Court Opinion

ID: 2832890
Source: CourtListenerOpinion
Date Created: 2015-09-01 22:01:00.150097+00
Date Added: 2024-06-11T13:21:45.203325
License: Public Domain

In the

    United States Court of Appeals
                For the Seventh Circuit
No. 14-1369

UNITED STATES OF AMERICA,
                                                  Plaintiff-Appellee,
                                 v.
ROBERT D. FALOR,
                                               Defendant-Appellant.

        Appeal from the United States District Court for the
          Northern District of Illinois, Eastern Division.
         No. 1:11-cr-00578-1 — Virginia M. Kendall, Judge.

No. 14-1603

UNITED STATES OF AMERICA,
                                                  Plaintiff-Appellee,
                                 v.
MICHAEL RICHARD JINES,
                                               Defendant-Appellant.

        Appeal from the United States District Court for the
                    Southern District of Illinois.
         No. 4:13-cr-40087-JPG-1 — J. Phil Gilbert, Judge.
2                                       Nos. 14-1369 & 14-1603

    ARGUED APRIL 16, 2015 — DECIDED SEPTEMBER 1, 2015

    Before BAUER, EASTERBROOK, and SYKES, Circuit Judges.
    BAUER, Circuit Judge. Defendant-appellant, Robert D. Falor
(“Falor”), was convicted of two counts of tax evasion, in
violation of 26 U.S.C. § 7201, and sentenced to 74 months’
imprisonment and 3 years of supervised release. In an unre-
lated case, defendant-appellant, Michael Richard Jines
(“Jines”), was convicted of one count of conspiracy to manufac-
ture methamphetamine, in violation of 21 U.S.C. §§ 841 and
846, and sentenced to 96 months’ imprisonment and 5 years of
supervised release. We have consolidated the two appeals,
heard on the same day, because they raise similar challenges to
the conditions of supervised release imposed at sentencing. In
light of this court’s recent decisions in United States v. Kappes,
782 F.3d 828 (7th Cir. 2015) and United States v. Thompson, 777
F.3d 368 (7th Cir. 2015), we reverse the judgments and remand
each case for resentencing.
                      I. BACKGROUND
    A. Robert D. Falor
   Falor worked as the chief operator and manager of The
Falor Companies, Inc. (“TFC”), which acquired and managed
hotel properties in Chicago, Miami Beach, and elsewhere.
Beginning in January 2006 and continuing until October 2008,
Falor willfully attempted to evade the income tax he owed to
the United States for the calendar years 2006 and 2007 by
Nos. 14-1369 & 14-1603                                          3

diverting millions of dollars generated by the hotel properties
managed by TFC into numerous nominee bank accounts that
he controlled. In August 2011, a federal grand jury indicted
Falor and charged him with three counts of tax evasion, in
violation of 26 U.S.C. § 7201. Falor pleaded guilty to Count 2
and Count 3 without a plea agreement, and stipulated to the
offense charged in Count 1.
    The PSR prepared by the probation department prior to
sentencing calculated the total tax loss caused by the two
offenses charged in Count 2 and Count 3 and relevant conduct
to be $1,561,675. This amount yielded a base offense level of 22,
which was adjusted to 27 after several enhancements. With a
Criminal History Category of I, Falor’s advisory Sentencing
Guidelines range was 70 to 87 months. The PSR noted that
Falor’s statutory range for supervised release was 0 to 3 years
and his range under the Guidelines was 1 to 3 years; the PSR
did not contain any conditions of supervised release.
    The government argued that the total tax loss amount
should include city and state occupancy taxes, which would
increase the tax loss to $4,109,795, and asked for a sentence of
74 months’ imprisonment. Falor opposed the government’s tax
loss calculation and objected to the PSR’s finding that he acted
as a leader or organizer, as well as its imposition of a sophisti-
cated means enhancement. Falor argued for a sentence of
3 years or less.
    At sentencing, the district court concluded that the total tax
loss amount included the unpaid city and state occupancy
taxes as relevant conduct. The district court also applied a two-
level enhancement pursuant to the United States Sentencing
4                                       Nos. 14-1369 & 14-1603

Commission Guidelines Manual (“U.S.S.G.”) § 2T1.1(b)(1)
based on Falor’s failure to report or correctly identify the
source of income from criminal activity, a two-level sophisti-
cated means enhancement, and a four-level enhancement
based on Falor’s role in the offense. Finally, the district court
applied a three-level reduction for acceptance of responsibility,
arriving at an adjusted offense level of 29. Based on this offense
level and his Criminal History Category, Falor’s advisory
Sentencing Guidelines range was 87 to 108 months’ imprison-
ment. The government then moved for a 15 percent downward
variance pursuant to U.S.S.G. § 5K1.1 based on Falor’s coopera-
tion, which the district court granted, without explanation,
over Falor’s objection that his cooperation warranted a larger
reduction. Ultimately, the court sentenced Falor to 74 months’
imprisonment and 3 years of supervised release, and ordered
him to pay special assessment and restitution fees.
    As to the conditions of supervised release, the district court
stated the following:
       … upon release from prison, [you] shall be
       placed on supervised release. Within 72 hours,
       you need to report to the probation office within
       your district. And you shall not commit another
       federal, state, or local crime while you comply
       with those standard conditions imposed by the
       court.
   The court then went on to impose several mandatory and
special conditions of supervision, without explanation. Then,
on February 11, 2014, the district court entered an amended
written judgment which included the orally pronounced
Nos. 14-1369 & 14-1603                                       5

“Additional Supervised Release Terms” and listed 13 “Stan-
dard Conditions of Supervision” that were not pronounced at
the sentencing hearing.
     Falor appeals, arguing that the district court erred by
(1) inadequately addressing a principal argument in mitigation,
(2) entering a written Amended Judgment whose “Standard
Conditions of Supervision” differ from the terms orally
pronounced at sentencing, and (3) imposing vague and over-
broad discretionary conditions of supervised release that were
unsupported by any findings under 18 U.S.C. § 3583(d) and
involve excessive deprivations of liberty.
   B. Michael Richard Jines
   From January to June 2013, Jines was involved in the
manufacture of methamphetamine. On July 9, 2013, a grand
jury returned a one-count indictment charging Jines with
conspiracy to manufacture methamphetamine, in violation of
21 U.S.C. §§ 841 and 846. Pursuant to a plea agreement, Jines
pleaded guilty to the one-count indictment.
    At sentencing, Jines faced an advisory Sentencing Guide-
lines range of 70 to 80 months and requested a sentence on the
low-end of the Guidelines. In mitigation, Jines asked the court
to consider his history of addiction, employment potential, and
opportunity for rehabilitation. The government asked for an
above-Guidelines sentence of 87 months on account of the
nature and circumstances of the offense, risk to the public
flowing from his offense and criminal history, and deterrence.
The district court sentenced Jines to an above-Guidelines
sentence of 96 months and 5 years of supervised release. The
court then imposed several mandatory conditions of super-
6                                       Nos. 14-1369 & 14-1603

vised release. It also adopted, without explanation, 13 standard
conditions and 6 special conditions.
   Jines appeals, contending that the district court committed
procedural error in failing to consider a principal argument in
mitigation—his cooperation with the government—when
fashioning his sentence. Jines also argues that the district court
did not adequately justify the above-Guidelines sentence it
imposed. Finally, Jines argues that the district court erred by
imposing non-mandatory supervised release conditions that
were unsupported by any findings under 18 U.S.C. § 3583(d)
and which excessively infringe on Jines’ rights under the
Constitution.
                        II. ANALYSIS
    Both Falor and Jines (collectively “appellants”) raise, among
other claims, that the discretionary supervised release condi-
tions imposed on them at sentencing are invalid. On
January 13, 2015, long after the parties had filed their opening
briefs on appeal, this court decided Thompson, which held that,
in imposing discretionary conditions of supervised release, a
sentencing court must consider the sentencing factors set forth
in 18 U.S.C. §§ 3553(a) and 3583(d) and state its reasons for
selecting particular conditions. Thompson, 777 F.3d at 373.
Failure to do so may constitute reversible error. Id. at 382.
    In light of Thompson, the appellants submitted position
statements asking the court to vacate their sentences and
remand to the district court for resentencing. Each also asked
this court to allow them to proceed on the other issues that
they raised on appeal. The government also submitted position
papers, agreeing that the district court committed procedural
Nos. 14-1369 & 14-1603                                           7

error in imposing conditions of supervised release without
making findings that those conditions were supported by the
§ 3553(a) factors. The government noted that summary reversal
and remand would be appropriate, but urged that it would not
be judicially expedient for the court to consider the appellants’
other arguments on appeal because the appellants would have
the opportunity to present those same arguments to the district
court upon remand.
    We agree that the district courts committed procedural
error in imposing discretionary conditions of supervised
release without considering the § 3553(a) factors and explain-
ing why those factors supported the imposition of the condi-
tions. This court has stressed the importance of justifying the
conditions and length of supervised release at sentencing by
providing an adequate statement of reasons, reasonably related
to the applicable § 3553(a) factors, because this practice allows
for meaningful appellate review. See Kappes, 782 F.3d at 845;
Thompson, 777 F.3d at 373. Although a sentencing court need
not address every factor “in checklist fashion, explicitly
articulating its conclusions regarding each one,” United States
v. Shannon, 518 F.3d 494, 496 (7th Cir. 2008), a “rote statement”
will not always suffice, United States v. Starko, 735 F.3d 989, 992
(7th Cir. 2013). When it comes to discretionary conditions of
supervised release, “‘[s]pecial’ conditions often require more
justification than ‘standard’ conditions—but not always—and
a condition’s label in the guidelines is ultimately irrelevant.”
Kappes, 782 F.3d at 846. “All discretionary conditions, whether
standard, special or of the judge’s own invention, require
findings.” Id. (emphasis in original). This rule is subject to a
8                                      Nos. 14-1369 & 14-1603

harmless error analysis on appellate review. United States v.
Siegal, 753 F.3d 705, 713 (7th Cir. 2014).
    Here, where the sentencing courts made no findings in
support of the discretionary conditions that they imposed on
Falor and Jines, we cannot find harmless error. As the addi-
tional issues presented by both appellants on appeal may be
raised at a full resentencing hearing in the district court, we
vacate the entire sentences of both appellants and remand for
a complete resentencing. On remand, the sentencing court
should consider our recent discussions of supervised release,
including Kappes, Thompson, and Siegal, supra.
                    III. CONCLUSION
    Both cases are REMANDED for resentencing.