United States Court of Appeals
Fifth Circuit
F I L E D
December 23, 2005
In the
United States Court of Appeals Charles R. Fulbruge III
Clerk
for the Fifth Circuit
_______________
m 04-30067
_______________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
VERSUS
MOTILLAL L. SUDEEN, ALSO KNOWN AS MOTI SUDEEN,
Defendant-Appellant.
_________________________
Appeal from the United States District Court
for the Eastern District of Louisiana
______________________________
Before JOLLY, SMITH, and DEMOSS, co-defendant; (2) in admitting evidence of an
Circuit Judges. uncharged investment scheme and statements
he alleges to be hearsay; (3) in the application
JERRY E. SMITH, Circuit Judge: of the sentencing guidelines; and (4) by finding
certain facts in contravention of United States
Motilall Sudeen was convicted of wire v. Booker, 543 U.S. ___, 125 S. Ct. 738
fraud, travel fraud, money laundering and (2005). We find Booker error with respect to
conspiracy offenses and sentenced to 220 the district court’s use of the 2002, rather than
months’ imprisonment. He appeals, contend- the 2000, guidelines. As to all other claims
ing that the district court committed reversible pertaining to conviction or punishment, we
error (1) in severing his trial from that of his find no reversible error. We therefore affirm
the conviction and vacate the sentence and posed to little or no risk; that the high yield
remand for resentencing. programs involved marquee banks, including
the World Bank and the IMF; and that the
I. trading programs were monitored by the fed-
Sudeen sought to build a large urea pro- eral government. Sudeen periodically molli-
cessing plant in Poplarville, Mississippi, where fied investors by returning “dividends” from
he ultimately consolidated all his business the programs;3 by encouraging investors to roll
dealings.1 He formed a corporation, MS over their investments instead of seeking im-
Carbamate (“Carbamate”), and acquired land mediate returns; and by reassuring investors
on which to build the plant. He contends that that their money had been safely invested and
he was “financing” the plant using a variety of that they would be paid soon.4 Sudeen and his
investment devices. co-conspirators used the funds to make “lull-
ing” payments to encourage further investment
The plant was never built, because of al- in the “programs” and for Sudeen's personal
leged regulatory difficulties. As a result, Su- and business expenses.5
deen breached contracts with investors.
Sudeen and Freeman continued to maintain
The investment programs Sudeen alleged the appearance of safety by issuing investors
he was using to finance the plant were, in ac- bogus “Private Placement Agreements” and
tuality, constituent frauds in a fairly elaborate “Joint Venture Agreements.” They also told
Ponzi scheme. Sudeen and his co-conspirators investors that Sudeen’s personal wealth guar-
represented to potential investors that their anteed their investment. Investors were told
money would be placed in “high yield to purchase Certificates of Deposit from vari-
investment programs” that would generate ous banks to allow Sudeen to use the credit for
profits for them at greater-than-market rates of loans, the proceeds of which would also be in-
return.2 vested. When a given investor demanded pro-
ceeds, Sudeen and Freeman would claim that
Sudeen told investors that their principal the investor was ineligible because he had
would remain safely in banks and would be ex- failed to comply with fictitious requirements,
1 3
Sudeen characterizes his efforts to acquire the Sudeen also lied about the composition of the
necessary funds for the plant as “legitimate ar- banks taking part in the financing. Sudeen and an
rangement[s] made with sophisticated investors.” accomplice, Jerry Freeman, sought to make the
He states that he signed agreements with investors trading programs appear legitimate and safe.
to use their money in “projects” that centered on
4
the plant. More than fifty people participated in the
high-yield trading program, and the victims spent
2
Sudeen sought to finance Carbamate with the more than $ 17 million.
high-yield investment program and what he de-
5
scribed to investors as a “private placement se- Sudeen used the funds, in addition to making
cured trading programs.” Sudeen told investors lulling payments, to pay Freeman’s salary, to re-
that these programs would yield 20-50% per month model Sudeen’s house, support Sudeen’s wife and
and that he would return their principal on the children, purchase property including luxury
expiration of the investment terms. goods, and to make credit card payments.
2
that the profits were “tied up” by the federal lines range of 210-262 months’ imprisonment.
government, or that the returns could not be The court sentenced Sudeen to 220 months.
liquidated from overseas assets.
II.
1. Sudeen was a principal in another Sudeen argues that because his and Free-
Ponzi scheme involving insulin (the man’s counsel had prepared their defenses
“insulin scheme”), for which he and jointly, Sudeen was prejudiced by a severance.
Freeman were not indicted. Sudeen We disagree.
co-mingled funds involved in the two
schemes, making lulling payments A.
using resources of one to the other. We review a grant or denial of severance
On this issue the government cites to for abuse of discretion. See United States v.
the record extensively, whereas Ramirez, 954 F.2d 1035, 1037-38 (5th Cir.
Sudeen does nothing more than ad- 1992). A severance is reversible only on a
vance speculation. showing of specific compelling prejudice. See
United States v. Barnett, 197 F.3d 138, 144
In February 2002 Sudeen and Freeman (5th Cir. 1999).6
were indicted on one count of conspiracy un-
der 18 U.S.C. § 371, fourteen counts of wire B.
fraud under 18 U.S.C. § 1343, two counts of Although it is generally true that “defen-
travel fraud under 18 U.S.C. § 2314, and dants who are indicted together should be tried
twenty-one counts of money laundering under together,” see United States v. Piaget, 915
18 U.S.C. § 1957. Trial was originally set for F.2d 138, 142 (5th Cir. 1990), that gener-
May 2002. The district court granted several alization says nothing of the legal circum-
of the defendants’ motions for continuance. stances that justify deviating from it. Sudeen
cites no authority for the standard he advances
In December 2002, Sudeen’s cardiologist as the criteria for such deviation: “[W]hether
informed the court that Sudeen was healthy the Government articulated a specific risk that
enough to go to trial in January. In January could be averted only through severance, and
2003 Sudeen and Freeman again moved for it must further query whether alternative
continuance because Freeman’s attorney had a means less prejudicial to Sudeen existed to
conflict with a case previously scheduled for remedy that risk.” Sudeen seems to be fabri-
trial in North Carolina. The government op-
posed the motion and moved to sever the trials
6
and proceed with Sudeen’s. The district court Under our caselaw, to demonstrate an abuse of
granted Freeman a continuance, denied a con- discretion as it relates to severance, Sudeen must
tinuance to Sudeen, and granted the govern- show “specific and compelling prejudice.” United
ment's motion to sever, thus forcing Sudeen to States v. Mitchell, 777 F.2d 248, 260 (5th Cir.
proceed to trial on January 13. 1995). The Mitchell standard requires that we
determine abuse of discretion by reference to
whether the severance caused Sudeen clear and
The jury found Sudeen guilty on
compelling prejudice, not whether the district court
thirty-eight of the counts. Applying the 2002
adequately identified evidence in the record show-
sentencing guidelines, the court calculated an ing that Sudeen would have been prejudiced by
offense level of 37, which produced a guide- joinder.
3
cating that standard entirely. evidence was extrinsic, we must determine
whether the court erred by failing to exclude
Sudeen’s primary argument attempting to the evidence under other evidence rules. We
show such prejudice involves the short period terminate our inquiry at the first stage by find-
in which his attorney had to prepare for trial ing that the court did not abuse its discretion in
after the severance. Sudeen does not allege treating the evidence as intrinsic.
prejudice with any specificity. His counsel was
ready for trial anyway, because Sudeen would A.
have been deemed the principal had the two We review admission of evidence for abuse
defendants been tried jointly, and Sudeen’s and of discretion. See United States v. Hicks, 389
Freeman’s attorneys had been working on a F.3d 514, 522 (5th Cir. 2004). That Sudeen
joint defense for many months. Moreover, Su- commingled funds between the two sub-
deen’s attorney was, by all accounts, well schemes is not a contested fact. Intrinsic evi-
prepared for trial.7 dence is generally admissible to allow the jury
to “evaluate all the circumstances under which
III. the defendant acted.”9 Evidence is considered
Sudeen actually orchestrated another fraud- intrinsic if it is “inexorably intertwined” with
ulent venture involving insulin contracts. He evidence used to prove the crime charged. See
does not deny that the funds from those in- Navarro, 169 F.3d at 233. Where evidence is
vesting in the insulin contracts were used as intrinsic, it qualifies without reference to rule
lulling payments to investors in the fertilizer 404(b), which states generally that “evidence
plant and vice versa.8 The district court there- of other crimes, wrongs, or acts is not admissi-
fore found that the funds from the two ven- ble to prove the character of a person in order
tures were commingled and that the evidence to show action in conformity therewith.” See
regarding the insulin venture was “intrinsic.” id.10 Citing superior authority and referencing
the record far better than Sudeen does, the
Sudeen argues that the insulin evidence was government overwhelmingly establishes the
extrinsic and should have been excluded under two propositions necessary for it to prevail on
Federal Rules of Evidence 403 and 404(b). this argument: (1) Funds for the insulin scheme
First, we must decide whether the district
court reversibly erred in finding the insulin
evidence intrinsic. Second, if we that the 9
United States v. Navarro, 169 F.3d 228, 233
(5th Cir. 1999); see also United States v. Wil-
liams, 900 F.2d 823, 825 (5th Cir. 1990) (stating
7
In fact, the greatest possibility for prejudice that evidence qualifies as “intrinsic” “when the evi-
appears to have been that to the detriment of the dence of the other act and the evidence of the other
government, if the district court had allowed de- crime charged are ‘inextricably intertwined’ or
fendants to proceed jointly. The trial had been both acts are part of a ‘single criminal episode’ or
pushed back four times already, and Sudeen’s other acts were ‘necessary preliminaries’ to the
health problems posed a significant potential for crime charged”) (internal citations omitted).
further delay.
10
See 1 STEVEN A. SALTZBURG, MICHAEL M.
8
In oral argument on appeal, Sudeen’s counsel MARTIN & DANIEL J. CAPRA, FEDERAL RULES OF
expressly admitted to the co-mingling of funds EVIDENCE MANUAL § 404.02[11] (LexisNexis 8th
between the two schemes. ed. 2002).
4
were commingled with funds from the fertilizer The district court noted that if it considered
scheme, and initial investments in each were evidence of the insulin scheme to be intrinsic,
used to make lulling payments to investors in it would not exclude that material on the
the other;11 and (2) such commingling of funds ground that it is prejudicial under rule 403.14
qualifies the insulin scheme as intrinsic This holding is consistent with language in our
evidence.12 circuit stating that rule 403 should generally
not be used to exclude intrinsic evidence,
B. because intrinsic inculpatory evidence is by its
Rule 403 states that: “Although relevant, very nature prejudicial.15 The insulin evidence
evidence may be excluded if its probative value proves both the source of the lulling payments
is substantially outweighed by the danger of made to Poplarville investors and the destina-
unfair prejudice, confusion of the issues, or tion of funds paid in by those investors. It is
misleading the jury, or by considerations of highly probative of the existence of a Ponzi
undue delay, waste of time, or needless scheme, and it is prejudicial only to the extent
presentation of cumulative evidence.”13 The that it establishes elements of the offense.16
insulin evidence must pass the rule 403 bar
without respect to whether the district court IV.
admitted it as intrinsic evidence. Sudeen further contends that the district
court abused its discretion in admitting the
out-of-court statements of Earl Gamble and
Walter Lauren under Federal Rule of Evidence
11
Even if each direction were not specifically
proven (i.e., the state specifically identified only a
14
particular transaction where money flowed from Specifically, the court stated: “It’s not con-
one scheme to another, and not vice versa), the co- fusing if it’s the same, if it’s advancing one, it’s not
mingling of funds obviously justifies the inference misleading, it’s not prejudicial any more than the
that money actually flowed both ways. indictment[,] charge or something [that] is pre-
judicial in the sense that it’s offensive but it’s part
12
The district court alternatively ruled, in an in of the crime.”
limine hear ing, that the insulin evidence was ad-
15
missible under rule 404(b), which states that prior See United States v. Powers, 168 F.3d 741,
(or other) wrongs or acts are admissible as “proof 749 (5th Cir. 1999) (“all probative evidence is by
of motive, opportunity, intent, preparation, plan, its very nature prejudicial”) (internal citations
knowledge, identity, or absence of mistake or ac- omitted); United States v. Leahy, 82 F.3d 624, 637
cident.” See United States v. Dula, 989 F.2d 772, (5th Cir. 1996) (stating that rule 403 should be
777 (5th Cir. 1993) (“Evidence of an uncharged used sparingly and only where the prejudicial effect
offense arising out of the same transaction or series substantially outweighs the evidence’s probative
of transactions as the charged offense is not an value).
‘extrinsic’ offense within the meaning of [rule]
16
404(b) and is therefore not barred by this rule.”) Sudeen contends that the court inappropri-
We do not reach this issue. ately failed to give a limiting instruction as to the
purposes of the insulin evidence. First, we see no
13
FED. R. EVID. 403; see also 1 SALTZBURG ET reason why such an instruction is necessary if we
AL., supra, § 403.02[16], at 403-37 (stating that deem the evidence intrinsic. Second, the record
rule 403 “is one of exclusion of otherwise admiss- indicates that the jury instructions quite candidly
ible evidence”). addressed the limited character of “similar acts.”
5
801(d)(2)(D) and/or 801(d)(2)(E). Rule 801- mission of out-of-court statements under rule
(d)(2)(D) deems non-hearsay a statement of- 801(d)(2)(D) and (E).18 There was
fered against a party made by “the party’s corroborating material (evidence other than
agent or servant concerning a matter within the statements themselves) demonstrating that
the scope of the agency or employment, made Lauren’s and Gamble’s statements were
during the existence of the relationship.” admissible under either subsection.
Similarly, rule 801(d)(2)(E) provides that a B.
statement is not hearsay if it is offered against Lauren received significant commissions for
a party and is “a statement by a co-conspirator recruiting investors. At least one investor
of a party during the course and in furtherance described him as an “associate” of Sudeen’s.
of the conspiracy. The contents of the state- Lauren received reports from investors who
ment shall be considered but are not alone were recruiting other investors in the high-
sufficient to establish the declarant’s author- yield trading program. An employee of MS
ity[.]” Carbamate testified that Lauren worked for
Sudeen. In light of this corroborating testi-
Sudeen contends that the district court’s mony, the district court did not abuse its dis-
finding that Gamble and Lauren were agents or cretion in admitting Lauren’s statements.
co-conspirators was not supported by sub-
stantial evidence.17 He correctly notes that the Some of the investors testified that they
statements themselves are not sufficient evi- thought Gamble and Sudeen were business
dence of the relationship to render them ad- partners. Gamble introduced several potential
missible. He then asserts that the government investors in the high-yield trading program to
offered no additional proof of Gamble’s and Sudeen. Another investor described Gamble
Lauren’s roles as co-conspirators or agents of as an “associate” of Sudeen’s.
Sudeen. He characterizes them as owners of
investment companies who dealt at arm’s Sudeen told one potential investor that
length with Sudeen and the potential investors. Gamble would be her “agent” if she decided to
participate in the high-yield program. That
A. same investor wrote a check to Gamble for
We review for abuse of discretion the ad- investment in the program, and that check was
later deposited in one of Sudeen’s business ac-
counts. Sudeen informed that investor that
17
There is some discrepancy between the briefs Gamble would receive a commission of one
as to which of the two subsections applies to percent of her investment principal. When in-
Gamble and which to Lauren. The government vestors inquired as to why they were not re-
asserts that Gamble’s statements were admitted ceiving the promised returns, Gamble provided
under the agency exception of subsection (d)(2)(D)
and that Lauren’s were admitted under either (D)
18
or (E). Whether the relationship among these three See United States v. Solis, 299 F.3d 420, 443
men is one of agency or co-conspiracy, however, (5th Cir. 2002) (stating standard with respect to
need not be decided for us to rule on this issue. For FED. R. EVID. 801(d)(2)(E); United States v. Cent.
a general discussion of agent versus co-conspirator Gulf Lines, Inc., 974 F.2d 621 (5th Cir. 1992)
admissions, see 4 SALTZBURG ET AL., supra, § (same with respect to F ED . R. E VID.
801.02[6] [f]-[g]. 801(d)(2)(D)).
6
explanations for the delays and reassurances B.
that their money was safe. The district court Sudeen relies on United States v. Echevar-
did not abuse its discretion in admitting ria, 33 F.3d 175 (2d Cir. 1994), for the propo-
Gamble’ testimony. sition that the district court may enhance a
sentence pursuant to § 3B1.3 only where the
V. defendant legitimately occupied a position of
Sudeen contends the court improperly en- trust. Sudeen makes no arguments beyond
hanced his sentence for abuse of a position of analogy to that case.
private trust, arguing that he was not a legiti-
mate trader or investment broker. Section A subsequent Second Circuit case, United
3B1.3 of the United States Sentencing Guide- States v. Hussey, 254 F.3d 428, 433 (2d Cir.
lines provides for a two-level increase in of- 2001), repudiates the reasoning of (but stops
fense level if “the defendant abused a position short of overruling) Echevarria. That court
of public or private trust, . . . in a manner that noted that two other courts of appeals have
significantly facilitated the commission or rejected or criticized Echevarria;20 it also ex-
concealment of the offense.” plains that, by adding an application note,21 the
A.
Even after Booker, we review a district 19
(...continued)
court’s interpretation and application of the fendant “abused a position of public or private
guidelines de novo. See United States v. Vil- trust, or used a special skill, in a manner that
legas, 404 F.3d 355, 359 (5th Cir.2005) (per significantly facilitated the commission or con-
curiam). We thus proceed to review the appli- cealment of the offense.” U.S.S.G. § 3B1.3
cation of guideline § 3B1.3 here without def- (1998). Whether a defendant occupies a “posi-
erence to the district court’s interpretation.19 tion of trust” within the meaning of this pro-
vision is viewed from the perspective of the
victim, and is a question of law, which we re-
view de novo. See United States v. Wright,
19
The government cites United States v. 160 F.3d 905, 910 (2d Cir.1998). Whether a
Reeves, 255 F.3d 208, 212 (5th Cir. 2001), for the defendant abused a position of trust in a manner
proposition that the panel “review[s] the appli- that “significantly facilitated the commission or
cation of the guideline to the facts for clear error.” concealment of the offense” is a question of
This reasoning should be distinguished from our fact, which we review for clear error. See
more recent holding in Villegas. The apparent dis- United States v. Hirsch, 239 F.3d 221, 227 (2d
crepancy is nonetheless something we feel com- Cir.2001).
pelled to address, even though the standard-of-
review issue makes little difference in the ultimate United States v. Hussey, 254 F.3d 428, 431 (2d
outcome here, because Sudeen’s challenge would Cir. 2001). We endorse this distinction.
fail even under our de novo scrutiny.
20
See Hussey, 254 F.3d at 432 n.3; see, e.g.,
We assess this issue much as did the Second United States v. Gill, 99 F.3d 484, 489 (1st Cir.
Circuit: 1996); United States v. Barnes, 125 F.3d 1287,
1292 (9th Cir. 1997).
Section 3B1.3 of the Sentencing Guidelines
21
provides for a two-level enhancement if the de- Application note 2 to U.S.S.G. § 3B1.3 now
(continued...) (continued...)
7
United States Sentencing Commission rejected Booker and an ex post facto violation. It is
Echevarria’s reasoning in November 1998. evident from oral argument and from briefing
See id. at 433 n.3. Most importantly, Reeves, that neither the government nor Sudeen is en-
255 F.3d at 212, affirmed an abuse-of-trust tirely sure how the two sets of precedent in-
enhancement where the defendants had posed teract. We conclude that the district court’s
as financial planners and advised their clients application of the 2002 edition of the guide-
to invest in a company owned by a co- lines—as opposed to the 2000 edition of the
defendant. There is no meaningful way to same—is reversible error for the reasons set
distinguish the facts in that case from the ones forth below and in the companion opinion is-
here. Therefore, the district court did not err sued contemporaneously herewith, United
in its application of § 3B1.3. States v. Freeman, No. 04-30037.
VI. A.
Sudeen claims the district court committed 1.
reversible error under Booker, 543 U.S. at First, we briefly dispose of Sudeen’s Book-
___, 125 S. Ct. at 738. Specifically, he rea- er claims involving amount of loss, number of
sons that the court improperly found facts at victims, and use of specific means. He con-
sentencing relating to (1) the amount of loss; cedes that he did not preserve a Sixth Amend-
(2) the number of victims; (3) the use of spe- ment objection to these issues at sentencing,
cific means; and (4) the effective date of the and we review unpreserved Booker arguments
conspiracy’s end. Sudeen’s brief styles the last for plain error. See United States v. Mares,
of these items—the only Booker objection we 402 F.3d 511, 520 (5th Cir.), cert. denied, 126
ultimately believe has merit—as a hybrid of a S. Ct. 43 (2005). The third prong of the plain
error analysis requires that, to prove reversible
21
error, Sudeen “demonstrate a probability
(...continued) ‘sufficient to undermine confidence in the out-
provides: come.’” Id. at 521 (quoting United States v.
Dominguez Benitez, 542 U.S. 74, 124 (2004)).
Th[e] adjustment . . . also applies in a case in
which the defendant provides sufficient indicia
Under Mares, “[t]he pertinent question is
to the victim that the defendant legitimately whether [Sudeen] demonstrated that the sen-
holds a position of private or public trust when, tencing judge—sentencing under an advisory
in fact, the defendant does not. For example, scheme rather than a mandatory one—would
the adjustment applies in the case of a defen- have reached a significantly different result.”
dant who (A) perpetrates a financial fraud by Id. Even if all three of these preceding condi-
leading an investor to believe that the defendant tions are satisfied, we may exercise our discre-
is a legitimate investment broker; or (B) per- tion to notice a forfeited error only if that
petrates a fraud by representing falsely to a mistake seriously affects “the fairness, integ-
patient or employer that the defendant is a rity, or public reputation of judicial proceed-
licensed physician. In making the misrepresen- ings.” United States v. Cotton, 533 U.S. 625,
tation, the defendant assumes a position of 631 (2002).
trust, relative to the victim, that provides the
defendant with the same opportunity to commit
2.
a difficult-to-detect crime that the defendant
would have if the position were held legit-
Sudeen attempts to carry his burden by do-
imately. ing nothing more than identifying, for each en-
8
hancement, the error and pointing out that the lines instead of the 2000 edition.23 Although
district court sentenced him at the low end of we discuss this issue as part of our “Booker
the guidelines range. Under the computed error” analysis, the objection actually subdi-
range, the district court could have sentenced vides into two distinct inquiries, only one of
him to a term of 210 to 262 months; it in fact which Booker technically controls: (1) whether
imposed 220 months. Therefore, Sudeen con- the use of the 2002 edition constitutes an
tends, the court, if it had known of its discre- independent Booker error and (2) whether the
tion to do so, likely would have imposed a use of the 2002 edition violated the Ex Post
lesser sentence. Facto Clause (a claim we analyze the same as
we would have before Booker).
This logic is unpersuasive. A sentence at
the low end of the range does not show that 1.
the error “must have affected the outcome of Sudeen asserts that, under Booker, the dis-
the district court proceedings.” United States trict court cannot constitutionally have made
v. Olano, 507 U.S. 725, 734 (1993). More- factual determinations regarding the end-date
over, in denying Sudeen’s request to sentence of the conspiracy. Sudeen neither admitted
him to the minimum guidelines sentence, the that end-date, nor was it found by a jury be-
district court indicated that it considered Su- yond a reasonable doubt. Nevertheless, that
deen’s offenses to be very serious.22 Sudeen finding plainly increased his sentencing range.
cannot show a reasonable probability that the
court would have imposed a lower sentence a.
under an advisory guidelines regime, so he The government argues that Sudeen did not
cannot prevail under a plain error standard of preserve his error under Booker. At sentenc-
review. ing, however, Sudeen’s attorney made the fol-
lowing remarks:
B.
Sudeen asserts that the district court im- And we would suggest that where like Ap-
properly used the 2002 edition of the guide- prendi the guidelines have [sic], I don’t
want to say legal effect, but clearly the
practical effect of increasing the statutory
maximum for the continuing offense. By
22
Specifically, the district court stated: having that offense drive a set of numbers
that are greater than what you can be sen-
I’ve heard countless stories . . .that people lost tenced to it [sic] under that offense and
their whole life savings or their future. And which apply to the whole case, it[’]s appro-
they entrusted it to you. They gave you their priate to begin looking at is that an issue
life savings. the jury has to decide.
It wasn’t for many of them given to you for the
23
urea plant, it was given to you to invest in the The government posits that the court actually
high interest scheme that you told them about. used the 2003 version, which was in effect on the
And there was no such program . . . You just date of sentencing. The difference is irrelevant,
used their money, used Peter’s money to pay because § 2S1.1 is the same in both. Use of the
Paul . . . And these victims didn’t do anything 2000 version, as urged, would have yielded a sub-
wrong and you just abused them. stantially lower range.
9
As we have held in the companion case, Free- also accurately points to the fact that at sen-
man, this language is enough for us to find a tencing, the district court made a finding that
mistake preserved for purposes of choosing the conspiracy continued past November 1,
between plain and harmless error analysis.24
b. 25
(...continued)
There is no dispute that if the conspiracy and $9,000 was wired to co-conspirator Walter
was proven to extend to a date on or after No- Lauren at an account in Switzerland as late as
vember 1, 2001, a set of guidelines later than February 27, 2002. Mortgage payments on the
the 2000 version would apply (in an advisory Poplarville property using funds from investors
capacity, of course, in the wake of Booker). were made until January 15, 2002. In addition,
The indictment states that “[b]eginning in or lulling payments of $10,000, $2,000, and
about March 1997, and continuing to the pres- $2,500 were made to investors Frank Gunn,
Kenneth Breaux and Sheran Frickey, respec-
ent [meaning February 28, 2002], . . . the de-
tively, on December 12, 2001. In November
fendants . . . did knowingly and willfully . . . 2001, Sudeen promised that he would give a
conspire . . . .” The indictment charges the bank guarantee to investor Mattias Baumeler.
overt acts under the conspiracy with specifi- In February 2002 Baumeler met with Sudeen in
city; the latest such charged act is Sudeen’s Switzerland, and Sudeen promised that he
promise to pay a particular investor additional would remit all overdue profits within two
money, an act alleged to have occurred “[i]n weeks.
or about August 2001.”
Moreover, Alice Celestin testified at trial and
In its brief on appeal, the government, in an sentencing that every 120 days she and her hus-
effort to avoid use of the 2000 guidelines, band “rolled over” their principal and purported
points to proof of several acts occurring on or interest payments into a new contract. When
after November 1, 2001.25 The government she met with Freeman on July 1, 2001, and
signed a fifth contract, she advised him that she
was going to need $54,000 back in November.
When she didn’t receive the money, she
24 telephoned Freeman frequently. In December
Not only does this language resemble that
which we found sufficient for preserving error in 2001 Freeman called her and said that he had
Freeman, but it is more specific than that which we both good news and bad news: she was getting
held to satisfy the error preservation requirements money, but it was only $10,000. They met the
in United States v. Akpan, 407 F.3d 360 (5th Cir. next day and he gave her three separate checks
2005) (“Although [the defendant] never explicitly totaling $10,000. She testified that at that time
mentioned the Sixth Amendment, Apprendi, or she still believed that she had funds invested in
Blakely until his Rule 28(j) letter, we are satisfied insulin. She continued calling Freeman and
that his objeciton adequately apprised the district during their last conversation in February 2002
court that he was raising a Sixth Amendment he said that her funds had “two more banks to
objection . . . .”). clear.” Freeman’s misrepresentations plainly
lulled Mrs. Celestin into the continued belief
25
According to the government’s brief, that her funds were safely invested and that the
promises made at the time of her initial in-
Freeman continued to receive biweekly salary vestment would be fulfilled.
payments of $1,450 through January 17, 2002,
(continued...) (Record citations and footnote omitted.)
10
2001. The flaw in the government’s position, Booker, 125 S. Ct. at 751.
however, is that the procedure it correctly
recounts is the very essence of a Booker viola- In short, the indictment charged no specific
tion. acts after August 2001, and the jury was told
it could find defendants guilty without finding
The jury was charged in relevant part as any overt acts on or after November 1, 2001.
follows: There is no basis on which, in the wake of
Booker, we can infer that any such acts indeed
It is not essential that the Government occurred, i.e., that the jury, if asked, would
proved that the conspiracy started and end- have found them beyond a reasonable doubt.27
ed on those specific dates [i.e., March 1997
through February 2002]. Indeed it is suffi- c.
cient if you find that in fact a conspiracy Because Sudeen’s sentence was infected
was formed and that it existed for some with Booker error, and he properly preserved
time within the period set forth in the In- his objection, we must vacate the sentence and
dictment and that at least one overt act was remand for resentencing unless we determine
committed to further the conspiracy within that the error was harmless under Federal Rule
that period of time. of Civil Procedure 52(a). See Mares, 402 F.3d
at 520 n.9. “Harmless error is ‘any defect,
Accordingly, the fact of conviction does not
necessarily establish that the jury found the
27
existence of any overt acts on or after Novem- It is true that under the law of this circuit,
ber 1, 2001. It was only the district court, and “[o]rdinarily, a defendant is presumed to continue
not the jury, that found that the conspiracy involvement in a conspiracy unless that defendant
continued beyond the trigger date for the post- makes a ‘substantial’ affirmative showing of with-
2000 guidelines.26 This is specifically what drawal, abandonment, or defeat of the conspira-
Booker prohibits: The torial purpose.” United States v. Puig-Infante, 19
F.3d 929, 945 (5th Cir. 1994) (citation and internal
quotation marks omitted). Accord United States v.
actual sentence . . . was . . . longer than the Schorovsky, 202 F.3d 727, 729 (5th Cir. 2000).
Guidelines range supported by the jury ver- These authorities, although sound, address a
dict alone. To reach this sentence, the situation entirely different from the one presented
judge found facts beyond those found by here; they involve multi-person conspiracies in
the jury . . . . ‘[T]he jury’s verdict alone which the defendant claims he tried to withdraw
does not authorize the sentence. The judge from the conspiracy that was continued by his co-
acquires that authority only upon finding conspirators. Here, there were no acts found by a
some additional fact’ [quoting Blakely v. jury after the trigger date, so there is no jury-found
Washington, 542 U.S. 296, 305 (2004)]. conspiracy at all that existed on or after that date.
In other words, those authorities demonstrate
26
The government relies entirely on the fact that that the absence of an overt withdrawal can extend
the district court found that the conspiracy the operative dates of an alleged withdrawing de-
continued past November 1, 2001. At no point fendant’s vicarious liability to the end of the con-
does the government even attempt to argue that we spiracy. Those authorities do not suggest, how-
may infer that the jury made any such finding, ever, that the absence of an overt withdrawal ex-
much less that it did so beyond a reasonable doubt. tends the length of the conspiracy itself.
11
irregularity, or variance that does not affect
substantial rights of the defendant,’ and ‘arises
when the mistake fails to prejudice the
defendant.’”28 Under this standard the govern-
ment must demonstrate, beyond a reasonable
doubt, that the error did not contribute to the
sentence that the defendant received. See
United States v. Olano, 507 U.S. 725, 734
(1993).
The government does not meet this burden.
It points to nothing that would show beyond a
reasonable doubt that the court would have
imposed the same sentence under an advisory
guidelines regime. See Akpan, 407 F.3d
at 377.
2.
We do not reach Sudeen’s ex post facto
claim. Under Akpan, id. at 360 n.2, we have
the authority to leave to the district court the
discretion to consider this argument as long as
we have already determined there was a re-
versible Booker violation.
In summary, the judgment of conviction is
AFFIRMED. The judgment of sentence is
VACATED and REMANDED for resentenc-
ing.
28
Akpan, 407 F.3d at 376-77 (quoting rule
52(a); United States v. Munoz, 150 F.3d 401, 413
(5th Cir. 1998)).
12
E. GRADY JOLLY, Circuit Judge, dissenting in part:
For the reasons stated in my dissent in the companion case,
United States v. Freeman, I respectfully dissent from the
majority’s finding of Booker error based on the district court’s
application of the 2002 version of the Guidelines.
13