U.S. v. Gallant

• Decision Date: 15 October 2002
• Docket Number: No. 01-2679.,01-2679.
• Citation: 306 F.3d 1181
• Parties: UNITED STATES of America, Appellee, v. Norman J. GALLANT, Defendant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

306 F.3d 1181

UNITED STATES of America, Appellee, v. Norman J. GALLANT, Defendant, Appellant.

No. 01-2679.

United States Court of Appeals, First Circuit.

Heard September 5, 2002.

Decided October 15, 2002.

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Jane Elizabeth Lee for appellant.

Karen L. Goodwin, Assistant U.S. Attorney, with whom Michael J. Sullivan, U.S. Attorney, was on brief, for appellee.

Before BOUDIN, Chief Judge, TORRUELLA and LYNCH, Circuit Judges.

LYNCH, Circuit Judge.

The principal issue in this case is whether the plaintiff forfeited his objection to an error that might but need not have resulted in a shorter sentence. On appeal, the defendant, Norman Gallant, objects to the denial of an additional one-level downward adjustment for acceptance of responsibility under § 3E1.1(b) of the United States Sentencing Guidelines, after the district court had granted a two-level downward adjustment. The government concedes that the court erred, but nonetheless argues that there should be no relief because the issue was not preserved. Forfeited sentencing objections are reviewed for plain error and there is no plain error, the government argues, because Gallant's 24-month sentence falls within the guidelines sentencing range that would have applied had the district court given Gallant the additional one-level adjustment.

Though the government's reasoning is not implausible, we find that Gallant did not forfeit his objection. The defendant consistently argued that he was entitled to a three-level reduction, the government warned the district court against its eventual ruling, the ruling was contrary to both parties' positions, and the sentencing judge did not invite further arguments.

Gallant also challenges the imposition of an order that, as a special condition of supervised release, he transfer to the government all property necessary to make restitution. Gallant argues that there was no criminal forfeiture provision in the information or indictment, and that the court's order is best characterized as requiring forfeiture. This argument fails. The order does not amount to an order of forfeiture. Rather, it was a reasonable use of the court's authority to effectuate restitution.

I.

Norman Gallant bilked the U.S. government out of roughly $300,000 over a decade. He waived indictment on May 21, 2001, and was charged by information. He timely pled guilty on two counts of mail fraud, 18 U.S.C. § 1341 (2000), one count of fraudulent receipt of Social Security benefits, 42 U.S.C. § 408(a)(4) (2000), and one count of tax evasion, 26 U.S.C. § 7201 (2000). Between August 1992 and October 2000, Gallant fraudulently obtained $29,130 in Section 8 rental subsidies from the Department of Housing and Urban Development. Between January 1995 and April 2001, he fraudulently secured $102,021 in Medicaid funds for a personal care attendant. Between July 1992 and February 2001, he fraudulently obtained $162,000 in Social Security disability benefits. The information had charged Gallant with cheating on his 1999 income taxes by a sum in excess of $11,000; Gallant pled guilty to committing tax fraud totaling between $23,500 and $40,000 over tax years 1995 to 1999. As part of the plea, the parties agreed that the total loss to the government was between $200,000 and $350,000.

In the plea agreement the government agreed to recommend a three-level reduction for acceptance of responsibility under U.S.S.G. § 3E1.1 (2002),¹ provided defendant met five conditions, three of which are pertinent here. Conditions (3), (4), and (5) stated that Gallant:

(3) acknowledges that he is the sole effective owner and has sole effective control of the assets owned by the Macantosh Realty Trust, the Serenity Equity Trust and the Serenity Equity Trust II, and that all such assets are available for restitution; (4) takes all necessary steps to make such assets available for restitution as the Court may order; and (5) makes an initial payment of $15,000 in restitution to the clerk of the court prior to sentencing.

The Pre-Sentence Report (PSR) originally recommended that Gallant receive a three-level reduction if he complied with the government's conditions. The government responded to the PSR, objecting that no three-level reduction should be granted for acceptance of responsibility because Gallant had not yet satisfied the terms of the agreement. Gallant had no objection, of course, to the recommended three-level reduction.

After reviewing the government's objections, the probation officer prepared an Addendum to the PSR revising his recommendations as follows:

(25) The defendant admitted his involvement in the instant offense and is being granted acceptance of responsibility. The offense level is reduced two (2) levels per U.S.S.G. § 3E1.1(a) as he has clearly demonstrated acceptance of responsibility for his offense.

(25a) Per U.S.S.G. § 3E1.1(b), if the defendant has assisted authorities in the investigation or prosecution of his own misconduct by taking one or more of the following steps: (1) Timely providing complete information to the government concerning his own involvement in the offense; or (2) Timely notifying authorities of his intention to enter a plea of guilty, thereby permitting the government to avoid preparing for trial and permitting the Court to allocate its resources efficiently, decrease the offense level by 1 additional level. As of this date, the defendant has not satisfied this criteria.

(emphasis added).

Although the PSR correctly stated that there are two alternate conditions for a further one-level reduction under U.S.S.G. § 3E1.1(b), it also said that "this criteria" had not been met. The PSR was incorrect — there has never been any question that Gallant had met the second condition it described,² and the government never argued that defendant had not "timely notified the authorities of his intention to enter a plea of guilty." The PSR Addendum did not alert the court to the relationship between the granting of a two-level reduction and the granting of the third level.

Gallant's subsequent Sentencing Memorandum to the district court argued that he was entitled to a three-level reduction.³ The government's position was that Gallant was not entitled to any reduction for acceptance of responsibility. If he was not entitled to a two-level reduction because he had not assisted the authorities, then he was ineligible for a third-level reduction. No party focused on the possibility that the court would deny a third-level reduction if the Court granted a two-level reduction. It simply was not an issue.

That was the posture in which the parties entered the sentencing hearing, and which they articulated at the hearing. The government continued to press its position that Gallant should receive no reduction for acceptance of responsibility. Its basis was that Gallant had not assisted the government: he had not disclosed all trust assets (he claimed a boat allegedly owned by one of the trusts had been sold to another party) and he had been unwilling to sell immediately the condominiums not occupied by himself or his sons to meet his restitution obligation. Nonetheless, the government raised the issue of a third-level reduction. The government's position at sentencing was that the defendant "may well have satisfied the timeliness and the timely plea, which you need for the third point, but he hasn't satisfied what he needs to do for the first two points." Gallant responded that he had satisfied the conditions necessary for the first two points. He added that he was willing to make restitution, but did not think his assets should all be liquidated immediately.

The court stated that Gallant's assets were ill-gotten and should be liquidated immediately, so that restitution could be made promptly, rather than being drawn out through the probation period. Concerned by Gallant's temporizing about restitution, the court said:

I'm puzzled ... about whether it's appropriate for me to give somebody the benefit of acceptance of responsibility when there isn't an acknowledgment that there is any immediate obligation to return or pay back or reimburse monies which were wrongfully obtained and that's the struggle that I'm having.

At the end of the hearing the court then solved its puzzling dilemma with a compromise: the court granted two levels for acceptance of responsibility but denied a third. The court explained:

As far as the three-level reduction goes, I think it is somewhat artificial but I think that a two point, not a three point, reduction is appropriate. I think the level 16 offense level is where this case should be.

I recognize in doing that I'm acknowledging the somewhat unusual facts of this case, but I do not think that the defendant has made the sort of recognition of fault and the intent to correct that fault which is within his power that would justify the full three-level reduction.

I have considered and frankly come close to the decision of not allowing any reduction whatsoever for acceptance of responsibility. But I have in mind that the defendant did offer his pleas of guilty, did save the government the necessity of going to trial with this case and is entitled to some benefit for having done that, even though what I would call the moral aspect of acceptance of responsibility seems to me to be lacking to some degree here.

Then the court promptly moved on to the next sentencing issue without entertaining any objections to its ruling. Neither party interrupted the court to ask it to revisit its denial of the third point on the grounds that, by its decision to give Gallant two points, the court had inherently determined that Gallant must receive three points. It is this "if two levels, then necessarily three levels" rationale which Gallant argues on appeal.

The court also ordered Gallant to pay a $50,000 fine and to make restitution in the amounts of $29,130 to HUD, $102,021 to Medicaid, and $162,000 to the...