United States v. Grasso

Opinions of the United
2006 Decisions States Court of Appeals
for the Third Circuit

9-25-2006

USA v. Grasso
Precedential or Non-Precedential: Non-Precedential

Docket No. 05-4048

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 NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

Nos. 05-4048 and 05-4049

UNITED STATES OF AMERICA

v.

MICHAEL J. GRASSO, JR.
Appellant

On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Crim. Nos. 00-cr-00051 and 01-cr-00783)
District Judge: Hon. Stewart Dalzell

Submitted Under Third Circuit LAR 34.1(a)
September 11, 2006

Before: SLOVITER, McKEE and BARRY, Circuit Judges

(Filed September 25, 2006)

OPINION
SLOVITER, Circuit Judge.

Michael J. Grasso, Jr., appeals his judgments of conviction in the United States

District Court for the Eastern District of Pennsylvania. Although he raises four issues, the

most substantial claim is that the District Court erred by increasing his sentence in one of

the cases following a remand. There is a somewhat complicated procedural background

that must be reviewed to understand the issues before us.

I.

In February 2000, Grasso was indicted in Criminal No. 00-51 for mail fraud, wire

fraud, and money laundering for selling fraudulent work-at-home schemes from 1997

through 1999. In November 2000, a superseding indictment was filed, which reduced the

number of money laundering counts from 508 to 482, and which added a charge of

obstruction of justice, based on Grasso’s attempt to access funds frozen by the

Government. In December 2001, Grasso was indicted in Criminal No. 01-783 which

charged him with two counts of forgery and one count of obstruction of justice, based on

his renewed attempt to gain access to frozen funds. The obstruction of justice charge also

alleged that Grasso forged the signatures of both a district judge, the Honorable Jay

Waldman, and a deputy clerk. On February 7, 2002, the District Court severed the

obstruction of justice count (Count 13) in Criminal No. 00-51 and consolidated that count

with Criminal No. 01-783.

After a two-week trial before the Honorable Bruce W. Kauffman, Grasso was

2
found guilty of all counts in the superseding indictment in No. 00-51, with the exception

of two counts that were dismissed during the trial. Grasso thereafter pled guilty to two

counts of forgery and one count of obstruction of justice in No. 01-783 and the severed

obstruction of justice count in No. 00-51 before the Honorable Berle M. Schiller. The

cases were eventually consolidated for sentencing before Judge Schiller. On the money

laundering and fraud convictions, No. 00-51, Judge Schiller sentenced Grasso to 97

months’ imprisonment, three years’ supervised release, a fine of $150,000, restitution in

the amount of $761,126.39, and a special assessment of $49,500. On the obstruction of

justice count, Judge Schiller sentenced Grasso to 15 months’ imprisonment, 10 months to

run concurrently and 5 months to run consecutively with the sentence in No. 00-51, a fine

of $30,000 and a $300 special assessment.

Grasso timely filed his appeal in No. 00-51 on February 13, 2003. He argued that

in light of United States v. Scialabba, 282 F.3d 475 (7th Cir.), cert. denied, 537 U.S. 1071

(2002), he should be sentenced under the fraud, rather than the money laundering,

guidelines. On appeal, this court upheld Grasso’s convictions and sentences. United

States v. Grasso, 381 F.3d 160 (3d Cir. 2004), vacated, 544 U.S. 945 (2005). However,

we vacated the restitution order and remanded that portion of the case. Id. at 172. While

Grasso’s appeal was pending, he filed a letter pursuant to Fed. R. App. P. 28(j) raising a

challenge to his sentence in light of the Supreme Court’s recently issued decision in

Blakely v. Washington, 542 U.S. 296 (2004). Approximately two weeks later, we issued

3
our decision without mentioning the Blakely issue.

Grasso then filed a petition for writ of certiorari challenging his convictions and

sentences. Thereafter, the Supreme Court issued its decision in United States v. Booker,

543 U.S. 220 (2005), on January 12, 2005. On March 28, 2005, the Court granted

Grasso’s petition for writ of certiorari, vacated the judgment, and remanded the case to

this court for further consideration in light of Booker. Grasso v. United States, 544 U.S.

945 (2005). On remand, this court vacated Grasso’s sentence and remanded the case to

the District Court for resentencing.

On remand to the District Court, the case was reassigned from Judge Schiller, who

recused due to a conflict, to the Honorable Stewart Dalzell. Judge Dalzell entered an

amended order directing the parties to “[s]ubmit their views to the court as to the

relevance, under the Supreme Court’s Booker calculus, of defendant’s October 6, 2002

letter to A. Richard Gerber, Esquire (which apparently had not been previously addressed

in connection with the defendant’s earlier sentencing).” App. at 448. The referenced

October 6, 2002 letter was sent by Grasso to Gerber, an attorney, in an effort to get the

latter to use his purported influence over Judge Kauffman to secure a sentence other than

imprisonment. Appellee’s Supp. App. at 4. Counsel for Grasso argued that Judge

Schiller had been aware of the letter at the original sentencing held in early February 2003

because the letter itself was the reason that the case had been reassigned to him from

Judge Kauffman. However, Judge Dalzell found the letter “extremely disquieting,” App.

4
at 567, and used it as the basis for increasing Grasso’s sentence in No. 01-783.

At resentencing, Judge Dalzell reimposed the 97-month sentence on the money

laundering and fraud charges in No. 00-51, and the $49,500 assessment, but reduced the

fine from $150,000 to $75,000. In No. 01-783, Judge Dalzell reimposed the $300

assessment, reduced the fine from $30,000 to $25,000, and increased Grasso’s sentence

from 15 months’ imprisonment to 20 months’ imprisonment, with 10 months, rather than

the initial 5 months, to run consecutively to the 97-month sentence in No. 00-51. It is this

increase that forms the basis of Grasso’s first issue on appeal.

II.

Grasso raises four issues on this appeal: (1) whether it was error for the District

Court to increase his sentence at resentencing; (2) whether the District Court’s sentence

was unreasonable;1 (3) whether the District Court improperly enhanced his money

laundering sentence for obstruction of justice; and (4) whether for purposes of 18 U.S.C.

§ 1956(a)(1)(A)(i) “proceeds” should be defined as gross receipts or net profits.

1
The Government argues that we do not have jurisdiction
to review Grasso’s sentence because it was imposed within the
properly calculated guideline range. However, in United States v.
Cooper, 437 F.3d 324, 328 (3d Cir. 2006), we held that we have
jurisdiction to review sentences for reasonableness under 18 U.S.C.
§ 3742(a)(1) (authorizing the appeal of sentences in violation of
law).

5
 A.

1.

Grasso first argues that the District Court’s resentencing in No. 01-783 was

improper because it was outside the scope of the mandate issued by this court on May 20,

2005. This contention is based largely on the fact that Grasso’s Rule 28(j) letter, filed in

response to our Order of April 20, 2005, did not refer to the obstruction charges in No.

01-783.2 However, Grasso’s argument misses the point.

Grasso filed notices of appeal in Nos. 00-51 and 01-783 on February 13, 2003,

which were docketed in this court as Nos. 03-1441, 03-1442, respectively. Our opinion

dated August 23, 2004 affirmed Grasso’s convictions in both cases, but remanded the

matter to the District Court for reconsideration of the restitution order only. However,

Grasso petitioned for writ of certiorari on December 20, 2004 in both No. 00-51 and No.

01-783. The Supreme Court granted the petition, vacated the judgment, and remanded

the consolidated case to this court. We then requested that Grasso inform us as to

whether he wished to challenge his sentence under Booker; he replied that he wished to

do so. We then remanded the case to the District Court. Because our Order remanding

the consolidated case applied to both criminal action numbers, it was well within the

2
However, in his letter, Grasso did state the name of the
case as follows: “United States of America v. Michael J. Grasso,
Jr., U.S. Ct. App. 3d Cir., Nos. 03-1441/03-1442 (Consolidated).”
No. 03-1442 is the appeal docket number for No. 01-783.

6
authority of the District Court to resentence Grasso in both cases. Because Grasso filed

his appeal to this court and his petition in the Supreme Court in both No. 00-51 and No.

01-783, rather than only in No. 00-51, he has no basis to complain that he was

resentenced in No. 01-783.

2.

Grasso next argues that the District Court’s resentencing in No. 01-783 violated

his constitutional rights to due process and freedom from double jeopardy. Grasso argues

that his due process rights were violated because the District Court did not state a “wholly

logical” reason for the increased sentence. Appellant’s Br. at 17. In North Carolina v.

Pearce, 395 U.S. 711 (1969), the Supreme Court held that due process “requires that

vindictiveness against a defendant for having successfully attacked his first conviction

must play no part in . . . [resentencing].” Id. at 725. In order to ensure that is the case, the

Court required that “whenever a judge imposes a more severe sentence upon a defendant

after a new trial, the reasons for his doing so must affirmatively appear.” Id. at 726. We

have previously stated that “[t]his requirement has been read to create ‘a presumption of

vindictiveness, which may be overcome only by objective information in the record

justifying the increased sentence.” Rock v. Zimmerman, 959 F.2d 1237, 1256 (3d Cir.

1992) (quoting United States v. Goodwin, 457 U.S. 368, 374 (1982)). However, this

presumption does not apply in every case. Id. As we stated in Zimmerman, “the Pearce

presumption does not apply where the second sentence is imposed by a different

7
sentencer and the record provides affirmative assurance that the harsher sentence reflects

simply a fresh look at the facts and an independent exercise of discretion.” Id. at 1257.

When the second sentencer “‘provides an on-the-record, wholly logical, non-vindictive

reason for the harsher sentence,’ it is not necessary for him or her to invoke facts not

available at the time of the first sentence.” Id. at 1257-58 (citations omitted in the

original); see Texas v. McCullough, 475 U.S. 134, 140 (1986). In the absence of the

Pearce presumption, a party challenging a second sentence must demonstrate actual

vindictiveness. See, e.g., Zimmerman, 959 F.2d at 1258.

The Pearce presumption does not apply in this case. The record demonstrates that

Judge Dalzell took a fresh look at the facts and independently exercised his discretionary

authority in sentencing Grasso to an additional five months of imprisonment in No. 01-

783. Judge Dalzell explained that he found Grasso’s attempt to pay Richard Gerber a

bribe to influence a federal judge’s disposition of his case “extremely disquieting.” App.

at 567. He stated that the letter compounded the attempts to corrode the sentencing

before Judge Kauffman and “raises the question of incorrigibility . . . .” App. at 562.

Vindictiveness is also negated by the fact that Judge Dalzell reduced Grasso’s fines in

both No. 00-51 and No. 01-783.3 Grasso seeks to bolster his argument by noting that his

letter to Gerber was available to Judge Schiller at his initial sentencing. Judge Dalzell

3
We note that Grasso has not raised a claim of actual
vindictiveness.

8
explained that he came to a different result than did Judge Schiller, stating that “I don’t

know whether [Judge Schiller] knew about [the letter] or not. All I can say for sure is that

the October 6, 2002 correspondence was not alluded to in any way, shape or form in the

transcript of the Sentencing Hearing.” App. at 567-68. We also believe it irrelevant

whether Judge Schiller was aware of Grasso’s second attempt to improperly influence a

federal judge. The dispositive fact is that Judge Dalzell looked at the case anew and

independently exercised his sentencing authority. See, e.g., Zimmerman, 959 F.2d at

1258 (Second sentencer did not err by imposing consecutive, as opposed to the initial

concurrent, life terms on defendant. The second judge “explained that the sentence

disparity was attributable to the fact that he . . . was taking a fresh look at the relevant

facts and exercising an independent judgment.”).

3.

Grasso argues that “[d]ouble jeopardy and due process also invalidate [his]

increased sentence for the . . . reason that [he] . . . had a legitimate expectation of finality

with respect to it.” Appellant’s Br. at 19. Grasso cites to a decision of this court where

we stated, “A defendant’s due process rights may be violated ‘when a sentence is

enhanced after the defendant has served so much of his sentence that his expectations as

to its finality have crystallized and it would be fundamentally unfair to defeat them.’”

United States v. Davis, 112 F.3d 118, 123 (3d Cir. 1997) (quoting United States v.

Lundien, 769 F.2d 981, 987 (4th Cir. 1985)). Grasso fails to quote the remainder of that

9
thought where we continued, “It is only in an extreme case that a later upward revision of

a sentence is so unfair that it is inconsistent with the fundamental notions of fairness

found in the due process clause.” Id. In Davis, we looked to three factors to determine

whether the defendant lacked a legitimate expectation of finality. The first was whether

the defendant himself challenged the sentence. Id. at 123-24. Here, Grasso made the

decision to appeal the sentence. The second factor was whether the defendant has

completed his prison term. Id. at 124 (“Davis ha[d] no expectation of finality as his

aggregate sentence [had] not been served[.]”). Here, Grasso had not completed his prison

term; he had served 44 months at the time of his resentencing before Judge Dalzell. The

third was whether the resentencing gives the defendant a lower overall sentence. Id.

Here, although Grasso’s overall sentence has increased by five months, we do not believe

an increase in prison time of that magnitude constitutes the type of sentence that is “so

unfair that it is inconsistent with the fundamental notions of fairness found in the due

process clause.” Id. at 123. We reject Grasso’s constitutional challenge to his resentence.

B.

We turn to the second issue Grasso raises on appeal, whether the sentence was

reasonable. Grasso argues that the District Court erred by refusing to take into account

the disparity in Grasso’s sentence and the sentences of two other defendants convicted

and previously sentenced for similar conduct. Defense counsel urged the District Court to

impose a sentence comparable to that imposed on the other two defendants. The District

10
Court declined, stating “[i]t seems to me we’re comparing apples to oranges with those

other cases . . . because those folks were not convicted of money laundering. . . . But

that’s what [Grasso was] [sic].”

The Supreme Court’s decision in United States v. Booker, 543 U.S. 220 (2005), is

by now well-worn territory. For purposes of this opinion, it is sufficient to note that in

Booker the Court held that the Sentencing Guidelines were henceforth to be treated as

advisory, rather than mandatory; to do otherwise would violate the constitutional

guarantee embedded in the Sixth Amendment. Id. As we stated in Cooper, “the Supreme

Court directed appellate courts to review sentences for reasonableness . . . .” 437 F.3d at

326 (citing Booker, 543 U.S. at 308).

In determining whether a sentencing court acted reasonably we must look to

whether the court considered the factors set forth in 18 U.S.C. § 3553(a). Id. at 329. A

sentence within the correct guideline range is less likely to be found unreasonable;

however, “a within-guidelines sentence is not necessarily reasonable per se. Otherwise,

as several Courts of Appeals have concluded, we would come close to restoring the

mandatory nature of the guidelines excised in Booker.” Id. at 331. Lastly, the appellant

has “the burden of demonstrating unreasonableness.” Id. at 332.

On appeal, Grasso has failed to demonstrate that his sentence was unreasonable.

The record demonstrates that the District Court considered the § 3553(a) factors,

11
specifically § 3553(a)(6),4 the factor at issue here, and nevertheless decided to sentence

Grasso within the advisory sentencing guidelines range. First, as the Government stated

at the sentencing hearing:

[T]he amount of loss with respect to [one of the individuals
mentioned by defense counsel] was about one-and-a-half to
two-and-a-half million dollars. . . . [With respect to] Grasso,
we have taken the position that we’re talking about essentially
a 10 million dollar loss. That’s the amount of money he
secured from others through the course of this fraudulent
scheme.” 5

App. at 552-53. Second, Grasso chose to go to trial, rather than plead guilty. Third, and

perhaps most importantly, Grasso was convicted under the money laundering guidelines –

the other two individuals were not. That alone accounts for the sentencing disparity. The

fact that the District Court failed to depart does not make the sentence unreasonable. In

fact, as we stated in Cooper, Booker did not overturn this circuit’s practice of “declining

to review . . . a district court’s decision to deny departure.” 437 F.3d at 333. In sum,

Grasso’s sentence was not unreasonable.

4
18 U.S.C. § 3553(a)(6) states, “The court, in determining
the particular sentence imposed, shall consider . . . the need to
avoid unwarranted sentence disparities among defendants with
similar records who have been found guilty of similar conduct[.]”
5
The Assistant United States Attorney present at the
sentencing hearing only addressed one of the other matters raised
by defense counsel. She stated, “I was involved in . . . the Frumin
case . . . . The other matter I was not involved in.” App. at 551.

12
 C.

Grasso next argues that the District Court improperly enhanced his money

laundering sentence for obstruction of justice. See U.S.S.G. § 3C1.1. He contends that

applying the enhancement for obstruction of justice in No. 00-51 amounts to double

counting because he was convicted for obstruction of justice in No. 01-783. However,

the record makes clear that no double counting occurred. The obstructive conduct for

which Grasso’s sentence was enhanced in No. 00-51 was related to Grasso’s attempt to

access frozen funds in January 2000. Grasso wrote a letter on January 21, 2000 to a

financial institution holding his frozen funds and claimed that the court order applied to

his father, rather than to him. In that letter, Grasso stated: “Sometime back, my father

became involved in a governmental litigation problem. The government ‘froze’ all his

assets . . . .” PSR ¶ 83. In contrast, the obstructive conduct for which Grasso was

convicted in No. 01-783 was related to Grasso’s attempt to secure frozen funds in

October 2001. That conduct consisted of sending fraudulent court orders and misleading

correspondence to financial institutions. Therefore, it is clear that Grasso engaged in

obstructive conduct in two separate instances. As such, the enhancement was properly

applied and does not amount to double counting.

D.

Finally, Grasso argues that under 18 U.S.C. § 1956(a)(1)(A)(i) the term “proceeds”

should be defined as net profits rather than gross receipts. In support of this argument he

13
relies on the Seventh Circuit’s decision in United States v. Scialabba, 282 F.3d 475 (7th

Cir. 2002). We held otherwise in Grasso’s first appeal. See Grasso, 381 F.3d at 169.

Grasso concedes that point and only seeks to preserve the issue for possible review in the

Supreme Court. We will not, of course, relitigate the issue.

III.

For the reasons stated herein the judgments of conviction and sentence entered in

Nos. 00-51 and 01-783 will be affirmed.

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