Opinion ID: 165717
Heading Depth: 1
Heading Rank: 3

Heading: Blakely, Booker & Plain Error

Text: 86 After oral argument, Mr. Dazey moved to file a supplemental brief arguing that his sentence was invalid under Blakely v. Washington, ___ U.S. ___, 124 S.Ct. 2531, 159 L.Ed.2d 403 (2004). We granted that motion and now consider his argument in light of the Supreme Court's ruling in United States v. Booker, ___ U.S. ___, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005). 87 The jury found Mr. Dazey guilty of one count of conspiracy to commit fraud, 18 U.S.C. § 371, ten counts of wire fraud, id. § 1343, and one count of money laundering, id. § 1957. During sentencing, the district court found the following facts that were not established by the jury's verdict: (1) that the loss attributable to Mr. Dazey's role in the conspiracy was more than $7 million (a 20 level enhancement under the Sentencing Guidelines); (2) that there were fifty or more victims of the scheme (a 4 level enhancement); and (3) that Mr. Dazey obstructed justice (a 2 level enhancement). Using these judge-found facts, the district court determined Mr. Dazey's offense level to be 32. Mr. Dazey's criminal history category of I and his offense level of 32 provided for a sentencing range of 121-151 months. See U.S.S.G. Ch. 5 Pt. A. The court sentenced Mr. Dazey to the bottom end of the range, 121 months. Mr. Dazey argues, and the government does not contest, that the judge-found facts increased the his sentence beyond the maximum authorized by the jury's verdict. 3 88 Though Mr. Dazey contested the evidentiary basis of the judge-found facts, he did not assert at trial that use of the Sentencing Guidelines violated the Constitution. Because Mr. Dazey did not raise this issue below, we review the district court's sentencing decision for plain error. United States v. Gonzalez-Huerta , 2004 WL 2732326, slip op. at 7 (10th Cir.2005) (en banc); United States v. Hurlich, 348 F.3d 1219, 1220 (10th Cir.2003); cf. Booker, 125 S.Ct. at 769 ([W]e expect reviewing courts to apply ordinary prudential doctrines, determining, for example, whether the issue was raised below and whether it fails the `plain-error' test.). 89 To establish plain error, Mr. Dazey must demonstrate that the district court (1) committed error, (2) that the error was plain, and (3) that the plain error affected his substantial rights. United States v. Cotton, 535 U.S. 625, 631, 122 S.Ct. 1781, 152 L.Ed.2d 860 (2002); Gonzalez-Huerta, slip op. at 7. If all these conditions are met, a court reviewing the error may exercise discretion to correct it if the error seriously affects the fairness, integrity, or public reputation of judicial proceedings. Cotton, 535 U.S. at 631-32, 122 S.Ct. 1781; Gonzalez-Huerta, slip op. at 8. We conduct this analysis less rigidly when reviewing a potential constitutional error. United States v. James, 257 F.3d 1173, 1182 (10th Cir.2001). 1. Error 90 The district court committed constitutional error in sentencing Mr. Dazey. In Booker, the Court extended the logic of Blakely to the Federal Sentencing Guidelines, holding that the Sixth Amendment requires that [a]ny fact (other than a prior conviction) ... necessary to support a sentence exceeding the maximum authorized by the facts established by a plea of guilty or a jury verdict must be admitted by the defendant or proved to a jury beyond a reasonable doubt. Booker, 125 S.Ct. at 756. To remedy this constitutional infirmity created by applying judge-found facts to mandatory sentencing guidelines, the Court severed the provision of the Sentencing Reform Act making application of the Guidelines mandatory. Id. at 756 (excising 18 U.S.C. § 3553(b)(1)). In Mr. Dazey's case, the district court, applying the then-mandatory Guidelines, relied on three facts that the judge found by a preponderance of the evidence to increase his sentence beyond the maximum authorized by the facts established by the jury's verdict. This sentencing methodology violated Mr. Dazey's Sixth Amendment rights. 91 The constitutional nature of this error distinguishes Mr. Dazey's case from cases such as Gonzalez-Huerta or United States v. Trujillo-Terrazas, No. 04-2075 (10th Cir.2005), in which the sentence was based entirely on facts found by the jury, admitted by the defendant, or the fact of a prior conviction. See Gonzalez-Huerta, slip op. at 6 (distinguishing between constitutional Booker error and non-constitutional Booker error). Such cases involve no violation of constitution and no misinterpretation of operative statutes; they are error only in the sense that they violate the remedial reconstruction of the Sentencing Reform Act performed by the Booker Court. Because the error in sentencing Mr. Dazey was constitutional, we relax our analysis on the remaining elements of plain error review. See James, 257 F.3d at 1182. 2. Plain 92 The error here is plain. To be plain, an error must be clear or obvious under current, well-settled law. United States v. Whitney, 229 F.3d 1296, 1309 (10th Cir.2000). An error is plain where the law at the time of trial was settled and clearly contrary to the law at the time of appeal. Johnson v. United States, 520 U.S. 461, 468, 117 S.Ct. 1544, 137 L.Ed.2d 718 (1997). That is the situation here. The district court sentenced Mr. Dazey in accordance with law that was well-settled at the time, which we know now was in error. See Gonzalez-Huerta, slip op. at 8. 3. Affects Substantial Rights 93 The more difficult question is whether the constitutional error in Mr. Dazey's case affects his substantial rights. For an error to have affected substantial rights, the error must have been prejudicial: It must have affected the outcome of the district court proceedings. United States v. Olano, 507 U.S. at 725, 734, 113 S.Ct. 1770 (1993); see Gonzalez-Huerta, slip op. at 8-9. The burden to establish prejudice to substantial rights is on the party that failed to raise the issue below. United States v. Vonn, 535 U.S. 55, 63, 122 S.Ct. 1043, 152 L.Ed.2d 90 (2002); Olano, 507 U.S. at 734-35, 113 S.Ct. 1770; Gonzalez-Huerta, slip op. at 8-9. 94 To demonstrate that the mandatory application of the Guidelines to facts that a judge found by a preponderance of the evidence affected substantial rights, a defendant must show a reasonable probability that the defects in his sentencing altered the result of the proceedings. See U.S. v. Dominguez Benitez, 542 U.S. 74, 124 S.Ct. 2333, 2339, 159 L.Ed.2d 157 (2004) (In cases where the burden of demonstrating prejudice ... is on the defendant seeking relief, we have invoked a standard... requiring the showing of `a reasonable probability that, but for [the error claimed], the result of the proceeding would have been different.') (quoting United States v. Bagley, 473 U.S. 667, 682, 105 S.Ct. 3375, 87 L.Ed.2d 481 (1985) (opinion of Blackmun, J.)). 95 In a case of constitutional Booker error, 4 there are at least two ways a defendant can make this showing. First, if the defendant shows a reasonable probability that a jury applying a reasonable doubt standard would not have found the same material facts that a judge found by a preponderance of the evidence, then the defendant successfully demonstrates that the error below affected his substantial rights. This inquiry requires the appellate court to review the evidence submitted at the sentencing hearing and the factual basis for any objection the defendant may have made to the facts on which the sentence was predicated. Second, a defendant may show that the district court's error affected his substantial rights by demonstrating a reasonable probability that, under the specific facts of his case as analyzed under the sentencing factors of 18 U.S.C. § 3553(a), 5 the district court judge would reasonably impose a sentence outside the Guidelines range. For example, if during sentencing the district court expressed its view that the defendant's conduct, based on the record, did not warrant the minimum Guidelines sentence, this might well be sufficient to conclude that the defendant had shown that the Booker error affected the defendant's substantial rights. 96 We do not agree with the apparent conclusion of some other courts that the mere difference between the imposed Guidelines sentence and the sentence the defendant would have received based on the facts found by the jury, admitted by the defendant, or based on the fact of a prior conviction, is sufficient to satisfy the third prong of plain error. See United States v. Hughes, 401 F.3d 540, 2005 WL 628224, slip op. at 14 (4th Cir. March 16, 2005); United States v. Oliver, 397 F.3d 369, 379-80 (6th Cir.2005). If the defendant is unable to show a reasonable probability that either the factual predicate for sentencing would be different if the district court were not required to sentence on the basis of judge-found, preponderance-of-the-evidence facts, or that the ensuing sentence would be different if the court were entitled to greater latitude in considering the sentencing factors of 18 U.S.C. § 3553(a), there is no basis for concluding that the error affected his substantial rights. The analytical error committed by the courts that have reached the opposite conclusion, we believe, is to treat the use of any use of extra-verdict enhancements as constitutional Booker error. See, e.g., Hughes, slip op. at 17-21 (refusing to consider the remedial scheme contemplated by Booker to determine whether Sixth Amendment error affected substantial rights); Oliver, 397 F.3d at 379-80. The error, instead, is the use of extra-verdict enhancements in a mandatory guidelines system. See United States v. Rodriguez, 398 F.3d 1291, 1300-01 (11th Cir.2005). To determine prejudice to substantial rights, we must compare the actual sentence to the sentence the defendant would have received under an effectively advisory guidelines system — not to the sentence he would have received solely on the basis of the facts found by a jury, admitted by the defendant, or based on prior convictions. 6 97 While Mr. Dazey does not point to any evidence that the judge believed that the Guidelines range was excessive in light of the facts found by the court, he does argue that there was insufficient evidence for the jury to find the sentence-enhancing facts that the judge found by a preponderance of the evidence. Mr. Dazey contends there was not sufficient evidence for a jury to conclude that he was responsible for the entire $14 million loss attributable to the Wealth-Mart scheme. He argues that the jury's verdict does not establish that he was responsible for over $7 million in losses and the evidence submitted at trial demonstrated that only $2.2 million ended up in his bank accounts. 98 A defendant convicted of conspiracy is accountable for reasonably foreseeable conduct in furtherance of the jointly undertaken criminal activity. See U.S.S.G. § 1B1.3(a)(1)(A). However, a defendant's accountability only extends to the criminal activity that he agreed to undertake. See id. § 1B1.3 n.2. This means proper attribution at sentencing requires ... particularized findings about, the scope of the specific agreement the individual defendant joined in relation to the conspiracy as a whole. United States v. Melton, 131 F.3d 1400, 1404 (10th Cir.1997) (internal quotation marks omitted). In the context of a conspiracy to defraud, we have held that a defendant is accountable for the entire loss created by a fraudulent organization if the defendant played a major role in the organization and the losses were reasonably foreseeable. See United States v. Osborne, 332 F.3d 1307, 1311-12 (10th Cir.2003). If the defendant's role in the conspiracy was less substantial, then particularized findings about the defendant's agreement to join the conspiracy must support the scope of the defendant's role in the conspiracy. See Melton, 131 F.3d at 1406. Moreover, a defendant is not accountable for the conduct of members of a conspiracy prior to the defendant joining the conspiracy, even if the defendant knows of that conduct. U.S.S.G. § 1B1.3 n.2. 99 At sentencing, Mr. Dazey strenuously contested the factual basis for the sentencing enhancements, presenting evidence that he did not play a central role in the Wealth-Mart scheme and did not reasonably foresee the full scope of the fraudulent activity. His principal role in the scheme was as an actor: he appeared at investor seminars in the guise of Wealth-Mart's international trader and lectured the guests about the profits to be had from investing. There is no evidence that he participated in any of Wealth-Mart's day-to-day business meetings or operations, received investments, handled finances, or participated in overall management. His name does not appear on Wealth-Mart documents or confidentiality agreements. On the other hand, the government stresses that Mr. Dazey had somewhat regular phone contact with Dr. Craft, was a speaker at Wealth-Mart seminars, and received over $2 million of investor funds in his bank account. While this inculpatory evidence was more than sufficient to satisfy the old, clearly erroneous standard, the question of what a jury would have concluded using a reasonable doubt standard is closer. 100 In light of the constitutional nature of the error, we are compelled to conduct this analysis less rigidly than we would otherwise. James, 257 F.3d at 1182. Taking the requisite, less rigid[ ] approach appropriate to constitutional error, we conclude there is a reasonable probability that a jury evaluating the evidence presented at trial would not determine, beyond a reasonable doubt, that Mr. Dazey could reasonably foresee the full extent of investor losses. Cf. United States v. Turner, 400 F.3d 491, 500 (7th Cir.2005) (remanding a sentence to correct constitutional Booker error where the defendant was one of fifteen people listed on an indictment for a money laundering conspiracy, but the jury's guilty verdict and the evidence presented were insufficient for the district court to conclude that the defendant was accountable for the entire amount of money laundered by the conspiracy). 101 We further conclude there is a reasonable probability that if the district judge had not thought himself bound by the mandatory Guidelines to sentence in accordance with these judge-found, preponderance-of-the-evidence facts, he might have determined that Mr. Dazey's conduct warranted a sentence below that prescribed for losses of more than $7 million. In the post- Booker world, district courts are accorded greater latitude to determine sentences in light of the seriousness of the offense. 18 U.S.C. § 3553(a)(2)(A). District courts might reasonably take into consideration the strength of the evidence in support of sentencing enhancements, rather than (as in the pre- Booker world) looking solely to whether there was a preponderance of the evidence, and applying Guidelines-specified enhancements accordingly. We therefore hold that Mr. Dazey has met his burden of establishing that the mandatory 20 point enhancement, based on a judicial finding that he was responsible for all the losses inflicted by Wealth-Mart, affected his substantial rights. 7 102 4. Integrity, Fairness, or Public Reputation 103 If a plain error affects the integrity, fairness, or public reputation of judicial proceedings, it is in the discretion of the reviewing court to correct the error. Johnson v. United States, 520 U.S. 461, 467, 117 S.Ct. 1544, 137 L.Ed.2d 718 (1997). In an instance of non-constitutional error the standard for satisfying the fourth prong of the plain error test is demanding. See Dominguez Benitez, 124 S.Ct. at 2335. A party that fails to raise an argument in the district court must show that allowing a non-constitutional error to stand would be particularly egregious and would constitute a miscarriage of justice. United States v. Gilkey, 118 F.3d 702, 704 (10th Cir.1997). In the context of an alleged constitutional error, the relaxed standard means we do not require the exceptional showing required to remand a case of non-constitutional error. Nevertheless, the defendant still bears the burden of showing that an exercise of our discretion is appropriate. United States v. Olano, 507 U.S. 725, 734, 113 S.Ct. 1770, 123 L.Ed.2d 508 (1993); Gonzalez-Huerta, slip op. at 18. 104 We believe there are at least three reasons to support the exercise of our discretion to correct this plain error. First, the error in this case was constitutional in nature, which entails a less rigorous application of the plain error review burden. See United States v. Jefferson, 925 F.2d 1242, 1254 (10th Cir.1991). Unlike the error in non-constitutional cases, which is purely the result of the Supreme Court's choice of remedy, Gonzalez-Huerta, slip op. at 20, Mr. Dazey's sentence was the result of a violation of his Sixth Amendment rights. 105 Second, Mr. Dazey does not merely speculate that, if the district court had understood it had discretion, it might have exercised leniency. Rather, Mr. Dazey vigorously contested the judge-found facts that enhanced his sentence. This distinguishes Mr. Dazey's case from our cases holding that Blakely/ Booker violations are not plain error when the defendant did not dispute a judge's factual findings that led to an increase in his sentence, even though, in such a case, the district court could have exercised its discretion to reach a different sentence. See United States v. Maldonado-Ramires, 384 F.3d 1228, 1231 n. 1 (10th Cir.2004); cf. Gonzalez-Huerta, slip op. at 19-24 (finding, in a case of non-constitutional Booker error, that the fourth prong was not satisfied). The strength of the evidence supporting Guidelines enhancements was not relevant to the mandatory results under the pre- Booker regime (provided the evidence satisfied the preponderance standard); now, in the discretion of the district court, it may be. See 18 U.S.C. § 3553(a)(2)(A) (requiring sentencing court to consider, inter alia, the seriousness of the offense). 106 Third, the judge-found facts in this case substantially increased Mr. Dazey's sentence under the Guidelines. In Booker, the Court noted that the significant divergence between the sentence authorized by the jury's verdict and the sentence imposed after judicial fact-finding demonstrates the extent to which the right to have a jury find facts has atrophied. Booker, ___ U.S. at ___, 125 S.Ct. at 751 (describing an increase of ten years as very serious). That divergence is present here. The judge-found fact that Mr. Dazey was responsible for over $7 million in losses authorized a sizable 20 level enhancement of his offense level. 8 While Booker permits this approach to sentencing, allowing a substantial increase in Mr. Dazey's sentence through the now-suspect practice of mandatory enhancements, based on judge-found facts, runs the risk of impugning the integrity and reputation of judicial proceedings. 107 We do not necessarily believe all constitutional Booker errors that affect substantial rights also undermine the integrity, fairness, or public reputation of judicial proceedings. However, Mr. Dazey received a substantial enhancement on the basis of judge-found facts that he contested at the sentencing hearing, and he has demonstrated a reasonable likelihood that, applying proper post- Booker standards, the outcome might have been significantly different. For these reasons, we believe this plain error warrants our exercise of discretion to remand the case.