U.S. v. Martin

• Decision Date: 30 March 2004
• Docket Number: No. 03-1068.,03-1068.
• Parties: UNITED STATES of America, Appellant, v. Daniel MARTIN, Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

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363 F.3d 25

UNITED STATES of America, Appellant, v. Daniel MARTIN, Defendant, Appellee.

No. 03-1068.

United States Court of Appeals, First Circuit.

Heard October 8, 2003.

Decided March 30, 2004.

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Diane C. Freniere, Assistant United States Attorney, with whom Michael J. Sullivan, United States Attorney, was on brief, for appellant.

Max D. Stern for appellee.

Before LIPEZ, Circuit Judge, CAMPBELL, Senior Circuit Judge, and HOWARD, Circuit Judge.

LIPEZ, Circuit Judge.

Defendant Daniel Martin pleaded guilty to fraud and tax evasion. The district court sentenced him to three years of probation, with six months to be served in home detention. The government, believing that Martin's sentence was too lenient, appeals. It argues that the district court improperly grouped the fraud counts with the tax evasion counts and improperly granted downward departures for extraordinary acceptance of responsibility and extraordinary physical impairment. Martin counters that, because he has already served a significant portion of his original sentence of probation, any subsequent sentence of imprisonment would violate double jeopardy principles.

Although we disagree with Martin's double jeopardy argument as posed, this case does raise a double jeopardy issue that must be addressed at re-sentencing. There will be a re-sentencing because we agree with the government that the court erred in its grouping decision and its grant of a downward departure for extraordinary acceptance of responsibility.

I.

From 1997 until 2000, Martin participated in a scheme to defraud several food distributors and the DeMoulas Supermarkets chain of more than $1.8 million. In the food merchandise industry, food distributors often pay grocers to run promotional campaigns for their products or place their products in preferred display locations. These transactions are negotiated almost entirely between representatives of the food distributors and the grocer, with little supervision by higher level executives. Thus, only the representatives know if a distributor pays more, or a grocer receives less, than the negotiated price. A representative could easily divert funds by lying to his or her supervisors about the actual terms of a contract.

Martin and his fellow conspirators took advantage of this lack of oversight. Robert Stella, a salesman for the food distributor Campbell's, stole more than $800,000 in checks written to DeMoulas. Robert McCarthy, a food broker for Advantage ESM, similarly stole checks destined for DeMoulas worth approximately $490,000. Finally, Wayne Dick, a food buyer at DeMoulas, took more than $400,000 worth of checks given to him by various food distributors as payment to DeMoulas. Stella, McCarthy, and Dick gave their stolen checks to Martin so he could deposit them at Fleet Bank where Linda Dempski, a teller who was a party to the scheme, would convert the proceeds to cash or cashiers checks. Thus, Martin served primarily as a middleman, taking the stolen checks and converting them to cash through his contacts at Fleet.

All told, Martin converted $1,803,990 in checks made out to DeMoulas. Martin's share of that sum was between $582,335 and $660,623.¹ Martin did not report this fraudulent income, and the resulting tax loss to the government was approximately $254,500.

In May 2000, a Fleet Bank official noticed a DeMoulas check deposited directly into Martin's personal account. From there, the scheme unraveled quickly. DeMoulas confronted Dick about the thefts and, soon after, Dick, Stella, and Martin contacted DeMoulas about paying restitution. Over the next five and a half months the three paid a total of $1,746,930 to the victims, representing the total known loss as of December 2000.² Martin contributed $837,491 to DeMoulas's and Campbell's losses, and $11,000 toward Fleet's attorneys' fees, for a total of $848,491.

II.

On July 26, 2002, Martin waived indictment and pleaded guilty to an information charging him with nine counts of "receipt of stolen moneys" in violation of 18 U.S.C. § 2315 (the "fraud counts") and two counts of filing a materially false U.S. income tax return in violation of 26 U.S.C. § 7206(1) (the "tax evasion counts"). There was no plea agreement.

On November 21, 2002, the district court began a three day sentencing hearing. The government argued primarily that Martin was the central figure in the scheme, had recruited the other participants, and was the organizer and leader of the criminal activity. To support this view, the government offered three cooperating witnesses — McCarthy, Stella, and Dempski — who testified about Martin's role in the scheme. The government further argued that, because Martin denied that he was the central figure in the conspiracy, the court should not grant any downward adjustment for acceptance of responsibility.

The defense offered evidence of Martin's restitution payments and his history of physical problems resulting from Crohn's disease. It argued that Martin's restitution payments were so extraordinary that they justified a departure above and beyond the normal adjustment for acceptance of responsibility recognized in the Guidelines. It further argued that Martin's fragile health justified a departure based on the discouraged factor of extraordinary physical impairment.

Finding the government witnesses unconvincing, the court stated that the scheme, while involving several people working in concert, was a disorganized assemblage of members concerned primarily with their own interests. Although Martin may have served as a middleman in the execution of the scheme, the court did not find that he played a central role as a leader or an organizer.

Against this backdrop, the court first calculated the sentence for the fraud counts.³ Applying U.S.S.G. § 2B1.1(a), it set the base offense level ("BOL") at four. It added a 14 level enhancement, pursuant to U.S.S.G. § 2B1.1(b)(1)(O), because the amount of stolen money was between $1.5 million and $2.5 million.⁴ It further added a two level enhancement under U.S.S.G. § 2B1.1(b)(4)(A) for more than minimal planning.⁵ This resulted in an adjusted offense level ("AOL") of 20 for the fraud counts.

For the tax evasion counts, the court applied U.S.S.G. § 2T1.1(a)(1). Pursuant to U.S.S.G. § 2T4.1(K), it set the BOL at 16 because the tax loss was between $200,000 and $325,000.⁶ It then added a two point enhancement under U.S.S.G. § 2T1.1(b)(1) for failing to report income in excess of $10,000 derived from criminal activity.⁷ Thus, the AOL for the tax evasion counts was 18.

The court found that the fraud counts embodied the same conduct that justified the two level upward adjustment to the tax evasion counts for failure to report criminally derived income. Thus, the court ruled that the fraud and tax evasion counts should be grouped pursuant to U.S.S.G. § 3D1.2(c).⁸ Applying U.S.S.G. § 3D1.3, the court set the grouped offense level at 20 — the highest offense level of the counts in the group (the fraud counts).⁹ The court then applied a three point reduction for acceptance of responsibility pursuant to U.S.S.G. § 3E1.1, reducing the AOL to 17. If the court had ended its sentencing analysis there, the sentencing range would have been 24-30 months.¹⁰

Instead, the court made two downward departures from the AOL. First, it made a four point downward departure for extraordinary acceptance of responsibility. The court made this departure primarily because Martin had repaid his share of the stolen money, had contributed to paying McCarthy's share, and had contributed to both DeMoulas's and Fleet Bank's attorneys' fees. Second, the court made an additional three point downward departure for Martin's "exceptional physical impairments" caused by Crohn's disease and a variety of other ailments. The resulting AOL of 10 put Martin in Zone B of the Sentencing Table, with a guideline range of 6-12 months. The court applied U.S.S.G. § 5B1.1(a)(2) and § 5C1.1(e)(3) to sentence Martin to three years probation, six months to be served as home detention in lieu of imprisonment, and a $1,100 special assessment.¹¹

The government now brings this appeal pursuant to 18 U.S.C. § 3742(b). First, the government argues that the district court erred in grouping the tax evasion and fraud counts. Next, it argues that the four level downward departure for extraordinary acceptance of responsibility was unwarranted. Finally, it argues that the three level downward departure for extraordinary physical impairment was likewise unwarranted. Before reaching these issues, we must address Martin's contention that double jeopardy principles preclude any sentence of imprisonment after this appeal.¹²

III.

At the time of this opinion, Martin has served approximately 15 months of his three year term of probation, including the six month portion of that term served in home detention.¹³ Martin contends that, because probation and imprisonment are alternative punishments under the sentencing statutes, he cannot be forced to serve both kinds of punishment, even if the initial imposition of probation rather than imprisonment was in error. He offers two related yet separate arguments in support of this position. First, he argues that imposing a term of imprisonment after an appeal would cause him to serve two punishments — first probation and then imprisonment — in violation of the relevant statutes that authorize the court to impose only one form of punishment or the other. Second, even if there is no statutory bar to a sentence of imprisonment after a successful appeal by the government, Martin argues that constitutional double jeopardy principles require the court to credit any time he has already served on probation against any imprisonment imposed after an appeal. Because probation and imprisonment are distinct forms of punishment, Martin contends that...