No. 99-1170
In the Supreme Court of the United States
WALLACE C. YOST, PETITIONER
v.
UNITED STATES OF AMERICA
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
BRIEF FOR THE UNITED STATES IN OPPOSITION
SETH P. WAXMAN
Solicitor General
Counsel of Record
JAMES K. ROBINSON
Assistant Attorney General
JUAN C. ZARATE
Attorney
Department of Justice
Washington, D.C. 20530-0001
(202) 514-2217
QUESTION PRESENTED
Whether the district court in this case acted within its authority under
Federal Rule of Criminal Procedure 35(c)-which provides that a district
court may correct a sentence "that was imposed as a result of arithmetical,
technical, or other clear error" within seven days after the imposition
of sentence-when, upon recognizing that it had sentenced petitioner under
the wrong Sentencing Guideline, it vacated the sentence, conducted a new
sentencing hearing, and revisited a prior ruling concerning the conduct
relevant to petitioner's offenses.
In the Supreme Court of the United States
No. 99-1170
WALLACE C. YOST, PETITIONER
v.
UNITED STATES OF AMERICA
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
BRIEF FOR THE UNITED STATES IN OPPOSITION
OPINION BELOW
The opinion of the court of appeals (Pet. App. 1a-8a) is reported at 185
F.3d 1178.
JURISDICTION
The judgment of the court of appeals was entered on August 11, 1999. A petition
for rehearing was denied on October 14, 1999 (Pet. App. 9a-10a). The petition
for a writ of certiorari was filed on January 12, 2000. The jurisdiction
of this Court is invoked under 28 U.S.C. 1254(1).
STATEMENT
After a guilty plea in the United States District Court for the Northern
District of Florida, petitioner was convicted on one count of conspiracy
to commit mail fraud, wire fraud, and bankruptcy fraud, in violation of
18 U.S.C. 371, and one count of mail fraud, in violation of 18 U.S.C. 1341
and 2. The district court initially sentenced petitioner to 14 months' imprisonment,
to be followed by three years' supervised release, and ordered petitioner
to pay a $10,000 fine and $50,000 in restitution. The district court subsequently
set aside that sentence and imposed a new sentence, in which petitioner
was ordered to serve 18 months' imprisonment, to be followed by three years'
supervised release, and was ordered to pay restitution in the amount of
$1,050,000 (but no fine). The court of appeals affirmed. Pet. App. 1a-8a.
1. Petitioner was a developer in the Pensacola, Florida, area who owned
properties both individually and in corporate names. From 1989 to 1991,
petitioner was unable to meet financial obligations as they became due,
and creditors began the process of liquidating the security on petitioner's
loans. Facing foreclosure actions, petitioner declared bankruptcy and illegally
transferred properties in an attempt to protect them from creditors. Eventually,
AmSouth Bank obtained three judgments against petitioner totaling $7,300,000,
and Citizens and Builders (C&B) Bank obtained two judgments totaling
more than $3,525,000. Gov't C.A. Br. 26-34; Presentence Report (PSR) 4-6.
In June 1990, attorneys for C&B Bank took depositions of petitioner
and his wife to identify personal assets that might satisfy an outstanding
judgment. During his deposition, petitioner did not tell the truth about
the existence and location of his personal assets, which frustrated the
bank's efforts to collect on the judgment. Gov't C.A. Br. 29-30.
2. In May 1997, a grand jury returned an indictment against petitioner charging
him with offenses arising out of his attempts to conceal assets from creditors
in his bankruptcy proceedings. The indictment charged petitioner with one
count of conspiracy to commit bank fraud, mail fraud, wire fraud, money
laundering, and bankruptcy fraud, in violation of 18 U.S.C. 371 (Count 1);
two counts of bank fraud, in violation of 18 U.S.C. 1344 and 2 (Counts 2
and 3); and one count of mail fraud, in violation of 18 U.S.C. 1341 and
2 (Count IV). Two co-defendants, David Fleming and Steven Oppenheim, were
also charged in Counts 1-3 of the indictment. See C.A. Rec. Ex. 1-23.
Petitioner entered into a plea and cooperation agreement with the government.
He eventually pleaded guilty to conspiracy to commit mail fraud, wire fraud,
and bankruptcy fraud (part of Count 1) and to mail fraud (Count 4). His
guilty plea to the conspiracy count, however, did not include a guilty plea
to conspiracy to commit money laundering or bank fraud. Pet. App. 2a-3a.
On March 24, 1999, the district court held a sentencing hearing. At that
sentencing hearing, the district court grouped petitioner's offenses in
Counts 1 and 4, pursuant to Sentencing Guidelines § 3D1.2(d), to determine
petitioner's offense level. In so doing, however, the district court erroneously
included under the conspiracy count the offenses of conspiracy to commit
money laundering and conspiracy to commit bank fraud, to which petitioner
had not pleaded guilty. Pet. App. 3a.
Under Guidelines § 3D1.3(b), which governs the offense level applicable
to groups of closely related counts, the district court was required to
impose a sentence based on the greatest offense level for any of petitioner's
offenses. The applicable Sentencing Guideline for fraud offenses, including
conspiracy to commit bank fraud, mail fraud, wire fraud, and bankruptcy
fraud, is Guidelines § 2F1.1. The applicable Guideline for conspiracy
to commit money laundering is Guidelines § 2S1.1. In determining petitioner's
offense level under the fraud Guideline, Section 2F1.1, the district court
concluded, based on United States v. Mueller, 74 F.3d 1152, 1159-1160 (11th
Cir. 1996), that petitioner had not committed the offense of bank fraud
in giving incomplete testimony at his deposition, and therefore declined
to consider that conduct as part of petitioner's relevant conduct.1 The
court then determined that the money laundering Guideline, Section 2S1.1,
would yield a higher offense level than the fraud Guideline. Accordingly,
it applied Section 2S1.1, which yielded an adjusted offense level of 17
and a sentencing range of 24-30 months' imprisonment. The court also granted
the government's motion for a downward departure pursuant to Guidelines
§ 5K1.1 based on petitioner's cooperation. The court then sentenced
petitioner to 14 months' imprisonment and ordered him to pay a $10,000 fine
and $50,000 in restitution.
3. When the district court sentenced co-defendant Fleming two days later,
on March 26, 1999, it realized that it had erred in petitioner's sentencing
by applying the money laundering Guideline, Section 2S1.1, since petitioner
had not pleaded guilty to conspiracy to engage in money laundering. The
next day, the district court vacated petitioner's sentence pursuant to Federal
Rule of Criminal Procedure 35(c) and conducted a new sentencing hearing.
Pet. App. 15a. Rule 35(c) provides that a district court, "within 7
days after the imposition of sentence, may correct a sentence that was imposed
as a result of arithmetical, technical, or other clear error." Fed.
R. Crim. P. 35(c) (emphasis added).
At the new sentencing hearing, the district court observed that it had improperly
applied the money laundering Guideline to petitioner because petitioner
had not pleaded guilty to conspiracy to engage in money laundering. The
court also ruled that the money laundering Guideline would not be applicable
to petitioner in any event because the statute of limitations would have
barred a conviction for money laundering. Pet. App. 15a. The court therefore
resentenced petitioner under the fraud Guideline, Section 2F1.1.
In correcting its error and imposing a new sentence, the district court
also reexamined its earlier determination that petitioner's conduct did
not constitute bank fraud under the Eleventh Circuit's decision in Mueller,
supra. The court concluded that petitioner's conduct did in fact constitute
conspiracy to commit bank fraud and therefore should be considered as part
of the relevant conduct in sentencing petitioner under the fraud Guideline.
The court then recalculated petitioner's offense level under the fraud Guideline.
That recalculation resulted in an adjusted offense level of 19, for a Guidelines
sentencing range of 30-37 months' imprisonment. After again granting the
government's motion for downward departure, the court sentenced petitioner
to 18 months' imprisonment, and ordered petitioner to pay restitution in
the amount of $1,050,000. Pet. App. 4a & n.3.
4. Petitioner appealed, arguing that, when the district court acted under
Rule 35(c) to correct its error in sentencing him based on the money laundering
Guideline, it had no authority also to reexamine its earlier decision that
petitioner had not engaged in conspiracy to commit bank fraud and to recalculate
his offense level under the fraud Guideline based on that reexamination.2
The court of appeals affirmed. Pet. App. 1a-8a. The court concluded that
the district court had authority under Rule 35(c) to resentence petitioner,
because it had made a "clear error" in sentencing petitioner under
the money laundering Guideline. See Pet. App. 6a-7a. Given that the district
court had that authority to resentence petitioner, the court held that it
also had the authority to revisit prior rulings that were reflected in its
original sentence. The court noted that it had taken a "holistic approach"
to criminal sentences reviewed on appeal, under which a sentence that is
vacated for error and remanded to the lower court "becomes void in
its entirety and the district court is free to revisit any rulings it made
at the initial sentencing." Id. at 7a-8a. The court saw "no reason
why the same should not be true when the district court resentences under
Rule 35(c)." Id. at 8a. Accordingly, it held that "it takes only
one clear error to give the district court authority under Rule 35(c) to
conduct an entire resentencing at which the court may correct any other
errors, clear or not." Ibid.
ARGUMENT
Petitioner contends (Pet. 6-13) that when the district court acted under
Federal Rule of Criminal Procedure 35(c) to correct his sentence, the court
lacked authority to reexamine its earlier determination that petitioner
had not engaged in conspiracy to commit bank fraud. The court of appeals
correctly rejected that contention, and its decision does not conflict with
any decision of this Court or any other court of appeals. Further review
is therefore not warranted.
1. Rule 35(c) provides that the district court, "acting within 7 days
after the imposition of sentence, may correct a sentence that was imposed
as a result of arithmetical, technical, or other clear error." Rule
35(c) therefore limits the reasons for which a district court may move in
the first instance to correct a sentence; the court may do so only if it
discovers some "arithmetical, technical, or other clear error"
in the sentence. Rule 35(c) does not, however, limit the district court's
authority to correct a defendant's sentence once it discovers the existence
of an arithmetical, technical, or clear error that influenced the sentence.
Thus, although under Rule 35(c) the district court may not correct a sentence
in the absence of an arithmetical, technical, or clear error, once it discovers
the existence of such an error, it may then correct any other error in the
sentence, even if that other mistake by itself would not have warranted
reopening the sentence.3 As the Seventh Circuit has explained: "[W]henever
the district court must revise one aspect of the sentencing scheme, it is
permitted by Rule 35 to revise the rest. The district court may act without
waiting for instructions or permission." United States v. Bentley,
850 F.2d 327, 329, cert. denied, 488 U.S. 970 (1988).
In this case, the district court initially erred in applying the money laundering
Guideline rather than the fraud Guideline to determine petitioner's sentence.
Once the district court recognized its error, it moved to correct petitioner's
sentence. At that point it was free to correct other errors that had influenced
its initial determination of petitioner's sentence.
Petitioner correctly observes (Pet. 7-8) that Rule 35(c) does not provide
the district court with the authority to correct a sentence merely because
the court changes its mind about the appropriateness of a sentence. See
Fed. R. Crim. P. 35 advisory committee note (1991); United States v. Layman,
116 F.3d 105, 107-109 (4th Cir. 1997), cert. denied, 522 U.S. 1107 (1998);
United States v. DeMartino, 112 F.3d 75, 80-81 (2d Cir. 1997). That is not
what occurred in this case, however; here, the district court was empowered
to correct the sentence because it resulted from a clear error, and in doing
so it was not precluded from also correcting other errors influencing the
sentence. This is not a case, therefore, where "the district court
unequivocally states a sentence and then imposes it, and the sentence is
not the product of error." United States v. Fraley, 988 F.2d 4, 7 (4th
Cir. 1993).
2. The decision below does not conflict with the decision of any other court
of appeals. Petitioner suggests that the decision below conflicts with the
Layman, DeMartino, and Fraley decisions, but as discussed above, those cases
involved situations where the initial sentence imposed by the district court
contained no error of any kind, much less clear error, and therefore the
resentencing simply reflected a change of heart on the part of the district
court about the appropriate sentence.
In United States v. Portin, 20 F.3d 1028 (9th Cir. 1994), the court held
that, when a district court acts pursuant to Rule 35(c) to correct the term
of imprisonment imposed on a defendant, it may not use that authority also
to alter a separate part of the sentence (in that case, a fine). In Portin,
the district court rejected plea agreements the parties had negotiated under
Federal Rule of Criminal Procedure 11(e)(1)(C) and did not allow the defendants
to withdraw their guilty pleas, as required under that Rule; instead, the
district court sentenced both defendants to more prison time than the amount
to which they had agreed in the plea agreements and also fined both defendants.
The district court later acknowledged its error in failing to allow the
defendants to withdraw their guilty pleas and corrected the defendants'
sentence of imprisonment pursuant to Rule 35(c), but it also increased the
fines it previously had imposed. The Ninth Circuit ruled that the district
court exceeded its authority under Rule 35(c) by increasing the fines because
there was no error as to the fines and all the issues with respect to fines
had been resolved at the initial sentencing hearing. Ibid. The court followed
its prior decisions holding that when "a sentence [is] composed of
legal and illegal 'portions,' * * * [and] the illegal part [can] be cleanly
'lopped off,'" id. at 1030, a district court may act under Rule 35
only to correct the illegal part of the sentence.
This case is distinguishable from Portin because the district court's error
at the initial sentencing did not yield an illegal part of the sentence
that could be cleanly "lopped off" from the rest of the sentence.
Rather, the district court's error was its use of an improper Sentencing
Guideline to determine petitioner's sentence. Because the district court
used the wrong Guideline, all aspects of petitioner's sentence required
correction through use of a different Guideline. When the district court
then applied the proper Guideline to determine petitioner's sentence, it
was entitled to make a correct, not an erroneous, sentencing determination
under that Guideline. That determination necessarily involved a calculation
of the loss and amount of applicable fines and restitution to be paid.
CONCLUSION
The petition for a writ of certiorari should be denied.
Respectfully submitted.
SETH P. WAXMAN
Solicitor General
JAMES K. ROBINSON
Assistant Attorney General
JUAN C. ZARATE
Attorney
APRIL 2000
1 Mueller held that a defendant's filing of a misleading answer and affidavit
in a civil suit did not constitute a violation of the criminal bank fraud
statute, 18 U.S.C. 1344.
2 Rule 35(c) provides that a court may correct a sentence based on clear
error "within 7 days after the imposition of sentence." It does
not, however, expressly define "the imposition of sentence" or
address whether a district court may reexamine determinations affecting
sentencing before "the imposition of sentence." In this case,
the district court conducted the second sentencing hearing within seven
days of its initial sentencing hearing, but before it had entered any written
imposition of sentence or entered judgment. Because the second sentencing
hearing occurred after the first oral sentence was pronounced but before
the judgment of conviction was entered, the question arose whether the district
court had initially imposed a sentence on petitioner. If no sentence had
been imposed before the second sentencing hearing, then the district court's
authority to reexamine its determinations might not be constrained by Rule
35(c). The court of appeals observed that other circuits are in disagreement
as to whether the oral pronouncement of sentence after a hearing constitutes
"the imposition of sentence" under Rule 35(c). See Pet. App. 5a
n.4. It found no need to resolve that issue in this case, however, because
it determined that the district court did have authority to reexamine its
earlier determination as to whether petitioner's conduct constituted conspiracy
to commit bank fraud when it corrected the sentence based on its error in
applying the money laundering Guideline. Id. at 6a. The Eleventh Circuit
has since ruled that the "seven-day period set out in Rule 35(c) begins
to run when the sentence in a case is orally imposed." United States
v. Morrison, 204 F.3d 1091, 1094 (11th Cir. 2000).
3 In this Court, petitioner does not dispute that the district court acted
properly to resentence him under the fraud Guideline, because application
of the money laundering Guideline was "arithmetical, technical, or
other clear error" within the meaning of Rule 35(c).