U.S. v. Woods
| Decision Date | 22 February 1993 |
| Docket Number | No. 92-3207,92-3207 |
| Citation | 986 F.2d 669 |
| Parties | UNITED STATES of America, Appellee, v. Anthony J. Pivorotto, John Robert WOODS. John Robert Woods, Appellant. |
| Court | U.S. Court of Appeals — Third Circuit |
John R. Carroll, (argued), Peter W. Cooley, Carroll & Carroll, Philadelphia, PA, for appellant.
Paul J. Brysh, (argued), Office of U.S. Atty., Pittsburgh, PA, for appellee.
Before: BECKER, NYGAARD and HIGGINBOTHAM, Circuit Judges.
In Hughey v. United States, 495 U.S. 411, 110 S.Ct. 1979, 109 L.Ed.2d 408 (1990), the Supreme Court held that under the Victim and Witness Protection Act of 1982, 18 U.S.C. §§ 3579, 3580 () ("VWPA"), courts have the authority to order restitution only for the offense of conviction. This appeal requires us to decide whether this rule retroactively applies to a pre-Hughey restitution order authorized under the Federal Probation Act, 18 U.S.C. § 3651 (repealed, effective November 1, 1987) ("FPA"), which has already been paid in full by the defendant.
The defendant-appellant, John Robert Woods, was convicted of defrauding numerous investors in a mail fraud scheme. Woods argues that the restitution order on the counts for which he was not convicted are illegal under Hughey, and that his sentence therefore should be invalidated under Rule 35, Fed.R.Crim.P. Woods contends that Hughey should be retroactively applied to him, and that, so applied, the portion of his restitution order that did not stem from the offenses for which he was convicted ($452,579.53) should be set aside as unauthorized by the FPA. He seeks repayment of that sum by the government, even though the government received the money only as a conduit for the victims whose losses Woods has not denied causing.
We conclude that Hughey should not be retroactively applied to Woods in his Rule 35(a) motion. The question of Hughey's retroactivity does not fit neatly under either the substantive standard for determining retroactivity, see Davis v. United States, 417 U.S. 333, 94 S.Ct. 2298, 41 L.Ed.2d 109 (1974), or the procedural standard, see Teague v. Lane, 489 U.S. 288, 109 S.Ct. 1060, 103 L.Ed.2d 334 (1989) (plurality opinion). However, both standards reflect the rule that courts will not ordinarily apply new decisions of criminal law retroactively without substantial justification. We glean from Teague and Davis that we should apply Hughey retroactively only if Woods demonstrates that to do otherwise would result in a serious miscarriage of justice. Because we conclude that Woods has not made this showing, we will affirm the district court order denying Woods' Rule 35(a) motion.
On October 17, 1984 a grand jury returned a 35-count indictment that charged Woods and his co-defendant, Anthony Pivorotto, with mail fraud and bankruptcy fraud in violation of 18 U.S.C. § 1341 and 18 U.S.C. § 152. The indictment alleged that from August 24, 1973 through June 13, 1980, Pivorotto and Woods engaged in a scheme to defraud the investors of the Safeguard Investment Company, which they jointly managed. The indictment charged that as a result of the fraudulent scheme, "approximately 234 investors who had deposited, reinvested and maintained moneys and funds in Safeguard ... were defrauded of approximately $3,278,673." 1
On January 29, 1985, Woods pled guilty to Counts 8 and 13 of the indictment, which charged him with using the mails in a scheme to defraud. In exchange, the government dismissed the remaining 33 counts. Through this plea agreement, Woods pled guilty to the fraud of only two investors, Sam and/or Elsie Fanelli. The plea agreement neither recommended a specific sentence nor referred to the possible imposition of a restitution order.
Before accepting the plea, the district court engaged in a lengthy Rule 11 colloquy in which it informed Woods and Pivorotto of its intention to require them to pay restitution to the victims of their crimes. Toward this end, the court requested Woods and Pivorotto to provide the Probation Office with detailed financial statements, sworn to under oath. Because there was a strong argument that the defendants' assets were primarily the result of the fraudulent scheme, the court placed the burden on Woods and Pivorotto to separate their legally and illegally acquired holdings. The court also asked the Probation Office, in consultation with the U.S. Attorneys' Office, to use these statements in compiling a presentence report that detailed the claims of the Safeguard investors and the current assets of Woods and Pivorotto. Specifically, the presentence report was to contain the Probation Office's determination of the amount of the original deposits made by Safeguard investors as well as the amount of interest owed to the investors.
At a sentencing hearing held four months later, the district court reviewed the presentence report in depth and heard testimony from several witnesses for the defense. The court concluded that the Safeguard investors had suffered a $1.8 million loss of principal. That figure represented the principal of the investors' deposits, minus the withdrawals made from the funds, minus the interest the investors would have earned on the funds, and minus the money already disbursed to the investors by Safeguard's trustee in bankruptcy.
The district court imposed on Woods and Pivorotto a joint restitution obligation of $989,218, of which Woods was required to pay $457,338. The court arrived at this figure after analyzing the presentence report and taking into consideration the defendants' ability to repay the Safeguard investors. This restitution order reflected only the amount of principal the court determined that Pivorotto and Woods owed the defrauded investors of Safeguard and, as mentioned above, excluded the interest owed to the investors. The district court also sentenced Woods to two years of imprisonment on count 8 of the indictment and five years on count 13. However, the court suspended the latter sentence in favor of five years of probation, conditioned on the payment of the restitution order pursuant to the FPA, 18 U.S.C. § 3651.
Woods appealed the restitution order, which this court affirmed in United States v. Woods, 775 F.2d 82 (3d Cir.1985) (Woods I ). Rejecting Woods' challenge, we held that the restitution order was proper even though it represented the victims' losses from the entire scheme and not just the counts to which Woods had pled guilty. 2 Woods had pled guilty to acts in furtherance of a unitary scheme to defraud and we reasoned that where the offense is a scheme to defraud, each count of mail fraud was simply an act in furtherance of the scheme and hence the district court had the authority to direct restitution for the entire scheme. Id. at 87-88.
In May of 1990, the Supreme Court decided Hughey v. United States, which vacated a restitution order imposed pursuant to the VWPA, 18 U.S.C. § 3579(a)(1) (1982 ed. and Supp. IV). In Hughey, a grand jury had indicted the defendant for three counts of theft by a Postal employee and three counts of use of an unauthorized credit card. Although Hughey pled guilty to only one count of each offense in return for the dismissal of the remaining counts, the district court ordered restitution for the losses stemming from the other credit cards Hughey was alleged to have stolen in the indictment. The Supreme Court held that this restitution order violated the language of the VWPA, which provided that a "defendant convicted of any offense" may be ordered to "make restitution to any victim of such offense." 18 U.S.C. § 3579(a)(1). Applying basic principles of statutory construction, the Court concluded that the language of the VWPA authorized restitution only for losses stemming from the offenses for which Hughey had been convicted and not the dismissed charges.
By 1990, when the Court decided Hughey, Woods had already served his two-year prison sentence on count 8, had fully paid his portion of the $989,218 restitution order--which totalled $457,338 3--and had served slightly more than two years of his five year period of probation. 4 In January, 1992, relying on Hughey, Woods filed a motion pursuant to Fed.R.Crim.P. 35(a) to vacate the portion of the restitution order which exceeded $4,758.47, the amount of loss underlying count 13, the mail fraud count for which he was convicted and for which he received probation. Woods sought the repayment of $452,579.53 the alleged excess restitution ($457,338.00 minus $4,758.47).
In April, 1992, the district court entered an order denying Woods' Rule 35(a) motion. The court concluded that Hughey should not be retroactively applied to Woods' sentence. In the alternative, the court found that even if Hughey were retroactively applied, it was not controlling because (1) Hughey concerned the proper interpretation of the VWPA, not the FPA under which Woods was sentenced; and (2) even if Hughey restricted restitution orders pursuant to the FPA, it did not apply when the defendant was someone who, like Woods, had been convicted of crime that required proof of a "unitary scheme" to defraud.
This appeal followed. We have jurisdiction pursuant to 28 U.S.C. § 1291. Our review of the district court's denial of the Rule 35(a) motion is plenary "since the legality of the sentence imposed by the district court is being challenged." United States v. Kress, 944 F.2d 155, 158 (3d Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 1163, 117 L.Ed.2d 410 (1992). We note that under Rule 35(a), Woods bears the burden of proving the illegality of his sentence. See Mark S. Rhodes, 5 Orfield's Criminal Procedure Under the Federal Rules § 35.15, at 433-34 (2d ed. 1987). 5
Woods contends that, although in Hughey the Court invalidated a restitution order under the VWPA, the Court...
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