Court Opinion

ID: 6330336
Source: CourtListenerOpinion
Date Created: 2022-04-13 00:00:35.224375+00
Date Added: 2024-06-11T09:22:59.880697
License: Public Domain

Case: 21-10206      Document: 00516273249          Page: 1   Date Filed: 04/08/2022

              United States Court of Appeals
                   for the Fifth Circuit                           United States Court of Appeals
                                                                            Fifth Circuit

                                                                          FILED
                                                                       April 8, 2022
                                    No. 21-10206
                                                                     Lyle W. Cayce
                                                                          Clerk
   United States of America,

                                                             Plaintiff—Appellee,

                                        versus

   Chupee Ernest Joe,

                                                          Defendant—Appellant.

                   Appeal from the United States District Court
                       for the Northern District of Texas
                            USDC No. 3:18-CR-590-1

   Before Stewart, Clement, and Elrod, Circuit Judges.
   Per Curiam:*
          Defendant-Appellant Chupee Ernest Joe appeals the order of
   restitution imposed by the district court following his guilty plea conviction
   for aiding and assisting in the preparation of false and fraudulent tax returns
   in violation of 26 U.S.C. § 7206(2). For the following reasons, we REVERSE
   the district court’s restitution order.

          *
            Pursuant to 5th Circuit Rule 47.5, the court has determined that this
   opinion should not be published and is not precedent except under the limited
   circumstances set forth in 5th Circuit Rule 47.5.4.
Case: 21-10206        Document: 00516273249         Page: 2    Date Filed: 04/08/2022

                                     No. 21-10206

                   I. FACTUAL & PROCEDURAL BACKGROUND
          In July 2020, Joe pled guilty, pursuant to a written plea agreement, to
   two counts of aiding and assisting in the preparation of a false and fraudulent
   tax return in violation of § 7206(2), as alleged in counts one and three of the
   13-count superseding indictment. The indictment alleged that Joe owned and
   operated a tax preparation business, Chupee Express Tax, and that he
   prepared false and fraudulent income tax returns in his capacity as a tax
   return preparer.
          In his factual resume, Joe stipulated that “[f]rom at least 2013 through
   2016, [he] engaged in a scheme and course of conduct in which he knowingly
   and willfully prepared and caused to be filed with the [Internal Revenue
   Service (“IRS”)] income tax returns that were materially false,” and that he
   “routinely falsified or inflated deductions and credits including education
   credits[,]” which “produced an inflated refund to the client and a
   corresponding tax loss to the United States.” With respect to the conduct
   alleged in count one, Joe stipulated that on or about March 28, 2017, he
   prepared an individual income tax return that he fraudulently inflated to
   result in a $3,463 refund, instead of a properly calculated $340 refund. No
   loss amount was stated in the factual resume with respect to that count. With
   respect to count three, Joe stipulated that on or about March 1, 2017, he
   prepared a tax return that fraudulently included deductions and credits
   resulting in a tax loss of $4,004 to the U.S. Treasury.
          Under the terms of the plea agreement, Joe waived the right to appeal
   his “conviction, sentence, fine, and order of restitution or forfeiture in an
   amount to be determined by the district court.” He reserved the right to
   appeal a sentence exceeding the statutory maximum punishment, to appeal
   an arithmetic error at sentencing, to challenge the voluntariness of his guilty
   plea or the waiver, and to bring a claim of ineffective assistance of counsel. In

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Case: 21-10206      Document: 00516273249          Page: 3    Date Filed: 04/08/2022

                                    No. 21-10206

   addressing the maximum penalties that could be imposed in terms of
   sentencing, § 3(e) of the plea agreement stated that restitution was
   mandatory, and that Joe agreed that restitution “may include restitution
   arising from all relevant conduct, not limited to that arising from the
   offense[s] of conviction alone.” In contrast, § 7(a) of the plea agreement
   specifically pertained to restitution and provided “that the total amount of
   restitution reflected in this agreement results from the defendant’s criminal
   conduct.” § 7 also stated that the full amount of restitution would ultimately
   be determined by the district court after the preparation of a presentence
   report (“PSR”) and that the Government made no guarantees regarding the
   amount of restitution that the district court would ultimately impose.
          Joe, represented by counsel, entered his guilty plea by teleconference
   before a magistrate judge. The district court reviewed the factual resume and
   the terms of the plea agreement, including the provisions pertaining to
   restitution and the appeal waiver. Joe confirmed that he spoke with his
   attorney about his proposed guilty plea, that he discussed the plea agreement
   with his attorney, and that he “fully understood everything set out in the plea
   agreement before [he] signed it.”
          The PSR listed 31 tax returns, from 12 taxpayers, totaling $134,063 in
   actual losses to the IRS. The probation officer assigned Joe a base offense
   level of 22, based on the estimated amount of the IRS’s tax loss attributable
   to Joe’s relevant conduct which was $2,230,904. Joe’s guidelines range was
   37 to 46 months of imprisonment and the restitution amount was set at
   $2,230,904—the same as the estimated loss amount.
          Joe filed written objections to the PSR arguing that the actual tax loss
   as a result of his criminal conduct should be at most $134,063, as noted in
   paragraph 23 of the PSR which reflected the tax loss based on 31 out of 1,708
   tax returns that Joe filed in the tax years of 2013 through 2016.

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                                        No. 21-10206

          Prior to sentencing, Joe filed a motion to remove his court-appointed
   attorney and to proceed pro se, which the district court granted after holding
   a hearing. Additionally, the Government moved to declare that Joe had
   materially breached the plea agreement by making false statements and
   omitting material information to the probation officer regarding his finances. 1
          At sentencing, Joe proceeded pro se with stand-by counsel. Despite
   being cautioned by the district court about the dangers of self-representation
   and being given the opportunity to reconsider whether he wished to proceed
   pro se, Joe insisted on representing himself. The district court first
   considered whether the Government should be relieved of its obligations
   under the plea agreement based on Joe’s breach and whether Joe should be
   denied a reduction for acceptance of responsibility. It then heard testimony
   regarding the methodology used to calculate the relevant conduct tax loss
   calculation, and the issues raised in the Government’s motion.
          The district court granted the Government’s motion, holding that Joe
   had materially breached the plea agreement, and denied Joe a reduction for
   acceptance of responsibility but otherwise enforced the plea agreement. The
   district court sentenced Joe within the guidelines range to 32 months of
   imprisonment on count one and 31 months of imprisonment on count three,
   to run consecutively, for a total sentence of 63 months of imprisonment, and
   one year of supervised release. With respect to restitution, the district court
   stated that it had accepted the methodology used to extrapolate the loss
   amount but questioned its authority to impose restitution for losses arising

          1
           According to the Government, about a week before sentencing, it learned that Joe
   had a bank account in the name of his tax business with a balance of approximately
   $480,000 that had not been disclosed to the probation officer for purposes of the PSR.

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                                        No. 21-10206

   from relevant conduct. It took the matter under advisement and directed the
   parties to file additional briefing on the issue.
           The Government filed supplemental briefing, arguing that the district
   court could, pursuant to 18 U.S.C. § 3663(a)(3), impose restitution as a
   condition of supervised release when the defendant expressly agreed,
   pursuant to a plea agreement, to pay restitution for the full scope of his
   criminal conduct. It continued that Joe’s agreement to pay restitution for all
   relevant conduct was similar to other agreements upheld by this court. The
   district court agreed and entered a written judgment ordering Joe to pay
   restitution in the amount of $2,230,904, as a special condition of supervised
   release. Joe moved for the appointment of counsel on appeal which was
   granted. This appeal followed. 2
                               II. STANDARD OF REVIEW
           The issue of whether a restitution award is illegal is reviewed de novo,
   and the amount of the restitution award is reviewed for abuse of discretion.
   United States v. Arledge, 553 F.3d 881, 897 (5th Cir. 2008). This court reviews
   the district court’s factual findings supporting the award for clear error.
   United States v. Sharma, 703 F.3d 318, 322 (5th Cir. 2012). “A factual finding
   is clearly erroneous only if based on the record as a whole, we are left with
   the definite and firm conviction that a mistake has been committed.” Id.
   (internal quotation marks and citation omitted).
                                     III. DISCUSSION
          The parties agree that the district court had the authority to impose
   restitution under § 3663(a)(3). Consequently, the only issue we address

          2
             After Joe filed his appellate brief, the Government filed an opposed motion to
   dismiss the appeal based on the appeal waiver. A panel of this court denied the motion.

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                                           No. 21-10206

   herein is whether the restitution award exceeded the scope of the plea
   agreement. See United States v. Tolentino, 766 F. App’x 121, 126 (5th Cir.
   2019). Joe asserts that because the plea agreement did not state a specific
   amount for restitution, and his counsel could not “walk him through the
   issue” due to the Covid-19 pandemic, 3 he believed that restitution would be
   set at the loss amount referenced in the factual resume, which was $4,004.
   He further argues that he did not expressly acknowledge during
   rearraignment that his agreement to pay restitution encompassed sums
   calculated based on his relevant conduct. The Government counters that the
   plea agreement, when read as a whole, reflects that Joe’s restitution
   agreement was not limited to restitution arising from the offenses of
   conviction but from all his relevant conduct. We address these arguments in
   turn.
           A district court may impose restitution as authorized by statute.
   United States v. Penn, 969 F.3d 450, 458 (5th Cir. 2020), cert. denied, 141 S.
   Ct. 2526 (2021). “Neither the Victim and Witness Protection Act, 18 U.S.C.
   § 3663, nor the Mandatory Victim Restitution Act, 18 U.S.C. § 3663A, allow
   restitution for a tax code offense under Title 26 (as opposed to offenses
   described in the general criminal code of Title 18).” United States v.
   Westbrooks, 858 F.3d 317, 327 (5th Cir. 2017), vacated on other grounds, 138 S.
   Ct. 1323 (2018). However, this court has explained that while § 3663 does not
   authorize restitution orders compelling payments to the IRS, § 3663(a)(3)
   does allow a district court to “order restitution in any criminal case to the
   extent agreed to by the parties in a plea agreement.” United States v.
   Campbell, 552 F. App’x 339, 344 (5th Cir. 2014) (quoting § 3663(a)(3)); see
   also United States v. Maturin, 488 F.3d 657, 661 (5th Cir. 2007) (noting that

           3
               Joe’s attorney appeared by video at his rearraignment.

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                                     No. 21-10206

   § 3663(a)(3) provides an exception to the general rules limiting restitution to
   statutorily-defined victims and counts of conviction).
          We have therefore upheld restitution orders for Title 26 offenses
   under § 3663(a)(3) when the defendant agreed to restitution in a plea
   agreement. See Tolentino, 766 F. App’x at 126–29 (upholding restitution
   award on plain error review for Title 26 offenses); United States v. Simmons,
   420 F. App’x 414, 421 (5th Cir. 2011). We have also recognized that the
   district court may order restitution for Title 26 offenses as a condition of
   supervised release pursuant to 18 U.S.C. § 3583(d)(3). See Campbell, 552 F.
   App’x at 344; see also Westbrooks, 858 F.3d at 327 (noting that “several
   statutes, read together, allow district courts to order restitution for tax
   offenses as a condition of supervised release”). Plea agreements are
   contracts, and this court will seek to determine a defendant’s reasonable
   understanding of the agreement and construe ambiguities against the
   Government. See United States v. Escobedo, 757 F.3d 229, 233 (5th Cir. 2014);
   United States v. Story, 439 F.3d 226, 231 (5th Cir. 2006) (construing plea
   agreements using general principles of contract law).
          Here, § 3(e) of the plea agreement pertains to sentencing and states
   that the restitution amount may arise “from all relevant conduct, not limited
   to that arising from the offense of conviction alone.” However, § 7(a) of the
   plea agreement, which is more specific and directly addresses restitution,
   provides “that the total amount of restitution reflected in this agreement
   results from [Joe’s] criminal conduct.” Reading these two sections together
   reveals an ambiguity in the plea agreement. Essentially, it is unclear if § 3(e)’s
   broad “all relevant conduct” clause is attributable to § 7(a)’s narrower clause
   providing that restitution is limited to “the defendant’s criminal conduct.”
   Given this ambiguous language in the plea agreement, Joe’s argument is
   reasonable that he believed he was agreeing to restitution resulting from his
   criminal conduct as reflected in the PSR, i.e., $134,063.

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                                    No. 21-10206

          In sum, because the plea agreement contained ambiguous and
   conflicting language as to the restitution amount, and we construe this
   ambiguity against the Government, see Escobedo, 757 F.3d at 233, we hold that
   the district court erred in ordering restitution in the amount of $2,230,904—
   a loss amount encompassing all of Joe’s relevant conduct as listed in the PSR.
   Rather, in accordance with § 7(a) of the plea agreement, the narrower
   provision involving restitution, we limit the award to $134,063—the amount
   arising solely from Joe’s criminal conduct.
                                IV. CONCLUSION
          For the foregoing reasons, we REVERSE the district court’s
   restitution order of $2,230,904 and RENDER an award of restitution in the
   amount of $134,063.

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