Opinion ID: 765751
Heading Depth: 2
Heading Rank: 1

Heading: Sentencing Under Section 2F1.1 (Fraud Guidelines): Was There a Stipulation?

Text: 20 A court must sentence a defendant under the guideline most applicable to the offense of conviction (here, smuggling) unless: (1) as explained in Appendix A of the Guidelines, the case is an atypical case such that the guideline section indicated for the statute of conviction is inappropriate for the particular conduct involved; or (2) under U.S.S.G. § 1B1.2(a), the parties stipulated to a more serious offense in a written or oral plea agreement. 21 The relevant smuggling guideline's introductory commentary states: This Subpart deals with violations of 18 U.S.C. §§ 496, 541-45, 547, 548 . . . and is designed to address violations involving revenue collection or trade regulation. The text of the section 2T3.1 guideline states: 22 (a) Base Offense Level: 23 (1) The level from §2T4.1 (Tax Table) corresponding to the tax loss, if the tax loss exceeded $1,000; or 24 (2) 5, if the tax loss exceeded $100 but did not exceed $1,000; or 25 (3) 4, if the tax loss did not exceed $100. 26 For purposes of this guideline, the tax loss is the amount of the duty. U.S.S.G. § 2T3.1. 27 While the District Court expressly determined that this case was not atypical in the context of Appendix A, see Electrodyne II, 28 F. Supp. 2d at 244-45, it did find that Nathan's and Lander's answers to the factual basis questions were stipulations to fraud (which the Guidelines treat more seriously than smuggling) and thus that section 2F1.1 was the proper sentencing guideline. 28 We must perforce determine whether the District Court erred as a matter of law by treating Nathan's and Lander's oral statements at the factual basis hearing as stipulations, an issue over which we have plenary review. See United States v. Morelli, 169 F.3d 798, 803 (3d Cir. 1999). This Court has not yet determined what constitutes a stipulation for the purpose of U.S.S.G. § 1B1.2(a). If the statements on which the District Court based its finding of fraud were not stipulations, then it erred in applying the fraud guidelines rather than the smuggling guidelines. 29 Nathan and Lander contend that: (i) the PSI conceded that their statements at the hearing were not stipulations; (ii) the plea agreement and its attendant stipulations contained a four corners provision that all stipulations between the parties were contained therein and could only be modified in writing; and (iii) they never signed the plea memorandum from which the government asked its questions at the factual basis colloquy. The government does not argue that the District Court was correct to deem Nathan's and Lander's responses stipulations; in fact, it argues only that, since the District Court properly sentenced Nathan under section 2T3.1, we need not resolve this issue. However, the Court clearly relied on the fraud guidelines in sentencing Nathan. See Electrodyne II, 28 F. Supp. 2d at 251 (Accordingly, the Individual Defendants stipulated to the more serious offense of fraud and Section 2F1.1 is the applicable Guideline.). We therefore must determine the meaning of stipulation in the section 1B1.2(a) context. 30 The Supreme Court was presented with (but did not decide) the meaning of stipulation in Braxton v. United States, 500 U.S. 344 (1991). The version of section 1B1.2 that existed in 1991 stated: 31 Provided, however, in the case of conviction by plea of guilty . . . containing a stipulation that specifically establishes a more serious offense than the offense of conviction, [the court should] determine the offense guideline section . . . most applicable to the stipulated offense. 32 U.S.S.G. § 1B1.2(a) (emphasis added). In Braxton, the defendant pled guilty to assault but not to attempted murder, though there was no formal plea agreement. Nevertheless, he agreed with the version of the facts proffered by the government at the plea hearing, which facts included a basis for an attempted murder charge. The district court, which sentenced him under the attempted murder guidelines, found--and the court of appeals agreed--that the defendant had stipulated to the more serious charge. Before the Supreme Court, the defendant argued that a stipulation had to be part of a formal plea agreement. The Court acknowledged a circuit split on the meaning of stipulation but declined to resolve the question, since the Sentencing Commission had just requested public comment on whether section 1B1.2(a) should be amended to provide expressly that such a stipulation must be as part of a formal plea agreement. See Braxton, 500 U.S. at 348 (quoting 56 Fed. Reg. 1891 (1991)). 33 In 1991, the Sentencing Commission amended section 1B1.2(a) to read: 34 [A court must determine] the offense guideline section . . . most applicable to the offense of conviction. . . . Provided, however, in the case of a plea agreement (written or made orally on the record) containing a stipulation that specifically establishes a more serious offense than the offense of conviction, [the court must] determine the offense guideline section . . . most applicable to the stipulated offense. 35 U.S.S.G. § 1B1.2(a) (emphasis added); U.S.S.G. App. C, amend. 434. Application Note 1 to this section provides: 36 Where a stipulation . . . made between the parties on the record during a plea proceeding specifically establishes facts that prove a more serious offense or offenses than the offense or offenses of conviction, the court is to apply the guideline most applicable to the more serious offense or offenses established. 37 Id. at application note 1. 38 Section 6B1.4 of the Guidelines, which governs stipulations, states, A plea agreement may be accompanied by a written stipulation of facts relevant to sentencing. See id. § 6B1.4(a) (emphasis added). The Commentary to this section notes that 39 [b]ecause of the importance of the stipulations and the potential complexity of the factors that can affect the determination of sentences, stipulations ordinarily should be in writing. However, exceptions to this practice may be allowed by local rule. The Commission intends to pay particular attention to this aspect of the plea agreement procedure as experience under the guidelines develops. 40 Id. (emphasis added). Though the Commission has not foreclosed the possibility that stipulations may be oral, it clearly favors written stipulations over oral ones. 3 41 While neither the language of section 1B1.2(a) itself nor the language of section 6B1.4 is dispositive of whether Nathan's and Lander's statements during the factual basis were stipulations, section 1B1.2(a)'s reference to a stipulation as something contained within the plea agreement strongly suggests that statements made in factual basis colloquies are not stipulations. Section 1B1.2(a) speaks of stipulations as part of a plea agreement. A scrupulous reading of section 1B1.2(a), which will require that all of the defendant's stipulations be either part of or annexed to his plea agreement, would provide notice to the defendant as to exactly what facts underlying his offense he is agreeing to and will ensure that the defendant receives the benefit of his bargain. In addition, though section 1B1.2 itself provides for oral plea agreements and, presumably, oral stipulations contained therein, the Guidelines favor written stipulations over oral ones. The Application Note also suggests that we should give a common sense reading to stipulation, such that it refers to situations in which both parties specifically and explicitly agree, on the record, to the truth of the relevant facts. We thus think the language of the Guidelines compels the Conclusion that Nathan's and Lander's statements should not be construed as stipulations. 42 We find support for our position in the caselaw, especially in United States v. Guerrero, 863 F.2d 245 (2d Cir. 1988). Guerrero held that a stipulation between the government and defense counsel, entered into to obviate fact-finding at a sentencing hearing, did not trigger the proviso of section 1B1.2(a). The court explained that section 1B1.2(a) 43 applies only to a stipulation contained in a plea of guilty or nolo contendere, not to a stipulation negotiated after a plea in connection with sentencing. Prior to plea, the prosecution has the opportunity to condition its willingness to accept a plea to less than all counts of an indictment on the defendant's willingness to stipulate that he committed crimes in addition to those to which he is pleading guilty. In offering to reduce the defendant's maximum exposure to the penalties in the conviction counts, the prosecution is entitled to extract an admission of facts that may justify a substantial sentence within that maximum. But once the Government agrees to a plea bargain without extracting such an admission, facts admitted by the defendant to shorten or obviate a sentencing hearing do not establish a stipulated offense within the meaning of section 1B1.2(a). 44 Id. at 248; see also United States v. Gardner, 940 F.2d 587, 591 (10th Cir. 1991) (requiring a knowing agreement by the defendant, as part of a plea bargain, that facts supporting a more serious offense occurred and could be presented to the court for the court to apply section 1B1.2(a)); United States v. McCall, 915 F.2d 811, 816 n.4 (2d Cir. 1990) (requiring that any stipulation be part of the plea agreement itself); United States v. Rutter, 897 F.2d 1558, 1561 (10th Cir. 1990) (explaining that once the government agrees to a plea bargain without extracting an admission, facts admitted by the defendant can be considered only as relevant conduct in determining the appropriate guideline range, not as stipulations under section 1B1.2(a)). But see United States v. Loos, 165 F.3d 504, 508 (7th Cir. 1998) (concluding that the objective behind section 1B1.2(a) is best achieved by reading stipulation to mean any acknowledgment by the defendant that he committed the acts that justify use of the more serious guideline), cert. denied, 119 S. Ct. 1090 (1999); United States v. Domino, 62 F.3d 716, 722 (5th Cir. 1995) (assuming that the factual resume--the equivalent of the factual basis in this case--can contain stipulations). 45 In this case, where the parties drafted and agreed to a document that explicitly contained all of the relevant stipulations between them, it is clear that their deal encompassed only those stipulations contained in that document. Though it is true that Nathan, Lander, and their attorneys had, in advance, read the plea memorandum from which the government asked its questions at the factual basis, see Electrodyne II, 28 F. Supp. 2d at 228 n.20 & 231 n.22, the defendants never signed it or in any other way assented to it. Here the facts at issue came out at the plea hearing itself while the Judge was deciding whether to accept the plea, rather than in negotiations after the plea had been accepted, as in Guerrero. We nevertheless conclude that the plea agreements between the government and the defendants were complete before the factual basis hearing, and that the facts admitted in the factual basis hearing were in no way part of the government's deal with Nathan and Lander. We also think it significant that the government did not attempt to defend the District Court's determination that Nathan's and Lander's comments were stipulations. 46 In sum, we conclude that the text of section 1B1.2(a), examined especially in light of the changes the Commission made from the earlier version of that section, indicates that a statement is a stipulation only if: (i) it is part of a defendant's written plea agreement; (ii) it is explicitly annexed thereto; or (iii) both the government and the defendant explicitly agree at a factual basis hearing that the facts being put on the record are stipulations that might subject a defendant to the provisions of section 1B1.2(a). Nathan's and Lander's statements at the factual basis hearing do not meet this definition of stipulation, and we conclude that the District Court erred in finding otherwise. 47 Because the District Court rejected the only other ground on which it could have relied to invoke the fraud guidelines when it concluded that the defendants' case was not atypical under Appendix A of the Guidelines, we hold that the District Court erred in applying the fraud guidelines in sentencing Nathan and Lander. In light of this, we examine whether he correctly sentenced Nathan and Lander in the alternative using the smuggling guidelines. 48