969 F.3d 873 (8th Cir. 2020), 19-1263, United States v. Flynn

Docket Nº:19-1263
Citation:969 F.3d 873
Opinion Judge:KOBES, Circuit Judge.
Party Name:UNITED STATES of America Plaintiff-Appellee v. Scott Phillip FLYNN Defendant-Appellant.
Attorney:David Genrich, Assistant U.S. Attorney, David J. MacLaughlin, Assistant U.S. Attorney, U.S. Attorney's Office, District of Minnesota, Minneapolis, MN, for Plaintiff-Appellee. Jeffrey J. Bouslog, Ian M. Comisky, Patrick J. Egan, Fox & Rothschild, Philadelphia, PA, for Defendant-Appellant. Scott Ph...
Judge Panel:Before GRUENDER, WOLLMAN, and KOBES, Circuit Judges.
Case Date:August 13, 2020
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit

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969 F.3d 873 (8th Cir. 2020)

UNITED STATES of America Plaintiff-Appellee

v.

Scott Phillip FLYNN Defendant-Appellant.

No. 19-1263

United States Court of Appeals, Eighth Circuit

August 13, 2020.

Submitted: June 17, 2020.

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Appeal from United States District Court for the District of Minnesota.

David Genrich, Assistant U.S. Attorney, David J. MacLaughlin, Assistant U.S. Attorney, U.S. Attorney's Office, District of Minnesota, Minneapolis, MN, for Plaintiff-Appellee.

Jeffrey J. Bouslog, Ian M. Comisky, Patrick J. Egan, Fox & Rothschild, Philadelphia, PA, for Defendant-Appellant.

Scott Phillip Flynn, Pro Se.

Before GRUENDER, WOLLMAN, and KOBES, Circuit Judges.

KOBES, Circuit Judge.

Scott Phillip Flynn pleaded guilty to conspiracy to defraud the United States and filing a false tax return. See 18 U.S.C. § 371; 26 U.S.C. § 7206(1). He tried to withdraw his plea before sentencing, but the district court1 denied his motion and sentenced him to 87 months in prison— 60 months for the conspiracy charge and 27 months for the false return— and ordered him to pay roughly $5.4 million in restitution. Flynn appeals, arguing that he should have been allowed to withdraw his guilty plea, his conspiracy conviction is void for vagueness, the restitution order was procedurally improper and clearly erroneous, and the district court wrongly applied an organizer or leader enhancement when it

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calculated his sentence. We find no error and affirm.

I.

Flynn's convictions arise out of two "reverse merger" transactions that he assisted in 2006 and 2008.[2] As payment, he received shares of stock in the resulting public companies. He transferred millions of these shares to two companies he controlled and, with the help of a co-conspirator, transferred millions more into the hands of Australian nominees. These Australian nominees placed their shares in U.S. brokerage accounts that Flynn could access.

From 2006 to 2014, Flynn controlled these accounts and used them to sell around $15 million worth of stock and transfer the proceeds to Australian bank accounts that he also controlled. In 2007, he purchased a house with $2.7 million of that money and yet only reported $26,136 of income on his tax return. Over the course of the conspiracy, all $15 million in sales was income to Flynn and he reported none of it.

Flynn stipulated to all these facts as part of his guilty plea. At his change of plea hearing, Flynn said he knew that pleading guilty meant his case would never go to trial, he had discussed his case with his lawyers and was satisfied with their representation, and he understood the rights he was waiving by pleading guilty. The court then read portions of the indictment and Flynn stated that he had read and understood the entire document with the help of his attorneys. Finally, the court reviewed the agreed-upon sentencing calculations described in the plea, including the application of a four-point enhancement because Flynn was an organizer or leader of an otherwise extensive scheme and a two-point reduction for acceptance of responsibility. Only then did the district court accept Flynn's guilty plea.

Six months later, just over a week before he was scheduled to be sentenced, Flynn (through new counsel) moved to continue his sentencing and withdraw his guilty plea, disavowed the stipulations contained in the plea, and asserted his innocence. The district court denied that motion. At sentencing, the district court enforced the agreement as written and Flynn received the two-point reduction for acceptance of responsibility even though the Government did not request it. It sentenced him to 87 months in prison and ordered him to pay $5,392,442.87 in restitution. Flynn timely appealed.

II.

Flynn first argues that he should have been allowed to withdraw his guilty plea because it was not knowing and voluntary, lacked a factual basis, and the Government breached the agreement. A defendant may withdraw a guilty plea after it has been accepted by the district court if "the defendant can show a fair and just reason for requesting the withdrawal." Fed. R. Crim. P. 11(d)(2)(B). "There is no right to withdraw; the plea of guilty is a solemn act not to be disregarded because of belated misgivings about its wisdom." United States v. Andolini, 705 F.3d 335, 337 (8th Cir. 2013) (citation omitted) (emphasis

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in original). If a defendant establishes a fair and just reason for withdrawal, the district court must then consider "whether the defendant asserts his innocence of the charge, the length of time between the guilty plea and the motion to withdraw it, and whether the government will be prejudiced if the court grants the motion." United States v. Heid, 651 F.3d 850, 853-54 (8th Cir. 2011) (citation omitted). We review the denial of a motion to withdraw a plea for abuse of discretion. Andolini, 705 F.3d at 337.

A.

Flynn's first "fair and just" reason for withdrawal is that he was not informed of the nature of the charges against him, so his plea was not knowing and voluntary. See Fed. R. Crim. P. 11(b)(1)(G). Whether a plea was knowing and voluntary presents a mixed question of law and fact that we review de novo. United States v. Gray, 152 F.3d 816, 819 (8th Cir. 1998). We assess whether Flynn understood the nature of the charges by examining the totality of the circumstances. United States v. Marks, 38 F.3d 1009, 1011 (8th Cir. 1994). We consider "whether the indictment gave him notice of the charge, whether he discussed the charge with his attorney or the judge, and ... any other facts which are in the record." Id.

The record shows Flynn understood how the law related to the facts of his case. See United States v. Johnson, 715 F.3d 1094, 1103 (8th Cir. 2013). The district court read aloud the relevant counts of his indictment, ensured he understood and had discussed those counts with his attorneys, he was satisfied with his attorneys, and he had discussed the rights he was waiving "at some length" with them. Nevertheless, Flynn complains that the indictment did not list the elements of his conspiracy charge and suggests that circuit courts inconsistently describe those elements, to the point where it was impossible for Flynn (or seemingly anyone else) to understand the charges.

Flynn pleaded guilty under the portion of 18 U.S.C. § 371 that prohibits conspiring to defraud the United States. When such a conspiracy is specifically focused on defrauding the IRS in its efforts to assess and collect taxes, it is commonly referred to as a Klein conspiracy. United States v. Fletcher, 322 F.3d 508, 513 (8th Cir. 2003); United States v. Klein, 247 F.2d 908 (2d Cir. 1957), cert. denied, 355 U.S. 924, 78 S.Ct. 365, 2 L.Ed.2d 354 (1958). Flynn alleges Klein conspiracies are unconstitutionally vague because federal circuit courts disagree on the elements necessary to secure a conviction.

Although the circuits subdivide the crime into different elements, all describe the same offense. We describe the crime with two elements. Fletcher, 322 F.3d at 513 ("To convict a defendant of a Klein conspiracy, the government must show the existence of an agreement to defraud the IRS and an overt act by one of the conspirators in furtherance of the agreement's objectives."). The Third Circuit has used three. United States v. Shoup, 608 F.2d 950, 956 (3d Cir. 1979) ("To establish a [ Klein ] conspiracy .... the prosecution must prove three elements: (1) the existence of an agreement, (2) an overt act by one of the conspirators in furtherance of the objectives, and (3) an intent on the part of the conspirators to agree, as well as to defraud the United States."). And the Second, four. United States v. Coplan, 703 F.3d 46, 61 (2d Cir. 2012), cert. denied, 571 U.S. 819, 134 S.Ct. 71, 187 L.Ed.2d 29 (2013) ("[T]o prove a Klein conspiracy, the Government must show (1) that the defendant entered into an agreement (2) to obstruct a lawful function of the Government (3) by deceitful or dishonest means and (4) at least one overt act in furtherance of the

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conspiracy.") (quotations and alterations omitted). But, in substance, each of these cases describes the same crime. And in any event, the district court properly applied the well-settled law in this circuit and the elements of Flynn's offense were laid out in his indictment and read aloud to him at his change of plea hearing.

Flynn also argues that both counts of conviction depended on a finding that he exercised dominion and control over the $15 million and this requirement was not explained to him. But the indictment alleged that Flynn exercised dominion and control over the funds, he admitted he did in his plea agreement (and admitted to facts supporting that admission as well), and answered yes when the district court asked whether he and his co-conspirator Steven Miotti had control over the Australian nominees. The importance of that admission was clear. The district court did not abuse its discretion when it concluded, based on the totality of the circumstances, that Flynn's guilty plea was knowing and voluntary.

B.

Flynn also argues that his guilty plea should have been withdrawn because it lacks a factual basis supporting either conviction.

"To convict a defendant of a Klein conspiracy, the government must show the existence of an agreement to defraud the IRS and an overt act by one of the conspirators in furtherance of the agreement's objectives." Fletcher, 322 F.3d at 513. Flynn admitted that he had agreed with Miotti and, through Miotti, several Australian nominees, to avoid taxation by placing his income in the hands of the Australian nominees and...

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