U.S. v. Mueffelman, No. CRIM.01-10387-NG.

• Decision Date: 14 November 2005
• Docket Number: No. CRIM.01-10387-NG.
• Citation: 400 F.Supp.2d 368
• Parties: UNITED STATES of America, v. Steven D. MUEFFELMAN, Defendant.
• Court: U.S. District Court — District of Massachusetts

Page 368

400 F.Supp.2d 368

UNITED STATES of America, v. Steven D. MUEFFELMAN, Defendant.

No. CRIM.01-10387-NG.

United States District Court, D. Massachusetts.

November 14, 2005.

Kristina E. Barclay, U.S. Attorney's Office, Boston, MA, Robert M. Goldstein, Boston, MA, Joseph F. Savage, Jr., Goodwin Procter, LLP, Boston, MA, Martin G. Weinberg, Oteri, Weinberg & Lawson, Boston, MA, for Steven D. Mueffelman (1), Defendant.

Maureen B. Hogan, United States Attorney's Office, Boston, MA, Jeanne M. Kempthorne, Law Office of Jeanne M. Kempthorne, Salem, MA, Peter A. Mullin, United States Attorney's Office, Boston, MA, for USA, Plaintiff.

SENTENCING MEMORANDUM

GERTNER, District Judge.

                TABLE OF CONTENTS
                  I.  GUIDELINE ANALYSIS ................................................372
                 II.  LOSS ..............................................................373
                      A.  General Principles ............................................373
                

                      B.  The Evidence ..................................................373
                      C.  The Amount of Loss/Victim Impact ..............................377
                      D.  Loss, the Guidelines and 18 U.S.C. § 3553(a) ..................377
                III.  RESTITUTION AND BOOKER ............................................379
                      A.  Introduction ..................................................379
                          1.  The Apprendi Position .....................................381
                          2.  The Indeterminate Sentence Position .......................382
                          3.  The Restitution-as-Civil Position .........................383
                      B.  Jointly and Severally; Pro Rata ...............................385
                 IV.  CONCLUSION ........................................................386
                

Steven D. Mueffelman ("Mueffelman") was found guilty by a jury of thirteen counts of mail and wire fraud in violation of 18 U.S.C. §§ 1341 and 1343. His co-defendant, John S. Lombardi ("Lombardi"), pled guilty to similar counts and testified against Mueffelman. Together, Mueffelman and Lombardi set up a corporation whose goal was to guarantee home ownership to persons with marginal or poor credit, promising "100 percent financing and no closing costs." These promises induced numerous clients to hand over money for various fees and expenses, but with few exceptions, they received little in return — neither the money they had spent nor the home they desired. Tragically, the clients were poor, trusting, and disadvantaged.

The critical issue in the sentencing and in the determination of restitution (under 18 U.S.C. § 3663A (c)(1)(A)(ii), the Mandatory Victim Restitution Act ("MYRA")) was the amount of loss to these victims, an issue whose determination was complicated by the changing sentencing law. Specifically, this case raised an issue of first impression in this Circuit — whether victims who were not specifically named in the indictment could receive restitution under the MVRA. That issue requires resolution of at least two others — whether restitution under the MVRA is compensatory (to the victims) or punitive (to the defendant) or both, and if punitive to any degree, whether the order is subject to the protections of the Sixth Amendment. I have concluded that restitution is punitive, and subject to the Sixth Amendment's protections. Nevertheless, in applying that analysis to the case at bar, I have ordered restitution to victims who, while not named in the indictment, fit within the "scheme" that was alleged and proved.

The restitution issues, like the sentencing issues involved in the instant case, were crystallized following a series of cases handed down by the United States Supreme Court after the Mueffelman verdict, but before the defendant's sentencing. First, the United States Supreme Court decided Blakely v. Washington, 542 U.S. 296, 124 S.Ct. 2531, 159 L.Ed.2d 403 (2004). Blakely held that a Washington State statute violated the Sixth Amendment because it authorized the trial court to impose a sentence above the "standard" statutory range if the government found any one of a list of aggravating factors. The Court noted that "[w]hen a judge inflicts punishment that the jury's verdict alone does not allow, the jury has not found all the facts `which the law makes essential to the punishment,' and the judge exceeds [her] proper authority." 542 U.S. at 303, 124 S.Ct. 2531.

Immediately after Blakely, I issued a procedural order calling for briefing on the decision's impact on prosecutions before me in which the verdict/plea occurred pre-Blakely but sentencing occurred post-Blakely.¹ Subsequently, I concluded that Blakely must be applied to the Federal Sentencing Guidelines and, as such, the Guidelines were unconstitutional in their entirety. I found:

[I]t is inconceivable that the system now required by the [Blakely] decision is at all consistent with anything contemplated by the drafters of the Sentencing Reform Act ("SRA"), Pub.L. No. 98-473, 98 Stat. 1837 (1987), or of the Guidelines. To literally engraft a system of jury trials involving fact-finding enhancements onto the Sentencing Guideline is to create a completely different regime than that comprehensive sentencing system envisioned by the legislation's drafters or the drafters of the Guidelines. If such a system is required to give full effect to the Constitution's jury trial guarantee then the entire sentencing system has to be recast. The constitutional sentencing pieces cannot be cobbled together by judges on a case by case basis.

United States v. Mueffelman, 327 F.Supp.2d 79, 82 (D.Mass.2004)(hereinafter Mueffelman I). At the same time, I found that the Guidelines, which had anchored sentencing analysis for over fifteen years, must be taken into account in all cases.

I addressed the specifics of this case (and that of co-defendant Lombardi) during two days of hearings.² Defendant Mueffelman took the position that I did not have the authority to sentence him on the basis of facts not found by the jury. Since the jury was not asked to determine the amount of money that the clients of the company had lost, the defendant's position meant that the Court would be obliged to ignore the scope of this offense in determining the sentence. The government took the position that the Court should determine the amount of loss and that that number should drive Mueffelman's sentencing range as though the Guidelines were unchanged.

I rejected both approaches (although I adopted the government's position with respect to restitution — but not the government's rationale). I was not willing to adopt the Guidelines-mandated sentence of nearly three years suggested by the government. Nor was I willing to sentence Mueffelman to probation as the defendant urged.

I took the Guidelines into account, calculating the amount of loss attributable to Mueffelman's acts as I would have pre-Blakely. I then used the loss calculations to determine the amount of restitution required by the MVRA, but I did not use it to determine Mueffelman's sentence. In sentencing Mueffelman, I discounted the Guideline sentencing range three levels because I found that the amount of loss did not serve as a fair proxy for Mueffelman's culpability. The sentencing range that resulted from that adjustment was more in keeping with Mueffelman's culpability and the purposes of sentencing.

Within months of the Mueffelman sentencing, The United States Supreme Court issued United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005), in which it applied Blakely to the Federal Sentencing Guidelines, finding that the mandatory "Guideline" scheme violated the Sixth Amendment.

This constitutional defect required the Court to excise the portion of the Sentencing Reform Act of 1984 (hereinafter "SRA"), 28 U.S.C. § 991 et seq., 18 U.S.C § 3551 et seq., that made the Guidelines mandatory, namely, 18 U.S.C. § 3553(b)(1). As a result, the Court declared the Guidelines to be "advisory." Courts are to "consider" Guidelines ranges, see 18 U.S.C. § 3553(a)(4), but are permitted to tailor their sentences in light of other statutory concerns. See § 3553(a); Booker, 125 S.Ct. at 757-69.

After Booker, the defendant moved for re-sentencing; the government opposed. I declined to re-sentence. My decision in Mueffelman I was consistent with the United States Supreme Court's later decision in Booker.³ I sentenced Mueffelman to twenty-seven months in prison and Lombardi, who cooperated, to three years of probation. I ordered restitution in the amount of $907,864.89.

I. GUIDELINE ANALYSIS⁴

The government and Probation argued for a loss of between $800,000 and $1,500,000, which would increase the base offense level eleven levels to a level seventeen (base offense of six plus an eleven level enhancement) U.S.S.G. § 2F1.1(a), § 2F1.1(b)(1)(L); an adjustment for more than one victim, under U.S.S.G. § 2F1.1(b)(2)(B), with an additional two levels; and an adjustment for a vulnerable victim under U.S.S.G. § 3A1.1(b) for two more points. The result was a base offense level of twenty-one with a category I criminal history, yielding a Guideline range of thirty-seven to forty-six months.⁵

Defendant argued pre-Booker that there should be no enhancement beyond the base offense level of six, because the issues of loss (as well as the number of victims and the vulnerability of the victims) were not submitted to the jury. At a base offense level of six, with a criminal history of I, the Guideline range was zero to six months.⁶ Post-Booker, defendant has argued that probation is the most appropriate sentence because it would maximize defendant's ability to pay restitution under 18 U.S.C. § 3553(a)(7)(describing "the need to provide restitution to any victims of the offense").

The principal issue driving both the sentence and the restitution amount was the "loss" to which I now turn.

II. LOSS

A. General Principles

The amount of loss that a given crime has engendered is surely one measure of the seriousness of the offense....