U.S. v. Brechner, 1449
| Decision Date | 01 November 1996 |
| Docket Number | No. 1449,D,1449 |
| Citation | 99 F.3d 96 |
| Parties | -878, 65 USLW 2351, 96-2 USTC P 50,582 UNITED STATES of America, Appellant, v. Milton BRECHNER, Defendant-Appellee. ocket 95-1649. |
| Court | U.S. Court of Appeals — Second Circuit |
Stanley J. Okula, Jr., Assistant United States Attorney, Brooklyn, NY, (Zachary W. Carter, United States Attorney for the Eastern District of New York, Peter A. Norling, of counsel), for Appellant.
Victor J. Rocco, New York City, (Gordon Altman Butowsky Weitzen Shalov & Wein, New York, N.Y., of counsel), for Defendant-Appellee.
Before: MINER, McLAUGHLIN, and LEVAL, Circuit Judges.
This is an appeal by the government from a sentence imposed by the United States District Court for the Eastern District of New York (Mishler, J.) upon the defendant Milton Brechner in which the court departed downward by reason of the defendant's cooperation.
After the defendant was charged with tax evasion, he and the government entered into a written cooperation agreement which provided that if the United States Attorney's Office determined that Brechner had cooperated fully, provided substantial assistance, and otherwise complied with the terms of the agreement, the government would move for a downward departure on his sentence under § 5K1.1 of the U.S. Sentencing Guidelines. Brechner went to considerable lengths to help the government obtain incriminating evidence against another person, but lied to prosecutors about the extent of his own criminal activities. At sentencing, the Assistant U.S. Attorney declined to move for a downward departure. Brechner moved for specific performance of the agreement. The district court found that the government's refusal was in bad faith and that the plea agreement entitled the defendant to the benefit of such a motion. Accordingly, on imposing sentence, the court departed downward from the level indicated by the Guidelines.
On appeal, the government argues that Brechner's lies justified the prosecutor's refusal to move for a downward departure. We agree that because Brechner breached his cooperation agreement in a way that damaged the case in which he was cooperating the government's refusal to make its promised motion was justified. We therefore vacate and remand for resentencing.
Brechner was president of a company that manufactured stuffed toy animals for sale to carnivals. In January 1992, shortly after the government began investigating him, Brechner offered to plead guilty to four counts of income tax evasion. In exchange for his plea, the government agreed not to prosecute Brechner's company, its affiliates, or his wife or son for their involvement in Brechner's tax fraud schemes. As was later determined, those schemes included at least three sources of unreported income. Most of the unreported income came from payments from one of Brechner's main customers, the Fred Silber Company. Two other sources were Brechner's Asian supplier, Manley Company, and the company that transported Manley's goods to Brechner, Zim Israel Navigation Company. Both of these companies issued inflated invoices to Brechner's company and then kicked back the difference to Brechner.
In May 1992, seeking a downward departure on his sentence, Brechner, through counsel, contacted the Assistant U.S. Attorney in charge of the investigation and offered to provide information about bribes he had paid to a corrupt bank officer. The Assistant expressed interest and arranged a formal proffer session on June 12, 1992, at which Brechner gave government representatives the details of his payments to the bank officer and the tax evasion scheme involving Fred Silber. Brechner's lawyer also advised the government that Brechner had received approximately $500,000 in unreported income from his overseas supplier, Manley. The payments from Zim Israel, however, were never mentioned. The district court later found that Brechner received almost $5 million dollars in income from Fred Silber, $50,000--$100,000 from Manley and about $200,000 from Zim Israel.
On August 12, 1992, Brechner and the Assistant executed a written cooperation agreement, which provided that "Milton Brechner will provide truthful, complete, and accurate information, and will cooperate fully with the [U.S. Attorney's] Office." According to the agreement, this cooperation would include debriefings "concerning his involvement in and knowledge of all criminal activities," participating in undercover work, and testifying at proceedings upon request.
In exchange for Brechner's cooperation, the government agreed to move for a downward sentencing departure under § 5K1.1 of the United States Sentencing Guidelines "[i]f the [U.S. Attorney's] Office determines that the defendant has cooperated fully, provided substantial assistance to law enforcement authorities, and otherwise complied with the terms of this agreement." The agreement further provided that, in connection with the sentencing departure, "it is understood that the [U.S. Attorney's] Office's assessment of the value, truthfulness, completeness, and accuracy of the cooperation shall be binding upon [Brechner]."
In the following paragraph, the agreement cautioned that
Milton Brechner must at all times give complete, truthful, and accurate information and testimony.... Should it be judged by the [U.S. Attorney's] Office that the defendant has failed to cooperate fully, has intentionally given false, misleading, or incomplete information or testimony ... or has otherwise violated any provision of this agreement, the defendant will not be released from his plea of guilty but this Office will be released from its obligation under this agreement ... to file the motion [for downward departure].
After signing the agreement, Brechner participated actively in the government's bribery investigation of the bank officer, who by this time had retired from the bank and apparently was employed as a consultant by Brechner. For over a year, Brechner arranged meetings with him about once a month, under audiotape and videotape surveillance, at which Brechner attempted, with limited success, to elicit incriminating statements from the bank officer about the bribes he had taken. In September 1993, the Assistant informed Brechner's attorney that the bank officer would be arrested.
Two months later, in November 1993, the Assistant scheduled a debriefing session with Brechner. At the debriefing, Brechner was asked whether he had received kickbacks from Manley and Zim. He denied receiving any such payments. Brechner's lawyer then asked to interrupt the session so that he could speak with his client in private. After a break, Brechner acknowledged his receipt of payments from both Manley and Zim. The Assistant said he would give Brechner a "fresh start," and Brechner proceeded to provide details of the Manley and Zim kickbacks. This was Brechner's last meeting with government representatives.
In April 1994, the Assistant informed Brechner's counsel that he was not inclined to move for a downward departure because of Brechner's misrepresentations and the fact that it would be difficult to prosecute the bank officer with Brechner as the sole witness in the case.
At sentencing, the government declined to move for a downward departure; Brechner moved to compel the § 5K1.1 motion, alleging prosecutorial bad faith. The district court held a hearing after which Judge Mishler found that Brechner "cooperated fully and completely" and that his "substantial assistance to the investigation was sufficient to warrant a § 5K1.1 motion" despite his false statements. The district court concluded that the government's refusal to move for a downward departure had been in bad faith and granted the motion for specific performance...
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