Court Opinion

ID: 200888
Source: CourtListenerOpinion
Date Created: 2011-02-07 05:03:09+00
Date Added: 2024-06-11T13:14:57.405538
License: Public Domain

United States Court of Appeals
                       For the First Circuit

No. 03-1077

                      UNITED STATES OF AMERICA,

                              Appellee,

                                 v.

                       JOSE OMAR CRUZ-MERCADO,

                        Defendant, Appellant.

No. 03-1078

                      UNITED STATES OF AMERICA,

                              Appellee,

                                 v.

                        VICTOR FAJARDO-VELEZ,

                        Defendant, Appellant.

            APPEALS FROM THE UNITED STATES DISTRICT COURT

                   FOR THE DISTRICT OF PUERTO RICO

           [Hon. Hector M. Laffitte, U.S. District Judge]

                               Before

                         Selya, Circuit Judge,
                    Coffin, Senior Circuit Judge,
                     and Smith,* District Judge.

    *
        Of the District of Rhode Island, sitting by designation.
     Gary H. Montilla with whom Luis A. Plaza, Osvaldo Carlo
Linares and Lausell & Carlo, PSC were on brief for appellant
Fajardo-Velez.
     Ignacio Rivera-Cordero for appellant Cruz-Mercado.
     Nelson Perez-Sosa, Assistant United States Attorney, with whom
H.S. Garcia, United States Attorney, and Sonia I. Torres-Pabon,
Assistant United States Attorney, were on brief for appellee.

                          March 2, 2004
      COFFIN, Senior Circuit Judge. Appellants Victor Fajardo-Velez

and   Jose    Omar     Cruz-Mercado    were   the   Secretary    and   Associate

Secretary of the Puerto Rico Department of Education (PRDE) when

they devised an extortion and kickback scheme that allegedly

involved fraudulent payments of more than $4.3 million in cash and

property from PRDE contractors.             Appellants entered into separate

cooperation agreements with the government and pled guilty to

several counts in exchange for what they hoped would be shorter

sentences.     Those hopes were not realized, however, and appellants

now raise a series of challenges to their sentences.1                  Finding no

reversible error, we affirm.

                                I. Background

      We     briefly    summarize     the   relevant   facts    and    procedural

history, drawing from appellants' cooperation agreements, and from

the transcripts of their sentencing proceedings and Fajardo's bail

revocation hearing.         See United States v. Mateo, 271 F.3d 11, 13

(lst Cir. 2001).        According to their agreements, Fajardo recruited

      1
       Fajardo also claims that his plea to Count Five of the
indictment, which charged a violation of 18 U.S.C. § 666, should be
vacated and the count dismissed because the count as alleged lacked
an essential jurisdictional element of the offense. Section 666
governs theft or bribery involving programs that receive federal
funds. The government agrees that omission of an allegation that
the program received more than $10,000 in federal funds in a single
year renders the count insufficient, see 18 U.S.C. § 666(b), and
concedes that it therefore should be dismissed. Although Cruz did
not raise this issue, the government states that he is entitled to
the same action. Consequently, we direct the district court to
dismiss Count Five as to both appellants.

                                        -3-
Cruz   to     collaborate     in   a    scheme      to    extort      money    from   PRDE

contractors initially for the purpose of financing their political

party obligations and later for personal purposes.                            Among other

activities, the two administrators orchestrated the creation of a

corporation to act as a front for their illegal activities.                            The

corporation, Research & Management Group, Inc., submitted three

contract proposals totaling more than $4 million to the PRDE and

also generated false invoices seeking payments from other PRDE

contractors.        Fajardo approved the Research & Management contracts

and    also    awarded    contracts       to    a    number      of   companies       whose

principals – charged as co-defendants in the indictment – had made

payments to         appellants.        Fajardo      and   Cruz     also   ordered      that

invoices for their political party activities be distributed to

various PRDE contractors for payment.                     In addition to the cash

payments extorted from the contractors between 1994 and 2001,

appellants         received   "items    for     personal      use."       Hundreds       of

thousands of dollars in cash were kept in a safe in Fajardo's

office, and appellants dipped into it for various political and

personal purposes.

       Appellants were charged in January 2002 with fifteen co-

defendants in an eight-count indictment.                    In February 2002, both

men pled guilty to three counts (Counts One, Five and Eight)

pursuant      to    non-binding    plea    and      cooperation       agreements       that

specified the sentencing calculations that the government would

                                          -4-
recommend and provided that the government would file motions for

downward departure if appellants provided substantial assistance in

the   investigation   or   prosecution   of   others.    For   Cruz,   the

anticipated recommended sentence was set at 46-57 months; for

Fajardo, the recommendation was to be for 70-87 months.          Fajardo

paid $1,352,000 in restitution before tendering his guilty plea;

Cruz agreed to forfeit $600,000, of which approximately $14,700 was

paid before his cooperation agreement was signed.        Both testified

before the Grand Jury and provided considerable information to

authorities about their own activities and the activities of

others.

      In September 2002, Fajardo was called by the government as the

first witness at the trial of three co-defendants.         On the fifth

day of his testimony, during cross-examination, the trial was

aborted when the government accused Fajardo of committing perjury

and moved to revoke his bond, requesting in addition that the case

be dismissed with prejudice as to all remaining defendants (the

three on trial as well as ten others).        The district court granted

the motions.   Maintaining that he had been truthful, Fajardo moved

for release on bail and also sought enforcement of the government's

obligations under the plea agreement. Following a hearing in which

the court explored the government's allegations of untruthfulness,

see infra at 14-19, the court denied Fajardo's motions.

                                  -5-
       Sentencing for both appellants took place on December 11,

2002.       Without any benefit from their plea agreements, their terms

pursuant to the Sentencing Guidelines were roughly twice as long as

they had hoped to receive.2         Fajardo was sentenced to a term of 151

months on Counts One and Eight and 120 months to be served

concurrently on Count Five.             The court ordered restitution in the

amount of $4.3 million.        Cruz was sentenced to a term of 132 months

on the three counts, with the previously agreed upon forfeiture

amount of $600,000.         These appeals followed.

                        II. Appeal of Cruz-Mercado

       Cruz asserts generally that, in light of his substantial

assistance to the government, he is entitled to be sentenced in

accordance with his plea agreement.                Presumably recognizing that

the     district    court    was        not    bound   by    the   agreement,   he

particularizes that contention by identifying three specific flaws

in    his    sentencing:    (1)    he    was    improperly    denied   a   downward

departure for substantial assistance; (2) his sentence should not

have been calculated based on the total loss alleged in the

indictment, $4.3 million; and (3) the court made several statements

during sentencing that reflected bias toward him.                  We address each

in turn.

       2
       The government did not renounce Cruz's agreement, but
simply declined to move for a downward departure for substantial
assistance. The court, however, refused to accept the agreement
and instead imposed sentence without regard to it.

                                          -6-
       A. Downward Departure.          Under Cruz's plea agreement, the

government    was   obliged    to    move    for    downward    departure   under

U.S.S.G. § 5K1.1 if prosecutors "determine[d] that the defendant

has   provided   substantial        assistance      in   the   investigation    or

prosecution of another person who has committed an offense."                   The

agreement also provided that it was "conditioned upon the defendant

providing full, complete, truthful and substantial cooperation,"

and that the government would be released from compliance if the

defendant failed "in any way" to fulfill his obligations.

       Cruz acknowledged that, in one instance, he did not tell the

truth, admitting in a sentencing motion that he had "failed to

remember a 1996 check that became important at trial and crucial to

the position of the US Attorney."            He consequently stipulated to a

two-level upward adjustment for obstruction of justice.

       Cruz maintains that this single episode does not negate the

extensive    cooperation   he    provided,       which    included   substantial

testimony before the Grand Jury and delivery of more than 150

incriminating documents.        He notes that he would have testified at

trial as well had the proceedings not been cut short by the

government.

       Although it appears that Cruz provided significant assistance

in    the   prosecution   of    this   case,       his   cooperation   agreement

explicitly gave the government the authority not to request a

downward departure in the event Cruz failed to meet his obligation

                                       -7-
to be truthful.        Cruz does not dispute his lack of veracity or the

relevance of his untruthfulness, seeking only to minimize its

weight   in    light    of     his   otherwise          full    cooperation      with     the

government. Whether or not we agree with the government's judgment

not to recommend a downward departure is of no consequence.                          In the

absence of an unconstitutional motivation or arbitrariness, see

United States v. Davis, 247 F.3d 322, 325-26 (1st Cir. 2001);

United States v. Doe, 233             F.3d 642, 644 (lst Cir. 2000), and in

the    face    of     Cruz's    admitted          obstruction       of     justice,       the

government's decision was within its discretion. Cf. United States

v. Saxena, 229 F.3d 1, 6 (1st Cir. 2000) ("A defendant who has

entered into a plea agreement with the government, and himself

fulfills      that    agreement,      is    entitled       to    the   benefit      of    his

bargain.") (emphasis added); see also Davis, 247 F.3d at 326

(government's        burden    in    defending      a     decision       not   to   file    a

substantial assistance motion, "at least where there is a plea

agreement,"      is     "modest,        only      one     of    production,         not    of

persuasion").

      To the extent Cruz separately challenges the district court's

denial of his motion for a downward departure under the general

departure guideline, U.S.S.G. § 5K2.0, his claim is without merit.

We    repeatedly      have     stated      that    "departures         for     substantial

assistance must come within the confines of USSG § 5K1.1," United

States v. Sandoval, 204 F.3d 283, 285 (lst Cir. 2000), and that a

                                           -8-
district court consequently is not empowered to independently grant

a departure for that reason under § 5K2.0, see, e.g., Davis, 247

F.3d at 328; Sandoval, 204 F.3d at 285; United States v. Alegría,

192 F.3d 179, 189 (lst Cir. 1999).                 The court therefore did not err

in denying his motion.

      B.   Calculation         of    Loss.     Cruz    maintains    that      the   court

improperly utilized the total loss alleged in the indictment, $4.3

million, in calculating his sentence, resulting in an erroneous

seven-level increase in his base offense level.                      See U.S.S.G. §

2S1.1(b)(2)(H).3        He contends that his sentence should have been

based     on   the    amount    of    loss    attributed     to    him   in   his    plea

agreement, $600,000, which would have triggered only a three-level

increase.

      It is undisputed that Cruz was not personally implicated in

the   full     $4.3    million       loss    charged    in   the   indictment.         At

sentencing, however, the district court expressed its view that

Cruz and Fajardo were equally culpable "partners in crime."                           The

court also noted that the factual allegations indicated that "the

money involved in the conspiracy significantly exceeded the 4.3

million dollars reflected in the indictment," which simply was the

amount the government felt it could prove beyond a reasonable

doubt. Because of the scope of the scheme and appellant's admitted

      3
       The district court utilized the November 1, 2000 edition of
the Sentencing Guidelines.

                                             -9-
obstruction of justice, the court found that it was not bound by

the plea agreement and that a sentence at the high end of the

applicable range, based on the full $4.3 million, was appropriate.

The court noted that there were grounds for imposing an upward

departure, but decided against doing so.

      Appellate review of a district court's application of the

Guidelines typically involves a two-part inquiry: "[W]e scrutinize

the district court's legal determinations . . . de novo and check

its factual determinations for clear error."     Mateo, 271 F.3d at

13.   Here, Cruz challenges the court's factual finding that he is

accountable for the full $4.3 million loss.   We see no clear error

in that judgment.   Cruz pled guilty to Count One, which charged a

conspiracy to interfere with commerce by extortion, in violation of

18 U.S.C. § 1951(a).   Although Cruz did not participate in each act

allegedly a part of the conspiracy, it is well established that co-

conspirators may be sentenced based on all reasonably foreseeable

acts of others in furtherance of the conspiracy – i.e., all

"relevant conduct" under U.S.S.G. § 1B1.3.     See United States v.

Laboy, 351 F.3d 578, 582-83 (lst Cir. 2003); USSG § 1B1.3(a)(1)(B).

Based on Cruz's extensive involvement throughout the relevant six-

year period, as detailed in his plea and cooperation agreement, the

court supportably found that he shared responsibility as a partner

for the full amount of the loss.

                                -10-
     C. Judicial Bias.     Cruz claims that two comments by the

district judge, one at his sentencing hearing and the other at

Fajardo's bail revocation hearing, reflected bias sufficiently

prejudicial to warrant his re-sentencing by another judge.        He

points to the judge's comment that Fajardo, Cruz and co-defendant

Ruperto Vazquez Lopez "operated like mafiosos," particularly when

they allocated among themselves specific percentages of the illegal

extortion and kickback proceeds they anticipated collecting.     Cruz

also challenges the judge's description of him as the "enforcer" in

the conspiracy.

     We need not dwell on this issue. First, Cruz neither objected

to these comments nor sought recusal of the trial judge based on

partiality, limiting our review to assessing only whether plain

error occurred.   See, e.g., United States v. Arache, 946 F.2d 129,

140 (lst Cir. 1991).   Whatever one's view of the judge's rhetoric,

we think it beyond debate that it reflected a fact-based assessment

of the type of conduct in which the defendants engaged and not a

fundamentally unfair bias toward Cruz.

     [J]udicial remarks during the course of a trial that are
     critical or disapproving of, or even hostile to, counsel,
     the parties, or their cases, ordinarily do not support a
     bias or partiality challenge. They may do so if they
     reveal an opinion that derives from an extrajudicial
     source; and they will do so if they reveal such a high
     degree of favoritism or antagonism as to make fair
     judgment impossible.

                                -11-
Liteky v. United States, 510 U.S. 540, 555 (1994) (emphasis in

original).   The remarks here reveal neither, and Cruz's claim is

thus unavailing.

                   III. Appeal of Fajardo-Velez

     Following an evidentiary hearing to explore the government's

allegations that Fajardo had committed perjury and breached his

plea agreement, the district court found that he was not entitled

to enforcement of the agreement and subsequently concluded that his

lack of truthfulness warranted an upward adjustment in his sentence

for obstruction of justice.    Fajardo claims that he must be re-

sentenced because it was the government – not he – who breached the

agreement, and because the court's imposition of a harsh sentence

stemmed from violations of his Fifth and Sixth Amendment rights.

     The constitutional claims primarily arose from the district

court's requirement that Fajardo answer a series of questions on

cross-examination at his co-defendants' trial after he had invoked

the Fifth Amendment, without first allowing him to consult with his

attorney.4   The questions concerned a company created by his wife

and for which he served as board president, "Community Services

Training Institute" ("Community"), that was largely unconnected

     4
       Fajardo makes a general, undeveloped claim that he was
denied his Sixth Amendment right to counsel based on the district
court's repeated admonition during his trial testimony that he not
speak to anyone, including counsel, about the case. The only time
he asked to speak with counsel, however, related to a matter not at
issue on appeal, and we therefore do not further address this
contention.

                               -12-
with the charged conspiracy but was the subject of a pending local

investigation.    It was Fajardo's answers to those questions, which

sought to link Community with Research & Management (the company

formed to implement the extortion scheme), that prompted the

government's allegations of perjury and, in large part, triggered

dismissal of the case.         The government acknowledges that the

testimony elicited after Fajardo invoked his Fifth Amendment rights

was   "improperly    received,"     but   it   correctly   points   out   that

Fajardo's statements about Community ultimately played no role in

his sentencing.      The district court relied on other factors to

conclude   that     Fajardo   had   breached     the   plea   agreement    and

obstructed justice, and we therefore need not address the substance

of the constitutional claims.

      Instead, we consider the three instances of untruthfulness on

which the district court did rely – which we will detail shortly –

and conclude that the court did not err in finding that Fajardo

breached the plea agreement.5       As we explain below, however, we are

troubled by the manner in which the government achieved this

result.    We begin our discussion with some additional procedural

background.

      5
         We review a district court's factual findings concerning
a plea agreement only for clear error, but "whether [undisputed]
conduct constituted a breach of the plea agreement is a question of
law subject to plenary review," United States v. Doe, 233 F.3d 642,
643-44 (lst Cir. 2000); see also United States v. Frazier, 340 F.3d
5, 9-10 (lst Cir. 2003).

                                     -13-
      Shortly after the co-defendants' trial was terminated and

Fajardo's bail was revoked, an evidentiary hearing – labeled a

"revocation hearing" – was held to determine if he had been

properly returned to custody.             The parties addressed the alleged

perjury concerning Community and, for the first time on the record,

the   government        identified      three     additional        instances    of

untruthfulness that it claimed justified withdrawal of the plea

agreement, supported an enhancement for obstruction of justice, and

contributed to the decision to end the trial and dismiss the case

against the remaining defendants.

      At   the    end   of    the   hearing,    the   court   ordered   Fajardo's

continued detention.           A month later, the court issued an order

finding that the government had met its burden of proving by a

preponderance      of   the    evidence    that   Fajardo     had   substantially

breached his obligation under the plea agreement "'to provide

truthful, complete and accurate testimony and information.'" See

United States v. Tilley, 964 F.2d 66, 71 (lst Cir. 1992).                       The

court thus released the government from its obligations under the

agreement.       The court based its decision on the three alternative

incidents of alleged untruthfulness, declining to address whether

Fajardo's testimony on Community constituted perjury.

      The court relied on the following discrepancies: (1) Fajardo's

acknowledgment on cross-examination that he had committed criminal

acts before 1994, the year he became Secretary of Education,

                                        -14-
allegedly contradicted a prior statement to prosecutors that his

criminal activity began when he assumed that position; (2) his

testimony that a co-defendant contractor had financed a trip to

Chicago conflicted with subsequently obtained documentary evidence

showing that Cruz had reimbursed the contractor for the expenses;

and (3) his testimony on cross-examination indicating that the co-

defendant contractors participated in the scheme under economic

duress allegedly differed from earlier statements to prosecutors

that the contractors were collaborators in a mutual business

undertaking.

     Fajardo claims that, because the government was unable to

substantiate the alleged perjury regarding Community, it contrived

these three inaccuracies as an alternative way to make him the

scapegoat    for   its    flawed     investigation   and   prosecution.      He

complains that these "vague and unannounced" allegations "blind-

sided" his     counsel    at   the    revocation    hearing.     Moreover,   he

maintains that none of the three claims has merit.

     On the alleged contradiction regarding the use of economic

duress against the contractors, Fajardo asserts that he testified

truthfully    in   response    to     technically    framed    questions   that

mirrored the language of the indictment, his plea agreement and the

charging statute.6       Any problem, he insists, is attributable to the

     6
       Count One of the indictment alleged a "conspiracy to
interfere with commerce by extortion induced by economic fear
and/or color of official right," in violation of the Hobbs Act, 18

                                       -15-
government's ill-conceived case; at the revocation hearing, his

attorney observed that bribery might have been a more appropriate

charge than one requiring fear of economic harm.              Moreover,

Fajardo points out, he was denied any opportunity to explain his

answers   –   and,   indeed,   the    government   acknowledged   at   the

revocation hearing that it initially anticipated being able to

rehabilitate Fajardo on the issue of duress on redirect. See infra

at 17.7   As for payment of the Chicago expenses, Fajardo discounts

the importance of any error in his recollection of that one

particular trip in light of the contractor's payments on his behalf

on other occasions.     And on the pre-1994 crimes, Fajardo asserts

that he again was not given an opportunity to explain his answer

and notes that such crimes may have been only "irrelevant juvenile

or petty offenses."

     At the revocation hearing, the government denied any attempt

to ambush Fajardo's counsel.         The prosecutor stated that counsel

U.S.C. § 1951. Under the statute, "extortion" is defined as "the
obtaining of property from another, with his consent, induced by
wrongful use of actual or threatened force, violence, or fear, or
under color of official right." 18 U.S.C. § 1951(b)(2). In cross-
examination, when asked if the requests for funds from the
contractors were made "with the threats that if they didn't make
them, it would be economic death," Fajardo replied, "Yes, sir."
This reply was one of several acknowledging that consent from the
contractors was "wrongfully induced by fear of economic harm."
     7
       Presumably, the government would have pursued its theory
that the contractors initially were the victims of economic duress,
but later became willing participants, and thus aiders and
abettors, in the scheme. Whether or not this is a viable theory is
not before us.

                                     -16-
previously had been told of the government's other untruthfulness

concerns,    and   he   explained   that   those   issues   had   not   been

highlighted in advance of the hearing because the government had

been asked specifically to identify and substantiate only its

perjury allegations – not instances of untruthfulness outside the

courtroom.    Because the government assumed that Fajardo's trial

testimony on the three additional matters was true, and that his

earlier statements, during debriefing sessions, had been false, the

government viewed the incidents as involving untruthfulness, but

not perjury.8

     The prosecutor also explained in some detail how these three

matters affected the government's view of the viability of its

case.    Initially, he reported, the government had been taken aback

by Fajardo's answers on cross-examination indicating that the

contractors were threatened with "economic death" if they did not

cooperate.    The prosecutor reported that he phoned his supervisors

during the next recess to alert them to the problem and was

instructed to try to rehabilitate Fajardo on redirect.

     According to the prosecutor, however, that plan fell apart in

the face of several developments affecting Fajardo's credibility.

     8
       We note that, unlike the cross-examination testimony on
economic duress and prior crimes, which differed from what the
government claimed it was earlier told, Fajardo's testimony about
the Chicago trip apparently matched the government's expectations.
It differed, however, from the documentary evidence produced by co-
defendant's counsel and thus presumably should have been viewed as
false testimony by the government.

                                    -17-
First, to the government's surprise, Fajardo invoked the Fifth

Amendment to avoid answering questions about his activities with

Community.9   The prosecutor noted that "[h]e never told us he was

going to have a problem with any questions concerning this matter."

Then, Fajardo admitted that he had committed crimes before 1994;

his exchange with co-defendant's counsel, reproduced in relevant

part below, suggests that such activity was not trivial:

     COUNSEL: Now, you had done prior illegal activities,
     didn't you, before the facts that are detailed in the
     indictment, weren't you?
     FAJARDO: Such as, sir?
     COUNSEL: I'm asking you, were you or were you not
     involved in any illegal activities prior to 1994, 1995?
     FAJARDO: If I were to answer yes or no, that would
     require an explanation.

     Fajardo was then directed by the court to answer yes or
     no.

     FAJARDO: My answer is yes, sir.
     COUNSEL: In other words, you're telling this jury that
     prior to 1994, you were involved in other illegal
     activities; is that correct?
     FAJARDO: Yes, sir.
     . . .
     COUNSEL: It involved illegal activities between you and
     Omar Cruz; is that correct? Yes or no.
     FAJARDO: Specifically Jose Omar Cruz?
     COUNSEL: Yes.
     FAJARDO: Right now, I don't know.
     COUNSEL: You don't recall?
     FAJARDO: I don't recall.

     9
       Although the court initially allowed Fajardo to deflect the
questions about Community, the court later required him to answer,
and his responses triggered the government's allegations of
perjury.   As noted earlier, however, that testimony was not a
factor in the court's disposition.

                               -18-
     Counsel then continued by asking Fajardo if his wife was

involved in those activities, and Fajardo replied, "In order to say

yes, I need to acknowledge what it is that we're talking about."

Then, when asked what he did illegally before 1994, he replied,

"[I]t depends on what you consider to be illegal, I may not

consider it to be illegal."     Counsel then asked if the activities

involved   Community,   and   Fajardo      said,   "I    cannot     answer   that

question   categorically."      The     exchange        continued    with    more

questions about Community, to which Fajardo at times replied by

invoking his Fifth Amendment right not to answer.

     Fajardo's   admission     of     earlier      criminal       activity    was

particularly troublesome for the government because the exchange

with counsel allowed an inference of involvement by Cruz, the

government's other key witness. And the final inconsistency – the

matter of who paid for the Chicago trip – similarly impacted the

credibility of both Fajardo and Cruz.         Both had attributed payment

for most of the trip's expenses to the contractor, but Cruz's

reimbursement check to the contractor's business proved otherwise.

     The government asserted at the revocation hearing that the

cumulative effect of the three discrepancies, together with the

alleged perjury concerning Community, prompted its decision to end

the trial and dismiss the case against the remaining defendants,

and also provided ample support for the decision to renounce

                                    -19-
Fajardo's plea agreement based on a breach of his obligation to

provide truthful information.

       When it enters into a plea agreement, the government must

carry out the obligations it undertakes at least with the diligence

it would bring to any contract.       United States v. Frazier, 340 F.3d

5, 11 (lst Cir. 2003).       Technical compliance is not enough; "[o]ur

case    law   prohibits     'not   only     explicit    repudiation      of     the

government's assurances, but must in the interests of fairness be

read to forbid end-runs around them.'"          Id. at 10 (quoting Saxena,

229 F.3d at 6).      As we noted with respect to Cruz, however, a

defendant is not entitled to the benefit of his bargain if he does

not himself comply with the terms of the agreement.                 See Saxena,

229 F.3d at 6.

       Before we begin our analysis, we think it important to place

in perspective the proper characterization of the breach issue.

Fajardo suggests     that    any   transgression       on   his   part   must   be

important enough to justify nearly a doubling of his expected

sentence from roughly six or seven years to about twelve-and-one-

half years.    What he overlooks is that the sentence he received was

what the guidelines normally would prescribe for the crimes he

committed, albeit with a two-level increase for obstruction of

justice.10    Only fidelity to his cooperation agreement, fulfilling

       10
        Fajardo was assigned base offense level 32, with Criminal
History Category I, which resulted in a guideline sentencing range
of 121 to 151 months. Without the obstruction of justice increase,

                                     -20-
all that the government reasonably could expect, entitled him to

the government's recommendation that the court halve the prison

term that otherwise could be imposed.               It is with this perspective

that we examine the record.

       We are satisfied that the government had a sufficient basis,

without relying on the alleged perjury concerning Community, for

finding      a    breach   by     Fajardo.     While    at    least    one   of   the

government's examples of untruthfulness – the Chicago expenses –

seems a minor dereliction and, thus, an inadequate basis for

renouncing the plea agreement, and the seeming inconsistency on the

role    of   the     contractors     may     have   been    more    semantics     than

contradiction,11 we are still left with the unexplained admission

that Fajardo committed crimes – perhaps with Cruz – prior to 1994.

At the revocation hearing, the prosecutor termed the failure to

disclose         prior   crimes    "crucial"    and    "a    breach   of   the    Plea

Agreement, per se."

       The record on that issue is far from ideal.                 At the revocation

hearing, the government supported its claim that Fajardo previously

had lied about his pre-1994 activities by pointing to the list of

prior bad acts it had provided to co-defendants pursuant to a July

his sentencing range would have been 97 to 121 months.                            See
U.S.S.G. ch. 5, pt. A (Sentencing Table).
       11
       We so describe this issue because, as noted earlier, see
supra note 7, the government might have been able to proceed with
its theory of the case by clarifying that the economic duress
occurred at the outset of the scheme.

                                        -21-
2002 court order.    The government stated that, based on Fajardo's

representations, the list did not include any pre-1994 activity.

The list itself, and any evidence of communication from Fajardo

underlying it, should have been a part of the record on appeal in

this case.

     Other factors, however, persuade us that this gap is not fatal

to the government's effort to use the inconsistency on pre-1994

offenses as a basis for breach of the plea agreement.           Although

Fajardo points to the lack of information on the nature of his

earlier conduct, and speculates that it may have been minor, the

exchange with counsel quoted above permits the inference that, like

the scheme at issue in this case, it involved illicit business

dealings.     These other offenses were, quite clearly, not minor

peccadillos.    In addition, Fajardo neither denies the conflict in

his statements nor offers clarification about the actual nature of

such crimes. Moreover, his counsel neither sought a continuance of

the revocation hearing to develop information about the crimes nor,

so far as the appellate record indicates, moved for reconsideration

on that basis following the court's order.             Every indicator,

therefore, points toward a conclusion that Fajardo misrepresented

significant past criminal activity.

     The substance and manner of Fajardo's testimony regarding his

earlier,     previously   undisclosed    criminal   activity   cannot   be

dismissed as trivial.      In the first place, the list of prior bad

                                  -22-
acts supplied by Fajardo had been given to co-defendants, who would

thus now have concrete proof for the jury of misrepresentation by

the government's key witness.    In the second place, this stain on

his credibility was worsened by his effort on multiple occasions

during cross-examination to avoid direct answers to questions.12

In the third place, the earlier quoted colloquy regarding his past

crimes indicates that Fajardo's less-than-forthcoming conduct was

not simple lapse of memory.     And, finally, the bland and evasive

response regarding possible illegal activities with Cruz allowed

the inference that Cruz participated in the earlier criminal

conduct as well, devaluing Cruz's still-to-come testimony.

     12
        Another example of Fajardo's sidestepping the specific
question asked occurred during the exchange with counsel about
whether the contractors were under duress:

     COUNSEL: And you knew, sir, that when you threatened
     contractors with no contracts, those contractors whose
     sole business was to provide educational services and
     products, you were threatening them with death, weren't
     you, sir?
     FAJARDO: That's an opinion, sir.
           COUNSEL to COURT: May I have an answer to that
     question, Your Honor?
           COURT: You mean economic death?
     COUNSEL: Economic death, sir.
     FAJARDO: Yes, sir.
     . . .
     COUNSEL: And you knew by the threats that you were
     communicating to those contractors, you were, in essence,
     threatening them with harming their employees and their
     employment, didn't you, sir?
     FAJARDO: Nobody complained when they were asked for the
     money. Therefore, they would be the ones to give you the
     answer.

                                -23-
      For these reasons, we conclude that the government reasonably

could treat Fajardo's dissembling on his past criminal activities

as a matter of considerable consequence in the jury's assessment of

his credibility – and a substantial breach of the plea agreement.

We thus see no basis for disturbing the district court's sentencing

judgment as to Fajardo.

      At the same time, however, the government must be chastised

for the manner in which it achieved this result.                    The trial

transcript makes clear that Fajardo's testimony on Community –

which the government viewed as perjury – was the primary basis for

the   decision    to    terminate   the   trial    and   seek   revocation   of

Fajardo's bail.        It is equally apparent from the transcript of the

revocation    hearing     that   Fajardo's   counsel     reasonably   had    the

impression that the government would be relying at the hearing only

on that alleged perjury to support the actions it had taken,

including its announced renunciation of the plea agreement.                   By

failing to provide explicit and complete notice of its intentions

for the hearing, the government was considerably less forthcoming

than the circumstances warranted.            In short, providing advance

information      only    about   matters     the    government    technically

considered perjury, omitting its other untruthfulness concerns, was

unnecessarily misleading.

      We do not doubt the government's representation that the

additional untruthfulness issues, though unmentioned at the time,

                                     -24-
played a role in its decision to dismiss the case.           Nor do we think

the lack of notice materially affected Fajardo's ability to defend

against the government's claims (especially given the absence of

any motion by Fajardo for a continuance). Nonetheless, in light of

the implied obligation of good faith and fair dealing that guides

the relationship of the parties in a plea agreement, see Frazier,

340    F.3d at 11, the government should have informed Fajardo's

counsel    that   it   intended   to     broaden   the   justification      for

renouncing the agreement beyond what had been articulated at trial

and in pre-hearing filings.       Its failure to do so did not deprive

Fajardo of any promised benefit – his own untruthfulness did that13

– but it triggered unnecessary confusion and raised legitimate

concerns about the government's conduct.              The government in the

future must make every effort to be more responsible in its

communications.

      Affirmed    in   part,   vacated   in   part,   and   remanded   to   the

district court for an order dismissing Count Five as to both

appellants.

      13
       In fact, Fajardo's sentence may well have been unaffected
by his breach of the agreement; the district court stated at
Fajardo's sentencing hearing that "regardless of the untruthfulness
. . . I would not have accepted this Plea Agreement."

                                    -25-