U.S. v. Lalonde

Decision Date12 December 2007
Docket NumberNo. 06-4536.,06-4536.
Citation509 F.3d 750
PartiesUNITED STATES of America, Plaintiff-Appellee, v. Paul M. LALONDE, Defendant-Appellant.
CourtU.S. Court of Appeals — Sixth Circuit

Michael M. Losavio, Louisville, Kentucky, for Appellant. Christopher K. Barnes, Assistant United States Attorney, Cincinnati, Ohio, for Appellee.


Michael M. Losavio, Louisville, Kentucky, for Appellant. Christopher K. Barnes, Assistant United States Attorney, Cincinnati, Ohio, for Appellee.

Before KEITH and CLAY, Circuit Judges; STEEH, District Judge.*


CLAY, Circuit Judge.

Defendant Paul M. Lalonde ("Lalonde") appeals the conviction and 78-month sentence imposed by the district court following his plea of guilty to wire fraud, 18 U.S.C. § 1343, and income tax evasion, 26 U.S.C. § 7201. Lalonde challenges his conviction on the grounds of alleged violations of Federal Rules of Criminal Procedure 10 and 11. Lalonde appeals his sentence on the basis of the district court's alleged misapplication of the United States Sentencing Guidelines (the "Guidelines") and for unreasonableness. For the reasons that follow, we AFFIRM both the conviction and sentence imposed by the district court.


From 1994 to 1998, Lalonde engaged in a scheme to fraudulently obtain over $1.6 million from various individuals and corporations. Lalonde and his associates, Richard G. Liggett ("Liggett") and Thomas McGhee ("McGhee"), obtained money from victims by falsely representing that they worked as either attorneys or financial advisors who would invest the victims' money. Rather than investing the money, however, Lalonde and his associates converted the funds to their own personal use. Lalonde failed to report this money as taxable income and thus willfully avoided paying federal income tax during these years as well.

The only details of the scheme that are relevant for this appeal concern Lalonde's dealings with Magellin Entertainment ("Magellin") and with Wright Gaming. In 1997 and 1998, Lalonde, with the help of McGhee, a registered securities broker with Continental Capital Securities ("Continental Capital") in Toledo, Ohio, induced Magellin, a California based entity, to send $880,319 to Lalonde for the purpose of enhancing Magellin's ability to secure financing for its motion picture business. Lalonde told Magellin that he would deposit this money in an escrow account and would provide Magellin with certificates of deposit to use as default collateral on any loans that Magellin might seek. The certificates of deposit were to be protected by default insurance and were to be placed with McGhee in an account set up for Magellin at Continental Capital. Lalonde never obtained any such certificates, but instead spent a substantial part of the $880,319 on personal expenses and repayment of earlier victims of the scheme.

In 1998, Lalonde and Liggett similarly induced Wright Gaming to send them $460,000 for the purpose of assisting Wright Gaming to obtain $45 million in financing for a barge casino on the Mississippi River. Lalonde and Liggett instructed Wright Gaming to wire transfer the funds to an account in the name of "Cloverleaf" at Continental Capital. The money sent to the account would be used to rent certificates of deposit owned by others and to buy Treasury bills which would enhance Wright Gaming's ability to secure financing. Cloverleaf would then provide Wright Gaming with the $45 million loan. After Wright Gaming wired the money, $73,000 was transferred to Lalonde's account and $46,000 went to Liggett. Lalonde and Liggett did not rent any Treasury bills nor did they obtain financing for Wright Gaming. Instead, they used the money for their own personal expenses.

Based upon his involvement in this scheme, Lalonde was indicted on December 4, 2002 in the Southern District of Ohio for one count of conspiracy, in violation of 18 U.S.C. § 371, nineteen counts of wire fraud, in violation of 18 U.S.C. § 2 and § 1343, nineteen counts of money laundering, in violation of 18 U.S.C. § 2 and § 1956, and three counts of income tax evasion, in violation of 26 U.S.C. § 2 and § 7201.

On January 16, 2003, Lalonde was arraigned on the indictment before a federal magistrate judge. Prior to the arraignment, defense counsel was provided with a copy of the indictment. At the hearing, the attorney for the government offered to read the indictment to Lalonde if he chose not to waive such a reading. However, because defense counsel proceeded to address other matters with the court, the indictment was never read to Lalonde and no waiver of reading was made. Lalonde did not object to the magistrate judge's failure to read the indictment.

On December 16, 2003, pursuant to a written plea agreement with an attached Statement of Facts, Lalonde entered a plea of guilty to Count 3 (wire fraud) and Count 41 (income tax evasion) of the indictment. At the hearing, the district judge confirmed that Lalonde had read and understood the indictment and had discussed all the counts charged in the indictment, and any defenses thereto, with defense counsel. The district judge also questioned Lalonde and the government about the plea agreement and Lalonde's awareness of the consequences of changing his plea. Based on this inquiry, the district court determined that there was a factual basis for the plea and that Lalonde was aware of the charges against him and was pleading guilty knowingly and voluntarily.

As part of the process of entering the plea, Kent Rogers, a Special Agent with the Internal Revenue Service, read into the record a statement of facts relevant to the wire fraud and income tax evasion charges. In particular, Special Agent Rogers stated that "[a]mong the interstate wire communications which furthered the fraud scheme that is set forth in Count 3 . . . defendant caused Magellin to wire transfer $550,000 from outside the Southern Judicial District of Ohio to his Clermont Savings personal checking account in the Southern District of Ohio." J.A. at 127 (emphasis added).1 Lalonde confirmed that Special Agent Rogers' account of the facts was accurate and that the Statement of Facts attached to the plea agreement was also correct.

The district judge then summarized the elements of wire fraud and informed Lalonde that the facts as set forth by Special Agent Rogers indicated that Lalonde was guilty of wire fraud. The judge's summary of the elements of wire fraud failed to include the word "interstate."2 Nevertheless, Lalonde confirmed that he had in fact committed the offenses of wire fraud and income tax evasion as alleged in the indictment. Lalonde raised only one objection to the factual account — which concerned the calculation of the amount of unpaid taxes. After discussing this issue, the district court accepted Lalonde's guilty plea and adjudged Lalonde guilty of the wire fraud and income tax evasion charges. During this plea hearing, Lalonde raised no objections regarding the failure of the magistrate judge to read the indictment or his lack of understanding concerning the elements of the wire fraud charge.

On December 18, 2003, because of concerns regarding Lalonde's health, the district judge ordered a medical study of Lalonde. Shortly thereafter, on December 21, 2003, Lalonde sent a letter along with a document entitled "Statement of Facts" to the district court, which presented a different version of the events giving rise to the charges.3 Over the next couple years, the district court granted Lalonde several continuances of the sentencing hearing in order to permit further medical examinations of Lalonde and to await the Supreme Court's sentencing decisions in Blakely v. Washington, 542 U.S. 296, 124 S.Ct. 2531, 159 L.Ed.2d 403 (2004), and United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005).

On June 30, 2006, Lalonde filed a pro se Motion to Withdraw Plea, followed by a pro se Supplemental Motion to Withdraw Plea on July 11, 2006. In these motions, Lalonde stated that he was not in proper physical or mental health at the time of his plea. He further claimed that "the only reason" that he plead guilty was because of "the state of his health and the promises of AUSA Brinkman" that his sentence would not be more than 30 months. J.A. at 77. Lalonde did not object that his wire fraud conviction was not based upon an interstate wire transfer. Likewise, Lalonde did not complain that he had never been read and did not understand the indictment. The district court held a hearing on these motions on July 31, 2006 at which Lalonde withdrew his Motion to Withdraw Plea and did not make any further objections regarding his conviction.

On November 22, 2006, the district judge held Lalonde's sentencing hearing. At the hearing, Lalonde motioned to withdraw the "Statement of Facts" in the December 21, 2003 letter which he had sent to the district court. Lalonde also raised seven objections to the presentence report, all of which were overruled. In particular, the court found that: (1) Lalonde qualified for a two-level enhancement, pursuant to U.S.S.G. § 2F1.1, because the crime was a scheme to defraud more than one person; (2) Lalonde qualified for a further two-level enhancement, pursuant to U.S.S.G. § 3B1.1, because he was a organizer, leader, manager, or supervisor of the scheme to defraud Magellin; (3) Lalonde's criminal history score was properly increased by three points, pursuant to U.S.S.G § 4A1.1, for a 1989 Kentucky felony conviction based upon his guilty plea entered in abstentia; and (4) the amount defrauded from Wright Gaming was properly included in the amount of loss calculation pursuant to U.S.S.G. § 1B1.3.4 The district court concluded that Lalonde had an adjusted offense level of 20 with a category V criminal history and, thus, the Guidelines sentencing range was 63 to 78 months.

Recognizing that the Guidelines are merely advisory post-Booker, the...

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