U.S. v. Hernandez, 96-8775

• Decision Date: 09 November 1998
• Docket Number: No. 96-8775,96-8775
• Citation: 160 F.3d 661
• Parties: 12 Fla. L. Weekly Fed. C 242 UNITED STATES of America, Plaintiff-Appellee, v. Frank J. HERNANDEZ, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 661

160 F.3d 661

12 Fla. L. Weekly Fed. C 242

UNITED STATES of America, Plaintiff-Appellee, v. Frank J. HERNANDEZ, Defendant-Appellant.

No. 96-8775.

United States Court of Appeals, Eleventh Circuit.

Nov. 9, 1998.

Ben Kirbo, Bainbridge, GA, for Defendant-Appellant.

Raymond Pierson, Asst. U.S. Atty., Augusta, GA, for Plaintiff-Appellee.

Appeal from the United States District Court for the Southern District of Georgia.

Before TJOFLAT, BIRCH and MARCUS ^*, Circuit Judges.

TJOFLAT, Circuit Judge:

I.

In April 1993, Frank J. Hernandez, the owner and operator of a number of business enterprises in southern Georgia, filed three voluntary petitions in the bankruptcy court for the Southern District of Georgia. Hernandez sought relief under Chapter 11 of the United States Bankruptcy Code for himself, personally, and for two of his business enterprises. ¹ These Chapter 11 cases were consolidated on June 7, 1993, and later converted to Chapter 7 cases because the debtors were insolvent. During the pendency of both the Chapter 11 and Chapter 7 proceedings, Hernandez committed fraud on the bankruptcy court by concealing assets and liabilities and appropriating funds paid to his businesses by its customers.

On August 10, 1995, a grand jury returned a thirteen-count indictment against Hernandez, charging him with bankruptcy fraud in violation of 18 U.S.C. § 152 (1994). On March 4, 1996, pursuant to a plea agreement, Hernandez pled guilty to five counts of the indictment. ² Sentencing was scheduled for June 13, 1996, following the preparation of a presentence investigation report (PSI) by the court's probation office.

At the sentencing hearing, Hernandez objected to several factual statements in the PSI on the ground that the information supporting the statements was unreliable. This information had been provided by the FBI agent who investigated the case. The agent testified at the hearing and, after entertaining argument from counsel, the district court found that the challenged information was reliable. Following the testimony of two defense witnesses--a physician who said that Hernandez suffered from angina and was recovering from a heart attack, and a psychiatrist who said that Hernandez had an IQ of 84 and had difficulty paying attention to detail--the court adopted as its findings of fact the factual statements contained in the PSI.

According to the PSI, the Sentencing Guidelines, see United States Sentencing Commission, Guidelines Manual (Nov. 1, 1995), ranked Hernandez' offenses at level sixteen on the offense severity scale, and his criminal history as category I. This combination yielded a sentence range of twenty-one to twenty-seven months. The probation officer who prepared the PSI recommended that the court make an upward departure to category III with respect to Hernandez' criminal history level, which would yield a sentence range of twenty-seven to thirty-three months. After hearing from the parties on the issue, the court fixed Hernandez' criminal history category at II, which, combined with his offense level of sixteen, yielded a sentence range of twenty-four to thirty months. Then, following Hernandez' allocution, the court imposed sentence: thirty months imprisonment on each count, with the terms to run concurrently, to be followed by a three-year term of supervised release, and a fine of $3,000 on each count, for a total of $15,000.

After imposing sentence, the court elicited the parties' objections, in accordance with Eleventh Circuit precedent. See United States v. Jones, 899 F.2d 1097, 1102 (11th Cir.1990), overruled on other grounds by United States v. Morrill, 984 F.2d 1136, 1137 (11th Cir.1993) (en banc). The Government had no objections. Hernandez renewed the objections he had made to the PSI prior to the sentencing hearing, as indicated above; he did not, however, make any new objections. Specifically, he did not object to the court's imposition of the $15,000 fine or the sentences of imprisonment.

II.

Hernandez now appeals his sentences, presenting four claims of error. First, he contends that the district court erred by: (1) fining him $15,000 when the PSI suggested he would be unable to pay a fine; (2) including the proceeds from the sale of two cars in the calculation of loss under U.S.S.G. § 2F1.1(b)(1) used to determine his base offense level; (3) failing to decrease his base offense level by two points under U.S.S.G. § 3E1.1(a) for his acceptance of responsibility; and (4) making, in accordance with U.S.S.G. § 4A1.3, an upward departure from criminal history category I to criminal history category II. We address these claims in order.

A.

Hernandez contends that the district court erred by imposing the $15,000 fine because he is unable to pay a fine. In support of this contention, he cites the PSI, which states that "the defendant does not have the ability to pay a fine within the applicable fine range." Unfortunately for Hernandez, his attorney made no objection at the sentencing hearing to the district court's imposition of the fine. As a result, we review the court's decision for plain error, and will upset the decision only if disregarding the error would result in "manifest injustice." See Jones, 899 F.2d at 1103. "This court has equated the manifest injustice inquiry with review under the plain error doctrine." United States v. Newsome, 998 F.2d 1571, 1579 (11th Cir.1993).

The Sentencing Guidelines require courts to "impose a fine in all cases, except where the defendant establishes that he is unable to pay and is not likely to become able to pay any fine." U.S.S.G. § 5E1.2(a) (emphasis added). It is clear from section 5E1.2 that the burden is on the defendant to prove an inability to pay the fine. If the sentencing court concludes that a fine is appropriate, the Guidelines Manual lists several factors it should consider in determining the amount of the fine. ³ Circuits are split on whether a court must make specific factual findings with respect to these factors. See United States v. Lombardo, 35 F.3d 526, 529 (11th Cir.1994). While some circuits require that the district court make specific findings, see id., we have adopted the less rigid approach, and do not require the sentencing court to make specific findings of fact with respect to the Sentencing Guideline factors as long as " 'the record reflect[s] the district court's consideration of the pertinent factors prior to imposing the fine.' " Id. at 530 (quoting United States v. Washington-Williams, 945 F.2d 325, 328 (10th Cir.1991)). Of course, when the record provides no guidance as to the court's reason(s) for imposing a fine, we must remand the case so that the necessary factual findings can be made. See United States v. Rowland, 906 F.2d 621, 624 (11th Cir.1990).

Had Hernandez objected to the fine, the district court could have addressed more specifically on the record its reasons for imposing the fine. That was the purpose of our holding in Jones: requiring the district court to seek objections from both parties after the pronouncement of the sentence "serve[s] the dual purpose of permitting the district court to correct on the spot any error it may have made and of guiding appellate review." Jones, 899 F.2d at 1102. Perhaps the court would have, in the face of such an objection, made more specific findings on the record regarding Hernandez' ability to pay, or after hearing evidence of his financial status, it may have imposed a lesser fine--perhaps even a fine below that prescribed by the Sentencing Guidelines. Hernandez did not make such an objection, however, and therefore the district court had no notice of the need to make further findings with respect to the fine. As a result, there is nothing in the record to guide us in our review of the court's judgment.

While it is unclear what factors the court relied upon in imposing the fine, the record suggests that Hernandez may be able to pay a $15,000 fine. For example, Hernandez owned a $500,000 home and a $500,000 yacht immediately prior to seeking bankruptcy relief. In addition, the PSI indicates that he was waiting until after the bankruptcy proceedings concluded to accept the remaining payments due on his sale of a Dairy Queen franchise. Finally, his unwillingness to answer specific questions concerning his financial dealings put to him by the probation officer who prepared the PSI may permit the inference that he is still concealing assets from the bankruptcy trustee. Given these circumstances, we conclude that sustaining the imposition of the $15,000 fine will not result in manifest injustice. We therefore affirm the district court's imposition of the fine.

B.

Hernandez' second assignment of error involves the inclusion of $22,100--proceeds from the auction sale of two of his automobiles--in the amount used to determine his base offense level. In conjunction with Hernandez' bankruptcy proceedings, the FBI case agent located two automobiles--a Dodge Intrepid and a Chevrolet Corvette--for sale on the grounds of a business owned by Hernandez' brother. The contact telephone number found on the cars was that of Hernandez. The agent notified the bankruptcy trustee, who moved the bankruptcy court to have the cars seized for fear that Hernandez would conceal the proceeds derived from their sale. The court granted the motion, and the trustee seized the cars and sold them at a public auction.

Hernandez argues that the inclusion of these funds in the calculation of loss for sentencing purposes was improper. Under the Guidelines Manual, a court may use, in calculating the base offense level, the loss that a defendant intended to inflict through fraudulent conduct, if that intended loss is greater than the actual loss, and if the loss can be determined. See U.S.S.G. § 2F1.1, comment. (n.7). The court must make that determination consistent with section 2X1.1, see id., which permits adjustments to a base offense level "for any intended offense conduct...