United States v. Puentes

• Decision Date: 05 October 2015
• Docket Number: No. 14–13587.,14–13587.
• Citation: 803 F.3d 597
• Parties: UNITED STATES of America, Plaintiff–Appellant, v. Angel PUENTES, a.k.a. D'Angelo Salvatore, a.k.a. Salvatore D'Angelo, Defendant–Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

803 F.3d 597

UNITED STATES of America, Plaintiff–Appellant

v.Angel PUENTES, a.k.a. D'Angelo Salvatore, a.k.a. Salvatore D'Angelo, Defendant–Appellee.

No. 14–13587.

United States Court of Appeals, Eleventh Circuit.

Oct. 5, 2015.

Madeleine R. Shirley, Lois A. Foster–Steers, Marlene Rodriguez, A. Cristina Perez Soto, U.S. Attorney's Office, Miami, FL, for Plaintiff–Appellant.

Paul D. Petruzzi, Law Offices of Paul Petruzzi, PA, Miami, FL, for Defendant–Appellee.

Appeal from the United States District Court for the Southern District of Florida.

Before MARCUS, WILLIAM PRYOR, and JILL PRYOR, Circuit Judges.

Opinion

MARCUS, Circuit Judge:

This case raises a question of first impression: whether the district court exceeded its authority under Federal Rule of Criminal Procedure 35(b) and the Mandatory Victims Restitution Act (MVRA) of 1996, 18 U.S.C. §§ 3663A –3664, by eliminating, sua sponte, Angel Puentes's obligation to jointly and severally pay more than $4 million in mandated restitution based upon his substantial assistance. Puentes and his associates conspired to defraud lending institutions out of more than $7 million by submitting fraudulent loan applications. Puentes pled guilty to conspiracy to commit wire and bank fraud in violation of 18 U.S.C. § 1349. As part of his sentence, he was required to pay $4,405,305.94 in restitution to his victims. While in prison, Puentes assisted federal law enforcement authorities with the investigation of another inmate in an unrelated case. In recognition of his substantial assistance, the United States filed a motion under Rule 35(b) to reduce his term of incarceration. In granting the motion, however, the district court decided to terminate Puentes's obligation to pay restitution as well as reduce his prison sentence from 97 months to 42 months. The United States appeals from that portion of the district court's order eliminating Puentes's obligation to pay restitution to the victims of his crime.

We hold that the district court did not have the legal authority to eliminate Puentes's restitution obligation based on a Rule 35(b) motion. The Mandatory Victims Restitution Act makes restitution mandatory for certain crimes, like the fraud offense to which Puentes pled guilty, “[n]otwithstanding any other provision of law.” 18 U.S.C. § 3663A(a)(1). We read this as a clear indication from Congress that the MVRA was intended to trump Rule 35. Moreover, one provision of the MVRA, 18 U.S.C. § 3664(o ), provides an exhaustive list of the ways in which a mandatory restitution order can be modified. None apply in this case. Notably, while § 3664(o ) allows for a sentence imposing an order of restitution to be corrected under Rule 35(a), the statute does not permit the district court to reduce such a sentence under Rule 35(b). The district court was not free to reduce Puentes's restitution as a reward for his substantial assistance, even though his co-conspirators may have remained jointly and severally liable for the amount owed. Thus, we reverse the district court's judgment, and remand with instructions to reinstate Puentes's obligation to make restitution to the victims.

I.

The essential facts are these. From September 2004 to December 2007, Puentes organized a scheme to defraud a variety of lending institutions out of millions of dollars in mortgage loan funds. Among other things, Puentes and his co-conspirators prepared fraudulent loan applications on behalf of straw purchasers for at least 11 parcels of property located in Miami–Dade County and Broward County, Florida. Specifically, one of Puentes's co-conspirators falsified HUD–1 Settlement Statements—standard forms used in closing real estate transactions—to induce lending institutions to approve the deals. Once the loans were approved, the mortgage funds would be illegally disbursed to one of 23 accounts controlled by Puentes. Eventually, Puentes and his co-conspirators stopped making payments on the mortgage loans, which caused the properties to fall into foreclosure and resulted in substantial losses for the lenders—losses which amounted to more than $7 million. Puentes's primary role in the scheme was to recruit straw purchasers, who received a fee for their participation once the loans were approved.

On February 22, 2011, Puentes and three co-defendants—Dania Aleman, Angela Frye, and David Burgos—were charged by a federal grand jury in a 23–count indictment in the United States District Court for the Southern District of Florida. For his role in the scheme, Puentes was accused of one count of conspiracy to commit wire and bank fraud, in violation of 18 U.S.C. § 1349 (Count 1); fourteen counts of wire fraud, in violation of 18 U.S.C. § 1343 (Counts 2–15); and eight counts of bank fraud, in violation of 18 U.S.C. § 1344 (Counts 16–23). The indictment also sought the forfeiture of any proceeds from the defendants' crimes, “including, but not limited to, the sum of $10,400,000.” Three other co-conspirators (Andrew David, Rosa Diaz, and Daniel Santiago) were charged in related cases in the same district.

Puentes entered into a written plea agreement with the United States and subsequently pled guilty to the conspiracy charge in Count 1. By agreement, Puentes acknowledged that he would be required to “make restitution in an amount determined by the Court.” The parties agreed that the losses resulting from his conduct amounted to somewhere between $7 million and $20 million, and that Puentes received “more than a million dollars in gross proceeds from financial institutions.” The United States also made a factual proffer, which laid out the basic details of the conspiracy—including the fact that Puentes “organized” the scheme—and reiterated that the losses stemming from Puentes's conduct amounted to more than $7 million.

For his role in the conspiracy, the district court sentenced Puentes to 97 months of imprisonment, followed by 5 years of supervised release. Puentes was assigned a base offense level of 7 for an offense involving fraud, U.S.S.G. § 2B1.1(a)(1) ; a 20–level increase because the loss was more than $7 million but less than $20 million, id. § 2B1.1(b)(1)(K) ; a 2–level increase because Puentes derived more than $1 million in gross receipts, id. § 2B1.1(b)(16)(A) ; and a 4–level increase because Puentes was an organizer of criminal activity involving 5 or more participants, id. § 3B1.1(a). However, he received a 3–level reduction for his acceptance of responsibility and assistance to the government, id. § 3E1.1(a), (b), yielding a total offense level of 30. Puentes had no criminal history, so with a total offense level of 30 and a criminal history category of I, the guidelines range was 97 to 121 months of imprisonment.

The district court also ordered Puentes to pay restitution in the amount of $4,445,305.94, for which he was jointly and severally liable with his co-conspirators. Upon his release from incarceration, Puentes was required to remit 10 percent of his monthly gross earnings to the Clerk of Court, to be forwarded to his victims—Bank of America, Ducat Insurance Group, Chase Bank, and Wells Fargo Bank. Puentes's co-conspirators also were ordered to pay restitution in varying amounts. Aleman was held jointly and severally liable for the same $4,445,305.94, while Frye and Burgos were held jointly and severally liable for $877,038.00 and $718,159.84, respectively.¹ In the related cases, David and Diaz were also held jointly and severally liable for $4,445,305.94, and Santiago was held jointly and severally liable for $103,497.02.

Three years later, on May 2, 2014, the United States filed a motion to reduce Puentes's sentence under Rule 35(b). While incarcerated, Puentes assisted the government in the investigation of another inmate in an unrelated case. The case, United States v. Stirling , involved a defendant, John Stirling, charged with importing cocaine and heroin. Puentes provided federal law enforcement officials with a letter that Stirling had written, in which he laid out a duress defense that he wanted his co-defendants to corroborate at trial. When Stirling testified as to his duress defense at trial, Puentes was called by the government as a rebuttal witness. Stirling was convicted by the jury, but was subsequently granted a new trial because the government had failed to disclose other evidence used to impeach Stirling's testimony. Puentes remained willing to testify at Stirling's second trial; however, Stirling pled guilty, eliminating any subsequent need for Puentes's testimony. In recognition of Puentes's substantial assistance, the United States submitted that a reduction in Puentes's sentence was fully warranted, moving the court under Rule 35(b). The government made no mention of Puentes's restitution.

The district court conducted a second sentencing hearing on the government's Rule 35(b) motion on June 18. At the hearing, the government recommended that Puentes's sentence be reduced from 97 to 64 months, while Puentes's attorney requested that it be reduced still more, to 42 months. After considering the parties' recommendations, the court observed that the Stirling case “was a very, very serious case,” that Puentes's assistance “was extraordinary and far beyond what we usually see,” and that his help was “obviously a vital controlling factor.” While the court respected the recommendations provided by the “experienced prosecutors,” the court concluded that the government had “perhaps underestimated” the extent of the reduction merited by Puentes's assistance. Thus, the court granted the government's Rule 35(b) motion and reduced Puentes's prison term to 42 months.

Then, without any application or prompting from the parties, the court took up the question of restitution. The court said, “there is going to be another reduction or reward ... to remove from the original sentence the order that the restitution is to be joint and several.” That is, Puentes would no longer be “jointly and severally responsible...