United States Court of Appeals
For the First Circuit
No. 01-2679
UNITED STATES OF AMERICA,
Appellee,
v.
NORMAN J. GALLANT,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Michael A. Ponsor, U.S. District Judge]
Before
Boudin, Chief Judge,
Torruella and Lynch, Circuit Judges.
Jane Elizabeth Lee for appellant.
Karen L. Goodwin, Assistant U.S. Attorney, with whom
Michael J. Sullivan, U.S. Attorney, was on brief, for appellee.
October 15, 2002
LYNCH, Circuit Judge. The principal issue in this case
is whether the plaintiff forfeited his objection to an error that
might but need not have resulted in a shorter sentence. On appeal,
the defendant, Norman Gallant, objects to the denial of an
additional one-level downward adjustment for acceptance of
responsibility under § 3E1.1(b) of the United States Sentencing
Guidelines, after the district court had granted a two-level
downward adjustment. The government concedes that the court erred,
but nonetheless argues that there should be no relief because the
issue was not preserved. Forfeited sentencing objections are
reviewed for plain error and there is no plain error, the
government argues, because Gallant's 24-month sentence falls within
the guidelines sentencing range that would have applied had the
district court given Gallant the additional one-level adjustment.
Though the government's reasoning is not implausible, we
find that Gallant did not forfeit his objection. The defendant
consistently argued that he was entitled to a three-level
reduction, the government warned the district court against its
eventual ruling, the ruling was contrary to both parties'
positions, and the sentencing judge did not invite further
arguments.
Gallant also challenges the imposition of an order that,
as a special condition of supervised release, he transfer to the
government all property necessary to make restitution. Gallant
-2-
argues that there was no criminal forfeiture provision in the
information or indictment, and that the court's order is best
characterized as requiring forfeiture. This argument fails. The
order does not amount to an order of forfeiture. Rather, it was a
reasonable use of the court's authority to effectuate restitution.
I.
Norman Gallant bilked the U.S. government out of roughly
$300,000 over a decade. He waived indictment on May 21, 2001, and
was charged by information. He timely pled guilty on two counts of
mail fraud, 18 U.S.C. § 1341 (2000), one count of fraudulent
receipt of Social Security benefits, 42 U.S.C. § 408(a)(4) (2000),
and one count of tax evasion, 26 U.S.C. § 7201 (2000). Between
August 1992 and October 2000, Gallant fraudulently obtained $29,130
in Section 8 rental subsidies from the Department of Housing and
Urban Development. Between January 1995 and April 2001, he
fraudulently secured $102,021 in Medicaid funds for a personal care
attendant. Between July 1992 and February 2001, he fraudulently
obtained $162,000 in Social Security disability benefits. The
information had charged Gallant with cheating on his 1999 income
taxes by a sum in excess of $11,000; Gallant pled guilty to
committing tax fraud totaling between $23,500 and $40,000 over tax
years 1995 to 1999. As part of the plea, the parties agreed that
the total loss to the government was between $200,000 and $350,000.
-3-
In the plea agreement the government agreed to recommend
a three-level reduction for acceptance of responsibility under
U.S.S.G. § 3E1.1 (2002),1 provided defendant met five conditions,
three of which are pertinent here. Conditions (3), (4), and (5)
stated that Gallant:
(3) acknowledges that he is the sole effective owner and
has sole effective control of the assets owned by the
Macantosh Realty Trust, the Serenity Equity Trust and the
Serenity Equity Trust II, and that all such assets are
available for restitution; (4) takes all necessary steps
to make such assets available for restitution as the
Court may order; and (5) makes an initial payment of
$15,000 in restitution to the clerk of the court prior to
sentencing.
The Pre-Sentence Report (PSR) originally recommended that
Gallant receive a three-level reduction if he complied with the
government's conditions. The government responded to the PSR,
1
U.S.S.G. § 3E1.1 provides:
(a) If the defendant clearly demonstrates acceptance of
responsibility for his offense, decrease the
offense level by 2 levels.
(b) If the defendant qualifies for a decrease under
subsection (a), the offense level determined prior
to the operation of subsection (a) is level 16 or
greater, and the defendant has assisted authorities
in the investigation or prosecution of his own
misconduct by taking one or more of the following
steps:
(1) timely providing complete information to the
government concerning his own involvement in
the offense; or
(2) timely notifying authorities of his intention
to enter a plea of guilty, thereby permitting
the government to avoid preparing for trial
and permitting the court to allocate its
resources efficiently,
decrease the offense level by 1 additional level.
-4-
objecting that no three-level reduction should be granted for
acceptance of responsibility because Gallant had not yet satisfied
the terms of the agreement. Gallant had no objection, of course,
to the recommended three-level reduction.
After reviewing the government's objections, the
probation officer prepared an Addendum to the PSR revising his
recommendations as follows:
(25) The defendant admitted his involvement in the
instant offense and is being granted acceptance of
responsibility. The offense level is reduced two (2)
levels per U.S.S.G. § 3E1.1(a) as he has clearly
demonstrated acceptance of responsibility for his
offense.
(25a) Per U.S.S.G. § 3E1.1(b), if the defendant has
assisted authorities in the investigation or prosecution
of his own misconduct by taking one or more of the
following steps: (1) Timely providing complete
information to the government concerning his own
involvement in the offense; or (2) Timely notifying
authorities of his intention to enter a plea of guilty,
thereby permitting the government to avoid preparing for
trial and permitting the Court to allocate its resources
efficiently, decrease the offense level by 1 additional
level. As of this date, the defendant has not satisfied
this criteria.
(emphasis added).
Although the PSR correctly stated that there are two
alternate conditions for a further one-level reduction under
U.S.S.G. § 3E1.1(b), it also said that "this criteria" had not been
met. The PSR was incorrect -- there has never been any question
-5-
that Gallant had met the second condition it described,2 and the
government never argued that defendant had not "timely notified the
authorities of his intention to enter a plea of guilty." The PSR
Addendum did not alert the court to the relationship between the
granting of a two-level reduction and the granting of the third
level.
Gallant's subsequent Sentencing Memorandum to the
district court argued that he was entitled to a three-level
reduction.3 The government's position was that Gallant was not
entitled to any reduction for acceptance of responsibility. If he
was not entitled to a two-level reduction because he had not
assisted the authorities, then he was ineligible for a third-level
reduction. No party focused on the possibility that the court
would deny a third-level reduction if the Court granted a two-level
reduction. It simply was not an issue.
2
It is possible the PSR was worded clumsily and meant only to
say the first criterion was not met.
3
In his sentencing memorandum, Gallant argued he had made
"timely admission of the relevant conduct underlying his
conviction." This is not quite the same as saying he had timely
notified the prosecutor of his intent to plead guilty under
U.S.S.G. § 3E1.1(b)(2). Cf. United States v. Hines, 196 F.3d 270,
273 (1st Cir. 1999) (absent unusual circumstances or an agreement
stating otherwise, defendant who communicates intent to plead
guilty does not normally qualify for one-level reduction under
U.S.S.G. § 3E1.1(b)(2) unless he intends to plead unconditionally
to all counts of the indictment). But there was no real dispute on
the point. In this sense Gallant replied to the PSR Addendum.
-6-
That was the posture in which the parties entered the
sentencing hearing, and which they articulated at the hearing. The
government continued to press its position that Gallant should
receive no reduction for acceptance of responsibility. Its basis
was that Gallant had not assisted the government: he had not
disclosed all trust assets (he claimed a boat allegedly owned by
one of the trusts had been sold to another party) and he had been
unwilling to sell immediately the condominiums not occupied by
himself or his sons to meet his restitution obligation.
Nonetheless, the government raised the issue of a third-level
reduction. The government's position at sentencing was that the
defendant "may well have satisfied the timeliness and the timely
plea, which you need for the third point, but he hasn't satisfied
what he needs to do for the first two points." Gallant responded
that he had satisfied the conditions necessary for the first two
points. He added that he was willing to make restitution, but did
not think his assets should all be liquidated immediately.
The court stated that Gallant's assets were ill-gotten
and should be liquidated immediately, so that restitution could be
made promptly, rather than being drawn out through the probation
period. Concerned by Gallant's temporizing about restitution, the
court said:
I'm puzzled . . . about whether it's appropriate for me
to give somebody the benefit of acceptance of
responsibility when there isn't an acknowledgment that
there is any immediate obligation to return or pay back
-7-
or reimburse monies which were wrongfully obtained and
that's the struggle that I'm having.
At the end of the hearing the court then solved its
puzzling dilemma with a compromise: the court granted two levels
for acceptance of responsibility but denied a third. The court
explained:
As far as the three-level reduction goes, I think it is
somewhat artificial but I think that a two point, not a
three point, reduction is appropriate. I think the level
16 offense level is where this case should be.
I recognize in doing that I'm acknowledging the
somewhat unusual facts of this case, but I do not think
that the defendant has made the sort of recognition of
fault and the intent to correct that fault which is
within his power that would justify the full three-level
reduction.
I have considered and frankly come close to the
decision of not allowing any reduction whatsoever for
acceptance of responsibility. But I have in mind that
the defendant did offer his pleas of guilty, did save the
government the necessity of going to trial with this case
and is entitled to some benefit for having done that,
even though what I would call the moral aspect of
acceptance of responsibility seems to me to be lacking to
some degree here.
Then the court promptly moved on to the next sentencing issue
without entertaining any objections to its ruling. Neither party
interrupted the court to ask it to revisit its denial of the third
point on the grounds that, by its decision to give Gallant two
points, the court had inherently determined that Gallant must
receive three points. It is this "if two levels, then necessarily
three levels" rationale which Gallant argues on appeal.
The court also ordered Gallant to pay a $50,000 fine and
to make restitution in the amounts of $29,130 to HUD, $102,021 to
-8-
Medicaid, and $162,000 to the Social Security Administration. The
court ordered the restitution payable "immediately or according to
a court-ordered repayment schedule." Along with the standard
conditions of supervised release, the court ordered, as a special
condition, that the condominium units be surrendered to the
government and sold for cash during the period of supervised
release. The court ordered Gallant to pay the balance of the
restitution according to a court-ordered repayment schedule, and
stated:
[T]he defendant will execute all necessary papers
permitting the timely sale of properties that are owned
by him either directly or through others to permit
restitution.
The execution of these papers will include execution of
any papers necessary to transfer the sailboat referred to
in the pre-sentence report to the government for sale as
part of the restitution.
The defendant takes the position that the sailboat no
longer belongs to him, but to the extent it's necessary
for him to execute any documents to assist the government
in obtaining that sailboat if it is available, he will do
so.
The court also found that the properties held in the
three trusts (the Macantosh Realty Trust, the Serenity Equity
Trust, and the Serenity Equity Trust II) all belonged to the
defendant, so the government was free to place liens on the
properties.
-9-
II.
Acceptance of Responsibility Reductions
A district court lacks discretion to deny the additional
one-level reduction if the defendant is found to have accepted
responsibility under U.S.S.G. § 3E1.1(a) and has complied with the
conditions specified in U.S.S.G. § 3E1.1(b)(2). United States v.
Marroquin, 136 F.3d 220, 223 (1st Cir. 1998). The government
concedes it was error not to give a three-level reduction, because
the court found Gallant was entitled to a two-level reduction and
he had satisfied the criteria for the third level. The government,
however, argues that Gallant has forfeited the issue by failing to
raise it in the trial court. As a result, the government contends,
this court should apply a plain error test, and Gallant does not
meet the test.4
The defendant argues he did not forfeit the issue. In
the alternative, he says, his substantial rights were affected
4
In United States v. Olano, 507 U.S. 725 (1993), and Johnson
v. United States, 520 U.S. 461 (1997), the Supreme Court set forth
a now-familiar four-step analysis to determine whether a mistake
constitutes plain error under Fed. R. Crim. P. 52(b). "[T]here
must be (1) error, (2) that is plain, and (3) that affects
substantial rights. If all three conditions are met, an appellate
court may then exercise its discretion to notice a forfeited error,
but only if (4) the error seriously affects the fairness,
integrity, or public reputation of judicial proceedings." Johnson,
520 U.S. at 467 (internal quotations omitted); see Olano, 507 U.S.
at 732. See generally United States v. Gandia-Maysonet, 227 F.3d
1, 5 (1st Cir. 2000) (contrasting the harmless error test, which
prevails when an issue has been preserved for appeal, with the
plain error test, which applies when an issue has been forfeited).
-10-
because he was given a total offense level of 16, with a GSR of 21
to 27 months imprisonment. The 24-month sentence he received was
within the GSR of 18 to 24 months that would have applied if the
court had granted the additional one-level reduction. We do not
consider this alternative "plain error" argument because Gallant
did not forfeit his objection.
The issue of when a forfeiture of an objection occurs
comes up in many different contexts. The issue is bounded on both
ends by clear and firm rules in particular settings. If a
defendant, for example, fails to timely object to a question put to
a witness, then he has forfeited his evidentiary objection. If he
objects and states the nature of his evidentiary objection, he has
preserved it. Between these clear poles, the matter of what
constitutes forfeiture is more one of degree and judgment by the
appellate court.
The nature of the issue on review influences the outcome
of the forfeiture analysis. For example, this circuit is notably
rigorous in requiring a party unhappy with a trial court's jury
instruction to promptly state the precise objection after the
instruction has been given. See Scarfo v. Cabletron Sys., Inc., 54
F.3d 931, 944 (1st Cir. 1995) (a party must not only identify the
error in the jury instruction but also explain how the judge can
correct it); Cyr v. B. Offen & Co., 501 F.2d 1145, 1155 (1st Cir.
1974) (quoting Palmer v. Hoffman, 318 U.S. 109, 119 (1943))
-11-
(objection to the jury instruction "must be sufficiently specific
to bring into focus the precise nature of the alleged error"). The
requirement for a post-instruction objection is set forth in the
federal rules, Fed. R. Crim. P. 30, and counsel are on clear notice
of the requirement. Counsel must make the post-instruction
objection even if she has objected earlier. This rule gives the
trial court an opportunity to rectify any error in the instruction
before the jury begins to deliberate. See Golden v. United States,
318 F.2d 357, 360 (1st Cir. 1963).
There is no such equivalent requirement for counsel to
make an objection after an evidentiary ruling when an earlier
timely objection was made. Nor is there a requirement that an
objection be made before the grounds for the objection reasonably
should have been known to the objector: the defense is "not
required to anticipate the government's line of questioning in
order for an objection to be timely." U.S. v. Meserve, 271 F.3d
314, 323 (1st Cir. 2001). Indeed, under Fed. R. Evid. 103(a)(1) a
party may oppose the admission of testimony through either a timely
objection or a motion to strike. The operative principle is that
the objection need not be made before the grounds are reasonably
known.
Our case concerns neither jury instructions nor
evidentiary issues. It concerns sentencing and whether the
continued insistence of Gallant's counsel that Gallant was entitled
-12-
to a three-level reduction was sufficient, although Gallant's
counsel did not present the precise argument made here. Context is
important. This is not a situation in which the government took the
position contrary to defendant on the precise argument and the
defendant failed to protest. To the contrary, the government said
that if Gallant was entitled to the two-level reduction, most
likely he was entitled to a third level. Gallant obviously would
not object to this part of the government's position. Nothing in
the government's position at any time put defendant on notice that
he might receive two levels but not three. Although the Addendum
to the PSR may be thought to have provided some notice, neither
party adopted its legal conclusions and both argued implicitly
against them.5 Further, Gallant consistently had said he was
entitled to a three-level reduction. Gallant had no real reason to
think this was at issue until after the court ruled. We generally
do not require objections to be made to hypothetical outcomes which
neither party anticipated.
To support its forfeiture argument, the government relies
heavily on United States v. Keppler, 2 F.3d 21 (2nd Cir. 1993).
5
The district judge may rely on factual assertions in a
PSR that are not rebutted by the defendant, United States v.
Torres-Otero, 232 F.3d 24, 32-33 (1st Cir. 2000), but we would
be reluctant to permit such reliance on legal conclusions,
particularly ones that neither party endorses. Fed. R. Crim.
P. 32(b)(6)(D) provides only that the district court may,
absent objection, adopt the findings of fact in the PSR, as
did occur here.
-13-
That case is easily distinguished. Far from conveying that the
sentencing reduction for acceptance of responsibility was an all-
or-nothing proposition, the government there argued at the
sentencing hearing that the court should deny "all or part" of the
three-level reduction. Id. at 22-23 (emphasis added). Moreover,
when the court granted a two- but not a three-level reduction, the
court specifically asked for objections and defense counsel had
none.6 Id. at 23.
The government also points to our case law saying that a
defendant cannot present one legal argument at the trial court and
another on appeal. See United States v. Lilly, 13 F.3d 15, 17-18
(1st Cir. 1994). That is quite so, but even that doctrine has its
limits. The doctrine has not been applied where the defendant
could not reasonably have anticipated the issue would arise until
after the court had ruled in a way contrary to both parties'
positions.
The government's argument that Gallant forfeited the
issue then depends on the premise that a criminal defendant must
state objections to the imposition of a particular sentence after
the sentence has been announced by the court -- even when the
ruling has not been advocated by any of the parties and the court
does not invite further arguments. Here, both parties had together
6
It is also unclear whether defendant in that case requested
a three-point reduction prior to or during the sentencing hearing.
See Keppler, 2 F.3d at 22-23.
-14-
argued a position before sentencing which would, if followed, have
obviated the error.
The government's argument that a post-sentence objection
is required is not implausible. If defense counsel had been quick
enough after the ruling to object, even absent any invitation from
the court, this problem might have been avoided.7 Considerations
of judicial economy may be thought to support a requirement of
objection after a sentence is given, even to unanticipated issues.
But judicial economy works two ways. There is also a need for
finality and few trial judges would warm to a rule which requires
continued argument after the court gives its sentence. Further,
unlike other areas, there is no Federal Rule of Criminal Procedure
giving advance notice to counsel of a requirement to make post-
sentence objections. Indeed, Fed. R. Crim. P. 32(c)(3) provides
that the court entertain argument from both defendant's counsel and
the government "before imposing sentence." There is also the
interest, expressed in other contexts, of avoiding judicial
proceedings conducted through surprise, sometimes called "trial by
ambush." Lawyers should have fair notice and an opportunity to
prepare.8 On balance, given the facts here, we think it simply
7
Counsel could also have sought a correction of the sentence
under Fed. R. Crim. P. 35(c).
8
Burns v. United States, 501 U.S. 129 (1991), and its First
Circuit progeny affirm the crucial importance of providing notice
of otherwise unexpected sentencing rulings. Burns states,
"Congress did not intend district courts to depart from the
-15-
would be unfair and unwise as a matter of policy to hold that
Gallant forfeited the argument. Accordingly, we will remand to the
district court for resentencing in light of the error.
To its credit, the government has simplified matters by
agreeing that there would be no claim by it on remand that the
defendant is not entitled to any credit or acceptance of
responsibility. See generally United States v. Ticchiarelli, 171
F.3d 24, 29-30 (1st Cir. 1999). The district court is free on
remand to determine where within the applicable GSR the defendant
should be resentenced. It is not a foregone conclusion that on
remand the appropriate sentence will be 21 months rather than 24
months.
Restitution
Gallant also challenges the order requiring, as a special
condition of supervised release, that he sell such of his assets as
necessary to permit restitution. Gallant argues that this was
effectively an asset forfeiture and that the government complied
with none of the procedures for obtaining a forfeiture order. See
[Sentencing] Guidelines sua sponte without first affording notice
to the parties." Id. at 136. United States v. Walker, 234 F.3d
780 (1st Cir. 2000), reconciles Burns and a case distinguishing
Burns, United States v. Canada, 960 F.2d 263 (1st Cir. 1992), by
observing that "[b]oth are premised on defendant's having adequate
notice of the facts and the law." Walker, 234 F.3d at 786.
Indeed, First Circuit cases limiting Burns consistently involve
fact patterns where the defendant had constructive notice. See
United States v. Sharpton, 252 F.3d 536, 543 & n.8 (1st Cir. 2001);
United States v. Brown, 235 F.3d 2, 4-5 (1st Cir. 2000); Canada,
960 F.2d at 266-67 & n.4.
-16-
Fed. R. Crim. P. 7(c)(2), 32.2(a); see also United States v. Loe,
248 F.3d 449, 464 (5th Cir. 2001).
This argument mischaracterizes the order. The order
merely effectuates the court's power to order restitution under 18
U.S.C. §§ 3663-3664 and U.S.S.G. § 5D1.3(a)(6). It is true that
Gallant's assets are to be surrendered to the government and sold
for cash. The government here wears two hats. Several agencies of
the government were defrauded by Gallant and are entitled to
restitution. Another branch of government, the prosecution, has
been authorized to sell the assets in order to make that
restitution. This is not a case of asset forfeiture at all and the
order was well within the district court's discretion over
conditions of supervised release. See United States v. Phaneuf, 91
F.3d 255, 262-63 (1st Cir. 1996). We bypass the government's
contention that this argument was not preserved either, and affirm
the restitution order on the merits.
For the reasons stated above, we remand for resentencing
proceedings consistent with this opinion. So ordered.
-17-
United States v. Gallant
Court: Court of Appeals for the First Circuit
Date filed: 2002-10-15
Citations: 306 F.3d 1181
Copy Citations