Court Opinion

ID: 2760842
Source: CourtListenerOpinion
Date Created: 2014-12-15 21:01:46.848451+00
Date Added: 2024-06-11T10:39:02.057397
License: Public Domain

Case: 14-11522   Date Filed: 12/15/2014   Page: 1 of 19

                                                        [DO NOT PUBLISH]

            IN THE UNITED STATES COURT OF APPEALS

                    FOR THE ELEVENTH CIRCUIT
                      ________________________

                            No. 14-11522
                        Non-Argument Calendar
                      ________________________

               D.C. Docket No. 1:12-cr-00383-CAP-JSA-1

UNITED STATES OF AMERICA,

                                                              Plaintiff-Appellee,

                                  versus

HEATH J. KELLOGG,
a.k.a. Red,

                                                         Defendant-Appellant.

                      ________________________

               Appeal from the United States District Court
                  for the Northern District of Georgia
                     ________________________

                           (December 15, 2014)

Before MARCUS, WILLIAM PRYOR, and ROSENBAUM, Circuit Judges.

PER CURIAM:
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      Heath Kellogg appeals his total sentence of 144 months of imprisonment

after pleading guilty to several counterfeiting offenses. Kellogg challenges his

sentence on three grounds, arguing that (1) the district court erred in applying

certain enhancements when calculating his guideline range; (2) his sentence was

substantively unreasonable; and (3) the court erred by imposing a $40,000 fine,

despite the fact that the presentence investigation report (“PSR”) concluded that

Kellogg had no ability to pay a fine. After careful consideration, we affirm

Kellogg’s sentence of imprisonment but vacate the $40,000 fine and remand for

further proceedings consistent with this opinion.

                                         I.

      Kellogg and Stacy Smith, a codefendant, ran a counterfeiting operation

based in Atlanta, Georgia. Kellogg was a self-taught graphic designer who created

the template for the counterfeit currency based on images that he downloaded from

the Internet. Using the template, Kellogg and Smith printed and sold counterfeit

notes to several “middlemen,” who, in turn, re-sold the bogus notes to others to use

for purchasing goods and services. According to the PSR, a total of around $1.25

million in counterfeit notes were manufactured and passed into distribution in the

national economy. After being tipped off by a woman who had been dating Smith,

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law enforcement conducted several controlled purchases of the counterfeit

currency, ultimately leading to Kellogg’s arrest.

      A federal grand jury indicted Kellogg on one count of conspiracy to produce

and deal in counterfeit United States currency, in violation of 18 U.S.C. §§ 371,

471, and 473; two counts of counterfeiting United States currency, in violation of

18 U.S.C. § 471; and one count of dealing in counterfeit currency, in violation of

18 U.S.C. § 473. Kellogg pled guilty to all counts without a written agreement.

      In the PSR, the probation officer calculated a base offense level of 9,

pursuant to United States Sentencing Guidelines Manual (“U.S.S.G.”) § 2B5.1(a).

The probation officer then applied the following guidelines adjustments: (1) a

sixteen-level increase under §§ 2B5.1(b)(1)(B) and 2B1.1(b)(1)(I) 1 because the

offenses involved a total loss of $1.25 million; (2) a two-level increase under

§ 2B5.1(b)(2) for possessing counterfeiting equipment; (3) a four-level increase

under § 3B1.1(a) on the ground that Kellogg was an organizer or leader of a

criminal operation that involved five or more participants; and (4) a three-level

reduction for acceptance of responsibility under § 3E1.1. With a resulting total

offense level of 28 and a criminal history category of V, Kellogg’s advisory

      1
          Section 2B5.1(b)(1)(B) provides that when the face value of the counterfeit items
exceeds $5,000, the offense-level increases for loss amount in § 2B1.1 apply.
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guideline range was 130–162 months of imprisonment. The guideline range for a

fine was $12,500–$125,000.

      Notably, Kellogg’s financial condition was reviewed in the PSR. The PSR

reflects that Kellogg had a negative net worth (-$6,000) and that his family’s

monthly cash flow, including $568 in food stamps out of a total income of $1,368,

was also negative (-$100). According to the PSR, “The defendant’s financial

condition reflects that he does not have the ability to pay a fine. He would be a

good candidate for community service work in lieu of a fine.”

      Kellogg initially objected to the sixteen-level loss-amount increase under

§ 2B1.1(b)(1)(I) and the four-level organizer-role enhancement under § 3B1.1(a).

At sentencing, however, Kellogg specifically withdrew these objections. Instead

of pursuing the objections, Kellogg requested a sentence of 84 months’

imprisonment, below the guideline range, arguing that the 2001 amendments to the

Sentencing Guidelines had unreasonably increased the penalty levels for

counterfeiting offenses without empirical support, so the pre-amendment offense

levels should apply. Kellogg further contended that his guideline range overstated

his criminal history because the majority of his criminal-history points came from

forgery convictions rather than “violent crimes or crimes against persons,” and he

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requested that the court downwardly depart to a criminal history category of III or

IV.

      The government requested a within-guidelines sentence of 144 months’

imprisonment and a fine of $125,000, or one-tenth of the total loss amount. Based

on Kellogg’s withdrawal of his objections, the government indicated that it would

not be presenting the evidence that it had originally planned to present.       In

objecting to the imposition of a fine, Kellogg highlighted that he had several

children to care for and that the court had appointed counsel.

      The district court sentenced Kellogg to a total term of 144 months’

imprisonment (60 months on Count One and 144 months each on Counts Two

through Five, all concurrent). After imposing sentence, the court explained the

reasons for the sentence as follows:

             [T]he defendant is 37 years old, this is a sentence for his
             first federal, but his eighth criminal conviction. Almost
             all of the offenses prior are fraud related, span over
             twenty years. He’s been sentenced to prison before.
             He’s served approximately eight years total in custody
             for all his various criminal convictions, but he continues
             to engage in that kind of activity.
                    The Court realizes the troubled family background
             that he’s from, but the Court imposes the sentence having
             in mind the various factors of 18 U.S.C. [§ 3553(a)],
             particularly the need for rehabilitation of this defendant,
             the need for deterrence as to particularly this defendant.
             The Court is unsure that a sentence like this is a

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            deterrence to others that would be inclined to get
            involved in this kind of activity.

Over Kellogg’s objection, the court also imposed a $40,000 fine, stating,

            The fine[] imposed, while it might be a significant
            amount to the defendant, the Court feels like it’s more of
            a token amount that’s in lieu of restitution and only a
            fraction of the total cost of incarceration that the
            taxpayers are about to obligate themselves to—or the
            Court is about to obligate [them] to.

Kellogg now appeals.

                                        II.

                                        A.

      Kellogg challenges the calculation of his guideline range. He first contends

that the district court erred in applying the sixteen-level increase under U.S.S.G.

§ 2B1.1(b)(1)(I). See U.S.S.G. § 2B5.1(b)(1)(B). The facts in the PSR did not

support the asserted loss amount of § 1.25 million, he asserts, and the court failed

to require the government to prove the amount at sentencing. The court also erred

by applying a four-point increase for his role as a leader of a conspiracy involving

five or more participants under § 3B1.1(a), he argues, because the PSR did not

contain facts that sufficiently supported the increase. Kellogg acknowledges that

he withdrew his objections at sentencing but maintains that plain-error review

applies.

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       Ordinarily, with respect to the district court’s guideline calculations, we

review legal questions de novo, the district court’s factual findings for clear error,

and the district court’s application of the Guidelines to the facts with due

deference, which amounts to review for clear error. United States v. Rothenberg,

610 F.3d 621, 624 (11th Cir. 2010). And we generally review issues raised for the

first time on appeal only for plain error.2 United States v. Madden, 733 F.3d 1314,

1319 (11th Cir. 2013). But we have held that a defendant’s clear and affirmative

withdrawal of a sentencing objection waives review of such objection on appeal,

even for plain error.            United States v. Horsfall, 552 F.3d 1275, 1283-84

(11th Cir. 2008);       United     States     v.   Masters,      118     F.3d     1524,     1525-26

(11th Cir. 1997); cf. United States v. Olano, 507 U.S. 725, 733, 113 S. Ct. 1770,

1777 (1993) (“Whereas forfeiture is the failure to make the timely assertion of a

right, waiver is the intentional relinquishment or abandonment of a known right.”

(internal quotation marks omitted)).

       Our review of the sentencing-hearing transcript shows that Kellogg

withdrew his objections to the guidelines-calculation issues he now seeks to raise

on appeal, and, therefore, has waived appellate review of those issues.                           See

       2
          “The plain-error test has four prongs: there must be (1) an error (2) that is plain and (3)
that has affected the defendant's substantial rights; and if the first three prongs are met, then a
court may exercise its discretion to correct the error if (4) the error seriously affects the fairness,
integrity or public reputation of judicial proceedings.” Madden, 733 F.3d at 1320 (brackets and
internal quotation marks omitted).
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Horsfall, 552 F.3d at 1283-84; Masters, 118 F.3d at 1525-26. Specifically, after

Kellogg indicated that he wished to withdraw his objections to the PSR at

sentencing, the district court directly asked whether Kellogg was withdrawing his

objections to the enhancements for the total loss amount and for his role as

organizer/leader. Kellogg (through counsel) responded to both questions, “Yes,

Judge,” and, upon the court’s further inquiry, stated that he had no other

objections.   Based on Kellogg’s affirmative withdrawal of his objections, the

government did not present the evidence that it had planned to present.            By

withdrawing his objections, Kellogg waived review of any error by the district

court in applying the challenged enhancements. See Horsfall, 552 F.3d at 1283-84.

      In any case, even if we treated the issues as forfeited, rather than waived, we

could not say that the district court committed plain error in applying the

enhancements. Given that Kellogg withdrew his objections, the district court was

permitted to rely on statements in the PSR concerning the enhancements. See

United States v. Aguilar-Ibarra, 740 F.3d 587, 592 (11th Cir. 2014) (stating that

“[a] district court may . . . base its factual findings on undisputed statements in the

PSR,” even conclusory ones for which “there is an absence of supporting

evidence,” “because a defendant is deemed to have admitted any such statements

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that he has not objected to with specificity and clarity” (internal quotation marks

omitted)).

      Here, the PSR contains sufficient factual content to support the

enhancements under plain error review.        First, the PSR expressly states that

Kellogg was behind the production of over $1 million in counterfeit notes made for

distribution and that “[a] total of at least $1.3 million in [counterfeit notes] were

manufactured and passed,” so it was not plainly erroneous for the court to apply

the sixteen-level increase for a total loss amount of more than $ 1million. See

U.S.S.G. § 2B1.1(b)(1)(I).

      Second, the court did not plainly err in finding that Kellogg “was an

organizer or leader of a criminal activity that involved five or more participants or

was otherwise extensive.” U.S.S.G. § 3B1.1(a). The PSR reflects that Kellogg

recruited Smith to the criminal conspiracy; that Kellogg procured the printing

equipment, designed templates for printing the counterfeit notes, and then sold

them to at least three other middlemen for resale to numerous others; and that he

was behind the production of more than $1 million in counterfeit notes intended for

distribution. Thus, it was not plainly erroneous for the court to find that Kellogg

organized or led criminal activity that involved five or more participants and that

Kellogg exercised “control or influence” over at least one other participant in the

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conspiracy. See United States v. Glover, 179 F.3d 1300, 1302 (11th Cir. 1999);

U.S.S.G. § 3B1.1, comment. (n.2). Consequently, Kellogg would not be entitled to

relief even if the sentencing-enhancement issues were not waived.

                                               B.

       Kellogg next argues that the district court imposed a substantively

unreasonable sentence by relying on the guideline range for his counterfeiting

offenses, which, he asserts, lacks empirical support. He also contends that the

sentence was unreasonable because the court did not downwardly depart to a lower

criminal history category under U.S.S.G. § 4A1.3(b). 3

       We lack jurisdiction to review the district court’s discretionary denial of

Kellogg’s request for a downward departure with regard to his criminal history

category. United States v. Norris, 452 F.3d 1275, 1282 (11th Cir. 2006) (“This

Court lacks jurisdiction to review a district court’s discretionary refusal to grant a

downward departure, unless the district court incorrectly believed that it lacked the

statutory authority to depart from the guideline range.”); United States v. Chase,

174 F.3d 1193, 1195 (11th Cir. 1999). Kellogg does not argue that the district

court incorrectly believed it lacked authority to issue such a departure, and the

       3
           Section § 4A1.3(b) provides, “If reliable information indicates that the defendant’s
criminal history category substantially overrepresents the seriousness of the defendant’s criminal
history or the likelihood that the defendant will commit other crimes, a downward departure may
be warranted.”

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record contains no indication that the court was unaware of its authority to do so.

See Norris, 452 F.3d at 1282-83; see also United States v. Dudley, 463 F.3d 1221,

1228 (11th Cir. 2006). Nevertheless, we will consider Kellogg’s arguments about

his criminal history in analyzing the substantive reasonableness of his sentence.

      We review a defendant’s sentence for reasonableness under an

abuse-of-discretion standard. Peugh v. United States, 569 U.S. __, __, 133 S. Ct.

2072, 2080 (2013).      The party challenging the sentence has the burden of

establishing its unreasonableness in light of the record and the factors in 18 U.S.C.

§ 3553(a). United States v. Talley, 431 F.3d 784, 788 (11th Cir. 2005).

      The district court must impose a sentence “sufficient, but not greater than

necessary, to comply with the purposes” listed in § 3553(a)(2), including the need

to reflect the seriousness of the offense, promote respect for the law, provide just

punishment, deter future criminal conduct, and protect the public.        18 U.S.C.

§ 3553(a)(2). In imposing a particular sentence, the court must also consider the

nature and circumstances of the offense, the history and characteristics of the

defendant, the kinds of sentences available, the applicable guideline range, the

pertinent policy statements of the Sentencing Commission, the need to avoid

unwarranted sentencing disparities, and the need to provide restitution to victims.

18 U.S.C. § 3553(a)(1), (3)-(7).

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       The weight given to any particular § 3553(a) factor is generally a matter

committed to the sound discretion of the district court. United States v. Williams,

526 F.3d 1312, 1322 (11th Cir. 2008).         The court must state its reasons for

imposing a particular sentence, but the court is not required to address each

§ 3553(a) factor on the record. Talley, 431 F.3d at 786; 18 U.S.C. § 3553(c). We

will vacate a sentence only if “we are left with the definite and firm conviction that

the district court committed a clear error of judgment in weighing the § 3553(a)

factors” under the facts of the case. United States v. Irey, 612 F.3d 1160, 1190

(11th Cir. 2010) (en banc) (internal quotation marks omitted).

       Here, the district court did not abuse its discretion in imposing a within-

guidelines-range sentence of 144 months of imprisonment. See, e.g., United States

v. Alfaro-Moncada, 607 F.3d 720, 735 (11th Cir. 2010) (“If the district court’s

sentence is within the guidelines range, we expect that the sentence is

reasonable.”).   The court concluded that the 144-month sentence satisfied the

purposes of sentencing, including the need to deter Kellogg from future criminal

activity.   As the court referenced, the PSR reflects that Kellogg had 8 prior

convictions, almost all of which were fraud-related. And even though he had

served several years in prison for these prior offenses, he continued to engage in

fraudulent criminal activity. Indeed, he was on probation for two prior convictions

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at the time of the instant offenses. What’s more, the counterfeiting convictions in

this case were more serious, sophisticated, and widespread than his previous

offenses. Therefore, in view of Kellogg’s ongoing pattern of disrespect for the

law, the district court reasonably could have concluded that a lengthy sentence was

necessary to deter Kellogg from future criminal activity.

      Although the district court did not explicitly discuss Kellogg’s argument that

the counterfeiting guidelines were not supported by empirical data, it was not

required to do so. Talley, 431 F.3d at 786. Nor was the court compelled to vary

downward on that basis alone, even assuming that Kellogg’s assertion about the

lack of empirical support is accurate. United States v. Snipes, 611 F.3d 855, 870

(11th Cir. 2010) (“[T]he absence of empirical evidence is not an independent

ground that compels the invalidation of a guideline.”); see Kimbrough v. United

States, 552 U.S. 85, 93, 109-10, 128 S. Ct. 558, 565, 575 (2007) (upholding a

downward variance based, in part, on the district court’s conclusion that the crack

cocaine guidelines were “disproportionate and unjust”). Rather, the absence of

empirical data behind a guideline is just one factor a district court may consider in

deciding whether to vary from the guideline range. Snipes, 611 F.3d at 870.

      Moreover, we disagree with Kellogg’s suggestion that the Sentencing

Commission changed the guidelines applicable to this case for no real reason.

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When it adopted the new loss table in § 2B1.1, increasing the penalty levels for

these and similar offenses beginning in 2001, the Commission explained the basis

for the amendments as follows:

               The new loss tables also provide substantial increases in
               penalties for moderate and higher loss amounts, even, for
               fraud and theft offenses . . . . These higher penalty levels
               respond to comments received from the Department of
               Justice, the Criminal Law Committee of the Judicial
               Conference, and others, that the offenses sentenced under
               the guidelines consolidated by this amendment under-
               punish individuals involved with moderate and high loss
               amounts, relative to penalty levels for offenses of similar
               seriousness sentenced under other guidelines.

U.S.S.G. App. C, Amend. 617 (2001). It was not unreasonable for the district

court to have relied on the loss table reflected in Amendment 617.

         In short, Kellogg has not established that his 144-month total sentence was

substantively unreasonable in light of his significant and repetitive history of

committing fraud crimes and the serious nature of the instant offenses, which

involved the distribution of over $1 million in counterfeit currency.

                                           C.
         Finally, Kellogg argues that the district court imposed a fine despite clear

evidence showing that he was unable to pay one.

         We review the district court’s determination of the appropriate fine for clear

error.    United States v. Lombardo, 35 F.3d 526, 527 (11th Cir. 1994).            The

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Sentencing Guidelines provide that the imposition of a fine is mandatory unless

“the defendant establishes that he is unable to pay and is not likely to become able

to pay any fine.” U.S.S.G. § 5E1.2(a). The defendant therefore bears the burden

of establishing his inability to pay a fine. Lombardo, 35 F.3d at 527.

      In determining an appropriate fine, the court must consider seven factors, as

specified in § 5E1.2(d), including the “defendant’s income; earning capacity;

financial resources; the burden on the defendant and his dependents; pecuniary loss

inflicted on others as a result of the offense; whether restitution is ordered; [and]

the need to deprive the defendant of illegal gains.” United States v. Khawaja, 118

F.3d 1454, 1459 (11th Cir. 1997); see also 18 U.S.C. § 3572(a) (setting forth

similar factors for the district court’s consideration in imposing a fine).

      We do not require the district court to make specific factual findings

concerning each of the § 5E1.2(d) factors, but “we need the court’s reasoning or

sufficient record evidence to show consideration of these factors for our review.”

United States v. Garrison, 133 F.3d 831, 849 (11th Cir. 1998). For example, if the

PSR presented information with respect to the § 5E1.2(d) factors, and the district

court reviewed the PSR prior to imposing the fine, we may “infer without

hesitation” that the district court considered the pertinent factors before imposing

the fine. Khawaja, 118 F.3d at 1459. However, “[i]f the record does not reflect

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the district court’s reasoned basis for imposing a fine, we must remand the case so

that the necessary factual findings can be made.” United States v. Gonzalez, 541

F.3d 1250, 1256 (11th Cir. 2008) (internal quotation marks omitted); United States

v. Rowland, 906 F.2d 621, 624 (11th Cir. 1990) (vacating the fine imposed and

remanding for further consideration of the fine issue).

      Here, we vacate the fine imposed and remand for further proceedings

because the record is insufficient to allow this Court to review the district court’s

decision that $40,000 was an appropriate amount to fine Kellogg. See United

States v. Paskett, 950 F.2d 705, 709 (11th Cir. 1992).           The district court’s

explanation contains no basis for concluding that Kellogg had the future ability to

pay the $40,000 fine. In deciding on the $40,000 fine, the court specifically

considered that restitution could not feasibly be ordered and that the cost of

confinement was about $28,000 per year. While the court found that Kellogg did

not have the current ability to pay a fine, it questioned whether Kellogg “should []

be let off the hook because he doesn’t [k]now when he might have that possibility

in the future.” This statement was as far as the court went in discussing Kellogg’s

future ability to pay.

      While our case law is clear that we may review the PSR, which the district

court adopted, and other record evidence to determine if there is a reasoned basis

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for imposing the fine, we find the PSR in this case to be inconclusive as to

Kellogg’s ability to pay a $40,000 fine in the future. See Khawaja, 118 F.3d at

1459. The government points to facts in the PSR indicating the Kellogg had

earned $20,000 to $30,000 a year from 2004 to 2006, and had been steadily

employed from 1999 to 2012 except for a period of incarceration.            And the

government highlights the graphic design talent Kellogg evidenced in creating the

counterfeit notes, which, the government asserts, demonstrates his earning

potential upon release from prison.

      Although the PSR reflects that Kellogg, who was 37 years old at sentencing,

appears to have maintained some level of employment from 1999 to 2012, and

clearly had some competence with graphic design, other factors weigh against

Kellogg’s future ability to pay the $40,000 fine. In particular, we highlight the

following: (1) Kellogg has at least three dependent children; (2) his family’s

monthly cash flow was negative, even including the fact that nearly half the

income was from food stamps; (3) Kellogg had a negative net worth; (4) Kellogg

was appointed counsel for the criminal case, see U.S.S.G. § 5E1.2, comment. (n.3)

(“[T]he fact that a defendant is represented by (or was determined eligible for)

assigned counsel [is a] significant indicator[] of present inability to pay any fine.

In conjunction with other factors, [it] may also indicate that the defendant is not

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likely to become able to pay any fine.”); and (5) the probation officer, after

reviewing Kellogg’s financial condition, did not recommend imposing a fine. The

record is also inconclusive as to whether Kellogg’s graphic design company

derived any legitimate income—or the amount of any such income—from 2009 to

2012.      One of the government’s representations at sentencing—that the

counterfeiting operation was how Kellogg was supporting his family—indicates

that his graphic design company may not have been particularly successful.

        In short, we find the record insufficient to conclude that the district court had

a reasoned basis for imposing the $40,000 fine. The court clearly considered some

relevant § 5E1.5(d) factors in support of imposing a fine, but the court did not

explain, and we cannot discern from the PSR or record evidence, the reasoned

basis the court had for concluding that Kellogg had the future ability to pay a

$40,000 fine.     Consequently, we vacate the district court’s imposition of the

$40,000 fine, and we remand the case for further consideration of this issue in

compliance with the Sentencing Guidelines.            See Paskett, 950 F.2d at 709;

Rowland, 906 F.2d at 623-24.

                                           IV.

        In sum, and for the reasons explained above, we AFFIRM Kellogg’s total

sentence of imprisonment, but we VACATE the district court’s imposition of

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Kellogg’s $40,000 fine and REMAND the case for the limited purpose of

determining whether there is a reasoned basis for imposing a fine on Kellogg.

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