United States v. Charles Gahan , 678 F. App'x 275 ( 2017 )

NOT RECOMMENDED FOR PUBLICATION
File Name: 17a0083n.06
No. 15-2425 FILED
Jan 30, 2017
UNITED STATES COURT OF APPEALS DEBORAH S. HUNT, Clerk
FOR THE SIXTH CIRCUIT
UNITED STATES OF AMERICA, )
)
Plaintiff-Appellee, )
)
v. ) ON APPEAL FROM THE
) UNITED STATES DISTRICT
CHARLES GAHAN, ) COURT FOR THE WESTERN
) DISTRICT OF MICHIGAN
Defendant-Appellant. )
)
)
BEFORE: KEITH, BATCHELDER, and CLAY, Circuit Judges.
ALICE M. BATCHELDER, Circuit Judge. Defendant Charles Gahan appeals the
district court’s sentencing decision as procedurally and substantively unreasonable. For the
following reasons, we AFFIRM the district court’s sentencing decision.
I.
In 2002, Charles Gahan co-owned and operated a real estate development company
called GBW Development. From late 2002 to 2006, Gahan conspired with Scott Hoeft, an
independent title insurance and closing agent operating under the name of Prime Title Services,
LLC. As stipulated in Gahan’s plea agreement, Gahan and Hoeft diverted proceeds from real
estate closings to Gahan’s business and personal bank accounts instead of to the financial
institutions and private lenders who should have received the proceeds to retire their existing
liens. As a result of this scheme, Old Republic National Title Insurance and First American Title
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United States v. Gahan
Insurance, two companies on behalf of which Hoeft was authorized to issue title insurance
policies, were forced to defend the innocent purchasers and pay off their existing liens to ensure
that the purchasers had clear title to their homes. By the time the scheme was uncovered, Old
Republic and First American suffered a total loss of approximately $8,691,834.90
On February 12, 2015, Gahan was indicted in the U.S. District Court for the Western
District of Michigan on a single count of conspiracy to commit wire fraud affecting financial
institutions, in violation of 18 U.S.C. § 1343 and 18 U.S.C. § 1349. Gahan pleaded guilty
pursuant to a plea agreement. The Presentence Investigation Report (“PSR”) assigned Gahan a
total offense level of 28 and a criminal history category of I. The PSR indicated that the
resulting guideline sentencing range was 78 to 97 months and recommended a sentence of 78
months. But, in anticipation of the forthcoming November 1, 2015, amendments to the
guidelines, the PSR noted that Gahan’s total offense level would be lowered to 26, with a
guideline range of 63 to 78 months.
At Gahan’s sentencing hearing, the district court noted that due to the amendments to the
sentencing guidelines, Gahan was entitled to the two-level reduction in his total offense level.
The district court also acknowledged the new corresponding guideline range of 63 to 78 months.
Neither party objected to the PSR or the calculations contained therein, and the court ultimately
sentenced Gahan to a within-guidelines sentence of 70 months’ imprisonment. This appeal
followed.
II.
We generally review a district court’s sentence under the deferential abuse-of-discretion
standard. Gall v. United States, 552 U.S. 38, 51 (2007); United States v. Lanning, 633 F.3d 469,
473 (6th Cir. 2011). Substantive-reasonableness claims, which are always reviewed for an abuse
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of discretion, need not be raised before the district court to be preserved for appeal.
United States v. Penson, 526 F.3d 331, 337 (6th Cir. 2008). “But ‘if a sentencing judge asks . . .
whether there are any objections not previously raised, in compliance with the procedural rule set
forth in United States v. Bostic, 371 F.3d 865 (2004)[,] and if the relevant party does not object,
then plain-error review applies on appeal to those’ procedural-reasonableness arguments that
were not preserved in the district court.” Lanning, 633 F.3d at 473 (quoting Penson, 526 F.3d at
337) (alterations in original). Because Gahan did not object at his sentencing hearing, plain-error
review applies to his procedural-reasonableness arguments.1
Gahan argues that his sentence was both procedurally and substantively unreasonable due
to the trial court’s alleged failure to recognize that the sentencing guidelines are advisory and the
district court’s alleged subsequent failure to provide an individualized assessment of the
18 U.S.C. § 3553(a) sentencing factors.
A.
“Procedural reasonableness requires that a district court must properly calculate the
guidelines range, treat the guidelines as advisory, consider the § 3553(a) factors and adequately
explain the chosen sentence—including an explanation for any variance from the guidelines
range.” United States v. Presley, 547 F.3d 625, 629 (6th Cir. 2008) (citation and internal
quotation marks omitted). Gahan’s primary contention on appeal is that the district court treated
the guidelines as mandatory. His only support from the record is an exchange between Ronald
Stella, the government’s attorney, and the district court during the sentencing hearing:
1
Despite his failure to object at sentencing, Gahan argues that we should review his procedural-reasonableness
argument for an abuse of discretion rather than for plain error. He argues that because at least one party, the
government, raised a procedural issue (i.e., sentence disparity between co-defendants), we should review his
sentence for an abuse of discretion. This court’s precedent is clear, however: it is the “relevant party” that must
object in order for the abuse-of-discretion standard to apply to claims of procedural unreasonableness. United States
v. Penson, 526 F.3d 331, 337 (6th Cir. 2008) (citing United States v. Vonner, 516 F.3d 382, 385 (6th Cir. 2008)
(en banc)). Because the government is not the party appealing the sentence, we review his procedural-
reasonableness claim for plain error.
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MR. STELLA: One thing I did want to cover just very briefly. An issue of
sentencing disparity was raised in the defense’s filing. It wasn’t brought up here
today, but I wanted the Court to understand what did happen with the co-defendant,
Mr. Hoeft.
Ironically, they [Hoeft and Gahan] ended up at the same exact point under the
guidelines, Your Honor. Mr. Hoeft was sentenced under the old guidelines and he
ended up at an offense level of 31 just like Mr. Gahan would have before acceptance
of responsibility which made him a 28, and then he received a two-level 5K for his
cooperation before he was sentenced. So he ended up at a 26 and he had the same
guideline range that Mr. Gahan ends up at today of 63 to 78 months.
He subsequently received a Rule 35 because he came back to our office after
sentencing and helped us prepare the case against Mr. Gahan and testified in grand
jury. So he ultimately ended up at 45 months, but I just wanted the Court to be aware
that in terms of the guidelines, they do not end up at exactly the same guideline range.
THE COURT: Except that the government by virtue of the guidelines gets to
manipulate the process, don’t they?
MR. STELLA: We don’t manipulate, Your Honor.
THE COURT: Well, you run the guidelines up. You ask me for 5K1s.
MR. STELLA: Well, that’s not a manipulation of the guidelines with all due respect,
Your Honor. That is rewarding someone who has recognized a responsibility and is
willing to stand up and help us convict another person.
THE COURT: It is. It is. It is.
MR. STELLA: Yes, it is.
THE COURT: But in fact it drives the ultimate sentence because we all know what
happens.
MR. STELLA: That’s the Court’s choice under 3553. They’re nonbinding guidelines,
Your Honor.
THE COURT: No, it’s not.
MR. STELLA: I don’t want to argue with the Court, but—
THE COURT: Well, I respectfully disagree with you. All you have to do is start
looking at some of these Court of Appeals decisions that are coming down. They’re
coming down very strictly on guidelines and very strictly on whether or not courts
grant government’s motions, and the judge better grant the motion and the judge
better stay somewhere near the guidelines. Isn’t that the message that we’re getting
now?
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This interchange, by itself, does not demonstrate that the district court believed the guidelines
are mandatory. See, e.g., United States v. Highgate, 521 F.3d 590, 596 (6th Cir. 2008) (reversing a
within-guidelines sentence that the district court thought was inconsistent with “justice, morality, and
all of the other considerations under 3553,” but which it nevertheless felt obliged to impose under the
guidelines); United States v. Martinovich, 810 F.3d 232, 243-44 (4th Cir. 2016) (reversing a district
court that expressly, and repeatedly, stated the guidelines were “not discretionary” but “mandatory”).
If anything, the district court’s comments in this case indicate its belief that this court too frequently
reverses sentences which deviate from the guidelines. We can therefore find no plain procedural
error in Gahan’s sentence.
B.
When reviewing a district court’s sentence, this court must determine “whether the length of
the sentence is greater than necessary to achieve the sentencing goals set forth in 18 U.S.C.
§ 3553(a).” United States v. Tristan-Madrigal, 601 F.3d 629, 632-33 (6th Cir. 2010) (internal
quotation marks omitted). “A sentence is substantively unreasonable if the district court selects the
sentence arbitrarily, bases the sentence on impermissible factors, fails to consider § 3553(a) factors
or gives an unreasonable amount of weight to any pertinent factor.” Id. (quoting United States v.
Walls, 546 F.3d 728, 736 (6th Cir. 2008)). Because Gahan’s sentence fell within the guidelines
range, we presume that his sentence is substantively reasonable. See Lanning, 633 F.3d at 473.
Notwithstanding this presumption, Gahan argues that the district court erred by not
addressing the § 3553(a) factors—specifically factor (6), sentence disparities among defendants with
similar records who have been found guilty of similar conduct. Gahan primarily cites United States
v. Wallace, 597 F.3d 794 (6th Cir. 2010), in which this court vacated a sentence and remanded for
resentencing because the district court did not sufficiently address § 3553(a)(6) after the defendant
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had raised the issue.2 Id. at 805-06. In the present case, Gahan raised a § 3553(a)(6) sentence
disparity argument in his sentencing memorandum. However, despite the fact that the government
began to rebut this argument at the sentencing hearing, Gahan failed to discuss the issue further—
effectively resting on his memorandum. He also neglected to respond to the government’s
contention that both Gahan and Hoeft were initially sentenced using the same guidelines range.
Thus, it is uncertain whether the sentencing disparity issue was clearly presented and in dispute at
sentencing. See United States v. Simmons, 587 F.3d 348, 361 (6th Cir. 2009) (“[A]s a procedural
matter, the district judge must generally speak to arguments that are clearly presented and in
dispute.”).
Furthermore, when presented with a response to Gahan’s sentence disparity argument by the
government at the sentencing hearing, the district court interrupted to assert that “it makes no
difference in this case because of all the previous motions that [the government] had of cooperation
versus this individual [Gahan] who comes in late. Really makes no difference to me.” We interpret
this statement to mean that the district court found Gahan’s § 3553(a)(6) sentence disparity argument
irrelevant as a result of the previous motions related to Hoeft’s cooperation in the subsequent
prosecution of Gahan. This interpretation of the transcript is strengthened by the fact that, at the time
of each co-defendant’s sentencing, the disparity between Hoeft’s sentence and Gahan’s sentence was
only seven months.3 This disparity is markedly different from the disparity in Wallace, in which the
defendant received more than twice the sentence despite being the “less-involved” party in the
commission of the crime. Wallace, 597 F.3d at 803, 805. Altogether, and unlike Wallace, in which
“no part of the record ma[de] clear that the district judge even understood Defendant’s argument,” id.
2
Although this court stated in United States v. Wallace, 597 F.3d 794 (6th Cir. 2010), that “[a] district judge is not
required to consider the disparity between the sentences of co-defendants,” “[w]hen a defendant raises a particular[,
non-frivolous] argument in seeking a lower sentence, the record must reflect both that the district judge considered
the defendant’s argument and that the judge explained the basis for rejecting it.” Wallace, 597 F.3d at 803 (citations
omitted).
3
After being initially sentenced to 63 months of incarceration, Hoeft was granted a discretionary Rule 35 sentence
reduction for providing substantial assistance in the prosecution of Gahan. See Fed. R. Crim. P. 35(b).
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at 806, the record in this case sufficiently illustrates that the district court understood and rejected
Gahan’s § 3553(a)(6) sentence disparity argument.
Gahan also makes much of the requirement that district courts state their reasoning for the
sentence imposed. See Rita v. United States, 551 U.S. 338 (2007). In addition to our prior holding
that “[t]here is no requirement that the district court . . . engage in a ritualistic incantation of the
§ 3553(a) factors it considers,” United States v. Chandler, 419 F.3d 484, 488 (6th Cir. 2005)
(citations and internal quotation marks omitted), the record in this case contains sufficient evidence
for us to find that the district court did not abuse its discretion here. The only requirement is that “the
district court’s sentence should nonetheless reflect the considerations outlined in § 3553(a).” Id.
(citation omitted). Although the district court did not explicitly mention the § 3553(a) factors, we
believe the sentencing transcript sufficiently demonstrates the court’s having considered the history
and characteristics of the defendant, the need for the sentence imposed, the kinds of sentence and the
sentencing range established, and the need to provide restitution to any victims of the offense. Given
this evidence, we cannot say that the district court abused its discretion in imposing Gahan’s
sentence.
III.
Upon review of the record, we find that Gahan’s sentence is neither procedurally nor
substantively unreasonable. We AFFIRM his sentence.
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CLAY, Circuit Judge, concurring. I agree with my colleagues that Defendant’s
sentence must be affirmed, and I concur fully in the Court’s opinion. I write separately to
highlight several remarks made by the district court at Defendant’s sentencing hearing that may
have created confusion, and explain how those remarks unnecessarily complicated our review in
this appeal.
At the sentencing hearing, counsel for the government attempted to respond to
Defendant’s argument that he should receive a downward departure so that there would not be an
unwarranted disparity between his sentence and the sentence received by his co-defendant. After
the prosecutor finished speaking, the district court accused the government of manipulating the
calculation of Defendant’s sentencing guidelines range, leading to the following exchange:
MR. STELLA: We don’t manipulate, Your Honor.
THE COURT: Well, you run the guidelines up. You ask me for 5K1s.
MR. STELLA: Well, that’s not a manipulation of the guidelines with all
due respect, Your Honor. That is rewarding someone who
has recognized a responsibility and is willing to stand up
and help us convict another person.
THE COURT: It is. It is. It is.
MR. STELLA: Yes, it is.
THE COURT: But in fact it drives the ultimate sentence because we all
know what happens.
MR. STELLA: That’s the Court’s choice under 3553. They’re nonbinding
guidelines, Your Honor.
THE COURT: No, it’s [sic] not.
MR. STELLA: I don’t want to argue with the Court, but—
THE COURT: Well, I respectfully disagree with you. All you have to
do is start looking at some of these Court of Appeals
decisions that are coming down. They’re coming down
very strictly on guidelines and very strictly on whether
or not courts grant government’s motions, and the
judge better grant the motion and the judge better stay
somewhere near the guidelines. Isn’t that the message
that we’re getting now?
(R. 45, Sentencing Tr., at 23–26 (emphasis added).)
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Defendant argues that this exchange shows that the district court treated the sentencing
guidelines as de facto mandatory in violation of United States v. Booker, 543 U.S. 220 (2005)
and its progeny. However, viewing the transcript in its entirety, I agree with the majority that the
district court was likely just indicating “its belief that this court too frequently reverses sentences
which deviate from the guidelines.” Maj. Op. at 5. The district court thoroughly considered the
nature and circumstances of Defendant’s crime, as well as his history and characteristics, and
nothing in the transcript clearly demonstrates that the district court failed to appreciate the extent
of its sentencing discretion.
Nevertheless, some of the district court’s comments create an unnecessary distraction,
and muddy the transcript for appellate review. As an appellate court confined to reviewing a
cold transcript, it is often difficult for us to discern whether a district court is speaking tongue-in-
cheek, or has legitimately misapplied the law when it makes comments suggesting that the
guidelines are de facto mandatory. Federal appellate courts have vacated sentences for
comments not considerably different than those uttered by the district court here, despite the
remote likelihood that any district judge still believes that the guidelines are literally mandatory
twelve years after Booker. See, e.g., United States v. Highgate, 521 F.3d 590, 596 (6th Cir.
2008); United States v. Martinovich, 810 F.3d 232, 243-44 (4th Cir. 2016).
The district court may well have been correct that this Court is often too willing to find
an abuse of discretion when reviewing federal sentences. However, district courts must
remember that Booker is still binding law, and no decision or decisions of this Court have held or
implied that district courts must necessarily “stay somewhere near the guidelines.” It is better for
all concerned if district courts stick to considering the § 3553(a) factors and other relevant
indicia in conducting sentencing hearings, and resist the temptation to editorialize about the
perceived implications of this Court’s sentencing case law.
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