Court Opinion

ID: 2671911
Source: CourtListenerOpinion
Date Created: 2014-05-01 00:01:39.141729+00
Date Added: 2024-06-11T13:18:16.558487
License: Public Domain

NOT RECOMMENDED FOR PUBLICATION
                                File Name: 14a0344n.06

                                           No. 12-3679
                                                                                        FILED
                                                                                   Apr 30, 2014
                                                                              DEBORAH S. HUNT, Clerk
                         UNITED STATES COURTS OF APPEALS
                              FOR THE SIXTH CIRCUIT

UNITED STATES OF AMERICA,                                )
                                                         )
       Plaintiff-Appellee,                               )
                                                         )
                                                                ON APPEAL FROM THE
v.                                                       )
                                                                UNITED STATES DISTRICT
                                                         )
                                                                COURT FOR THE
KOLJO NIKOLOVSKI,                                        )
                                                                NORTHERN DISTRICT OF
                                                         )
                                                                OHIO
       Defendant-Appellant.                              )
                                                         )
                                                         )

BEFORE:        CLAY and ROGERS, Circuit Judges; LUDINGTON, District Judge. *

       PER CURIAM. Defendant Koljo Nikolovski appeals the district court’s sentence of

120 months in prison after he pleaded guilty to bank fraud and bribery, in violation of 18 U.S.C.

§ 1344 and 18 U.S.C. § 215(a)(1), as well as his consecutive sentence of 96 months for money

laundering in violation of 18 U.S.C. § 1957. Nikolovski argues that the district court erred by

employing an incorrect guidelines range and by imposing a substantively unreasonable sentence

when it varied upward for both the substantive bank-fraud offense and the imposition of

consecutive sentences. Because the district court correctly calculated the guidelines ranges and

varied upward from the guidelines range for bank fraud after considering the relevant statutory

factors, the substantive sentences must be upheld. However, the decision to impose consecutive

rather than concurrent sentences, which raised the sentence to fully twice the maximum

guidelines range, must be remanded.
       *
        The Honorable Thomas L. Ludington, United States District Judge for the Eastern District of
Michigan, sitting by designation.
No. 12-3679
United States v. Nikolovski

                                                      I

       In February 2003, defendant Koljo Nikolovski recruited several co-defendants to

fraudulently obtain loans from St. Paul Croatian Federal Credit Union (“St. Paul”) in Eastlake,

Ohio, for deposit in the bank accounts of either the defendant or his wife, co-defendant Rose

Nikolovski. On March 2, 2011, a federal grand jury in the Northern District of Ohio, returned a

superseding indictment charging him with: bank fraud, in violation of 18 U.S.C. § 1344; giving

commissions or gifts for procuring bank loans (bank bribery), in violation of 18 U.S.C.

§ 215(a)(1); and engaging in monetary transactions in property derived from specified unlawful

activity (money laundering), in violation of 18 U.S.C. § 1957. The defendant initially pleaded

not guilty and intended to contest these charges at trial; however, he eventually agreed to forgo

trial and on January 30, 2012, pleaded guilty to all counts.

       The plea agreement provided that the “parties agree to recommend that the Court impose

a sentence within the range and of the kind specified pursuant to the advisory Sentencing

Guidelines,” and that “neither party will recommend or suggest in any way that a departure or

variance is appropriate.” Moreover, Nikolovski agreed to partially waive his right to appeal the

sentence imposed by the district court, specifically waiving the right to appeal the role-in-offense

and receiving-more-than-$1 million enhancements, while retaining the general right to appeal a

punishment that exceeds the statutory or guidelines maximum. 1

       1
           In pertinent part, Nikolovski’s plea agreement stated:

       Defendant expressly and voluntarily waives [his appellate] rights, except as specifically
       reserved below. Defendant also agrees not to appeal or otherwise challenge collaterally
       an adverse ruling by the Court on the enhancement for Role in the Offense and/or
       Receiving more than $1 million from a financial institution . . . . Defendant reserves the
       right to appeal: (a) any punishment in excess of the statutory maximum; (b) any sentence
       to the extent it exceeds the maximum of the sentencing range determined under the
       advisory Sentencing Guidelines in accordance with the sentencing stipulations and

                                                     -2-
No. 12-3679
United States v. Nikolovski

        The Probation Office generated a Presentence Report (“PSR”) that provided an initial

Guideline calculation of 108 months. The PSR began the calculation by noting that the offenses

of conviction (bank fraud, bank bribery, and money laundering) are grouped together as one

offense pursuant to U.S.S.G. § 3D1.2.2 The PSR then determined the offense-level calculation in

the money-laundering offense to be 7 based on the underlying bank-fraud offense. Therefore,

the level was increased by 18 levels for the amount of loss ($5.88 million), 2 levels because

Nikolovski received more than $1 million from a financial institution, 1 level because he was

convicted of money laundering, and 4 levels because of his role in the offense—not his role in

the money laundering, but his role as a purported organizer or leader in the bank fraud. The PSR

did not reduce the offense level for acceptance of responsibility. Thus, the PSR calculated a total

offense level of 32. The PSR’s suggested offense level of 32 is the same as the offense level

recommended in the plea agreement to the court by Nikolovski and the government.

        At the sentencing hearing, the district court ultimately concluded that the offense level of

32 stated in the PSR was correct, except that Nikolovski was entitled to a three-point reduction

for acceptance of responsibility, resulting in a total offense level of 29.

        Accordingly, the district court concluded that Nikolovski’s advisory guideline range was

87 to 108 months. Nikolovski’s counsel sought a sentence of not greater than 46 months,

emphasizing the violence in Nikolovski’s childhood home in Skopje, Macedonia, the extent of

        computations in this agreement, using the Criminal History Category found applicable by
        the Court; or (c) the Court’s determination of Defendant’s Criminal History Category.
        2
           Grouping the offenses “prevent[s] multiple punishment for substantially identical offense
conduct . . . . In essence, counts that are grouped together are treated as constituting a single offense for
purposes of the guidelines.” U.S.S.G. ch. 3, pt. D Intro. Comm. Nikolovski’s convictions for bank fraud,
bank bribery, and money laundering are grouped because “the offense level is determined largely on the
basis of the total amount of harm or loss . . . .” U.S.S.G. § 3D1.2. This grouping of offenses is
particularly relevant to the guidelines calculation with respect to the imposition of concurrent sentences,
as discussed infra.

                                                    -3-
No. 12-3679
United States v. Nikolovski

his family support, and the absence of a criminal record.         The government, in contrast,

emphasized Nikolovski’s use of violent threats to carry out his activities and his wild use of his

ill-gotten gains.   Government counsel concluded by explaining that for those reasons, “a

sentence at the high-end of the guideline range, which if I have calculated it correctly, is a

sentence of 108 months, is appropriate.”

       The district court then turned to the § 3553(a) factors to impose the sentence. The court

discussed the Guidelines factors, including some of Nikolovski’s history and characteristics

(including the fact that he had threatened people), the offenses at issue, and the need for proper

punishment. The court noted that “we have some positive factors here and many negative ones.”

The court concluded:

                Well, I mean, I can go on and on, but you’re getting an idea of how I feel
       about your conduct in this case. When I look at all these 3553(a) factors, you
       know, I’m half—I’m compelled to conclude a couple things here.
                Number one, you’re a thief. Number two, you lie. Number three, you’re a
       gambler. Number four, you bully people and you act like a thug. That’s what all
       of this tells me here in front of me.
                Saint Paul’s Croatian Federal Credit Union, now this is an ethnic credit
       union, these people are proud, hard-working people that spend all of their lives
       saving their money so they can have something for their retirement, and you and
       Raguz and others gut the place so you can party.
                I think what bothers me the most out of all this, money aside, put the
       money aside, is broken trust that all these members must have felt. This is their
       credit union. They—this is supposed to be their people, people that they can trust
       above everybody else in the world are the ethnics that they go to, socialize with,
       live in a community with, go to church with, all putting their money together
       totaling $238 million.
                Good for them. It shows how hard working they are and how much they
       save so they can have something when they retire. And then it collapses. Half of
       them must have had heart attacks. I would have, too.
                My point is, now that trust goes out the window and we hope that as
       people living in this country we can trust each other. It’s never the case now.
       Everybody’s getting ripped off every single day. And when trust goes out the
       window, our communities suffer and society suffers as a whole.
                I’ve talked enough. All right. Let’s go ahead and sentence you.

                                               -4-
No. 12-3679
United States v. Nikolovski

The district court then sentenced Nikolovski to 120 months for the bank fraud and bribery

convictions and 96 months for the money laundering conviction, stating that it had “decided to

upward vary in this case based upon all the aggravating factors that [it had] gone over and

rejecting the proposed range in the plea agreement.”

        In addition to the upward variance in sentence length, the district court ultimately decided

that the sentences should run consecutively, resulting in a total imprisonment of 216 months,

followed by three years of supervised release on all counts.3 The court also ordered Nikolovski

to pay $5,881,250 in restitution and an $1,800 special assessment. After the district court asked

whether Nikolovski objected to the sentence, he stated that he did. Nikolovski now appeals.

                                                    II

        We review a district court’s sentencing determination for reasonableness under a

deferential abuse-of-discretion standard. United States v. Bolds, 511 F.3d 568, 578 (6th Cir.

2007). This reasonableness review involves two steps: (1) procedural and (2) substantive. Id.
        3
           The parties acknowledged at oral argument that neither the PSR nor the district court
specifically addressed the Guidelines’ recommendation for concurrent sentences for grouped offenses. A
district court has a duty to first address the Guidelines’ recommendation for concurrent or consecutive
sentences before considering § 3553(a) factors. Here, the Guidelines’ recommendation determines the
limits of Nikolovski’s appeal waiver.
         U.S.S.G. § 5G1.2 requires a sentencing court to determine the “total punishment,” the Criminal
History Category, and the defendant’s guideline range. U.S.S.G. § 5G1.2 cmt. 1. In this case, because
the offenses are grouped, the “total punishment” is derived from the adjusted combined offense level
according to Part D of Chapter 3. See U.S.S.G. §§ 5G1.2, 3D1.5. According to the PSR, Nikolovski’s
adjusted combined offense level was a 29 and his criminal history corresponded to Criminal History
Category I.
         Section 5G1.2 then requires that the maximum sentence be imposed on each count up to the total
punishment amount. The combined length of each sentence cannot exceed the total punishment. The
comments further require that “all counts are to be imposed to run concurrently to the extent allowed by
the statutory maximum sentence of imprisonment . . . .” U.S.S.G. § 5G1.2 cmt. 1 (emphasis added). In
contrast, consecutive sentences are imposed only “to the extent necessary to achieve the total
punishment.” Id.
         Based on Nikolovski’s calculated “total punishment,” his Guidelines range was 87–108 months.
Because U.S.S.G. § 5G1.2 instructs any sentence exceeding 108 months to run concurrently, the court
could only order consecutive sentences under the Guidelines if there was a justification for departure. See
U.S.S.G. ch. 5, pt. K. And if the court did impose consecutive sentences in excess of 108 months,
Nikolovski retained the right to appeal that sentence in his Rule 11 plea agreement.

                                                   -5-
No. 12-3679
United States v. Nikolovski

In performing this two-step review, “[t]he district court’s interpretation of the advisory

Guidelines is reviewed de novo, and its findings of fact are reviewed for clear error.” United

States v. Brown, 579 F.3d 672, 677 (6th Cir. 2009). “This Court reviews the question of whether

a defendant waived his right to appeal his sentence in a valid plea agreement de novo.” United

States v. Swanberg, 370 F.3d 622, 626 (6th Cir. 2004) (quoting United States v. Smith, 344 F.3d

479, 483 (6th Cir. 2003)).

       First, we evaluate the procedural reasonableness to “ensure that the district court did not

commit significant procedural error such as: failing to calculate (or improperly calculating) the

Guidelines range, treating the Guidelines as mandatory, failing to consider the § 3553(a) factors,

selecting a sentence based on clearly erroneous facts, or failing to adequately explain the chosen

sentence.” Brown, 579 F.3d at 677 (quoting Gall v. United States, 552 U.S. 38, 51 (2007)).

When reviewing a sentence for procedural reasonableness, “we must ensure that the district court

‘correctly calculate[d] the applicable Guidelines range’” because it is “‘the starting point and

initial benchmark’ of its sentencing analysis.” Bolds, 511 F.3d at 579 (quoting Gall, 552 U.S. at

49). Next, we assess the substantive reasonableness of a sentence. As “[t]he essence of a

substantive reasonableness claim is whether the length of the sentence is greater than necessary

to achieve the sentencing goals set forth in 18 U.S.C. § 3553(a),” a sentence will be found

substantively unreasonable if “the district court selects the sentence arbitrarily, bases the

sentence on impermissible factors, fails to consider pertinent § 3553(a) factors or gives an

unreasonable amount of weight to any pertinent factor.” United States v. Corp, 668 F.3d 379,

386 (6th Cir. 2012) (internal quotation marks omitted).

                                               -6-
No. 12-3679
United States v. Nikolovski

                                                  III

        Nikolovski argues that the district court made a mistake in calculating the highest offense

level with which he could have been charged. The district court found that the highest offense

level among the three possible offenses Nikolovski was charged with was an offense level of 29,

while Nikolovski argues that the highest offense level should have been at an offense level 28,

which would have carried a sentencing range of 78–97 months. He argues that the district court

improperly used a base level of 7 instead of 6 when calculating the money laundering count and

also added 4 points instead of 2 to the money laundering offense level when it found him to be

an organizer or leader in a money laundering scheme that involved five or more participants.

Without these 3 extra points (7 instead of 6 for the base level and 4 instead of 2 for the lead role

in the money-laundering offense), bank fraud instead of money laundering would have been the

offense with the highest offense level, and the proper sentencing range would be 78–97 months

instead of 87–108 months.

        Nikolovski’s challenge to the calculation of the sentencing range does not require

reversal.    Nikolovski specifically waived the right to challenge the role-in-the-offense

enhancement. The only remaining challenge to the calculation is that the district court used the

wrong base offense level when it used a base offense level of 7.

        This challenge fails, because 7 is the correct base offense level for bank fraud under

§ 2B1.1(a)(1). Subsection (a)(1) applies a 7-point base offense level “if (A) the defendant was

convicted of an offense referenced to this guideline; and (B) that offense of conviction has a

statutory maximum of 20 years or more.” The commentary provides that “[f]or purposes of

subsection (a)(1), an offense is ‘referenced to this guideline’ if . . . this guideline is the applicable

Chapter Two guideline determined under the provisions of § 1B1.2 (Applicable Guidelines) for

                                                  -7-
No. 12-3679
United States v. Nikolovski

the offense of conviction.” U.S.S.G. § 2B1.1 cmt. n.2(A). In turn, § 1B1.2 determines the

applicable guideline range by reference to Appendix A, which matches substantive offenses from

the U.S. Code to particular guidelines. Here, Nikolovski was convicted of bank fraud under 18

U.S.C. § 1344, which Appendix A references to § 2B1.1 and which carries a maximum sentence

of 30 years. Since Nikolovski was convicted of an offense referenced to § 2B1.1 and that

offense has a statutory maximum of 20 years or more, the district court correctly used a base

offense level of 7 points under § 2B1.1(a)(1).4

                                                   IV

        The district court did not abuse its discretion in imposing 120 months for bank fraud,

which is above the suggested sentencing range of 87–108 months.5 When analyzing a district

court sentence above the suggested sentencing range, the relevant policy statement in the

Guidelines provides for an upward departure under certain factors. United States v. Johnson,

640 F.3d 195, 202 (6th Cir. 2011). Immediately after pronouncing Nikolovski’s sentences, the

court stated that it had “decided to upward vary in this case based upon all the aggravating

factors that [it had] gone over and rejecting the proposed range in the plea agreement,” referring

to its preceding, extensive discussion of § 3553(a) aggravating factors. This statement made

        4
          This reading of § 2B1.1(a)(1) is consistent with this court’s decision in United States v.
Abdelsalam, 311 F. App’x 832 (6th Cir. 2009), which Nikolovski argues supports the application of a 6-
point base offense level. Abdelsalam also involved a situation in which the base offense level for money
laundering was calculated by borrowing the offense level of an offense that was referenced to § 2B1.1.
However, Abdelsalam differs because the underlying offense did not meet the second prong of Subsection
(a)(1)—receipt of stolen property, in violation of 18 U.S.C. § 2315, carried a maximum statutory penalty
of only 10 years. Since the money laundering offense carried a statutory maximum term of imprisonment
of 20 years, the question before the court was thus limited to “whether money laundering is ‘referenced to
[§ 2B1.1]’” for purposes of § 2B1.1(a)(1)(A). Id. at 845. In holding that money laundering was not
“referenced to” § 2B1.1, the court appears to have held that “indirectly referenced offenses of
conviction,” namely those that are referenced to § 2B1.1 through an underlying offense that is directly
referenced to § 2B1.1, are not covered by § 2B1.1(a)(1)(A). See id. In contrast, application of the 7-point
base offense level for Nikolovski does not require reference to an “indirectly referenced offense of
conviction,” since bank fraud is directly referenced. Therefore, Abdelsalam does not control.

                                                   -8-
No. 12-3679
United States v. Nikolovski

clear that the sentence constituted a variance from the Guidelines based on the court’s discussion

of the § 3553(a) factors. These aggravating factors included the substantial damage to St. Paul’s

members from Nikolovski’s crimes, the fact that, notwithstanding the absence of criminal history

points, Nikolovski threatened co-defendants and engaged in a pattern of threatening behavior

toward others, and the need for the sentence to provide adequate deterrence and protect the

public. The upward variance from 108 months to 120 months for bank fraud does not constitute

an abuse of discretion in light of the court’s lengthy discussion of the § 3553(a) factors.

                                                  V

                                                  A

       However, the district court was unreasonable in failing to indicate clearly its reasons for

imposing consecutive rather than concurrent prison terms, thereby increasing Nikolovski’s

sentence from 120 months to 216 months. “If multiple terms of imprisonment are imposed on a

defendant at the same time . . . the terms may run concurrently or consecutively.” 18 U.S.C. §

3584(a). The exercise of this authority “is predicated on the district court’s consideration of the

factors listed in 18 U.S.C. § 3553(a), including any applicable Guidelines or policy statements

issued by the Sentencing Commission.” Johnson, 640 F.3d at 208 (citing 18 U.S.C. § 3584(b)).

In reviewing the district court’s application of the § 3553(a) factors, “there is no requirement . . .

that the district court engage in a ritualistic incantation to establish consideration of a legal

issue,” or that it “make specific findings related to each of the factors considered.” Bolds, 511

F.3d at 580 (internal quotation marks omitted). However, in order for a sentence over the

suggested range to be reasonable, “the record must contain the district court’s rationale for

       5
         Although Nikolovski does not specifically challenge the upward variance with respect to the
120-month sentence for bank fraud, he generally challenges his total sentence as substantively
unreasonable.

                                                 -9-
No. 12-3679
United States v. Nikolovski

concluding that the ‘sentence imposed is sufficient but not greater than necessary, to comply

with the purposes’ of sentencing set forth in 18 U.S.C. § 3553(a).” Id.

       The ambiguous and cursory treatment of consecutive sentences in the sentencing

transcript precludes any meaningful appellate review of the district court’s decision. The district

court announced Nikolovski’s sentence in the following way:

               Okay. Mr. Nikolovski, it’s the judgment of this Court that you are
       committed to the custody of the Bureau of Prisons for a term of 120 months on
       each Counts 7 through 14, 16 through 20, and 96 months on each Counts 21
       through 25 to be served consecutively.
               The Court has decided to upward vary in this case based upon all the
       aggravated factors that I have gone over and [sic] rejecting the proposed range in
       the plea agreement.

This short statement provides the only reference to consecutive or concurrent sentences in the

entire transcript. Because a court may vary upward after consideration of the § 3553(a) factors

either by imposing a substantive sentence that exceeds the guidelines range or by having

sentences run consecutively, the district court may have intended and accurately expressed a

desire both to vary upward to the above-Guidelines 120-month sentence and to impose

consecutive sentences. The transcript leaves little doubt that the district court intended to vary

upward with the 120-month sentence based on the § 3553(a) factor analysis, so what is really at

issue is whether the court’s decision to vary upward based on the § 3553(a) factors also includes

the decision to impose consecutive sentences. Any review of the decision to impose consecutive

sentences would necessitate inferences that we decline to make when such serious penalties flow

from so few words. Meaningful appellate review is only possible when the appellate court can

accurately ascertain the actual rationale underlying a sentencing decision. See United States v.

Inman, 666 F.3d 1001, 1004 (6th Cir. 2012). In this case, unlike in Johnson, the district court

                                               -10-
No. 12-3679
United States v. Nikolovski

did not sufficiently indicate that its reasons for imposing consecutive sentences were the same as

those for which it determined the length of the defendant’s sentence. Johnson, 640 F.3d at 208.

         This court has explained, “[r]equiring district courts to conduct a separate § 3553(a)

analysis for the concurrent or consecutive nature of the sentence would be repetitious and

unwarranted.” United States v. Berry, 565 F.3d 332, 343 (6th Cir. 2009). Thus, while the

district court was not required to state a “specific reason for a consecutive sentence,” Johnson,

640 F.3d at 208–09 (internal quotation marks omitted), it was nevertheless obliged to make

“generally clear the rationale under which it has imposed the consecutive sentence.” United

States v. Owens, 159 F.3d 221, 230 (6th Cir. 1998). And the reasons for imposing a consecutive

sentence are particularly important when the effect of imposing a consecutive sentence is to vary

so significantly from the advisory guidelines.6 The district court need not state its rationale

explicitly, but may incorporate it by reference. Berry, 565 F.3d at 342–43.

                                                  B

         Moreover, it is unclear from the transcript alone whether the district court actually

intended to impose consecutive sentences. The only phrase that communicates the intent to vary

upward yet more with a consecutive sentence is the single word “consecutively.” This gives us

pause.       Common sense and experience tells us that the words “concurrently” and

“consecutively,” which are used in the same context, start with the same three letters, and have

the same number of syllables, could easily be confused. A slip of the tongue or a mistake in

reporting could have distorted the district court’s intent, and there are no other clues in the

transcript that would lead us to conclude with more confidence that the district court actually

intended to impose consecutive sentences. The consequences of a potential mistake are large in

         6
         Indeed, to merit even a 188-month sentence under the advisory guidelines, Nikolovski would
have had to qualify as a career offender and have a category VI criminal history.

                                                -11-
No. 12-3679
United States v. Nikolovski

this case, as the word “consecutively” increased Nikolovski’s sentence to fully twice the top of

the Guidelines range.

        This ambiguity deprives us of full confidence that the district court actually intended to

impose consecutive sentences based on the § 3553(a) analysis, which already supports the

decision to exceed the guidelines range for the bank fraud sentence. In order to ensure that the

sentence that was actually imposed accurately reflects the district court’s judgment, a remand is

necessary for the district court to clarify or correct its decision expressed in the transcript.

                                                  VI

        For the foregoing reasons, we AFFIRM Koljo Nikolovski’s sentence of 120 months for

bank fraud and bribery and 96 months for money laundering but VACATE the district court’s

decision to sentence him to consecutive terms and REMAND for the limited purpose of

determining the extent to which the sentences are to be served consecutively or concurrently.

                                                 -12-
No. 12-3679
United States v. Nikolovski

       CLAY, Circuit Judge, concurring in part and dissenting in part. I agree with the

majority’s decision to affirm the Guidelines range employed by the district court in sentencing

Koljo Nikolovski (“Defendant”) to 120 months for bank fraud and bribery and 96 months for

money laundering. However, I dissent from the majority’s view that the appeal waiver did not

foreclose Defendant’s challenge to the base offense level utilized by the district court and the

view that the trial judge may have mistakenly imposed consecutive sentences rather than doing

so intentionally or without providing a sufficient explanation.

                                         BACKGROUND

       In February 2003, Defendant recruited several co-defendants to fraudulently obtain loans

from St. Paul Croatian Federal Credit Union (“St. Paul”) in Eastlake, Ohio, for deposit in the

bank accounts of either Defendant or his wife, co-defendant Rose Nikolovski. A federal grand

jury, on March 2, 2011, returned an indictment charging Defendant with bank fraud, in violation

of 18 U.S.C. § 1344, giving commissions or gifts for procuring bank loans (bank bribery), in

violation of 18 U.S.C. § 215(a)(1), and engaging in monetary transactions in property derived

from specified unlawful activity (money laundering), in violation of 18 U.S.C. § 1957.

Defendant initially pleaded not guilty and indicated he intended to contest these charges at trial;

however, he eventually agreed to forego trial and plead guilty to bank fraud, bribery, and money

laundering pursuant to a Rule 11 plea agreement.

       In the plea agreement, Defendant partially waived his right to appeal the sentence

imposed by the district court: “Defendant also agrees not to appeal or otherwise challenge

collaterally an adverse ruling by the Court on the enhancement for Role in the Offense and/or

Receiving more than $1 million from a financial institution . . . .” Aside from those two explicit

exceptions, Defendant “reserve[d] the right to appeal . . . any sentence to the extent it exceeds the

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No. 12-3679
United States v. Nikolovski

maximum of the sentencing range determined under the advisory Sentencing Guidelines in

accordance with the sentencing stipulations and computations in this agreement, using the

Criminal History Category found applicable by the Court . . . .” Thus, if Defendant’s sentence

exceeded the sentencing range under the Guidelines, then Defendant reserved the right to appeal

the sentence with two explicit exceptions: he could not appeal the enhancements for his role in

the offense or for receiving more than $ 1 million from a financial institution.

       The Probation Office then generated the Presentence Report (“PSR”), which provided an

initial Guideline calculation of 108 months. The PSR began the calculation by noting that the

offenses of conviction here (bank fraud, bank bribery, and money laundering) are grouped

together as one offense pursuant to U.S.S.G. § 3D1.2.          Grouping the offenses “prevent[s]

multiple punishment for substantially identical offense conduct . . . . In essence, counts that are

grouped together are treated as constituting a single offense for purposes of the guidelines.

U.S.S.G. Ch. 3 Pt. D Intro. Comm. Defendant’s convictions for bank fraud, bank bribery, and

money laundering are grouped because “the offense level is determined largely on the basis of

the total amount of harm or loss . . . .” U.S.S.G. § 3D1.2.

       The PSR determined the offense-level calculation in the money-laundering offense to be

7 based on the underlying bank-fraud offense. That level was increased by 18 levels for the

amount of loss ($5.88 million), 2 levels because Defendant received more than $1 million from a

financial institution, 1 level because he was convicted of money laundering, and 4 levels because

of his role in the offense—not his role in the money laundering, but his role as a purported

organizer or leader in the bank fraud. The PSR did not reduce the offense level for acceptance of

responsibility. Thus, the PSR calculated a total offense level of 32. The PSR’s suggested

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No. 12-3679
United States v. Nikolovski

offense level of 32 is the same as the offense level recommended in the plea agreement to the

court by Defendant and the government.

       At the sentencing hearing, the district court ultimately concluded that the offense level of

32 stated in the PSR was correct, except that Defendant was entitled to a three point reduction for

acceptance of responsibility, resulting in a total offense level of 29. The parties acknowledged at

oral argument that neither the PSR nor the district court specifically addressed the Guidelines’

recommendation for concurrent sentences for grouped offenses. A district court has a duty to

first address the Guidelines’ recommendation for concurrent or consecutive sentences before

considering § 3553(a) factors.

       After determining that Defendant’s Guidelines range was set at 87–108 months, the

district court then turned to the § 3553(a) factors to impose Defendant’s sentence. The court

discussed the factors, including some of Defendant’s history and characteristics (including the

fact that he had threatened people), the offenses at issue, and the need for proper punishment.

The court noted that “we have some positive factors here and many negative ones.” The court

described Defendant as a lying thief who bullied people and spent money lavishly on himself.

The district court then sentenced Defendant to 120 months for the bank fraud and bribery

convictions and 96 months for the money laundering conviction, stating that it had “decided to

upward vary in this case based upon all the aggravating factors that [it had] gone over and

rejecting the proposed range in the plea agreement . . . .”

       In addition to the upward variance in the length of Defendant’s sentence, the district court

ultimately decided that the sentences should run consecutively, resulting in a total term of

incarceration of 216 months, followed by three years of supervised release on all counts, and

ordered Defendant to pay $5,881,250 in restitution and an $1,800 special assessment. After the

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district court asked whether Defendant objected to the sentence, Defendant stated that he did.

Defendant filed a timely notice of appeal on May 21, 2012.

                                         DISCUSSION

                                      Standard of Review

       “This Court reviews the question of whether a defendant waived his right to appeal his

sentence in a valid plea agreement de novo.” United States v. Swanberg, 370 F.3d 622, 626 (6th

Cir. 2004) (quoting United States v. Smith, 344 F.3d 479, 483 (6th Cir. 2003)). We review a

district court’s sentencing determination for reasonableness under a deferential abuse of

discretion standard.   United States v. Bolds, 511 F.3d 568, 578 (6th Cir. 2007).            This

reasonableness review involves two steps: (1) procedural and (2) substantive. Id. First, we

evaluate the procedural reasonableness to “ensure that the district court did not commit

significant procedural error such as:     failing to calculate (or improperly calculating) the

Guidelines range, treating the Guidelines as mandatory, failing to consider the § 3553(a) factors,

selecting a sentence based on clearly erroneous facts, or failing to adequately explain the chosen

sentence.” Id. (quoting Gall v. United States, 552 U.S. 38, 51 (2007)). Next, we assess the

substantive reasonableness of a sentence. As “[t]he essence of a substantive reasonableness

claim is whether the length of the sentence is greater than necessary to achieve the sentencing

goals set forth in 18 U.S.C. § 3553(a),” a sentence will be found substantively unreasonable if

“the district court selects the sentence arbitrarily, bases the sentence on impermissible factors,

fails to consider pertinent § 3553(a) factors or gives an unreasonable amount of weight to any

pertinent factor.” United States v. Corp, 668 F.3d 379, 386 (6th Cir. 2012) (internal quotation

marks omitted). In performing this two-step review, “[t]he district court’s interpretation of the

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advisory Guidelines is reviewed de novo, and its findings of fact are reviewed for clear error.”

United States v. Brown, 579 F.3d 672, 677 (6th Cir. 2009).

I.     Defendant waived right to challenge the Guidelines Range

       When reviewing a sentence for procedural reasonableness, “we must ensure that the

district court ‘correctly calculate[d] the applicable Guidelines range’” because it is “‘the starting

point and initial benchmark’ of its sentencing analysis.” Bolds, 511 F.3d at 579 (quoting Gall,

552 U.S. at 49). In this case, Defendant argues that the district court employed an incorrect

Guideline range in determining his sentencing range.

       Defendant argues that the district court made a mistake in calculating the highest offense

level with which he could have been charged. The district court found that the highest offense

level among the three possible offenses Defendant was charged with was an offense level of 29.

That offense level carried a sentencing range of 87–108 months. Defendant argues that the

highest offense level should have been at an offense level 28, which would have carried a

sentencing range of 78–97 months. He argues that the district court improperly used a base level

of 7 instead of 6 when calculating the money laundering count and also added 4 points instead of

2 to the money laundering offense level when it found Defendant to be an organizer or leader in

a money laundering scheme that involved five or more participants. Without these three extra

points (7 instead of 6 for base level and 4 instead of 2 for role in money-laundering offense),

Defendant argues that bank fraud instead of money laundering would have been the offense with

the highest offense level and would thus have made the sentencing range 78–97 months instead

of 87–108 months.

       Defendant signed a valid plea agreement in which he agreed to only appeal if the

sentence handed out by the district court “exceeds the maximum of the sentencing range

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determined . . . in accordance with . . . this agreement[.]” (R. 119, Plea Agreement, at 597.)

This provision can be read in one of two ways. First, Defendant could have agreed not to appeal

the sentence unless it exceeded 108 months, the top of the calculated range agreed to by

Defendant in the plea agreement.         This reading would permit us to consider Defendant’s

challenges to the calculation of the 29-point offense level. Because Defendant explicitly waived

his right to challenge the role-in-the-offense enhancement, the only remaining challenge to the

calculation would be whether the district court used an incorrect base offense level when it used

a base offense level of 7.

       Alternatively, Defendant may have agreed to only appeal sentences that varied upward

from the statutory maximum of 108 months according to the court’s consideration of the §

3553(a) factors. This reading would bar Defendant from challenging the base offense level used

by the district court in calculating his sentencing range because had the district court decided not

to vary upward the sentence from 108 to 120 months, Defendant would have had no right to

appeal since his sentence would not have “exceed[ed] the maximum of the sentencing range

determined” in the plea agreement. Defendant would thus be limited to only appeals of the 120-

month substantive sentence, the imposition of consecutive sentences, and the substantive

reasonableness of the entire sentence.

       Because Defendant signed a valid plea agreement stipulating to the offense levels in

question, the second reading is more likely. The parties’ stipulated Guidelines computation in

the plea agreement included a base offense level of 7 for fraud under U.S.S.G. § 2B1.1(a)(1). (R.

119, Plea Agreement, at 595.) Having asserted below that the proper base offense level was 7,

Defendant is precluded on appeal from claiming that the base offense level was an error. United

States v. Demmler, 655 F.3d 451, 458–59 (6th Cir. 2011). Based on several upward adjustments,

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the parties further acknowledged that an offense level of 32, before a three-level reduction for

acceptance of responsibility, “represented the correct computation of the applicable offense

level.” (R. 119, Plea Agreement, at 595.) This is what resulted in the district court finding an

offense level of 29 and recommending a sentencing range between 87 and 108 months.

       Despite specifically waiving the right to challenge the district court’s sentencing

enhancements for Defendant’s role as an organizer or leader and receiving more than $1 million

from a financial institution, Defendant challenges the district court’s Guidelines calculations. As

this Court has explained, however, “[c]riminal defendants may waive their right to appeal as part

of a plea agreement so long as the waiver is made knowingly and voluntarily.” Swanberg,

370 F.3d at 625 (citing United States v. Fleming, 239 F.3d 761, 763–64 (6th Cir. 2001)).

       Defendant in the plea agreement agreed not to appeal a sentence of 108 months or less,

which corresponds to the applicable range for a total offense level of 29.               Defendant

acknowledged that the agreement constituted “the entire agreement between Defendant and the

[government.]” (R. 119, Plea Agreement, at 605.) Before pleading guilty, Defendant confirmed

that he had sufficient time to discuss the plea agreement with his attorney, that he understood and

agreed to the plea agreement’s terms and had no questions about the agreement.

       Under this Court’s Demmler decision, Defendant cannot challenge the base offense level

of 7 because he agreed that the base offense level 7 was correct. 655 F.3d at 458–59. At

sentencing, the district court applied the stipulated offense level of 29 and the correct sentencing

range of 87-108 months. Thus, while Defendant may challenge the extent to which his sentence

exceeds the Guidelines range, as preserved under the plea agreement, he cannot challenge the

district court’s underlying Guidelines calculations, including the base offense level to which

Defendant specifically agreed below.

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II.      Defendant’s sentencing proceedings

         The district court sentenced Defendant to sentences of 120 months for bank fraud and

bribery as well 96 months for money laundering, to be served consecutively, for a total of 216

months. (Pl.’s Br. at 3.) The 120 months for bank fraud are above the suggested sentencing range

of 87–108 months. When analyzing a district court sentence above the suggested sentencing

range, it is important to note that the relevant policy statement in the Guidelines provides for an

upward departure under certain factors. United States v. Johnson, 640 F.3d 195, 202 (6th Cir.

2011).

         In reviewing the district court’s application of the § 3553(a) factors, “there is no

requirement . . . that the district court engage in a ritualistic incantation to establish consideration

of a legal issue,” or that it “make specific findings related to each of the factors considered.”

Bolds, 511 F.3d at 580 (internal quotation marks omitted). However, in order for a sentence

exceeding the suggested range to be reasonable, “the record must contain the district court’s

rationale for concluding that the ‘sentence imposed is sufficient but not greater than necessary, to

comply with the purposes’ of sentencing set forth in 18 U.S.C. § 3553(a).” Id. The district court

must provide an “articulation of the reasons [why it] reached the sentence ultimately imposed.”

United States v. Jackson, 408 F.3d 301, 305 (6th Cir. 2005).

         Defendant argues that the district court did not sufficiently explain its reasons for

imposing consecutive sentences.       However, the district court’s remarks, viewed in context,

indicate that the reasons for imposing consecutive sentences were the same as the court’s reasons

for exceeding the guidelines. Immediately after pronouncing Defendant’s consecutive sentences,

the court stated that it had “decided to upward vary in this case based upon all the aggravating

factors that [it had] gone over and rejecting the proposed range in the plea agreement,” (R. 157,

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Sentencing Tr., at 865), referring to its extensive § 3553(a) discussion of aggravating factors. (R.

157, Sentencing Tr., at 859–64.) This statement made clear that the sentences constituted a

variance from the Guidelines based on the court’s discussion of the § 3553(a) factors. These

aggravating factors included the substantial damage to St. Paul’s members from Defendant’s

crimes, the fact that, notwithstanding the absence of criminal history points, Defendant threatened

co-defendants and engaged in a pattern of threatening behavior toward others, and the need for the

sentence to provide adequate deterrence and protect the public. (R. 157, Sentencing Tr., at 859–

64.) The upward variance from 108 months to 120 months for bank fraud as well as the

imposition of consecutive sentences do not constitute an abuse of discretion in light of the court’s

lengthy discussion of the § 3553(a) factors.

       Although Defendant may have preferred a separate or more detailed discussion regarding

the court’s decision to impose consecutive sentences, the court was not required to provide it.

How much a district court says in explaining a sentence is a discretionary matter committed to the

court’s professional judgment. Rita v. United States, 551 U.S. 338, 356 (2007); United States v.

Brooks, 628 F.3d 791, 796 (6th Cir. 2011); United States v. Lanning, 633 F.3d 469, 474 (6th Cir.

2011). This Court has “never held that a district court is required to repeat a § 3553(a) analysis in

its consideration of the consecutive or concurrent nature of a sentence when the same reasons for

rejecting a downward variance also support the decision for a consecutive sentence.” United

States v. Cochrane, 702 F.3d 334, 346 (6th Cir. 2012) (quoting United States v. Berry, 565 F.3d

332, 343 (6th Cir. 2009)). As this Court has explained, “[r]equiring district courts to conduct a

separate § 3553(a) analysis for the concurrent or consecutive nature of the sentence would be

repetitious and unwarranted.” Id. Thus, while the district court was not required to state a

“specific reason for a consecutive sentence,” Johnson, 640 F.3d at 208–09 (internal quotation

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marks omitted), it was nevertheless obliged to make “generally clear the rationale under which it

has imposed the consecutive sentence.” United States v. Owens, 159 F.3d 221, 230 (6th Cir.

1998).    The district court need not state its rationale explicitly, but may incorporate it by

reference. Berry, 565 F.3d at 342–43.

         It would have been preferable for the district court to have been clearer in imposing

consecutive sentences, but the district court’s remarks, viewed in context, indicate that the reasons

for the consecutive sentences were the same as the court’s reasons for exceeding the guidelines.

The district court explained why it sentenced Defendant to serve consecutive sentences when it

stated that it had “decided to upward vary in this case based upon all the aggravating factors.”

When the district court made that statement, it was referring to both the decision to sentence

Defendant above the Guideline maximum sentence of 108 months as well as the reason the

sentences should be served consecutively. The court also went to great lengths to explain the

harm perpetrated by Defendant’s criminal behavior. As a result, the district court did not abuse its

discretion in sentencing Defendant to consecutive sentences.

                                         CONCLUSION

         For the foregoing reasons, I would affirm Defendant’s sentence of 120 months for bank

fraud and bribery and 96 months for money laundering to be served in consecutive terms.

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