Court Opinion

ID: 2994847
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:16:58.573181+00
Date Added: 2024-06-11T11:45:22.548985
License: Public Domain

In the
United States Court of Appeals
For the Seventh Circuit

No. 99-4105

United States of America,

Plaintiff-Appellee,

v.

Cora Buckowich,

Defendant-Appellant.

Appeal from the United States District Court
for the Eastern District of Wisconsin.
No. 98-CR-215--Thomas J. Curran, Judge.

Argued January 23, 2001--Decided March 22, 2001

  Before Posner, Easterbrook, and Ripple, Circuit
Judges.

  Easterbrook, Circuit Judge. Cora Buckowich raised
money using the lure of spectacular profits. She
promised that an investment of $500,000 placed in
overseas "bank note trading programs" would grow
to $93 million within three months. The offer was
ludicrous; a promise of extravagant returns is a
signal of fraud (and it also should have posed
the question why, if Buckowich had such amazing
opportunities, she would allow the profits to go
to strangers rather than reaping them herself).
Yet Gordon Ralph was taken in; and the oddity
that a well-to-do person would be such a sucker
was compounded by the fact that Ralph had his
lawyer William Wylie represent him in the
transaction. How any competent attorney could
have failed to protect his client from this scam
is a mystery, but Wylie and his partner Grant
Markuson seem to have been more naive than Ralph.
At least Ralph knew that he needed professional
assistance. Wylie and Markuson not only failed to
steer Ralph away from the fraud but also did not
keep tabs on the money. Buckowich used a series
of bank transfers to spirit the funds from
Markuson’s lax supervision during a trip to
London for the supposed closing. By the time
prosecutors caught up with her, Buckowich had
spent the proceeds and could not make
restitution. She has been sentenced to 40 months’
imprisonment for wire fraud, 18 U.S.C. sec.1343,
and unlawful financial transactions, 18 U.S.C.
sec.1957.

  Buckowich’s sole argument on appeal is that the
district judge erroneously believed that he
lacked authority to sentence her below the
applicable range under the Sentencing Guidelines,
and would have given her the benefit of a
downward departure had he recognized the extent
of his discretion. This is an implausible line of
argument, because the district judge did not act
as if constrained to sentence Buckowich to a
longer term than the judge believed appropriate.
After concluding that the guidelines prescribed
a range of 33-41 months’ imprisonment, the judge
selected a sentence of 40 months, almost the top
of the range. A judge who preferred to depart
downward, but thought that legal rules blocked
such a step, would sentence the defendant at the
bottom of the available range. We do not mean
that a sentence above the bottom of the range
makes it legally impossible for a defendant to
argue on appeal that the judge imposed an
excessive sentence because he misunderstood the
extent of his discretion; perhaps some odd events
that we do not foresee would reconcile a top-of-
range sentence with a desire to depart downward,
if that step were lawful. But a top-of-range
sentence surely dispels ambiguity in the district
judge’s rulings. If there are two possible ways
to understand the district court’s ruling--either
as a discretionary decision not to depart
downward, or as a statement of belief that the
law precludes downward departure, the former not
reviewable on appeal, see United States v. Franz,
886 F.2d 973 (7th Cir. 1989), but the latter
reviewable under 18 U.S.C. sec.3742(a)--a top-of-
range sentence demonstrates that the judge meant
the former. A high-in-range sentence also usually
demonstrates that, even if the judge erred in
believing that he lacked discretion to depart,
this error did not harm the defendant and so does
not furnish grounds for reversal.

  Inferences drawn from the high-in-range sentence
resolve this appeal against Buckowich, for the
district court’s ruling is ambiguous--doubtless
because Buckowich’s lawyer presented a garbled
oral argument at sentencing. (A different lawyer
represents Buckowich on appeal and is not
responsible for the events we describe.) After
receiving a copy of the presentence report,
Buckowich’s lawyer filed several documents. One
of these, entitled "Objections to Presentence
Report", sets out 14 numbered objections to
statements and calculations in the report.
Objections 7 through 10 contend, in slightly
different ways, that the district court should
start with the base offense level for fraud under
U.S.S.G. sec.2F1.1(a), rather than the base
offense level for money laundering in
sec.2S1.2(a). (The guidelines treat a violation
of sec.1957 as a form of money laundering, and we
do likewise.) The base offense level for fraud is
6, with a 9-level increase for a loss between
$350,000 and $500,000, adding up to a total
offense level of 15. But the base offense level
for money laundering is 17, with 3 more levels
under sec.2S1.1(b)(2)(D) for laundering between
$350,000 and $600,000, yielding a total offense
level of 20. Objection 10 argues that the
district court should not "group" the two
offenses under sec.3D1.2. Counsel apparently
believed that non-grouping would enable the
district judge to treat the total offense level
as 15. Actually it would have increased the
offense level to 22, because it would have added
a second "unit" with a corresponding increase
under sec.3D1.4. The district court denied this
request, grouped the offenses, and as
sec.3D1.3(a) requires settled on a final offense
level of 20. Buckowich’s criminal history of I
produced the 33-41 month sentencing range.

  Another document filed by Buckowich’s lawyer,
captioned "Memorandum re: Sentencing", argued for
a downward departure on several grounds,
including Buckowich’s medical problems (she is a
diabetic and has been diagnosed with cancer), the
consequences suffered in her private life (her
husband left her as a result of these events, and
she is financially ruined), her assertion that
someone else was the mastermind of the crime, and
her contention that Ralph should have been able
to avoid the loss he suffered. The district judge
did not think that these circumstances,
individually or collectively, justified a
downward departure, and under Franz such a
decision is not reviewable.

  On his feet at sentencing, counsel offered an
admixture of these arguments. He suggested that
it is unjust that the base offense levels for
fraud and money laundering are so different;
argued that money laundering was just incidental
to Buckowich’s fraud offense, making sec.2F1.1
the more appropriate guideline to use; and
continued:

[T]his circuit agrees with several other circuits
in the grouping theory versus the distinct
offense theory of at least four other circuits
which conflict with this circuit. And
fortunately, the Seventh Circuit grouping, as the
probation department in grouping in taking the
highest offense level, highest offense level in
this case, if we have to use money laundering we
go from the wire fraud of 6 to the money
laundering of 17, even though these are monetary
instruments of personal checks in her account.
Not within the heartland of cases I would suggest
to the court that are within the ambit of
application of the money laundering statute.
Where does this leave us? What I’m going to
suggest to the court is that the court follow the
Eighth Circuit which is also a grouping circuit
that follows the Seventh Circuit, and whatever
guideline it applies it does a downward departure
to make up for what could be an injustice in this
case of going from a base offense level of 7 to
17.

This nearly incoherent argument drew the
unsurprising response from the court that it
would apply seventh circuit rather than eighth
circuit law. That is the response that, according
to Buckowich’s appellate counsel, makes the error
of supposing that departure was legally
impossible.

  Put grouping aside, for it has nothing to do
with the subject. Counsel did at least use one of
the code words of a request for a departure--the
submission that the circumstances are not within
the "heartland" of the applicable guideline. See
Koon v. United States, 518 U.S. 81, 93-100
(1996). Departure is proper only when "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." 18 U.S.C.
sec.3553(b). Lawyers and judges often use
"outside the heartland" to allude to these
statutory requirements. Counsel might have been
suggesting two things: first, that the court
start with the offense level of 20 generated by
the money-laundering guideline and then depart
downward on the ground that this was an unusually
innocuous use of banks to shuffle funds, not as
threatening as the level-20 brand of money
laundering; second, that the court should simply
disregard the bank transactions (and thus the
money-laundering guideline) and base the sentence
exclusively on the fraud guideline. Most of
counsel’s submission, both written and oral,
seems to support the second theme, as does his
reliance on United States v. Woods, 159 F.3d 1132
(8th Cir. 1998). But the district judge was right
to dismiss this line of argument; Woods is
incompatible with the law of this circuit.
Buckowich was convicted of both wire fraud and
money laundering; the judge in sentencing must
consider both offenses and may not act as if the
defendant had been convicted of just one.

  Woods was convicted of bankruptcy fraud and
money laundering; the money laundering consisted
in financial transactions to conceal funds from
the bankruptcy court. The district judge decided
that Woods’ offense was a bankruptcy crime and
that it bore none of the hallmarks of money
laundering, which the district judge thought
associated with organized crime and drug
trafficking. Effectively, the district judge
held, Woods should not have been charged with or
convicted of money laundering, and he used the
form of a downward departure to make the money
laundering offense (and its higher guideline
level) vanish. The court of appeals affirmed,
evidently sharing the district court’s view that
because "the underlying offense was . . . fraud,
and not drug trafficking or some other offense
typical of organized crime," 159 F.3d at 1134,
the money laundering guideline need not be
applied. In support of this conclusion, the
eighth circuit observed (id. at 1135-36) that in
1995 the Sentencing Commission had concluded that
the money laundering guideline often increased
penalties unduly and proposed an amendment that
would conform the offense level for money
laundering to the offense level for the
underlying offense. The district judge had done
the same thing, the eight circuit held, and could
not be reversed.

  Although the Sentencing Commission concluded in
1995 that the offense level for money laundering
should track the offense level for the underlying
offense, Congress did not share this view. It
enacted legislation (Pub. L. 104-38, 109 Stat.
334 (Oct. 30, 1995)) that nullified the proposed
amendment, which would have abrogated all
punishment for money laundering unless that were
the only offense of which the defendant was
convicted. An unsuccessful proposal for a change
in the guidelines is a poor reason for a downward
departure, which would adopt the amendment at
retail even after Congress has rejected it at
wholesale. Although Woods applied the term
"departure" to this process, it would be more
accurately called nullification of the
legislative decision, a refusal to use the
guidelines as currently written. The eighth
circuit’s position cannot be reconciled with
United States v. Jackson, 103 F.3d 561, 571-73
(7th Cir. 1996), in which this circuit nixed a
similar maneuver in drug cases. The Commission
proposed changing the ratio between crack and
powder cocaine. After Congress rejected that
proposal, in the same statute that rejected the
money-laundering proposal, defendants contended
that district judges could base departures on the
views reflected in the proposed amendment. We
disagreed, and the rationale of Jackson also
precludes accepting the eighth circuit’s view in
Woods. The eighth circuit’s approach, which
relied heavily on a disapproved proposal for
amendment and a follow-up report prepared by the
Department of Justice (159 F.3d at 1135-36) also
appears to violate 18 U.S.C. sec.3553(b), which
provides: "In determining whether a circumstance
was adequately taken into consideration [for
purposes of departure], the court shall consider
only the sentencing guidelines, policy
statements, and official commentary of the
Sentencing Commission." (Emphasis added.) The
eighth circuit considered matters that are not on
this list, an approach that Jackson held
forbidden. 103 F.3d at 573. (Woods did not cite
either Jackson or this part of sec.3553(b).) As
long as the guidelines continue in their current
form, a defendant convicted of both fraud and
money laundering must take, as his base offense
level, the greater of the levels generated by the
two distinct guidelines.

  To say that the district judge must start with
the money-laundering guideline (if it is the
higher) is not to say that it must stop there. It
may conclude that particular conduct was
abnormally innocuous and depart downward on that
account. But under the law of this circuit
departure must be a reasoned step, linked to the
structure of the guidelines, and any departure
greater than two offense levels requires strong
reasons. United States v. Thomas, 930 F.2d 526,
531 (7th Cir. 1991); United States v. Schmude,
901 F.2d 555, 560 (7th Cir. 1990); United States
v. Ferra, 900 F.2d 1057, 1061-63 (7th Cir. 1990).
Tossing out an entire guideline, as Buckowich
proposed to do (and as Woods approved), would not
be a measured approach linked to the structure of
the guidelines; it would instead reflect profound
disagreement with the current structure of the
guidelines and a preference for the failed 1995
amendment. Disagreement with the guidelines is
not a proper reason for departure. United States
v. Krilich, 159 F.3d 1020, 1030 (7th Cir. 1998);
United States v. Scott, 914 F.2d 959, 963 (7th
Cir. 1990). Buckowich did not ask the district
judge to depart by a level or two, to 19 or 18.
She wanted a reduction to 15, achieved by
disregarding the money-laundering guideline. That
request the district judge properly rejected as
outside legal bounds. To the extent a request for
a smaller reduction may be inferred from the
record, the district court was entitled to deny
it too; as we have said, the top-of-range
sentence demonstrates that the judge was not
inclined to exercise discretion in Buckowich’s
favor.

Affirmed
  RIPPLE, Circuit Judge, dissenting. Because I
believe Ms. Buckowich’s arguments to the district
court encompassed a request for a modest
departure, and because I do not believe it is
clear from the record that the district court
understood its ability to grant such a departure,
I respectfully dissent.

  Ms. Buckowich’s arguments to the district court
are, as my colleagues point out, hardly a model
of clarity. Nevertheless, I believe a fair
reading of Ms. Buckowich’s submissions
encompasses the argument that her actions were
"outside the heartland" of money laundering
cases. Koon v. United States, 518 U.S. 81, 98
(1996). Specifically, Ms. Buckowich’s actions
constituted, in the language of the majority,
"unusually innocuous use of banks to shuffle
funds." Slip op. at 5.

  The district court did not respond directly to
this argument. Perhaps it did not believe Ms.
Buckowich was making this claim. Perhaps it
recognized the argument, but did not believe that
Ms. Buckowich’s transgressions fell "outside the
heartland" of money laundering cases, or it
simply was not inclined to exercise discretion in
her favor. Perhaps, however, the district court
did not understand that it had the discretion to
depart in such circumstances.

  The majority does not discount entirely this
latter possibility. Nevertheless, because the
district court’s "top-of-range sentence
demonstrates that the judge was not inclined to
exercise discretion in Buckowich’s favor,"
remanding would not affect Ms. Buckowich’s
sentence. Slip op. at 8. I do not believe that a
"top-of-range" sentence eliminates the
possibility that the district court would have
granted Ms. Buckowich a departure had it
understood its ability to do so.

  Ideally, a district court, even in the face of
a muddled presentation by counsel, informs the
parties (and the appellate court) of the
arguments it is addressing, its actions on those
arguments, and the analytical process employed in
reaching its decision. In the absence of such
explanations, an appellate court is left with
only circumstantial evidence as to the district
court’s reasoning in reaching the end result.

  In the present case, the circumstantial evidence
is not sufficient to determine whether the
district court understood that it could grant a
"heartland" departure in these circumstances and
whether the district court would have granted
such a departure if it properly understood its
authority. I, therefore, would remand the case to
the district court. The district court, of
course, could determine that Ms. Buckowich’s
actions did not meet the criteria for a
"heartland" departure. It also could refuse to
exercise its discretion in her favor. In the
absence of a clearer statement, however, I cannot
be confident what path the district court would
follow. I, therefore, respectfully dissent.