United States v. Kitts

• Decision Date: 03 March 2022
• Docket Number: No. 19-1325,19-1325
• Parties: UNITED STATES of America, Appellee, v. Kimberly KITTS, Defendant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

27 F.4th 777

UNITED STATES of America, Appellee,

v.Kimberly KITTS, Defendant, Appellant.

No. 19-1325

United States Court of Appeals, First Circuit.

March 3, 2022

Vivian Shevitz for appellant.

Sara Miron Bloom, Assistant United States Attorney, with whom Andrew E. Lelling, United States Attorney, was on brief, for appellee.

Before Lynch, Lipez, and Thompson, Circuit Judges.

LIPEZ, Circuit Judge.

Appellant Kimberly Kitts, an investment adviser, pleaded guilty to one count of investment adviser fraud, four counts of wire fraud, and one count of aggravated identity theft. On appeal, Kitts argues that her plea was not knowing and voluntary, that her conduct, as described at the change-of-plea hearing, did not constitute wire fraud and aggravated identity theft, that several sentencing enhancements were improperly applied, and that her counsel was ineffective. Hence, she asks that her guilty plea, the judgment of conviction, and the sentence relating thereto all be vacated. If those contentions are rejected, Kitts argues that her sentence should at least be reduced from eighty-seven to eighty-four months to accord with the district court's oral ruling. We affirm.

I.

Kitts's arguments on appeal primarily target her change-of-plea hearing and sentencing, and we therefore only briefly recount the facts concerning her criminal activity before describing those two proceedings. Because Kitts pleaded guilty, "we draw the essential facts from the change-of-plea colloquy and the uncontroverted portions of the presentence investigation report." United States v. Jimenez, 512 F.3d 1, 2 (1st Cir. 2007).

Kitts worked as an investment adviser at Royal Alliance, a financial services firm in Massachusetts. She also operated a "purported financial consulting" company named Marquis Consulting, LLC. In approximately 2011, she began misappropriating client funds by directing her clients' money into an account (the "Marquis Consulting Account"), which she used to pay personal expenses. From 2011 through mid-2017, Kitts appropriated approximately $3,454,138, primarily from three clients (referred to as Clients A, B, and C),¹ before her conduct was discovered.

In an information filed in September 2018, Kitts was charged with investment adviser fraud in violation of 15 U.S.C. §§ 80b-6 and 80b-17 (Count One), wire fraud in violation of 18 U.S.C. § 1343 (Counts Two through Five), and aggravated identity theft in violation of 18 U.S.C. § 1028A (Count Six). Although Kitts initially pleaded not guilty to all counts, she subsequently entered a guilty plea, without a plea agreement, and waived indictment.

Throughout the proceedings in the district court, Kitts was represented by attorney Michael Mattson, who had previously represented Kitts in "local matters." According to Kitts, Mattson had no prior experience in federal criminal matters.

A. The Change-of-Plea Hearing

At the outset of her change-of-plea hearing, the district court confirmed with Kitts that she was in an appropriate mental state to participate in the proceeding. The court then asked whether she had received a copy of the information, understood that she was charged with six counts, and had an opportunity to discuss the charges with counsel. Kitts answered yes to these questions.

The court advised her that, by pleading guilty, she would be waiving her constitutional right to be indicted by a grand jury. Again, Kitts confirmed that she understood. In response to another inquiry from the court, Kitts stated that she had discussed the waiver with her attorney. Neither party raised any objections during this portion of the proceeding.

The district court then proceeded with the plea colloquy. Kitts affirmed that she was neither forced to plead guilty nor had she received any assurances that induced her to plead guilty. Then, as directed by the court, the government detailed the maximum statutory penalties applicable to the charges. In relevant part, the government explained that the aggravated identity theft charge carried a "mandatory term of incarceration of two years, which shall not be concurrent with any other term of imprisonment imposed under any other provision of law." The government also reported the maximum five-year sentence for investment adviser fraud and the maximum twenty-year sentences that accompanied the wire fraud counts.

When asked if she understood that the district court had the authority to impose a term of imprisonment of up to five years on Count One, charging investment adviser fraud; up to twenty years on Counts Two through Five, the wire fraud counts; and a "minimum mandatory sentence of two years" on the identity theft charge, Kitts said yes. Noting that Kitts was upset, the district court confirmed that she still understood the court's questions.

After informing Kitts of the role of the sentencing guidelines in the court's sentencing decision, the court explained the rights she would forfeit by pleading guilty, including the right to a trial by jury, the right to a trial in which she would have been presumed innocent, the right to assistance of counsel in her defense during the trial, and the right to confront the witnesses against her. The court then asked the government to summarize the facts that would have been offered at trial. Kitts agreed with the prosecutor's summary of the facts as they related to the essential elements of the charges, although she disputed the exact monetary amounts involved.

The district court then accepted Kitts's guilty plea, finding that it was knowing and voluntary, and that she understood the charges against her and the consequences of her plea.

B. Sentencing

The Presentence Report ("PSR") calculated a total offense level of twenty-eight for Counts One through Five and a criminal history category of I, corresponding to a guideline sentencing range of seventy-eight to ninety-seven months. That calculation began with a base offense level of seven, which was increased by sixteen levels to reflect losses of more than $1.5 million but less than $3.5 million attributable to her crimes. See U.S.S.G. § 2B1.1(b)(1). The offense level was further increased by a two-point enhancement for the victims' substantial financial hardship, a two-point enhancement for sophisticated means, and a four-point enhancement "because the offense involved a violation of securities law and ... the defendant was an investment adviser, or a person associated with an investment adviser." See U.S.S.G. § 2B1.1(b)(2)(A)(iii), (b)(10)(c), (b)(20)(A). The offense level was then decreased by three to credit Kitts's acceptance of responsibility. See U.S.S.G. § 3E1.1(a), (b). For the sixth count -- aggravated identity theft -- the PSR reported the mandatory, consecutive two-year sentence. Thus, the total guideline range was 102 to 121 months.²

Kitts's attorney, Mattson, lodged several objections to the PSR, including an objection to the application of the sophisticated means enhancement. Although he did not submit a sentencing memorandum before the sentencing hearing, Mattson did provide additional documentation at the hearing, including medical records,³ documentation that Kitts had surrendered her passport, and at least one letter in support of Kitts. Mattson also raised an objection at the hearing to the application of the substantial financial hardship enhancement. In addition, two victims made oral statements at the sentencing hearing.

The district court overruled Kitts's objections and orally imposed a sentence of eighty-seven months, three years of supervised release, and restitution in the amount of $3,085,939. The eighty-seven-month sentence included sixty-three months for Counts One through Five and the consecutive two years for the aggravated identity theft count. The sentence imposed was thus a substantial downward variance from the guideline range of 102 to 121 months for all six counts.

II.

As noted, Kitts challenges on appeal the validity of her guilty plea, the judgment of conviction, and her sentence. We start our analysis with her ineffective assistance of counsel claim.

A. Ineffective Assistance of Counsel

Generally, "[w]e have held with a regularity bordering on the monotonous that fact-specific claims of ineffective assistance cannot make their debut on direct review of criminal convictions, but, rather, must originally be presented to, and acted upon by, the trial court" in post-conviction proceedings. United States v. Mala, 7 F.3d 1058, 1063 (1st Cir. 1993). On direct appeal of an ineffective assistance of counsel claim, we have three options: "(1) decline to hear the claim, permitting the appellant to raise the issue as part of a subsequent § 2255 petition; (2) remand the claim to the district court for necessary fact-finding; or (3) decide the claim on the record before us." United States v. Colón-Torres, 382 F.3d 76, 85 (1st Cir. 2004) (quoting United States v. Leone, 215 F.3d 253, 256 (2d Cir. 2000) ). Ordinarily, we will only reach the merits if the factual record is sufficiently developed to allow consideration of the claim or remand for further factual development if there are significant indicia of ineffectiveness in the record. See id. On this record, we find no basis for departing from our usual practice of requiring that the claim be first raised in post-conviction proceedings. Hence, we dismiss Kitts's ineffective assistance of counsel claim without prejudice.

B. The Guilty Plea

When a defendant pleads guilty, she "effectively waives several constitutional rights. For that waiver to be valid, due process requires that the plea amount to a voluntary and ‘intentional relinquishment ... of a known right.’ " United States v Cotal-Crespo, 47 F.3d 1, 4 (1st Cir. 1995) (quoting McCarthy v. United States, 394 U.S. 459, 466, 89 S.Ct. 1166, 22 L.Ed.2d 418 (1969) ). The entry of a guilty plea is governed by Federal Rule of Criminal Procedure 11, which was designed "to ensure that a defendant who pleads guilty does so with full comprehension of the specific...