No Angry Men

Portolatin v. Graham, No. 07-1599-pr (2d Cir. October 18, 2010) (en banc)

Earlier this year, a Second Circuit panel held that New York’s persistent felony offender (PFO) statute violated the right to a jury trial under Apprendi. See The Persistents of Apprendi, posted April 9, 2010. In this en banc opinion, authored by Judge Wesley, the full court changed course and held that the PFO scheme does not, in fact, violate Apprendi. The members of the original panel, along with Judge Pooler, dissented.

The PFO scheme provides for dramatic sentencing enhancements for certain recidivists, and those that are deemed PFO’s can be subject to a sentence far greater than statutory maximum they would otherwise face. Application of the PFO statute is a two-step process. The first step requires the prosecution to prove that the defendant has two or more qualifying prior felonies. Once this is established, the second step is for the sentencing judge to assess whether a PFO sentence is warranted, taking into account the defendant’s “history and character” and the “nature and circumstances of his criminal conduct.” The original panel concluded that step two violated Apprendi, which “prohibits ... judicial factfinding” beyond the fact of a prior conviction that “result[s] in enhanced sentences.” But the en banc court disagreed.

Or, perhaps more accurately, the en banc court concluded that the New York courts’ conclusion that the PFO scheme did not violate Apprendi - because sentencing courts can impose a PFO sentence based on step one alone - was not an unreasonable application of federal law. Since the New York Court of Appeals “has interpreted step two of the PFO sentencing scheme as a procedural requirement that informs only the sentencing court’s discretion, the New York courts were not unreasonable to conclude that this consideration is unlike the factfinding[s]” that are impermissible under Apprendi and its progeny.

And, while there might be an argument that step two requires a court to consider subsidiary facts about a defendant’s criminal history that stray beyond the boundaries of Apprendi’s fact-of-conviction rule, federal courts have not been uniform in applying that rule. Absent a clear Supreme Court holding on the question, in a habeas case, such an argument goes nowhere. “[I]f our Court cannot divine a clear answer from the [Supreme] Court’s existing holdings, AEDPA prevents us from faulting a state court for selecting one reasonable conclusion over another.”

PC World

United States v. Pfaff, No. 09-1702-cr (2d Cir. August 27, 2010)(Jacobs, Winter, McLaughlin, CJJ) (per curiam)

Apprendi rears its head once again in this latest per curiam, this time with respect to a fine.

A jury convicted John Larson, one of the defendants in the KPMG tax shelter case, of twelve counts of tax evasion under 26 U.S.C. 7201, but did not make a finding as to the pecuniary loss Larson caused or the gain he derived from the conduct. At sentencing, the district judge found a “gross pecuniary loss” of more than $100 million. Since 18 U.S.C. § 3571(d) authorizes a fine of up to twice the loss, the judge determined that the statutory maximum fine would be more than $200 million. The court ultimately imposed a $6 million fine.

While no Larson made no Apprendi objection, the circuit found plain error and vacated the fine. Section 3571(b) establishes a maximum fine of $250,000 per felony count of conviction. Section 3571(d), however, allows an alternative fine of up to twice the gain or loss resulting from the offense. But this alternative provision implicates Apprendi, since “any fact that increases the penalty ... beyond the prescribed statutory maximum must be submitted to a jury, and proved beyond a reasonable doubt.” The “statutory maximum” for Apprendi purposes is the maximum sentence that a judge can impose based solely on the facts reflected in the jury verdict or admitted by the defendant.

Accordingly, absent a jury finding as to loss or gain, Larson’s statutory maximum fine was $250,000 for each of the twelve counts, or $3 million. By fining him more than that based on its own loss finding, the district court violated Apprendi.

Nor is a different outcome required by the cases holding that Apprendi does not apply to restitution or forfeiture calculations. Unlike those financial penalties, criminal fines are subject to statutory maximums. Thus, when a jury does not make a finding as to pecuniary gain or loss, the statute’s default maximums “cap the amount a district court may fine the defendant.”

The Persistents of Apprendi

Besser v. Walsh, No. 05-4375-pr (2d Cir. March 31, 2010) (Winter, Sack, CJJ, Murtha, DJ)

While the blog does not usually cover habeas cases, this one is important, as it invalidates New York State’s discretionary felony persistent offender sentencing scheme. The decision involves five separate cases heard “in tandem,” which is what the circuit calls cases that present the same legal issue that are heard together but not formally consolidated.

In New York, a first-time felon usually faces an indeterminate sentencing range based on the grade of the offense of conviction. If the court finds that a defendant sustained a qualifying predicate felony, he faces an enhanced sentence as a second felon. A defendant with two prior felonies is a “persistent felony offender,” a designation that in many instances requires a minimum sentence that is greater than the maximum sentence authorized for a second felony offender convicted of the same offense.

Unlike second-felony treatment, which requires merely a finding that the predicate felony exists, persistent felon treatment requires a two findings. First the judge finds that the defendant has at least two prior felonies. This makes the defendant eligible for the enhanced sentence. But in order to impose the enhanced sentence, the court must also find that the “history and character of the defendant and the nature and circumstances of his criminal conduct” are such that it is in the public interest for the defendant to be subject to the longer term.

The New York Court of Appeals repeatedly rejected Apprendi challenges to this scheme even though it would seem fairly clear that it violates Apprendi. After all, Apprendi holds that, other than the fact of a prior conviction, “any fact that increases the penalty for a crime beyond the prescribed statutory maximum must be submitted to a jury and proved beyond a reasonable doubt.” Under this scheme, the maximum is increased by fact-findings that are far more extensive than the mere existence of the prior conviction.

It is somewhat surprising to learn, then, the circuit did not find an Apprendi violation, per se. Rather, it found that the scheme violated Apprendi only as interpreted by Blakely. The reason derives from the habeas corpus standard of review, which constrains federal courts to look only at whether the state court’s interpretation of federal law - in this instance Apprendi - was “reasonable.” In fact, the circuit had twice upheld New York’s persistent felon scheme on Apprendi-based habeas challenges, holding that, despite Apprendi’s use of the phrase “any fact,” it was reasonable to read Apprendi to mean that “certain kinds of judicial fact-finding did not violate Apprendi even if it resulted in a sentence beyond the statutory maximum.”

In other words, according to the circuit, it was "reasonable" to read the word “any” to mean “some.” This is why we do not blog habeas cases.

According to the circuit, Apprendi’s “any” did not really stop meaning “some” until Blakely, which made it “unambiguously clear” that “any” meant “any,” and not “some.” So, in this decision the court at last holds that the New York persistent felony offender scheme violates not Apprendi, but Apprendi as interpreted by Blakely. That Apprendi alone was not enough to secure this result was bad news for one defendant, whose case, although otherwise identical to the other four, became final before Blakely was decided. This is another reason why we do not blog habeas cases.

Finally, instead of simply granting the petitions and ordering new sentencings for four post-Blakely defendants, the court remanded the case to the district court to address whether the application of the unconstitutional sentencing statute was harmless error.

The Loan Arranger

United States v. Confredo, No. 06-3201-cr (2d Cir. June 10, 2008) (Newman, Winter, Parker, CJJ)

This case takes on the difficult question of fixing the loss amount under the sentencing guidelines when the case involves fraudulently obtained that loans have been partially repaid. It also addresses an interesting Apprendi claim.

1. The Loss Amount

Defendant Confredo and his associates coordinated the submission of more than 200 fraudulent loan applications to New York banks. The borrowers were small businesses, which paid Confredo a fee, and knew that the applications were false, in most instances because the businesses were not credit worthy. Most of the applications were cosigned by second parties with good credit, but none were secured by real collateral. In total, more than $24 million was sought, and more than $12 million was actually lent, mostly from Citibank.

At sentencing, the probation department recommended that the full $24 million be treated as intended loss under the guidelines, although the available evidence suggested that the banks had actually lost significantly less than that, because some of the $12 million in loans had been repaid. When Confredo was originally sentenced, in 1997, the district court used the $24 million figure, rejecting Confredo’s argument that the guidelines should be based on the actual loss, which he conceded was between $10 million and $20 million.

He won his first appeal, which included an unpreserved claim that the loss amount was incorrect. Because the government had conceded on other issues, the court directed that the district court revisit loss amount on remand.

At resentencing, the government urged the district court to stick to its original ruling. Confredo argued that the intended loss was less than $20 million because he expected that (1) the banks would reject some of the applications and (2) some of his customers would repay their loans, at least in part. The district court sided with the government, but the circuit disagreed.

The court first dealt with the “uncertainty” as to whether the district court’s loss calculation was a fact-finding, reviewed only for clear error, or an interpretation of the guidelines, which would be reviewed de novo. Here, the court treated the ruling here a legal question - as a matter of law, does the presenter of loan applications intend a loss equal to the aggregate amount of the loans when the presenter is not the borrower?

Then the court then surveyed the law on this point. Until 1991, it had held that the proper measure of intended loss was always the value of the loan obtained or sought, even if the defendant intended to repay it. A 1991 guideline amendment, however, permitted greater flexibility on this issue, giving a defendant credit for actions - such as loan repayments or assets pledged to secure the loan - that might reduce the intended loss amount.

The court viewed Confredo’s case as more difficult, however, because he was not the borrower himself, and no assets had been pledged to secure the loans. Nevertheless, the court concluded that the 1991 amendment means that a defendant “should have an opportunity to persuade the sentencing judge that the loss he intended was less than the face amount of the loans.” The court remanded the case for this purpose, directing that the district court “determine the extent, if any, to which Confredo has proven a subjective intent to cause a loss of less than the aggregate amount of the loans.”

2. The Apprendi Issue

Confredo also received to a 3-level enhancement for committing some of the offenses to which he had pled guilty while on bail for others. He argued that this enhancement violated his right to a jury trial, under Apprendi. Interestingly, the court held that Apprendi does apply in this situation because, even though Confredo did not receive a sentence above the unenhanced statutory maximum, the enhancement “expose[d him] to the risk of a sentence that exceed[ed] the statutory maximum.” But the court also held that Apprendi’s jury fact-finding requirement was not violated, because Confredo “sufficiently” admitted that he committed offenses while on release, by admitting to conduct that “the public record indisputably establishe[d]” had occurred after his release on bail.

The court also recognized that there was a second Apprendi violation here - the absence from the indictment of an allegation that Confredo committed the offenses while on release. But it held that such an omission is harmless error “where the evidence is overwhelming that the grand jury would have found the fact at issue.”