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January/February 1999 White-Collar Crime By Kathryn Keneally Kathryn Keneally specializes in white-collar crime, tax controversy, and commercial litigation. In practice in New York City, she is a member of the U.S. Sentencing Com-mission Practitioners’ Advisory Group. Two Courts Allow Substantial Assistance Downward Departures in the Absence of a Government Motion Section 5K1.1 of the U.S. Sentencing Guidelines provides:
Sentencing courts need not regard the power to decide whether a defendant’s substantial assistance supports a downward departure as residing solely with the government. In two recent decisions, courts found different grounds for departure despite the government’s failure to make the § 5K1.1 motion. In United States v. Harpaul,1 the district court ordered the prosecutors to provide the court with letters under § 5K1.1, despite the government’s decision not to make the motion and over the government’s objection. In the wonderfully titled In re: Sealed Case (Sentencing Guidelines’ “Substantial Assistance”),2 the D.C. Circuit held that a sentencing court could consider whether the defendant’s assistance took the case out of the relevant heartland of cases, so that a downward departure may be appropriate regardless of whether the government made a § 5K1.1 motion. The starting point for defendants seeking to challenge the government’s failure to make a § 5K1.1 motion is the Supreme Court’s decision in United States v. Wade.3 The Court in Wade held that a prosecutor’s refusal to file a motion under § 5K1.1 is subject to judicial review, to determine whether “the refusal was based on an unconstitutional motive.”4 The Court then gave as specific examples of “unconstitutional motives” whether the refusal occurred “because of the defendant’s race or religion.”5 Although the Court stated that “generalized allegations of improper motive” would not suffice, courts following Wade have reviewed the government’s failure to make a § 5K1.1 motion to determine whether the government acted in good faith.6 Wade also recognized that a defendant “would be entitled to relief if the prosecutor’s refusal to move was not rationally related to any legitimate Government end.”7 The standard set in Wade is complicated by the language of cooperation agreements, which are sometimes read by the courts to permit a subjective standard. As one court summarized, “where the explicit terms of a cooperation agreement leave the acceptance of the defendant’s performance to the judgment of the prosecutor, the prosecutor may reject the defendant’s performance provided that he or she is honestly dissatisfied.”8 The Harpaul and Sealed Case decisions are all the more significant because neither is based on the principles of Wade. Rather, each of these decisions offers new grounds for contesting the government’s failure to make a § 5K1.1 motion, despite substantial assistance by the defendant. Right to Specific Performance of a Plea Agreement Is Held To Include the Right to a § 5K1.1 Letter The defendants in Harpaul pled guilty to tax, mail fraud and conspiracy offenses based on the operation of a restaurant.9 They then agreed to participate in an undercover sting operation unrelated to the charges against them. Specifically, the government was conducting an investigation of a luxury car dealer to determine whether sales receipts were being falsified to facilitate the under-reporting of sales. The government acknowledged that the defendants in Harpaul, who were immigrant owners of a cash business, presented attractive candidates for an undercover sting operation. The defendants made three visits and two telephone calls to the suspect car dealership; they wore wires during the visits, and consented to the government’s taped monitoring of the telephone calls. As the court described, "[u]nexpectedly, the salesman became apprehensive and refused to accept cash for the transaction.”10 The U.S. Attorney’s Office for the Eastern District of New York has a “5K Committee” that determines whether the government will make the § 5K1.1 motion in a particular case. In Harpaul, the prosecutors with primary responsibility for the case recommended that the motion be made. The court noted that the 5K Committee defined “substantial assistance” to include “substantially furthering a prosecution or investigation; and arrest, indictment or guilty plea; identification of a target; and information that a government witness is lying or a target/defendant is wrongly suspected or charged.” These standards are commendable, since they include criteria that may serve to exonerate a third party and to cast doubt on government witnesses. They offered no solace to the defendants in Harpaul, however, because the 5K Committee determined that none of the criteria were met by their attempted cooperation. As the court stated: “Simply put, notwithstanding the best efforts of the defendants and the Government’s concession that they did what they were asked to do, including the potentially dangerous acts of three times wearing wires, nothing occurred as a result of their best assistance.”11 Notably, the court emphatically rejected an argument that the government acted in bad faith. Implicitly, the court did not grant relief under Wade. The court turned instead to long-standing principles concerning the enforceability of plea agreements. Thus the court began with a discussion of the Supreme Court’s pre-guidelines decision in Santobello v. New York: “In the seminal case in this field, the Supreme Court instructs the Court that when 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.”12 The court reiterated that the defendants had done all that the government had asked. The court considered whether a promise had been made by the prosecutors that such conduct would be deemed “substantial assistance.”13 The court looked to the affidavit of one of the defense attorneys, who attested that the prosecutors had stated that the decision to make a § 5K1.1 motion was not dependent on whether an arrest resulted, but rather that the motion would be made “so long as defendants did everything that they were asked to do.”14 Internal government documents tended to corroborate the position of the defendant’s counsel, stating: “What makes the case somewhat close . . . is that the DOJ attorneys may have shared the defense belief, even if it was not communicated in a binding manner.”15 The court also looked to the allocution, at which the prosecutor explained the terms of the plea agreements by stating that the defendant was to plead guilty, and “[i]n exchange he agrees to be fully debriefed and attend all meetings with the United States, and cooperate . . . with the United States as we see fit. And if he fulfills his obligation, the government will supply a 5K letter to the court in order to reduce his sentence. . . .”16 The sentencing judge concluded: “In the Court’s opinion, there is clear and convincing evidence that at least one Government attorney not only shared in the defense belief, but communicated it in a binding manner.” Under Santobello, the court recognized the alternative possibilities of permitting the defendants to withdraw their pleas, or ordering specific performance. The court concluded that “we know that the issuance of a 5K1.1 letter may be even more beneficial to a defendant than the withdrawal of a plea.”17 The court directed the government to issue the letter. The court emphasized that its holding was limited to the specific facts of the case. Moreover, the opinion specifically stated that “the Court ascribes no fault to the trial prosecutors . . . [r]ather, the Court compliments them for admirably attempting to perform their duty in a difficult situation.”18 Despite the court’s caveat, the principle that a defendant is entitled to specific performance of a cooperation or plea agreement is long-settled, and there may well be other opportunities to make use of the successful arguments in Harpaul. Indeed, in a 1994 article in The Champion, Jim Felman recommends that defense attorneys use Santobello and its progeny when faced with the government’s failure to make a promised § 5K1.1 motion.19 Compliments should also be extended to Jay Goldberg, Judd Berstein, and Laurie McPherson, the defense attorneys whose tenacity and diligence developed the arguments and the records which provided the basis for the Harpaul decision. Government’s Failure To Make a Motion Under § 5K1.1 May Be Redressed Under § 5K2.0 The sentencing court in Harpaul found that, as alternative ground for downward departure, the “peculiar and atypical facts” of the case presented “a unique situation that falls outside the boundary of the heartland factors.” The court highlighted the “truly novel situation where the prosecutors and the case agent recommended the issuance of a 5K1.1 letter; there is no express refutation of the defendants’ claim as to a promise made and condition fulfilled; and the defendants’ assertion of a promise is borne out in the prosecutor’s statements at the plea allocution.”20 It should not be necessary to show a situation so “peculiar and atypical” as that presented in Harpaul. Rather, the D.C. Circuit’s decision in In re: Sealed Case (Sentencing Guidelines’ “Substantial Assistance”) 21 more broadly holds that sentencing courts may consider the circumstances of any case in which the defendant has rendered substantial assistance to determine whether a departure is appropriate regardless of whether the government has made a motion under § 5K1.1. The court in In re: Sealed Case began its analysis by noting that while the Supreme Court’s holding in Wade determined that “a district court may review for unconstitutional motivation” the government’s decision not to file a § 5K1.1 motion, the Supreme Court “has never decided whether departure might be appropriate when the government has not filed a motion under § 5K1.1.”22 Thus the court in In re: Sealed Case, as the court in Harpaul, looked beyond the Wade decision. Specifically, the court in In re: Sealed Case turned to the language of § 3553(b), Title 18, and to the holding in United States v. Koon.23 Section 3553(b) provides that a court shall impose a sentence within the range of the federal Sentencing Guidelines “unless the court finds that there exists an aggravating or mitigating circumstance of a kind, or to a degree, not adequately taken into consideration by the Sentencing Commission in formulating the guidelines. . . .”24 The guidelines in turn address § 3553(b) in the Policy Statement set out in § 5K2.0. Section 5K2.0 notes that departures may be made for factors not considered by the guidelines, for “unusual circumstances” as to which the guidelines consideration of a factor may be inadequate, and for a characteristic or circumstance that is “present to an unusual degree and distinguishes the case from the ‘heartland’ cases covered by the guidelines.”25 The Supreme Court in Koon gave guidance to sentencing courts in determining the degree to which factors may be considered under § 3553(b) and § 5K2.0. The Court’s analysis turned on whether the factor is one of the few prohibited under the guidelines, in which case it may never be considered, or whether it is encouraged, discouraged, or unmentioned by the guidelines.26 Addressing the circumstance of substantial assistance by a defendant in the absence of a government motion under § 5K1.1, the D.C. Circuit in In re: Sealed Case found it “obvious” that this was not prohibited as a ground for departure.27 The court also determined that the guidelines did not discourage departures on this ground, reasoning that “[j]ust because the filing of a government motion makes substantial assistance an encouraged ground does not mean the government’s failure to file such a motion transforms substantial assistance ...into a discouraged ground.”28 The court then considered whether substantial assistance in the absence of a government motion was considered by the guidelines, or whether, in the language of Koon, it was an “unmentioned” factor. The court reasoned that a proposed departure factor is taken into consideration by the guidelines only when it is the “semantic or practical equivalent of an explicitly mentioned factor or a completely covered subset of an explicitly mentioned factor.” The court concluded that presence of § 5K1.1 in the guidelines did not suffice to demonstrate that the Sentencing Commission adequately considered the circumstance of substantial assistance in the absence of a government motion.29 The practical consequence of this reasoning is the degree to which the factor must be established to be taken into consideration in sentencing. Had the D.C. Circuit concluded that the circumstance of substantial assistance in the absence of a government motion had been discouraged, or encouraged but taken into account by the Sentencing Commission, departure would be permitted “‘only if the factor is present to an exceptional degree or in some other way makes the case different from the ordinary case in which the factor is present.’”30 Because the D.C. Circuit concluded that the factor was unmentioned and therefore not taken into account by the guidelines, the sentencing court, when presented with the factor, “must, ‘after considering the “structure and theory of both relevant individual guidelines and the guidelines taken as a whole,” decide whether [the factor] is sufficient to take the case out of the guideline’s heartland.’”31 The D.C. Circuit acknowledged that prior to the Supreme Court’s decision in Koon, § 5K1.1 had been interpreted to deprive sentencing courts of the authority to depart based on a defendant’s assistance unless the government made a motion in support of the departure.32 In light of Koon, the court held that district courts are authorized to depart from the guidelines based on a defendant’s assistance to the government, regardless of whether the government makes a motion under § 5K1.1, when “circumstances take the case out of the relevant guideline heartland.”33 The court in In re: Sealed Case concluded that, “[a]s Koon directs, we leave to the district court to define the ‘heartland’ for a particular case.”34 In turn, it is for defense counsel now to develop the record and make the persuasive arguments. Author's Note: After the column was written, the D.C. Circuit granted the government's petition for rehearing en banc in one of these cases. See In re: Sealed Case, 1998 U.S. App. LEXIS 29803. Oral argument is scheduled for January 27, 1999. Notes 1. At the time that this column was written, Harpaul was not published. The opinion was reprinted in full in the New York Law Journal, October 21, 1998, at 32, col. 6. It is available on LEXIS at NY library, NYLAWJ file. The opinion issued in September 1998, and was authored by the Honorable Arthur D. Spatt, U.S. District Judge for the Eastern District of New York. 2. 149 F.3d 1198, 1998 U.S. App. LEXIS 16922 (D.C. Cir. 1998). At the time that this column was written, page citations to the reported decision were not available. Accordingly only page citations to the decision as reported by LEXIS have been included. 3. 504 U.S. 181 (1992). 4. Id. at 185-86. 5. Id. at 186. Other courts have recognized that unconstitutional motives may include prosecutorial vindictiveness based on, for example, the defendant’s exercise of his right to trial or other constitutional rights. See, e.g., United States v. Khoury, 62 F.3d 1138 (9th Cir. 1995); United States v. Paramo, 998 F.2d 1212 (3d Cir. 1993), cert. denied, 510 U.S. 1121 (1994). 6. Wade, 504 U.S. at 186; see, e.g., United States v. Isaac, 141 F.3d 477 (3d Cir. 1998); United States v. Knight, 968 F.2d 1483, 1486 (2d Cir. 1992). 7. Wade, 504 U.S. 181, 186 (1992). 8. United States v. Rexach, 896 F.2d 710, 713 (2d Cir.), cert. denied, 498 U.S. 969 (1990). 9. A background discussion is set out in an earlier opinion in the case. United States v. Harpaul, 4 F. Supp. 2d 137 (E.D.N.Y. 1998). 10. New York Law Journal, October 21, 1998, at 32, col. 6 to 33, col. 1. 11. Id. at 33, col. 1. 12. Id. at 33, col. 2, quoting United States v. Santobello, 404 U.S. 257, 261 (1971). 13. Id. at 33, col. 3. 14. Id., quoting affidavit. 15. Id., quoting government memorandum. 16. Id. at 33, col. 4. The court quoted similar language in connection with the allocution of the co-defendant: “‘He agrees to cooperate with the United States in any way the government sees fit and attend all debriefings. . . . If [the defendant] kept up his end of the bargain, the government will file a letter with the Court in order to be able to downwardly depart. . . .’”Id. 17. Id. at 33, col. 2. 18. Id. at 33, col. 6. 19. J. Felman, Grid & Bear It: Defense Strategies For Litigating Substantial Assistance Downward Departures, The Champion, July 1994. 20. New York Law Journal, October 21, 1998, at 33, col. 6. 21.149 F.3d 1198, 1998 U.S. App. LEXIS 16922 (D.C. Cir. 1998). 22. Id., 1998 U.S. App. LEXIS 16922 at *12. 23. 518 U.S. 81 (1996). 24. 18 U.S.C. § 3553(b). 25. U.S.S.G. § 5K2.0. 26. 518 U.S. at 96. 27. 149 F.3d 1198, 1998 U.S. App. LEXIS 16922 at *13. 28. Id., 1998 U.S. App. LEXIS 16922 at *14-15. The court noted in this context that “Congress expressly injected” substantial assistance “into the sentencing decision-making process” in 28 U.S.C. § 994(n). 29. Id., 1998 U.S. App. LEXIS 16922 at *17-20. 30. Id., 1998 U.S. App. LEXIS 16922 at *13, quoting Koon, 518 U.S. at 96. 31. Id., 1998 U.S. App. LEXIS 16922 at *13, quoting Koon, 518 U.S. at 96. 32. Id., 1998 U.S. App. LEXIS 16922 at *2; see, e.g., United States v. Love, 985 F.2d 732 (3d Cir. 1993) (rejecting argument that Section 5K2.0 permitted departure); United States v. Ortez, 902 F.2d 61 (D.C. Cir. 1990) (expressly overruled by In re: Sealed Case). 33. 149 F.3d 1198, 1998 U.S. App. LEXIS 16922 at *20. 34. Id., 1998 U.S. App. LEXIS 16922 at *20. Readers with ideas, comments, information, etc. are welcome to contact: White-Collar Crime Kathryn Keneally 230 Park Ave, Ste 1140 New York NY 10169 Phone (212) 808-8100 Fax (212) 808-8108 | |||||||||
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