United States v. Rowland

UNITED STATES OF AMERICA v. JOHN G. ROWLAND

Criminal No. 3:14cr79 (JBA)

UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT

March 19, 2015

OPINION AND RULING ON THE APPLICATION OF THE ADVISORY SENTENCING GUIDELINES

This ruling details the Court's analysis of the applicable advisory guidelines utilized at Defendant's sentencing hearing on March 18, 2015.

I. Background

After trial, the jury found Defendant John G. Rowland guilty on all seven counts of the indictment charging falsification of records, 18 U.S.C. § 1519 (Counts One and Three); conspiracy to commit an offense against or to defraud the United States, 18 U.S.C. § 371 (Count Two); causing false statements, 18 U.S.C. § 1001(a)(2) (Counts Four and Five); and illegal campaign contributions, 2 U.S.C. §§ 441a(a)(1)(A), 441a(f) and 437g(d)(1)(A)(i) (Counts Six and Seven).

II. Discussion

In determining the applicable sentencing guidelines calculation, the parties agree that the Probation Office properly grouped the offenses of conviction, because all counts "involve substantially the same harm." U.S.S.G. § 3D1.2. The applicable offense guideline is then that which results in the "highest offense level of the counts in the Group." U.S.S.G. § 3D1.3.

The United States Probation Office determined that the applicable offense guideline was U.S.S.G. § 2C1.1(a)(2) for the conspiracy conviction (Count Two) and Defendant's base offense level was 12 with a 6-point enhancement under U.S.S.G. § 2C1.1(b)(2) based upon Mr. Rowland's gain from the offense. (PSR [Doc. # 177] ¶¶ 43-44.) With an adjusted offense level of 18 and a Criminal History Category II, the PSR calculates an advisory range of 30 to 37 months' imprisonment.

The Government concurred with this analysis except it contended that the Court should apply a 2-level enhancement for obstruction of justice under U.S.S.G. § 3C1.1, resulting in an offense level of 20 with a sentencing range of 37 to 46 months. (Gov't's Mem. [Doc. # 182] at 4.) Defendant maintained that § 2C1.1 only applies "to offenses involving bribery or the extortion of a public official." (Def.'s Mem. [Doc. # 181] at 33.)

The Court concluded that Defendant was correct that § 2C1.1 applies only to bribery and similar offenses and instead applied § 2C1.8 for violations of the Federal Election Campaign Act with the 2-level enhancement under § 3C1.1 for obstruction of justice. With a base offense level of 8, 6 levels added for unlawful contributions of more than $30,000, and the 2-level enhancement under § 3C1.1, the resulting offense level is 16 with a 24 to 30 month sentencing range.

A. Section 2C1.1 Applies Only to Bribery and Similar Offenses

U.S.S.G. § 2C1.1 is applicable to a conviction under 18 U.S.C. § 371 only if the conduct was a "conspiracy to defraud by interference with governmental functions." U.S.S.G. § 2C1.1, comment. (Statutory Provisions); see also U.S.S.G. App. A (Statutory Index). Where, however, an 18 U.S.C. § 371 conviction is "Not Covered by a Specific Offense Guideline," the general conspiracy provision of U.S.S.G. § 2X1.1 applies instead.See U.S.S.G. § 2X1.1; U.S.S.G. App. A (Statutory Index). Therefore, there are two potential guideline sections that could apply to Defendant's conspiracy conviction and the Court must apply the guideline that is "most appropriate for the offense conduct charged in the count of which the defendant was convicted." U.S.S.G. 1B1.2, comment. (n.1).

The Government maintains that § 2C1.1 applies on its face because the indictment charged Defendant with a conspiracy to defraud the United States "by impeding . . . the lawful government[al] functions of the FEC." (Superseding Indictment ¶ 32d.) While the guidelines do not explicitly state that § 2C1.1 applies only to conspiracies that involve bribery of public officials, the structure, language, and commentary to § 2C1.1 suggest such a limitation. U.S.S.G. § 2C1.1 is titled "Offering, Giving, Soliciting, or Receiving a Bribe; Extortion Under Color of Official Right; Fraud Involving the Deprivation of the Intangible Right to Honest Services of Public Officials; Conspiracy to Defraud by Interference with Governmental Functions." It also applies to violations of the Foreign Corrupt Practices Act, 15 U.S.C. § 78dd, et seq.; bribery of public officials, 18 U.S.C. § 201; bribery affecting port security, 18 U.S.C. § 226; honest services fraud, 18 U.S.C. §§ 1341, 1343; and extortion, 18 U.S.C. § 1951. See Almendarez-Torres v. United States, 523 U.S. 224, 234 (1998) ("[T]he title of a statute and the heading of a section are tools available for the resolution of a doubt about the meaning of a statute." (internal quotation marks omitted)).

The background to the section explains that it "applies to a person who offers or gives a bribe for a corrupt purpose, such as inducing a public official to participate in a fraud or to influence such individual's official actions, or to a public official who solicitsor accepts such a bribe." U.S.S.G. § 2C1.1, comment. (backg'd). It further explains that the section applies to honest services fraud and "conspiracy to defraud by interference with governmental functions," because such "fraud offenses typically involve an improper use of government influence that harms the operation of government in a manner similar to bribery offenses."¹ Id.

Two cases cited by Defendant confirm the viewpoint that the high base offense level of 12 under U.S.S.G. § 2C1.1 reflects the Sentencing Commission's determination that corruption of public officials by bribery merits harsher punishment than other frauds. In United States v. Huizar-Velazquez, 720 F.3d 1189, 1191 (9th Cir. 2013), the Ninth Circuit held that U.S.S.G. § 2C1.1 applies only to a conspiracy to defraud that harms the government "in a manner similar to bribery offenses" and therefore does not apply to a conspiracy conviction for evading import duties. Id. (quoting U.S.S.G. § 2C1.1, comment (backg'd)).

The Government does not dispute that Huizar-Velazquez undermines its position but contends that the Court should not follow the Ninth Circuit, criticizing it for "ignoring the precise statutory violation of conviction in favor of its generic characterization of the offense conduct in determining the applicable guideline provision." (Gov't's Reply [Doc. # 184] at 4.) However, the Ninth Circuit did not"ignore" the offense of conviction but rather determined that U.S.S.G. § 2X1.1 rather than U.S.S.G. § 2C1.1 applied, both of which are listed in the Statutory Index for a violation of 18 U.S.C. § 371. Huizar-Velazquez, 720 F.3d at 1192.

In United States v. Orsburn, 525 F.3d 543, 544 (7th Cir. 2008), the Seventh Circuit held that U.S.S.G. § 2C1.1 did not apply to "simple theft by public officials" without bribes or kickbacks and vacated the sentence of a defendant convicted of mail fraud for embezzling funds from the township for which he worked. The court reasoned that although § 2C1.1 is among the guideline provisions applicable to mail fraud convictions, see U.S.S.G., App. A, the list of offenses in § 2C1.1 was "best understood in light of its companions (bribery, extortion, and interference with governmental functions)," which shows it "is designed to include the many kinds of bribery," but a "fraud that does not include bribery or any closely related offense is outside the scope of § 2C1.1." Orsburn, 525 F.3d at 546.

The Government attempts to distinguish Orsburn on the basis that it involved a conspiracy to defraud under the mail fraud statute (Gov't's Reply at 5-6), but the Seventh Circuit's reasoning is equally applicable to fraud charged under § 371 and the Government does not attempt to offer any justification for why frauds charged under the two statutes should be treated differently.²

The Government contends that the Eleventh Circuit's unpublished opinion in United States v. Trent, 306 F. App'x 482, 486 (11th Cir. 2009) "squarely" concluded that§ 2C1.1 applies to § 371 conspiracies to defraud the United States unrelated to bribery. (Gov't's Reply at 6.) However, the defendant in Trent did not argue that § 2C1.1 applied only to bribery offenses, but rather that because "her primary criminal activity involved a scheme to defraud" a local housing authority, the guidelines for theft and embezzlement should have applied instead. Trent, 306 F. App'x at 490. The Eleventh Circuit did not discuss the argument advanced by Defendant here or examine the scope of § 2C1.1, and therefore Trent is inapposite.

The Government maintains that this conspiracy is similar to a bribery scheme, because it "also undermines a governmental entity's ability to fulfill its public purpose." (Gov't's Mem. at 5.) However, this scheme did not involve the "improper use of government influence," U.S.S.G. § 2C1.1, comment. (backg'd), that is associated with bribery and similar schemes. Rather, as in Huizar-Velazquez, Defendant sought to conceal his criminal activities by sneaking past, rather than bribing, the government gatekeepers. See Huizar-Velazquez, 720 F.3d at 1192 ("Sneaking shipments past Customs agents to evade duties is not subject to as harsh a punishment as bribing Customs agents.").

Accordingly, based on the text, structure, and the Sentencing Guidelines' commentary to the § 2C1.1 as well as the Ninth and Seventh Circuits' holdings, which the Court finds persuasive, the Court concludes that § 2C1.1 does not apply to Defendant's offense conduct.

B. Applicable Offense Guideline is § 2C1.8

The Court must now apply the offense guideline that results in the highest offense level, see U.S.S.G. § 3D1.3, which the Court concludes is § 2C1.8 for violations of theFederal Election Campaign Act³ and results in an offense level of 16, because the base offense level is 8, 6 levels are added under §§ 2C1.8(b) and 2B1.1 for an illegal transaction of more than $30,000, and 2 levels are added under § 3C1.1 for obstruction of justice.⁴

C. Obstruction of Justice Offense Adjustment (U.S.S.G. § 3C1.1)

The obstruction...