2012 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

2-24-2012

USA v. Neal Saferstein

Precedential or Non-Precedential: Precedential

Docket No. 10-4092

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1

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

No. 10-4092

_____________

UNITED STATES OF AMERICA

v.

NEAL D. SAFERSTEIN,

 Appellant

Appeal from the United States District Court 

for the Eastern District of Pennsylvania

 (D.C. Crim. No. 2:07-00557)

District Judge: Honorable Cynthia M. Rufe

____________

Submitted Under Third Circuit LAR 34.1(a)

January 24, 2012

______________

Before: FISHER, GREENAWAY, JR., Circuit Judges, and 

JONES*, District Judge.

 

*

The Honorable John E. Jones, III, United States District 

Court for the Middle District of Pennsylvania, sitting by 

designation. 
2

(Opinion Filed: January 26, 2012)

Peter Goldberger, Esq.

50 Rittenhouse Place

Ardmore, PA 19003-2276

Stephen R. LaCheen, Esq.

LaCheen Wittels & Greenberg

1429 Walnut Street

Suite 1301

Philadelphia, PA 19102-0000

Counsel for Appellant

Jason Bologna, Esq.

Jennifer A. Williams, Esq.

Office of United States Attorney

615 Chestnut Street

Suite 1250

Philadelphia, PA 19106

Counsel for Appellee

_____________

OPINION

______________

GREENAWAY, JR., Circuit Judge.

Neal Saferstein (“Saferstein”) pled guilty in the United 

States District Court for the Eastern District of Pennsylvania 

to four federal criminal charges related to a 
3

fraudulent business scheme in which he had engaged. In the 

plea agreement, Saferstein waived his appellate rights subject 

to several exceptions, including an exception for “the 

assertion of constitutional claims that the relevant case law 

holds cannot be waived.” (App. 90.) Following his sentence, 

Saferstein now argues on appeal that the District Court (1) 

violated his due process rights by denying him credit he 

believes he was due under the United States Sentencing 

Guidelines (the “Guidelines”) for acceptance of 

responsibility; (2) denied him his right of allocution at 

sentencing; and (3) violated his rights under the ex post facto 

clause. He contends that his appellate waiver does not 

foreclose any of these arguments. 

We hold, as a result of a statement by the District 

Court during the plea colloquy, which improvidently 

expanded Saferstein‟s appellate rights, that Saferstein did not 

waive his right to raise constitutional claims on appeal. We 

further find that his ex post facto claim is of constitutional 

moment and meritorious. We will vacate and remand to the 

District Court for resentencing.

I. BACKGROUND

From 1997 until 2004, Saferstein was President, Chief 

Executive Officer, and majority owner of GoInternet, a 

telemarketing company based in Philadelphia. Beginning in 

1997, GoInternet‟s telemarketers cold-called businesses 

around the country in an attempt to sell them an internet 

services package, including a web page, dial-up web access, 

and an email account. GoInternet began charging each 

business that agreed to receive a “welcome packet” $29.95 

per month for these services, a fee which was added to its 

telephone bill. By the end of 2003, more than 350,000 
4

businesses were “customers” of GoInternet, yielding annual 

gross revenue in excess of $49 million. 

GoInternet‟s implementation of this business model 

had several fraudulent aspects. First, the telemarketers 

frequently failed to disclose the full terms of the agreement, 

including the fact that consenting to receive a welcome packet

would result in the $29.95 monthly charge unless the business 

called GoInternet within fifteen days to cancel services. 

Second, the welcome packet looked like unsolicited junk 

mail, so that it was often discarded unopened. Even if a 

customer did open and read the welcome packet, disclosures 

related to billing were hidden, so that most customers 

remained unaware that they were required to cancel services 

in order to avoid being charged. Third, because the charges 

appeared only within telephone bills, many customers did not 

notice the GoInternet charges. Fourth, GoInternet lacked the 

personnel to handle incoming calls from customers, making it 

extremely difficult for customers who attempted to cancel to 

do so successfully. 

In addition to these fraudulent practices, the web pages 

provided to GoInternet customers were not accurate or useful 

to potential customers. The websites were generic, filled with 

mistakes, and often appeared at web addresses that were 

impossible to locate using major search engines. 

The Government has estimated the losses to customers 

associated with the scheme to be approximately $74 million. 

In 2000, the Federal Trade Commission (“FTC”) 

brought suit against Saferstein and GoInternet. Federal 

Trade Commission v. Mercury Marketing of Delaware, Inc., 

and Neal D. Saferstein, No. 00-CV-3281 (E.D. Pa. filed June 
5

29, 2000). On March 1, 2001, the parties agreed to a 

stipulated judgment and order for permanent injunction, 

which contained various prohibitions to protect customers 

from unauthorized billing and directed GoInternet to send 

postcards to all of its customers informing them that they 

were being billed and were paying for GoInternet services. 

Despite the agreement, Saferstein directed that those 

postcards be altered or destroyed. 

As a result of this and other noncompliant conduct, the 

FTC sought to hold Saferstein and GoInternet in contempt. In 

anticipation of a hearing on that matter before the District 

Court, Saferstein directed GoInternet executive, and eventual 

co-defendant, Billy D. Light to testify falsely that 55,000 

GoInternet customers used their email accounts and 33,000 

used their dial-up internet service each week. Throughout his 

time as CEO of GoInternet, Saferstein earned approximately 

$20,000 each month in commissions, in addition to an annual 

base salary. He also paid for significant personal expenses 

with corporate funds. His tax returns, however, reported only 

his annual base salary. 

The criminal indictment in this case charged Saferstein 

with failing to report more than $1.8 million in income. 

Saferstein additionally failed to pay more than $2.8 million in 

payroll taxes that had been withheld from GoInternet 

employees‟ paychecks. 

The indictment charged Saferstein with (1) sixteen 

counts of mail and wire fraud; (2) one count of conspiracy to 

commit perjury; (3) four counts of submitting false tax 

returns; and (4) six counts of failure to pay over payroll taxes. 

Just before trial, Saferstein pled guilty to Count 1, mail fraud; 
6

Count 16, wire fraud; and Counts 20 and 21, submitting false 

tax returns.

The plea agreement contained language stipulating 

that, “as of the date of this agreement, the defendant has 

demonstrated acceptance of responsibility for his offense”

and is therefore “eligible for a 2-level downward adjustment” 

pursuant to the Guidelines. (App. 86.) It also contained an 

appellate waiver provision, which provided that Saferstein 

“voluntarily and expressly waive[d] all rights to appeal or 

collaterally attack” his conviction, subject to several 

exceptions. (Id. at 90.) The waiver was “not intended to bar 

the assertion of constitutional claims that the relevant case 

law holds cannot be waived.” (Id.) Further, it provided an 

exception if the government were to appeal Saferstein‟s 

sentence and excepted a small number of enumerated claims 

that Saferstein would be permitted to raise on appeal: (1) that 

his sentence exceeded the statutory maximum for that count; 

(2) that the sentencing judge erroneously departed upward 

under the Guidelines; or (3) that the sentencing judge 

imposed an unreasonable sentence above the Guideline range. 

During the plea colloquy, the District Court discussed 

the waiver in detail with Saferstein. It explained the appellate 

rights that Saferstein would have absent the waiver and 

precisely what rights remained. Regarding the provision 

concerning constitutional claims, the court stated that the 

waiver “of course, is not intended to bar you [from] raising 

constitutional claims, and only the Court can decide whether 

they are constitutional claims or some other kind of claim.” 

(Id. at 161.) When asked whether he understood, Saferstein 

responded in the affirmative. 
7

After the sentencing hearing, the District Court 

ultimately agreed with the Pre-Sentence Investigation Report 

(“PSR”) that Saferstein qualified for a criminal history 

category of I and an offense level of 43, largely as a result of 

the enormous amount of money that the fraud involved. 

Based on this Guidelines calculation, Saferstein was eligible 

for the statutory maximum sentence, forty-six years on the 

four counts.

The District Court denied Saferstein credit for 

acceptance of responsibility. It based this determination on 

several factors. First, the Court noted that after pleading 

guilty, Saferstein had failed to expeditiously turn over certain 

financial and medical reports to the probation office. Second, 

it determined that a number of his statements during the 

sentencing hearing “backtrack[ed] on the enormity of his own 

involvement in the scheme that he is responsible for 

contriving.” (Id. at 298.) 

The court, after granting a significant downward 

variance, sentenced Saferstein to twenty-three years of 

imprisonment, composed of concurrent twenty-year sentences

on each of the wire and mail fraud counts, followed by 

concurrent three-year sentences on the two counts charging 

submitting false tax returns. He also received three years of 

supervised release and a fine of $100,000. Saferstein timely 

appealed. 

II. JURISDICTION AND STANDARD OF REVIEW

The District Court had jurisdiction over this case 

pursuant to 18 U.S.C. § 3231. This Court has jurisdiction 

over a challenge to the sentence under 18 U.S.C. §§ 1291 and

3742(a). “[O]ur review of the validity and scope of appellate 
8

waivers is plenary.” United States v. Corso, 549 F.3d 921, 

926 (3d Cir. 2008) (citations omitted). 

We review for plain error Saferstein‟s claim that he 

was sentenced in violation of the ex post facto clause, which 

he did not raise in the District Court. Fed. R. Crim. P. 52(b); 

United States v. Syme, 276 F.3d 131, 158 (3d Cir. 2002). “A 

defendant must satisfy a four-prong test to be successful 

under plain error review: there must be (1) an error; (2) that 

is plain; (3) which affects substantial rights; and (4) seriously 

impairs the fairness, integrity, or public reputation of judicial 

proceedings.” United States v. Cesare, 581 F.3d 206, 209 (3d 

Cir. 2009) (citations omitted).

III. ANALYSIS

A. Appellate Waiver

When “the government invokes an appellate-waiver 

provision contained in a defendant‟s plea agreement, we must 

determine as a threshold matter whether the appellate waiver 

prevents us from exercising our jurisdiction to review the 

merits of the defendant‟s appeal.” Corso, 549 F.3d at 926 

(citations omitted). We decline to exercise jurisdiction over 

the appeal where the issues on appeal fall within the scope of 

the waiver and the defendant knowingly and voluntarily 

agreed to the waiver, unless “enforcing the waiver would 

work a miscarriage of justice.” Id. at 927 (citations omitted). 

Here, Saferstein argues that he did not waive his right 

to this appeal because each of the issues he presents represent 

constitutional claims and the District Court, during the plea 

colloquy, stated that the appellate waiver “of course, is not 

intended to bar you [from] raising constitutional claims, and 
9

only the Court can decide whether they are constitutional 

claims or some other kind of claim.” (App. 161.) As a result, 

Saferstein argues that the agreement he entered into 

voluntarily and knowingly preserves his right to appeal 

constitutional claims. 

The Government contends that this statement is not 

controlling, since it misrepresents the plain language of the 

plea agreement, which states that the waiver was “not 

intended to bar the assertion of constitutional claims that the 

relevant case law holds cannot be waived.” (Id. at 90.) The 

District Court‟s statement is clearly at odds with the 

otherwise plain and straightforward language of the 

agreement. That statement thus created a plausible and 

tangible ambiguity and seemingly expanded Saferstein‟s 

appellate rights. 1

We have not spoken before on the impact of a 

sentencing court‟s oral statement during a plea colloquy on 

the interpretation of a plea agreement. It is clear that 

 

1

“[L]ogic indicates that if we may rely on the sentencing 

court‟s statements to eliminate ambiguity prior to accepting a 

waiver of appellate rights, we must also be prepared to 

recognize the power of such statements to achieve the 

opposite effect. If it is reasonable to rely upon the court‟s 

words for clarification, then we cannot expect a defendant to 

distinguish and disregard those statements of the court that 

deviate from the language of a particular provision in a 

lengthy plea agreement.” United States v. Wilken, 498 F.3d 

1160, 1168 (10th Cir. 2007).
10

principles of contract law apply to plea agreements. United 

States v. Williams, 510 F.3d 416, 422 (3d Cir. 2007). 

Generally speaking, because the government exercises 

tremendous bargaining power during the process of plea 

negotiation, we construe any ambiguities in the text against 

the government as drafter, id. at 422, but the plain text at 

issue here is not ambiguous. It clearly refers to a specific

subset of constitutional claims,2not to the entire category of 

constitutional claims, as the District Court‟s statement during 

the colloquy indicated. 

The parol evidence rule generally mandates that when 

a “written contract is clear and unequivocal, its meaning must 

be determined by its contents alone.” Amer. Eagle Outfitters 

v. Lyle & Scott Ltd., 584 F.3d 575, 594 (3d Cir. 2009). 

However, the plea colloquy has no analogue in contract law; 

indeed, regardless of the clarity of a written plea agreement,

Rule 11(b) of the Federal Rules of Criminal Procedure 

obligates a district court, before accepting a plea of guilty, to 

place the defendant under oath and to address the defendant 

orally and in open court, informing him of, inter alia, “the 

terms of any plea-agreement provision waiving the right to 

appeal or to collaterally attack the sentence.” Fed. R. Crim. 

P. 11(b)(1)(N). The court must also determine that the 

defendant understands those terms. Id. 

 

2 Although the parties engage in substantial debate as to 

whether the category of non-waiveable constitutional claims 

is an empty category, this is not a question we need to resolve 

here. The language of the agreement is not ambiguous 

regardless of the answer.
11

We have recognized that a plea colloquy that fails to 

meet the requirements of Rule 11(b)(1)(N) can prevent a 

defendant from knowingly and voluntarily waiving his 

appellate rights. Corso, 549 F.3d at 928-930; see also United 

States v. Goodson, 544 F.3d 529, 540-41 (3d Cir. 2008). 

Given that precedent, and our recognition that plea 

agreements must be construed to protect the defendant as the 

weaker bargaining party, see Williams, 510 F.3d at 422, we 

must find that a statement made by the sentencing court 

during the colloquy can create ambiguity where none exists in 

the plain text of the plea agreement. See United States v. 

Wilken, 498 F.3d 1160, 1168 (10th Cir. 2007) (“[W]e cannot 

expect a defendant to distinguish and disregard those 

statements of the court that deviate from the language of a 

particular provision in a lengthy plea agreement-especially 

where, as here, neither the government nor defense counsel 

apparently noticed the error at the time.”). We construe this 

ambiguity against the government and interpret the waiver 

narrowly. Therefore, we shall allow Saferstein to raise 

constitutional claims on appeal, as the District Court

represented during the colloquy that he would be able to do.

3

 

3

Saferstein‟s argument that the District Court erred by 

denying him credit for acceptance of responsibility is not 

constitutional in nature. The only support Saferstein musters 

for his contention that this error implicates his due process 

rights, United States v. Furst, 918 F.2d 400, 408 (3d Cir. 

1990), and its progeny, in fact notes constitutional dimensions 

to sentencing based on materially false information. 

Saferstein‟s allegation that the sentencing court erroneously 

interpreted the Guidelines is distinct and does not implicate 

his due process rights. 
12

B. Ex Post Facto Claim

The only issue Saferstein raises which is of 

constitutional moment is his ex post facto claim. Saferstein 

argues that his sentencing, which occurred in accordance with 

the 2009 Guidelines Manual, violated the ex post facto clause. 

See art. I, § 9, cl. 3. The mail and wire fraud counts of which 

he was convicted occurred in December 2002 and June 2003, 

and the base offense level for fraud under the Guidelines was 

 

Saferstein also argues that the District Court infringed upon 

his right of allocution by allowing the Government to crossexamine him before sentencing. “[T]he right of allocution is 

not constitutional.” United States v. Adams, 252 F.3d 276, 

288 (3d Cir. 2001). Although Saferstein asserts that our later 

opinion in United States v. Fisher, 502 F.3d 293 (3d Cir. 

2007), undermines the clear pronouncement in Adams, Adams 

still controls. Our precedent makes clear that “to the extent 

that [an opinion of a panel of this Circuit] is read to be 

inconsistent with earlier case law, the earlier case law . . . 

controls.” Holland v. N.J. Dep’t of Corr., 246 F.3d 267, 278 

n.8 (3d Cir. 2001) (citing O. Hommel Co. v. Ferro Corp., 659 

F.2d 340, 354 (3d Cir. 1981)). 

Accordingly, neither of these claims falls under the 

constitutional exception to Saferstein‟s appellate waiver, and 

we shall not consider them on the merits. 
13

subsequently increased on November 1, 2003. U.S.S.G.

appx. C, amend. 653. Both counts for submitting false tax 

returns of which Saferstein was convicted occurred after that 

date. 

The Guidelines direct a one-book rule, requiring that a 

“Guidelines Manual in effect on a particular date shall be 

applied in its entirety.” U.S.S.G. § 1B1.11(b)(2). When a 

“defendant is convicted of two offenses, the first committed 

before, and the second after, a revised edition of the 

Guidelines Manual became effective, the revised edition of 

the Guidelines Manual is to be applied to both offenses.” § 

1B1.11(b)(3). According to the background note in the 

Guidelines, “Because the defendant completed the second 

offense after the amendment to the guidelines took effect, the 

ex post facto clause does not prevent determining the 

sentence for that count based on the amended guidelines.” Id. 

The background note also provides that this approach “should 

be followed regardless of whether the offenses of conviction 

are the type in which the conduct is grouped under § 

3D1.2(d),” unless the ex post facto clause would be violated 

by that treatment. Id. 

Nonetheless, commentary to the Guidelines does not 

bind federal courts where it violates the Constitution, United 

States v. Bertoli, 40 F.3d 1384, 1405 (3d Cir. 1994), and we 

have held that the ex post facto clause requires that a 

sentencing court apply the Guidelines Manual in effect at the 

time the offense was committed if retroactive application of 

the later Manual would result in harsher penalties. United 

States v. Seligsohn, 981 F.2d 1418, 1424 (3d Cir. 1992), 

superseded by statute for other reasons as stated in United 

States v. Corrado, 53 F.3d 620, 624 (3d Cir. 1995). Further, 

we have expressly disapproved the one-book rule where it 
14

conflicts with the ex post facto clause by resulting in “more 

stringent penalties than were authorized at the time of the 

offense.” Id. 

Even “[t]he fact that various counts of an indictment 

are grouped cannot override ex post facto concerns,” Bertoli, 

40 F.3d at 1404 (citing Seligsohn, 981 F.2d at 1424), although 

our ex post facto concerns are assuaged when counts are 

properly grouped under § 3D1.2(d) as “continuing, related 

conduct” and the sentencing court applies the Guidelines 

Manual relevant to the latest count. United States v. Siddons, 

660 F.3d 699, 707 (3d Cir. 2011). In such a case, “the 

grouping provisions, combined with the one-book rule, place 

a defendant on notice that a court will sentence him or her 

under the Guidelines Manual in effect during the commission 

of his or her last offense in a series of continuous, related 

offenses.” Id.

Here, the sentencing court applied the Guidelines 

Manual in effect when the false tax returns were submitted to 

the IRS even though those counts were not grouped with the 

mail and wire fraud counts. Indeed, the PSR recognized that, 

pursuant to our decision in United States v. Astorri, 923 F.2d 

1052 (3d Cir. 1991), tax fraud counts could not be grouped 

with fraud on private individuals. In this circumstance, the 

application of the later edition of the Guidelines Manual did 

violate the ex post facto clause. 

Since the sentencing court made an error that is plain, 

Saferstein meets the first two prongs of the plain error test. 

See Cesare, 581 F.3d at 209. We have also held that when 

the application of the wrong Guidelines Manual, in violation 

of the ex post facto clause, results in the use of a higher 

sentencing range, there is a presumption that the defendant‟s 
15

substantial rights are affected. See Syme, 276 F.3d at 158. 

The government has failed to rebut this presumption of 

prejudice. Finally, we have concluded in the past that such an 

error “too „seriously affects the fairness, integrity, or public 

reputation of judicial proceedings‟ to be left uncorrected.” Id. 

(quoting Olano, 507 U.S. 725 (1993)). 

Accordingly, we vacate Saferstein‟s sentence and 

remand to the District Court with instructions to calculate his 

base offense level in accordance with the Guidelines Manual 

in effect when the mail and wire fraud counts were 

committed.

IV. CONCLUSION

For the reasons set forth above, we will vacate the 

sentence imposed by the District Court and remand for 

resentencing in accordance with the above opinion.