Source: https://law.justia.com/cases/federal/appellate-courts/F2/930/30/151876/
Timestamp: 2019-11-17 17:00:04
Document Index: 629262581

Matched Legal Cases: ['§ 1334', '§ 3661', '§ 994', '§ 3661', '§ 3661', '§ 3553', '§ 994', '§ 3553', '§ 994', '§ 3553', '§ 3553', '§ 3661', '§ 994', '§ 3553', '§ 3661']

UNITED STATES of America, Plaintiff-Appellant,v.THOMAS J. PRICE, JR. Defendant-Appellee.UNITED STATES of America, Plaintiff-Appellant,v.Ralph BRANDT, Defendant-Appellee.
Nos. 90-30148, 90-30149.
Argued and Submitted Jan. 8, 1991.Decided March 28, 1991.
Over a period of three and one-half years, Thomas Price, Jr. and Ralph Brandt engaged in a check-kiting scheme that eventually resulted in some $3.6 million in losses to a federally insured bank. The two men were charged with and pleaded guilty to bank fraud, for which they received sentences substantially below those set by the Sentencing Guidelines. The government now appeals, arguing that the district court erred by, inter alia, basing its downward departures from the Sentencing Guidelines on factors adequately taken into consideration by the Sentencing Commission. We agree and, for the reasons set forth below, vacate and remand for resentencing.
Price owned two auto dealerships in Spokane, Washington, and Brandt served as the dealerships' manager and treasurer. In 1984 the two men began kiting checks between the two banks with which the dealerships did business.1 They would draw checks on one bank that were clearly in excess of the dealerships' account balances there and deposit them to their businesses' accounts at the other bank, then electronically transfer funds between the two accounts in order to take advantage of the usual two-day "float" period it took for the checks to clear. During the course of the 3 1/2 years in which they operated this scheme, Price and Brandt wrote literally hundreds of millions of dollars' worth of kited checks. Near the end they were depositing some $1.5 million in checks daily, only a fraction of which reflected legitimate business dealings. When the scheme finally collapsed in December 1987, one of the banks suffered approximately $3.6 million in losses.
On July 20, 1989, Price and Brandt were jointly charged in a two-count indictment, Price with two counts of bank fraud and Brandt with one count of bank fraud, in violation of 18 U.S.C. § 1334. They both pleaded guilty.
Price's presentence report calculated his Guideline sentence range to be between 27 and 33 months' imprisonment, based on an offense level of 18 and a criminal history category of I. Brandt's presentence report calculated his Guideline sentence range to be between 21 and 27 months' incarceration, based on an offense level of 16 and a criminal history category of I. The district court departed downward and sentenced Price to six months in a jail-type institution, six months of work release, six months' house arrest, two years' probation, and 400 hours of community service, while Brandt received a sentence of six months of work release, six months' house arrest, two years of probation and 200 hours of community service.
The district court justified its downward departures by concluding as a matter of law that it could depart, as an element of its sentencing discretion, by considering the defendants' respective backgrounds, characters, and conduct; and that it should depart based on its findings with regard to such factors as, e.g., the defendants' respective ages, family ties and responsibilities. On appeal, the government argues that (1) the district court lacked the authority to depart from the Guideline ranges based on the considerations mentioned; (2) the court's findings concerning the other factors used to justify the departures were either not supported by the record or had already been taken into consideration in calculating the defendants' Guideline ranges; and (3) the departures were unreasonable in any event.
I. Discretionary Departure Based on Defendants' Backgrounds, Characters, and Conduct
A district court's interpretation of the Sentencing Guidelines is subject to de novo review. United States v. Lawrence, 916 F.2d 553, 554 (9th Cir. 1990).
The district court's rationale for departing downward in the instant cases may be summarized as follows: Pursuant to 18 U.S.C. § 3661,2 a trial court's discretion may not be fettered in its consideration of a defendant's background, character and conduct in imposing an "appropriate" sentence; the standards enunciated by 28 U.S.C. §§ 994(d) and (e)3 and set out in United States Sentencing Commission, Guidelines Manual, Secs. 5H1.1-5H1.6 (Nov. 1990)4 ("U.S.S.G.") restrict a sentencing court's discretion to consider criteria relating to a defendant's background, character and conduct; because these specific provisions are in conflict with the general rule established by 18 U.S.C. § 3661, the latter statute controls, i.e., the Guidelines may not proscribe or otherwise limit a district court's discretion to depart from ?? Guideline range based on considerations of a defendant's background, character or conduct.5
It is true that section 3661 allows a sentencing court to take into consideration any and all information relevant to a defendant's background, character and conduct "for the purpose of imposing an appropriate sentence." 18 U.S.C. § 3661. An "appropriate" sentence is deemed to be one that falls within the Guideline range unless there exist aggravating or mitigating circumstances not adequately considered by the Sentencing Commission in its formulation of the Guidelines. 18 U.S.C. § 3553(b);6 United States v. Nuno-Para, 877 F.2d 1409, 1413 (9th Cir. 1989).
Sections 5H1.1-5H1.6 of the Guidelines were promulgated in accord with the dictates of 28 U.S.C. §§ 994(d) and (e) and do not prohibit a sentencing court from considering a defendant's personal characteristics, background or conduct. They do, however, ordinarily limit the relevance of such personal information to a determination of what a defendant's sentence should be within the Guideline range. United States v. Mondello, No. 90-50121, slip op. 2501, 2512-16 (9th Cir. Mar. 7, 1991); see United States v. Brady, 895 F.2d 538, 543 (9th Cir. 1990).
In United States v. Bruno, 897 F.2d 691 (3d Cir. 1990), the Third Circuit held that "the use of information of the type encompassed in Sec. 3661 must be subject to the limitations of Sec. 3553(b)." Id. at 696. Accord, United States v. Lara-Velasquez, 919 F.2d 946, 955-56 (5th Cir. 1990); see also United States v. La Guardia, 902 F.2d 1010, 1013 & n. 4 (1st Cir. 1990) (" [T]he contested provisions inhibit a judge's discretion to impose a sentence below the guideline minimum ..."). Our holding in United States v. Duarte, 901 F.2d 1498 (9th Cir. 1990), is not to the contrary. Although we noted in Duarte that the language of U.S.S.G. Sec. 1B1.47 "suggests that the sentencing court has the same discretion it had under Section 3661 and its predecessor, Section 3551," we did so in the context of distinguishing sentences within the Guideline range from departures. Id. at 1500 ("By its plain language, section 5H1.6 is limited to departures from the appropriate Sentencing Guideline range") (emphasis in original). Duarte thus stands for the proposition that such information as, e.g., a defendant's family ties may be considered under section 3661 in deciding what sentence to impose within the Guideline range, while U.S.S.G. Sec. 5H1.6 applies to departures from that range. Id. at 1500-1501. Mondello, slip op. at 2512. Accord, United States v. Borrayo, 898 F.2d 91, 93-94 (9th Cir. 1990) (district judge's discretion limited by 18 U.S.C. § 3553(b) and U.S.S.G. Sec. 5K2.13, precluding downward departure based on reduced mental capacity due to alcohol abuse).
Here, the district court interpreted the provisions of 28 U.S.C. §§ 994(d) and (e) and 18 U.S.C. §§ 3553(b) and 3661 to be in conflict. Because statutes which appear on their faces to conflict, should, if possible, be interpreted to avoid that conflict, United States v. Lopez-Cavasos, 915 F.2d 474, 479 (9th Cir. 1990), we agree with the Third Circuit's analysis as set out in Bruno. Accordingly, we reverse on this point. Mondello, slip op. at 2512.
II. Downward Departures Based on Considerations of Various Factors
A sentencing court may depart from the Guideline range if it finds that "there exists an aggravating or mitigating circumstance of a kind, or to a degree, not adequately taken into consideration by the Sentencing Commission." 18 U.S.C. § 3553(b). A district court's decision to depart is ordinarily reviewed in a two-step process: "First, we must determine whether a departure is permissible on the grounds stated by the sentencing court." United States v. Ward, 914 F.2d 1340, 1347 (9th Cir. 1990). Departure on an impermissible ground requires vacation and remand for resentencing. Id. Second, " [w]hen the reasons articulated for the departure are proper, we then must determine whether the sentence imposed is unreasonable." Id. "If the sentencing court relied upon factors that already were taken into consideration in the guidelines, the departure is unreasonable and the sentence must be vacated and remanded." Id.
A sentencing court may depart from the Guideline range under two circumstances: (1) if the circumstance was ignored by the Commission in formulating the Guidelines; or (2) if the circumstance is "present to a degree substantially in excess of that which ordinarily is involved in the offense." U.S.S.G. Sec. 5K2.0. Where, as here, a departure is based on the second of the above circumstances, it will be upheld only in an "atypical" case, i.e., one in which the circumstance is present to an unusual or "extraordinary" degree. See United States v. Doering, 909 F.2d 392, 394 (9th Cir. 1990) (per curiam); United States v. Richison, 901 F.2d 778, 781 (9th Cir. 1990) (per curiam).
The district court's departure for Price was based on considerations of his age, family ties and responsibilities, community service, lack of a criminal record, acceptance of responsibility, prompt offer to make restitution, and motive (viz., to "save businesses and jobs"). Taking these factors slightly out of order, they stack up as follows:
(1) The district court's departure based on Price's lack of a prior criminal record is inappropriate because Criminal History Category I is itself based on a defendant's status as a first-time offender. See United States v. Borrayo, 898 F.2d 91, 94 (9th Cir. 1990); U.S.S.G. Sec. 4A1.3;.
(2) Considerations of family ties and responsibilities and of community service "are not ordinarily relevant in determining whether a sentence should be outside the guidelines," U.S.S.G. Sec. 5H1.6, and the district court's ruling does not adequately explain why these considerations were extraordinary or unusual in Price's case.
(3) Price's acceptance of responsibility and prompt offer to make restitution had been taken into consideration already by virtue of the two-step reduction he received in his offense level. See U.S.S.G. Sec. 3E1.1(a) and commentary.
(4) The district court's findings with respect to Price's motive ("to save businesses and jobs") are irrelevant because economic motive does not qualify as a ground for departure in any event. See U.S.S.G. Secs. 2F1.1, 5K2.12. We agree with the holding in United States v. Carey, 895 F.2d 318, 322-23 (7th Cir. 1990) (vacating downward departure for businessman convicted of fifteen-month, $219,000 check-kiting scheme).
(5) Age is a relevant factor for departure only where the defendant is both elderly and infirm. See U.S.S.G. Sec. 5H1.1. A 59 year-old man who is not in ill health does not qualify for departure under section 5H1.1.
Turning to Brandt, we note that the district court based its departure on considerations of his age, family ties and responsibilities, employment record, and role in the offense. With respect to the first two considerations, Brandt's departure suffers from the same infirmities as does Price's. As for his employment record, U.S.S.G. Sec. 5H1.5 states that one's employment record is "not ordinarily relevant in determining whether a sentence should be outside the guidelines," and there is nothing about Brandt's employment record that made it so unusual or extraordinary as to qualify as an "atypical" situation. Finally, the fact that Brandt's motive may not have been greed, but loyalty to his employer, was something that had already been taken into consideration in adjusting his offense level downward. See U.S.S.G. Sec. 3B1.2. It was therefore error for the court to depart from the Guideline range based on Brandt's status as a loyal employee. See Nuno-Para, 877 F.2d 1409, 1413 (9th Cir. 1989).
The district court lacked the discretionary authority to use considerations of Price's and Brandt's backgrounds, characters, and conduct to depart outside the Guideline ranges in imposing appropriate sentences. In addition, the factors cited by the court in imposing the sentences it did were either not supported by the record or had already been taken into consideration in determining the Guideline sentence ranges. Because we hold that the district court erred both in its conclusion that it could depart and in its findings supporting its ruling that it should depart, we need not reach the question of the reasonableness of the departures.
At the inception of the check-kiting scheme in 1984, Price owned a single automobile dealership in Spokane. He acquired the second (truck) dealership two years later with money obtained at least in part from the check-kiting scheme. For the sake of both clarity and brevity, however, the two businesses will be identified throughout this opinion simply as "the dealerships," despite their different acquisition dates and characters
18 U.S.C. § 3661 (1988):
28 U.S.C. §§ 994(d) and (e) (1988):
(d) The Commission in establishing categories of defendants for use in the guidelines and policy statements governing the imposition of sentences of probation, a fine, or imprisonment, governing the imposition of other authorized sanctions, governing the size of a fine or the length of a term of probation, imprisonment, or supervised release, and governing the conditions of probation, supervised release, or imprisonment, shall consider whether the following matters among others, with respect to a defendant, have any relevance to the nature, extent, place of service, or other incidents of an appropriate sentence, and shall take them into account only to the extent that they do have relevance--
United States Sentencing Commission, Guidelines Manual, Secs. 5H1.1-5H1.6:
Sec. 5H1.1. Age
Age is not ordinarily relevant in determining whether a sentence should be outside the guidelines. Neither is it ordinarily relevant in determining the type of sentence to be imposed when the guidelines provide sentencing options. Age may be a reason to go below the guidelines when the offender is elderly and infirm and where a form of punishment (e.g., home confinement) might be equally efficient as and less costly than incarceration. If, independent of the consideration of age, a defendant is sentenced to probation or supervised release, age may be relevant in the determination of the length and conditions of supervision.
Sec. 5H1.2. Education and Vocational Skills
Education and vocational skills are not ordinarily relevant in determining whether a sentence should be outside the guidelines, but the extent to which a defendant may have misused special training or education to facilitate criminal activity is an express guideline factor. See Sec. 3B1.3 (Abuse of Position of Trust or Use of Special Skill). Neither are education and vocational skills relevant in determining the type of sentence to be imposed when the guidelines provide sentencing options. If, independent of consideration of education and vocational skills, a defendant is sentenced to probation or supervised release, these considerations may be relevant in the determination of the length and conditions of supervision for rehabilitative purposes, for public protection by restricting activities that allow for the utilization of a certain skill, or in determining the type or length of community service.
Sec. 5H1.3. Mental and Emotional Conditions
Mental and emotional conditions are not ordinarily relevant in determining whether a sentence should be outside the guidelines, except as provided in the general provisions in Chapter Five. Mental and emotional conditions, whether mitigating or aggravating, may be relevant in determining the length and conditions of probation or supervised release.
Sec. 5H1.4. Physical Condition, Including Drug Dependence and Alcohol Abuse
This provision would also apply in cases where the defendant received a sentence of probation. The substance abuse condition is strongly recommended and the length of probation should be adjusted accordingly. Failure to comply would normally result in revocation of probation.
Sec. 5H1.5. Previous Employment Record
Employment record is not ordinarily relevant in determining whether a sentence should be outside the guidelines or where within the guidelines a sentence should fall. Employment record may be relevant in determining the type of sentence to be imposed when the guidelines provide for sentencing options. If, independent of the consideration of employment record, a defendant is sentenced to probation or supervised release, considerations of employment record may be relevant in the determination of the length and conditions of supervision.
Sec. 5H1.6. Family Ties and Responsibilities, and Community Ties
Family Ties and responsibilities and community ties are not ordinarily relevant in determining whether a sentence should be outside the guidelines. Family responsibilities that are complied with are relevant in determining whether to impose restitution and fines. Where the guidelines provide probation as an option, these factors may be relevant in this determination. If a defendant is sentenced to probation or supervised release, family ties and responsibilities that are met may be relevant in the determination of the length and conditions of supervision.
This argument is also advanced in Judge McNichols' published opinion in United States v. Boshell, 728 F. Supp. 632, 633-36 (E.D. Wash.), appeal pending, Nos. 90-30115, 90-30119 (9th Cir. 1990), and other cases now before this court, including United States v. King, No. 89-50590
18 U.S.C. § 3553(b) (1988):
(b) Application of guidelines in imposing a sentence.--The court shall impose a sentence of the kind, and within the range, referred to in subsection (a) (4) unless the court finds that there exists an aggravating or mitigating circumstance of a kind, or to a degree, not adequately taken into consideration by the Sentencing Commission in formulating the guidelines that should result in a sentence different from that described. In determining whether a circumstance was adequately taken into consideration, the court shall consider only the sentencing guidelines, policy statements, and official commentary of the sentencing Commission. In the absence of an applicable sentencing guideline, the court shall impose an appropriate sentence, having due regard for the purposes set forth in subsection (a) (2). In the absence of an applicable sentencing guideline in the case of an offense other than a petty offense, the court shall also have due regard for the relationship of the sentence imposed to sentences prescribed by guidelines applicable to similar offenses and offenders, and to the applicable policy statements of the Sentencing Commission.
"In determining the sentence to impose within the guideline range, or whether a departure from the guidelines is warranted, the court may consider, without limitation, any information concerning the background, character and conduct of the defendant, unless otherwise prohibited by law. See 18 U.S.C. § 3661." U.S.S.G. Sec. 1B1.4