[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 04-13455 MAY 5, 2006
________________________ THOMAS K. KAHN
CLERK
D. C. Docket No. 03-00195-CR-C-S
UNITED STATES OF AMERICA,
Plaintiff-Appellant,
versus
MALCOLM E. MCVAY,
Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Northern District of Alabama
_________________________
(May 5, 2006)
Before DUBINA and MARCUS, Circuit Judges, and GOLDBERG*, Judge.
MARCUS, Circuit Judge:
*
Honorable Richard W. Goldberg, Judge, United States Court of International Trade,
sitting by designation.
The United States appeals from a sentence of 60 months’ probation imposed
by the district court on Malcolm E. McVay, the former Chief Financial Officer,
Senior Vice-President, and Treasurer of HealthSouth Corporation
(“HealthSouth”). McVay pled guilty to conspiracy to commit wire and securities
fraud that resulted in losses of some $400 million, and to false certification of
financial information filed with the Securities and Exchange Commission
(“SEC”). On appeal, the government argues that the trial court erred by
downwardly departing so drastically from the Sentencing Guidelines range -- from
an offense level 29 to an offense level 8 -- based on the government’s substantial-
assistance motion, filed pursuant to 18 U.S.C. § 3553(e) and U.S.S.G. § 5K1.1.
This 21-level departure resulted in an adjustment from a Guidelines sentencing
range of 87 to 108 months’ imprisonment to a sentencing range of 0 to 6 months’
imprisonment. The government says that this extraordinary downward departure
was unwarranted as a substantial-assistance adjustment.
After careful review of the record and the parties’ briefs and oral arguments,
we conclude the district court reversibly erred by downwardly departing so
sharply, based on substantial assistance, virtually without explanation, and on a
wholly improper basis. Accordingly, we vacate McVay’s sentence and remand for
resentencing consistent with this opinion.
2
I.
This is the fourth appeal by the United States challenging what we have
called “dramatic” and “extraordinary” downward departures awarded by the
district court, without sufficient record support. See United States v. Livesay, 146
F. App’x 403 (11th Cir. 2005) (reversing “dramatic” 18-level reduction in offense
level based on record that provided “scant basis to assess reasonableness” of
departure); United States v. Botts, 135 F. App’x 416 (11th Cir. 2005) (reversing
“extraordinary” 26-level reduction in offense level based on record that “is
incapable of meaningful appellate review”); United States v. Martin, 135 F. App’x
411 (11th Cir. 2005) (reversing “extraordinary” 21-level reduction in offense level
based on record that “is incapable of meaningful appellate review”). All arise out
of crimes, to which all four defendants, former executives of HealthSouth, pled
guilty, in connection with a massive, multibillion-dollar securities fraud. As in the
other three cases, the instant offenses occurred in the course of a conspiracy by
senior officers of HealthSouth, one of the nation’s largest providers of outpatient
surgery, diagnostic imaging, and rehabilitative healthcare services. HealthSouth
has approximately 1,800 locations in all fifty states, Puerto Rico, the United
Kingdom, Australia, and Canada. HealthSouth is an issuer of a class of securities
registered under Section 12 of the Securities and Exchange Act of 1934, 15 U.S.C.
3
§ 78l. Because its common stock was listed on the New York Stock Exchange,
HealthSouth was required to comply with federal securities laws and regulations
to ensure that the company’s financial information was accurately reported and
disclosed to the public.
Beginning in 1994, if not earlier, senior officers of HealthSouth conspired
to inflate sharply financial statements filed with the SEC, including the company’s
Forms 10-Q and 10-K for years 1994 through 2002. Publicly traded corporations
must file the Form 10-Q quarterly and the Form 10-K annually with the SEC,
pursuant to the Securities Exchange Act of 1934, 15 U.S.C. § 78m, and 17 C.F.R.
§§ 240.13a-1, 240.13a-13. The conspirators accomplished this earnings inflation
in the financial statements by making false entries in HealthSouth’s books and
records and presenting false financial reports to banks and other lenders. Some of
HealthSouth’s officers, including McVay, took these actions after recognizing that
the company’s financial results were not producing sufficient earnings to meet or
exceed Wall Street “earning expectations” or “analyst expectations” and that these
shortfalls would lead to a decline in the market price of HealthSouth’s securities.
Over the course of the conspiracy, the cumulative inflations amounted to
about $400 million. When the conspiracy was uncovered in March 2003, the SEC
temporarily suspended trading and the total drop in value of the outstanding stock
4
was approximately $1.4 billion. While the investing public, HealthSouth
shareholders, and the company were the direct victims of the conspiracy, the
scheme collaterally affected many others, including: HealthSouth employees,
several of whom were fired when the conspiracy was discovered, and particularly
those who had participated in the company’s stock ownership plan or pension fund
and were long-time employees close to retirement; employees of contractors who
were dependent on HealthSouth contracts for income; banks and other lenders
who loaned money to HealthSouth based on the false financial information; and
health-service competitors who lost business or financing, again based on
HealthSouth’s false financial representations.
Malcolm McVay was employed at HealthSouth from September 1999 to
May 2003. In September 2000, he was promoted to Senior Vice-President and
Treasurer. From August 27, 2002 to January 3, 2003, McVay was the Chief
Financial Officer (“CFO”) and Treasurer of the company. Finally, in April 2003,
he served solely as Treasurer. Shortly after he became CFO in August 2002,
McVay learned that revenue had been materially overstated in prior quarters and
that cash was materially overstated on the balance sheet. At the plea colloquy,
McVay informed the district court that the person who told him about the
irregularities was Emery Harris, who was then serving as Group Vice-President
5
and Controller. McVay also spoke to the then-current CEO, Richard Scrushy, who
informed McVay that it was okay to sign the 10-Q because irregularities in the
numbers on the form were “commonplace.” Despite this knowledge, on or about
November 14, 2002, McVay signed HealthSouth’s 10-Q Form for the third quarter
of 2002, knowing that it did not fairly represent the financial condition at Health
South.
On April 21, 2003, in a three-count information, McVay was charged with
conspiracy to commit wire and securities fraud, in violation of 18 U.S.C. § 371
(“Count 1”), and falsification of financial information filed with the SEC, in
violation of 18 U.S.C. § 1350 and 18 U.S.C. § 2 (“Count 2”). The information
also included a forfeiture count, pursuant to 18 U.S.C. § 981 and 28 U.S.C. §
2461(c). McVay pled guilty to all three counts under a plea agreement in which
the government agreed to recommend that McVay be given a three-level reduction
to his offense level for his acceptance of responsibility, and also agreed to file a
motion for a downward departure based on substantial assistance, pursuant to
U.S.S.G. § 5K1.1 and 18 U.S.C. § 3553(e), if the government determined that
McVay’s cooperation and substantial assistance warranted such a motion.
At sentencing, the presentence investigation report (“PSI”) recommended a
base offense level of 6 and the following adjustments: (1) a 26-level upward
6
adjustment based on a $1,390,800,000 loss (representing the total drop in value of
the outstanding stock when the conspiracy was uncovered in March 2003 and the
SEC temporarily suspended trading), pursuant to U.S.S.G. § 2B1.1(b)(1)(N)
(2002); and (2) a 3-level reduction for acceptance of responsibility, pursuant to
U.S.S.G. § 3E1.1. With an adjusted offense level of 29 and a criminal history
category I (based on 0 criminal history points), McVay’s Guidelines sentencing
range was 87 to 108 months’ imprisonment. The PSI recommended a sentence at
the bottom of that range, 87 months.1
The government and McVay filed objections to the PSI.2 The government
also filed a § 5K1.1 motion for a downward departure from the Guidelines, citing
McVay’s substantial assistance in the investigation and prosecution of others. The
1
The probation officer noted that if the government filed a § 5K1.1 motion, she would
recommend a probationary term, with at least 6 months’ home detention and a substantial fine and/or
restitution. She suggested the following reasoning supported a downward departure based on
substantial assistance:
The conduct committed by this defendant is a shame. He is a single father who, with
the exception of his actions in the instant offense, was successful in building a
financially secure future for himself and his daughter. It is this officer’s opinion that
the individuals higher on the “food chain” of this conspiracy exploited the
defendant’s drive for success. This defendant, although he held a position of great
significance (CFO), was not in the “family” who w[as] the foundation of this
conspiracy. He was not involved in the “family meetings” and he did not direct
anyone in the furtherance of the conspiracy.
2
At the sentencing hearing, the district court determined that the government’s objections
were filed untimely because they were not filed within 14 days of receipt of the PSI. The
government does not appeal that decision.
7
government noted that McVay made himself available on a “continuous and
regular basis” and provided “information implicating several other culpable
individuals.” McVay’s “immediate cooperation has allowed the HealthSouth case
to be prosecuted at a pace which, on a relative basis, constitutes swift and efficient
enforcement of the United States’ criminal laws. Further, the details of the
fraudulent scheme were exposed to the public shortly after discovery of the fraud
due, in part, to the defendant’s cooperation.” The government continued: “The
United States expects the defendant to continue his substantial assistance in the
investigation and prosecution of others after the sentencing hearing is complete.”
In connection with the substantial-assistance motion, based on McVay’s
adjusted offense level of 29, the government recommended that, despite McVay’s
cooperation, a “substantial term of imprisonment is required” given the
seriousness of McVay’s crimes. After noting that McVay “knowingly submit[ted]
false and misleading financial statements to the markets . . ., knowing that the
document he submitted had between 2 and $400 million of phoney cash,” the
government urged that “giving Mr. McVay anything other than a substantial term
of imprisonment in this case sends the message to the markets that this type of
conduct can be committed and committed successfully without punishment.” The
government ultimately urged a term of not less than 65 months’ imprisonment.
8
At the sentencing hearing, the government presented the testimony of Neal
A. Seiden, a senior staff accountant in the SEC Division of Enforcement, in
support of the amount of loss. Seiden opined that a conservative estimate of the
amount of loss to the stockholders was approximately $330 million.
In fact, the district court found that the amount of loss to the victims was
approximately $400 million. It adopted the PSI’s recommendations as to offense
level, criminal history and sentencing range. Immediately after the government
noted its substantial-assistance motion and requested a sentence of not less than 65
months, without further discussion or any explanation, the district court summarily
stated: “All right. The Court departs downward to a Level 8 which, when
combined with a criminal history category of I, creates a Guideline Imprisonment
Range of 0 to 6 months, a fine range of $1,000.00 to $1,000,000.00, and a
supervised release term of 2 to 3 years.” The court then imposed the following
sentence:
First, you shall pay a fine of $10,000.00, with interest waived.
I will not require restitution because the number of identifiable
victims is so large as to make restitution impracticable. And
determining complex issues of fact relating to the amount of the
victims’ losses would complicate or prolong the sentencing process to
a degree that the need to provide restitution to any victim is
substantially outweighed by the burden on the sentencing process.
9
And thirdly, in light of the pending civil litigation to which you
are a party defendant, the Court will not order restitution in this case
on consideration of the other two findings I’ve just made.
You shall pay to the United States a special assessment of
$200.00. And that special assessment and fine are due immediately.
You shall be placed on probation for a term of 5 years as to Counts
One and Two, separately, with the sentence on each count to run
concurrently with the other.
You shall serve 6 months home detention for the first part of
that probationary period. The home detention may include electronic
monitoring as directed by the probation officer.
....
You shall forfeit $50,000.00 to the United States which will be
made available to the victims of your crime.
The probationary sentence is influenced by the exemplary
record you’ve compiled before becoming involved in this most
serious kind of criminal activity and by the circumstances
surrounding your daughter.
(emphasis added). The foregoing is the only record explanation given by the
district court to support its downward departure, from an advisory Guidelines
range of 87 to 101 months’ imprisonment to a probationary term, and McVay’s
resulting sentence.
After the district court announced the terms of the sentence, the government
stated that, in addition to its objection to the ultimate sentence imposed, it objected
10
to “the Court’s failure to follow 18 U.S.C. § 3553 and the factors that are supposed
to be considered in the imposition of sentence,” to which the district court
responded:
I have factored all of those considerations in imposing the sentence
that I have. I do wish to point out that it’s only because of your
motion that I’m allowed to exercise any discretion. Otherwise, the
discretion would be with the United States Attorney. If you hadn’t
made the motion for a downward departure, I would have had to
sentence him to at least 87 months.
In its final (written) judgment, entered on June 7, 2004, the district court checked a
box stating that the downward departure was “based on 5K1.1 motion of the
government based on the defendant’s substantial assistance.” The court offered no
other explanation or additional reasons. This appeal followed.
II.
We review a district court’s interpretation of the Sentencing Guidelines de
novo and its factual findings for clear error. See United States v. Jordi, 418 F.3d
1212, 1214 (11th Cir.), cert. denied, 126 S. Ct. 812 (2005). Although we review a
defendant’s ultimate sentence for reasonableness, United States v. Booker, 543
U.S. 220 (2005), “[n]othing in Booker suggests that a reasonableness standard
should govern review of the interpretation and application as advisory of the
Guidelines by a district court.” United States v. Crawford, 407 F.3d 1174, 1178
11
(11th Cir. 2005). This is so because “Booker did not affect 18 U.S.C. section
3742(f), which mandates remand of any case in which the sentence was imposed
as a result of an incorrect application of the sentencing guidelines.” Id. (internal
quotation marks and citation omitted). Thus, whether the district court misapplied
the Guidelines remains, according to our pre-Booker precedent, subject to de novo
review. See United States v. Luiz, 102 F.3d 466, 468 (11th Cir. 1996) (engaging
in de novo review of whether district court misapplied § 5K1.1 in refusing to grant
downward departure).
Before we conduct a reasonableness review of the ultimate sentence
imposed, “we first determine whether the district court correctly interpreted and
applied the Guidelines to calculate the appropriate advisory Guidelines range.”
United States v. Williams, 435 F.3d 1350, 1353 (11th Cir. 2006) (citing Crawford,
407 F.3d at 1178). It is only after a district court correctly calculates the
Guidelines range, which it still must do after Booker, that it may consider
imposing a more severe or more lenient sentence. Id.; see also United States v.
Caldwell, 431 F.3d 795, 798 (11th Cir. 2005) (“After United States v. Booker, . . .
the district court is still required to correctly calculate the guidelines range, and the
same standards of review apply.” (footnote omitted)), cert. denied, 126 S. Ct. 1665
(2006); Crawford, 407 F.3d at 1178-79 (holding that after Booker, district courts
12
“remain[ ] obliged to ‘consult’ and ‘take into account’ the Guidelines in
sentencing,” and the Guidelines “remain an essential consideration in the
imposition of federal sentences, albeit along with the factors in § 3553(a)”;
observing that the consultation requirement is “inescapable”).
We have held that “pursuant to 18 U.S.C. § 3742(a), a defendant may not
appeal a court’s refusal to make a downward departure.” United States v.
Castellanos, 904 F.2d 1490, 1497 (11th Cir. 1990) (citation omitted). We will,
however, review the government’s challenge to the extent of a departure under §
5K1.1 for an abuse of discretion. United States v. Blas, 360 F.3d 1268, 1274 (11th
Cir. 2004). As we have recognized, “[o]nce it has made a 5K1.1 motion, the
government has no control over whether and to what extent the district court
departs from the Guidelines, except that if a departure occurs, the government may
argue on appeal that the sentence imposed was ‘unreasonable.’” United States v.
Pippin, 903 F.2d 1478, 1485 (11th Cir. 1990) (emphasis added).3
3
The government has not appealed the initial calculation of the Guidelines range in the
PSI, which was adopted by the district court prior to its decision to grant a substantial-assistance
departure. The government objected in the district court to the PSI’s use of the 2002 Guidelines,
arguing that the PSI used the wrong version of the Guidelines because the probation officer focused
on the date of the last overt act, as charged in the information (November 2002), rather than the date
of the offense of conviction (McVay did not withdraw from the conspiracy prior to March 2003).
Cf. Pippin, 903 F.2d at 1482 (commission of overt act in furtherance of conspiracy after effective
date of Sentencing Guidelines was not prerequisite to application of Guidelines in compliance with
ex post facto clause where conspiracy continued after effective date of Guidelines) (citing United
States v. Wells Fargo Armored Serv. Corp., 587 F.2d 782, 783 (5th Cir. 1979) (affirming conspiracy
13
The government concedes that a substantial-assistance departure from the
Guidelines range was warranted here, but challenges the district court’s
enumeration of non-assistance-related grounds for downwardly departing, and the
extent of the departure as being wholly unreasonable. The government adds that
to the extent the district court provided two cursory explanations of its reasoning -
- (1) the substantial-assistance motion, and (2) McVay’s “exemplary record” and
“the circumstances surrounding his daughter” -- the enumerated reasons did not
provide sufficient support for its dramatic departure.
Section 5K1.1 provides that “[u]pon motion of the government stating that
the defendant has provided substantial assistance in the investigation or
prosecution of another person who has committed an offense, the court may depart
from the guidelines.” U.S.S.G. § 5K1.1, p.s. The appropriate substantial-
assistance reduction
shall be determined by the court for reasons stated that may include,
but are not limited to, consideration of the following:
conviction under Sherman Act after a plea of nolo contendere, even though defendant argued that
his conviction violated the ex post facto clause “in that the indictment purported to charge a felony
without alleging that overt acts occurred during the time period after December 21, 1974, when the
offense was made a felony”)). But, because the government has not appealed the district court’s
decision that the government’s objection was untimely, on remand, the district court need not
recalculate the initial Guidelines range, which is not disputed here. Thus, we start our analysis from
the correctly calculated Guidelines range of 87 to 108 months’ imprisonment, which was based on
an adjusted offense level of 29 and a criminal history category I.
14
(1) the court’s evaluation of the significance and usefulness of the
defendant’s assistance, taking into consideration the government’s
evaluation of the assistance rendered;
(2) the truthfulness, completeness, and reliability of any information
or testimony provided by the defendant;
(3) the nature and extent of the defendant’s assistance;
(4) any injury suffered, or any danger or risk of injury to the
defendant or his family resulting from his assistance;
(5) the timeliness of the defendant’s assistance.
U.S.S.G. § 5K1.1(a), p.s. The commentary to § 5K1.1 recognizes that the “nature,
extent, and significance of assistance can involve a broad spectrum of conduct that
must be evaluated by the court on an individual basis,” and, thus, accords latitude
to the sentencing judge to reduce a sentence based on “variable relevant factors.”
U.S.S.G. § 5K1.1 comment. (backg’d). “The sentencing judge must, however,
state the reasons for reducing a sentence under this section.” Id. (citing 18 U.S.C.
§ 3553(c)). Thus, it is clear the Guidelines contemplate a substantial-assistance
determination that is individualized to the defendant based on the relevant factors
and more specific than a simple statement that the reduction is based on the
defendant’s substantial assistance. Moreover, the commentary to § 5K1.1 requires
the sentencing court to give “[s]ubstantial weight . . . to the government’s
15
evaluation of the extent of the defendant’s assistance.” U.S.S.G. § 5K1.1,
comment. (n.3).
The only individualized analysis that we can discern in the instant
sentencing calculation was the PSI’s and the district court’s vague references to
McVay’s “exemplary record” and “relationship with his daughter” as supporting
the § 5K1.1 downward departure. However, we have made clear that “[w]hen, on
the Government’s motion, a district court grants a downward departure under
U.S.S.G. § 5K1.1 or reduces a sentence under Rule 35(b), the sentence reduction
may be based only on factors related to the defendant’s substantial assistance.”
Luiz, 102 F.3d at 469 (emphasis added); see also United States v. Aponte, 36 F.3d
1050, 1052 (11th Cir. 1994) (holding that a court, in considering a § 5K1.1 motion
to depart below a statutory minimum, should only consider factors relative to a
defendant's substantial assistance); cf. United States v. Chavarria-Herrara, 15 F.3d
1033, 1037 (11th Cir. 1994) (reversing Rule 35(b) substantial-assistance
departure, where district court considered factors such as the defendant’s first-time
offender status and good prison behavior in reducing his sentence).
Thus, the district court’s consideration of McVay’s “exemplary record” and
“the situation with his daughter,” in the context of a § 5K1.1 substantial-
assistance departure, was error as a matter of law and must be reversed. Simply
16
put, although the sentencing court had discretion under § 5K1.1 to decide (1)
whether to depart from the guidelines based on substantial assistance, and (2) if so,
the reasonable extent of that departure, plainly it did not have discretion to
consider factors altogether unrelated to the nature and extent of McVay’s
assistance. See Luiz, 102 F.3d at 469; cf. United States v. Davis, 407 F.3d 1269,
1271 (11th Cir. 2005) (rejecting government’s argument that district court’s grant
of § 5K1.1 motion rendered Booker error harmless beyond a reasonable doubt;
“The flaw in the Government’s argument is that the grant of § 5K1.1 did not give
the sentencing court ‘unfettered’ discretion, but rather, gave the court only limited
discretion to consider the assistance that Davis rendered.”).
The foregoing prohibition on the consideration of factors unrelated to
substantial assistance is consistent with a majority of the courts of appeals that
have considered the issue. See, e.g., United States v. Pepper, 412 F.3d 995, 999
(8th Cir. 2005) (holding that district court’s consideration of non-assistance-
related matters in the context of a § 5K1.1 motion was improper); United States v.
Pearce, 191 F.3d 488, 492 (4th Cir. 1999) (holding that “any factor considered by
the district court on a § 5K1.1 motion must relate to the ‘nature, extent, and
significance’ of the defendant’s assistance” (quoting U.S.S.G. § 5K1.1 comment.
(backg’d))); United States v. Campbell, 995 F.2d 173, 175 (10th Cir. 1993)
17
(holding that “a district court may depart below the minimum sentence set by
Congress only to reflect substantial assistance by the defendant”); United States v.
Valente, 961 F.2d 133, 134-35 (9th Cir. 1992) (rejecting defendant’s argument
that “once the court departed below the mandatory minimum sentence pursuant to
the government’s [substantial assistance] motion, it was free to depart even further
downward based on Valente’s ‘aberrant’ behavior”); United States v. Thomas, 930
F.2d 526, 529 (7th Cir. 1991) (holding that “only factors relating to a defendant’s
cooperation should influence the extent of a departure for providing substantial
assistance under § 3553(e)”), overruled on other grounds by United States v.
Canoy, 38 F.3d 893, 903-07 (7th Cir. 1994). Indeed, the assistance-related
limitation on a district court’s consideration of a § 5K1.1 motion formed the basis
for our post-Booker reversal and remand for resentencing in Davis, in which we
held that a § 5K1.1 motion does not render a Booker error harmless because a
sentencing court is limited by the factors identified in § 5K1.1 when determining
the extent of the downward departure. See 407 F.3d at 1271; see also United
States v. Turnbough, 425 F.3d 1112, 1115 (8th Cir. 2005) (same) (citing Davis).
The district court’s consideration of factors unrelated to substantial
assistance was improper. Moreover, under the facts and circumstances of this
18
case, the district court’s single mention of the government’s substantial-assistance
motion alone did not warrant the extraordinary departure granted in this case.
Section 5K1.1 allows a downward departure upon motion by the
government based on the defendant’s substantial assistance “for reasons stated.”
U.S.S.G. § 5K1.1(a), p.s. Here, the record contains no indication that the
sentencing judge considered any of the § 5K1.1(a) factors. Moreover, in its
written judgment, the court provided no reasons, other than the single fact of the
government’s motion, for the extent of its § 5K1.1 departure. Although the
government’s motion for a § 5K1.1 departure detailed the extent of McVay’s
assistance and its usefulness, the district court failed to consider the government’s
evaluation of the assistance provided, as required by Application Note 3. See
U.S.S.G. § 5K1.1, comment. (n.3).
On this record, meaningful appellate review is simply not possible due to
the district court’s (1) erroneous consideration of non-assistance-related factors,
and (2) failure to consider the § 5K1.1(a) factors or otherwise detail a permissible
basis for the substantial-assistance departure upon which it did rely. Cf. United
States v. Suarez, 939 F.2d 929, 933 (11th Cir. 1991) (observing that “[t]he district
court’s reasons [for departing] must be sufficiently specific so that an appellate
court can engage in the meaningful review envisioned by the Sentencing
19
Guidelines”). Here there was no discussion by the district court of the assistance
provided by McVay to the government. Nor was there any discussion about the
nature and extent of that assistance, nor was there any reference, let alone any
explanation for rejecting the government’s recommendation of 65 months’ in
prison. Section 5K1.1 expressly enumerates, as we have noted, several particular
factors for the district court to consider including the government’s evaluation of
the assistance, the truthfulness and reliability of the information provided by the
defendant, any injury suffered or any danger or risk of injury to the defendant or
his family resulting from his assistance, or, indeed, the timeliness of the
defendant’s assistance. U.S.S.G. § 5K1.1(a), p.s. None were so much as
referenced by the district court. On remand, in considering the government’s
substantial-assistance motion, the district court is obliged to confine its § 5K1.1
analysis to assistance-related reasons supporting a departure and state its reasoning
if it departs in such a manner as to enable us to engage in meaningful appellate
review.
Because we must remand for resentencing in light of the district court’s
consideration of improper factors within the § 5K1.1 calculus and its failure to
provide any rationale for its extraordinary departure, we have no occasion to
address the permissible extent of a substantial-assistance departure or the overall
20
reasonableness of the ultimate sentence. We do however provide the following
observations for guidance at resentencing. First, on remand, in deciding the nature
and extent of a substantial-assistance departure, the district court should consider
the factors expressly enumerated in § 5K1.1(a), p.s. Moreover, after it has decided
the length of departure warranted by the substantial assistance motion, the district
court is then obliged to take into account the advisory Guidelines range and the
sentencing factors set forth in 18 U.S.C. § 3553(a) in fashioning a reasonable
sentence. See Booker, 543 U.S. at 259-60. “The factors in § 3553(a) include: (1)
the nature and circumstances of the offense; (2) the history and characteristics of
the defendant; (3) the need for the sentence imposed to reflect the seriousness of
the offense, to promote respect for the law, and to provide just punishment; (4) the
need to protect the public; and (5) the Guidelines range.” United States v. Scott,
426 F.3d 1324, 1328-29 (11th Cir. 2005) (citing 18 U.S.C. § 3553(a)).
We add that when imposing a sentence falling far outside of the Guidelines
range, based on the §3553(a) factors, “[a]n extraordinary reduction must be
supported by extraordinary circumstances.” United States v. Dalton, 404 F.3d
1029, 1033 (8th Cir. 2005); see also United States v. Moreland, 437 F.3d 424, 434
(4th Cir. 2006) (when district court imposes sentence substantially outside of the
Guidelines range, “[t]he farther the court diverges from the advisory guideline
21
range, the more compelling the reasons for the divergence must be”); United
States v. Johnson, 427 F.3d 423, 426-27 (7th Cir. 2005) (“How compelling [the]
justification must be [to support a sentence varying from the Guidelines range] is
proportional to the extent of the difference between the advisory range and the
sentence imposed.”). We pause to note that, in the absence of truly compelling
reasons -- in the face of a multi-billion dollar securities fraud at the expense of the
investing public -- a six-month probationary term given to the Chief Financial
Officer, Senior Vice-President, and Treasurer of the company at the time of the
fraud (who signed the Form 10-Q with full knowledge of its falsity), is not easily
reconcilable with the basic factors enumerated by Congress in § 3553(a),
including the need for a sentence to reflect the seriousness of the offense, to
promote respect for the law, and to provide just punishment.
Accordingly, we vacate and remand McVay’s sentence for resentencing in a
manner consistent with this opinion and with the Supreme Court’s decision in
Booker.
VACATED AND REMANDED.
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