U.S. v. Leahy, No. 03-4490.

CourtUnited States Courts of Appeals. United States Court of Appeals (3rd Circuit)
Writing for the CourtFuentes
Citation438 F.3d 328
Decision Date15 February 2006
Docket NumberNo. 03-4184.,No. 03-4490.,No. 03-4542.,No. 03-4560.,No. 04-2912.
PartiesUNITED STATES of America, v. Paul J. LEAHY, Appellant United States of America, v. James C. Fallon, Appellant United States of America, v. Timothy Smith, Appellant United States of America, v. Dantone, Inc., t/a Carriage Trade Auto Auction, Appellant United States of America, v. Kennard Gregg, Appellant.
438 F.3d 328
UNITED STATES of America,
v.
Paul J. LEAHY, Appellant
United States of America,
v.
James C. Fallon, Appellant
United States of America,
v.
Timothy Smith, Appellant
United States of America,
v.
Dantone, Inc., t/a Carriage Trade Auto Auction, Appellant
United States of America,
v.
Kennard Gregg, Appellant.
No. 03-4490.
No. 03-4184.
No. 03-4542.
No. 03-4560.
No. 04-2912.
United States Court of Appeals, Third Circuit.
Argued November 1, 2005.
Filed February 15, 2006.

Page 329

Ian M. Comisky (Argued), Jordana Cooper, Matthew D. Lee, Blank Rome LLP, Philadelphia, PA, Robert E. Welsh, Jr., Welsh & Recker, Philadelphia, PA, Jeffrey M. Miller, Nasuti & Miller, Philadelphia, PA, for Appellants Paul J. Leahy, Timothy Smith and Dantone Inc.

Robert Epstein (Argued), David McColgin (Argued), Elaine DeMasse, Maureen Kearney Rowley, Defender Association of Philadelphia, Federal Court Division, Philadelphia, PA, for Appellants James C. Fallon and Kennard Gregg.

Patrick L. Meehan, Laurie Magid, Mary E. Crowley, Joseph G. Poluka, Robert A. Zauzmer (Argued), Office of the United States Attorney, Philadelphia, PA, David Farnham, United States Department of Justice, Washington DC, Joshua L. Dratel, Law Offices of Joshua L. Dratel, New York, NY, for Amicus Curiae Party National Association of Criminal Defense Lawyers.

Before SCIRICA, Chief Judge, SLOVITER, ALITO,* ROTH, MCKEE, RENDELL, BARRY, AMBRO, FUENTES, SMITH, FISHER, VAN ANTWERPEN, ROSENN** and BECKER Circuit Judges.

FUENTES, Circuit Judge.


We ordered rehearing en banc in three separate appeals to determine whether the

Page 330

District Courts' orders of restitution and forfeiture violated defendants' Sixth Amendment right to trial by jury.

I. Background

In United States v. Paul J. Leahy, 2006 WL 335806, following trial, a jury found defendant Dantone, Inc. ("Dantone"), and its two senior managers, defendants Paul Leahy and Timothy Smith, guilty of engaging in, and aiding and abetting, bank fraud in violation of 18 U.S.C. § 1344.1 Defendants' convictions stemmed from their defrauding various banks out of profits derived from Dantone's auctioning of 311 repossessed and after-lease cars on behalf of the banks. At sentencing, the District Court imposed prison sentences upon Leahy and Smith and entered orders of forfeiture in the sum of $418,657 and restitution in the sum of $408,970, jointly and severally, against all three defendants. Dantone, Leahy and Smith appeal both their convictions and the orders of forfeiture and restitution.2

In United States v. Kennard Gregg, 2006 WL 463876, after being arrested and charged for twice attempting to sell counterfeit money to a government informant, defendant Gregg pled guilty to two counts of dealing in counterfeit obligations in violation of 18 U.S.C. § 473. Gregg was sentenced to six months in prison and three years of supervised release, and ordered to pay restitution to the federal government in the amount of $350. He appeals only the restitution order.

In United States v. James C. Fallon, No. 03-4184, a jury convicted defendant Fallon of one count of wire fraud in violation of 18 U.S.C. § 1341, and three counts of mail fraud in violation of 18 U.S.C. § 1343 in connection with marketing his company's Derma Peel skin treatment without FDA approval. Fallon was sentenced to 12 months in prison and ordered to pay restitution in the amount of $55,235. Fallon appeals both his conviction and the District Court's restitution order.

In these appeals, all five of the defendants — Dantone, Leahy, Smith, Gregg and Fallon — challenge their respective restitution orders on Sixth Amendment grounds, arguing that, in accordance with United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005), the facts underlying the orders should have been submitted to a jury and established by proof beyond a reasonable doubt. Additionally, on the same grounds, Dantone, Leahy and Smith challenge their orders of forfeiture. We called for rehearing en banc to consider three sentencing issues:

1. Whether the decision of the Supreme Court in Booker applies to forfeiture;

2. Whether orders of restitution are a criminal penalty;

3. Whether Booker applies to orders of restitution under the Victim and Witness Protection Act (the "VWPA")3 and the Mandatory Victims

Page 331

Restitution Act (the "MVRA").4

Because, in our view, restitution under the VWPA and the MVRA is not the type of criminal punishment that evokes Sixth Amendment protection under Booker, we conclude that the amount a defendant must restore to his or her victim need not be admitted by the defendant or proved to a jury beyond a reasonable doubt. As to forfeiture, based upon the Supreme Court's decision in Libretti v. United States, 516 U.S. 29, 116 S.Ct. 356, 133 L.Ed.2d 271 (1995), we conclude that the amount a defendant must forfeit also need not be admitted or proved to a jury beyond a reasonable doubt.

II. Forfeiture and Booker

We consider first the constitutionality of the District Court's forfeiture order in Leahy. Following trial, the District Court entered an order of forfeiture in the sum of $418,657, finding that the Government had proven by a preponderance of the evidence that this sum constituted the defendants' "proceeds" from their fraudulent activity within the meaning of 18 U.S.C. § 982(a)(2).5 The Leahy defendants contend that the imposition of forfeiture by the District Court under a preponderance of the evidence standard violated their Sixth Amendment right in light of the Supreme Court's decisions in Blakely v. Washington, 542 U.S. 296, 124 S.Ct. 2531, 159 L.Ed.2d 403 (2004), and Booker.

The Leahy defendants' Sixth Amendment argument with respect to forfeiture cannot be reconciled with the Supreme Court's decision in Libretti. In that case, the defendant entered a guilty plea in the middle of trial and agreed in his plea agreement to forfeit considerable property. Libretti, 516 U.S. at 33-34, 116 S.Ct. 356. He subsequently argued that his forfeiture plea colloquy was inadequate, in part because the District Court did not explain the right to a jury determination regarding forfeiture and in part because the District Court failed to obtain his express waiver of that right. Id. at 37-38, 116

Page 332

S.Ct. 356. The Supreme Court acknowledged that, pursuant to what was then Federal Rule of Criminal Procedure 31(e), a special jury verdict was required to permit an order of forfeiture.6 Id. at 48-49, 116 S.Ct. 356. It nonetheless concluded that there was no Sixth Amendment right to a jury determination, rejecting the defendant's claim that an express description and waiver of the jury right was a necessary component of the plea proceeding:

Without disparaging the importance of the right provided by Rule 31(e), our analysis of the nature of criminal forfeiture as an aspect of sentencing compels the conclusion that the right to a jury verdict on forfeitability does not fall within the Sixth Amendment's constitutional protection. Our cases have made abundantly clear that a defendant does not enjoy a constitutional right to a jury determination as to the appropriate sentence to be imposed.

Id. at 49. Libretti thus flatly holds that the Sixth Amendment is not implicated in the forfeiture context. See id. at 40-41, 116 S.Ct. 356 (rejecting defendant's argument that forfeiture "is not `simply' an aspect of sentencing, but is, in essence, a hybrid that shares elements of both a substantive charge and a punishment imposed for criminal activity").

The Leahy defendants contend that Libretti has been undercut by Blakely and Booker to such an extent that its precedential value has been eroded. Even assuming that to be true, we nonetheless note that as a Court of Appeals, we are not free to ignore the Supreme Court's holding in Libretti, nor do we possess the authority to declare that the Supreme Court has implicitly overruled one of its own decisions. See United States v. Ordaz, 398 F.3d 236, 241 (3d Cir.2005) ("[I]f a precedent of [the Supreme Court] has direct application in a case, yet appears to rest on reasons rejected in some other line of decisions, the Court of Appeals should follow the case which directly controls, leaving to [the Supreme] Court the prerogative of overruling its own decisions.") (quoting Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477, 484, 109 S.Ct. 1917, 104 L.Ed.2d 526 (1989)).

Defendants argue in the alternative that Libretti should be distinguished on the grounds that it addressed only the question of whether there exists a Sixth Amendment jury right to forfeiture determinations, not the constitutionally-mandated burden of proof, which they contend must be "beyond a reasonable doubt" after Booker. While there may be some tension between Booker and Libretti to the extent that the Libretti Court cites with approval its earlier statement in McMillan v. Pennsylvania that "[t]here is no Sixth Amendment right to jury sentencing, even where the sentence turns on specific findings of fact," we are not dissuaded from our conclusion that Libretti controls the forfeiture issue here. 516 U.S. at 49, 116 S.Ct. 356 (quoting McMillan, 477 U.S. 79, 93, 106 S.Ct. 2411, 91 L.Ed.2d 67 (1986)).

We further observe that the other Courts of Appeals that have considered this issue have reached the same conclusion. See United States v. Fruchter, 411 F.3d 377, 382-83 (2d Cir.2005) (rejecting arguments that Sixth Amendment applies

Page 333

to forfeiture and that Booker and Blakely require proof beyond reasonable doubt in forfeiture determinations; further holding that "Libretti remains the determinative decision"), cert. denied sub nom. Braun v. United States, ___ U.S. ___, 126 S.Ct. 840, ___ L.Ed.2d ___ (2005); United States v. Hall, 411 F.3d 651, 655 (6th Cir.2005) (stating that "we fail to see how Booker . . . allows us to turn our back on the Supreme Court's prior ruling in this area (Libretti)"); United States...

To continue reading

Request your trial
91 practice notes
  • U.S. v. Leahy, No. 03-4490.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • March 24, 2006
    ...S.Ct. 738, 160 L.Ed.2d 621 (2005), to orders of forfeiture and restitution is addressed in a separate opinion. See United States v. Leahy, 438 F.3d 328, (3d Cir. Feb. 15, 2006) 2006 U.S.App. LEXIS 3576. We apply our holding in Leahy in Part 2. The ten banks at issue in this matter are: Meri......
  • U.S. v. Reifler, Docket No. 03-1244(L).
    • United States
    • U.S. Court of Appeals — Second Circuit
    • April 18, 2006
    ...restore to his or her victim need not be admitted by the defendant or proved to a jury beyond a reasonable doubt." United States v. Leahy, 438 F.3d 328, 331 (3d Cir.2006) (en banc). Dissenting members of the court argued that "[a] finding of loss necessarily is a condition precedent to an o......
  • United States v. Williams, Criminal No. 09-0026 (PLF)
    • United States
    • United States District Courts. United States District Court (Columbia)
    • January 8, 2019
    ...850 F.3d 821, 826-27 (6th Cir. 2017) ; United States v. Day, 418 F.3d 746, 755-57 (7th Cir. 2005) ; see also United States v. Leahy, 438 F.3d 328, 337-38 (3d Cir. 2006). As the Sixth Circuit put it in Sizemore: "Courts consider the financial circumstances of the defendant in deciding whethe......
  • U.S. v. Atlantic States Cast Iron Pipe Co., Criminal No. 03-852(MLC).
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • March 23, 2009
    ...for specified crimes and augmented and partially superseded the VWPA in the statutory restitution arsenal. See United States v. Leahy, 438 F.3d 328, 331 nn. 3-4 (3d Cir.2006) (joining circuits holding that Booker does not apply to orders of restitution under MVRA and VWPA). Both the VWPA an......
  • Request a trial to view additional results
90 cases
  • U.S. v. Leahy, No. 03-4490.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • March 24, 2006
    ...S.Ct. 738, 160 L.Ed.2d 621 (2005), to orders of forfeiture and restitution is addressed in a separate opinion. See United States v. Leahy, 438 F.3d 328, (3d Cir. Feb. 15, 2006) 2006 U.S.App. LEXIS 3576. We apply our holding in Leahy in Part 2. The ten banks at issue in this matter are: Meri......
  • U.S. v. Reifler, Docket No. 03-1244(L).
    • United States
    • U.S. Court of Appeals — Second Circuit
    • April 18, 2006
    ...restore to his or her victim need not be admitted by the defendant or proved to a jury beyond a reasonable doubt." United States v. Leahy, 438 F.3d 328, 331 (3d Cir.2006) (en banc). Dissenting members of the court argued that "[a] finding of loss necessarily is a condition precedent to an o......
  • United States v. Williams, Criminal No. 09-0026 (PLF)
    • United States
    • United States District Courts. United States District Court (Columbia)
    • January 8, 2019
    ...850 F.3d 821, 826-27 (6th Cir. 2017) ; United States v. Day, 418 F.3d 746, 755-57 (7th Cir. 2005) ; see also United States v. Leahy, 438 F.3d 328, 337-38 (3d Cir. 2006). As the Sixth Circuit put it in Sizemore: "Courts consider the financial circumstances of the defendant in deciding whethe......
  • U.S. v. Atlantic States Cast Iron Pipe Co., Criminal No. 03-852(MLC).
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • March 23, 2009
    ...for specified crimes and augmented and partially superseded the VWPA in the statutory restitution arsenal. See United States v. Leahy, 438 F.3d 328, 331 nn. 3-4 (3d Cir.2006) (joining circuits holding that Booker does not apply to orders of restitution under MVRA and VWPA). Both the VWPA an......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT