U.S. v. Wright

• Decision Date: 18 November 1998
• Docket Number: 98-1156,Docket Nos. 98-1148
• Citation: 160 F.3d 905
• Parties: -7198 UNITED STATES of America, Appellee, v. Kay WRIGHT and Leslie Wright, aka Leslie White, Les White, Defendants-Appellants.
• Court: U.S. Court of Appeals — Second Circuit

Page 905

160 F.3d 905

82 A.F.T.R.2d 98-7198

UNITED STATES of America, Appellee, v. Kay WRIGHT and Leslie Wright, aka Leslie White, Les White Defendants-Appellants.

Docket Nos. 98-1148, 98-1156.

United States Court of Appeals Second Circuit.

Submitted Nov. 3, 1998.

Decided Nov. 18, 1998.

Zachary W. Carter, United States Attorney for the Eastern District of New York, Brooklyn, New York (Peter A. Norling, Lisa Fleischman, Assistant United States Attorneys, Brooklyn, New York, on the brief), for Appellee.

Hurwitz Stampur & Roth, New York, New York (James Roth, New York, New York, on the brief), for Defendant-Appellant Kay Wright.

Philip Katowitz, New York, New York, for Defendant-Appellant Leslie Wright.

Before: KEARSE and POOLER, Circuit Judges, and POLLACK, District Judge ^*.

KEARSE, Circuit Judge:

Defendants Kay Wright ("Kay") and Leslie Wright ("Leslie") (collectively the "Wrights") appeal from judgments entered in the United States District Court for the Eastern District of New York following their pleas of guilty before Charles P. Sifton, Chief Judge, convicting them of embezzling moneys from an organization that received federal funds, in violation of 18 U.S.C. § 666, and evading income taxes, in violation of 26 U.S.C. § 7201. Kay was sentenced principally to 24 months' imprisonment, to be followed by a two-year term of supervised release, and was ordered to make restitution in the amount of $377,818.03. Leslie was sentenced principally to 37 months' imprisonment, also to be followed by a two-year term of supervised release, and was ordered to make restitution in the same amount. On appeal, Kay challenges her sentence, contending that the district court erred in enhancing her Sentencing Guidelines ("Guidelines") offense level for abusing a position of trust and for defrauding vulnerable victims. Finding no merit in her contentions, we affirm the judgment against her.

Leslie, whose appeal principally challenged the amount of loss calculated by the court for sentencing purposes, died before his appeal could be heard. For the reasons that follow, we vacate the judgment against Leslie and remand to the district court for dismissal of the indictment against him.

I. BACKGROUND

For a number of years prior to 1993, the Wrights operated a facility called Community Living Alternative ("CLA"), a 10-bed residence for mentally retarded adults. CLA was funded in part by Medicaid moneys that were provided by the federal government and administered by the New York State Department of Health. Leslie was its executive director and was responsible for its day-to-day operations. From 1988 until late 1992, Kay, his wife, was the chairperson and sole member of CLA's board of directors.

During the period 1990-1992, the Wrights wrote numerous checks to "cash" on CLA bank accounts, deposited cash thus obtained in their personal joint bank account, and used the money for personal items such as credit-card payments and luxury cars. The Wrights abruptly closed the facility in 1992 following official investigations of complaints from a CLA staff member and the sister of one resident that the Wrights were abusing the residents, providing them inadequate food and care, and forcing them to live in squalor.

Indicted in 1996 on various charges, the Wrights pleaded guilty in 1997 to embezzling funds from an organization that received federal funds, in violation of 18 U.S.C. § 666, and evasion of income taxes, in violation of 26 U.S.C. § 7201. Following the preparation of a presentence report ("PSR") on each defendant, and the receipt of the Wrights' objections to the PSR calculations of loss and recommendations for certain offense-level enhancements, the district court conducted a Fatico hearing.

Based on the evidence presented at that hearing, the court concluded that offense-level enhancements pursuant to Guidelines § 3A1.1(b) and 3B1.3 were appropriate because the embezzlement offense involved vulnerable victims and the defendants' abuse of positions of trust (see Part II.B. below). The court found that the amounts embezzled totaled $249,692.21 and that the total tax loss on unreported income was $128,125.82. The court used these figures both in calculating defendants' offense levels and in ordering restitution in the total amount of $377,818.03. The court sentenced each defendant at the bottom of the applicable Guidelines range, imposing prison terms of 24 months on Kay and 37 months on Leslie, each term of imprisonment to be followed by a two-year period of supervised release.

With respect to monetary penalties to be imposed on Leslie, the court stated as follows:

I'm not going to impose a fine, because I find financially Mr. Wright, particularly given this period of incarceration will not be finally [sic ] in a position to pay one. Since for one reason any earnings which he is able to make during the period of supervision following his release or any monies that he has at present should be first and foremost paid in restitution for the very substantial losses that he's caused. I'm going to enter a restitution order directing that restitution be made to the New York Health Department in the total amount of $249,692.21. With credit for amounts that have previously been recovered. And to the United States Government for the amount of the tax loss of $128,125.82. This obligation of restitution becomes effective immediately. But I am not going to require any payments to be made prior to the commencement of the period of supervision when it is hoped Mr. Wright will again be in a position to earn a living.

At that point I'm going to impose a restitution obligation in the amount of $200 a month, with the full amount of restitution becoming due immediately prior to the termination of supervision. At that point, if he lacks the financial resources to pay the restitution, that is something that the statute can take into account at that point. But if he has the financial means to make restitution it will become due and owing at that point.

(Sentencing Transcript, March 10, 1998 ("Tr."), 26-27.) The court imposed the same restitutionary obligations on Kay.

Judgments were entered accordingly, and these appeals followed.

II. DISCUSSION

In his brief on appeal, Leslie argued that the district court erred in calculating the

amount of loss for sentencing purposes; however, he died before this appeal could be heard. Kay challenges two of the offense-level enhancements used in arriving at her sentence. For the reasons that follow, we vacate Leslie's conviction, in light of his death, and remand for dismissal of the indictment against him; we reject Kay's contentions.

A. Leslie's Appeal

Ordinarily, when a convicted defendant dies while his direct appeal as of right is pending, his death "abates not only the appeal but also all proceedings had in the prosecution from its inception." Durham v. United States, 401 U.S. 481, 483, 91 S.Ct. 858, 28 L.Ed.2d 200 (1971) (per curiam). Two considerations underlie this rule of abatement. First, "the interests of justice ordinarily require that [a defendant] not stand convicted without resolution of the merits of an appeal." United States v. Pogue, 19 F.3d 663, 665 (D.C.Cir.1994) (per curiam) (internal quotation marks omitted). Second, to the extent that the judgment of conviction orders incarceration or other sanctions that are designed to punish the defendant, that purpose can no longer be served. See, e.g., United States v. Dudley, 739 F.2d 175, 177 (4th Cir.1984) ("shuffling off the mortal coil completely forecloses punishment, incarceration, or rehabilitation, this side of the grave at any rate"). Accordingly, upon receiving notice of a defendant-appellant's death during the pendency of his direct appeal as of right, we normally vacate the judgment and remand to the district court with instructions to dismiss the indictment. See, e.g., Durham v. United States, 401 U.S. at 483, 91 S.Ct. 858 (noting the unanimity of the lower courts in adopting this course); United States v. Mollica, 849 F.2d 723, 726 (2d Cir.1988).

The second rationale for the rule of abatement focuses on sanctions that are punitive, not on sanctions such as restitution, which are designed to compensate the victims of crime. In Mollica, we left open the question of whether the abatement principle should be applied when the sentence includes an order of forfeiture or restitution, see 849 F.2d at 726, and we have not since then ruled on that issue. Other Circuits, when faced with such a question, have expressed varying views, usually hinging on whether the order in question was viewed as punitive or compensatory. See, e.g., United States v. Oberlin, 718 F.2d 894, 896 (9th Cir.1983) (forfeiture order abated as "essentially penal" even though some aspects may have been compensatory); United States v. Dudley, 739 F.2d at 176-78 (no abatement of restitution order, which court found to be essentially compensatory); United States v. Mmahat, 106 F.3d 89, 93 (5th Cir.) (restitution order abates if its purpose was penal but not if its purpose was compensatory), cert. denied, --- U.S. ----, 118 S.Ct. 200, 139 L.Ed.2d 138 (1997); United States v. Logal, 106 F.3d 1547, 1551-52 (11th Cir.) (restitution order should always be abated), cert. denied, --- U.S. ----, 118 S.Ct. 376, 139 L.Ed.2d 292 (1997). See also United States v. Cloud, 921 F.2d 225, 226-27 (9th Cir.1990) (rejecting challenge of (live) defendant to portion of judgment specifying that restitutionary amounts unpaid at the time of his death would then become due and payable immediately).

In the present case, Leslie was ordered not only to serve a prison term but also to pay restitution to the New York State Department of Health and to the United States government. After learning of his death, we asked the parties to submit supplemental briefs on the issue of whether so much of the judgment as convicted him and ordered him to pay restitution remains enforceable despite his...