U.S. v. Mizrachi, 491

• Decision Date: 16 February 1995
• Docket Number: No. 491,D,491
• Citation: 48 F.3d 651
• Parties: UNITED STATES of America, Appellee, v. Nissim MIZRACHI, Defendant-Appellant. ocket 94-1215.
• Court: U.S. Court of Appeals — Second Circuit

Page 651

48 F.3d 651

UNITED STATES of America, Appellee, v. Nissim MIZRACHI, Defendant-Appellant.

No. 491, Docket 94-1215.

United States Court of Appeals Second Circuit.

Argued Dec. 15, 1994.

Decided Feb. 16, 1995.

Peter Goldberger, Ardmore, Penn. (Anna M. Durbin, Pamela A. Wilk, Law Offices of Alan Ellis, Ardmore, Penn., on the brief), for defendant-appellant, and E. Stewart Jones and David J. Taffany, Troy, NY, also submitted a brief for defendant-appellant.

Thomas Spina, Jr., Asst. U.S. Atty. (Thomas J. Maroney, U.S. Atty., Albany, NY, on the brief), for appellee.

Before NEWMAN, Chief Judge, FEINBERG and MESKILL, Circuit Judges.

JON O. NEWMAN, Chief Judge:

This appeal primarily concerns application of the multi-count analysis of the Sentencing Guidelines. Nissim Mizrachi appeals from the April 21, 1994, judgment of the District Court for the Northern District of New York (Thomas J. McAvoy, Chief Judge) convicting him, on his plea of guilty, of arson, mail fraud, and money laundering offenses.

The conduct underlying these offenses involved the January 1992 defrauding of a German bank of $4 million, borrowed to purchase and modernize a warehouse complex in Amsterdam, New York, and the August 1992 destruction by fire of portions of that complex in an attempt to defraud an insurance company of $14 million. The details of the offenses are not necessary to an understanding of appellant's claims, except to note that the evidence recounted in appellant's presentence report established that the planning of the arson began contemporaneously with the bank borrowing, and permitted the inference that appellant borrowed the money with the intention of both buying the building and destroying it for the insurance. A six-count information charged Mizrachi with conspiracy to commit arson and mail fraud, in violation of 18 U.S.C. Sec. 371 (Count One); arson, in violation of 18 U.S.C. Sec. 844(i) (Count Two); two counts of mail fraud, in violation of 18 U.S.C. Sec. 1341 (Counts Three and Four); money laundering, in violation of 18 U.S.C. Sec. 1957 (Count Five); and forfeiture, as provided by 18 U.S.C. Sec. 982(a)(1), (b)(1)(B) (Count Six). The District Court sentenced appellant to concurrent terms of imprisonment of 60 months on Count One and 78 months on Counts Two through Five, and ordered forfeiture of $4 million and restitution of $4.1 million.

Discussion

Of the various issues raised on appeal, it will be convenient to turn first to the claim that the District Court improperly applied the multi-count analysis set forth in the Sentencing Guidelines. U.S.S.G. Secs. 3D1.1--3D1.4. One of the major innovations of the Guidelines was the solution to the problem of sentencing a defendant convicted of multiple counts. Prior to the Guidelines, sentencing judges often considered themselves limited to a choice between completely concurrent and completely consecutive sentences. Completely concurrent sentences were often too lenient, imposing no penalty for the offenses other than the offense meriting the highest sentence. Completely consecutive sentences were often too harsh, aggregating the sentences merited for each count.

The Guidelines' multi-count analysis interposed a sensible middle ground between completely concurrent and completely consecutive sentences that uses a combination of concurrent and partially consecutive sentences. Under this analysis, closely related counts are, in effect, treated as a single offense, id. Sec. 3D1.2, and counts not closely related receive incremental penalties that produce a total sentence significantly less than what would have resulted if the sentences were calculated for each count separately and then aggregated, id. Sec. 3D1.4. The extent of the increments reflects both the number of unrelated offenses and their seriousness compared to the most serious offense. Id. Once the combined offense level for all counts is determined under the multi-count analysis, id. Sec. 3D1.1(a)(3), and translated into a sentence by using the sentencing table, id., ch. 5, pt. A, the sentence is imposed in either of two ways. If the count carrying the highest statutory maximum permits a sentence at least as high as the sentence called for by the sentencing table, such a sentence is imposed on that count and sentences on all other counts are imposed to run concurrently. Id. Sec. 5G1.2(c). If the statutory maximum sentence for the most serious count is less than the sentence called for by the sentencing table, then sentences on the other counts are imposed consecutively "but only to the extent necessary to produce a combined sentence equal to the total punishment" called for by the sentencing table. Id. Sec. 5G1.2(d). ¹ This can be accomplished either by imposing a consecutive sentence no longer than what is sufficient to make this sentence and the sentence on the most serious count equal to the intended aggregate punishment, see United States v. Loeb, 45 F.3d 719, 721 (2d Cir.1995) (11-month sentence imposed consecutively to five-year sentence to equal 71-month aggregate punishment), or by selecting an appropriate punishment for counts other than the most serious count and running them consecutively only to the extent necessary to equal the intended aggregate punishment. The latter technique of partial consecutiveness avoids the risk of leaving in place a sentence less than what the sentencing judge intended in the event that the sentence on the most serious count is subsequently vacated.

Normally, it will be to a defendant's advantage to have multiple counts considered "closely related" and therefore placed within a single group for purposes of the multi-count analysis. Such grouping avoids the incremental offense levels that are added to reflect additional groups. That advantage obtains, however, only if the offense level for a single group is less than the combined offense level that results from first calculating the offense levels for each offense separately and then calculating a combined offense level using the highest offense level for one offense and adding the incremental offense levels for the other offenses (i.e., the other "groups").

In appellant's case, the presentence report recommended that Counts One through Five should be grouped pursuant to section 3D1.2(d). Subsection 3D1.2 permits grouping for counts that "involve substantially the same harm," and subparagraph 3D1.2(d) specifies that counts "involve substantially the same harm" when "the offense behavior is ongoing or continuous in nature and the offense guideline is written to cover such behavior." Contrary to normal expectations, the defendant objected to the recommended grouping and the prosecution favored it. The District Judge accepted the grouping recommendation upon a finding that the bank fraud and the arson were part of one continuous scheme. He thus drew the inference, fully available from the facts set forth in Mizrachi's presentence report, that the defendant had planned from the outset to borrow the money by fraud, buy the building, destroy it, collect the insurance, pay off the loan, and pocket the difference between the insurance proceeds and the loan.

On appeal, defendant's counsel initially renewed the claim that the fraud and arson counts should not have been grouped. However, new appellate counsel, entering the case with leave to file an expanded reply brief, has now explicitly "withdrawn that argument," Expanded Reply Brief for Appellant at 10 n. 5, thereby accepting the grouping and adopting the position traditionally urged by defendants. We note that the abandonment of the grouping objection, which new counsel evidently believes operates to the defendant's advantage, is consistent with section 3D1.2(d). The offense behavior starting with the bank fraud and ending with the arson and the insurance fraud was "ongoing or continuous," and the offense guideline for arson "is written to cover such behavior" in that the guideline contemplates an arson "committed in connection with a scheme to defraud." U.S.S.G. Sec. 2K1.4(a)(3).

Though accepting the fact of grouping, the appellant nonetheless objects to the manner in which the District Court calculated the offense level for the single group into which Counts One through Five were placed. The objection, stated variously in appellant's brief, is that the District Court "fail[ed] to apply ... adjustments prior to grouping all the counts," Expanded Reply Brief for Appellant at 10, and "erred at the least in applying [adjustments] to the case overall, rather than to particular counts," id. at 11. Phrased either way, the objection is without merit. The correctness of the District Court's methodology emerges upon examination of the various steps taken.

Having concluded that grouping of Counts One through Five was warranted under section 3D1.2(d), the step to which the defendant no longer objects, the Court correctly proceeded to determine the offense level for Count Two, the count charging arson. Section 3D1.3(b) instructs that where counts are grouped pursuant to section 3D1.2(d), as occurred in this case, and where different guidelines apply to the various counts, the offense level for the group is "the offense guideline that produces the highest offense level." Appellant does not dispute that in this case, that guideline is the guideline for arson, section 2K1.4.

The arson guideline instructs that the base offense level is determined by selecting the highest level from among four choices. Id. Sec. 2K1.4(a)(1)-(4). In appellant's case, the District Judge correctly chose subparagraph 2K1.4(a)(3), which applies if the arson offense "was committed in connection with a scheme to defraud." That subparagraph instructs that the base offense level is "2 plus the offense...