U.S. v. Khimchiachvili

• Decision Date: 09 June 2004
• Docket Number: Docket No. 03-1166(L).,Docket No. 03-1219(CON).,Docket No. 03-1318(C0N).,Docket No. 03-1237(CON).
• Citation: 372 F.3d 75
• Parties: UNITED STATES of America, Appellee, v. Robert KHIMCHIACHVILI, also known as Prince Robert, also known as Dr. Von Badische; Cesar A. Viana; Christopher Berwick, Defendants, Brian D. Sherry, also known as Colonel Sherry, also known as Major Sherry, also known as Sir Brian Sherry, also known as Prince Brian, also known as Brian Sherry-Berwick, George R. Englert, also known as Dr. Moncrieffe, also known as Baron Moncrieffe, also known as Prince George; Cesar A. Viana; Christopher Berwick, Defendants-Appellants.
• Court: U.S. Court of Appeals — Second Circuit

372 F.3d 75

UNITED STATES of America, Appellee, v. Robert KHIMCHIACHVILI, also known as Prince Robert, also known as Dr. Von Badische; Cesar A. Viana; Christopher Berwick, Defendants Brian D. Sherry, also known as Colonel Sherry, also known as Major Sherry, also known as Sir Brian Sherry, also known as Prince Brian, also known as Brian Sherry-Berwick, George R. Englert, also known as Dr. Moncrieffe, also known as Baron Moncrieffe, also known as Prince George; Cesar A. Viana; Christopher Berwick, Defendants-Appellants.

Docket No. 03-1166(L).

Docket No. 03-1219(CON).

Docket No. 03-1237(CON).

Docket No. 03-1318(C0N).

United States Court of Appeals, Second Circuit.

Argued: May 7, 2004.

Decided: June 9, 2004.

Alexander H. Southwell, Assistant United States Attorney, New York, NY, for Appellee (David N. Kelley, United States Attorney for the Southern District of New York and Adam B. Siegel, of counsel, on the brief).

Mark P. Goodman, Debevoise & Plimpton, New York, NY, for Defendant-Appellant George Englert.

Before: OAKES, B.D. PARKER, Circuit Judges, and KORMAN, District Judge.^*

KORMAN, Chief District Judge.

George Englert appeals from a sentence imposed after his plea of guilty to mortgage fraud, wire fraud, and conspiracy to commit wire fraud. Specifically, he challenges the imposition of a two-level enhancement for obstruction of justice and the consequent denial of a three-level reduction for acceptance of responsibility. We will resolve the appeals of Mr. Englert's co-defendants under separate cover. Here, we consider only whether the sentencing judge was correct in holding that Mr. Englert's swearing to a false financial affidavit in order to obtain court-appointed counsel constituted obstruction of justice within the meaning of USSG § 3C1.1.

Background

In late 2000, George Englert and his co-defendants came under investigation for an elaborate scheme of mortgage and wire fraud. They were suspected of participating in a fraudulent scheme to convince individuals that they represented a trust that had substantial assets to lend, when in fact, there were no assets. Defendants would convince these individuals — generally entrepreneurs seeking financing — to pay them substantial "performance guarantees" in exchange for loans, knowing that their trust would never provide the sought-after loans.

The United States Attorney warned Mr. Englert that he might be a material witness in the investigation and it advised that he obtain counsel. On January 8, 2001, Mr. Englert followed that advice and sought counsel pursuant to the Criminal Justice Act. He submitted a financial affidavit and swore to its accuracy before United States Magistrate Judge Theodore H. Katz. On the basis of that financial affidavit, Magistrate Judge Katz appointed counsel to Mr. Englert, free of charge. Mr. Englert was not indicted until November 6, 2001, when he was charged with one count of conspiracy to commit wire fraud in violation of 18 U.S.C. § 371 and ten counts of wire fraud in violation of 18 U.S.C. § 1343. On March 14, 2002, the United States Attorney filed another indictment charging Mr. Englert with one count of mortgage fraud in violation of 18 U.S.C. § 1014.

One and a half years after the appointment of counsel, on July 22, 2002, Mr. Englert pleaded guilty to charges of mortgage fraud, wire fraud, and conspiracy to commit wire fraud. In connection with his pre-sentence report, Mr. Englert submitted to the Probation Office a Net Worth Statement and a Cash Flow Statement. In total, Mr. Englert listed assets of approximately $817,000 and liabilities of $345,000. His most significant assets were a home worth $500,000 (with an outstanding mortgage of $345,000) and paintings, furniture, and antiques worth $300,000.

Mr. Englert was sentenced on May 15, 2003. On the basis of the Net Worth Statement Mr. Englert had filed for his pre-sentence report, the United States Attorney argued that Mr. Englert's earlier financial affidavit, sworn to in connection with the appointment of counsel, was clearly false. Further, he argued that this false affidavit constituted obstruction of justice worthy of a two-level enhancement pursuant to USSG § 3C1.1. Mr. Englert's earlier financial affidavit was not in evidence and could not be located, but the circumstantial evidence was sufficient to support a finding that the affidavit Mr. Englert had filed was false. Accepting the argument of the United States Attorney, the sentencing judge observed:

While this enhancement must be evaluated in the light most favorable to the defendant, I find by a preponderance of the evidence that defendant intended to mislead the court by omitting certain information from his financial affidavit. The motivation for these omissions is obvious — he did not want to pay for a lawyer. He knew that if he disclosed all of his assets, he would not qualify for appointed counsel, and that he would have to pay for counsel. This lying is reprehensible [and] constitutes obstruction of justice. A two-level enhancement [is] therefore warranted.

On the basis of this obstruction of justice enhancement, the sentencing judge also denied Mr. Englert a three-level reduction for acceptance of responsibility. The probation report had recommended a three-level reduction on this ground, and the United States Attorney had not opposed it. But after the sentencing judge enhanced Mr. Englert's sentence by two-levels for obstruction of justice, the United States Attorney pointed out that "when there is obstruction of justice enhancement, ordinarily acceptance is not warranted." The sentencing judge agreed and stated that a reduction for acceptance of responsibility "wouldn't be warranted where there is a finding of obstruction of justice during the prosecution." Accordingly, Mr. Englert was sentenced to a term of imprisonment of 41 months, five years of supervised release, a $1,200 special assessment, and restitution of $2,957,791.

Discussion

Mr. Englert makes two principal arguments on appeal. First he claims that the sentencing judge was wrong to enhance his sentence by two levels for obstruction of justice where the financial affidavit claimed to be false was not in evidence and there was no clear showing that Mr. Englert in fact intended to obstruct justice. Second, he claims that the sentencing judge incorrectly denied him a three-level reduction for acceptance of responsibility without considering whether the obstruction of justice at issue was of the sort that suggests a lack of acceptance of responsibility. He argues that any obstruction alleged here should not have precluded a three-level reduction for acceptance of responsibility because the conduct underlying his obstruction of justice enhancement "was not part of an effort to deny guilt or hinder case investigation, but rather resulted from the wholly unrelated process of filling out a financial affidavit at arraignment." By asking us to distinguish among different kinds of allegedly obstructive conduct, Mr. Englert's claim implicitly raises a more basic question. That question, whether swearing to a false financial affidavit in order to obtain court-appointed counsel constitutes obstruction of justice under USSG § 3C1.1, is the only one we address. Because it turns on a legal interpretation of the Sentencing Guidelines, the sentencing judge's decision is reviewed de novo. 18 U.S.C. § 3742(e); United States v. McSherry, 226 F.3d 153, 157 (2d Cir.2000).

The Sentencing Guidelines dictate a two-level enhancement under the following circumstances:

If (A) the defendant willfully obstructed or impeded, or attempted to obstruct or impede, the administration of justice during the course of the investigation, prosecution, or sentencing of the instant offense of conviction, and (B) the obstructive conduct related to (i) the defendant's offense of conviction and any relevant conduct; or (ii) a closely related offense, increase the offense level by 2 levels.

USSG § 3C1.1. The first clause of this guideline places a temporal requirement on defendant's obstructive conduct. The second clause requires that the obstructive conduct relate in some manner to the underlying offense or related conduct. But we focus first on whether Mr. Englert's swearing to a false affidavit in a proceeding to obtain appointed counsel was in fact a willful attempt to obstruct or impede the administration of justice.

To enhance a sentence for obstruction of justice, "the court must find that the defendant's statements unambiguously demonstrate an intent to obstruct." United States v. Kelly, 147 F.3d 172, 178 (2d Cir.1998); USSG § 3C1.1. The Sentencing Commission's understanding of what constitutes obstruction of justice is set forth in examples in Application Notes 4 and 5 to USSG § 3C1.1. See infra pp. 79-81. But it is perhaps better explained by considering what led to two amendments to those examples. In United States v. Stroud, 893 F.2d 504 (2d Cir.1990), we considered whether a defendant's flight from an arresting officer could provide the basis for an obstruction of justice enhancement under § 3C1.1. At the time, the commentary to § 3C1.1 was silent on this score. We observed, however, that "the word `willfully,' as used in section 3C1.1, requires that the defendant consciously act with the purpose of obstructing justice." Id. at 507. We held that flight from an arresting officer could not constitute obstruction of justice in that case because, "the purpose of Stroud's flight was not a deliberate pre or post-arrest attempt to frustrate or impede an ongoing criminal investigation.... Rather, Stroud's flight appears to have been a natural attempt to avoid apprehension." Id. at 508. Less than one year later, the Sentencing Commission implicitly adopted that holding by amending the commentary to § 3C1.1 to state that "avoiding or fleeing from arrest" was not conduct that would warrant an obstruction of justice enhancement. See USSG, App. C., amend. 582.

A...