U.S. v. Ali

• Decision Date: 27 November 2007
• Docket Number: No. 05-2099.,No. 05-2098.,05-2098.,05-2099.
• Citation: 508 F.3d 136
• Parties: UNITED STATES of America, Appellant v. Faridah ALI a/k/a Rita Spicer. United States of America, Appellant v. Lakiha Spicer a/k/a Kiki.
• Court: U.S. Court of Appeals — Third Circuit

508 F.3d 136

UNITED STATES of America, Appellant v. Faridah ALI a/k/a Rita Spicer.

United States of America, Appellant v. Lakiha Spicer a/k/a Kiki.

No. 05-2098.

No. 05-2099.

United States Court of Appeals, Third Circuit.

Argued January 16, 2007.

Filed: November 27, 2007.

Patrick L. Meehan, United States Attorney, Robert A. Zauzmer, Assistant United States Attorney Chief of Appeals, Anthony J. Wzorek, (Argued), Assistant United States Attorney, Frank A. Labor, III, Assistant United States Attorney, Office of the United States Attorney, Philadelphia, PA, for Appellant.

Joel I. Fishbein, Esquire, (Argued), Gail Z. Weilheimer, Esquire, Frank, Rosen, Snyder & Moss, Elkins Park, PA, Alan L. Frank, Esq., Alan L. Frank Law Associates, Elkins Park, PA, for Appellee.

Before: McKEE, AMBRO and STAPLETON, Circuit Judges.

OPINION OF THE COURT

AMBRO, Circuit Judge.

The Government appeals the sentencing calculations and downward departures from the Sentencing Guidelines ranges for defendants found guilty of fraud. A criminal jury convicted Faridah Ali (also known as Rita Spicer) and her daughter Lakiha Spicer (together, "defendants") for using a school to obtain federal funds for classes that were never conducted. At sentencing, the District Court applied a reasonable-doubt standard to determine loss amounts far below the ones the Government had urged under a preponderance-of-the-evidence standard. The Court then looked to good works and community support along with other factors to depart downward from the suggested Guidelines ranges. Defendants received no prison time. Instead, the Court sentenced each defendant to some term of probation with periods of in-home confinement and restitution payments in line with its determination of the loss amounts.

The issues presented to us are whether the Court erred in its initial Guidelines calculations, whether it relied on inappropriate factors for its downward departures, and whether the resulting sentences were unreasonable. We conclude yes for all three issues and remand for further proceedings.

II. Factual and Procedural Background

The Community College of Philadelphia (the "College" or "CCP") is a state-accredited public college that obtained a federal grant from the U.S. Department of Education to provide adult basic education ("ABE") classes. In addition to on-site classes, the terms of the grant required the College to conduct classes at approved neighborhood sites in Philadelphia. Under the arrangement, CCP paid $450 per month in rent for these sites plus salaries for qualified teachers (i.e., those who had completed at least a bachelor's degree). One of the approved ABE sites was the Sister Clara Muhammad School ("the School") in West Philadelphia, a private K-12 school.

Between 1999 and 2001, this program was a façade. The School and CCP personnel maintained all the trappings of a functioning program—hiring and paying teachers, establishing a course schedule, filing registration forms, and causing CCP to pay rent to the School for the classrooms. But no courses were taught. Rather, Faridah Ali, assistant director of education at the School, and Delores Weaver, director of the ABE program at CCP, led a fraudulent scheme to steal the money allocated to the program. Specifically, they submitted false student registration forms to CCP, thereby ensuring that it would make salary and rent payments to the School for a certain number of classes. Ali and Weaver divided the rent payments between themselves and arranged for salaries to go to "ghost teachers," many of them unqualified, for courses that never took place. Ali's children, Lakiha and Azheem Spicer, and Weaver's son, Eugene Weaver III, were some of the ghost teachers who received money through this scheme.

In 2004, Ali and the Spicers (Lakiha and Azheem) were tried and convicted on several counts of fraud by a federal jury in the United States District Court for the Eastern District of Pennsylvania.¹ The grand jury indictment specified that Ali and Weaver had fraudulently obtained over $200,000, and Lakiha Spicer $71,000, but the verdict slip did not designate loss amounts. Those amounts were to be determined at sentencing.²

Between the jury verdict and the time of sentencing in 2005, the Supreme Court issued United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005), making "sweeping changes" to federal sentencing. United States v. Davis, 407 F.3d 162, 163 (3d Cir.2005). Booker "sever[ed] and excis[ed]" the portions of the United States Code that made the United States Sentencing Guidelines mandatory on sentencing and appellate courts. 543 U.S. at 245, 258-65, 125 S.Ct. 738; see also 18 U.S.C. §§ 3553(b)(1), 3742(e). It then set a "reasonableness" standard of appellate review to this now-advisory Guidelines scheme. 543 U.S. at 261, 125 S.Ct. 738. Booker did not, however, decide the required standard of proof for finding facts relevant to sentencing. See United States v. Grier, 475 F.3d 556, 561 (3d Cir.2007) (en banc).

At sentencing, the Judge stated his view that the loss amounts should be calculated by evidence proved beyond a reasonable doubt. The Government argued that Booker required only proof by a preponderance of the evidence. However, the Judge maintained his view, stating:

The question then becomes, under the — in calculating the guideline range, what was the amount of money that is properly chargeable as having been obtained by fraud. I persist in the view that this is a finding — since it affects the guideline[s] calculation in an upward way, that this is a — an issue which should be resolved by — insofar as applying — calculating the [G]uideline[s] range is concerned, it has to be found beyond a reasonable doubt.... I confess to considerable doubt as to exactly what the amount of loss was in each case.

App. at 160.

As noted below in more detail, the Judge determined that the Presentence Report ("PSR") likely had overstated the amount of funds fraudulently obtained. For Ali he calculated the Guidelines sentencing range according to his determination of the loss amount proved beyond a reasonable doubt, and for Spicer based on the perjury conviction.³ He further departed downward from those advisory ranges based on four factors: (1) records of public service and community support for both defendants, (2) the lack of an initial intent to defraud for both, (3) the minor role played by Lakiha Spicer, and (4) the "exculpatory no" doctrine in Lakiha Spicer's case.⁴ He sentenced Ali to five years' probation with in-home confinement for the first year, restitution payments of $30,000, and a special assessment of $2,500. He sentenced Spicer to four years' probation with in-home confinement for the first six months, restitution payments of $25,000, and a special assessment of $800.

In appealing these sentences, the Government contends that the District Court erred by applying a reasonable-doubt standard to determine the loss amounts for both defendants, resulting in erroneous Guidelines calculations. It also argues that the Court relied on impermissible factors to depart downward for both defendants. In this context, the Government maintains the final sentences were unreasonable.⁵

III. Standard of Review

We review sentences for reasonableness. Booker, 543 U.S. at 261, 125 S.Ct. 738; see also Grier, 475 F.3d at 561. Booker "attempt[ed][no] elaborate discussion of [the reasonableness] standard," Cunningham v. California, 549 U.S. ___, 127 S.Ct. 856, 867, 166 L.Ed.2d 856 (2007), but the Supreme Court recently clarified its meaning. Reasonableness review "merely asks whether the trial court abused its discretion" in calculating and applying the Guidelines. Rita v. United States, 551 U.S. ___, 127 S.Ct. 2456, 2465, 168 L.Ed.2d 203 (2007); see also id. at ___, 127 S.Ct. at 2470 (Stevens, J., concurring) ("Simply stated, Booker replaced the de novo standard of review required by 18 U.S.C. § 3742(e) with an abuse-of-discretion standard that we called `reasonableness' review.").

Rita, which allowed appellate courts to apply a nonbinding presumption of reasonableness to within-Guidelines sentences, did not set standards governing below-Guidelines range sentences like those before us. See id. at ___, 127 S.Ct. at 2462.⁶ However, it did note that the reasonableness presumption applies only to within-Guidelines sentences without suggesting an unreasonableness presumption to outside-of-Guidelines sentences. Id. at ___, 127 S.Ct. at 2467. It also emphasized that the reasonableness presumption applies to appellate review only; it does not affect the ordinary sentencing process that a district court judge must undertake. Id. at ___, 127 S.Ct. at 2465.

We have interpreted Booker to require the following three steps in the ordinary sentencing process:

(1) Courts must continue to calculate a defendant's Guidelines sentence precisely as they would have before Booker.

(2) In doing so, they must formally rule on the motions of both parties and state on the record whether they are granting a departure and how that departure affects the Guidelines calculation, and take into account our Circuit's pre-Booker case law, which continues to have advisory force.

(3) Finally, they are required to exercise their discretion by considering the relevant [18 U.S.C.] § 3553(a) factors in setting the sentence they impose regardless whether it varies from the sentence calculated under the Guidelines.

United States v. Gunter, 462 F.3d 237, 247 (3d Cir.2006) (internal citations, brackets, and quotation marks omitted); see also United States v. King, 454 F.3d 187, 196 (3d Cir.2006); United States v. Cooper, 437 F.3d 324, 330 (3d Cir.2006).

IV. Discussion

A. Step One: Guidelines Calculation

1. Initial Calculation

As we have noted repeatedly, sentencing "[c]ourts must continue to calculate a defendant's Guidelines sentence precisely as they would have before Booker." Gunter, 462 F.3d at 247 (citing King, 454 F.3d...