United States v. Munoz

• Court: Court of Appeals for the Fifth Circuit
• Decided: April 29, 2005
• Docket: 04-40481
• Status: Published

Opinion

United States Court of Appeals Fifth Circuit F I L E D REVISED APRIL 29, 2005 IN THE UNITED STATES COURT OF APPEALS April 29, 2005 FOR THE FIFTH CIRCUIT _____________________ Charles R. Fulbruge III Clerk No. 04-40481 _____________________

UNITED STATES OF AMERICA,

Plaintiff - Appellee,

versus

RUFINO SERNA MUNOZ,

Defendant - Appellant. _________________________________________________________________

Appeal from the United States District Court for the Southern District of Texas, Corpus Christi Division District Court Cause No. 03-CR-289(1) _________________________________________________________________

Before REAVLEY, JOLLY and PRADO, Circuit Judges.

EDWARD C. PRADO, Circuit Judge:

Appellant Rufino Serna Munoz challenges his sentence in this

appeal. After considering his arguments, the court vacates

Munoz’s sentence and remands this case for resentencing.

Background of the Case

Munoz was a party to a Ponzi scheme that defrauded numerous

individuals by convincing them to turn over funds under the false

pretense that they would be invested in legitimate enterprises.1

Early investors received “profits” from funds contributed by

1 A Ponzi scheme involves payment of early investors with funds taken from later investors. See United States v. Cook, 573 F.2d 281, 282 n.3 (5th Cir. 1978).

1 later investors, and the scheme eventually collapsed. Munoz and

his codefendants were indicted for 33 counts of various instances

of conspiracy, wire fraud, mail fraud, and money laundering.

Pursuant to a written plea agreement, Munoz pleaded guilty

to conspiracy to commit wire fraud and mail fraud in violation of

18 U.S.C. § 371 and to conspiracy to commit money laundering in

violation of 18 U.S.C. § 1956 (a)(1)(A)(I) and (h), as charged in

counts one and fourteen of the indictment. In return for Munoz’s

guilty plea, the Government agreed to recommend that Munoz

receive maximum credit for acceptance of responsibility and a

sentence at the lowest end of the guideline range; dismiss all

remaining counts against him in the indictment; and, if Munoz

provided substantial assistance, move for a downward departure.

The Government agreed that the applicable sentencing guidelines

for the fraud offense should be calculated using a base offense

level of 6,2 increased by 14 levels because the loss in his case

was less than $1,000,000, but more than $400,000;3 increased by 2

levels because the scheme defrauded more than ten, but fewer than

50 victims;4 increased by two levels because execution of the

offense involved sophisticated means;5 increased by two levels

2 See U.S. SENTENCING GUIDELINES MANUAL § 2B1.1(a) (2003). 3 See id. § 2B1.1(b)(1)(H). 4 See id. § 2B1.1(b)(2)(A). 5 See id. § 2B1.1(b)(8)(C).

2 because Munoz was a leader and organizer of the criminal

conduct;6 and decreased by three levels for acceptance of

responsibility.7 The Government also agreed that Munoz’s base

offense level for the money laundering offense should be

calculated using a base offense level of 24,8 increased by 2

levels because Munoz was convicted under 18 U.S.C. § 1956,9

increased by two levels because Munoz was a leader and organizer

of the criminal conduct;10 and decreased by three levels for

acceptance of responsibility.11 Taking the higher of the two

offense levels, the Government further agreed that the resulting

total offense level of 25, combined with a criminal history

category of I, yielded a guidelines sentencing range of 57-71

months of imprisonment.

The presentence report (PSR) calculated Munoz’s sentence

differently. The PSR grouped the offenses12 and assigned Munoz a

6 See id. § 3B1.1(c). 7 See id. § 3E1.1(a), (b). 8 See id. § 2S1.1(a)(1). 9 See id. § 2S1.1(b)(2)(B). 10 See id. § 3B1.1(c). 11 See id. § 3E1.1(a), (b). 12 The sentencing guidelines instruct the sentencing court to “group” offenses “[w]hen one of the counts embodies conduct that is treated as a specific offense characteristic in, or other adjustment to, the guideline applicable to another of the counts.” Id. § 3D1.2(c). The guidelines further provide that the offense level for the grouped offenses is “the offense level

3 base offense level of 6 for the fraud offense as the offense with

the highest offense level.13 The PSR recommended that the base

offense level be increased by 16 levels because the loss in the

case was more than $1,000,000, but less than $2,500,000;14

increased by four levels because the scheme defrauded more than

50;15 increased by two levels because execution of the offense

involved sophisticated means;16 increased by two levels because

Munoz was a leader and organizer of the criminal conduct;17 and

increased by two levels because the offense was facilitated

through abuse of a position of trust;18 and reduced by three

levels for acceptance of responsibility.19 Munoz’s total offense

level of 29, combined with his criminal history category I,

yielded a sentencing guidelines range of 87-108 months of

imprisonment.

Munoz filed a written objection to the PSR in which he

. . . for the most serious of the counts comprising the [g]roup, i.e., the highest offense level of the counts in the [g]roup.” Id. § 3D1.3(a). In Munoz’s case, count I——conspiracy to commit wire fraud and mail fraud——carried the highest offense level. 13 See id. § 2B1.1(a). 14 See id. § 2B1.1(b)(1)(I). 15 See id. § 2B1.1(b)(2)(B). 16 See id. § 2B1.1(b)(8)(C). 17 See id. § 3B1.1(c). 18 See id. § 3B1.3. 19 See id. § 3E1.1(a), (b).

4 challenged the enhancement of his sentence for an abuse of trust

and asked the district court to follow the calculation set forth

in the plea agreement. The probation officer did not revise his

recommendations.

At sentencing, Munoz renewed his objection to the PSR’s

recommendation of an abuse-of-trust enhancement and asked the

district court to follow the sentencing guidelines calculation in

the plea agreement. Munoz’s attorney explained that the two-

point adjustment for an abuse of trust was not included in the

plea agreement. The Assistant United States Attorney (AUSA)

acknowledged that the enhancement was not part of the agreement,

but stated that he was free to take a position on the

enhancement. The district court then questioned several victim

witnesses about whether they trusted Munoz. During its

questioning, the court periodically asked the AUSA to clarify

certain facts relevant to the enhancement.

After hearing the testimony, the district court asked the

AUSA if he urged the application of the abuse-of-trust

enhancement. The AUSA answered in the affirmative. The court

admonished Munoz in accordance with the PSR’s guideline

calculations and asked the AUSA if there was a motion for a

downward departure. The AUSA moved for a departure based on

substantial assistance, and the district court granted the

motion. The court then sentenced Munoz to 90 months of

imprisonment for the money laundering conviction and 60 months of

5 imprisonment for the wire fraud conviction, to run concurrently.

The court dismissed the remaining counts against Munoz upon

motion by the Government. Munoz timely filed a notice of appeal.

Whether the Government Breached the Plea Agreement

Munoz argues that the Government breached the plea agreement

by arguing at the sentencing hearing that his conduct constituted

an abuse of trust. Munoz explains that the Government stipulated

in the plea agreement to a guidelines calculation that did not

include an enhancement for an abuse of trust. Munoz complains

that despite the agreement, the Government breached its promise

to recommend and support the stipulated-to guidelines range by

affirmatively advocating for an enhancement that was not included

in the plea agreement. Munoz contends that he is entitled to

specific performance of the agreement, and thus, he asks this

court to vacate his sentence and remand his case for resentencing

before a different judge.

Whether the Government has breached a plea agreement is a

question of law that the court reviews de novo.20 Because Munoz

did not object on this basis at sentencing, the court reviews the

argument for plain error.21 The Government’s failure to fulfill

its promise affects the fairness, integrity, and public

20 United States v. Brown, 328 F.3d 787, 790 (5th Cir. 2003); United States v. Reeves, 255 F.3d 208, 210 (5th Cir. 2001). 21 Brown, 328 F.3d at 790; Reeves, 255 F.3d at 210.

6 reputation of judicial proceedings, and thus, a breach of the

plea agreement can constitute plain error without regard to the

whether the sentencing judge was influenced by the Government's

actions.22

If a defendant pleads guilty as part of a plea agreement,

the Government must strictly adhere to the terms and conditions

of its promises in the agreement.23 “[W]hen a plea rests in any

significant degree on a promise or agreement of the prosecutor,

so that it can be said to be part of the inducement or

consideration, such promise must be fulfilled.”24 In determining

whether the Government violated a plea agreement, this court

considers whether the Government's conduct was “consistent with

the defendant's reasonable understanding of the agreement.”25 If

22 See United States v. Goldfaden, 959 F.2d 1324, 1328 (5th Cir. 1992) (concluding that breach of a plea agreement can constitute plain error); United States v. Saling, 205 F.3d 764, 766-67 (5th Cir. 2000) (“If a breach has in fact occurred, the sentence must be vacated without regard to whether the judge was influenced by the government's actions.”); see United States v. Olano, 507 U.S. 725, 734, (1993) (explaining that the appellate court should correct a plain error if it seriously affects the fairness, integrity or public reputation of judicial proceedings); see also United States v. Reeves, 255 F.3d 208, 210 (5th Cir. 2001) (recognizing that the Government's breach may constitute plain error). 23 United States v. Valencia, 985 F.2d 758, 761 (5th Cir. 1993). 24 Santobello v. New York, 404 U.S. 257, 262 (1971). 25 Brown, 328 F.3d at 790; United States v. Wittie, 25 F.3d 250, 262 (5th Cir. 1994).

7 the Government breaches a plea agreement, the defendant is

entitled to specific performance of the agreement with sentencing

by a different judge.26

Here, the record indicates that the Government breached the

plea agreement. The agreement states that the Government and

Munoz “agree that the applicable sentencing guidelines should be

calculated as follows.” The agreement then sets out a specific

guideline calculation, which does not include an enhancement for

an abuse of trust. By not including an enhancement for an abuse

of trust, the parties agreed that it was not an applicable

guideline and that it should not be included in the guideline

calculation.

Despite the agreement, the Government, through the AUSA,

urged application of the abuse-of-trust enhancement. When

district court asked him, “What’s your position,” the AUSA

answered, “I believe that there was a private trust that was

violated.” The AUSA explained that “I . . . did not mention this

aspect in the Plea Agreement, but that didn’t mean I was not free

to argue my position about it.” When the court asked if he urged

the application of the enhancement, the AUSA answered, “Yes, your

Honor.” These responses are inconsistent with the plea

26 Valencia, 985 F.2d at 761; see Santobello, 404 U.S. at 263 (allowing the state court to decide if specific performance and sentencing by a different judge, or withdrawal of the defendant’s guilty plea, was proper remedy where government breached the plea agreement).

8 agreement. Even though the Government reserved the right to

“dispute sentencing factors or facts material to sentencing,” the

Government implicitly promised not to argue for an enhancement

that was not part of the plea agreement. Urging an enhancement

that was not part of the agreement constituted a breach.27

Although the Government has a duty to provide the sentencing

court with relevant factual information and to correct

misstatements,28 it may not hide behind this duty to advocate a

position that contradicts its promises in a plea agreement.29

Here, the Government suggests that it was duty-bound to urge the

abuse-of-trust enhancement because Munoz’s attorney incorrectly

27 United States v. Rivera, 357 F.3d 290, 295 (3d Cir. 2004) (“Because the Offense Level was specifically stipulated to, whereas the government's right to advocate a role enhancement was not, the government's endorsement of an enhancement that would raise the Offense Level above the stipulated level contravened the plea agreement.”); United States v. Taylor, 77 F.3d 368, 371 (11th Cir. 1996) (explaining that the Government breached the plea agreement by advocating a position contrary to its agreed-upon recommendation and supporting a position inconsistent with the agreement). 28 See United States v. Block, 660 F.2d 1086, 1091 (5th Cir. Unit B. Nov. 1981) (explaining that the prosecutor must speak up where the sentencing court lacks certain relevant information or where the court is mistaken about the facts, and thus the prosecutor did not breach the plea agreement in which he agreed to take no position in the defendant’s sentence). 29 Colvin v. Taylor, 324 F.3d 583, 586 (8th Cir. 2003) (“As an officer of the court, the prosecutor had the duty to convey to the court facts about the case and the defendant as long as the specific terms of the plea agreement were not violated.” (relying on this court’s reasoning in United States v. Block, 660 F.2d 1086, 1091 (5th Cir. Unit B. Nov. 1981))).

9 stated that the AUSA did not agree with the PSR’s recommendation

for a two-point increase. Munoz’s attorney, however, made no

misstatement. Instead, the attorney stated, “I have noted in the

Plea Agreement, the Government was not recommending the two-point

adjustment. The Government, through [the AUSA], was not

recommending the two-point adjustment for purposes of the

calculation of Mr. Munoz’s guidelines.” Those statements are

correct, and thus Munoz’s attorney conveyed accurate facts to the

court. Had the AUSA simply provided the court with accurate

relevant facts, the Government would not have breached the

agreement;30 but the Government crossed the line to breach by

affirmatively advocating the application of the enhancement.

Although, in closing, the AUSA asked the court to follow the plea

agreement,31 that request, considered in light of the AUSA’s

position on the enhancement, amounted to little more than lip

service to the plea agreement and did not rectify the breach.

The United States Court of Appeals for the Third Circuit

reached the same conclusion in United States v. Rivera.32 In

30 See Block, 660 F.2d at 1092-92. 31 The AUSA stated that he wanted to “clear for the record [his] position on the . . . guideline application due to our Plea Agreement in the case.” The AUSA stated further that “the total numbers that I did give to the Probation Department are correct the way they have it calculated, but I’m asking the Court, based on our Plea Agreement, to follow the recommendation [in the plea agreement] that would place Mr. Munoz at a level 25 instead of a 29.” 32 357 F.3d 290 (3d Cir. 2004).

10 that case, defendant Rivera and the Government agreed to a total

offense level of 35.33 The PSR, however, recommended a four-

point enhancement based on a leadership role.34 Although the PSR

acknowledged that the adjustment was contrary to the plea

agreement, it recommended an offense level of 39.35 In response

the Rivera’s objection, the Government maintained that it was not

precluded from arguing for the enhancement, and the AUSA stated

at sentencing that it stood by the probation officer’s

conclusions.36 On appeal, the Government argued that it was free

to advocate for the enhancement because it had reserved “its

right to take any position with respect to the appropriate

sentence.” The court of appeals rejected this argument because

endorsing the PSR’s recommendation for an offense level of 39

after agreeing to an offense level of 35 was inconsistent with

the plea agreement.37 Likewise, this court rejects the

Government’s position that it was free to urge the abuse-of-trust

enhancement because the plea agreement was silent about the

enhancement. Advocating an enhancement that was not in the plea

agreement and that increased the sentencing range was

33 Rivera, 357 F.3d at 292. 34 Id. 35 Id. 36 Id. at 292-93. 37 Id. at 295.

11 inconsistent with the agreement.

The United States Court of Appeals for the Eleventh Circuit

reached a similar conclusion in United States v. Taylor.38 In

Taylor, the defendant agreed to plead guilty to possession of

marijuana in exchange for the Government’s promise to recommend a

sentence of ten years, with the qualification that the Government

would recommend a lesser sentence if Taylor cooperated with the

Government.39 The PSR, however, considered Taylor’s attempt to

import cocaine as relevant conduct under the sentencing

guidelines and recommended a sentencing range of 188-235

months.40 Taylor objected to the inclusion of the cocaine-

related activities as relevant conduct.41 In its response to the

objection, the Government stated that it was prepared at

sentencing to prove by a preponderance of the evidence that

Taylor conspired to import cocaine.42 At sentencing, the

Government’s attorney recommended a sentence of ten years, but

the sentencing judge adopted the PSR’s position on relevant

conduct, applied a two-point reduction for acceptance of

responsibility, and sentenced Taylor to 151 months of

38 77 F.3d 368 (11th Cir. 1996). 39 Taylor, 77 F.3d at 369. 40 Id. 41 Id. 42 Id.

12 imprisonment.43 On appeal, the court of appeals determined that

the Government breached the plea agreement by advocating the

PSR’s position on related conduct.44 The court explained that

the defendant reasonably understood the Government’s promise to

recommend a ten-year sentence as including a promise not to

advocate a position that would require a longer sentence.45 The

court characterized the Government’s request that the court

follow the plea agreement as lip service that did not cure the

breach.46 Like defendant Taylor, Munoz reasonably understood the

Government’s agreement to a specific guidelines calculation as

including a promise not to advocate an enhancement that was not

included in the agreement. Paying lip service to the agreed-to

calculation did not cure the breach.

Conclusion

The Government breached the plea agreement, and thus, the

court need not reach Munoz’s other arguments. Munoz is entitled

to be sentenced by a different judge as the Government abides by

its agreement.47 Consequently, the court VACATES Munoz’s

sentence and REMANDS to the district court for reassignment to a

43 Id. 44 Id. at 370-71. 45 Id. at 370. 46 Id. at 371. 47 See Valencia, 985 F.2d at 761.

13 different judge and resentencing.

SENTENCE VACATED and REMANDED FOR RESENTENCING.