Receipt of the Noonan Tapes

The government on July 24, 2002, shortly after

Brown’s arraignment, sent the attorneys representing Brown

and his co-defendants audio tapes containing copies of the six

surreptitiously recorded Noonan conversations (March 13,

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We at times will refer to the audio tapes of the Noonan 4

conversations the government sent Brown on July 24, 2002, as

the “July 2002 copies.”

The letter from the FBI states that the March 13 conversation 5

could not be transcribed, but Brown and the government agree

that a transcript of the March 13 conversation was disclosed, and

that the missing transcript was that of the March 30

conversation.

10

2001; March 30, 2001; April 1, 2001; April 27, 2001; May 2,

2001; and May 21, 2001), transcripts of each conversation 4

except that of March 30, and a composite video tape

consisting of footage taken by an FBI surveillance team of

four of the six Noonan conversations (March 30, 2001; April

1, 2001; May 2, 2001; and May 21, 2001). In the letter

enclosing these recordings, the government stated that the

poor audio quality of the March 30 tape prevented the

production of a complete transcript at that time. Then on 5

July 30, 2002, the government sent the defense lawyers an

FBI surveillance videotape of the March 13 conversation, and

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In order to produce this rough transcript, the government sent 6

the tape of the March 30 conversation to an FBI laboratory to be

enhanced. As we discuss below, the government claims it did

not attempt to produce a more thorough transcript of the March

30 conversation because of the extremely poor audio quality of

the tape and because the government believed the subject matter

of the March 30 conversation to be redundant of the other

recorded conversations.

11

a 28-page rough transcript of the March 30 conversation.6

According to Brown, after he reviewed these tapes and

transcripts, he “immediately recognized that there were

radical differences between what [he] observed and heard on

the tapes and what [he] recollected of the conversations.”

App. at 888. Though Brown considered retaining an expert to

examine the tapes, his trial counsel initially discouraged him

from taking that action, but on or about August 31, 2002,

Brown nevertheless brought three of the six tapes to Bruce E.

Koenig, an audio-forensic expert the FBI formerly employed,

for examination. After Koenig listened to the tapes for

several hours, he advised Brown that they were less than ideal

samples because they were not originals or first-generation

copies, but that Brown should not “waste [his] money”

pursuing further examination of the tapes because, according

to Koenig, the FBI never tampers with tape-recorded

evidence. App. at 889.

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2. Allen’s Preliminary Report

Although Brown claims that he remained convinced

that there were substantial irregularities on the tapes, so far as

we are aware he did not make any further investigation into

the circumstances leading to their preparation to determine

whether his belief was correct until approximately one year

later when in August 2003 he retained forensic expert Stuart

Allen to examine the audio tapes of the March 13 and March

30 conversations. After conducting a digital examination of

the tapes, Allen provided Brown with a “Preliminary Forensic

Examination Report,” dated September 17, 2003, containing

the following preliminary conclusions with respect to the

tapes of both conversations:

Preliminary digital findings indicate that the

audiocassettes examined in our laboratory were

copies made from a digital original and contain

anomalies of unknown origin. . . .

The preliminary forensic examination of this

subject tape identified several anomalies of

unknown origin, however the results are

inconclusive, since the examination was

performed on a copy as previously stated and

not the original. The anomalies observed may

have been the result of a faulty duplication

process or some other unknown process yet to

be identified.

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As we explain below the trial had been scheduled to start in 7

June 2003 but was delayed because of circumstances

surrounding an attempt to reach a plea agreement.

13

Therefore it is the professional opinion of this

examiner that the original recording device and

the original media associated with the subject

recording, be produced and delivered for nondestructive forensic examination at this

laboratory.

App. at 1165, 1167, 1168 (emphasis in original). Shortly after

receiving Allen’s report and three days prior to the date that

jury selection was set to begin in Brown’s trial, one of his

lawyers sent an email message to AUSA Daniel inquiring

whether it would be possible for Allen to examine the original

tapes of the March 13 and March 30 conversations at Allen’s

place of business. AUSA Daniel responded the next business 7

day, September 22, 2003, stating “you gotta be kidding,” and

asking Brown’s attorney to call him to discuss the request.

App. at 1169. We are uncertain of AUSA Daniel’s reason for

taking that approach to Brown’s request, though it may have

reflected exasperation at the timing of the request. 

3. The Evidence at Trial

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The District Court empaneled Brown’s jury on

September 25, 2003, and the presentation of evidence began

the next day. The trial transcript indicates that early in the

proceedings Brown’s defense counsel stated to the Court that

Brown had “some nagging concerns about the technical

aspects of the tapes,” but acknowledged that the defense had

raised these concerns with the government, and that “[t]he

government has been completely cooperative in terms of

providing [the defense] with what [it] need[s].” App. at 463.

Defense counsel then agreed with the government that the

Court should admit the tapes provisionally subject to Brown’s

right to object to technical aspects of the tapes if an expert

examination of them later provided a ground for the objection.

During the government’s case-in-chief, it displayed to

the jury a presentation consisting of a video display of

portions of the recorded Noonan conversations, synchronized

with the matching audio recordings and a rolling transcript of

the conversation projected across the screen (the “jury

presentation”). The government had provided digital copies

of the jury presentation to defense counsel several months in

advance of trial. At the close of the prosecution’s case, the

government moved to admit into evidence the audio and

video tapes of the Noonan conversations on which the

government based its jury presentation. In so doing, the

government noted that it had not shown the actual tapes to the

jury but, instead, had shown it a computerized presentation

generated from the tapes. 

According to the government, it did not rely on or

move to admit a tape of the March 30 conversation because

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We at times will refer to the tapes of the March 13, March 30, 8

and May 21 conversations that the government made available

to Owen at the FBI’s Harrisburg office as the “Harrisburg

tapes.” We sometimes will refer to the copies of the Harrisburg

tapes that Owen downloaded onto his laptop as the “Owen

laptop copies.”

15

the recording from that date was largely inaudible, and, in any

event, the subject of the March 30 conversation was

duplicative of the other recorded Noonan conversations. The

defense stated the government had given it an opportunity to

review the tapes along with the digital presentation, and the

defense agreed that they were accurate representations of the

events recorded. The defense did not voice any objection to

the tapes being admitted into evidence, but again reserved the

right to object later to technical aspects of the tapes. The

District Court admitted the tapes into evidence. 

4. Owen’s Report

During the trial, the FBI transported the original reelto-reel analog tapes of the March 13, March 30, and May 21

conversations to its office in Harrisburg, Pennsylvania, where

an FBI agent met with defense expert Tom Owen and allowed

Owen to inspect, photograph, and download copies of the

tapes onto Owen’s laptop. After conducting a physical and 8

electronic inspection of the downloaded copies that consisted

of “[c]ritical listening, tape enhancement, spectrum analysis,

[and] speed correction,” Owen issued a final report dated

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Pursuant to the All Writs Act, “[t]he Supreme Court and all 9

courts established by Act of Congress may issue all writs

necessary or appropriate in aid of their respective jurisdictions

and agreeable to the usages and principles of law.” 28 U.S.C. §

16

October 12, 2003, concluding that the recordings of the three

conversations he examined were “original and authentic

within the conversation, but contain some very questionable

recording procedures and anomalies.” App. at 1204, 1206.

Owen’s report indicated that both the March 13 and March 30

tapes had been started and stopped a number of times before

the actual recording began, but that the internal integrity of

the recorded conversations was intact. The report also noted

that the conversation recorded on the March 30 tape was at

times unintelligible. 

5. The Motion under the All-Writs Act 

 Brown did not call an audio forensic expert as a

witness during his trial to challenge the authenticity of the

Noonan tapes, and he did not object to the tapes being

admitted into evidence. Nevertheless, following his

conviction on October 17, 2003, Brown, aided by a new team

of attorneys, continued to examine the tapes of the Noonan

conversations for signs of hidden edits or inaccuracies. On

July 7, 2004, Brown filed a motion under the All Writs Act,

28 U.S.C. § 1651, to place under seal and compel the

examination and review of the original audio and video

recordings of the Noonan conversations. In his motion, 9

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1651. 

It is unclear from the record whether Allen’s and Owen’s 10

reports submitted in support of Brown’s motion are those of

September 17, 2003, and October 12, 2003, respectively. But

we are not concerned with this uncertainty because Brown is not

appealing from the District Court’s denial of his motion under

the All Writs Act.

17

Brown argued that further examination, made subsequently to

the trial, of the Owen laptop copies had “uncovered

significant anomalies (suspicious acoustic events) which call

into question the authenticity and originality of these tapes.”

App. at 636. In support of his motion, Brown attached reports

from Allen and Owen and an affidavit from James Reames, a

former FBI forensic technician. 

10

In a Memorandum and Order dated August 16, 2004,

the District Court denied Brown’s motion because (1) the

Court found the timing of the motion suspect, (2) Brown did

not make any suggestion that there were anomalies in the jury

presentation, which was the only evidence actually considered

by the jury, and (3) Brown’s experts contended that only the

third-generation copies—i.e., copies of the Owen laptop

copies—contained anomalies in the conversation portion of

the tapes. Because Owen’s initial examination of the Owen

laptop copies revealed anomalies only at the beginning of the

tapes before the conversations began, the Court concluded

that anomalies found in the conversation portions of later

generation copies were a product of duplication error. 

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The audio tapes of the Noonan conversations originally were 11

recorded onto an analog recording device known as a Nagra

SNST recorder. Federal law prohibits the possession of such

recorders by private persons. See 18 U.S.C. § 2512(1)(b); App.

at 1565.

Although we refer to the May 31, 2005 motion as the initial 12

motion for a new trial, Brown had filed an earlier motion for a

judgment of acquittal pursuant to Fed. R. Crim. P. 29 and a new

trial pursuant to Fed. R. Crim. P. 33 on more conventional

grounds than those we discuss here. The District Court denied

that motion on May 6, 2004, and Brown does not appeal from

that order. Therefore we do not discuss that motion further.

18

6. The Initial Motion for a New Trial

Even though he had been convicted and the Court had

denied his motion under the All Writs Act, Brown continued

to employ Owen, Allen, and Reames to test the Owen laptop

copies and the jury presentation. On May 31, 2005, Brown

filed a motion pursuant to Rule 33 of the Federal Rules of

Criminal Procedure for a new trial based on newly discovered

evidence, or in the alternative, for (1) an order directing the

government to produce to the defense for testing the original

Nagra recorder and original Nagra SNST reel-to-reel audio

tapes, and the original VHS camcorder and VHS video tapes 11

of conversations between Brown and Noonan, and (2) an

evidentiary hearing. In support of this motion, Brown 12

averred that his defense experts, “meticulously” had tested the

Owen laptop copies and the jury presentation, and had

concluded after “painstaking, time-consuming work” that the

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19

Harrisburg tapes proffered to Owen at the FBI offices were

not original recordings, and that anomalies associated with

computerized editing found in the Owen laptop copies and the

jury presentation suggested that the government had edited

both the Harrisburg tapes and the jury presentation.

Consequently, Brown believed that the Harrisburg tapes and

the jury presentation could not be deemed true and accurate

records of the events that took place on the dates in question. 

The government and the defense subsequently entered

into an agreement, memorialized in an August 8, 2005 letter

from defense counsel to AUSA Daniel, in which it agreed to

provide the defense with the original audio and video tapes of

the March 13, March 30, and May 21 Noonan conversations,

a new set of FBI created first-generation duplicates of these

recordings, the original Nagra SNST recorder on which the

audio recordings of the conversations initially were made, and

an additional working Nagra recorder. The letter agreement

expressed the government’s belief that the process of

production should take no more than two weeks. On August

10, 2005, after being notified of the agreement, the District

Court denied Brown’s motion as moot, noting it also would

be premature to rule on the motion at that time because

Brown still was determining what, if any, newly discovered

evidence existed. 

7. The Renewed Motion for a New Trial

The government on November 9, 2005, released to the

defense the original tapes of the March 13, March 30, and

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We at times will refer to the original tapes that the government 13

released to the defense on November 9, 2005, as the “November

2005 tapes” and the first-generation digital copies released on

the same date as the “FBI Archive copies.”

20

May 21 conversations, as well as a set of first-generation

digital copies of those tapes that the FBI made. After 13

extensive examination, testing, and comparison by Brown’s

experts of the July 2002 copies, the Owen laptop copies, the

November 2005 tapes, the FBI archive copies, the original

Nagra SNST recorder, and the video tapes used to create the

jury presentation, Brown presented his experts’ findings in

support of a renewed Rule 33 motion for a new trial that he

filed with the District Court on September 28, 2006. 

According to Brown, these findings “confirmed what

[he] suspected all along: the government intentionally

withheld exculpatory material from the defense and

misrepresented the authenticity of the tapes furnished to the

defense and incorporated in the Jury Presentation.” App. at

1231. Specifically, Brown contended that the government

took the original analog recordings of the Noonan

conversations, recorded them onto a digital format, deleted

material exculpatory to Brown, and recorded the edited

versions of the conversations from the digital format back

onto the original analog reels. The government then

presented modified analog tapes to the defense as originals

(the Harrisburg tapes and the November 2005 tapes) or as the

source of the generational copies that were presented to the

defense (the July 2002 tapes and the FBI Archive copies) and

used to create the jury presentation. Additionally, Brown

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The Supreme Court held in Brady that “the suppression by the 14

prosecution of evidence favorable to an accused upon request

violates due process where the evidence is material either to

guilt or to punishment, irrespective of the good faith or bad faith

of the prosecution.” 373 U.S. at 87, 83 S.Ct. at 1196-97. “The

Supreme Court has outlined a three-part test to determine if a

Brady violation has occurred: ‘The evidence at issue must be

favorable to the accused, either because it is exculpatory, or

because it is impeaching; that evidence must have been

suppressed by the State, either willfully or inadvertently; and

prejudice must have ensued.’” Lewis v. Horn, 581 F.3d 92, 108

(3d Cir. 2009) (quoting Banks v. Dretke, 540 U.S. 668, 691, 124

S.Ct. 1256, 1272 (2004)). 

18 U.S.C. § 3500(b) provides that “[a]fter a witness called by 15

the United States has testified on direct examination, the court

shall, on motion of the defendant, order the United States to

provide any statement . . . of the witness in the possession of the

United States which relates to the subject matter as to which the

witness has testified. . . .”

21

averred in his motion that the November 2005 tape of the

March 30 conversation “is far more audible” than previously

disclosed recordings of the conversation, and that the newly

audible portions of that conversation contained exculpatory

material. App. at 1231-32. Brown alleged that the

government violated his rights under Brady v. Maryland, 373

U.S. 83, 83 S.Ct. 1194 (1963), and the Jencks Act, 18 14

U.S.C. § 3500, by failing to disclose a full transcript or an 15

audible version of the March 30 conversation. 

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22

In support of his renewed motion, Brown submitted

new reports and affidavits from Reames, Allen, Owen, and a

forensic video expert, Grant Fredericks. These submissions

included two new transcriptions of the March 30

conversation, one prepared by Reames (the “Reames

transcript”) and another prepared by Allen (the “Allen

transcript”). Brown claimed these transcripts revealed

exculpatory material not disclosed previously. 

Specifically, Brown argued that both transcripts

revealed statements contradicting Noonan’s trial testimony

about a computer the SEC subpoenaed that allegedly had been

used to create backdated severance letters. At trial, Noonan

testified that Brown had stated in the March 30 conversation

that the SEC “will never get [the] computer now. It is in the

Atlantic.” App. at 1249. In the Reames and Allen transcripts,

however, this statement does not appear and it is Noonan who

first mentions the Atlantic Ocean. Reames transcribed the

relevant exchange as follows:

FRANKLIN BROWN: There are [. .] [. .]

working on it.

TIMOTHY NOONAN: I n t h e A t l a n t i c

Ocean, huh?

FRANKLIN BROWN: That was just an 

 expression on his 

 part . .

TIMOTHY NOONAN: I understand that.

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23

App. at 1426. The conversation is transcribed similarly in the

Allen transcript:

TIMOTHY: OK Gottcha. (inaudible)

FRANKLIN: Wo’ What (inaudible)

TIMOTHY: It’s in the Atlantic Ocean!!! ---

 (pause).

FRANKLIN: That was just an expression on 

 his part. That’s the equivalent 

 .. (inaudible)

TIMOTHY: I understand that

App. at 2633. Brown also claimed that the Reames transcript

contained Brown’s previously undisclosed statements

encouraging Noonan to be forthright in his discussions with

the government. On appeal, however, Brown appears to

concede that these statements were urging Noonan to be

candid with Noonan’s defense attorney, and at least were not

urging Noonan directly to be candid with the government

investigators. See Appellant’s Op. Br. at 61.

In Allen’s reports and affidavits submitted with

Brown’s motion, Allen explained his testing methodology and

noted a number of anomalies on the different recordings.

Allen’s findings left him unable to “eliminate the possibility”

that the November 2005 tapes were not recorded

Case: 05-3879 Document: 003110031449 Page: 23 Date Filed: 02/23/2010
24

contemporaneously with the events taking place in them, or

that the recordings originated from a digital source instead of

the analog recording device that the government purportedly

used. App. at 1272-73; App. at 2571. Additionally, Allen

concluded “with a high degree of certainty” that the July 2002

copies and the Owen laptop copies differed considerably from

the November 2005 tapes and the FBI archive copies, such

that it would be “reasonable” to conclude that the November

2005 and FBI archive copies were, in fact, different

recordings than the earlier disclosed copies. App. at 1273-74;

App. at 2572-73. 

Owen’s materials contained similar findings. He

concluded that the November 2005 tapes showed evidence of

previous digitization inconsistent with an analog recording.

Owen also was “not able to eliminate the possibility” that the

Owen laptop copies and FBI archive copies originated from

different sources. App. at 2675. Allen and Owen also

concluded that the video tapes that the government provided

of the Noonan conversations contained evidence of editing.

Fredericks, in his affidavit, concluded that the video

tapes the government provided to the defense were accurate

originals, but that they had been converted into digital files

and edited in order to create the jury presentation in such a

manner that the resultant product was an “inaccurate and

visually impaired reproduction” of the original video tapes.

App. at 1468. Fredericks also concluded that the “[a]udio to

video alignment of the DVD Jury Presentation was

misaligned to such a degree that when the mouths of the men

were moving, what was being heard by the jury, was not what

they were actually saying at that exact time.” App. at 1468.

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25

The District Court held an evidentiary hearing on

Brown’s renewed Rule 33 motion on May 14 and 15, 2007.

Over these two days, the District Court heard testimony from

defense experts Owen and Allen, the government’s FBI

expert David Snyder, as well as from other persons including

FBI case agents who had worked on the Rite Aid

investigation. The government then sought an adjournment to

seek discovery of the defense experts’ test results and the

District Court adjourned the hearing to allow additional

discovery. The hearing resumed on August 13 and 14, 2007,

and at that time the District Court again heard testimony from

witnesses including Owen, Allen, Snyder, and Paul Ginsberg,

a forensic audio consultant, who presented expert testimony

on behalf of the government. Over the course of the four days

of hearings, the District Court heard testimony from a total of

nine witnesses and accepted 27 exhibits into evidence. 

On February 22, 2008, the District Court entered an

order denying Brown’s renewed motion for a new trial. In its

comprehensive accompanying Memorandum, the Court

detailed the history of the various recordings made of the

Noonan conversations as well as the evidence the numerous

experts proffered, and concluded that the tapes the

government provided were authentic, and that the government

did not submit false evidence or perjured testimony to the

jury. The Court also found that the Reames and Allen

transcripts of the March 30 conversation did not contain

exculpatory or impeaching information, and it therefore held

that the government had not committed a Brady or Jencks Act

violation in delaying the delivery of an audible recording or

transcript of that conversation. The Court also concluded that

a new trial was unwarranted because Brown’s supposed “new

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26

evidence”—a transcript of the previously inaudible March 30

statements—was not in fact newly discovered. See United

States v. Brown, No. 1:02-CR-00146-2, 2008 WL 510126, at

*28 (M.D. Pa. Feb. 22, 2008).

8. The District Court Did Not Abuse its

Discretion

We will reverse a denial of a Rule 33 motion for a new

trial based on newly discovered evidence only if we conclude

that the district court abused its discretion in denying the

motion. United States v. Saada, 212 F.3d 210, 215 (3d Cir.

2000). We have explained that “a district court abuses its

discretion if its decision rests upon a clearly erroneous finding

of fact, an errant conclusion of law or an improper application

of law to fact.” Montgomery v. Pinchak, 294 F.3d 492, 498

(3d Cir. 2002) (internal quotation marks and citation omitted).

Federal Rule of Criminal Procedure 33 provides that “[u]pon

the defendant’s motion, the court may vacate any judgment

and grant a new trial if the interest of justice so requires.”

Our precedents instruct that five requirements must be met

before a district court may grant a new trial on the basis of

newly discovered evidence: 

(a) the evidence must be in fact, newly

discovered, i.e., discovered since the

trial; 

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27

(b) facts must be alleged from which the

court may infer diligence on the part of

the movant; 

(c) the evidence relied on, must not be

merely cumulative or impeaching;

(d) it must be material to the issues involved; and

(e) it must be such, and of such nature, as

that, on a new trial, the newly discovered

evidence would probably produce an

acquittal. 

United States. v. Cimera, 459 F.3d 452, 458 (3d Cir. 2006)

(quoting United States v. Iannelli, 528 F.2d 1290, 1292 (3d

Cir. 1976)). A movant seeking a new trial on the basis of

newly discovered evidence bears a “heavy burden” in proving

each of these requirements. Id. (citing Saada, 212 F.3d at

216).

We find no basis to conclude that the District Court

abused its discretion in denying Brown’s Rule 33 motion.

Even if we assume for the sake of argument that Brown

through his epic efforts after the trial satisfied the first four

Iannelli factors listed above, in light of the Court’s properly

found facts, Brown failed to prove that his newly discovered

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Actually it is questionable whether the evidence Brown 16

presents in his attempt to show that the tapes had been altered is

“newly discovered,” and whether he was diligent in seeking it

before the trial. If there had been alterations in the tapes as

Brown believes, he should have known of them when he first

heard the tapes and, indeed, he contends that he suspected from

the outset that the tapes were inaccurate. Thus, he could have

and should have developed his expert testimony before the trial.

Instead, based on the advice of counsel, he did not take steps

prior to trial to demonstrate that the tapes contained alterations

of the sort allegedly discovered following his conviction.

28

evidence probably would result in his acquittal at a new

trial.16

After considering voluminous amounts of briefing,

expert reports, and live testimony, the District Court made a

factual finding that the various tapes of the Noonan

conversations had not been “edited, altered, digitized, or

manipulated by the government at any time,” and that,

accordingly, “[t]hey [were] authentic recordings.” Brown,

2008 WL 510126, at *25. Brown claims that this finding of

authenticity was clearly erroneous because (1) the Court

based the finding solely on Ginsburg’s expert testimony and

the Court should not have allowed Ginsburg to testify, (2)

even considering Ginsburg’s testimony, the evidence did not

support the finding of authenticity, and (3) evidence of breaks

in the tapes’ chain-of-custody further undermined the finding

of authenticity.

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29

Brown argues with respect to the first point that the

government’s request for an adjournment of the evidentiary

hearing and subsequent use of Ginsburg as an expert was part

of “a subterfuge seemingly designed to avoid having an FBI

agent testify under oath that the tapes had not been altered,”

and that the District Court abused its discretion by allowing

the government to engage in this subterfuge. Appellant’s Op.

Br. at 40. We are perplexed by this argument because, as the

District Court found, there was testimony from FBI agents

that the tapes had not been altered. In any event, the

government claims that it sought the adjournment to obtain

the test results from Owen and Allen in order to crossexamine them effectively, and that it based its decision to use

Ginsburg on a perceived need to counter Brown’s evolving

allegations of evidence tampering with testimony from an

independent expert, as opposed to testimony from a

government employee (i.e., Snyder). Ultimately, the Court

granted the adjournment to allow additional discovery,

required Snyder to testify, and allowed Ginsburg to testify.

The Court went to great lengths to consider all the evidence

relevant to the issues before it, and we cannot conclude that

the Court abused its discretion in making its determination to

allow Ginsburg’s testimony over Brown’s objection, in

addition to that of Snyder, Owen, Allen, and the other

witnesses.

We also are unable to find any error in the District

Court’s conclusion that the tapes were authentic. As the

Court noted, Brown’s experts’ detailed findings led them only

to the lukewarm conclusions that it would be “reasonable” to

believe that earlier disclosed recordings of the Noonan

conversations came from a different source than the

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We see no reason with respect to the chain-of-custody issues 17

Brown raises to second-guess the District Court’s determination

that the testimony of the government’s witnesses on this point

was credible.

30

November 2005 tapes, and that the possibility the recordings

were inauthentic could not be eliminated. While a different

fact-finder might have reached a conclusion contrary to the

one the Court reached, the record by no means compels a

conclusion that the tapes were inauthentic. Given the history

of the proceedings and the conflicting expert testimony, both

between the government and defense experts and among the

defense experts themselves, we cannot conclude that the

Court clearly erred by finding the challenged tapes were

authentic.17

It also is important to consider that, as the District

Court explained, it had evidence “from the FBI agents, that

they did not themselves, or cause another person to, edit, alter,

or modify the original tapes except to attempt enhancement”

and that this testimony “was credible.” Brown, 2008 WL

510126, at *25. Certainly in the face of somewhat conflicting

expert testimony this lay evidence was important and the

Court could rely on it.

Even were we to reject the District Court’s finding and

hold the tapes inauthentic, Brown does not demonstrate, or

even seriously contend, that any of the conversations

allegedly removed by the government from the Noonan tapes

actually was exculpatory, much less that their admission as

trial evidence probably would have resulted in his acquittal.

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31

Moreover, even if we presumed that the government would

not expend the effort to tamper with evidence in the manner

ascribed to it by Brown to remove statements that were not

exculpatory, Brown still bears the “heavy burden” of

demonstrating that his newly discovered evidence probably

would result in his acquittal at a new trial, and he simply did

not meet this burden. Assuming Brown’s argument to be that

if we make a finding that the tapes were inauthentic the

consequence would be the suppression of all of the video and

audio recordings of the Noonan conversations, it does not

follow a fortiori that a new trial without the recordings

probably would result in Brown’s acquittal, or that the

original trial would have had a different outcome if the video

and audio recordings had been excluded from evidence at that

trial. As the District Court noted, Noonan testified at trial

about his conversations with Brown, and “was cross

examined thoroughly, on all topics that might impugn his

credibility.” Brown, 2008 WL 510126, at *28. The Court

described the evidence at trial of Brown’s guilt to be

“concrete, credible, and more than sufficient to sustain his

conviction.” Id. On appeal, Brown fails to challenge this

observation and plausibly explain how the absence of the

Noonan tapes would have rendered the evidence at his

original trial or would render the evidence at a new trial less

than sufficient to sustain his conviction. 

We agree with the District Court’s conclusion with

respect to the allegedly exculpatory statements in the Reames

and Allen transcripts of the March 30 conversation that the

statements were, at best, neutral as to Brown’s guilt or

innocence and not exculpatory. The statements regarding the

Atlantic Ocean do not contradict substantially Noonan’s

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Frequently our review of criminal cases makes it clear that the 18

government’s resources devoted to the trial exceeded those of

the defendant. This case does not seem to be within that

category.

32

testimony on which Brown’s counsel thoroughly crossexamined him at the trial. Moreover, we disagree with

Brown’s argument that because attorneys have ethical

obligations not to suborn perjury, see Nix v. Whiteside, 475

U.S. 157, 171-74, 106 S.Ct. 988, 996-97 (1986), Brown’s

statement urging Noonan to be candid with Noonan’s lawyer

is akin to a statement urging Noonan to confess wrongdoing

at Rite Aid to the government. Therefore, even if the

government could have produced a more audible version of

the March 30 conversation, it is unlikely that the use of this

version would have led to Brown’s acquittal at his trial or

would lead to his acquittal at a new trial. For the same

reason, we agree with the District Court that the government

did not commit a Brady violation and that any violation of the

Jencks Act amounted to harmless error. 

Finally, Brown’s evidence with respect to the video

tapes and the jury presentation suggests only that the

government could have created a more polished presentation

if it had the resources of Brown and his experts at its

disposal. At trial, Brown conceded that the video tapes and 18

jury presentation were accurate representations of the events

recorded, and, on appeal, Brown does not offer any evidence

which could give rise to an inference that exculpatory

material on the video tapes somehow was hidden from him.

Accordingly, we will affirm the order denying Brown’s

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33

motion for a new trial entered by the District Court on August

10, 2005, and the order denying Brown’s renewed motion for

a new trial or for dismissal of the indictment entered by the

District Court on February 22, 2008. 

B. The Pre-Trial Suppression Motion

Prior to the trial, Grass and Brown filed a motion to

suppress the tapes of the Noonan conversations, arguing that

the government had obtained them in violation of the 1998

“McDade Amendment,” the provisions of which we describe

below, by reason of AUSA Daniel, a government lawyer,

having violated the Pennsylvania Rules of Professional

Conduct by using Noonan as his proxy to elicit information

from Grass and Brown about the subject matter of the

government’s investigation prior to their indictment but at a

time when Daniel knew that they were represented by counsel

with respect to that investigation. After holding a suppression

hearing, the District Court issued an opinion on January 13,

2003, denying Grass’s and Brown’s motion. The Court held

that AUSA Daniel had not committed an ethical violation by

using Noonan as a confidential informant, and that, even if he

had done so, suppression was not an appropriate remedy for

the violation. See United States v. Grass, 239 F. Supp. 2d

535, 549 (M.D. Pa. 2003). We review a district court’s denial

of a suppression motion for clear error as to the underlying

facts, but exercise plenary review with respect to legal

findings made in light of the district court’s properly found

facts. United States v. Coles, 437 F.3d 361, 365 (3d Cir.

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An August 23, 2004 order amended Rule 4.2 to substitute 19

“person” for “party” and “to do so by law or a court order” for

“by law to do so.” Pa. R. of Prof’l Conduct 4.2, historical notes.

34

2006) (citing United States v. Givan, 320 F.3d 452, 458 (3d

Cir. 2003)). 

At the time of the alleged violations, Rule 4.2 of the

Pennsylvania Rules of Professional Conduct, known as the

“no-contact rule,” provided:

In representing a client, a lawyer shall not

communicate about the subject of the

representation with a party the lawyer knows to

be represented by another lawyer in the matter,

unless the lawyer has the consent of the other

lawyer or is authorized by law to do so.

Pa. R. Prof’l Conduct 4.2. Rule 8.4(a) provides that an 19

attorney has engaged in misconduct if he violates the

Pennsylvania Rules of Professional Conduct through the acts

of another. Pa. R. of Prof’l Conduct 8.4. Pursuant to the

McDade Amendment an attorney that the federal government

employs is subject to the ethical rules in each state where such

attorney engages in that attorney’s duties to the same extent

and in the same manner as any other attorney in that state. 28

U.S.C. § 530B(a). Accordingly, AUSA Daniel, a federal

prosecutor in this Pennsylvania-based prosecution, was bound

by Rule 4.2 at all times relevant to this appeal, and he

ethically was not permitted to violate Rule 4.2 through the

acts of a surrogate.

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The New Jersey rule provided at the time of Balter that “[i]n 20

representing a client, a lawyer shall not communicate about the

subject of the representation with a party the lawyer knows to be

represented by another lawyer in the matter, unless authorized

by law to do so.” Balter, 91 F.3d at 435 (quoting N.J. R. of

Prof’l Conduct 4.2).

35

The government does not dispute seriously that at the

time the Noonan conversations were recorded, Brown was a

“party” within the meaning of Rule 4.2 as that rule is

interpreted in Pennsylvania, or that Brown was represented by

counsel and AUSA Daniel was aware of that representation.

The question before us then is whether AUSA Daniel was

“authorized by law” to use a confidential informant to

communicate with a represented suspect in the course of a

pre-indictment investigation. Relying largely on our decision

in United States v. Balter, 91 F.3d 427 (3d Cir. 1996), the

District Court answered this question in the affirmative. 

In Balter, we found that a federal prosecutor did not

violate New Jersey’s no-contact rule when he used a 20

confidential informant to contact a represented person in the

course of a pre-indictment investigation. We reached that

conclusion because the rule did not apply to a criminal

suspect prior to the commencement of adversarial

proceedings against the suspect, and that even if the rule did

apply, “pre-indictment investigation by prosecutors is

precisely the type of contact exempted from the Rule as

‘authorized by law.’” See id. at 435-36. After noting that

New Jersey case law supported this latter point, we stated:

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36

Prohibiting prosecutors from investigating an

unindicted suspect who has retained counsel

would serve only to insulate certain classes of

suspects from ordinary pre-indictment

investigation. Furthermore, such a rule would

significantly hamper legitimate law enforcement

operations by making it very difficult to

investigate certain individuals.

Id. at 436. We then observed that decisions of every other

court of appeals to have considered a similar case have

supported this conclusion except for a decision of the Court of

Appeals for the Second Circuit. Id. (citing United States v.

Powe, 9 F.3d 68 (9th Cir. 1993); United States v. Ryans, 903

F.2d 731 (10th Cir. 1990); United States v. Sutton, 801 F.2d

1346 (D.C. Cir. 1986); United States v. Dobbs, 711 F.2d 84

(8th Cir. 1983); United States v. Weiss, 599 F.2d 730 (5th Cir.

1979)). The Court of Appeals for the Second Circuit

concluded in United States v. Hammad, 858 F.2d 834, 839-40

(2d Cir. 1988), that a federal prosecutor overstepped the

boundaries of legitimate pre-indictment investigation by

preparing a false grand jury subpoena to aid a confidential

informant elicit admissions from a represented suspect.

Brown contends that Balter is distinguishable from this

case because it dealt with the New Jersey rather than

Pennsylvania ethical rules, was decided prior to the enactment

of the McDade Amendment, and the government’s conduct in

the present case is far more egregious than the government’s

conduct in Balter. We find these distinctions unavailing. To

begin, New Jersey’s no-contact rule is virtually identical to

Pennsylvania’s, and both states have derived their version of

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We note that New Jersey’s rule has been interpreted to apply 21

only after the initiation of formal adversarial proceedings,

whereas Pennsylvania’s rule is not so limited. See Balter, 91

F.3d at 436 (citing State v. CIBA-GEIGY Corp., 589 A.2d 180,

183 (N.J. Super. Ct. App. Div. 1991)). This distinction in the

overall coverage of the two rules, however, has no bearing on

the scope of the “authorized by law” exception found in both

rules, although in this case the alleged violation took place prior

to the initiation of adversarial proceedings. It is worth noting,

however, that in New Jersey there would be that additional

reason to hold that there had not been an ethical violation in the

circumstances of this case.

37

the rule from the American Bar Association’s Model Rules of

Professional Conduct. See Balter, 91 F.3d at 435 n.4. We 21

recognize that Brown correctly points out that we supported

our holding in Balter that pre-indictment investigations by

prosecutors were “authorized by law” with a citation to a

decision from an intermediate New Jersey state appellate

court for which there is no analogous Pennsylvania decision.

See id. at 436 (citing State v. Porter, 510 A.2d 49, 54 (N.J.

Super. Ct. App. Div. 1986)). But our conclusion in Balter did

not rest solely on the New Jersey state court decision and we

do not believe the absence of an analogous Pennsylvania

decision renders any less compelling our observations

regarding the negative consequences that would follow from

an outcome contrary to that we reach here.

We recognize that Congress passed the McDade

Amendment in part to combat perceived abuses by federal

prosecutors and require them to comply with state no-contact

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At least Brown has not cited to us any Pennsylvania case so 22

holding and our research has not revealed that there is any such

case.

38

rules. See generally Note, Federal Prosecutors, State Ethics

Regulations, and the McDade Amendment, 113 Harvard L.

Rev. 2080 (2000). But Congress did not enlarge on the type

of conduct that state rules forbid. Our inquiry therefore

would be no different if AUSA Daniel had been a state

prosecutor and we were entertaining an appeal from a state

court conviction. Nevertheless Brown argues that the

McDade Amendment “supersedes cases such as Balter by

making a particular state’s rules, rather than general principles

of ethics, applicable to the conduct of the federal prosecutor,”

and that, accordingly, AUSA Daniel ran afoul of Rule 4.2

because of the absence of a Pennsylvania statute or court

decision expressly authorizing the conduct in which he

engaged. Appellant’s Op. Br. at 69. But we reject his

argument because we do not believe the McDade Amendment

prohibits federal prosecutors in Pennsylvania from using a

well-established investigatory technique simply because the

Pennsylvania courts have not considered whether such

conduct is permissible. After all, the Pennsylvania courts

have not held that such conduct is impermissible.22

Finally, though we acknowledge that the government’s

conduct in investigating Brown gives us pause, we do not

regard it as so egregious that it falls outside the realm of

acceptable pre-indictment investigation. Although the

government created a fictitious letter addressed to Noonan’s

counsel that Noonan showed to Brown in order to guide the

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We also agree with the District Court’s conclusion that even if 23

there had been an ethical violation, suppression would not have

been the appropriate remedy. See, e.g., Hammad, 858 F.2d at

841-42 (although prosecutor had violated New York’s nocontact rule by using “sham” grand jury subpoena to elicit

admissions from represented suspect, the district court abused

its discretion by ordering suppression as result of violation).

39

topics of the March 30 conversation, Brown voluntarily

agreed to the March 30 meeting with Noonan, the

government’s letter did not invoke the authority of the District

Court or contain any forged signatures, the letter was not

addressed to Brown, and the letter in no way purported to

compel any action or inaction on Brown’s behalf.

Accordingly, we agree with the District Court that AUSA

Daniel did not violate Rules 4.2 and 8.4(a) of the

Pennsylvania Rules of Professional Conduct. Inasmuch as

Brown, or for that matter any other government agent, did not

commit an ethical violation in this case with respect to the

fictitious letter or the March 30 meeting, the District Court

properly denied Brown’s pre-trial suppression motion. 

23

C. The Plea Agreement 

Brown next seeks a vacatur of his sentence and a

remand for resentencing in accordance with a proposed plea

agreement that he reached with the government because of the

manner in which the District Court dealt with the agreement.

Specifically, Brown argues that the District Court violated

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Sorkin pled guilty on June 26, 2003. 24

40

Rule 11 of the Federal Rules of Criminal Procedure by

participating in the plea discussions between Brown and the

government, and that the Court abused its discretion by

improperly rejecting the plea agreement. If the Court had

accepted the plea agreement the sentence that it could have

imposed would have been shorter than the sentence it did

impose following Brown’s conviction at trial.

1. The Terms of the Agreement

By June 17, 2003, Grass and Bergonzi had entered into

plea agreements with the government and agreed to cooperate

in its investigation. Pursuant to the agreements, Bergonzi

pled guilty to one count of conspiracy, and Grass pled guilty

to two counts of conspiracy. On June 24, 2003, several days 24

before Brown’s trial was set to begin before Judge Sylvia H.

Rambo, Brown also entered into a plea agreement with the

government. Under this agreement, Brown agreed to plead

guilty to one count of conspiracy to obstruct justice, an

offense carrying a maximum term of imprisonment of five

years. The government agreed that upon entry of Brown’s

guilty plea, it would move to dismiss all of the remaining

counts in the indictment against him. 

The plea agreement further provided that if Brown

adequately could demonstrate his acceptance of

responsibility, the government would move at sentencing for

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41

a 3-level reduction in Brown’s offense level under the United

States Sentencing Commission Guidelines (the “Sentencing

Guidelines” or “Guidelines”) because Brown had “assisted

authorities in the investigation and prosecution of his own

misconduct by timely notifying authorities of his intention to

enter a plea of guilty, thereby permitting the government to

avoid preparing for trial and permitting the government and

the court to allocate its resources efficiently.” App. at 439.

The agreement also took into account Brown’s pledge to

cooperate with the government in its ongoing investigation

and prosecution of the Rite Aid matter, and raised the

possibility that if the government believed Brown had

rendered it “substantial assistance,” the government would

recommend, pursuant to Section 5K1.1 of the Sentencing

Guidelines, that the District Court impose a sentence on

Brown below the applicable Guidelines range.

2. Judge Rambo’s Letter

After receiving a courtesy copy of Brown’s plea

agreement on June 25, Judge Rambo sent a letter to AUSA

Daniel, with a carbon copy to Brown’s trial counsel, stating

the following:

As you are aware, I have decided to reject the

proposed plea agreement which has been

forwarded to my chambers. However, I will

accept Mr. Brown’s plea of guilty to Count 33

[for conspiracy to obstruct justice]. Attached to

this letter, you will find a statement of reasons

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42

for rejecting the agreement. I am planning on

reading this statement in open court tomorrow.

If you should have any questions, please contact

me. 

App. at 25. In the attached statement of reasons, Judge

Rambo recited that the plea agreement was unacceptably

lenient given the diverse range of serious crimes with which

Brown was charged. Judge Rambo further found

“particularly nauseating” the portion of the agreement

indicating that Brown’s timely acceptance of responsibility

had allowed the government and the Court to allocate its

resources efficiently. Judge Rambo understandably took that

view of the acceptance of responsibility provision of the plea

agreement because Brown did not agree to plead guilty until

almost the eve of trial, i.e., between two and eight years after

the conduct at issue took place. After noting that the

government’s proposal to drop all the other charges against

Brown “essentially caps his prison sentence at 60 months,”

Judge Rambo stated that the proposed plea agreement “does

nothing to eviscerate” the public’s “perception that white

collar defendants are given preferential treatment in our

system of justice.” App. at 29-30. Judge Rambo concluded

her statement of reasons for rejecting the plea agreement by

stating: “I must distance myself and the judiciary from this

agreement. I will not accept this plea agreement.” App. at

30.

3. The Chambers Meeting

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43

The following morning on June 26, 2003, Judge

Rambo held a meeting in her chambers to discuss Brown’s

plea situation with Brown’s trial defense team and

representatives from the United States Attorney’s Office,

including United States Attorney Thomas Marino. Obviously

Judge Rambo’s letter with the statement of reasons for

rejecting the plea agreement had jolted the attorneys in the

case. Brown’s lead trial counsel, Reid Weingarten, began the

meeting by explaining that as a result of Judge Rambo’s

letter, Brown was unwilling to plead guilty because he no

longer believed he had a “fair shot” to argue for leniency in

sentencing from the District Court. Id. at 453. Weingarten

requested a continuance of the trial “to catch our breath” and

attempt to “salvage th[e] deal.” App. at 452. The government

joined the defense’s request for a continuance. 

Over the course of the meeting, Marino made three

statements that Brown characterizes as references to an ex

parte conversation about Brown’s case that the United States

Attorney’s Office had with Judge Rambo June 25, 2003. In

one reference, Marino stated, “As an aside, I had a concern

when the Court raised an issue — what you said to us

yesterday as to was I giving away the farm? Because there is

nothing I want more in this case than the Court to say that this

is a fair and just agreement.” Id. at 459. Marino then asked

whether a “preliminary guideline check” that Judge Rambo

stated the Court had made with the Probation Office had

resulted in a Sentencing Guidelines calculation different from

that the government had provided in the plea agreement. Id.

at 458-59. After Judge Rambo indicated that the Probation

Office indeed had come up with a different calculation,

Marino responded, “That is what I think the problem is. I am

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44

hoping that the facts we discussed with the Court yesterday

and facts that we may be able to bring to the Court’s attention

in the future once we get — if we do get these continuances

will resolve that matter.” Id. at 460. Brown’s attorney did

not raise any objection to the Court proceedings at the

meeting or at any time prior to this appeal on the ground that

there had been ex parte or improper contacts between the

government and the Court.

Following Marino’s statements, Judge Rambo

expressed her perception that, based on the facts known to

her, Brown and Grass seemed equally to blame for the

wrongdoing at Rite Aid, and that she did not understand why

the government was treating Brown more favorably than

Grass. Judge Rambo continued, “Now if there are facts that

you have that you are going to present that wipe away that

perception, then fine. I don’t have that.” Id. at 460.

Despite Judge Rambo’s reservations, the transcript of

the chambers conference suggests that during the period

between when she sent the parties her letter and statement of

reasons and the following day’s conference, she had become

more willing to consider accepting Brown’s plea agreement.

On one occasion, Judge Rambo stated she had “no problem

accepting the plea” and that even if she did not accept the

agreement, Brown would not receive a sentence heavier than

he otherwise would receive, so long as the District Court’s

Guidelines calculation comported with that arrived at by the

government. Id. at 458. On the second occasion, Judge

Rambo stated she had “no problem with the plea,” but that she

“wanted to see what the guidelines were and then look at the

plea in conjunction with the presentence report” as she had

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45

done with Grass. Id. at 461. Additionally, Judge Rambo

never read aloud her statement of reasons for rejecting the

plea agreement even though her June 25 letter indicated her

intent to do so. Nevertheless, Weingarten concluded the

chambers meeting by reiterating that, in light of Judge

Rambo’s June 25 letter and statement of reasons, Brown was

unwilling at that point to enter a guilty plea. 

Several hours after the June 26 meeting, Judge Rambo

entered an order granting Brown until July 14, 2003, to notify

the Court of his plea decision. Of course, inasmuch as Brown

did not plead guilty, the case ultimately proceeded to trial.

The record does not reflect that there were any further plea

negotiations between Brown and the government following

the chambers conference and does not reveal how Brown

communicated his decision not to enter a guilty plea to the

Court. 

4. Application of Rule 11(c)(1)

Brown first contends that the District Court violated

Rule 11(c)(1)’s prohibition on judicial participation in plea

negotiations. That rule allows an attorney for the government

to discuss and reach a plea agreement with the defendant’s

attorney, but provides that “[t]he court must not participate in

these discussions.” Fed. R. Crim. P. 11(c)(1). When a

defendant makes a Rule 11 objection for the first time on

appeal, a court of appeals reviews the alleged violation on a

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If there is a timely objection in the district court to an alleged 25

Rule 11 violation, a court of appeals exercises plenary review in

determining whether there had been a violation. United States

v. Ebel, 299 F.3d 187, 190-91 (3d Cir. 2002). Nevertheless, a

court of appeals still will consider the record as a whole to

determine whether the error affected a defendant’s substantial

rights or was merely harmless. See id. at 191; Fed. R. Crim. P.

11(h). We note that the use of the plain error standard is not

without its critics. See United States v. Baker, 489 F.3d 366,

371-72 (D.C. Cir. 2007). Here, however, our result would be

the same regardless of whether we exercise plain error or

plenary review.

46

plain error basis. To succeed under this standard of review, 25

a defendant must demonstrate that (1) the asserted violation of

Rule 11(c)(1) was error, (2) the error was plain, and (3) the

error affected the defendant’s substantial rights; if these three

conditions are met, then a court may exercise its discretion to

notice the forfeited error, but only if (4) “the error seriously

affect[s] the fairness, integrity, or public reputation of judicial

proceedings.” See United States v. Bradley, 455 F.3d 453,

461 (4th Cir. 2006) (quoting United States v. Olano, 507 U.S.

725, 731-32, 113 S.Ct. 1770, 1776 (1993)).

Brown claims the District Court violated the “core

values” of Rule 11 by holding ex parte discussions with the

government on the day that the Court received the plea

agreement, and that the Court violated the letter of Rule

11(c)(1) by agreeing at the chambers conference to the

government’s proposal to provide further factual information

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47

which might lead the Court to later accept the agreement.

Appellant’s Op. Br. at 85.

According to the government, the record does not

establish that there were any ex parte discussions between the

government and the District Court, and that even if there were

such discussions, Brown did not raise a contemporaneous

objection when he became aware of them, and he cannot

establish now that as a result of those discussions there was

plain error. The government also contends that the Court did

not involve itself improperly in the plea discussions, noting

that the Court’s alleged involvement arose after Brown had

entered into the plea agreement with the government.

The courts have viewed Rule 11’s ban on judicial

participation in plea agreements as serving several purposes:

First, it diminishes the possibility of judicial

coercion of a guilty plea, regardless whether the

coercion would actually result in an involuntary

guilty plea. Second, the judge’s involvement in

the negotiations is apt to diminish the judge’s

impartiality. By encouraging a particular

agreement, the judge may feel personally

involved, and thus, resent the defendant’s

rejection of his advice. Third, the judge’s

participation creates a misleading impression of

his role in the proceedings. The judge’s role

seems more like an advocate for the agreement

than a neutral arbiter if he joins in the

negotiations.

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We take the government’s point to be that, since an ex parte 26

communication clearly would have been improper, Marino’s

comments could not mean that such communications took place

because no one would be inclined to admit to that kind of ethical

breach. We do not take the government’s suggestion to be that

if it had engaged in improper conduct the wise approach for it

thereafter would have been to keep quiet about what had

happened. We trust that if the government came to recognize

that it had acted improperly in a prosecution, it would reveal the

facts and then let the matter proceed to an appropriate outcome.

48

United States v. Baker, 489 F.3d 366, 370-71 (D.C. Cir. 2007)

(quoting United States v. Cannady, 283 F.3d 641, 644-45 (4th

Cir. 2002)). We consider Brown’s Rule 11(c)(1) challenge in

light of these purposes.

The record, in particular Judge Rambo’s June 25, 2003

letter to AUSA Daniel and Marino’s statements at the

chambers conference the next day, permits an inference that

the government communicated with the District Court on June

25, 2003—the day it forwarded the plea agreement to the

Court and the day before the chambers conference—although

the context of these communications if they did occur is not

immediately apparent. The government attempts to deny that

there were such communications, arguing that the statements

in the record are susceptible to multiple interpretations and

that it would have been “extremely unlikely” and “foolish”

for Marino to mention such conversations in the presence of

defense counsel. See Appellee’s Br. at 78-79. Assuming 26

that there were ex parte communications, however, Brown’s

experienced counsel apparently did not view them as

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Brown’s attorneys on this appeal were not representing him in 27

June 2003.

49

problematic, or at least decided not to object to them if he did

view them as improper, as he did not raise any objection

either upon receiving Judge Rambo’s June 25 letter or upon

hearing Marino’s statements at the chambers conference on

June 26 or at any time thereafter. 

27

After our study of the record of what happened after

Judge Rambo sent her June 25 letter, we are satisfied that

Judge Rambo did not violate Rule 11(c)(1) as neither the

alleged ex parte communications nor Judge Rambo’s

statements at the chambers conference took place until after

Brown and the government had finalized the plea agreement.

See Baker, 489 F.3d at 371 (there is “no room for doubt” that

the “purpose and meaning” of Rule 11(c)(1)’s injunction on

judicial involvement in plea negotiations “are that the

sentencing judge should take no part whatever in any

discussion or communication regarding the sentence to be

imposed prior to . . . submission to him of a plea agreement”)

(quoting United States v. Werker, 535 F.2d 198, 201 (2d Cir.

1976)). Here, by June 25, 2003, the plea negotiations were

over and there was no risk that judicial pressure was going to

influence the outcome of those negotiations. Moreover, it is

unclear how any ex parte conversations would have harmed

Brown given the government’s attempt persuade the Court to

accept the plea bargain to which Brown had agreed.

Rule 11(c)(1) seeks to avoid a situation in which a

court places pressure on a defendant to plead guilty

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50

involuntarily. In this case, Judge Rambo’s position led to the

collapse of the plea agreement and had the opposite effect.

Thus, though Brown may have lost the benefit of his bargain

with the government because of Judge Rambo’s position, he

did not lose his right to be tried by an impartial jury of his

peers and he surely was not coerced to plead guilty. In fact,

quite to the contrary, Judge Rambo’s actions caused him to

adhere to his previously entered plea of not guilty even

though he had been prepared to change his plea to guilty.

Accordingly, even if we agreed with Brown that Judge

Rambo violated the letter of Rule 11(c)(1) by discussing the

plea negotiations at the chambers conference and agreeing to

allow the government to provide additional factual

information in support of a plea agreement, such error was

harmless given that the parties did not reach a subsequent plea

agreement. See Fed. R. Crim. P. 11(h).

5. Abuse of Discretion Standard

Brown also contends that the District Court improperly

rejected the plea agreement by distributing the letter to AUSA

Daniel with the attached “statement of reasons” to counsel on

June 25, 2003. On this point we first observe that the record

by no means is clear that the Court ever rejected the plea

agreement. The reality may be that Brown simply abandoned

the agreement when he became aware of the Court’s view of

it. However, assuming that the letter and statement of reasons

constituted a rejection of the plea agreement, we review the

District Court’s rejection of Brown’s plea agreement for an

abuse of discretion. See United States v. Hecht, 638 F.2d

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51

651, 658 (3d Cir. 1981) (Weis, J., dissenting) (citing

Santobello v. New York, 404 U.S. 257, 262, 92 S.Ct. 495, 498

(1971)); see also Government of the Virgin Islands v. Walker,

261 F.3d 370, 375 (3d Cir. 2001) (“A sentencing court can, of

course, reject the results of a plea negotiation if it concludes

that the resulting agreement is not in the best interest of

justice.”). 

On the question of whether the District Court rejected

the plea agreement it is clear that, on its face, Judge Rambo’s

June 25 letter and her accompanying “statement of reasons”

would lead most reasonable readers to believe that the

rejection of Brown’s plea agreement was a foregone

conclusion. By the next day, however, Judge Rambo clearly

indicated a willingness to consider the plea agreement at the

chambers conference. In this regard the record indicates that

when Judge Rambo originally read that the plea agreement

suggested that Brown’s timely acceptance of responsibility

had permitted the Court to allocate its resources efficiently,

she reacted negatively, but by the next day she had softened

her views. 

Yet we need not determine if Judge Rambo actually

rejected the plea agreement for even if we construe the

“statement of reasons” as a formal rejection, she did not abuse

her discretion in rejecting the agreement. Brown argues that

Judge Rambo in issuing her “statement of reasons” abused her

discretion because she displayed a predisposition to find

Brown guilty and impose a substantial penalty, and because

she improperly based her decision to reject the plea agreement

on the circumstance that she and her staff had spent

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Brown also makes the novel assertion that once the District 28

Court acknowledged the government’s prerogative to dismiss

certain counts in the indictment against Brown—i.e., the counts

other than Count 33 for conspiracy to obstruct justice—the plea

agreement became a Rule 11(c)(1)(B) agreement that the Court

was compelled to accept. See Fed. R. Crim. P. 11(c)(3)(A)

(court has discretion to reject agreements under Rule

11(c)(1)(A) and (c)(1)(C)); In re Richards, 213 F.3d 773, 784-89

(3d Cir. 2000) (narrowly construing Rule 48’s requirement that

“leave of court” be obtained before a prosecution may be

dismissed). With the exception of Richards, which did not

involve plea agreements, Brown does not cite authority for this

position. In any event, Brown’s argument fails at the outset

because, although the Court in its June 25 letter to AUSA Daniel

did state it would accept Brown’s guilty plea to Count 33, it did

so while expressing its intention to reject all other aspects of the

agreement. Moreover, even though the Court at the next day’s

chambers conference did seem willing to accept the entire plea

agreement, it never acknowledged that the government

possessed a unilateral right to dismiss the remaining counts in

the indictment because the plea agreement did not grant the

government any such right. In the agreement, the government

agreed to move to dismiss the remaining counts upon entry of

Brown’s guilty plea to the conspiracy count. Dismissal still

hinged on the Court’s granting of the government’s motion,

which it never could do because the government never filed the

motion. Hence, the agreement remained subject to Rule

11(c)(1)(A) and thus the Court had discretion to accept, reject,

or defer a decision on the agreement until after its review of the

52

substantial time and effort preparing for Brown’s trial. We 28

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presentence report. See Fed. R. Crim. P. 11(c)(3)(A).

53

disagree. The grand jury charged Brown with an array of

felonies which allegedly resulted in very serious financial

harm to the Rite Aid Corporation and its shareholders, as well

as obstruction of justice and witness tampering. The

indictment charged Brown and Grass equally, and alleged

they both were more culpable than Bergonzi and Sorkin. Yet

the government in Judge Rambo’s view inexplicably offered

Brown a significantly more lenient plea agreement than it did

Grass. Although Judge Rambo spoke harshly in describing

why she felt Brown’s plea agreement did not serve the

interests of justice, if she actually rejected the plea agreement

she did not abuse her discretion by so doing.

Brown draws our attention to Judge Rambo’s

statement that she found “particularly nauseating” the portion

of the plea agreement indicating that the government would

move for a reduction in Brown’s offense level because

Brown’s timely acceptance of responsibility had allowed the

government and the District Court to allocate their resources

efficiently. Judge Rambo noted that Brown’s decision to

enter a plea agreement on almost the eve of trial had by no

means prevented the Court and its staff from expending

considerable effort preparing for trial. Brown reads these

statements to mean that Judge Rambo rejected the plea

agreement because of the time the Court had spent on trial

preparation. Though we can understand why a district court

would be frustrated if, after it expended great efforts to

prepare for a trial, the parties in effect settled the case, as the

court might wonder why they could not have reached their

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We are not suggesting that there never could be a situation in 29

which a court appropriately could not reject a plea agreement on

the basis of its untimeliness.

54

agreement earlier, we agree that ordinarily it would be

improper for a court to reject a plea agreement solely because

of its annoyance attributable to the parties’ delay in reaching

an agreement. The record demonstrates, however, that 29

Judge Rambo’s comments regarding timing referred

specifically to the proposed Sentencing Guidelines 3-level

reduction for Brown’s timely acceptance of responsibility,

and not to the acceptability of the plea agreement generally.

Judge Rambo’s hostility to this proposed reduction, though

expressed harshly, was certainly understandable given the

circumstances of the case of which she was well aware. In

fact, we, too, cannot understand how the parties seriously can

have recited in the plea agreement that Brown’s acceptance of

responsibility was timely. After considering all of Brown’s

arguments, we find no abuse of discretion in the District

Court’s reaction to Brown’s plea agreement.

D. The Sentence

The District Court sentenced Brown, who was 76 years

old, to a ten-year term of imprisonment. Brown argues that

he is entitled to a remand for resentencing because this

sentence, which the Court imposed after the Supreme Court’s

decision in Blakely v. Washington, 542 U.S. 296, 124 S.Ct.

2531 (2004), but before its decision in United States v.

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55

Booker, 543 U.S. 220, 125 S.Ct. 738, was unreasonable in a

variety of ways. Specifically, Brown contends that the

District Court abused its sentencing discretion by (1) failing

to consider properly the factors listed at 18 U.S.C § 3553(a)

or articulate a statement of reasons for the sentence pursuant

to 18 U.S.C. § 3553(c), (2) improperly calculating the loss for

which he was responsible under Section 2B1.1 of the

Sentencing Guidelines, and (3) wrongly denying his motion

for a downward departure based on his medical condition.

1. The Sentencing Proceedings

Following Brown’s conviction, the Probation Office

submitted a presentence report (“PSR”) to the District Court.

The PSR calculated Brown’s base offense level at 6, but then

included a 16-level enhancement based on the amount of

financial loss for which Brown was responsible, calculated to

be $38,113,383; a 2-level enhancement because the offense

involved more than minimal planning; a 4-level enhancement

because Brown was an organizer and leader of the conspiracy

to obstruct justice; a 2-level enhancement for abuse of a

position of trust; and a 2-level enhancement for obstruction of

justice. Accordingly, the PSR calculated Brown’s total

offense level at 32, with a corresponding sentencing range of

121-151 months. 

Brown filed objections to the PSR on the grounds that

the loss calculation was incorrect and that the enhancement

for an aggravated role in the offenses was improper. Brown

also filed two motions for downward departures based on his

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The court in Croxford held that application of the Guidelines 29

would be unconstitutional pursuant to Blakely, and thus it

approached the sentencing determination “as the courts handled

sentencing before the Guidelines-by making a full examination

of the relevant evidence and imposing an appropriate sentence

within the statutory range set by Congress.” 324 F. Supp. 2d at

1246. The Croxford court nevertheless determined what the

sentencing range would be under the Guidelines and looked to

that range for guidance. Id. at 1248-49.

56

extraordinary civic and charitable contributions and on his age

and physical condition. After holding two days of evidentiary

hearings, the District Court entered a Memorandum Opinion

discussing sentencing issues on August 17, 2004. See United

States v. Brown, 338 F. Supp. 2d 552 (M.D. Pa. 2004). 

In that opinion, the District Court concluded that, in

light of the Supreme Court’s decision in Blakely, the

mandatory application of the Sentencing Guidelines to

Brown’s case was unconstitutional. The Court nevertheless

used the Sentencing Guidelines as a “measuring point” for its

analysis, but stated that it would base its ultimate sentencing

determination on an “indeterminate scheme in accordance

with the principles set forth” by a decision of the United

States District Court for the District of Utah in United States

v. Croxford, 324 F. Supp. 2d 1230 (D. Utah 2004). Brown, 29

338 F. Supp. 2d at 555-56. The Court stated it would not

issue an “alternative Guidelines sentence,” but it nevertheless

addressed Brown’s challenges to the PSR, overruling his

objections and denying his motions for downward departure.

Id. at 556-62. With respect to the loss calculation, the District

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57

Court accepted over Brown’s objection the PSR’s use of an

“average selling price methodology” for determining the

amount of shareholder loss that resulted from Brown’s fraud,

noting that other courts had sanctioned this method of loss

calculation in recent accounting fraud decisions. Id. at 557

(citing United States v. Snyder, 291 F.3d 1291 (11th Cir.

2002); United States v. Bakhit, 218 F. Supp. 2d 1232 (C.D.

Cal. 2002); United States v. Grabske, 260 F. Supp. 2d 866

(N.D. Cal. 2002)). Brown urged reliance on his expert, who

conducted “an event study, which measures the out-of-pocket

damages to investors by calculating the difference between

the fraudulent mis-pricing in the price paid for the security

and the inflation in the sales price,” and calculated that there

was no shareholder loss attributable to Brown’s fraud.

Brown, 338 F. Supp. 2d at 558.

As described by the District Court, the average selling

price method “attempts to estimate the effect inflated earnings

had upon the value of the company’s shares by comparing the

average selling price of the stock during the lifetime of the

fraud to the average selling price after the fraud was disclosed

or corrected via a restatement.” Id. at 557 (citing Bakhit, 218

F. Supp. 2d at 1241). “Once an average loss per share has

been established, it is multiplied by the number of harmed

shares to estimate the total shareholder loss.” Id. (citing

Bakhit, 218 F. Supp. 2d at 1242). To calculate the loss

attributable to Brown’s misconduct, the Court’s methodology

looked at six-, seven-, and eight-day windows before and after

Rite Aid’s October 18, 1999 announcement that it intended to

restate its income. The average losses per share over these

three time periods then were multiplied by the total number of

“innocent shares” (the total number of shares minus those

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It is unclear why the District Court focused solely on averages 30

of arbitrary multi-day windows surrounding the October 18,

1999 announcement, given that Rite Aid’s stock price was in a

period of continuous decline both before and after this date, and

that the effect of Brown’s fraud on Rite Aid’s stock price began

at least as early as June 1, 1999, when Rite Aid reported its

income for fiscal year 1999 to the SEC. Under a typical average

selling price approach to loss calculation, sometimes referred to

as a “rescissory” or “modified rescissory” approach, a court will

calculate the average selling price of the security over the entire

life of the fraud (the “average fraud price”) and the average

selling price during a period—often several weeks or

more—following the fraud’s revelation (the “average post-fraud

price”) then subtract the average post-fraud price from the

average fraud price. The resulting loss per share then is

multiplied by the number of affected shares to derive the total

loss figure. See Bakhit, 218 F. Supp. 2d at 1240-42; Kevin P.

McCormick, Untangling the Capricious Effects of Market Loss

in Securities Fraud Sentencing, 82 Tul. L. Rev. 1145, 1165-66

(2008); Samuel W. Buell, Reforming Punishment of Financial

Reporting Fraud, 28 Cardozo L. Rev. 1611, 1635-36 (2007).

58

held by the Rite Aid defendants), reduced by the percentage

of the total fraud for which Brown was responsible. The

separate figures for the six-, seven-, and eight-day windows

then were averaged to arrive at the final loss figure.30

Although the District Court accepted the PSR’s

methodology, it did disagree with the PSR’s loss calculation

in two respects, as it found that the amount of loss attributable

to Brown’s fraud should be discounted by a dividend Rite Aid

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Brown also objected to the PSR’s loss calculation including 31

amounts from rebate and settlement agreements that Rite Aid

fraudulently had listed as income in itsfinancial disclosures, and

to the amount of loss attributable to the backdated severance

letters. Additionally, Brown objected to the 4-level offense

level enhancement based on his aggravated role. The District

Court overruled all of these objections.

59

paid to its shareholders on October 14, 1999, and that the

government overestimated the number of shares harmed by

Brown’s fraud. After accounting for these adjustments, the

Court determined that the amount of loss for which Brown

was responsible was $23,170,452. The Court noted that this

revision of the loss amount would not affect Brown’s

sentencing range under the Sentencing Guidelines, as his

overall offense level remained at 32.31

The District Court denied Brown’s motion for a

downward departure based on his medical condition because

it concluded that Brown “did not meet his burden of

establishing that the Bureau of Prisons could not provide

appropriate medical care for a person of [Brown]’s age and

physical condition.” Brown, 338 F. Supp. 2d at 562. The

Court likewise denied Brown’s motion for a downward

departure based on his charitable and civic contributions,

finding that although Brown was generous in these regards,

his contributions were not extraordinary given his financial

means. 

The District Court imposed Brown’s sentence at a

hearing on October 14, 2004. At the hearing, the Court

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60

rejected additional sentencing objections that Brown raised

with respect to his vulnerability to abuse and his medical

condition. The Court noted with respect to Brown’s medical

condition that many defendants have similar problems and, in

its experience, the federal prison system was very capable of

dealing with defendants in Brown’s situation. The Court also

addressed Brown’s charitable deeds, and, although it already

had rejected his motion for a downward departure predicated

on those deeds, the Court stated that Brown’s “good deeds are

very much acknowledge[d] . . . and I believe that is addressed

in the sentence that will be given.” App. at 94-95. The Court

then sentenced Brown to a term of imprisonment of 120

months, one month below the minium Guidelines range.

2. Post-Booker Sentencing Requirements

In considering a challenge to a district court’s

sentencing decision, we engage in two levels of review. First,

we must ensure that the district court did not commit a

significant procedural error in arriving at its decision, “such as

failing to calculate (or improperly calculating) the Guidelines

range, treating the Guidelines as mandatory, failing to

consider the § 3553(a) factors, selecting a sentence based on

clearly erroneous facts, or failing to adequately explain the

chosen sentence-including an explanation for any deviation

from the Guidelines range.” United States v. Wise, 515 F.3d

207, 217 (3d Cir. 2008) (quoting Gall v. United States, 552

U.S. 38, 51, 128 S.Ct. 586, 597 (2007)). We review alleged

factual errors for clear error but exercise plenary review over

“purely legal” errors, such as a misinterpretation of the

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61

Guidelines or the governing case law. United States v.

Arrelucea-Zamudio, 581 F.3d 142, 145 (3d Cir. 2009).

Second, if we determine that there has not been a significant

procedural error, we review the ultimate sentence imposed to

determine if it was substantively reasonable under an abuse of

discretion standard. Wise, 515 F.3d at 218 (citing Gall, 552

U.S. at 51, 128 S.Ct. at 597). 

As we have indicated, the District Court imposed

Brown’s sentence after the Supreme Court’s decision in

Blakely v. Washington, 542 U.S. 296, 124 S.Ct. 2531, but

prior to its decision in United States v. Booker, 543 U.S. 220,

125 S.Ct 738. In similar circumstances in other cases, we

have remanded the case for resentencing unless the district

court followed the procedures required after Booker. See

United States v. Corley, 500 F.3d 210, 221 (3d Cir. 2007),

vacated on other grounds, U.S. , 129 S.Ct. 1558 (2009).

We have held that these procedures require that in setting a

sentence a district court must (1) calculate the applicable

Guidelines range, (2) formally rule on any departure motions,

and (3) exercise its post-Booker discretion by considering the

factors in 18 U.S.C. § 3553(a) in setting the sentence it

imposes regardless whether it varies from the sentence

calculated under the Guidelines. United States. v. Olhovsky,

562 F.3d 530, 546-47 (3d Cir. 2009). 

3. Unreasonableness of the Sentence

Following Blakely, a district court must consider the

factors that 18 U.S.C. § 3553(a) enumerates before sentencing

Case: 05-3879 Document: 003110031449 Page: 61 Date Filed: 02/23/2010
62

a defendant. Those factors include the nature and

circumstances of the offense, the history of the defendant, and

the need to avoid unwarranted sentence disparities among

defendants with similar records who have been found guilty

of similar conduct. Additionally, the court must impose a

sentence sufficient, but not greater than necessary, to reflect

the seriousness of the offense, promote respect for the law,

provide just punishment for the offense, afford adequate

deterrence to criminal conduct, protect the public from the

defendant’s further crimes, and provide the defendant with

needed treatment, training, or care. 

“While sentencing courts need not discuss each of the

§ 3553(a) factors if the record makes clear the court took the

factors into account in sentencing, where . . . the record

strongly suggests that some of the statutorily prescribed

sentencing factors were ignored, we cannot conclude that the

resulting sentence was reasonable.” Olhovsky, 562 F.3d at

547 (internal quotation marks and citation omitted); see

also United States v. Tomko, 562 F.3d 558, 567 (3d Cir.

2009) (en banc) (“In the wake of Booker, it is essential . . .

that district courts provide courts of appeals with an

explanation sufficient for [them] to see that the particular

circumstances of the case have been given meaningful

consideration within the parameters of § 3553(a).”) (internal

quotation marks and citation omitted). Here the District

Court, based on the Supreme Court’s reasoning in Blakely,

correctly determined that the mandatory application of the

Guidelines to Brown’s sentence would be unconstitutional.

The Court, however, being conducted by a judge not a

prophet, was unable precisely to predict the effect that the

Supreme Court’s eventual holding in Booker would have on

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With respect to the District Court’s loss calculation, however, 32

we note that the legal landscape has changed somewhat since

the time of Brown’s sentencing. Notably, two courts of appeals

explicitly now have applied the loss calculation principles that

the Supreme Court has required in civil securities fraud cases,

see Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336, 125

S.Ct. 1627 (2005), in the criminal sentencing context, United

States v. Rutkoske, 506 F.3d 170, 179-80 (2d Cir. 2007); United

States v. Olis, 429 F.3d 540, 546-49 (5th Cir. 2005), another has

opined that such an application would be appropriate, United

States v. Nacchio, 573 F.3d 1062, 1078-79 (10th Cir. 2009), and

a fourth has held that although a sentencing court need not

follow Dura Pharmaceuticals’s loss causation approach, it

nevertheless must determine “how much of the shareholders’

loss was actually caused by [defendant]’s fraud.” United States

v. Berger, 587 F.3d 1038, 1046 (9th Cir. 2009) (emphasis

added).

63

federal sentencing. Lacking this clairvoyance the Court failed

to explain, in the manner now required, how it considered the

factors listed in section 3553(a) in imposing Brown’s

sentence. For this reason, we must remand the case to the

District Court for resentencing. Because we remand for

resentencing on this ground, we express no opinion on

Brown’s remaining sentencing arguments which, of course,

he can advance at his resentencing.32

V. CONCLUSION

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For the reasons we set forth above, we will affirm the

judgment of conviction but will vacate the sentence entered

by the District Court on October 15, 2004, and we will

remand the case for resentencing in accordance with this

opinion. We will affirm the order denying Brown’s motion

for a new trial entered by the District Court on August 10,

2005, and the order denying Brown’s renewed motion for a

new trial or for dismissal of the indictment entered by the

District Court on February 22, 2008. 

Case: 05-3879 Document: 003110031449 Page: 64 Date Filed: 02/23/2010