United States v. Hayes

• Decision Date: 12 August 2014
• Docket Number: No. 11–13678.,11–13678.
• Citation: 762 F.3d 1300
• Parties: UNITED STATES of America, Plaintiff–Appellant, v. James Winston HAYES, Defendant–Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

762 F.3d 1300

UNITED STATES of America, Plaintiff–Appellant,

v.James Winston HAYES, Defendant–Appellee.

No. 11–13678.

United States Court of Appeals, Eleventh Circuit.

Aug. 12, 2014.

Praveen S. Krishna, Ramona Albin, James Dennis Ingram, George A. Martin, Jr., Joyce White Vance, U.S. Attorney's Office, Birmingham, AL, for Plaintiff–Appellant.

James Derek Drennan, Jaffe & Drennan, PC, Birmingham, AL, for Defendant–Appellee.

Appeal from the United States District Court for the Northern District of Alabama. D.C. Docket No. 7:07–cr–00507–VEH–TMP–1.

Before ED CARNES, Chief Judge, TJOFLAT, and JORDAN, Circuit Judges.

JORDAN, Circuit Judge:

“Corruption,” Edward Gibbon wrote more than two centuries ago, is “the most infallible symptom of constitutional liberty.” Edward Gibbon, The History of the Decline and Fall of the Roman Empire, Vol. II, Ch. XXI, at 805 (David Womersley ed., Penguin Classics 1995) [1781]. And so, although unfortunate, it is perhaps not surprising that, even today, people continue to pay bribes to government officials with the expectation that they will make decisions based on how much their palms have been greased, and not what they think is best for the constituents they serve.

In this criminal appeal involving corruption in Alabama's higher education system, we consider whether the district court abused its discretion by imposing a sentence of three years of probation (with a special condition of six to twelve months of home confinement) on a 67–year–old business owner who—over a period of four years—doled out over $600,000 in bribes to a state official in order to ensure that his company would continue to receive government contracts, and whose company reaped over $5 million in profits as a result of the corrupt payments. For the reasons which follow, we hold that such a sentence was indeed unreasonable.

I

We begin with the facts, and then discuss what transpired in the district court at sentencing. Along the way, and in response to our colleague's dissent, we add a bit of background on the relationship between departures under U.S.S.G. § 5K1.1 and variances after United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005).

A

For years, James Winston Hayes ran ACCESS Group Software, LLC, a successful computer software company in Alabama. ACCESS sold educational software to the Alabama Department of Postsecondary Education (“ADPE”), and the two-year colleges it regulates. ACCESS did business with more than 25 two-year colleges and technical schools in Alabama.

Starting in 2002, when he was 59, Mr. Hayes decided to increase his company's chances of being profitable by rigging the competitive bid processes through which the ADPE awards contracts to vendors. Over the course of four years, Mr. Hayes paid over $600,000 in bribes to Roy Johnson—the then-Chancellor of the ADPE—his family, and his friends. The payments, to list a few, included $124,400 towards the construction costs of Mr. Johnson's home; $23,850 for a sound system in that home; and $55,000—as directed by Mr. Johnson—to Mr. Johnson's son-in-law, an attorney, for legal services that were never provided to Mr. Hayes or ACCESS. In order to conceal the nature of the payments, Mr. Hayes and others reimbursed third parties and created false invoices, contracts, and mortgages.

The bribes proved successful. From 2002 to 2006, ACCESS received more than $14 million in gross income from the ADPE, from which it realized a profit of approximately $5 million.

At some point, the federal government began investigating corruption at the ADPE. During the early stages of that investigation, the government contacted Mr. Hayes and subpoenaed his bank records. Perhaps realizing that the jig was up, Mr. Hayes obtained counsel and began cooperating with the government. Among other things, Mr. Hayes permitted his office and vehicle to be wired for audio and video and personally wore a recording device to tape meetings with several targets of the investigation. He also provided the government with documentation verifying his illicit financial dealings with a number of Alabama officials.

In 2007, the government charged Mr. Hayes by information with bribing Mr. Johnson, the former Chancellor of the ADPE—an agency receiving federal funds—in violation of 18 U.S.C. § 666(a)(2) (Count 1), and conspiring to commit money laundering, in violation of 18 U.S.C. § 1956(h) (Count 2). The information also sought criminal forfeiture based on the charges in Counts 1 and 2. In February of 2008, Mr. Hayes pled guilty to Counts 1 and 2, and consented to forfeiture.

The probation office prepared a presentence investigation report to be used at Mr. Hayes' sentencing. The report indicated that, under the 2010 version of the Sentencing Guidelines Manual, Mr. Hayes scored out to a total offense level of 33 and had a criminal history category of I, resulting in an advisory guidelines range of 135 to 168 months' imprisonment. Neither party voiced objections to the report's calculation of the advisory guidelines, and as a result the district court adopted that range at the initial sentencing hearing.¹

B

The Sentencing Guidelines contain a number of departure provisions. Among them is § 5K1.1, which allows a departure from the advisory guidelines range “[u]pon motion of the government stating that the defendant has provided substantial assistance in the investigation or prosecution of another[.]”

Because § 5K1.1 is silent as to the methodology to be used in determining the extent of a substantial assistance departure, the government has discretion in recommending a methodology, and the district court has discretion in deciding what methodology to use once it grants a motion for departure. See United States v. Lindsey, 556 F.3d 238, 245–46 (4th Cir.2009); United States v. Floyd, 499 F.3d 308, 312 n. 6 (3d Cir.2007). As the Seventh Circuit has explained:

Once the sentencing court decides to depart downward, it in turn may quantify the assistance the defendant provided by a simple numerical reduction in the offense level or by a percentage reduction of the total sentence; both methods (and perhaps others we do not consider here) are tools that appropriately recognize the rationale of the guidelines—that the reduction should reflect accurately the assistance that the defendant has rendered to the government.

United States v. Senn, 102 F.3d 327, 332 (7th Cir.1996). See also United States v. Vazquez–Lebron, 582 F.3d 443, 445 (3d Cir.2009) (“A [d]istrict [c]ourt need not follow a particular formula in calculating a § 5K1.1 departure—it may be appropriate to depart by a certain number of months or guideline ranges below the initial sentencing range.”); United States v. Hargrett, 156 F.3d 447, 450 n. 1 (2d Cir.1998) (“A downward departure based on [§ ] 5K1.1 does not require the district [court] to pick a new offense level and a particular sentence within the range set for that level; rather the court may simply pick a sentence of so many months without mention of an offense level.”).

Not surprisingly, therefore, reported cases illustrate a variety of approaches to § 5K1.1 departures. Sometimes, as was the case here, the departure is based on offense levels deducted from the defendant's total offense level. See, e.g., United States v. Livesay, 525 F.3d 1081, 1087 (11th Cir.2008) (government recommendation of three-level downward departure from defendant's total offense level); United States v. Martin, 455 F.3d 1227, 1233 & n. 4 (11th Cir.2006) (government recommendation of nine-level downward departure from defendant's total offense level); United States v. Knapp, 955 F.2d 566, 568 (8th Cir.1992) (district court's seven-level downward departure from defendant's total offense level). Sometimes the departure is based on a percentage deduction from the bottom, midpoint, or top of the defendant's advisory guidelines range. See, e.g., United States v. Burns, 577 F.3d 887, 889 (8th Cir.2009) (en banc) (government recommendation of 15% downward departure); United States v. Senn, 102 F.3d 327, 332 (7th Cir.1996) (government recommendation of 50% downward departure). And sometimes the departure is based on a reduction of a specific number of months from the defendant's advisory guidelines range. See, e.g., United States v. Koufos, 666 F.3d 1243, 1254 (10th Cir.2011) (government recommendation of 20–month reduction from bottom and top of applicable range).

Regardless of the methodology used, once the district court grants a motion for downward departure under § 5K1.1, it will be left with a new number (or range of numbers) insofar as the Sentencing Guidelines are concerned. See United States v. Hippolyte, 712 F.3d 535, 541 (11th Cir.2013) (“A departure provision is a change to a sentencing guideline range based on, e.g., substantial assistance to authorities.”); U.S.S.G. § 1B1.1, n.1(E) (“ ‘Downward departure’ means [a] departure that effects a sentence less than a sentence that could be imposed under the applicable guideline range or a sentence that is otherwise less than the guideline sentence.”). The “calculation of the initial advisory [g]uidelines range, along with any applicable departures, results in a ‘final advisory [g]uidelines sentencing range.’ ” United States v. Lozoya, 623 F.3d 624, 626 (8th Cir.2010).

A concrete example helps put these principles into focus. Assume that a defendant has an advisory guidelines range of 70–87 months' imprisonment. If the district court grants a government § 5K1.1 motion which recommends a 50% departure from the bottom of that range, the new bottom number for guidelines purposes will be 35 months of imprisonment (50% of 70 = 35). The district court will then have to determine whether, under the factors set forth in 18 U.S.C. § 3553(a), it should sentence the defendant to 35 months, something less, or something more. That is the approach dictated by the Sentencing Guidelines and our cases. SeeU.S.S.G. § 1B1.1(a)-(c) (“Application...