UNITED STATES COURT OF APPEALS

For the Fifth Circuit

No. 94-20951

UNITED STATES OF AMERICA

Plaintiff-Appellee

VERSUS

KENNETH LEE ADERHOLT

Defendant-Appellant

Appeal from the United States District Court

for the Southern District of Texas

June 28, 1996

Before SMITH, DUHÉ, and DeMOSS, Circuit Judges.

DUHÉ, Circuit Judge:

Appellant, Kenneth Lee Aderholt, was charged with one count of

conspiracy to commit mail fraud and three counts of aiding and

abetting mail fraud in violation of 18 U.S.C. §§ 2, 371 and 1341.

He pled guilty to the conspiracy count and one of th e aiding and

abetting counts. He was sentenced to two consecutive terms of 60

months imprisonment. Aderholt appeals his sentence claiming the

Government ac ted in bad faith in failing to move for a downward

departure for substantial assistance and because his sentence was

calculated using the base offense level for murder. We affirm on

the substantial assistance issue but reverse, vacate and remand on

the use of the offense level for murder.1 Christopher Mylett was tried and convicted on all four counts

of the indictment. His appeal is pending.

2 Aderholt and Christopher Mylett, 1 created a partnership,

Empire Premium Finance Company (Empire). They named Scott Houck,

a bouncer at various Houston topless bars, president. Appellant

and Mylett then insured Houck’s life for $500,000 with an Allstate

“key man” life insurance policy which they obtained with the use of

falsified documents.

Within three weeks, Houck’s body was found in the trunk of his

car at Hobby Airport in Houston, Texas. At Mylett’s urging,

Appellant filed a claim on the insurance policy even though he

believed that Mylett either murdered or orchestrated the murder of

Houck. Aderholt claims he was not involved in the murder and never

believed that Houck’s murder was part of the scheme. Aderholt

persisted in his not guilty plea until the eve of trial.

Aderholt pled guilty to two of the four counts in the

indictment and agreed to cooperate fully with the Government. In

consideration for Aderholt’s plea, the Government agreed to dismiss

the two remaining counts, not oppose a finding of acceptance of

re sponsibility, and not prosecute Aderholt further for offenses

arising from the conduct charged in the indictment. The plea

agreement further states:

The United States reserves its optio n to seek any

departure from the applicable sentencing guidelines,

pursuant to United States Sentencing Guidelines § 5K1.1,

or Rule 35(b) of the Federal Rules Criminal Procedure, if

in the sole discretion of the Uni ted States, it is

determined that such a departure is appropriate.2 The prosecutor prefaced his address by stating that his words

were not i ntended to amend or modify the terms of the written

agreement.

3 The 1993 edition of the United States Sentencing Commission

Guidelines Manual was used this case.

4 Section 5K1.1 states in part:

Upon motion of the government stating that the defendant

has provided substantial assistance in the investigation

of prosecution of another person who has committed an

offense, the court may depart from the guidelines.

3 During the taking of the plea, the prosecutor stated: 2

[T]here is language in the plea agreement to the extent

that should Mr. Aderholt’s cooperation result in

substantial assistance under 5K1.1 of the sentencing

guidelines, that in the so le discretion of the United

State s, the United States may move for a downward

departure based on that cooperation. Again, that is

within the sole discretion of the United States and the

United States will not waive that discretion.

Defendant stated that he agreed to and understood the terms

outlined by the government.

The Government did not move for downward departure. Aderholt

argues that the Government negotia ted the plea agreement in bad

faith because it never intended to file a § 5K1.1 3 motion, and the

Government breached the plea agreement by refusing to file the

motion. Whether the government’s conduct violates a plea agreement

is a question of law. U nited States v. Hernandez

, 17 F.3d 78, 80-

81. (5th Cir. 1994). In determining whether the terms of a plea

agreement have been violated, the court must determine whether the

government’s conduct is consistent with t he parties’ reasonable

understanding of the agreement. Id. at 81.

Under the guideline, 4 the Government is not required to file4

a § 5K1.1 motion but instead is granted discretion to do so. W ade

,

504 U.S. at 185; United State s v. Garcia-Bonilla , 11 F.3d 45, 46

(5th Cir. 1993). While the Government can bargain away its

discretion, it did not do so in this case. S ee Garcia-Bonilla

, 11

F.3d at 4 6-47 (plea agreement with nearly identical language did

not bargain away prosecutorial discretion). If the Government

retains sole discretion to file the motion, its refusal to file is

reviewable only for unconstitutional motives such as the race or

religion of the accused. G arcia-Bonilla

, 11 F.3d at 46-47.

Appellant does not assert that the Government’s refusal was

motivated by unconstitutional considerations.

Appellant argues that he off ered all assistance that he

possibly could and that under the rules of United States v.

Hernandez

, 17 F.3d 78 (5th Cir. 1994) and United States v. Wilder

,

15 F.3d 1292 (5th Cir. 1994), he is entitled to a downward

departure for substan tial assistance. Implicitly, Aderholt asks

this Court to determine whether his actions amounted to substantial

assistance as in Hernandez and Wilder

. We cannot do so in this

case.

In both Hernandez and Wilder

, the Government bargained away a

measure of its discretion when it agreed to move f or a downward

departure if the accused rendered substantial assistance.

Therefore, those panels of this Court were required to evaluate the

Government’s conduct in light of the agreement. Here, the

Government did not bargain away any of its discretion and its

refusal to file a motion for downward departure is subject to the5

more limited review for unconstitutional motivation.

Appellant also argues that the Government’s retention of sole

discretion violates Appellant’s right to due process in two ways.

First, the retention of sole discretion puts the prosecutor’s

actions beyond review by the court. Second, the possibility of a

§ 5K1.1 motion was an inducement for the plea which requires that

Appellant give up constitutional rights and implicates due process.

Defendants have no con stitutional right to a “substantial

assistance” departure. U nited States v. Harrison

, 918 F.2d 30 (5th

Cir. 1990). The refusal to move for downward departure is

reviewable only for unconstitutional motivation when sole

discretion is retained. And, as recognized by this Court in U nited

States v. Watson

, 988 F.2d 544, 552 (5th Cir. 1993), the

implication of the principle of just return for giving up

constitutional rights requires the existence of a plea bargain in

which the Government bargains away its discretion. There can be no

inducement when the Government retains sole discretion.

Appellant’s due process challenge is without merit.

Appellant also challenges the calculation of his sentence. A

sentence based on the Sentencing Guidelines must be upheld unless

the Appellant demonstrates that it was imposed in violation of the

law, was imposed as a re sult of an incorrect application of the

guidelines, or was outside the range of the applicable guidelines

and was unreasonable. 18 U.S.C. § 3742(e). Because Aderholt

asserts a ground of error not raised below, the judgment may be

reversed only upon a finding of p lain error. Fed. R. Crim. P.5 The district court adopted the calculations contained in the

Presentence Investigation Report.

6 52(b); United States v. Olano , 507 U.S. 725 (1993); United States

v. Calverley , 37 F.3d 160 (5th Cir. 1994)(en banc).

To determine Defendant’s base offen se level, the district

court 5 grouped the four counts in the indictment, and pursuant to

§§ 3D1.2 and 3D1.3, purported to choose the offense level for the

most serious offense. The district court chose the offense level

for murder because, relying on § 3D1.2 application note 8, §

1B1.2(d) and § 1B1.2 application note 5, it concluded that murder

was an object of the conspiracy.

Section 3D1.2 application note 8 advises:

A defendant may be co nvicted of conspiring to commit

several substantive offenses . . . In such cases, treat

the conspiracy count as if it were several counts, each

charging conspiracy to commit one of the substantive

offenses. See § 1B1.2(d) and accompanying commentary.

Section 1B1.2(d) states:

A conviction on a count charging a conspiracy to commit

more than one offense sha ll be treated as if the

defendant had been convicted on a separate count of

conspiracy for each offense that the defendant conspired

to commit.

Application note 5 to § 1B1.2 elaborates:

Particular care must be taken in applying subsection (d)

because there are cases in which the verdict or plea does

not establish which offense(s) was the object of the

conspiracy. In such cases, subsection (d) should only be

applied with respect to an object offense alleged in the

conspiracy count if the court, were it sitting as a trier

of fact, would convic t the Defendant of conspiracy to

commit the object offense.

Defendant was ultimately sentenced to the statutory maximum7

sen tences for conspiracy to commit and aiding and abetting mail

fraud because his total offense level exceeded the statutory

maximum sentences for the offenses of co nviction. U.S.S.G. §

5G1.1; 18 U.S.C. §§ 371 and 1341. Had the base offense level for

mail fraud been used, Defendant’s potenti al sentence under the

guidelines would have been less than the statutory maximums.

Defendant argues that conspiracy to commit murder could not be

used to calculate the base offense level because he was not charged

with and did not plead guilty to conspiracy to commit murder. We

agree. Both § 3D1.2 application note 8 and § 1B1.2(d) apply when

a defendant is convicted of conspiring to commit more than one

offense. Aderholt was convicted of conspiring to commit only one

offense, mail fraud. The conspiracy count charges that Defendant

“did knowingly combine, conspire, confederate and agree

. . . to

commit an offense against the United States, specifically, to use

the mail in execution of a scheme to defraud, in violation of Title

18, United States Code, Section 1341.” While the murder is

mentioned in section C of that count entitled “The Manner and Means

of the Conspiracy”, Aderholt was not charged with murder. In fact,

the Government concedes that Appellant could not have been

convicted in federal court for conspiracy to commi t this murder

because this murder is a state offense.

Section 1B1.2 application note 5 also offers no support. It

applies to “cases in which the verdict or plea does not establish

which offense(s) was the object of the conspiracy.” Here, the

indictment clearly charges only conspiracy to commit mail fraud and8

eliminates the need for the sentencing court to determine what

other offenses may be objects of the conspiracy.

The Government argues that conspiracy to commit murder is an

offense eligible for use in sentencing because “offense” includes

relevant conduct. The Guidelines define “offense” as “the offense

of conviction and all relevant conduct under § 1B1.3 (Relevant

Conduct) unless a different meaning is specified or is otherwise

clear from the context.” U.S.S.G. § 1B1.1 Application Note 1(l).

Both § 3D1.2 application note 8 and § 1B1.2(d) refer to the offense

of conviction, not me rely offense as contemplated by the

definition. In these contexts, “offense” does not include relevant

conduct.

Finding that the d istrict court erroneously applied the

Sentencing Gu idelines, we must decide whether the error is plain

and affects substantial rights. C alverley

, 37 F.3d at 162. Plain

means clear or obvious. Olano , 509 U.S. at 734. Affects

s ubstantial rights, in most cases, means prejudicial, that is,

affected the outcome of the district court proceedings. O lano

, 509

U .S. at 734-735. Both requirements are satisfied. The error is

evident from a plain reading of the statute and thus, is obvious.

See United States v. Smith

, 80 F.3d 1188 (7th Cir. 1996).

Defendant was prejudiced by the error because, absent an upward

departure, he would have received a lesser sentence.

Rule 52(b), however, is permissive, not ma ndatory. We have

authority to order correc tion, but we are not required to do so.

Olano , 509 U.S. at 735. We should correct a plain error when the9

error “seriously affect[s] the fa irness, integrity or public

reputation of judicial proceedings.” O lano

, 509 U.S. at 736

(quoting United States v. Atkinson

, 297 U.S. 157 (1936)). In light

of the sentencing calculation errors, we think the fairness and

integrity of this judicial proceeding wer e seriously affected.

United States v. Franks , 46 F.3d 402 (5th Cir. 1995).

W e AFFIRM in part, REVERSE in part, VACATE the senten ce and

REMAND for resentencing.