U.S. v. Hughes

• Citation: 401 F.3d 540
• Decision Date: 16 March 2005
• Docket Number: No. 03-4172.,03-4172.
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. David C. HUGHES, Defendant-Appellant. The Office Of The Federal Public Defender, Amicus Supporting Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (4th Circuit)

401 F.3d 540

UNITED STATES of America, Plaintiff-Appellee, v. David C. HUGHES, Defendant-Appellant The Office Of The Federal Public Defender, Amicus Supporting Appellant.

No. 03-4172.

United States Court of Appeals, Fourth Circuit.

Argued: October 29, 2004.

Decided: March 16, 2005.

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ARGUED:

William Collins Brennan, Jr., Brennan, Trainor, Billman & Bennett, L.L.P., Upper Marlboro, Maryland, for Appellant. Stuart A. Berman, Assistant United States Attorney, Office of the United States Attorney, Greenbelt, Maryland, for Appellee.

ON BRIEF:

Thomas M. DiBiagio, United States Attorney, Baltimore, Maryland, for Appellee. James Wyda, Federal Public Defender, Martin G. Bahl, Staff Attorney, for Amicus Supporting Appellant.

Before WILKINS, Chief Judge, and TRAXLER and GREGORY, Circuit Judges.

Affirmed in part, vacated in part, and remanded with instructions by published opinion. Chief Judge WILKINS wrote the opinion, in which Judge TRAXLER and Judge GREGORY joined.

OPINION

WILLIAM W. WILKINS, Chief Judge:

David C. Hughes appeals his convictions for five counts of bankruptcy fraud and perjury and his subsequent sentence. We affirm Hughes' convictions. However, in light of United States v. Booker, ___ U.S. ___, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005),¹ we find plain error in sentencing, exercise our discretion to notice the error, vacate the sentence, and remand to the district court for resentencing consistent with the remedial scheme set forth in Justice Breyer's opinion for the Court in Booker. See Booker, 125 S.Ct. at 764-65.²

I.

In an effort to avoid foreclosure on her Virginia townhouse, Hughes' wife, Norma Gerstenfeld, filed for Chapter 11 bankruptcy protection in October 1997. Because Gerstenfeld suffered from a physical disability, Hughes assisted her in nearly every step of the bankruptcy proceedings. The actions giving rise to Hughes' convictions began when Hughes assisted Gerstenfeld in filing schedules with the bankruptcy court, under penalty of perjury, that understated the value of her personal property by several hundred thousand dollars. Then, without permission from the bankruptcy trustee, Hughes arranged with auction houses in Maryland and New York for the appraisal and sale of some of Gerstenfeld's most valuable assets. On two subsequent occasions while under oath before the bankruptcy court, Hughes testified falsely that he had not authorized the sale of Gerstenfeld's property by the auction houses.

Hughes was charged with three counts of bankruptcy fraud, see 18 U.S.C.A. § 152 (West 2000), and two counts of perjury, see 18 U.S.C.A. § 1623(a) (West 2000). A jury returned guilty verdicts on all five counts. At sentencing, the district court grouped the five counts together pursuant to United States Sentencing Guidelines Manual § 3D1.2(c) (2000) and calculated the sentence as follows:

                  Base offense level for fraud, § 2F1.1(a):       6
                  Enhancement for loss greater than
                  $200,000, § 2F1.1(b)(1)(I):                    +8
                  Enhancement for more than minimal
                  planning, § 2F1.1(b)(2)(A):                    +2
                  Enhancement for commission of offense
                  during bankruptcy proceeding
                  § 2F1.1(b)(4)(B):                              +2
                  Enhancement for abuse of position of
                  trust, § 3B1.3:                                +2
                  Enhancement for obstruction of justice
                  § 3C1.1:                                       +2
                                                                     ___
                  Final Offense Level:                                22
                

The enhancements to Hughes' sentence were based upon facts found by the district court, not by the jury.³ Based on an Offense Level of 22 and a Criminal History Category of I, the court sentenced Hughes to 46 months in prison. Hughes now appeals.

II.

Hughes first argues that the evidence against him was insufficient to support his convictions on the first three counts in the indictment, namely for making false statements in bankruptcy, see 18 U.S.C.A. § 152(3); concealing assets, see id. § 152(1); and fraudulently transferring assets, see id. § 152(7). "In evaluating the sufficiency of the evidence to support a criminal conviction, we must determine — viewing the evidence and all of the inferences reasonably to be drawn from it in the light most favorable to the Government — whether a reasonable trier of fact could have found the defendant guilty beyond a reasonable doubt." United States v. Rahman, 83 F.3d 89, 93 (4th Cir.1996).

To be convicted under § 152(1), (3), and (7), a defendant must be proven to have acted "knowingly and fraudulently." 18 U.S.C.A. § 152(1), (3), (7). Hughes contends that the Government failed to prove that he acted fraudulently because it failed to present evidence that he intended to deceive any creditor, trustee, or bankruptcy judge. See United States v. Sabbeth, 262 F.3d 207, 217 (2d Cir.2001) (holding that to sustain convictions under § 152, government must prove defendant acted with "intent to deceive"); United States v. Gellene, 182 F.3d 578, 586-87 (7th Cir.1999) (same). He argues that his disclosure of a trust held for Gerstenfeld's benefit and valued at approximately $5 million removed any motivation he might have had to conceal other personal assets since the disclosure enabled the estate to pay all creditors in full. What Hughes fails to acknowledge is that the Government presented evidence that Gerstenfeld lacked authority to liquidate the trust and instead was at the mercy of the trustee, who had discretion over the trust disbursements. Indeed, it was not clear at the time of the alleged concealment that the reorganization plan would provide for full payment to all creditors. A reasonable jury thus could have concluded that Hughes had ample motive and intent to deceive the creditors and the bankruptcy court. We therefore conclude that the evidence against Hughes was sufficient to support the bankruptcy fraud convictions.

III.

Next, Hughes argues that the district court violated his Sixth Amendment rights by imposing a sentence exceeding the maximum authorized by the jury findings alone. In light of Booker, we conclude that the district court plainly erred in this regard.⁴ Accordingly, we vacate the sentence and remand to the district court for resentencing consistent with the remedial scheme set forth in Justice Breyer's opinion for the Court in Booker. See Booker, 125 S.Ct. at 764-65.

A.

For almost two decades, sentences for federal offenses have been imposed pursuant to the Federal Sentencing Guidelines, a regime drafted and revised by the United States Sentencing Commission at the direction of Congress. See generally Sentencing Reform Act of 1984, codified as amended at 18 U.S.C.A. § 3551 et seq. (West 2000 & Supp.2004) and at 28 U.S.C.A. §§ 991-998 (West 1993 & Supp.2004). Designed to facilitate uniformity in sentencing by accounting for the offense of conviction, the "real conduct" underlying the offense, and the individual characteristics of each defendant, the guidelines prescribe ranges of sentences that were generally binding on the district courts. See 18 U.S.C.A. § 3553(b)(1). After a defendant was convicted, the guidelines required the district court to make a series of factual findings about the characteristics of the defendant and of the offense, calculating the final sentence using the facts found by the jury and the facts found independently by the court prior to sentencing. Only under very limited circumstances were courts permitted to depart from the ranges prescribed by the guidelines. See id. (requiring a district court to sentence within the guideline range "unless the court finds that there exists an aggravating or mitigating circumstance of a kind, or to a degree, not adequately taken into consideration by the Sentencing Commission in formulating the guidelines"); United States v. Fenner, 147 F.3d 360, 363 (4th Cir.1998).

In Booker, the Supreme Court ruled that the Sixth Amendment is violated when a district court, acting pursuant to the Sentencing Reform Act and the guidelines, imposes a sentence greater than the maximum authorized by the facts found by the jury alone. See Booker, 125 S.Ct. at 756. The Court noted that by virtue of § 3553(b)(1), "[t]he Guidelines as written ... are not advisory; they are mandatory and binding on all judges" and therefore "have the force and effect of laws." Id. at 750. In light of the binding nature of the federal regime, the Court found no distinction of constitutional significance between the guidelines and the state sentencing regime it evaluated and found wanting in Blakely v. Washington, ___ U.S. ___, 124 S.Ct. 2531, 159 L.Ed.2d 403 (2004). See id. at 751. The Court concluded that enhancing sentences based on facts found by the court alone and not by the jury violated the Sixth Amendment imperative that "[a]ny fact (other than a prior conviction) which is necessary to support a sentence exceeding the maximum authorized by the facts established by a plea of guilty or a jury verdict must be admitted by the defendant or proved to a jury beyond a reasonable doubt." Id. at 756 (citing Apprendi v. New Jersey, 530 U.S. 466, 490, 120 S.Ct. 2348, 147 L.Ed.2d 435 (2000)).

Having determined that this feature of the federal sentencing regime was unconstitutional, the Court next decided upon an appropriate remedial scheme that would best effectuate Congress' intent in passing the Sentencing Reform Act in light of the Court's constitutional holding. See id. Rejecting a solution that would have preserved the mandatory nature of the guidelines while grafting upon them a requirement that all facts providing the basis for enhancements be found by a jury, see id. at 757, 759, the Court ruled that Congress would have preferred a solution that rendered the guidelines advisory and restored discretion to courts to impose sentences within the range prescribed by the statutes of conviction, see id. at 767-68, as long as those sentences...