U.S. v. Reinke, 00-3954.

• Decision Date: 15 March 2002
• Docket Number: No. 00-3954.,00-3954.
• Citation: 283 F.3d 918
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. Faye S. REINKE, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

283 F.3d 918

UNITED STATES of America, Plaintiff-Appellant, v. Faye S. REINKE, Defendant-Appellee.

No. 00-3954.

United States Court of Appeals, Eighth Circuit.

Submitted: August 21, 2001.

Filed: March 15, 2002.

COPYRIGHT MATERIAL OMITTED

Karen M. Quesnel, argued, Tax Div., Justice Dept., Washington, DC (Robert E. Lindsay, Alan Hechtkopf, on the brief), for appellant.

Dean S. Grau, argued, Minneapolis, MN, for appellee.

Before BYE, LAY, and JOHN R. GIBSON, Circuit Judges.

JOHN R. GIBSON, Circuit Judge.

The United States appeals from the sentence imposed on Faye S. Reinke after her conviction of conspiring to defraud the United States, in violation of 18 U.S.C. § 371 (1994). The district court departed downward from the sentencing range prescribed by the Sentencing Guidelines, arriving at a sentence of six months in a community facility, two years probation with 150 hours per year of community service, and three years of supervised release. The United States contends that the district court abused its discretion in sentencing because the court found that Reinke's case did not fall outside the heartland of the applicable guideline and because the factors the district court relied on in deciding to depart downward were already adequately taken into account by the guidelines. We vacate the sentence and remand.

I.

Reinke and her co-defendant, Glenn Rois, marketed and sold hundreds of trusts throughout the Midwest over a ten-year period. Rois and Reinke told trust purchasers that they could assign their assets and income to the trusts and then deduct from their taxes the money that they paid for personal living expenses, such as food and clothing. As one purchaser put it, "You put all your assets, everything you have into the trust, and the trust takes care of you." Rois and Reinke helped the trust purchasers get tax identification numbers for the trusts. They instructed the purchasers to identify the trusts by tax identification number, rather than by the purchaser's own social security number, so that the trust's bank accounts could not be traced back to the purchaser. Reinke notarized documents for people who never actually signed them, and Rois and Reinke advised trust purchasers to backdate the trust instruments. When Rois learned that customers were about to be audited by the Internal Revenue Service, Rois and Reinke purged the customers' files, substituted new documents for original ones, and asked the customers to lie if questioned about who prepared their trust documents.

Rois was indicted on one count of conspiracy to defraud the United States and four counts of making and subscribing a false tax return. Reinke was indicted only for conspiracy to defraud the United States. The case was tried to a jury, which convicted Reinke of the conspiracy charge and Rois of all five charges. After they received their presentence investigation reports, both Rois and Reinke sent a letter to the probation officer who prepared their reports. The letter demanded that the officer pay the defendants $132,555, which was the amount of the tax loss from their activities, as ascertained by the court. There was, of course, no legal basis for their demand. During the sentencing hearing, Reinke apologized to the probation officer and to the court. The court asked her what specifically she was apologizing for, and Reinke said. "I am apologizing because if I have done wrong, I will never be involved with anything like this again."

At the conclusion of the sentencing hearing, the court determined that the appropriate base offense level was prescribed by USSG § 2T1.9, United States Sentencing Commission, Guidelines Manual, the guideline for conspiracy to impede. impair, obstruct, or defeat tax. Section 2T1.9, in turn, incorporates by reference another guideline and a table prescribing offense level according to amount of tax loss. USSG §§ 2T1.4 and 2T4.1. To the base offense level derived from § 2T1.9, the court added two points for the specific offense characteristic of sophisticated concealment under § 2T1.4(b)(2). The court also added two points for the specific offense characteristic of conduct intended to encourage others to violate the law.

USSG § 2T1.9(b)(2). Finally, the court adjusted the offense level upward by two points for obstruction of justice, USSG § 3C1.1, because of the harassing letter Reinke sent to the probation officer.

The court denied Reinke's request for a downward adjustment for mitigating role in the offense, with the following findings:

The Defendant clearly was less of a moving actor than her colleague [Rois]. I will take that into account in my sentencing. But, she was also a person who fully cooperated, fully assisted, made it easier for Mr. Rois in his work, and participated on her own. She signed documents and falsified them and did a number of other things.

They basically were equal in their roles, but they did differing kinds of things. And I will take that into consideration in the course of my sentencing. And so, on that basis, I do note that she was present during the meetings. She assisted in many ways. And of course she also, you know, we had all of these silly lies about what he really did, that sort of thing. It was all wrong and she knew it was all wrong. So, I have no problem with the fact that she was also involved in all aspects of this.

Later, in a similar vein, the court addressed Reinke directly:

[T]he record is absolutely crystal clear who was the largest moving part in this operation. But, I also know that you assisted in every way that you could and you provided the various kinds of information and you performed services, made it possible for your colleague to do the thing that he was doing.... It appears to me ... you thought Mr. Rois was speaking important words that were of value.... You knew he wasn't doing the right things. You are too smart for that.

Adding the results of all these guidelines point determinations, the court set Reinke's final offense level at 21.

The court specifically found that Reinke's case fell within the heartland of the appropriate guideline: "I do not see a basis to indicate that this case falls outside of the heartland...." However, the court did observe that if sending the harassing letter to the probation officer had not been accounted for as an obstruction of justice, the court would have been authorized to depart upward from the guidelines range to account for it.

The court determined that the guidelines range was 37-46 months imprisonment. However, the court announced that the sentence imposed would instead be six months in a community facility, two years probation, and three years supervised release. The court stated: "I departed downward. I gave you the guideline here and I went below it." The Judge explained his decision:

I want to tell you the reasons why, because you were not the most active, most active participant in this arrangement. It did not appear to me that you were the initiator. It does not appear to me you derived any dollar or cash benefits of any substance in this case. Under those circumstances it appears to me appropriate. Also, frankly, you have indicated at least a degree of contrition. Those things make it appear to me that it is proper to depart downward in this circumstance.

After the court announced the reasons for its departure, the Assistant United States Attorney inquired about the court's methodology for arriving at the sentence:

AUSA: [W]ould the Court tell us to what level it has departed from the level 21?

Court: I can do a split at 10, can't I?

AUSA: Yes, you can.

Court: For the moment we will call it 10.... I have no hesitation in indicating both for the record and for any possible appeal that I am not sentencing a mathematical construct. I am not sentencing a collection of points. I am sentencing a real live human being who has made some mistakes.

The United States appeals, arguing that no downward departure was appropriate because the district court found Reinke's case fell within the heartland of the applicable guideline, and even without that finding the district court did not identify any basis for departure that was not adequately accounted for in the guidelines. Even if some departure were permissible, the United States argues, the district court abused its discretion by ignoring the structure and methodology of the Sentencing Guidelines when arriving at the sentence.

II.

Congress authorized district courts to depart from the sentencing range prescribed by the Sentencing Guidelines if "the court finds that there exists an aggravating or mitigating circumstance of a kind, or to a degree, not adequately taken into consideration by the Sentencing Commission in formulating the guidelines that should result in a sentence different from that described." 18 U.S.C. § 3553(b) (1994).

Atypical cases were not adequately taken into consideration, and factors that may make a case atypical provide potential bases for departure. Potential departure factors `cannot, by their very nature, be comprehensively listed and analyzed in advance,' 1995 U.S.S.G. § 5K2.0, of course. Faced with this reality, the Commission chose to prohibit consideration of only a few factors, and not otherwise to limit, as a categorical matter, the considerations that might bear upon the decision to depart.

Koon v. United States, 518 U.S. 81, 94, 116 S.Ct. 2035, 135 L.Ed.2d 392 (1996). The district court must ascertain whether the Commission has adequately accounted for a particular circumstance by referring only to the Sentencing Guidelines, policy statements and official commentary. 18 U.S.C. § 3553(b). The Commission has forbidden the use of some circumstances as grounds for departure and discouraged or encouraged the use of others. Koon, 518 U.S. at 93-96, 116 S.Ct. 2035. Not all possible grounds for departure were anticipated by the Commission in the Guidelines, policy statements or commentary. Id. at 94, 116...