United States v. Vallone

• Decision Date: 18 June 2014
• Docket Number: 08–4246,09–2174.,08–4320,09–1864,Nos. 08–3690,s. 08–3690
• Citation: 752 F.3d 690
• Parties: UNITED STATES of America, Plaintiff–Appellee, v. Michael A. VALLONE, Robert W. Hopper, Timothy S. Dunn, and Edward Bartoli, Defendants–Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

752 F.3d 690

UNITED STATES of America, Plaintiff–Appellee,

v.Michael A. VALLONE, Robert W. Hopper, Timothy S. Dunn, and Edward Bartoli, Defendants–Appellants.

Nos. 08–3690, 08–4246, 08–4320, 09–1864, 09–2174.

United States Court of Appeals,Seventh Circuit.

Submitted Sept. 6, 2013.

Decided May 16, 2014.

Rehearing Denied June 18, 2014.

Limitation Recognized

U.S.S.G. §§ 1B1.11(a, b), 2T4.1, 3B1.4, 18 U.S.C.A.

Stephen L. Heinze, Attorney, Barry Rand Elden, Attorney, Office of the United States Attorney, Chicago, IL, for Plaintiff–Appellee.

Richard H. McLeese, Attorney Chicago, IL, for Defendant–Appellant.

Before ROVNER and WILLIAMS, Circuit Judges and YOUNG, District Judge. ^*

On Remand From The Supreme Court of the United States

ROVNER, Circuit Judge.

This case returns to us on remand from the Supreme Court of the United States. The defendants were convicted of engaging in a sophisticated tax-fraud conspiracy that caused a loss of income-tax revenue to the government exceeding $60 million. We affirmed the defendant's convictions and sentences in United States v. Vallone, 698 F.3d 416 (7th Cir.2012); and we assume the reader's familiarity with that decision. Five of the six defendants thereafter jointly petitioned the Supreme Court for a writ of certiorari, contending (among other points) that their sentences violate the ex post facto clause, U.S. Const. art. I, § 9, cl. 3, because the district court sentenced each of them using the version of the Sentencing Guidelines in effect at the time of his sentencing rather than the more favorable version in effect at the time of his offenses. The Court granted the defendants' petition, vacated the judgment, and remanded the case for reconsideration in light of the Court's recent decision in Peugh v. United States, ––– U.S. ––––, 133 S.Ct. 2072, 186 L.Ed.2d 84 (2013). See Dunn v. United States, ––– U.S. ––––, 133 S.Ct. 2825, 186 L.Ed.2d 881,reh'g denied,––– U.S. ––––, 134 S.Ct. 42, 186 L.Ed.2d 955 (2013). Pursuant to Circuit Rule 54, the parties have submitted memoranda setting forth their respective positions as to what action this court should take in light of Peugh. We now conclude that no violation of the ex post facto clause occurred in sentencing any of the four defendants before us, as the relevant change in the Guidelines occurred in November 2001, and the conspiracy of which the defendants were convicted did not conclude until 2003. We therefore again affirm the sentences imposed on Vallone, Hopper, Dunn, and Bartoli ¹ and reinstate our previous opinion as modified by the reasoning we set forth below.

The tax-related crimes charged in this case ended late in 2003. In sentencing the various defendants, however, the district court applied the 2007 and 2008 versions of the Guidelines in effect at the time of their sentencings. See18 U.S.C. § 3553(a)(4)(A)(ii); U.S.S.G. § 1B1.11(a) & (b)(1) (court shall use Guidelines Manual in effect at time of sentencing unless doing so would violate ex post facto clause). Hopper argued both below and on appeal that this constituted an ex post facto violation, because the tax loss table used to establish his base offense level, seeU.S.S.G. § 2T4.1, had been changed to his detriment after his active participation in the criminal activity ended.² Both the district court and this court rejected that argument on the strength of our decision in United States v. Demaree, 459 F.3d 791 (7th Cir.2006), which reasoned that, in view of the advisory-only status of the guidelines after United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005), no ex post facto problem was posed by applying the version of Guidelines in effect at sentencing, even if that version treated the defendant's crimes more harshly than the one in effect at the time of his offense. See Vallone, 698 F.3d at 494–95; R. 1085 at 12–13, 17.

Peugh rejected our reasoning in Demaree. The Supreme Court emphasized that the Guidelines continue to play a significant role at sentencing notwithstanding the fact they no longer bind the judge's choice of sentence after Booker. The district judge must still begin by properly calculating the Guidelines range, 133 S.Ct. at 2080, and although he has the authority and discretion to impose a sentence outside that range, the advisory range, which represents the Sentencing Commission's view as to what constitutes an appropriate sentence, remains a benchmark throughout the processes of sentencing and appellate review, id. at 2083. Indeed, if the judge is contemplating a sentence outside of the Guidelines range, he must consider the extent of the deviation from that range and satisfy himself that there is a compelling justification for it. Id. These requirements mean that “[i]n the usual sentencing, ... the judge will use the Guidelines range as the starting point in the analysis and impose a sentence within the range.” Id. (quoting Freeman v. United States, ––– U.S. ––––, 131 S.Ct. 2685, 2692, 180 L.Ed.2d 519 (2011) (plurality opinion)). Even when a judge decides to impose a non-Guidelines sentence, the Guidelines represent the basis for the sentence in the sense that the advisory range constitutes both the starting and reference points for that sentence. Id. (quoting Freeman). Similarly, a reviewing court may presume that a within-range sentence is reasonable, and when confronted with a sentence below or above the range will consider whether the extent of the variance is appropriate in comparison with the advisory range. Id. In short: “The federal system adopts procedural measures intended to make the Guidelines the lodestone of sentencing. A retrospective increase in the Guidelines range applicable to a defendant [thus] creates a sufficient risk of a higher sentence to constitute an ex post facto violation.” Id. at 2084.

Obviously our reliance on Demaree as the basis for rejecting the ex post facto argument can no longer stand; we therefore retract the relevant portions of our prior opinion, 698 F.3d at 489, 494–95, and consider anew whether in fact the defendants' ex post facto rights were violated by the district court's use of the 2007 and 2008 Guidelines in determining their sentences. We shall assume arguendo that each of the four defendants before us is entitled to advance the ex post facto argument, although among these four only Hopper preserved such an argument by making it to us earlier. The certiorari petition filed by these defendants candidly acknowledged that fact and suggested that any question of waiver could be addressed by this court on remand. SeePetition for Writ of Certiorari, Dunn, et al. v. United States, 2013 WL 703419, at *9 & n. 5 (Feb. 25, 2013) (No. 12–1056). We do not understand the Court's remand order to foreclose consideration of whether the defendants other than Hopper waived the ex post facto issue; but in view of our conclusion that their ex post facto rights were not violated, we need not take up that issue.

The one and only change in the Guidelines that the defendants contend affected them adversely is the revision to the tax table which establishes the base offense level for the sorts of tax evasion and tax fraud offenses of which the defendants were found guilty. SeeU.S.S.G. § 2T4.1. The change took effect with the 2001 version of the Guidelines. Previously, the tax table would have specified a base offense level of 25 for losses approximating $60 million, which is the loss for which most of the defendants in this case were held to account. See§ 2T4.1(T) (Nov.2000); after the revision, the table specified a base offense level of 30. See§ 2T4.1(M) (Nov.2001). There is no doubt that this change was adverse to the defendants. The question, then, is whether this change can be said to have taken effect after the defendants' offenses were completed; only then could it be characterized as a retrospective change implicating their ex post facto rights. Cf. United States v. Cruz, 522 Fed.Appx. 352, 353 n. 1 (7th Cir.2013) (nonprecedential decision) (although court applied November 2012 Guidelines rather than November 2009 or 2010 Guidelines in effect at time of defendant's offense, “[n]o Ex Post Facto Clause issues are present in this case, ... because the relevant portions of the November 2012 Sentencing Guidelines do not provide a higher applicable sentencing range than the November 2009 and November 2010 Sentencing Guidelines”).

The defendants were convicted of multiple crimes, but for present purposes the pertinent one is the offense of conspiracy, given its nature as a continuing offense. Each of the defendants was convicted on Count One of the superseding indictment, which pursuant to 18 U.S.C. § 371 charged them with conspiring to defraud the United States by interfering with the collection of income taxes by the Internal Revenue Service (“IRS”) and by committing offensesagainst the United States through, inter alia, aiding and abetting the preparation and presentation of false and fraudulent income tax returns to the IRS. The evidence revealed that the conspiracy began in 1994 and ended in 2003. Notably, that time period straddles the former and current version of the tax loss table.

In United States v. Vaughn, 433 F.3d 917 (7th Cir.2006), on which the government relies, the defendant likewise had been convicted of conspiracy under section 371. As here, the conspiracy began prior to the effective date of the November 2001 version of the Guidelines but did not conclude until after that date. In view of the continuing nature of the conspiracy offense, which brought the offense within the scope of the later version of the Guidelines, we concluded that it was appropriate to sentence the defendant under that version notwithstanding that it punished him more severely than prior versions. Id. at 921–22. Our reasoning, because it bears directly on the arguments made here, is worth quoting at some length:

This court previously has determined that, when a defendant is convicted of an...