U.S. v. Gonzalez

• Decision Date: 22 July 2011
• Docket Number: Docket No. 10–2202–cr.
• Citation: 647 F.3d 41
• Parties: UNITED STATES of America, Appellee,v.Efrain GONZALEZ, Jr., Defendant–Appellant.
• Court: U.S. Court of Appeals — Second Circuit

647 F.3d 41

UNITED STATES of America, Appellee,

v.Efrain GONZALEZ, Jr., Defendant–Appellant.

Docket No. 10–2202–cr.

United States Court of Appeals, Second Circuit.

Argued: April 11, 2011.Decided: July 22, 2011.

Michael A. Levy, Assistant United States Attorney, New York, NY, (Preet Bharara, United States Attorney for the Southern District of New York, Pablo Quiñones, Assistant United States Attorney, New York, NY, on the brief), for Appellee.Lance Croffoot–Suede, Patrick C. Ashby, New York, NY, (Linklaters, New York, NY, on the brief), for Defendant–Appellant.Before: KEARSE, MINER, and CHIN, Circuit Judges.KEARSE, Circuit Judge:

Defendant Efrain Gonzalez, Jr. (“Gonzalez”), a former Senator in the New York State Legislature, appeals from a judgment entered in the United States District Court for the Southern District of New York following his plea of guilty before William H. Pauley III, Judge, convicting him on two counts of mail fraud, in violation of 18 U.S.C. § 1341 (Counts 6 and 8 of the superseding indictment), one count of conspiracy to commit mail fraud and federal-program fraud, in violation of 18 U.S.C. § 371 (Count 2), and one count of conspiracy to commit mail fraud, federal-program fraud, and wire fraud, in violation of 18 U.S.C. § 371 (Count 3). Gonzalez was sentenced principally to 84 months' imprisonment, to be followed by a two-year term of supervised release, and was ordered to pay $122,775 in restitution. On appeal, he contends principally that the district court (1) abused its discretion in denying his motion to withdraw his guilty plea, (2) erred in calculating the imprisonment range recommended by the advisory Sentencing Guidelines (“Guidelines”), and (3) erred in ordering restitution without proof that the persons characterized by the government as victims were directly harmed by his offense conduct. For the reasons that follow, we vacate and remand with respect to the amount of the restitution order; in all other respects, we affirm.

I. BACKGROUND

The following description of the conduct underlying the present prosecution is drawn largely from the sentencing findings of the district court, adopting the facts described in the presentence report (“PSR”), to which there was no objection by Gonzalez, and from Gonzalez's statements under oath in pleading guilty to the above offenses.

A. The Mail Fraud and Conspiracy Offenses

Gonzalez was a member of the New York State Senate from 1990 through 2008, representing a district in the Bronx. During all or part of that period, the New York State (“State”) Legislature (“Legislature”) annually allocated $200 million to certain groups or projects for the public benefit (“public benefit funds”); of that annual total, elected members of the Senate were allowed to designate the recipients of $85 million.

Pathways for Youth, Inc. (“Pathways”), was a not-for-profit corporation founded with the stated purpose of helping to improve the lives of young people. From October 1999 through January 2005, Gonzalez caused the Legislature to provide more than $400,000 in public benefit funds to Pathways. Pathways also received funding from a number of federal agencies, including the United States Departments of Health and Human Services, Labor, Education, and Justice; between October 1999 and July 2004, the total amount of federal funding to Pathways exceeded $4 million.

West Bronx Neighborhood Association, Inc. (“West Bronx” or “WBNA”), was a not-for-profit corporation whose bylaws stated that it was organized to foster an interest in, inter alia, civic and community affairs and welfare, and to promote, inter alia, social and civic responsibility in the community. Gonzalez, having procured State funds for Pathways, caused Pathways to provide funding to West Bronx between 1999 and 2004.

The United Latin American Foundation, Inc. (“ULAF”), was a not-for-profit corporation whose certificate of incorporation stated that it was organized to, inter alia, raise funds for the benefit of residents of the Dominican Republic. Gonzalez caused Pathways to enter into consulting agreements with ULAF on ways to strengthen the quality of life for residents of the Bronx and northern Manhattan, with respect to, inter alia, housing and drug problems. ULAF too was a recipient of funds from Pathways.

1. Moneys From Pathways to West Bronx to Gonzalez

West Bronx, despite the corporate purposes set out in its bylaws, did not engage in any substantial amount of not-for-profit activity. Instead, WBNA funds were used to pay personal expenses of Gonzalez. Gonzalez was an honorary member of WBNA's board; WBNA's office adjoined Gonzalez's District Office in the Bronx; the two offices shared a common door; and Gonzalez placed members of his Senate staff in key operating positions at WBNA.

From October 1999 through January 2005, Gonzalez had the Legislature provide Pathways with $423,000 in funding. From October 1999 through July 2004, Gonzalez caused Pathways to make payments to WBNA totaling $462,500. From about March 1999 through about May 2006, WBNA funds were used to pay more than $400,000 of Gonzalez's personal bills, funding, inter alia, his membership in a vacation club in the Dominican Republic, his rental of a luxury apartment in the Dominican Republic for his wife, his rental of a summer residence in Monroe, New York, college tuition for his daughter, and his purchases of jewelry, apparel, and premium New York Yankees baseball tickets.

2. Moneys From Pathways to ULAF to Gonzalez

ULAF, having entered into consulting agreements with Pathways, proceeded to send Pathways reports describing work purportedly done by ULAF personnel on behalf of Pathways. Pathways in 2003 paid ULAF a total of $152,500 for the services described. In fact, ULAF had not performed any substantial work in connection with the contracts; it used funds it received from Pathways to pay personal expenses of Gonzalez and others.

Miguel Castanos, a former Gonzalez Senate staff employee and an indicted coconspirator in the present case, was installed as ULAF's president; ULAF's business address was Castanos's home address. Other coconspirators became signatories on ULAF's checking account and made payments to Castanos, to creditors of Gonzalez, and to creditors of one of Gonzalez's companies.

3. The Superseding Indictment and Proceedings Toward Trial

Gonzalez was arrested in August 2006. A 10–count superseding indictment filed in December 2006 named him in nine counts. He was charged with substantive counts of federal-program fraud and mail fraud with regard to West Bronx (Counts 5 and 6) and substantive counts of federal-program fraud, mail fraud, and wire fraud with regard to ULAF (Counts 7–9); Gonzalez and various codefendants were charged with conspiracy to commit mail and federal-program fraud with respect to West Bronx (Count 2) and conspiracy to commit mail, wire, and federal-program fraud with respect to ULAF (Count 3). Gonzalez was also charged with defrauding New York citizens of his honest services (Count 1), and money laundering conspiracy (Count 4). Each of the defendants initially pleaded not guilty.

Extensive discovery followed, and, principally for that reason, there were repeated adjournments of the date for trial. Eventually, trial was scheduled for May 4, 2009. In mid-April 2009, Gonzalez's attorney, Murray Richman, asked the district court to, inter alia, postpone the start of trial for one week and to allow Gonzalez to change attorneys. At the ensuing conference with the court, Richman stated as follows:

I know it is late in the game and I hesitate even making this application, but I believe that Mr. Gonzalez is entitled to a trial that he feels he is entitled to. I have been involved in this case from the very beginning. There has been a complete divergence of views on how to handle this case in terms of what the evidence shows, what it doesn't show, how to handle the case....

.... [A]fter his ... non-election ... communications seemed to break down.

.... We have met two times in the last couple of months in order to try to prepare for this case in order to get ready, and we have a different view as to what this evidence is, what the case shows, what counsel can do.

I am in no way impugning my client's integrity. I think it is just an honest breakdown in how a case can be handled. He is of the opinion that there is one course of conduct that can be taken and that establishes his non-guilt. And I am of the opinion that, frankly speaking, that it does not. So we are at a divergence. We can't communicate and we have not communicated and it is difficult to defend him personally under those circumstances.

My concern is that I don't want to throw the weight on him. It is easy to do that and it would not be fair, but we are just not getting this thing done.

I recognize, your Honor, this case is an old case and, at this stage, it should have been tried months ago, years ago or whatever. But I am at that position where, if I go forward, I believe that I am involved in an ethical problem.

(Conference Transcript, April 24, 2009 (“Apr. 24, 2009 Conf. Tr.”), at 2–4.)

The court rejected the suggestion that the disagreements Richman described between himself and Gonzalez constituted a sufficient basis for a change of attorneys so shortly before trial. ( See id. at 5(“Mr. Richman, you are a highly experienced and well qualified lawyer. I am sure that there are any number of clients with whom you have had a disagreement over the years about how to approach a case.”).) Noting that the May 4, 2009 trial date had been set on October 15, 2008, “after many, many extended adjournments,” the court said, “You cannot wait until the eve of trial to report to the Court that you are having a difficulty with your client, especially when you know exactly what the landscape of this case is.” ( Id.) The court stated:

We are going to go to trial, and I am not going to relieve you as counsel in the case.

....

If Mr....