U.S. v. Wetherald

• Decision Date: 28 March 2011
• Docket Number: No. 09–11687.,09–11687.
• Citation: 636 F.3d 1315
• Parties: UNITED STATES of America, Plaintiff–Appellee,v.Timothy WETHERALD, Marc Shiner, Leon Swichkow, Defendants–Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

636 F.3d 1315

22 Fla. L. Weekly Fed. C 1927

UNITED STATES of America, Plaintiff–Appellee,

v.Timothy WETHERALD, Marc Shiner, Leon Swichkow, Defendants–Appellants.

No. 09–11687.

United States Court of Appeals, Eleventh Circuit.

March 28, 2011.

David Jonathon Joffe (Court–Appointed), Joffe & Joffe, P.A., Avin E. Entin, Entin, Margules & Della Fera, P.A., Bernardo Lopez, Fed. Pub. Def., Ft. Lauderdale, FL, Robert E. Adler, Asst. Fed. Pub. Def., West Palm Beach, FL, Kathleen M. Williams, Fed. Pub. Def., Miami, FL, for Defendants–Appellants.Lisa A. Hirsch, Madeleine R. Shirley, Miami, FL, for U.S.Appeals from the United States District Court for the Southern District of Florida.Before DUBINA, Chief Judge, BLACK, Circuit Judge, and GOLDBERG, ^* Judge.DUBINA, Chief Judge:

Appellants Timothy Wetherald, Marc Shiner, and Leon Swichkow (collectively “Appellants”) appeal their convictions and sentences resulting from a thirty-one count indictment for their involvement in a scheme—running from approximately 2000 to 2003—to defraud investors in telecommunication companies, known as competitive local exchange carriers (“CLECs”), operated by Appellants. Counts 1–3, 7–8, and 10–18 charged Shiner and Swichkow with wire fraud in violation of 18 U.S.C. § 1343. Counts 4–6 and 9 charged Wetherald with wire fraud. Counts 19–22 charged Shiner and Swichkow with mail fraud in violation of 18 U.S.C. § 1341. Count 23 charged all three men with securities fraud in violation of 15 U.S.C. §§ 78j(b) and 78ff. Finally, counts 24–31 charged Shiner and Swichkow with money laundering in violation of 18 U.S.C. § 1957. A jury found Appellants guilty on all counts.

Appellants appeal their convictions on a number of grounds. Appellants argue the district court should have dismissed the case for pre-indictment delay, the evidence was insufficient to support their convictions, the securities fraud statute is unconstitutional, the district court's trial rulings resulted in reversible error, application of the Sentencing Guidelines in effect at the time of sentencing violated the Ex Post Facto Clause of the U.S. Constitution, and the district court imposed unreasonable sentences. With the benefit of the parties' briefs and oral argument, we find no merit in the bulk of Appellants' contentions. But Appellants' argument that the district court violated the Ex Post Facto Clause by applying a different Guideline range than that in effect at the time of the offense raises questions that this court has not squarely addressed in the wake of the Supreme Court's decision in United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005). Because the use of the Sentencing Guidelines in effect at the time of sentencing did not raise a substantial risk of a harsher punishment for the Appellants, we conclude that the district court's failure to apply the Guidelines in effect at the time of the offense did not violate the Ex Post Facto Clause.

I.

Appellants' convictions stem from a scheme by the three men to create and sell partnerships in CLECs operating in Colorado, Arizona, Washington, Minnesota, Oregon, and one serving both Iowa and Nebraska. The underlying business model—buying wholesale telecommunications services for resale—was not itself unsound. Due to an effort to prevent the monopolization of local telephone service by national outfits, Congress enacted the Federal Telecommunications Act of 1996. As a part of this legislation, the so-called “Regional” or “Baby Bells” that dominated the telecommunications industry at the time are required to offer local retail telecommunications services for resale at a wholesale discount to any CLECs that possess the proper state licenses. These CLECs are then able to offer communications services without any infrastructure of their own. Thus, the business of the CLECs consists only of acquiring customers and reselling to those customers at a retail price services purchased from the Regional Bell at a wholesale cost.

In 2000, Wetherald created ON Systems, a company intended to establish and manage CLECs. His plan was to purchase services from Qwest, a large western telecommunications company, and then resell those services around the western United States. After Wetherald had difficulty finding investors for his venture, he met with Shiner who, with Swichkow, ran a telemarketing company known as Telecom Advisory Services (“Telecom”). Working together, ON Systems and Telecom eventually gathered 250 investors for six limited-liability partnerships: Mile High Telecom Partners, LLP in Colorado (“Mile High”); The Phone Company of Arizona, LLP; The Washington Phone Company, LLP; The Minnesota Phone Company Financial Group, LLP; The Iowa/Nebraska Phone Company, LLP; and The Oregon Phone Company Financial Group, LLP.

A Securities and Exchange Commission investigation later revealed that these investors were enticed by misleading and in some cases patently false claims made by Appellants. They also were not informed that Shriner was a convicted felon who had been a defendant in previous regulatory actions or that Wetherald, in addition to steering several telecommunications companies into bankruptcy, was the subject of a permanent injunction in Washington and Oregon regarding his actions in the telecommunications industry in those states. By the time the Securities and Exchange Commission stepped in—filing an enforcement action against Appellants that later became the basis of this criminal action—the CLECs had collapsed, losing investors in excess of $8 million.

At sentencing, the district judge sentenced Appellants according to the 2008 U.S. Sentencing Guidelines rather than the 2002 Guidelines in effect at the time the Appellants committed the offenses. Departing downward for each Appellant, the court sentenced Wetherald to 144 months, Shiner to 168 months, and Swichkow to 108 months. Appellants filed timely notices of appeal and are presently incarcerated.

II.

Preserved constitutional challenges to the district court's application of the sentencing guidelines are reviewed de novo. United States v. Paz, 405 F.3d 946, 948 (11th Cir.2005). This court reviews a district court's denial of a motion to dismiss an indictment for abuse of discretion, but will review the court's choice of legal standard de novo. United States v. Robison, 505 F.3d 1208, 1225 n. 24 (11th Cir.2007). Sufficiency of the evidence is reviewed de novo in the light most favorable to the government to determine whether any rational trier of fact could have reached a verdict of guilty. Jackson v. Virginia, 443 U.S. 307, 318–19, 99 S.Ct. 2781, 2789–90, 61 L.Ed.2d 560 (1979). Evidentiary rulings are reviewed for abuse of discretion. United States v. Baker, 432 F.3d 1189, 1202 (11th Cir.2005). When a party claims evidentiary error for the first time on appeal, the court applies a plain error standard of review. Id. If the cumulative effect of evidentiary errors is prejudicial, the court will reverse, even if each individual error is harmless. Id. at 1203. We review sentences for procedural and substantive reasonableness under an abuse of discretion standard. United States v. Livesay, 587 F.3d 1274, 1278 (11th Cir.2009).

III.

Prior to the Supreme Court's decision in Booker, this court had repeatedly held that although the district courts should “presumptively apply the Guidelines as they exist at the time of sentencing, they may not do so where those Guidelines would lead to imposition of a harsher penalty than that to which the defendant was subject at the time of the offense.” United States v. Simmons, 368 F.3d 1335, 1338 (11th Cir.2004). The court based this holding on long-established precedent, citing the 1798 case of Calder v. Bull, 3 U.S. 386, 390, 3 Dall. 386, 1 L.Ed. 648 (1798), for the proposition that “every law that changes the punishment, and inflicts a greater punishment, than the law annexed to the crime, when committed” is an ex post facto law. Simmons, 368 F.3d at 1338.

This court has yet to directly address the ex post facto implications of Booker on the Guidelines. In United States v. Masferrer, the court, citing our pre- Booker decision in Simmons, wrote, “However, if a more lenient guidelines sentence was in effect at the time of the offense, the Guidelines Manual applicable at the time of the offense must be applied to avoid an Ex Post Facto Clause violation.” 514 F.3d 1158, 1163 (11th Cir.2008); see also United States v. Kapordelis, 569 F.3d 1291, 1314 (11th Cir.2009) (“Pursuant to the Ex Post Facto Clause, if applying the Guidelines in effect at the time of sentencing would result in a harsher penalty, a defendant must be sentenced under the Guidelines in effect at the time when he committed the offense.”). Masferrer, however, did not require us to address the ex post facto implications of Booker. Nevertheless, while we have not addressed the question as presented in this case, we have affirmed the underlying principles that led to the application of the Ex Post Facto Clause in our pre- Booker opinions.

Our sister circuits have split on the impact of Booker in regards to the Ex Post Facto Clause. The Seventh Circuit has taken the view that the Ex Post Facto Clause no longer poses a problem, as it applies “only to laws and regulations that bind rather than advise.” United States v. Demaree, 459 F.3d 791, 795 (7th Cir.2006); see also United States v. Barton, 455 F.3d 649, 655 n. 4 (6th Cir.2006) (“Now that the Guidelines are advisory, the Guidelines calculation provides no such guarantee of an increased sentence, which means that the Guidelines are no longer akin to statutes in their authoritativeness. As such, the Ex Post Facto Clause itself is not implicated.”). The Seventh Circuit noted that after Booker the district judge's sentence, “whether inside or outside the guideline range, is discretionary and subject therefore to only light appellate review.” Demaree, 459 F.3d at 795. The court further opined that...