US v. Schultz

• Decision Date: 23 February 1996
• Docket Number: No. CR 95-3011.,CR 95-3011.
• Citation: 917 F. Supp. 1343
• Parties: UNITED STATES, Plaintiff, v. George E. SCHULTZ, et al., Defendants.
• Court: U.S. District Court — Northern District of Iowa

917 F. Supp. 1343

UNITED STATES, Plaintiff, v. George E. SCHULTZ, et al., Defendants.

No. CR 95-3011.

United States District Court, N.D. Iowa, Central Division.

February 23, 1996.

Janet L. Papenthien, Assistant United States Attorney, Sioux City, Iowa, for U.S Jane Kelly, Assistant Federal Defender, Cedar Rapids, Iowa, for Defendant George E. Schultz.

                                              TABLE OF CONTENTS
                  I. INTRODUCTION AND BACKGROUND ...................................... 1344
                 II. LEGAL ANALYSIS ................................................... 1347
                     A. The "Acceptance-Of-Responsibility" Guideline .................. 1347
                     B. Judicial Interpretations And Applications ..................... 1348
                        1. Burdens, standards, and tests .............................. 1348
                        2. Applications ............................................... 1350
                     C. "Acceptance Of Responsibility" In This Case ................... 1352
                        1. Acceptance of responsibility in "gambling business" cases .. 1352
                        2. Application of principles and tests ........................ 1354
                III. CONCLUSION ....................................................... 1355
                

MEMORANDUM OPINION REGARDING SENTENCING OF DEFENDANT SCHULTZ

BENNETT, District Judge.

This sentencing demonstrates the painful and Hobsonian tension created by the United States Sentencing Guidelines between a criminal defendant's most precious constitutional right, the Sixth Amendment right to trial by jury, and his or her efforts to obtain a reduction in sentence for "acceptance of responsibility." Although the Eighth Circuit Court of Appeals has held that the "acceptance-of-responsibility" guidelines do not "punish" a defendant for asserting a right to a jury trial, the practical effect of the guidelines, whether that effect is described as a "penalty" for going to trial or a "reward" for acknowledging criminal conduct prior to trial, is that only in "rare situations" can a defendant who stands on the right to a trial take advantage, after conviction, of a reduction in sentence for acceptance of responsibility. Does this case present one of those "rare situations" in which a criminal defendant, who put the government to the burden of proving its case before a jury, has nevertheless shown a recognition and affirmative responsibility for his offense, and sincere remorse for that offense, such that he is entitled to a sentence reduction for "acceptance of responsibility"? Because the court concludes that the answer to this question is yes, despite no supporting recommendation in the pre-sentence investigation report, the court here details its grounds for that conclusion.

I. INTRODUCTION AND BACKGROUND

Following his conviction by a jury, defendant George Schultz has moved for a reduction in his sentence for "acceptance of responsibility" pursuant to U.S.S.G. § 3E1.1(a). The request is contrary to the recommendation found in the pre-sentence investigation (PSI) report, but the government stood silent on the issue of such a reduction at sentencing on February 23, 1996. The court, recognizing not only that such a reduction is contrary to the PSI report, but perhaps counterintuitive in a case in which the defendant demanded a trial to prove his guilt, enters this memorandum opinion in support of its decision to grant the requested reduction for "acceptance of responsibility."

George Schultz and others were indicted in a four-count indictment on May 4, 1995, after an investigation of an illegal gambling operation in Fort Dodge, Iowa. Three of the counts in the indictment pertained to Mr. Schultz; however, prior to trial, the United States was granted leave to dismiss one of those counts against Mr. Schultz. This matter therefore proceeded to jury trial beginning on October 17, 1995, on Counts I and IV of the indictment against Mr. Schultz. Count I charged Mr. Schultz with conducting an illegal gambling business in violation of 18 U.S.C. § 1955. Count IV charged Mr. Schultz under 18 U.S.C. § 371 with conspiracy to conduct an illegal gambling business or conspiracy to use the telephone, a facility in interstate commerce, with intent to promote or carry on an illegal gambling business. Mr. Schultz was convicted on both counts of the indictment on October 30, 1995, following an eight-day trial.¹ On February 20, 1996, the court denied Mr. Schultz's post-trial motions for judgment of acquittal and for a new trial. Mr. Schultz therefore came on for sentencing on February 23, 1996. At sentencing, the court granted Mr. Schultz's request for a two-level reduction for "acceptance of responsibility" pursuant to U.S.S.G. § 3E1.1(a).

The court finds that two matters are telling on the issue of whether or not Mr. Schultz, despite standing on his right to a jury trial, which resulted in a conviction, has accepted responsibility for his criminal offense such that his sentence should be reduced. One of those matters is the nature of Mr. Schultz's defense. The other is Mr. Schultz's conduct during trial. The court therefore provides the pertinent background on these matters before turning to a legal analysis and factual determination of Mr. Schultz's request for a reduction in sentence.

Mr. Schultz's principal defense to these federal charges under 18 U.S.C. § 1955 and 18 U.S.C. § 371 was that the gambling business he honestly admitted he conducted, and honestly admitted violated state law, did not violate the federal statute, because it did not involve the requisite five persons necessary to establish federal jurisdiction or a violation under the federal statute. In drafting the jury instructions, the parties and the court were at some pains to determine the legal requirements for the five-person requirement and its relationship to the other elements of the offense, particularly the "thirty days" or "$2,000 per day" requirements. See 18 U.S.C. § 1955; and compare United States v. Grey, 56 F.3d 1219, 1222 (10th Cir.1995) ("The `five or more persons' requirement is separate from the thirty day requirement and, consequently, the government did not have to show that five or more persons at all times continued the operation for a period in excess of thirty days. United States v. Smaldone, 485 F.2d 1333, 1351 (10th Cir. 1973)."); United States v. Rieger, 942 F.2d 230, 234-35 (3d Cir.1991) (concluding that the "five persons" and "thirty days" requirements present "two separate and independent jurisdictional requirements for an illegal gambling business," and following Smaldone, 485 F.2d at 1351, to hold that each requirement should be applied separately); United States v. Smaldone, 485 F.2d 1333, 1351 (10th Cir.1973), cert. denied, 416 U.S. 936, 94 S.Ct. 1934, 40 L.Ed.2d 286 (1974) (holding that the two requirements are separate and independent, and stating: "It is not essential, contrary to the appellants' assertions, to establish that each conductor was involved in the gambling business for more than thirty days or generated at least $2,000 gross revenue in a single day. These requirements refer to the gambling operation and not to individuals.");²with United States v. Murray, 928 F.2d 1242, 1246-47 (1st Cir.1991) (recognizing the contrary "Gresko" line of cases, and the fact that only "substantially continuous," and daily, operation was required, and also relying on United States v. Marrifield, 515 F.2d 877, 881 (5th Cir.), cert. denied, 423 U.S. 1021, 96 S.Ct. 462, 46 L.Ed.2d 394 (1975), as indicating that "the requirements of § 1955 are satisfied if the gambling business involves the participation of five persons for more than thirty days, whether or not each of the five persons participates every day"); United States v. Gresko, 632 F.2d 1128, 1133 (4th Cir.1980) (five-person and thirty-day requirements must be read in conjunction); United States v. Tarter, 522 F.2d 520, 525 (6th Cir.1975) (same); United States v. Bridges, 493 F.2d 918, 920 (5th Cir.1974) (same). This process involved a difficult legal inquiry into the meaning of the statute and its applicability to the gambling business involved here. The court ultimately required the jury, in its responses in the verdict form, to identify by name or description which five or more persons were conducting the gambling operation for what period of thirty or more days, if they found Mr. Schultz guilty on Count I of the indictment. The jury identified six individuals, including Mr. Schultz and one of his co-defendants, who had pleaded guilty prior to trial, but not the co-defendant the jury acquitted at trial, as constituting the jurisdictional five or more persons. Identification and sufficient involvement of at least three of these persons was based on evidence drawn from Mr. Schultz's own records of his gambling business and from his testimony. Although Mr. Schultz characterized his records as demonstrating that some of these persons were "mere bettors," the jury apparently came to a contrary conclusion.

Turning from the nature of his defense at trial to the nature of his conduct during trial, the court's recollection of both Mr. Schultz's testimony and his manner in giving that testimony is that Mr. Schultz honestly and truthfully admitted every factual matter concerning his operation of a gambling business illegal under state law. Indeed, the court cannot recall a defendant who more openly acknowledged the factual elements of the government's case or cooperated more fully with counsel for both sides in presenting and explaining all factual matters for the jury's understanding and consideration. The court's knowledge of the record indicates that Mr. Schultz was no less forthcoming with government investigators prior to trial of this matter.

Furthermore, the court finds that Mr. Schultz was genuinely regretful, not just at being "caught," but at involvement in a business that was illegal. Also, Mr. Schultz constantly asserted that any wrongful conduct in operation of the gambling business was entirely his...