U.S.A v. Martinez

• Decision Date: 28 June 2010
• Docket Number: No. 09-2117.,09-2117.
• Parties: UNITED STATES of America, Plaintiff-Appellee,v.Toby MARTINEZ, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

610 F.3d 1216

UNITED STATES of America, Plaintiff-Appellee,v.Toby MARTINEZ, Defendant-Appellant.

No. 09-2117.

United States Court of Appeals, Tenth Circuit.

June 28, 2010.

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Brian A. Pori of Inocenté P.C., Albuquerque, NM, for Defendant-Appellant.

Jonathon M. Gerson, Assistant United States Attorney, (Gregory J. Fouratt, United States Attorney, and Paula G. Burnett, Assistant United States Attorney, with him on the brief), Albuquerque, NM, for Plaintiff-Appellee.

Before BRISCOE, Chief Judge, McWILLIAMS, and TYMKOVICH, Circuit Judges.

BRISCOE, Chief Judge.

Defendant-Appellant Toby Martinez was convicted of one count of conspiring to defraud the State of New Mexico during the construction of the Bernalillo County Metropolitan Courthouse in Albuquerque, in violation of 18 U.S.C. § 371, and two counts of mail fraud committed in furtherance of that fraudulent scheme, in violation of 18 U.S.C. §§ 1341 and 1346. The district court sentenced Martinez to 67 months' imprisonment, and pursuant to the Mandatory Victims Restitution Act of 1996 (“MVRA”), 18 U.S.C. §§ 3663A, 3664, imposed restitution in the amount of $2,710,818.66 to the State of New Mexico. On appeal, Martinez challenges the reasonableness of his sentence and several aspects of the district court's restitution order. Exercising jurisdiction under 28 U.S.C. § 1291 and 18 U.S.C. § 3742(a), we affirm.

I

The participants in the Bernalillo County Metropolitan Courthouse conspiracy defrauded the State of New Mexico through the submission of over-billings from two components of the construction of that facility: the architectural design of the courthouse and the installation of an audiovisual system. Martinez played a central role in the conspiracy: serving as the Metropolitan Court Administrator until June 2003, Martinez approved the invoices that fraudulently exaggerated the cost of services rendered. All told, the district court found that the conspiracy caused a total loss of $4,374,286.64 to the State of New Mexico.

The architectural design aspect of this conspiracy began shortly after the New Mexico State Legislature enacted a bill providing for the construction of a new Bernalillo County Metropolitan Courthouse in 1998. Martinez and a judge on the Metropolitan Court consulted with Manny Aragon, who was at that time the President Pro-Tem of the New Mexico State Senate. Aragon suggested that Design Collaborative Southwest (“DCSW”) be hired to complete the architectural design of the courthouse. DCSW was later awarded the contract in 1999: Marc Schiff, a DCSW partner, oversaw the contract, and Kenneth Schultz, a former mayor of Albuquerque, was hired by DCSW as a lobbyist. Aragon, Martinez, Schiff, and Schultz conspired to defraud the State of New Mexico through fraudulent over-billings. Schiff submitted inflated invoices, Martinez approved them, and cash payments were distributed among the conspirators. The district court found that the architectural design aspect of the conspiracy resulted in a total loss of $918,015.38 to the State of New Mexico. Of that amount, Martinez admitted to receiving $150,000, Schultz admitted to receiving $50,000, Schiff kept at least $136,645.38, and Aragon received at least $40,000. These distributions left an unaccounted shortfall of $541,370 that the Government could not attribute to any one of these particular individuals.

The audiovisual aspect of the conspiracy began in 2001, when Aragon and Martinez discussed the possibility of obtaining additional state funding to install an audiovisual system. Raul Parra, who was a partner in the engineering firm P2RS, “lined up the contractor and the subcontractors to perform the work on the audio-visual contract.” R. Vol. 1 at 206. Manuel Guara, the owner of a subcontractor company named Datcom, submitted inflated invoices to the general contractor; the general contractor incorporated Datcom's invoices into its own invoices that it submitted to Martinez for approval. Upon receiving payment, Datcom transferred funds to Parra, who then distributed the proceeds among the other conspirators. Martinez “created a shell company called Smart Solutions, using [his] wife's name, for the sole purpose of receiving proceeds of the inflated audio-visual billings.” Id. at 207. When Martinez left his position as Courthouse Administrator in June 2003, he “relied upon” Michael Murphy, the owner of the company supervising the courthouse construction, to “make sure the inflated [general contractor] invoices were approved for payment.” Id. Martinez promised Murphy $20,000 for his cooperation.

The district court found that the total loss to the State of New Mexico resulting from the audiovisual aspect of the conspiracy was $3,456,253.26. Of that amount, the district court found Martinez responsible for $2,019,448.66, Aragon for $609,272.32, Parra for $601,532.28, Sandra Martinez (Martinez's wife) for $106,000, Guara for $100,000, and Murphy for $20,000.

Evidence of this criminal conduct later surfaced in 2005, and in December of that year the FBI confronted Martinez about the courthouse project. Martinez, represented by counsel, gave the FBI a lengthy and detailed statement about the entire conspiracy. His assistance was substantial: Martinez alerted the FBI to the architectural design aspect, which had not yet been discovered, and convinced Parra to cooperate. Shortly thereafter, Schiff, Schultz, and Guara all agreed to cooperate, and each of these co-conspirators entered into pre-indictment plea agreements.

In March 2007, a grand jury empaneled by the United States District Court for the District of New Mexico returned a multiple count indictment against Martinez and several co-conspirators. The fourth superseding indictment, returned on October 8, 2008, charged Martinez, Sandra Martinez, Parra, Aragon, and Murphy with a conspiracy to commit money laundering and mail fraud in violation of 18 U.S.C. § 371, and also alleged multiple counts of mail fraud in violation of 18 U.S.C. §§ 1341 and 1346, and multiple counts of money laundering in violation of 18 U.S.C. §§ 1956 and 1957. The indictment alleged that the conspiracy lasted from 1999 until January 2006, and also contained allegations of forfeiture for Martinez, Sandra Martinez, and Aragon.

As part of its pretrial pleadings, the Government filed a notice of intent pursuant to Federal Rule of Evidence 404(b) to introduce specific acts of uncharged conduct that related to two other construction projects. First, the Government sought to introduce evidence that during the earlier construction of the New Mexico Second Judicial District Courthouse, a company that Parra at least partly owned was paid for unnecessary data network design, and that there was evidence tending to show that Parra paid Aragon $50,000. Id. at 51-52. Second, the Government sought to introduce evidence that during the construction of the Bernalillo County Metropolitan Detention Center, Parra convinced P2RS, DCSW, and another company that it would be beneficial to pay Aragon thousands of dollars to guarantee work on public construction contracts. Id. at 52-54. The Government argued the prior acts were relevant to show “opportunity, knowledge, intent, identity, preparation and planning, and absence of mistake....” Id. at 48. The district court initially ruled that most of this evidence was admissible, but later reconsidered that ruling and excluded evidence relating to the construction of the Metropolitan Detention Center.

On October 10, 2008, Martinez pleaded guilty to the conspiracy count and to two counts of mail fraud pursuant to a cooperation agreement. In the plea agreement, the parties entered into the following stipulations to assist the district court in calculating Martinez's advisory guideline range: Martinez should be responsible for a loss amount between $1.5 and $2.5 million; Martinez was a “public official in a high-level sensitive position,” and should receive a four-level enhancement under U.S.S.G. § 2C1.1(b)(3); Martinez “did not supervise the activities of his co-conspirators,” and should not receive an enhancement for his role in the offense under U.S.S.G. § 3B1.1(a); Martinez should not receive an enhancement for abuse of a position of trust under U.S.S.G. § 3B1.3 because he was subject to an equivalent enhancement under U.S.S.G. § 2C1.1(b)(3). Id. at 210. Martinez reserved the right to argue that the 2000 version of the United States Sentencing Guidelines should apply to his sentence, and agreed to forfeit several of his assets to the federal government. Id. at 211, 215-16.

On October 14, 2008, Parra pleaded guilty pursuant to a cooperation agreement under Federal Rule of Criminal Procedure 11(c)(1)(C) in which the parties stipulated to a maximum term of imprisonment of 71 months. Id. at 235. Parra was eventually sentenced to 46 months' imprisonment. On October 15, 2008, Aragon pleaded guilty pursuant to a plea agreement under Rule 11(c)(1)(C) in which the parties stipulated to a term of imprisonment of 67 months. Id. at 264.

Prior to Martinez's sentencing, the Government filed a motion seeking a reduction in Martinez's sentence because of his substantial assistance, and a United States Probation Officer prepared Martinez's presentence report (PSR). Using the 2008 version of the United States Sentencing Guidelines, the PSR determined Martinez's base offense level was 14 under U.S.S.G. § 2C1.1(a)(1), applied a 16-level enhancement under § 2B1.1(b)(1) because Martinez was responsible for a loss between $1.5 and $2.5 million, and applied a 4-level enhancement under § 2C1.1(b)(3). When Martinez's base offense level was adjusted three levels for acceptance of responsibility, his total offense level was 31, which when combined with Martinez's criminal history category I, produced a guideline range of 108-135 months.

Martinez filed written objections to the PSR and raised several arguments concerning the...