Court Opinion

ID: 623536
Source: CourtListenerOpinion
Date Created: 2012-02-25 01:01:21+00
Date Added: 2024-06-11T15:32:47.502930
License: Public Domain

PRECEDENTIAL

          UNITED STATES COURT OF APPEALS
               FOR THE THIRD CIRCUIT
                    _____________

                         No. 10-4092
                        _____________

              UNITED STATES OF AMERICA

                               v.

                   NEAL D. SAFERSTEIN,
                                   Appellant

          Appeal from the United States District Court
            for the Eastern District of Pennsylvania
                     (D.C. Crim. No. 2:07-00557)
          District Judge: Honorable Cynthia M. Rufe
                         ____________

          Submitted Under Third Circuit LAR 34.1(a)
                      January 24, 2012
                      ______________

    Before: FISHER, GREENAWAY, JR., Circuit Judges, and
                   JONES*, District Judge.

*
 The Honorable John E. Jones, III, United States District
Court for the Middle District of Pennsylvania, sitting by
designation.

                               1
              (Opinion Filed: January 26, 2012)

Peter Goldberger, Esq.
50 Rittenhouse Place
Ardmore, PA 19003-2276

Stephen R. LaCheen, Esq.
LaCheen Wittels & Greenberg
1429 Walnut Street
Suite 1301
Philadelphia, PA 19102-0000
       Counsel for Appellant

Jason Bologna, Esq.
Jennifer A. Williams, Esq.
Office of United States Attorney
615 Chestnut Street
Suite 1250
Philadelphia, PA 19106
       Counsel for Appellee
                       _____________

                         OPINION
                      ______________

GREENAWAY, JR., Circuit Judge.

       Neal Saferstein (“Saferstein”) pled guilty in the United
States District Court for the Eastern District of Pennsylvania
to four federal criminal charges related to a

                              2
fraudulent business scheme in which he had engaged. In the
plea agreement, Saferstein waived his appellate rights subject
to several exceptions, including an exception for “the
assertion of constitutional claims that the relevant case law
holds cannot be waived.” (App. 90.) Following his sentence,
Saferstein now argues on appeal that the District Court (1)
violated his due process rights by denying him credit he
believes he was due under the United States Sentencing
Guidelines (the “Guidelines”) for acceptance of
responsibility; (2) denied him his right of allocution at
sentencing; and (3) violated his rights under the ex post facto
clause. He contends that his appellate waiver does not
foreclose any of these arguments.

       We hold, as a result of a statement by the District
Court during the plea colloquy, which improvidently
expanded Saferstein‟s appellate rights, that Saferstein did not
waive his right to raise constitutional claims on appeal. We
further find that his ex post facto claim is of constitutional
moment and meritorious. We will vacate and remand to the
District Court for resentencing.

                    I. BACKGROUND

       From 1997 until 2004, Saferstein was President, Chief
Executive Officer, and majority owner of GoInternet, a
telemarketing company based in Philadelphia. Beginning in
1997, GoInternet‟s telemarketers cold-called businesses
around the country in an attempt to sell them an internet
services package, including a web page, dial-up web access,
and an email account. GoInternet began charging each
business that agreed to receive a “welcome packet” $29.95
per month for these services, a fee which was added to its
telephone bill. By the end of 2003, more than 350,000

                              3
businesses were “customers” of GoInternet, yielding annual
gross revenue in excess of $49 million.

       GoInternet‟s implementation of this business model
had several fraudulent aspects. First, the telemarketers
frequently failed to disclose the full terms of the agreement,
including the fact that consenting to receive a welcome packet
would result in the $29.95 monthly charge unless the business
called GoInternet within fifteen days to cancel services.
Second, the welcome packet looked like unsolicited junk
mail, so that it was often discarded unopened. Even if a
customer did open and read the welcome packet, disclosures
related to billing were hidden, so that most customers
remained unaware that they were required to cancel services
in order to avoid being charged. Third, because the charges
appeared only within telephone bills, many customers did not
notice the GoInternet charges. Fourth, GoInternet lacked the
personnel to handle incoming calls from customers, making it
extremely difficult for customers who attempted to cancel to
do so successfully.

       In addition to these fraudulent practices, the web pages
provided to GoInternet customers were not accurate or useful
to potential customers. The websites were generic, filled with
mistakes, and often appeared at web addresses that were
impossible to locate using major search engines.

       The Government has estimated the losses to customers
associated with the scheme to be approximately $74 million.

       In 2000, the Federal Trade Commission (“FTC”)
brought suit against Saferstein and GoInternet. Federal
Trade Commission v. Mercury Marketing of Delaware, Inc.,
and Neal D. Saferstein, No. 00-CV-3281 (E.D. Pa. filed June

                              4
29, 2000). On March 1, 2001, the parties agreed to a
stipulated judgment and order for permanent injunction,
which contained various prohibitions to protect customers
from unauthorized billing and directed GoInternet to send
postcards to all of its customers informing them that they
were being billed and were paying for GoInternet services.
Despite the agreement, Saferstein directed that those
postcards be altered or destroyed.

       As a result of this and other noncompliant conduct, the
FTC sought to hold Saferstein and GoInternet in contempt. In
anticipation of a hearing on that matter before the District
Court, Saferstein directed GoInternet executive, and eventual
co-defendant, Billy D. Light to testify falsely that 55,000
GoInternet customers used their email accounts and 33,000
used their dial-up internet service each week. Throughout his
time as CEO of GoInternet, Saferstein earned approximately
$20,000 each month in commissions, in addition to an annual
base salary. He also paid for significant personal expenses
with corporate funds. His tax returns, however, reported only
his annual base salary.

       The criminal indictment in this case charged Saferstein
with failing to report more than $1.8 million in income.
Saferstein additionally failed to pay more than $2.8 million in
payroll taxes that had been withheld from GoInternet
employees‟ paychecks.

       The indictment charged Saferstein with (1) sixteen
counts of mail and wire fraud; (2) one count of conspiracy to
commit perjury; (3) four counts of submitting false tax
returns; and (4) six counts of failure to pay over payroll taxes.
Just before trial, Saferstein pled guilty to Count 1, mail fraud;

                               5
Count 16, wire fraud; and Counts 20 and 21, submitting false
tax returns.

       The plea agreement contained language stipulating
that, “as of the date of this agreement, the defendant has
demonstrated acceptance of responsibility for his offense”
and is therefore “eligible for a 2-level downward adjustment”
pursuant to the Guidelines. (App. 86.) It also contained an
appellate waiver provision, which provided that Saferstein
“voluntarily and expressly waive[d] all rights to appeal or
collaterally attack” his conviction, subject to several
exceptions. (Id. at 90.) The waiver was “not intended to bar
the assertion of constitutional claims that the relevant case
law holds cannot be waived.” (Id.) Further, it provided an
exception if the government were to appeal Saferstein‟s
sentence and excepted a small number of enumerated claims
that Saferstein would be permitted to raise on appeal: (1) that
his sentence exceeded the statutory maximum for that count;
(2) that the sentencing judge erroneously departed upward
under the Guidelines; or (3) that the sentencing judge
imposed an unreasonable sentence above the Guideline range.

        During the plea colloquy, the District Court discussed
the waiver in detail with Saferstein. It explained the appellate
rights that Saferstein would have absent the waiver and
precisely what rights remained. Regarding the provision
concerning constitutional claims, the court stated that the
waiver “of course, is not intended to bar you [from] raising
constitutional claims, and only the Court can decide whether
they are constitutional claims or some other kind of claim.”
(Id. at 161.) When asked whether he understood, Saferstein
responded in the affirmative.

                               6
       After the sentencing hearing, the District Court
ultimately agreed with the Pre-Sentence Investigation Report
(“PSR”) that Saferstein qualified for a criminal history
category of I and an offense level of 43, largely as a result of
the enormous amount of money that the fraud involved.
Based on this Guidelines calculation, Saferstein was eligible
for the statutory maximum sentence, forty-six years on the
four counts.

        The District Court denied Saferstein credit for
acceptance of responsibility. It based this determination on
several factors. First, the Court noted that after pleading
guilty, Saferstein had failed to expeditiously turn over certain
financial and medical reports to the probation office. Second,
it determined that a number of his statements during the
sentencing hearing “backtrack[ed] on the enormity of his own
involvement in the scheme that he is responsible for
contriving.” (Id. at 298.)

       The court, after granting a significant downward
variance, sentenced Saferstein to twenty-three years of
imprisonment, composed of concurrent twenty-year sentences
on each of the wire and mail fraud counts, followed by
concurrent three-year sentences on the two counts charging
submitting false tax returns. He also received three years of
supervised release and a fine of $100,000. Saferstein timely
appealed.

  II. JURISDICTION AND STANDARD OF REVIEW

       The District Court had jurisdiction over this case
pursuant to 18 U.S.C. § 3231. This Court has jurisdiction
over a challenge to the sentence under 18 U.S.C. §§ 1291 and
3742(a). “[O]ur review of the validity and scope of appellate

                               7
waivers is plenary.” United States v. Corso, 549 F.3d 921,
926 (3d Cir. 2008) (citations omitted).

        We review for plain error Saferstein‟s claim that he
was sentenced in violation of the ex post facto clause, which
he did not raise in the District Court. Fed. R. Crim. P. 52(b);
United States v. Syme, 276 F.3d 131, 158 (3d Cir. 2002). “A
defendant must satisfy a four-prong test to be successful
under plain error review: there must be (1) an error; (2) that
is plain; (3) which affects substantial rights; and (4) seriously
impairs the fairness, integrity, or public reputation of judicial
proceedings.” United States v. Cesare, 581 F.3d 206, 209 (3d
Cir. 2009) (citations omitted).

                       III. ANALYSIS

   A. Appellate Waiver

        When “the government invokes an appellate-waiver
provision contained in a defendant‟s plea agreement, we must
determine as a threshold matter whether the appellate waiver
prevents us from exercising our jurisdiction to review the
merits of the defendant‟s appeal.” Corso, 549 F.3d at 926
(citations omitted). We decline to exercise jurisdiction over
the appeal where the issues on appeal fall within the scope of
the waiver and the defendant knowingly and voluntarily
agreed to the waiver, unless “enforcing the waiver would
work a miscarriage of justice.” Id. at 927 (citations omitted).

        Here, Saferstein argues that he did not waive his right
to this appeal because each of the issues he presents represent
constitutional claims and the District Court, during the plea
colloquy, stated that the appellate waiver “of course, is not
intended to bar you [from] raising constitutional claims, and

                               8
only the Court can decide whether they are constitutional
claims or some other kind of claim.” (App. 161.) As a result,
Saferstein argues that the agreement he entered into
voluntarily and knowingly preserves his right to appeal
constitutional claims.

       The Government contends that this statement is not
controlling, since it misrepresents the plain language of the
plea agreement, which states that the waiver was “not
intended to bar the assertion of constitutional claims that the
relevant case law holds cannot be waived.” (Id. at 90.) The
District Court‟s statement is clearly at odds with the
otherwise plain and straightforward language of the
agreement. That statement thus created a plausible and
tangible ambiguity and seemingly expanded Saferstein‟s
appellate rights. 1

       We have not spoken before on the impact of a
sentencing court‟s oral statement during a plea colloquy on
the interpretation of a plea agreement. It is clear that

1
  “[L]ogic indicates that if we may rely on the sentencing
court‟s statements to eliminate ambiguity prior to accepting a
waiver of appellate rights, we must also be prepared to
recognize the power of such statements to achieve the
opposite effect. If it is reasonable to rely upon the court‟s
words for clarification, then we cannot expect a defendant to
distinguish and disregard those statements of the court that
deviate from the language of a particular provision in a
lengthy plea agreement.” United States v. Wilken, 498 F.3d
1160, 1168 (10th Cir. 2007).

                              9
principles of contract law apply to plea agreements. United
States v. Williams, 510 F.3d 416, 422 (3d Cir. 2007).
Generally speaking, because the government exercises
tremendous bargaining power during the process of plea
negotiation, we construe any ambiguities in the text against
the government as drafter, id. at 422, but the plain text at
issue here is not ambiguous. It clearly refers to a specific
subset of constitutional claims,2 not to the entire category of
constitutional claims, as the District Court‟s statement during
the colloquy indicated.

       The parol evidence rule generally mandates that when
a “written contract is clear and unequivocal, its meaning must
be determined by its contents alone.” Amer. Eagle Outfitters
v. Lyle & Scott Ltd., 584 F.3d 575, 594 (3d Cir. 2009).
However, the plea colloquy has no analogue in contract law;
indeed, regardless of the clarity of a written plea agreement,
Rule 11(b) of the Federal Rules of Criminal Procedure
obligates a district court, before accepting a plea of guilty, to
place the defendant under oath and to address the defendant
orally and in open court, informing him of, inter alia, “the
terms of any plea-agreement provision waiving the right to
appeal or to collaterally attack the sentence.” Fed. R. Crim.
P. 11(b)(1)(N). The court must also determine that the
defendant understands those terms. Id.

2
   Although the parties engage in substantial debate as to
whether the category of non-waiveable constitutional claims
is an empty category, this is not a question we need to resolve
here. The language of the agreement is not ambiguous
regardless of the answer.

                               10
       We have recognized that a plea colloquy that fails to
meet the requirements of Rule 11(b)(1)(N) can prevent a
defendant from knowingly and voluntarily waiving his
appellate rights. Corso, 549 F.3d at 928-930; see also United
States v. Goodson, 544 F.3d 529, 540-41 (3d Cir. 2008).
Given that precedent, and our recognition that plea
agreements must be construed to protect the defendant as the
weaker bargaining party, see Williams, 510 F.3d at 422, we
must find that a statement made by the sentencing court
during the colloquy can create ambiguity where none exists in
the plain text of the plea agreement. See United States v.
Wilken, 498 F.3d 1160, 1168 (10th Cir. 2007) (“[W]e cannot
expect a defendant to distinguish and disregard those
statements of the court that deviate from the language of a
particular provision in a lengthy plea agreement-especially
where, as here, neither the government nor defense counsel
apparently noticed the error at the time.”). We construe this
ambiguity against the government and interpret the waiver
narrowly. Therefore, we shall allow Saferstein to raise
constitutional claims on appeal, as the District Court
represented during the colloquy that he would be able to do. 3
3
   Saferstein‟s argument that the District Court erred by
denying him credit for acceptance of responsibility is not
constitutional in nature. The only support Saferstein musters
for his contention that this error implicates his due process
rights, United States v. Furst, 918 F.2d 400, 408 (3d Cir.
1990), and its progeny, in fact notes constitutional dimensions
to sentencing based on materially false information.
Saferstein‟s allegation that the sentencing court erroneously
interpreted the Guidelines is distinct and does not implicate
his due process rights.

                              11
   B. Ex Post Facto Claim

       The only issue Saferstein raises which is of
constitutional moment is his ex post facto claim. Saferstein
argues that his sentencing, which occurred in accordance with
the 2009 Guidelines Manual, violated the ex post facto clause.
See art. I, § 9, cl. 3. The mail and wire fraud counts of which
he was convicted occurred in December 2002 and June 2003,
and the base offense level for fraud under the Guidelines was

 Saferstein also argues that the District Court infringed upon
his right of allocution by allowing the Government to cross-
examine him before sentencing. “[T]he right of allocution is
not constitutional.” United States v. Adams, 252 F.3d 276,
288 (3d Cir. 2001). Although Saferstein asserts that our later
opinion in United States v. Fisher, 502 F.3d 293 (3d Cir.
2007), undermines the clear pronouncement in Adams, Adams
still controls. Our precedent makes clear that “to the extent
that [an opinion of a panel of this Circuit] is read to be
inconsistent with earlier case law, the earlier case law . . .
controls.” Holland v. N.J. Dep’t of Corr., 246 F.3d 267, 278
n.8 (3d Cir. 2001) (citing O. Hommel Co. v. Ferro Corp., 659
F.2d 340, 354 (3d Cir. 1981)).

Accordingly, neither of these claims falls under the
constitutional exception to Saferstein‟s appellate waiver, and
we shall not consider them on the merits.

                              12
subsequently increased on November 1, 2003. U.S.S.G.
appx. C, amend. 653. Both counts for submitting false tax
returns of which Saferstein was convicted occurred after that
date.

       The Guidelines direct a one-book rule, requiring that a
“Guidelines Manual in effect on a particular date shall be
applied in its entirety.” U.S.S.G. § 1B1.11(b)(2). When a
“defendant is convicted of two offenses, the first committed
before, and the second after, a revised edition of the
Guidelines Manual became effective, the revised edition of
the Guidelines Manual is to be applied to both offenses.” §
1B1.11(b)(3). According to the background note in the
Guidelines, “Because the defendant completed the second
offense after the amendment to the guidelines took effect, the
ex post facto clause does not prevent determining the
sentence for that count based on the amended guidelines.” Id.
The background note also provides that this approach “should
be followed regardless of whether the offenses of conviction
are the type in which the conduct is grouped under §
3D1.2(d),” unless the ex post facto clause would be violated
by that treatment. Id.

       Nonetheless, commentary to the Guidelines does not
bind federal courts where it violates the Constitution, United
States v. Bertoli, 40 F.3d 1384, 1405 (3d Cir. 1994), and we
have held that the ex post facto clause requires that a
sentencing court apply the Guidelines Manual in effect at the
time the offense was committed if retroactive application of
the later Manual would result in harsher penalties. United
States v. Seligsohn, 981 F.2d 1418, 1424 (3d Cir. 1992),
superseded by statute for other reasons as stated in United
States v. Corrado, 53 F.3d 620, 624 (3d Cir. 1995). Further,
we have expressly disapproved the one-book rule where it

                             13
conflicts with the ex post facto clause by resulting in “more
stringent penalties than were authorized at the time of the
offense.” Id.

       Even “[t]he fact that various counts of an indictment
are grouped cannot override ex post facto concerns,” Bertoli,
40 F.3d at 1404 (citing Seligsohn, 981 F.2d at 1424), although
our ex post facto concerns are assuaged when counts are
properly grouped under § 3D1.2(d) as “continuing, related
conduct” and the sentencing court applies the Guidelines
Manual relevant to the latest count. United States v. Siddons,
660 F.3d 699, 707 (3d Cir. 2011). In such a case, “the
grouping provisions, combined with the one-book rule, place
a defendant on notice that a court will sentence him or her
under the Guidelines Manual in effect during the commission
of his or her last offense in a series of continuous, related
offenses.” Id.

       Here, the sentencing court applied the Guidelines
Manual in effect when the false tax returns were submitted to
the IRS even though those counts were not grouped with the
mail and wire fraud counts. Indeed, the PSR recognized that,
pursuant to our decision in United States v. Astorri, 923 F.2d
1052 (3d Cir. 1991), tax fraud counts could not be grouped
with fraud on private individuals. In this circumstance, the
application of the later edition of the Guidelines Manual did
violate the ex post facto clause.

       Since the sentencing court made an error that is plain,
Saferstein meets the first two prongs of the plain error test.
See Cesare, 581 F.3d at 209. We have also held that when
the application of the wrong Guidelines Manual, in violation
of the ex post facto clause, results in the use of a higher
sentencing range, there is a presumption that the defendant‟s

                             14
substantial rights are affected. See Syme, 276 F.3d at 158.
The government has failed to rebut this presumption of
prejudice. Finally, we have concluded in the past that such an
error “too „seriously affects the fairness, integrity, or public
reputation of judicial proceedings‟ to be left uncorrected.” Id.
(quoting Olano, 507 U.S. 725 (1993)).

       Accordingly, we vacate Saferstein‟s sentence and
remand to the District Court with instructions to calculate his
base offense level in accordance with the Guidelines Manual
in effect when the mail and wire fraud counts were
committed.

                    IV. CONCLUSION

       For the reasons set forth above, we will vacate the
sentence imposed by the District Court and remand for
resentencing in accordance with the above opinion.

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