United States v. Scott W. Rothstein

939 F.3d 1286

• Court: Court of Appeals for the Eleventh Circuit
• Decided: September 30, 2019
• Docket: 18-11796
• Status: Published

Opinion

Case: 18-11796 Date Filed: 09/30/2019 Page: 1 of 15

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT ________________________

No. 18-11796 Non-Argument Calendar ________________________

D.C. Docket No. 0:09-cr-60331-JIC-1

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

versus

SCOTT ROTHSTEIN,

Defendant-Appellant.

________________________

Appeal from the United States District Court for the Southern District of Florida ________________________

(September 30, 2019)

Before TJOFLAT, WILLIAM PRYOR and GRANT, Circuit Judges.

TJOFLAT, Circuit Judge: Case: 18-11796 Date Filed: 09/30/2019 Page: 2 of 15

Scott Rothstein, a federal prisoner, appeals the District Court’s grant of the

Government’s motion to withdraw a prior motion made pursuant to Federal Rule

of Criminal Procedure 35, which allows the Government to recommend a

reduction in sentence if the defendant “provided substantial assistance in

investigating or prosecuting another person.” Rothstein argues (1) that his plea

agreement with the Government did not give the Government any discretion to

withdraw a Rule 35 motion, and (2) that he should have been entitled to an

evidentiary hearing in the District Court on the Government’s motion to withdraw.

Neither of Rothstein’s arguments are meritorious. We affirm the judgment of the

District Court.

I.

A criminal information filed on December 1, 2009, charged Scott Rothstein,

a former attorney and chairman of a law firm, with using his firm to perpetuate a

Ponzi scheme. Rothstein was charged with: racketeering, in violation of 18 U.S.C.

§ 1962(d); conspiracy to commit money laundering, in violation of 18 U.S.C. §

1956(h); conspiracy to commit mail fraud and wire fraud, in violation of 18 U.S.C.

§ 1349; and two counts of wire fraud, in violation of 18 U.S.C. § 1343.

Rothstein would eventually plead guilty to all the above counts, but before

doing so, he entered into a written cooperation agreement with the Government. In

the agreement, Rothstein promised to cooperate by:

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(a) providing truthful and complete information and testimony, and producing documents, records, and other evidence, when called upon by [the Government], whether in interviews, before a grand jury, or at any trial or other court proceeding;

(b) appearing at such grand jury proceedings, hearings, trials, and other judicial proceedings, and at meetings, as may be required by [the Government]; and

(c) if requested by [the Government], working in an undercover role to contact and negotiate with others suspected and believed to be involved in criminal misconduct under the supervision of, and in compliance with, law enforcement officers and agents.

Rothstein agreed that the Government would have “sole and unreviewable”

discretion to determine the “quality and significance” of Rothstein’s

cooperation in any investigation or prosecution. The agreement stated that,

if the Government evaluated Rothstein’s cooperation favorably, it “may . . .

make a motion . . . [under] Rule 35 of the Federal Rules of Criminal

Procedure subsequent to sentencing . . . recommending that the defendant’s

sentence be reduced,” but noting that “nothing in this Agreement may be

construed to require [the Government] to file any such motion.” Rothstein

moved to have the cooperation agreement filed under seal, and stated in his

motion that the agreement “is intended to be part of the Plea Agreement in

this matter.”

On June 9, 2010, the District Court sentenced Rothstein to 600

months’ imprisonment and three years of subsequent supervised release.

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Almost one year later, on June 8, 2011, the Government filed a motion for

reduction of sentence under Rule 35. The motion stated that while

Rothstein’s “cooperation is not yet complete and will not be complete within

one year of [his] initial sentencing,” the Government was filing this motion

“in an abundance of caution” to “preserve this Court’s jurisdiction under

Fed. R. Crim. P. 35(b)(1).”1 Accordingly, the Government asked the Court

not to rule on this motion until the Government filed a motion to hold a

hearing to “advise the Court of the nature, extent, and value of [Rothstein’s]

cooperation.” Further, the motion indicated that the Government “expressly

reserves the right to withdraw this motion if, in the judgment of the

[Government], [Rothstein] should fail to comply with the terms of his plea

1 A Rule 35(b)(1) motion to reduce a sentence for “substantial assistance” must be made by the government within one year of sentencing. Rule 35 motions can be made after one year, but they must comport with the heightened showing required by 35(b)(2). A judge may only reduce a sentence on a motion made more than one year after sentencing if the defendant’s “substantial assistance” involved:

(A) information not known to the defendant until one year or more after sentencing; (B) information provided by the defendant to the government within one year of sentencing, but which did not become useful to the government until more than one year after sentencing; or (C) information the usefulness of which could not reasonably have been anticipated by the defendant until more than one year after sentencing and which was promptly provided to the government after its usefulness was reasonably apparent to the defendant.

Fed. R. Crim. P. 35(b)(2). The Government’s anticipatory filing under Rule 35(b)(1) within the one-year limit was therefore to prevent the need to satisfy one of these more stringent criteria. 4 Case: 18-11796 Date Filed: 09/30/2019 Page: 5 of 15

agreement, fail to testify truthfully, or falsely implicate any person or

entity.” Rothstein’s attorney joined in the filing of the motion.

More than six years passed. At some point during this period, the

Government concluded that Rothstein “provided false material information

to [the Government] and violated the terms of his plea agreement.”

Accordingly, on September 26, 2017, it moved to withdraw the Rule 35

motion that had not yet been considered by the District Court. The

Government reiterated its “sole discretion” to evaluate Rothstein’s

cooperation and its “expressly reserved . . . right to withdraw” the Rule 35

motion, which it described as a “placeholder motion” intended to prevent the

expiration of the one-year time limit after sentencing for Rule 35(b)(1)

motions. Rothstein disputed that the Government had the power to

withdraw the motion and requested, at a minimum, that the District Court

hold an evidentiary hearing on the matter. The District Court granted the

Government’s request and withdrew the substantial-assistance motion over

Rothstein’s objections.

Rothstein appealed. He principally contends that the Government

breached the cooperation agreement because any discretion that the

Government reserved for itself in that agreement ended when the

Government filed its “placeholder” Rule 35 motion in June 2011. If the

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Government wanted to give itself the right to withdraw a Rule 35 motion,

Rothstein argues, it “should have included [it]” in the cooperation

agreement. He contends that because the word “withdraw” is not to be

found within the language of the cooperation or plea agreements, the

Government could not, consistent with the agreement, withdraw an already-

filed Rule 35 motion. Without such language, Rothstein says, he was not

adequately warned that the Government could withdraw a substantial-

assistance motion. Finally, Rothstein argues that the District Court needed

to hold an evidentiary hearing to determine whether Rothstein had actually

breached the cooperation agreement, in light of his assertion that he

provided “extraordinary assistance” to the Government’s investigation.

Since the Government had no discretion to withdraw the Rule 35 motion, the

argument goes, it would have needed to present proof establishing by a

preponderance of the evidence that Rothstein had materially breached his

plea agreement.

In response, the Government contends that the cooperation agreement

made it clear that there was no guarantee that the Government would file a

Rule 35 motion – it promised only to consider whether to do so if it

determined that Rothstein had provided “complete and truthful information.”

In its view, Rothstein’s argument that language about withdrawal actually

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had to be included in the cooperation agreement “imposes a rigidly literal

approach” that conflicts with “common-sense constructions of contract law

[and] with the majority of case law regarding this issue.” Further, the

Government contends that Rothstein was adequately placed on notice of the

possibility of withdrawal because the Government’s Rule 35 motion, which

was signed by Rothstein’s own attorney, “expressly stated that [the

Government] reserved the right to withdraw the motion” under certain

circumstances. The Government reiterates, too, that the Rule 35(b)(1)

motion was really just a “placeholder motion” to preserve the one-year time

limitation, and that the motion explicitly indicated that the substantiality of

Rothstein’s cooperation could not yet be evaluated at the time of filing.

Finally, the Government quickly dispenses with Rothstein’s request for an

evidentiary hearing, noting that this case presents a “purely legal question”

that would only require a hearing if there were an allegation that the

Government refused to file, or withdrew, a substantial-assistance motion

based on an unconstitutional motive, like race or religion.

II.

Whether the Government has breached a plea agreement is reviewed

de novo by this Court. United States v. Copeland, 381 F.3d 1101, 1104

(11th Cir. 2004).

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Rothstein concedes that the Government would have had the

discretion to choose not to file the Rule 35 motion. This Court has not yet

determined whether, in the instant set of circumstances, there is any

analytical difference between the Government withdrawing a previously

filed Rule 35 motion, and the Government refusing to file a Rule 35 motion

at all.2 Rothstein points to no authority indicating that we should imply a

distinction between the two. Other circuits that have addressed the issue

have disagreed with Rothstein’s interpretation. See United States v.

Hartwell, 448 F.3d 707, 718 (4th Cir. 2006) (“We conclude that the

language giving the government ‘sole discretion’ to file a Rule 35(b) motion

also includes the discretion to file a motion to withdraw it”); see also

Stropshire v. United States, 278 F. App’x 520, 526–27 (6th Cir. 2008)

(finding that the District Court did not err in granting the government’s

motion to withdraw a Rule 35 motion because “[t]he government was not in

any way obligated by the plea agreement to file a Rule 35(b) motion”);

2 In an unpublished opinion, we held that the District Court did not err in granting the government’s motion to withdraw a previously-filed motion under U.S.S.G. § 5K1.1, the substantial-assistance provision of the federal sentencing guidelines. United States v. Jackson, 635 F. App’x 657 (11th Cir. 2015) (unpublished). Just like Rothstein, the defendant in Jackson argued that the government could not withdraw a substantial-assistance motion when no provision of the plea agreement explicitly allowed it to do so. Id. at 658–59. We declined to find any distinction “between the government’s refusal to file a motion recommending a reduction in sentence and its withdrawal of one.” Id. at 660. “[E]ither way,” we stated, “[t]he government would have fulfilled its obligations under the terms of the plea agreement” to “consider whether [defendant’s] cooperation warranted a [substantial-assistance motion].” Id. 8 Case: 18-11796 Date Filed: 09/30/2019 Page: 9 of 15

United States v. Emerson, 349 F.3d 986, 987–88 (7th Cir. 2003) (affirming

the grant of a motion to withdraw a Rule 35(b) motion where the motion had

been filed to avoid the one-year deadline, but the government later

determined that the defendant’s cooperation had not been substantial

assistance).

Rothstein claims that United States v. Padilla, 186 F.3d 136 (2d Cir.

1999), is the most persuasive authority applicable to this case. Padilla found

error where a District Court allowed the government to withdraw a

substantial-assistance motion, but differs from our facts in three important

respects. First, the plea agreement in that case stated that the government

“will” file a substantial-assistance motion if the defendant provided the

requisite cooperation. Padilla, 186 F.3d at 141. In our case, the

Government provided no such affirmative promise in Rothstein’s

cooperation agreement, only a promise to consider whether to do so.

Second, in Padilla, the government advised the District Court that it had

concluded that the defendant’s assistance had been substantial. Id. at 139.

Under our facts, the Government explicitly told the District Court that it

could not yet evaluate whether Rothstein’s assistance was substantial.

Finally, Padilla’s agreement specifically enumerated the consequences if the

defendant breached the plea agreement – and it was integral to the Second

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Circuit’s analysis that withdrawal of a substantial-assistance motion was not

listed as a possible consequence. Id. at 142. Rothstein’s cooperation

agreement contained no such specific delineation of potential consequences,

aside from the general observation that the Government could choose in its

discretion not to file a Rule 35 motion.

Rothstein lists in his brief a variety of plea agreements in other cases

that he would have found to be “adequate” in this case. Notably, none of the

plea agreements that he cites to expressly list withdrawal as a possibility

once the government has made a substantial-assistance motion. Finding the

right to withdraw such a motion in the text of these agreements relies on the

same type of inferential analysis of the agreement that Rothstein argues is

impermissible here. Furthermore, Rothstein can point to no authority that

requires the express delineation of any possible consequence of misbehavior

in a plea agreement when the defendant is clearly made aware of the

government’s unfettered discretion to evaluate whether the defendant

deserves a lesser sentence.

Rothstein’s arguments that in his agreement the Government was

required to expressly include a “right to withdraw” are unavailing. “A plea

agreement is, in essence, a contract between the Government and a criminal

defendant.” United States v. Howle, 166 F.3d 1166, 1168 (11th Cir. 1999).

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The terms of a plea agreement are interpreted based on what a defendant

“could have reasonably understood the terms of his plea agreement to

mean.” United States v. Rewis, 969 F.2d 985, 988 (11th Cir. 1992). In

doing so, this court will not apply a “hyper-technical” or “rigidly literal”

approach to interpreting the language. Id. (quoting United States v. Jefferies,

908 F.2d 1520, 1523 (11th Cir. 1990)). A strained, artificial reading of the

agreement does not comport with a reasonable defendant’s expectations

when signing a deal with the government.

Rothstein argues that he understood the Government’s retention of

sole discretion to decide whether to file a Rule 35 motion, without more, to

preclude any similar discretion to withdraw a filed Rule 35 motion. This

claim is unsupported by a rational interpretation of the agreement and by the

record. As a general rule, the government has a “power, not a duty, to file a

motion when a defendant has substantially assisted.” Wade v. United States,

504 U.S. 181, 185, 112 S. Ct. 1840, 1843 (1992); see also United States v.

McNeese, 547 F.3d 1307, 1309 (11th Cir. 2008) (applying this principle to a

motion under Rule 35(b)). The government’s refusal to exercise that power

may only be questioned if the government’s decision is based on an

unconstitutional motive. United States v. Nealy, 232 F.3d 825, 831 (11th

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Cir. 2000).3 This Court has emphasized its unwillingness to intrude on the

prosecutorial discretion provided to the government in making substantial-

assistance motions. See United States v. Forney, 9 F.3d 1492, 1501 n.4

(11th Cir. 1993).

The cooperation agreement that Rothstein signed fully retains this

level of discretion for the Government – that is, “sole and unreviewable.” It

is true that the agreement says nothing about withdrawal of a Rule 35

motion. But we see nothing in the plain language of this agreement that

counsels us to limit the Government’s discretion when it comes to

withdrawing a motion. 4 Holding that the Government had implicitly

relinquished the power to withdraw a placeholder motion would use a

technicality to intrude on prosecutorial discretion in this field in a manner

3 Rothstein makes no allegation that the Government’s withdrawal of its Rule 35 motion here was based on any unconstitutional motive, such as race or religion. 4 Consider the Rule 35 motion’s language: “Upon completion of the defendant’s cooperation, the government will file a motion for a hearing at which time the government will advise the Court of the nature, extent, and value of the defendant’s cooperation.” Suppose, hypothetically, that instead of withdrawing the Rule 35 motion, the Government informed the Court that, in the Government’s discretion, Rothstein’s “assistance” was not at all useful to the Government’s investigation and no downward variance in sentencing was warranted. Surely this would be permitted by the cooperation agreement, which gives the Government the “sole and unreviewable” discretion to evaluate the substantiality of Rothstein’s assistance and to communicate that evaluation to the District Court. Rothstein’s implicit argument that the Government was permitted to do the latter but not the former relies on technicality and evinces an untenable, “rigidly literal” interpretation of the cooperation agreement, one that this Court refuses to endorse. See Rewis, 969 F.2d at 988.

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that this Court has continually refused to do. See, e.g., Forney, 9 F.3d at

1501 n.4; McNeese, 547 F.3d at 1309; Nealy, 232 F.3d at 831.

Rothstein’s argument claiming that he was not “warned” of the

Government’s discretion to withdraw the motion is likewise unavailing. The

Government’s Rule 35 motion, which was joined by Rothstein through the

assent of his attorney, specifically stated that the Government “expressly

reserve[d] the right to withdraw this motion” if Rothstein breached his plea

agreement, falsely testified, or falsely implicated any person. Second, that

same motion indicated that Rothstein’s “cooperation is not yet complete,”

“[s]ome of the information provided . . . has not yet become useful to the

government,” and requested that the District Court “stay any ruling on the

instant motion” until the Government informed the Court that Rothstein’s

cooperation was complete. These reservations by the Government would

have put Rothstein on notice that the Government was not relinquishing all

further discretion with respect to the future of this motion. Rothstein cannot

credibly claim that he had no idea that withdrawal was a possibility.

III.

A district court’s denial of an evidentiary hearing is reviewed for

abuse of discretion. United States v. Brown, 441 F.3d 1330, 1349–50 (11th

Cir. 2006). “An evidentiary hearing is not required where none of the

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critical facts are in dispute and the facts as alleged by the defendant if true

would not justify the relief requested.” United States v. Smith, 546 F.2d

1275, 1279–80 (5th Cir. 1977) (quoting United States v. Poe, 462 F.2d 195,

198 (5th Cir. 1972)).5

An evidentiary hearing to allow Rothstein to present evidence that he

complied with the cooperation agreement, as he requests, is unwarranted.

We are faced with the purely legal question of whether the Government had

full discretion to withdraw its Rule 35 motion based on its own

unreviewable evaluation of Rothstein’s assistance to the investigation – and

we concluded that the Government did have this discretion. No facts that

Rothstein can allege regarding his actual level of cooperation would disturb

the Government’s unilateral conclusion that his help was insufficient to

warrant a substantial-assistance motion. See also Wade, 504 U.S. at 185,

112 S. Ct. at 1844 (“[A] claim that a defendant merely provided substantial

assistance will not entitle a defendant to a remedy or even to discovery or an

evidentiary hearing.”) Therefore, the District Court did not abuse its

discretion in denying Rothstein’s request for an evidentiary hearing.

5 In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), this Court adopted as binding precedent all decisions of the former Fifth Circuit handed down prior to the creation of the Eleventh Circuit on September 30, 1981. 14 Case: 18-11796 Date Filed: 09/30/2019 Page: 15 of 15

IV.

For the foregoing reasons, the District Court’s order is

AFFIRMED.