United States v. George
| Decision Date | 23 March 2018 |
| Docket Number | No. 17-1371,17-1371 |
| Citation | 886 F.3d 31 |
| Parties | UNITED STATES of America, Appellee, v. John GEORGE, Jr., Defendant, Appellant. |
| Court | U.S. Court of Appeals — First Circuit |
William J. Cintolo, with whom Thomas R. Kiley and Cosgrove Eisenberg & Kiley, PC, Boston, MA, were on brief, for appellant.
Randall E. Kromm, Assistant United States Attorney, with whom William D. Weinreb, Acting United States Attorney, was on brief, for appellee.
Before Thompson, Circuit Judge, Souter,* Associate Justice, and Selya, Circuit Judge.
In United States v. George (George I ), 841 F.3d 55 (1st Cir. 2016), we affirmed the conviction and sentence of a corrupt politician, defendant-appellant John George, Jr. At the same time, we vacated the district court's forfeiture order because the court lacked jurisdiction when it purposed to enter that order. See id. at 72. On remand, the district court—its jurisdiction having reattached—revisited the matter of forfeiture and ordered the defendant to forfeit proceeds of his criminal activity in the amount of $1,382,214.
The defendant again appeals. This time around, he mounts both procedural and substantive challenges to the forfeiture order. After careful consideration, we hold that the district court did not abridge the defendant's procedural rights. We further hold, as a matter of first impression in this circuit, that the district court applied an appropriate yardstick in measuring the "proceeds" to be forfeited. Accordingly, we affirm the forfeiture order.
We sketch the relevant facts and travel of the case. The reader who hungers for more exegetic detail is free to consult our earlier opinion.
This case revolves around the Southeast Regional Transit Authority (SRTA), a public authority funded jointly by the Commonwealth of Massachusetts and the federal government. The defendant, described in our earlier opinion as a local "political satrap," id. at 58, served on the SRTA advisory board until 1988, when he arranged for his friend and political ally, Joseph Cosentino, to replace him. Some three years later, the defendant purchased Union Street Bus Company (Union Street) through an alter ego, Trans-Ag Management, Inc. (Trans-Ag). The defendant was the sole shareholder of Trans-Ag and was its only employee.
After the defendant took control of Union Street, the SRTA granted the company an exclusive franchise for certain bus routes, and the contract between the SRTA and Union Street was periodically renewed (the last time in 2006). In order to secure the 2006 renewal, the defendant colluded with Cosentino to discredit Union Street's main competitor. What is more, he brought in a stalking horse—an artificially high bidder—to make Union Street's bid appear more attractive. The defendant's machinations succeeded, and Union Street's contract was renewed.
The renewed contract was lucrative. Throughout its term, the SRTA reimbursed Union Street for the amounts by which Union Street's operating expenses exceeded its operating income. Over and above this stipend, the SRTA paid Union Street a hefty management fee to oversee the operation of the designated routes.1 The operating expenses included the salaries of two individuals, nominally employees of Union Street, who spent most of their work-hours (during which they were compensated directly by Union Street and, thus, indirectly by the SRTA) toiling at the defendant's farm and otherwise ministering to the defendant's personal projects.
This was the tip of a rather large iceberg; the trial transcript is replete with other instances of the defendant appropriating SRTA-funded resources for personal use. See, e.g., id. at 60-61.
The defendant's success at bilking the SRTA was not a mere fortuity. During the renewal term, he was able to limit oversight of Union Street's contract. Moreover, the defendant was able to arrange for Cosentino (his political ally) to be appointed, mid-way through the contract term, as the SRTA Administrator.
Toward the end of the renewal term, Cosentino turned over a new leaf and began challenging the defendant's diversion of SRTA-funded resources. He also took steps to ensure a fair bidding process for the next renewal of the contract. Displeased by this about-face, the defendant used his influence to have Cosentino removed as Administrator. Nevertheless, the 2010 renewal of the contract was awarded to another bidder.
Eventually, the chickens came home to roost. After conducting an investigation of the SRTA's finances, the government charged the defendant with conspiracy to commit an offense against the United States and embezzlement.2 See 18 U.S.C. §§ 371, 666(a)(1)(A) & (a)(2).
Following a lengthy jury trial that resulted in the defendant's conviction, the district court held a sentencing hearing on July 29, 2015. In the course of that hearing, the court, inter alia, entertained arguments on the government's motion for an order of forfeiture. When the sentencing hearing had concluded, the court (wanting additional time to consider forfeiture) suggested that it delay the actual imposition of sentence. Defense counsel resisted this suggestion and instead sought the immediate imposition of sentence. He told the court that "[t]o require [the defendant], who is obviously taking this very badly, ... to have to wait more time to know what his fate is going to be, I think would be devastating ... let's get a sentence today, your Honor." Defense counsel prefaced this request with an acknowledgment that he had "absolutely no problem" with the court resolving the issue of forfeiture at a later date and entering an amended judgment. The government did not object, and the court acquiesced. It sentenced the defendant to a 70-month term of immurement on the substantive offense count and a concurrent 60-month term of immurement on the conspiracy count; ordered restitution in the amount of $688,772;3 and reserved judgment on the forfeiture issue.
The court embodied these sentencing determinations in a written judgment, and the defendant appealed. While his appeal was pending, the district court accepted additional briefing and heard further argument with respect to forfeiture. On September 21, 2015—with the defendant's appeal still pending—the district court entered an amended judgment, which included a forfeiture award in the amount of $1,382,214 (the total amount of the management fees paid under the 2006 contract renewal).
In due course, we upheld the defendant's conviction and the sentencing determinations made at the July 29, 2015 sentencing hearing. See George I, 841 F.3d at 72. Withal, we did not reach the merits of the September 21 forfeiture order because the district court had entered that order at a time when it lacked subject-matter jurisdiction. See id. at 70-72. To tie up this loose end, we authorized the district court, "once its jurisdiction has reattached, [to] consider the issue of forfeiture anew." Id. at 72. The case was remanded for that purpose.
On December 7, 2016, the district court—its jurisdiction having been refreshed—notified the parties that it was "inclined" to consider the matter of forfeiture on the papers previously filed. In an abundance of caution, the court nonetheless allowed additional briefing. After receiving the parties' supplemental briefs, the court ordered forfeiture in the amount of $1,382,214, holding that this amount, which it derived by aggregating the management fees paid under the 2006 renewal contract, constituted proceeds of the charged crimes. This timely appeal followed.
In this forum, the defendant advances both procedural and substantive claims. First, he contends that the district court denied him the right to allocute and the right to be present when the forfeiture order was entered. Second, he contends that the management fees that formed the basis for the forfeiture award did not constitute "proceeds" of the offenses of conviction. We discuss these contentions sequentially.
The defendant claims that he had a right to allocute before the district court upon remand and a right to be present when the district court reentered the forfeiture order. We deem it useful to start our analysis of this two-pronged claim by rehearsing a baseline principle discussed in United States v. Bryant, 643 F.3d 28 (1st Cir. 2011). Bryant was a case in which we considered a defendant's rights upon remand after we had vacated his original sentence. We explained that "whether the defendant's presence and an opportunity to allocute are required has in practice turned on whether requiring these safeguards made sense in the context of the proceedings." Bryant, 643 F.3d at 32. On one end of the continuum are remanded cases involving the full range of sentencing issues in proceedings that are as "open-ended as an initial sentencing." Id. On the other end are remanded cases in which the remand order is "so focused and limited that it involves merely a technical revision of the sentence dictated by the appeals court and calls for no formal proceeding." Id.Bryant fell near the "full range" end of the continuum; the case at hand falls near the "limited" end of the continuum.
1. Allocution. Against this backdrop, we turn first to the defendant's claim that he was denied the right to allocute. With respect to this claim, his argument relies principally on Federal Rule of Criminal Procedure 32. Specifically, he says that the entry of the order of forfeiture comprised a part of his sentence; that the prescriptions of Rule 32(i)(4) therefore applied; and that those prescriptions conferred a right to allocute, which he did not receive.
Pertinently, Rule 32(i)(4)(A)(ii) obliges a sentencing court, before imposing a sentence, to "address the defendant personally in order to permit the defendant to speak or present any information to mitigate the sentence." The claim that this prescription was transgressed is belied by the record, which shows beyond hope of contradiction that the...
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