USA v. Johnston, 99-10027

• Decision Date: 14 July 1999
• Docket Number: No. 99-10027,99-10027
• Citation: 199 F.3d 1015
• Parties: (9th Cir. 1999) UNITED STATES OF AMERICA, Plaintiff-Appellee, v. JERRY LEE JOHNSTON, Defendant-Appellant
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1015

199 F.3d 1015 (9th Cir. 1999)

UNITED STATES OF AMERICA, Plaintiff-Appellee, v. JERRY LEE JOHNSTON, Defendant-Appellant.

No. 99-10027

U.S. Court of Appeals for the Ninth Circuit

Argued and Submitted July 14, 1999--San Francisco, California

Filed December 21, 1999

Paul Turner, Assistant Federal Public Defender, Las Vegas, Nevada, for the defendant-appellant.

David A. Bybee, United States Department of Justice, Washington, D.C., for the plaintiff-appellee.

Appeal from the United States District Court for the District of Nevada; Reed, Senior District Judge, Presiding. D.C. No. CR-96-00201-ECR

Before: Stephen Reinhardt, Diarmuid F. O'Scannlain, and William A. Fletcher, Circuit Judges.

REINHARDT, Circuit Judge:

Jerry Lee Johnston appeals his conviction and sentence by the District Court of Nevada for racketeering and conspiracy arising out of fraudulent telemarketing activities in which he participated as an employee of Pioneer Enterprises. On April 23, 1998, Johnston pleaded guilty to one count of racketeering, one count of racketeering conspiracy, and forfeiture pursuant to a plea agreement in which he waived his right to appeal all matters pertaining to the case or sentencing. Three years earlier, Johnston had entered into a similar plea agreement in Michigan, before the U.S. District Court for the Eastern District of Michigan. That earlier plea agreement included a non-prosecution provision.

Johnston raises two principal issues on appeal. First, Johnston appeals his Nevada plea and sentence on the basis of the non-prosecution provision in the earlier Michigan plea agreement. He argues preliminarily that consideration of this claim should not be barred by the non-appealability provision of the Nevada agreement or by his guilty plea, or even by his failure to move for a dismissal of the indictment at the district court level. Then, on the merits, he asserts that the Michigan plea agreement precludes any subsequent prosecutions by the United States. Second, Johnston argues that the Nevada district court erred by not setting off the money forfeited against the restitution ordered. Moreover, Johnston contends on appeal that the non-appealability provision of the Nevada plea agreement does not foreclose appellate review of the second issue.

We conclude with respect to the first issue that the Michigan plea agreement does not bar the subsequent Nevada prosecution. Whether, as the government asserts, this means we have no jurisdiction over that issue is merely a tautological matter. With respect to the second issue, we conclude first, that review of the set-off question is not foreclosed by the non-appealability provision of the plea agreement, and second, that the district court did in fact err by not providing for a set-off of the money forfeited against the restitution ordered. We thus affirm in part, and reverse in part.

I. BACKGROUND

On April 3, 1995, Jerry Lee Johnston entered a guilty plea to one count of wire fraud and one count of bank fraud, pursuant to a plea agreement reached with the United States Attorney's Office for the Eastern District of Michigan. The counts arose out of Johnston's participation in fraudulent telemarketing groups that promised valuable gifts in return for expensive purchases. Those who bought the various products sold by the group on the strength of the promised prize in fact received "gimme gifts," items of little or no value. From 1988 to 1990, Johnston owned his own telemarketing enterprise in Detroit, Michigan, and the charges included in the Michigan plea agreement stemmed from those activities.

As part of that plea agreement, the "government agree[d] not to charge defendant with any other offenses of which it [was] aware at the time of the signing of this document." However, the agreement also provided that "[u]nless an exception to this paragraph is explicitly set forth elsewhere in this document, this agreement does not bind or obligate governmental entities other than the United States Attorney's Office for the Eastern District of Michigan" (emphasis added). Pursuant to the agreement, Johnston was sentenced to nine months in prison, a term of supervised release, a $10,000 fine, and $13,739 in restitution.

On August 28, 1996, a Nevada grand jury filed a criminal indictment against 17 defendants, including Jerry Lee Johnston, in the United States District Court for the District of Nevada. All of the defendants had at one time been associated with Pioneer Enterprises, a telemarketing company located in Las Vegas, Nevada. In particular, Johnston worked for Pioneer Enterprises from 1991 to 1993. As in the earlier Michigan case, the indictment charged the defendants with inducing potential customers to buy their merchandise at inflated prices by fraudulently leading them to believe that they would receive a valuable award in return for their purchases.¹ Johnston himself was indicted on multiple counts of racketeering, racketeering conspiracy, wire fraud, and conspiracy to commit wire fraud. The indictment also demanded forfeiture of at least $142,414.50².

On April 20, 1998, Johnston entered into a plea agreement with the U.S. Attorney's Office for the District of Nevada. In the agreement, Johnston agreed to enter a plea of guilty to one count of racketeering and one count of racketeering conspiracy. As part of the agreement, Johnston consented to forfeiture and restitution. Moreover, the agreement included a waiver of appeal provision, which read: "The defendant is aware that Title 18, United States Code, Section 3742 gives the defendant a right to appeal the sentence imposed. Acknowledging this, the defendant knowingly waives the right to appeal all matters pertaining to this case and any sentence imposed by the Court provided the sentence is within the guidelines contemplated under this agreement " (emphasis added).

At the hearing on Johnston's motion to change his plea pursuant to the agreement, the judge examined Johnston at length about his mental capacity, his understanding of the plea agreement and its consequences, and the rights he would be waiving in it. The judge also explained the consequences of his plea to Johnston, spelling out each right which Johnston would give up by entering a guilty plea. In particular, the judge: a) explained that Johnston had a right to appeal; b) explained that he would be "waiving a number of the rights of appeal . . ."; and c) directed him to the appeal waiver provision in the agreement.

More specifically, the judge said, by pleading guilty pursuant to the agreement, Johnston would "knowingly waive the right to appeal all matters pertaining to this case and any sentence imposed by the court, provided the sentence is within the guidelines contemplated under this agreement." In particular, the district court told Johnston that to be successful on appeal, Johnston would have to show that the court failed to follow or misapplied the guidelines, or that the court failed to follow a statute that it was required to obey. In addition, the court warned Johnston that, to successfully appeal the guilty plea itself, he would have to show that the plea was either unlawful or involuntary or otherwise "unintelligent."

At the sentencing hearing, the district court explicitly found that the defendant's plea was both voluntary and knowing, and that the plea was supported by an adequate independent basis in fact. Moreover, the court concluded that Johnston fully understood both his rights and the consequences of his plea for those rights. Having reached those conclusions, the court turned to the question of sentencing.

In determining the sentence, the court entertained recommendations and objections from both sides. During the hearing, Johnston's counsel raised both the issues of restitution and of the non-prosecution clause. In particular, counsel argued that any restitution ordered should be set off against the amount forfeited. In setting the sentence, however, the district court noted that restitution is measured by loss to the victims, not profit received by the defendant. Specifically, the court held that it would be inappropriate to deduct the amount forfeited from that allocated for restitution in light of the different purposes and nature of forfeiture and restitution. In particular, the court pointed out that, whereas forfeiture is mandatory and designed to ensure that a defendant does not profit from his crimes, restitution is discretionary and designed to compensate victims for their loss. In setting the appropriate amounts, the court considered Johnston's resources, earning capacity, and financial obligations. The district court ultimately set the amount of restitution at $577,754 and of forfeiture at $142,414.50.

The issue of the non-prosecution provision in the earlier plea agreement also arose at sentencing, albeit indirectly. In an attempt to argue that Johnston's criminal history did not demonstrate a need for extended incarceration, his counsel referred specifically to the Michigan plea agreement, but appeared to concede that the plea agreement was limited to the Eastern District of Michigan:

When this case first came to fruition in Las Vegas, his prior attorney had moved to get this case dismissed based upon that language in the Michigan plea agreement. However, upon close scrutiny of that plea agreement, the government pointed out to Ms. Pancoast, his prior attorney, that the Michigan plea agreement specifically was limited to the district of Michigan. It's our position that if Mr. Johnston had any idea that the employees of Pioneer were going to be indicted or if his attorney was aware of it, or it [sic] the government had been aware of it, it would have been packaged up together.

Moreover, in arguing for a downward departure under U.S.S.G. S 5K2.0, Johnston's counsel again referred to the plea agreement:

Specifically the plea agreement in that case had indicated that any other offenses which...