U.S. v. Swartz

• Citation: 975 F.2d 1042
• Decision Date: 16 September 1992
• Docket Number: No. 91-6604,91-6604
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Angela B. SWARTZ, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (4th Circuit)

Page 1042

975 F.2d 1042

UNITED STATES of America, Plaintiff-Appellee, v. Angela B. SWARTZ, Defendant-Appellant.

No. 91-6604.

United States Court of Appeals, Fourth Circuit.

Argued April 10, 1992.

Decided Sept. 16, 1992.

Arthur Camden Lewis, Lewis, Babcock & Hawkins, Columbia, S.C., argued (Cameron B. Littlejohn, Jr., on brief), for defendant-appellant.

John William McIntosh, First Asst. U.S. Atty., Columbia, S.C., argued (E. Bart Daniel, U.S. Atty., Gregory P. Harris, Asst. U.S. Atty., Matthew R. Hubbell, Asst. U.S. Atty., on brief), for plaintiff-appellee.

Before WIDENER, Circuit Judge, BUTZNER, Senior Circuit Judge, and MERHIGE, Senior District Judge for the Eastern District of Virginia, sitting by designation.

OPINION

WIDENER, Circuit Judge:

Angela B. Swartz challenges the sentence imposed upon her by the United States District Court for the District of South Carolina following her conviction on a plea of guilty to charges of conspiracy, bank fraud, making false statements in a loan application, and money laundering. Mrs. Swartz alleges that she was denied her Sixth Amendment right to effective assistance of counsel during her sentencing in that her counsel simultaneously represented both her and her co-defendant, resulting in an actual conflict of interest. We agree that an actual conflict of interest developed during the sentencing proceedings of Mrs. Swartz and her co-defendant. Being of opinion that the conflict adversely affected her attorney's performance and was not effectively waived by Mrs. Swartz, we vacate her sentence and remand for resentencing.

I

In November, 1989, Mrs. Swartz became aware of the possibility that she would be indicted for her conduct in connection with certain fraudulent transactions at Republic National Bank in Columbia, South Carolina, where she had been employed as a loan officer. At that time Mrs. Swartz contacted David A. Fedor, Esq., in an attempt to secure his representation in the anticipated criminal proceedings. Mrs. Swartz initially arranged to have Fedor represent her alone, but on or about November 12, 1989, it was agreed that Fedor would represent both Mrs. Swartz and Weldon D. Waites, her co-conspirator in the bank fraud scheme. On November 20, 1989, Waites and Mrs. Swartz executed a written waiver of the potential conflict of interest created by Fedor's multiple representation.

On May 16, 1990, Mrs. Swartz and Waites were indicted, and on June 20, 1990, a federal grand jury returned a 29-count superseding indictment charging them, among others, with various crimes involving conspiracy, bank fraud, and money laundering. On May 30, 1990, ¹ Mrs. Swartz and Waites appeared before the United States Magistrate for their initial appearance and arraignment. Upon learning that attorney Fedor was representing both Mrs. Swartz and Waites, the magistrate conducted the inquiry required by Fed.R.Crim.P. 44(c). ² In so doing, the magistrate described generally the potential conflicts of interest that may arise when a single attorney undertakes to represent co-defendants. ³ Following this description of the potential danger of conflicts of interest, the magistrate asked both Mrs. Swartz and Waites if either of them had "any question, at all, in your mind as to there being a conflict in your own mutual interest insofar as defending yourself in this case is concerned?" Mrs. Swartz and Waites indicated that they had no such questions, and accordingly the magistrate, finding no "readily perceptible conflict," accepted their decision to proceed under the joint representation of Fedor.

Plea negotiations ensued, as a result of which Mrs. Swartz and Waites executed plea agreements with the Government in September of 1990. Mrs. Swartz agreed to plead guilty to four counts of the indictment and to cooperate fully with the Government's investigation and prosecution of the other defendants involved in the bank fraud scheme. In exchange, the Government agreed to dismiss the remaining counts against her and, assuming her cooperation was found sufficiently forthcoming and helpful, to move the sentencing court for a downward departure for substantial assistance pursuant to U.S.S.G. § 5K1.1. Waites' plea agreement, in contrast, contained no promise by the Government to move for any downward departure; rather, it simply provided that Waites would plead guilty to thirteen counts of the indictment, in exchange for which the Government would dismiss the remaining counts of the indictment.

Pursuant to the plea agreements, on September 27, 1990 Swartz and Waites appeared before the district court to enter their respective guilty pleas. Before beginning the Fed.R.Crim.P. 11 colloquy, the court noticed that both defendants were represented by attorney Fedor. At that time the court asked Fedor whether the magistrate had conducted "a hearing on the possible conflict of interest of one counsel representing two defendants." To this inquiry Fedor replied "Yes, he did, Your Honor. We went into that fully. We signed documents and had sworn testimony by both the defendants, and Magistrate Gambrell allowed us to proceed as we do." ⁴ The district court accepted this, and no further reference was made to the issue during the plea proceeding.

Following the acceptance of the guilty pleas, the Government called Mrs. Swartz and Waites to testify at the trial of one of their co-defendants, David Cole. ⁵ During that trial Mrs. Swartz became concerned that Waites was knowingly misrepresenting the nature and extent of her involvement in the bank fraud. She thereafter approached Fedor and told the attorney that she was concerned about the apparent development of a conflict of interest. Mrs. Swartz feared that Fedor would be unable properly to plead her case at sentencing if he were bound by his ethical obligations not to say anything derogatory about Waites. She therefore asked Fedor to withdraw from his representation of Waites and continue as her attorney. At this suggestion Fedor initially offered, instead, to withdraw as Mrs. Swartz's counsel, as well as Waites'. Ultimately, however, Fedor advised Mrs. Swartz that he had "given the situation considerable thought," and that he could fairly represent her in her sentencing, which she accepted.

Mrs. Swartz later learned that she would be called by the Government to testify at Waites' sentencing hearing. This development caused her again to ask Fedor to withdraw from his representation of Waites. Fedor again assured her that he could adequately represent her without withdrawing as Waites' counsel, and Mrs. Swartz apparently accepted that assertion.

The conflict of interest of which Mrs. Swartz now complains developed fully during the sentencing hearings of her and Waites, both of which were held on May 6, 1991. Waites' was the first of the two sentencing hearings that day. At that hearing Waites was represented by Fedor, as well as Fedor's co-counsel John M. Young, Esq. and J. Edward Holler, Esq. Fedor, Young, and Holler divided the responsibilities attendant to arguing Waites' case, each taking part at various times throughout the proceeding.

An understanding of Waites' argument at sentencing is necessary to an understanding of the nature of the conflict of interest that arose on the part of Fedor. Though that argument was rather ill-defined as a matter of Sentencing Guidelines law, and ultimately was unavailing, it caused Fedor and his co-counsel to take a position that cannot be reconciled with Fedor's duty of loyalty to Mrs. Swartz. Following their respective guilty pleas, both Mrs. Swartz and Waites were faced with the same base offense level under the Guidelines, namely 20. Both defendants then received a six-level upward adjustment pursuant to U.S.S.G. § 2S1.1(b)(2)(G), reflecting that the value of the funds involved in the money laundering operation exceeded $2,000,000.

At this point the Guidelines calculations of the two defendants diverged. Waites received a further four-level upward adjustment for his role in the offense, as the court accepted the probation officer's determination that he "was an organizer or leader of a criminal activity that involved five or more participants or was otherwise extensive." U.S.S.G. § 3B1.1(a). This increase would have raised his total offense level to 30. Ultimately, however, the court fixed his total offense level at 28. The record does not reveal the basis of the two-level decrease; but in light of Waites' guilty plea, we might surmise that he was awarded the adjustment for acceptance of responsibility pursuant to U.S.S.G. § 3E1.1(a). Waites' total offense level of 28, combined with a criminal history category of I, gave him a potential imprisonment range of from 78 to 97 months.

Mrs. Swartz, on the other hand, enjoyed a slightly more favorable Guideline sentence score. She also received the six-level upward adjustment reflecting the total dollar value of the money laundering scheme. However, rather than the four-level adjustment that Waites received for his role in the offense, Swartz received a two-level upward adjustment because she "abused a position of public or private trust, or used a special skill in a manner that significantly facilitated the commission or concealment of the offense." U.S.S.G. § 3B1.3. After a two-level reduction for acceptance of responsibility, Swartz's total offense level stood at 26, yielding, with a criminal history category of I, an imprisonment range of 63 to 78 months. Finally, on the Government's motion the district court granted Swartz a four-level downward departure on the grounds that she had provided substantial assistance to the Government in the investigation and prosecution of others involved in the bank fraud and money laundering scheme. The resulting total offense level of 22 yielded an imprisonment range of 41 to 51 months. See U.S.S.G. Ch. 5, Part A (Sentencing Table). Within this range the court sentenced Swartz to a term of imprisonment of 48 months.

...