U.S. v. Mikaelian
| Decision Date | 17 February 1999 |
| Docket Number | 97-50184,97-50260 and 97-50295,Nos. 97-50174,s. 97-50174 |
| Citation | 168 F.3d 380 |
| Parties | 99 Cal. Daily Op. Serv. 1191, 1999 Daily Journal D.A.R. 1589 UNITED STATES of America, Plaintiff-Appellee, v. Hovsep MIKAELIAN, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Ninth Circuit |
David A. Katz, Los Angeles, California, for the defendant-appellant.
Stephen G. Larson, Assistant United States Attorney, Los Angeles, California, for the plaintiff-appellee.
Appeals from the United States District Court for the Central District of California; George H. King, District Judge, Presiding. D.C. Nos. CR-96-00470-GHK, CR-95-00866-GHK and CR-95-00865-GHK.
Before: BETTY B. FLETCHER, ROBERT BOOCHEVER, and DAVID R. THOMPSON, Circuit Judges.
Hovsep Mikaelian appeals from the sentence imposed by the district court following his guilty plea in a conspiracy to purchase and sell fuel oil without paying federal excise tax, among other offenses. Mikaelian pleaded guilty to mail, wire, and tax fraud, failure to register for federal excise tax, conspiracy to possess narcotics with intent to distribute, and telecommunications fraud. He challenges the district court's consideration of in camera documents at sentencing, the failure to grant him a downward departure for substantial assistance, and other alleged sentencing errors. We affirm in part and reverse in part.
In 1994 and 1995, a group of ten men conspired to avoid payment of motor fuel excise taxes by fraudulently obtaining, in the names of legitimate companies, permits to sell fuel on the wholesale market. The group then purchased large amounts of fuel through Magnum Oil Company in Burbank, California, and proceeded to sell the fuel at retail service stations without paying the required state and federal diesel fuel excise taxes. The proceeds were deposited in bank accounts the group controlled. Mikaelian was a fuel broker who arranged the sale of the untaxed fuel to retail customers.
In attempts to avoid detection, the group used aliases, obtained mail boxes in assumed names, and used cellular telephones encoded with the serial numbers of uninvolved, innocent users. Some members of the group, including Mikaelian, sold heroin to others involved in the fuel tax sales. The plan evaded $2,262,601 in state taxes and $172,679 in federal taxes.
Unfortunately for the men involved in the scheme, Magnum Oil was actually part of a sting operation by the Federal Bureau of Investigation ("FBI") to detect such tax evasion, and the individuals who purchased drugs from Mikaelian were undercover agents. In September 1995, Mikaelian was In May 1996, Mikaelian entered a plea of guilty to the count charging conspiracy to commit mail and wire fraud and to evade excise taxes, to one count of conspiracy to possess heroin with the intent to distribute, and to three added counts of telecommunications fraud for the use of the "cloned" cellular phones, in violation of 18 U.S.C. § 1029.
indicted on counts of mail fraud and wire fraud and conspiracy to commit each of them, as well as failure to register regarding federal excise tax. Mikaelian was also named in a separate indictment for trafficking in narcotics and conspiracy to commit those acts.
The plea agreement provided that Mikaelian agreed to cooperate fully with law enforcement, "respond[ing] truthfully and completely to any and all questions or inquiries ... whether in interviews, before a grand jury or at any trial(s) or other Court proceeding(s)." In return, the government agreed to "bring to the Court's attention the nature and extent of [Mikaelian's] cooperation, including specific references to the criteria set forth in sentencing guideline 5K1.1(a)." The agreement provided that any motion for downward departure was discretionary, and that a failure to move for a downward departure would not be grounds for withdrawal of the guilty plea.
When the government filed its sentencing position in November 1996, however, it declined to move for a downward departure for substantial assistance because in its opinion "defendant has not meaningfully cooperated." Despite five opportunities to be interviewed, the government stated that Mikaelian "either was unwilling to speak or provided the federal and state law enforcement officers conducting the interviews inconsistent statements concerning his own involvement and the involvement of his co-conspirators in various criminal activities, made numerous material omissions, and on several occasions made blatant misrepresentations." Examples included Mikaelian's various inconsistent stories regarding how many times he had distributed narcotics; what types and quantities he had distributed; his stating that he did not know a codefendant well, and then stating that the codefendant was his cousin and employee; and three "extensive but mutually inconsistent versions of his business and criminal relationship with [another codefendant]." Internal Revenue Service Agent Kathryn Montemorra, who attended all the meetings, filed a declaration stating:
The collective judgment of those involved in these debriefing sessions was that defendant was not honest, frequently misrepresented facts or would often change the facts in a story that he had previously told, and his answers particularly with respect to his narcotics trafficking were vague and confusing. In my judgement [sic], defendant told us what he thought we knew, and no more.
In addition, on March 20, 1997, the government filed the FBI's written report of Mikaelian's debriefing sessions. The report was filed in camera, "to avoid its dissemination and prevent compromising on-going investigations." The debriefing report, which was not given to defense counsel, details Mikaelian's statements regarding his coconspirators over the course of four interviews, and includes a number of statements impugning Mikaelian's veracity.
At the sentencing hearing, defense counsel stated that he had noticed in a footnote in the government's 67-page sentencing position that the government had submitted the debriefing report to the court in camera, and that he had not received a copy of it. Counsel argued that the government had stated it would not rely at the sentencing hearing on any statements made by Mikaelian during debriefing sessions. Counsel complained that "they now turned right around and have given [the debriefing report] only to your Honor and not given it to us." Counsel stated that "a man cannot be sentenced in a Federal Court in the United States where the Court has seen a critical document as to whether he has cooperated or not and the defense has been deprived of that."
The government replied that it "took the position in its earlier paper that it would not rely on any statements in that [debriefing report]." The government reiterated that it filed the document under seal and in camera because of a "security risk:" "We have had experiences in this case where debriefing [reports] have found their way, within two The court declined to disclose the report to the defense, stating:
days, back to the MDC [apparently the Metropolitan Detention Center] in Brooklyn and into the Armenian community back in New York."
With respect to the debriefing report, the Government is not relying upon that for purposes of its upward departure and therefore [it] will not be considered for purposes of its upward departure, at all.
Whether or not the debriefing has any influence in terms of the Court's decision on whether there should be a departure for or decrease for substantial assistance, we will address that point as we hear argument, Counsel.
During argument, defense counsel protested the government's failure to move for a 5K1.1 downward departure for substantial assistance, pointing out that Agent Montemorra's declaration "doesn't cite one single fact [Mikaelian] supposedly misrepresented." When counsel again asked what would happen with the debriefing report filed in camera, the court stated that the government was The court then rejected defense counsel's argument that the terms of the plea agreement compelled the government to move for a downward departure for substantial assistance.
The defense next argued that the government acted in bad faith in refusing so to move, because Mikaelian had cooperated. Defense counsel also argued that the government's "extraordinary meeting with the ex-paralegal" for Mikaelian constituted part of the bad faith. The government responded that it had not acted in bad faith, and that the debriefing sessions ended because Mikaelian was not truthful.
The court declined to make a downward departure for substantial assistance, and stated
[t]he Court is of the view that the defendant has not introduced any evidence sufficient to carry its showing or sufficient to establish a showing on the 5(k)1 [sic] that there has been any bad faith or unconstitutional action on behalf of the Government.
The court then sentenced Mikaelian with this final mention of the in camera debriefing report, declining to provide a copy to the defense:
The debriefing was not relied upon by the Court for purposes of--as it turned out, it's irrelevant because they withdrew their motion for upward departure [on the basis of underrepresented criminal history].
So it may have been considered by the Court for that purpose but certainly was not considered because the motion has been withdrawn.
....
The Court has indicated to [the defense] that you have not made any sufficient evidentiary showing that the refusal of the Government to move for downward departure under 5K1.1 is occasioned by bad faith or other unconstitutional motives or means.
.... You cannot have [the debriefing report].
The district court sentenced Mikaelian to a prison term of 168 months, five years of...
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