United States v. Cortés-López

101 F.4th 120

UNITED STATES, Appellee, v. Alejandro CORTÉS-LÓPEZ, Defendant, Appellant.

No. 22-1918

United States Court of Appeals, First Circuit

May 10, 2024

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO, [Hon. Francisco A. Besosa, U.S. District Judge]

Franco L. Pérez-Redondo, Assistant Federal Public Defender, with whom Héctor L. Ramos-Vega, Interim Federal Public Defender, was on brief, for appellant.

Maarja T. Luhtaru, with whom W. Stephen Muldrow, United States Attorney, and Mariana E. Bauzá-Almonte, Assistant United States Attorney, were on brief, for appellee.

Before Rikelman, Hamilton,^* and Thompson, Circuit Judges.

THOMPSON, Circuit Judge.

Alejandro Cortés-López is serving a 24-month term of imprisonment after pleading guilty to conspiracy to commit mail and wire fraud. In this direct appeal, he asks this court to vacate his sentence and remand to the district court because the government, he asserts, breached the plea agreement during the sentencing hearing. On plain error review, we conclude the government did just that. We therefore vacate Cortés' sentence and remand for further proceedings.

HOW CORTÉS GOT HERE¹

In July 2020, a grand jury indicted Cortés and a co-defendant with conspiracy to commit mail and wire fraud, one count of securities fraud, and several substantive counts of wire fraud. In March 2022, Cortés entered into a plea agreement with the government, stipulating that, from 2010 to 2017, he perpetrated a fraudulent financial scheme in which he solicited residents in Puerto Rico to invest in short-term, high-interest loans in the Dominican Republic through The Republic Group, Inc., a Florida corporation. Cortés stipulated that he used the money from the investors to pay himself and to distribute supposed returns on prior investments to the earlier investors -- so-called "lulling payments" -- so the investors were further duped "into a false sense of security that their investments were safe and performing as promised." Cortés copped to his actions, agreeing to plead guilty to conspiracy to commit mail and wire fraud.

In the plea agreement, the parties agreed that the sentencing guidelines calculation would lead to a total offense level (TOL) of 18. Important for the discussion to come, the agreement's TOL contemplated a 14-level enhancement for the agreed-to $749,200 loss amount, which, when combined with a criminal history category of I (Cortés had no prior arrests or convictions), would suggest a guidelines sentencing range (GSR) of 27-33 months' imprisonment. Nonetheless, the parties promised to jointly request a variant sentence of 24 months' probation regardless of the court's final TOL calculation. In addition, the government agreed to move to dismiss the other counts in the indictment still pending at the time of sentencing. For his part, Cortés waived his right to appeal the sentence if the sentence imposed by the district court was within or below the sentence recommendation agreed to by the parties. The district court accepted Cortés' change of plea in April.

According to the Presentence Investigation Report (PSR), Cortés' and his co-defendant's financial fraud scheme resulted in more than $5.4 million in losses to the investors. The probation office therefore applied an 18-level addition to the base offense level (applicable when the loss exceeds $3.5 million), as well as a 6-level enhancement for substantial financial hardship to 25 or more victims.² Prior to the sentencing hearing, Cortés filed a written objection to these enhancements as not in line with the figures to which the parties had stipulated in the plea agreement. The probation office responded with an addendum to the PSR explaining how it arrived at the precise levels applied and noting that, based on information provided by the Assistant U.S. Attorney about the number of victims identified from the scheme, the higher loss amount and inclusion of the additional enhancement were "correct."

At Cortés' November 2022 sentencing hearing, his attorney told the court that 24 months' probation was a just sentence because this was Cortés' first offense, he accepted responsibility for his role in the scheme and, pursuant to an agreement with the Securities and Exchange Commission (SEC) resulting from the prosecution of the same fraud scheme in the Southern District of Florida, he had been working and paying restitution even before the grand jury indicted him in this case.³ The government's response was, in its entirety:

Your Honor, we will be very brief, but before we make our argument, I would like to highlight the fact that the defendant filed some objections to the [PSR], and Probation responded to those objections by Defendant, and the United States believes the United States Probation Office is correct in their assessment of those enhancements. Nonetheless, the United States and the defendant entered into a plea agreement wherein the United States and the defendant took into consideration a specific amount of loss.

So for that reason, the United States is standing by its plea agreement recommendation of 24 months of probation in this case for this defendant, together with a judgment for restitution in the amount of . . . $749,200 that the defendant should pay jointly and severally with the co-defendant in this case. The defendant should do this pursuant to the payment plan established already in the case before the [SEC], and that case number is 20-CV-23616-DPG. That would be all from our part.

The district court summarily denied Cortés' objections to the PSR after commenting "that the probation officer is free to consider everything, not just what's in the plea agreement." The Assistant U.S. Attorney then added that she "wanted to remind the Court that we have two victims present who would like to speak." After the two victims spoke, Cortés allocuted at some length, apologizing to his family, acknowledging responsibility for his actions, and pledging an intent to spend the rest of his life repairing the financial harm he caused to the victims of the scheme.

The district court assigned the same base offense level of 7 as that reflected in the plea agreement and subtracted 3 levels for acceptance of responsibility but then added 18 levels (rather than the plea-agreement-contemplated 14) accounting for the $5.4 million loss amount listed in the PSR and added 6 levels for causing substantial financial hardship to more than 25 victims. This brought the TOL to 28 (rather than 18). With a criminal history category of I, the GSR was 78-97 months. The court said it had considered the PSR, the plea agreement, the sentencing memoranda filed by each side, the victims' statements, the parties' arguments, Cortés' allocution, and the 18 U.S.C. § 3553(a) factors. The court opted to impose a sentence of incarceration, stating that the requested sentence of probation did not reflect the seriousness of the offense, promote respect for the law, protect the public, or address deterrence and punishment, but assigned a below-guidelines sentence in consideration that Cortés' involvement was less than that of his co-defendant. The court pronounced a sentence of 24 months' imprisonment to be followed by 3 years of supervised release and $5.4 million in restitution to be paid jointly and severally with the co-defendant in accordance with the co-defendant's judgment. Cortés' attorney immediately requested reconsideration and proposed a 5-year sentence of probation so Cortés could continue to work and make restitution payments. The court summarily denied this idea. Before the hearing ended, Cortés' attorney lodged an objection to the sentence, labeling it procedurally and substantively unreasonable.⁴

Now before us, Cortés challenges his 24-month term of immurement on the sole basis that the government breached the plea agreement during the sentencing hearing by: (1) voicing support for the higher TOL calculated in the PSR; and (2) failing to "advocate meaningfully" for the agreed upon 24-month probation sentence.⁵

DISCUSSION

We kick off our discussion by deciding whether Cortés forfeited his arguments by not first raising them to the district court, a threshold point so we can pin down the applicable standard of review for Cortés' challenge to his sentence.

This court generally reviews a claim that the government breached a plea agreement de novo, but the review shifts to plain error when a defendant had an opportunity to raise the issue to the district court but did not and therefore, in legal lingo, forfeited the argument. United States v. Sierra-Jiménez, 93 F.4th 565, 570 (1st Cir. 2024). Cortés admits that he did not raise the breach-of-the-agreement issue to the district court, but he attempts to salvage our plenary review by arguing that any objection he might have raised at the sentencing hearing was futile. According to him, this judge has an "unflinching, unyielding position that government promises begin and end with the rote recitation of a number of months," meaning as long as the government mouths, on sentencing day, the agreed-upon months and nothing more, then its obligation to the bargain is fulfilled. Just look, says Cortés, at two other appeals pending before this court wherein the defendants alerted the district court in writing to the government's alleged breaches of the respective plea agreements during the lead up to the sentencing hearing, but the district court denied their plaints.⁶ And in any event, Cortés continues, this court has excused "[a] party's failure to spell out a claim in the district court . . . if he had no reasonable opportunity to do so," United States v. Fernández-Garay, 788 F.3d 1, 4 (1st Cir. 2015) (citing Fed. R. Crim. P. 51(b)), because "a court should not require a lawyer 'to persist stubbornly when the judge has made it perfectly clear that he does not wish to hear what the lawyer has to say,' " id. (quoting United States v. Toribio-Lugo, 376 F.3d 33, 41 (1st Cir. 2004)...