United States v. Vandebrake

Citation2012 Trade Cases P 77880,679 F.3d 1030
Decision Date27 April 2012
Docket NumberNo. 11–1390.,11–1390.
PartiesUNITED STATES of America, Appellee, v. Steven Keith VANDEBRAKE, also known as Steve Keith VandeBrake, Appellant.
CourtU.S. Court of Appeals — Eighth Circuit

OPINION TEXT STARTS HERE

Mark E. Weinhardt, argued, Des Moines, IA, William B. Ortman, Des Moines, IA, and Francis L. Goodwin, Sioux City, IA, on the brief, for appellant.

John Fonte, argued, U.S. DOJ, Civil Division, Washington, DC, John J. Powers, III, U.S. DOJ, Civil Division, Washington, DC, Andre M. Geveroa, Robert M. Jacobs, L. Heidi Manschreck, U.S. DOJ, Civil Division, Chicago, IL, on the brief, for appellee.

Before RILEY, Chief Judge, BEAM and BYE, Circuit Judges.

BYE, Circuit Judge.

Steven VandeBrake pleaded guilty to two counts of price fixing and one count of bid rigging in violation of 15 U.S.C. § 1. The guilty plea was pursuant to a nonbinding plea agreement he reached with the government after the district court 1 indicated it would not accept a binding plea agreement calling for a sentence of nineteen months. The district court sentenced VandeBrake to forty-eight months of imprisonment followed by three years of supervised release, and imposed a fine of $829,715.85. In selecting a sentence of forty-eight months, the district court varied upward from the advisory guidelines range based primarily upon VandeBrake's lack of remorse and the court's policy disagreement with United States Sentencing Guidelines Manual ( U.S.S.G.) § 2R1.1. VandeBrake appeals his sentence contendingthe district court abused its discretion by not accepting the binding plea agreement. He also contends the sentence of forty-eight months, as well as the amount of the fine, are substantively unreasonable. We affirm.

I

In 1994, VandeBrake took over his family's concrete business in Orange City, Iowa. Fourteen years later VandeBrake sold the family business to Grupo Cementos de Chihuahua (GCC), a Mexico-based corporation which operates close to two dozen cement plants in Iowa. GCC formed GCC Alliance Concrete (Alliance), and VandeBrake thereafter worked as a sales manager for the new company. In March 2009, the United States Department of Justice (DOJ) began investigating VandeBrake for his involvement in a bid-rigging conspiracy arising from the sale of concrete products in northern Iowa. The investigation began after one of Alliance's competitors reported the bid-rigging conspiracy to the DOJ under the Antitrust Division's Leniency Program.2

The DOJ's investigation confirmed the existence of a bid-rigging conspiracy between VandeBrake's company, Alliance, and two of its competitors, as well as a price-fixing scheme between Alliance and a third competitor. As a result of the investigation, the government filed a criminal information against VandeBrake charging him with three antitrust violations of 15 U.S.C. § 1, two counts for bid rigging and one count for price fixing. Through his counsel, VandeBrake engaged in extensive negotiations with the DOJ's Antitrust Division, ultimately reaching an agreement whereby the parties would ask the district court to accept a binding plea agreement under Rule 11(c)(1)(C) of the Federal Rules of Criminal Procedure. The binding agreement, if accepted by the district court, called for VandeBrake to serve a sentence of nineteen months and pay a fine of $100,000 for his role in the bid-rigging and price-fixing conspiracies.

Shortly after VandeBrake entered guilty pleas to all three counts before a magistrate judge, the district court entered an order announcing it would not accept the binding plea agreement. The district court scheduled a hearing under Rule 11(c)(5) to discuss the matter. At the hearing, the district court disclosed the reasons why it was not accepting the binding plea agreement, which included: 1) the leniency of the sentence in light of VandeBrake's conduct; 2) a policy disagreement with the antitrust guidelines; 3) the presence of codefendants and the need to give fair sentences to each defendant after reviewing all of the applicable presentence investigation reports (PSRs), which the district court had not yet done; 4) the DOJ attorney's relative lack of experience when compared to the district court's own sentencing experience; and 5) a reluctance to surrender the district court's sentencing discretion in light of the other factors just mentioned.

Ultimately, however, the district court did not reject the binding plea agreement, but gave VandeBrake the option of going forward with the sentencing hearing, after which the district court would decide whether to accept or reject the binding plea agreement. SeeFed.R.Crim.P. 11(c)(3)(A) (indicating a district court “may accept [a binding] agreement, reject it, or defer a decision until the court has reviewed the presentence report”). Speaking with candor, the district court represented “there's probably a less than 10 percent chance that I would accept the plea” if the parties opted to go forward with the sentencing hearing first. The district court recessed briefly to allow the parties to discuss their options. After the recess, VandeBrake indicated he still wanted to plead guilty, but would plead to a non-binding plea agreement under Rule 11(c)(1)(B) rather than a binding plea agreement under Rule 11(c)(1)(C). The district court accepted VandeBrake's guilty plea pursuant to the non-binding plea agreement.

Prior to sentencing, the district court ordered a PSR prepared. The PSR discussed, among other things, the length and scope of the concrete bid-rigging and price-fixing conspiracies. The first bid-rigging conspiracy took place between Alliance and one of its competitors from June 2008 through March 2009. The second bid-rigging conspiracy took place between Alliance and a second competitor from January 2008 through August 2009. The price-fixing conspiracy took place between Alliance and a third competitor from January 2006 through August 2009. The PSR calculated the volume of commerce affected by each conspiracy to be $591,000, $95,000, and $4,845,439.61, respectively, for a total of $5,531,439.61.3 Using the antitrust guideline set forth in U.S.S.G. § 2R1.1, which includes adjustments for the volume of commerce attributable to a defendant, the PSR calculated a final offense level of sixteen. The advisory guidelines range was 21–27 months.

The district court conducted a three-day sentencing hearing for VandeBrake and one of his codefendants. Following the sentencing hearing, the district court issued a detailed memorandum indicating it was varying upward from the advisory guidelines range by imposing a sentence of forty-eight months. The two primary reasons given by the district court for the variance were a policy disagreement with the antitrust guidelines and VandeBrake's lack of remorse for his crimes. The district court's policy disagreement focused on the Sentencing Commission's choice to increase the offense levels for antitrust violations less rapidly than the offense levels for fraud violations despite the comparable societal harm targeted by both the fraud and antitrust guidelines. The district court also indicated why it believed the Commission's explanation for the disparity did not apply in VandeBrake's situation.

The court further concludes that because of a flaw in U.S.S.G. § 2R1.1(b)(2), application of that section fails to provide a just and reasoned sentencing range given the facts of VandeBrake's case. The Sentencing Commission has explained that the offense levels for antitrust violations were increased in § 2R1.1 “to make them more comparable to the offense levels for fraud with similar amounts of loss.” U.S.S.G. app. C, amend. 377. The base offense level for antitrust violations begins at a higher level than the base offense level for fraud violations “in order to reflect the serious nature of and the difficulty of detecting such violations.” Id. However, the base offense level for antitrust violations then increases less rapidly than the offense level for fraud violations “in part, because, on the average, the level of mark up from an antitrust violation may tend to decline with the volume of commerce involved.” Id. This assumption is incorrect in this case, particularly with respect to VandeBrake's price-fixing of concrete sales through [Alliance's] price list. [Alliance] would establish a price list in January for a given year and then stick to that price list for the remainder of the year. Because [Alliance's] price list was based on a per cubic yard price, [Alliance's] price for its concrete did not decrease with volume. Thus, the level of mark up here for VandeBrake's price-fixing violations did not decline with the volume of commerce involved. Consequently, [Alliance's] unit cost of production should have decreased as production increased, thereby increasing the profits to be drawn from VandeBrake's antitrust activities and increasing the losses to his victims.

Therefore, there is no basis in this case for the base offense level for VandeBrake's antitrust violations to increase less rapidly than the offense level for comparative fraud violations. The court notes that the volume of commerce in this case, as agreed by the parties, is $5,666,439. The commentary to § 2R1.1 indicates that:

It is estimated that the average gain from price-fixing is 10 percent of the selling price. The loss from price-fixing exceeds the gain because, among other things, injury is inflicted upon consumers who are unable or for other reasons do not buy the product at the higher prices.

U.S.S.G. § 2R1.1 cmt. 3. Ten percent of the affected volume of commerce in this case is $566,634. Thus, the estimated loss to VandeBrake's victims in this case is more than $566,634. Under such circumstances, the fraud guideline § 2B1.1(b)(1)(H) directs a fourteen level increase because the resulting loss in this case is more than $400,000 but less than $1,000,000. This is substantially more...

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