Opinion ID: 612373
Heading Depth: 2
Heading Rank: 3

Heading: Calculation of the final guidelines range

Text: The Government next argues that the District Court made a fundamental procedural error in the second step of the sentencing process when, after granting Fumo a departure based upon his extraordinary public works, it did not calculate a new, final guidelines range. As we have repeatedly made clear “[c]ourts must continue to calculate a defendant‟s Guidelines sentence precisely as they would have before Booker[;] [i]n doing so, they must formally rule on the motions of both parties and state on the record whether they are granting a departure and how that departure affects the Guidelines calculation.” Gunter, 462 F.3d at 247 (emphasis added) (internal quotations and citations omitted); see also United States v. Lofink, 564 F.3d 232, 238 (3d Cir. 2009). Fumo initially sought a departure based on his health 47 and his “good works” (i.e., his public service). The District Court ultimately awarded him a significant reduction from the guidelines sentencing range of 121 to 151 months that it had calculated at step one. Whether this reduction was ultimately a departure under the Guidelines or a variance under § 3553(a) is itself a contested issue discussed in more detail below. However, at the time the sentence was announced in the courtroom, it appeared that it was a departure. At the July 14 final sentencing hearing, the Court stated: “I have considered what the guidelines have said here and I did make a finding as to what the guidelines are, but I‟ve also added a finding that I‟m going to depart from them.” (J.A. 1623). Nevertheless, the District Court never actually stated what that departure was in terms of the guidelines range; a fact the parties noticed. In his post-sentencing Rule 35(a) motion, seeking to have the Court deem its sentence a variance instead of a departure, Fumo noted that “[w]hen a sentencing court grants a true „departure‟ [as opposed to a variance,] it must state how the departure affects the Guidelines calculation. This Court[] fail[ed] to make such a statement . . . .” (J.A. 1629) (emphasis added) (internal quotation omitted). While opposing that motion, the Government noted that the court had initially established a “baseline” (i.e., before the resolution of the motion for a departure based on good works) offense level of 33—although later changed to 32—but carefully took no position on whether the court had ever announced a final guideline offense level. In ruling on the Rule 35(a) motion, the Court held: “The government correctly states that the court announced it was granting a departure. Thereafter, the court never announced the guideline level to which it departed, and, in fact, never reached the sentence it did by consulting any specific level on the guideline chart.” (J.A. 1653). Then, in an amendment to the judgment accompanying its ruling, the court stated, “I never announced nor have I ever determined to what guideline level I had departed.” (Sealed App. 18586). 48 Fumo attempts to argue that the Court adequately completed step two simply by sentencing Fumo to the sentence it did—i.e., that reducing Fumo‟s sentence by a certain number of months implies what the degree of the departure was. However, the only case that Fumo cites to for the proposition that announcing a departure in terms of months rather than in terms of offense levels and guidelines ranges is United States v. Torres, 251 F.3d 138 (3d Cir. 2001), a pre-Booker case. Such an approach would make little sense under the post-Booker sentencing procedure described in Gall. Offense levels, cross-referenced with the criminal history of the defendant, now result in a recommended range of months incarceration, and the court must then exercise its discretion under § 3553(a) to determine where—whether inside or outside of that range—the sentence should fall. If after step one the court simply decides on a final sentence without separately completing the second (i.e., departures that change the Guidelines range) and third steps (i.e., variances that determine the final sentence), it becomes impossible for an appellate court to reconstruct its logic and reasoning, and therefore to review the sentence. As we note below, this is no idle worry and precisely what occurred here. As a result, to the extent the District Court‟s sentencing reduction was a departure rather than a variance under § 3553(a), it erred by failing to calculate a final guideline offense level and guidelines sentencing range. D. Articulation of the basis for the below-guidelines sentence related to public service The Government argues that the District Court further erred by failing to clearly articulate whether it was granting Fumo a departure or a variance, and that this error requires remand. There are “two types of sentence that diverge from the original Guidelines range . . . . A traditional sentencing „departure‟ diverges . . . from the originally calculated range „for reasons contemplated by the Guidelines themselves.‟ In contrast, a „variance‟ diverges . . . from the Guidelines, 49 including any departures, based on an exercise of the court‟s discretion under § 3553(a).” United States v. Floyd, 499 F.3d 308, 311 (3d Cir. 2007) (internal citations omitted). This distinction is more than mere formality. “Although a departure or a variance could, in the end, lead to the same outcome . . . it is important for sentencing courts to distinguish between the two, as departures are subject to different requirements than variances.” Id. “[D]istrict courts should be careful to articulate whether a sentence is a departure or a variance from an advisory Guidelines range.” United States v. Vampire Nation, 451 F.3d 189, 198 (3d Cir. 2006). When a district court‟s sentencing decision “leaves us unable to determine whether the court intended to grant [a] . . . departure or a variance,” the court has not, as it must, “adequately explain[ed] the chosen sentence.” United States v. Brown, 578 F.3d 221, 226 (3d Cir. 2009) (internal quotation omitted). Under such circumstances, “we will remand for resentencing unless we conclude on the record as a whole . . . that the error did not affect the district court‟s selection of the sentence imposed.” Id. (internal quotation omitted). Therefore, the Government must establish first, that it is impossible to determine with confidence from the record whether the District Court granted a departure or a variance based on Fumo‟s good works; and second, that the error affected the District Court‟s selection of its sentence. Before the July 8 hearing, Fumo moved for a departure based on both good works and ill health. In its July 9 ruling, the District Court denied the request for a departure based on ill health, but stated that “a decision on a departure based upon good works will be reserved until . . . July 14, 2009.” (J.A. 1566). At the July 14 hearing, the Court initially noted that “I did not deny with regards to the good works.” (J.A. 1568). Later on in the hearing, the court announced, “You worked hard for the public . . . and I‟m therefore going to grant a departure from the guidelines.” (J.A. 1622). Finally, the court stated, “I did make a finding as to what the guidelines are, but I‟ve also added a finding that I‟m going to 50 depart from them.” (J.A. 1623). Shortly after the hearing, in response to Fumo‟s Rule 35(a) motion to “correct” the sentence to establish that the sentencing reduction was a variance rather than a departure, the District Court issued an order stating that “[t]he government correctly states that the court announced it was granting a departure. Thereafter, the court never enunciated the guideline level to which it departed, and, in fact, never reached the sentence it did by consulting any specific level on the guideline chart.” (J.A. 1653). The District Court then attached an amendment to the judgment, which included the following passage: I next determined whether there should be a departure from the guidelines and announced at the sentencing hearing that there should be based on my finding extraordinary good works by the defendant. I did not announce what specific guideline level the offense fell into; that is to say, the precise number of levels by which I intended to depart because until I considered all other sentencing factors, I could not determine in precise months the extent that I would vary from the guidelines. Having advised counsel of the offense level that I found and my intent to depart downward, I then proceeded to hear from counsel their respective analyses of what an appropriate sentence should be. The procedure I followed was perhaps more akin to that associated with a variance than a downward departure because I never announced nor have I ever determined to what guideline level I had departed. Ultimately, the argument over which it was elevates form over substance. 51 (Sealed App. 185-86) (emphasis added). Without the amendment to the judgment, we might have been satisfied that the Court was departing rather than varying. However, the statement in that document that “[t]he procedure I followed was perhaps more akin to that associated with a variance than a downward departure” indicates that the District Court itself was not certain whether it was departing or varying. This conclusion is reinforced by the District Court‟s earlier statement in the same filing that “I did not announce what specific guideline level the offense fell into; that is . . . the precise number of levels by which I intended to depart because until I considered all other sentencing factors, I could not determine in precise months the extent that I would vary from the guidelines.” (Sealed App. 186). This language uses “depart” and “vary” interchangeably and admits that the Court conflated and combined the second and third steps of the sentencing process. The District Court did not need to “consider . . . all other sentencing factors” under § 3553(a) before departing to a different guideline level, nor was it appropriate to do so. We have previously responded to the District Court‟s criticism that the distinction between departures and variances “elevates form over substance” by noting that “in the sentencing context, it is firmly established that form—i.e. procedure—and substance are both of high importance.” Wright, 642 F.3d at 154. “We have a responsibility „to ensure that a substantively reasonable sentence has been imposed in a procedurally fair way.‟” Id. (emphasis added) (quoting United States v. Levinson, 543 F.3d 190, 195 (3d Cir. 2008)). Moreover, the difference here may be more than a mere formality, given the different scrutiny and standards of review we apply to departures as opposed to variances. In particular, our precedent places certain limitations on courts‟ abilities to depart based on good works in the case of public officials. United States v. Serafini, 233 F.3d 758, 773 (3d Cir. 2000) (holding that “if a public servant performs civic and charitable work as part of his daily functions, these should not 52 be considered in his sentencing because we expect such work from our public servants” but that “assistance, in time and money, to individuals and local organizations” that would not ordinarily be part of a defendant‟s work as a public servant may properly be considered). While we need not decide whether a departure based on good works could be applied here, it is undeniable that a district court has more discretion in imposing a variance, where the substance of the sentence is only subject to substantive reasonableness review. Because of the substantial uncertainty regarding whether the District Court‟s reduction was a departure or variance, and because that distinction could very well have practical effects on Fumo‟s ultimate sentence, we cannot conclusively say based on the record as a whole that “the error did not affect the district court‟s selection of the sentence imposed.” Brown, 578 F.3d at 226. Accordingly, on remand the District Court should take care to first address any departures, and if departures are granted, to then calculate a final guidelines range. Taking this final guidelines range as advisory, it should only then consider the sentencing factors included in 18 U.S.C. § 3553(a), decide whether to vary from the guidelines, and determine the appropriate sentence. E. Consideration of the Government’s arguments for an upward variance After learning that the Court proposed to depart downwards, the Government moved for an upward variance, arguing that the proposed sentence did not adequately represent or take into account the full loss from the fraud, the damage to public institutions, Fumo‟s perjury at trial, other obstructive conduct, and Fumo‟s alleged lack of remorse. The District Court did not vary upwards on any of these bases. At the hearing, the Government also raised the disparity between the sentence imposed on Fumo and other sentences imposed for fraud involving public and charitable funds, as well the disparity between Fumo‟s sentence and 53 those imposed on his accomplices in the scheme.11 In setting forth how a court should respond to a party‟s request for a variance, the Supreme Court has held that “[t]he sentencing judge should set forth enough to satisfy the appellate court that he has considered the parties‟ arguments and has a reasoned basis for exercising his own legal decisionmaking authority.” Rita v. United States, 551 U.S. 338, 356 (2007). “[T]he court must acknowledge and respond to any properly presented sentencing argument which has colorable legal merit and a factual basis.” United States v. Ausburn, 502 F.3d 313, 329 (3d Cir. 2007). Nevertheless, we need not address this argument now, in light of the fact that some or many of the Government‟s arguments may become moot after the District Court recalculates the guideline range and rules on the parties‟ motions for departures. On remand, the District Court should consider any colorable arguments for a variance that have a basis in fact, whether made by Fumo or the Government. F. Prejudgment interest on the order of restitution Finally, Fumo also challenges one aspect of his sentence, raising two arguments for why prejudgment interest on the restitution awarded was an abuse of discretion. First, although we previously affirmed an award of prejudgment interest on a restitution award in Gov’t of Virgin Islands v. Davis, 43 F.3d 41, 47 (3d Cir. 1994), Fumo argues that Davis has been overturned sub silentio by our decision in United States v. Leahy, 438 F.3d 328, 333-35 (3d Cir. 2006) 11 In particular, John Carter, the former President of the ISM, was sentenced to a term of 15 years‟ imprisonment. Computer technician Leonard Luchko, who was only involved with the obstruction of justice portion of the case, received a sentence of 30 months‟ imprisonment. Computer technician Mark Eister, who cooperated with the Government, received a 5K1.1 departure and was sentenced to probation. 54 (en banc). In Davis, we noted that as a general matter, it is “well established that criminal penalties do not bear interest.” 43 F.3d at 47 (internal citations omitted). However, we also held that the inclusion of prejudgment interest on restitution under the Victim and Witness Protection Act (“VWPA”), as amended by the Mandatory Victims Restitution Act (“MVRA”), 18 U.S.C. § 3663(b)(1), was proper because the “restitution ordered . . . is compensatory rather than punitive” and the “[VWPA] [a]wards are designed to compensate victims for their losses, rather than to serve retributive or deterrent purposes.” 43 F.3d at 47 (internal citation omitted). Given that the restitution ordered here was awarded under the VWPA, it would seem that prejudgment interest is appropriate under Davis. Fumo argues that in Leahy, which determined whether United States v. Booker applied to orders of restitution, we concluded “that restitution ordered as part of a criminal sentence is criminal rather than civil in nature” and expressly agreed with three other circuits who we characterized as holding “that restitution, when ordered in connection with a criminal conviction, is a criminal penalty.” 438 F.3d at 33435. Thus, Fumo argues, because restitution is a “criminal penalty,” under Davis‟s own terms prejudgment interest should be unavailable. The underlying tension is that restitution, unlike a criminal fine on the one hand, or compensatory damages, on the other, serves both punitive purposes and compensatory ones. Indeed, in Leahy we framed our analysis by noting “that restitution combines features of both criminal and civil penalties, as it is, on the one hand, a restoration to the victim by defendant of ill-gotten gains, while it is, at the same time, an aspect of a criminal sentence.” 438 F.3d at 333. The question then arises, which dictate should courts follow: that a criminal penalty should not bear interest, Rodgers v. United States, 332 U.S. 371, 374 (1947), or that a victim who has suffered actual money damages at the hands of a defendant should be fairly compensated for the loss, id. at 373, in situations where both principles are applicable. 55 In Rodgers, a cotton farmer produced and sold more cotton than his quota permitted under the Agricultural Adjustment Act of 1938, and the United States sued to recover “money „penalties‟” that the Act made the farmer subject to. Id. at 372. The District Court awarded interest on the approximately $7,000 from the dates the penalties became due to the date of judgment. The Sixth Circuit affirmed, and the Supreme Court reversed. The Supreme Court first affirmed the general rule that “the failure to mention interest in statutes which create obligations has not been interpreted by this Court as manifesting an unequivocal congressional purpose that the obligation shall not bear interest.” Id. at 373. In this particular case, however, the Court analogized the penalties to criminal penalties, and noted: [t]he contention is hardly supportable that the Federal Government suffers money damages or loss in the common law sense, to be compensated for by interest, when one convicted of a crime fails promptly to pay a money fine assessed against him. The underlying theory of that penalty is that it is a punishment or deterrent and not a revenue- raising device; unlike a tax, it does not rest on the basic necessity of the Government to collect a carefully estimated sum of money by a particular date in order to meet its anticipated expenditures. Id. at 374. According to Rodgers then, it is the absence of “money damages or loss . . . to be compensated for” and the lack of authority for “revenue-raising” that makes prejudgment interest inapplicable to criminal penalties. Yet in the context of restitution under the VWPA, there are money damages and losses to be compensated. Further, as courts have widely agreed, there is authority to seek “carefully estimated sum[s] of money”, id., for victims under the VWPA, as its “purpose . . . is to ensure that wrongdoers, to the degree possible, make their victims 56 whole.” United States v. Rochester, 898 F.2d 971, 983 (5th Cir. 1990) (quoting United States v. Hughey, 877 F.2d 1256, 1261 (5th Cir. 1989) (collecting cases), rev’d on other grounds, 494 U.S. 411 (1990)). And in order to make a victim whole, prejudgment interest may be necessary to “allow an injured party to recoup the time-value of his loss.” William A. Graham Co. v. Haughey, --- F.3d ---, 2011 WL 1833238, at  (3d Cir. May 16, 2011). Other circuits have reached the same conclusion that we reached in Davis, finding that prejudgment interest is available on orders of restitution under the VWPA and MVRA. See United States v. Qurashi, 634 F.3d 699, 704 (2d Cir. 2011); United States v. Huff, 609 F.3d 1240, 1247 n.4 (11th Cir. 2010); United States v. Hoyle, 33 F.3d 415, 420 (4th Cir. 1994); United States v. Patty, 992 F.2d 1045, 1049-50 (10th Cir. 1993); United States v. Simpson, 8 F.3d 546, 552 (7th Cir. 1993); United States v. Smith, 944 F.2d 618, 626 (9th Cir. 1991); Rochester, 898 F.2d at 982-83. Moreover, in Leahy, our characterization of restitution as a criminal penalty came in the context of whether it was the type of award to which the Sixth Amendment right to a jury trial applied. For purposes of our Sixth Amendment analysis in Leahy, it was constitutionally irrelevant whether restitution under the VWPA also has an important, and indeed primary purpose of compensating victims. While Leahy shows that restitution under the VWPA has a punitive component that makes it a criminal penalty in the eyes of the Sixth Amendment, that does not modify our ruling in Davis that such restitution also serves an important compensatory purpose under the VWPA, which permits courts to award prejudgment interest in order to recoup the time-value of the victim‟s loss. Accordingly, we reaffirm our holding in Davis that prejudgment interest is available for orders of restitution under the VWPA and MVRA. Fumo also argues that the Government, when it obtained prejudgment interest on the restitution after the date of sentencing, did not give the proper 10 days‟ notice that it would need more time to ascertain the amount of loss under 57 18 U.S.C. § 3664(d)(5). Section 3664(d)(5) reads: If the victim‟s losses are not ascertainable by the date that is 10 days prior to sentencing, the attorney for the Government or the probation officer shall so inform the court, and the court shall set a date for the final determination of the victim‟s losses, not to exceed 90 days after sentencing. On its face this language does seem to suggest that the Government should provide prejudgment interest calculations before sentencing or give 10 days‟ notice that it will need more time to make and present such calculations. However, the Fourth Circuit, in United States v. Johnson, 400 F.3d 187, 199 (4th Cir. 2005), noted that other circuits have concluded, based on the statute‟s purpose in protecting victims, that the 90-day “deadline” for determining the victim‟s losses does not bar a court from ordering restitution even after 90 days as long as there is no substantial prejudice to the defendant. This holding has since been affirmed by the Supreme Court. Dolan v. United States, 130 S. Ct. 2533, 2539 (2010) (a court‟s failure to meet the statute‟s 90-day deadline for restitution, “even through its own fault or that of the Government, does not deprive the court of the power to order restitution”). Johnson also held, in light of the treatment of the 90-day deadline, that the 10-day deadline for the Government to provide notice of the need to further ascertain the victim‟s loss was similarly no bar to the Court postponing or modifying restitution. 400 F.3d at 199. We agree with Johnson and see no reason to distinguish between the 10-day deadline at issue here and the 90-day deadline in the same provision that the Supreme Court in Dolan held creates a nonenforceable deadline for district courts. We will therefore affirm the order of restitution, including prejudgment interest.