United States v. Michael Giorgio , 802 F.3d 845 ( 2015 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 15a0238p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
UNITED STATES OF AMERICA, ┐
Plaintiff-Appellee, │
│
│ No. 14-4193
v. │
>
│
MICHAEL GIORGIO, │
Defendant-Appellant. │
┘
Appeal from the United States District Court
for the Northern District of Ohio at Akron.
No. 5:13-cr-00420—Patricia A. Gaughan, District Judge.
Decided and Filed: September 25, 2015
Before: BOGGS, SUTTON, and COOK, Circuit Judges.
_________________
COUNSEL
ON BRIEF: Drew Findling, THE FINDLING LAW FIRM, Atlanta, Georgia, Brian H. Bieber,
GRAY ROBINSON, P.A., Miami, Florida, for Appellant. Carole S. Rendon, Rebecca Lutzko,
Matthew Cronin, UNITED STATES ATTORNEY’S OFFICE, Cleveland, Ohio, for Appellee.
_________________
OPINION
_________________
SUTTON, Circuit Judge. Michael Giorgio admitted to soliciting money from “straw
campaign donors” in violation of federal campaign-finance laws and signed a plea agreement to
that effect. After a jury acquitted his co-conspirators on similar charges, he had second thoughts,
trying twice to withdraw his plea. The district court declined each time. Finding no abuse of
discretion, we affirm.
1
No. 14-4193 United States v. Giorgio Page 2
I.
At the relevant time, federal campaign-finance law banned all corporate donations to
candidates, 2 U.S.C. § 441b (2006), and it banned individual donations of more than $5,000 per
candidate in an election cycle, see id. § 441a; 76 Fed. Reg. 8368, 8370 (Feb. 14, 2011). To
prevent people from using “straw donors” to bypass those laws, federal law also bans people
from “mak[ing] a contribution in the name of another person.” 52 U.S.C. § 30122 (formerly
2 U.S.C. § 441f).
Giorgio served as the Chief Financial Officer of Suarez Corporation Industries, a direct-
marketing company that sells a variety of household products to consumers. His boss, the
company’s owner Benjamin Suarez, asked him to help make a total of $200,000 in illegal
corporate donations to two candidates for federal office. Giorgio agreed. The two asked Suarez
Corporation employees to donate $5,000 each to the candidates, with a promise that the company
would reimburse any donation. As the money came in, Giorgio submitted the employees’
donations and paperwork to the candidates. He then reimbursed the employees using company
payroll checks grossed up for taxes so that it looked like the company had merely paid a little
extra to its employees. The upshot was that Giorgio and Suarez made thousands of dollars of
corporate donations in the names of other people.
The plan did not succeed. A newspaper article questioned the legality of the donations,
and eventually so did the United States. A grand jury indicted Giorgio, Suarez, and the company
in 2013 for violating campaign-finance laws.
The defendants obtained separate counsel. Giorgio used attorneys from the law firm
Walter Haverfield, while Suarez and the company each used other law firms. Consistent with a
joint defense agreement, the company paid for the representation of all three defendants. Due to
that fee arrangement, Giorgio’s attorneys should have obtained his informed consent to allow the
company to pay on his behalf. See Ohio R. Prof. Conduct 1.8(f). They did not. But they did
make clear to the company that they would “be serving as [Giorgio’s] counsel and not as counsel
for [the company].” R. 310-3 at 3.
No. 14-4193 United States v. Giorgio Page 3
As the firms formed defenses for their clients, Walter Haverfield explored the possibility
of having Giorgio take a plea. He initially refused. But two weeks before trial, after eight
months of “soul searching,” Giorgio had a change of heart and pleaded guilty. No. 14-4192,
R. 299 at 193. Giorgio figured that if he “own[ed] up to what [he] did,” waived most of his right
to appeal, and testified against his codefendants, he would receive a reduced sentence. Id. at
191. The government figured it could use Giorgio’s testimony to secure the convictions of the
company and Suarez.
Neither side of the deal benefitted from it as planned. The jury acquitted Suarez and the
company of the campaign-finance violations, though it did convict Suarez on a misdemeanor
charge of attempted witness tampering. United States v. Suarez, Nos. 14-4192, 14-4249, 2015
WL 4478112 (6th Cir. July 22, 2015). Giorgio did not receive the government’s support for a
reduced sentence because the United States thought he did not testify consistent with his proffer
at the time of the plea.
After watching the jury acquit his co-conspirators on the campaign-finance charges,
Giorgio had second thoughts about his guilty plea. Over the next four months, he fired Walter
Haverfield, hired new attorneys, and moved to withdraw the plea. He contended that the firm
had a conflict of interest with the company because the company paid the firm’s legal fees. The
district court disagreed, finding no conflict of interest. Giorgio tried to withdraw his plea again
at sentencing, this time claiming the government breached the plea agreement by not requesting
a reduced sentence. The district court again disagreed, reasoning that the plea agreement gave
the government discretion on whether to ask for a lower sentence. The court did, however, vary
downward four levels on its own initiative: two due to Giorgio’s acceptance of responsibility
and two due to Giorgio’s assistance, “extraordinar[il]y good character,” and “dutiful obedience.”
R. 369 at 13, 56–57. It sentenced him at the bottom of the (much-lowered) guideline range—to
27 months in prison.
On appeal, Giorgio challenges the district court’s refusal to allow him to withdraw his
guilty plea.
No. 14-4193 United States v. Giorgio Page 4
II.
A defendant may withdraw his plea if he presents the district court with a “fair and just”
reason for doing so. Fed. R. Crim. P. 11(d)(2)(B). We review a district court’s decision to deny
a plea withdrawal for abuse of discretion. United States v. Quinlan, 473 F.3d 273, 276 (6th Cir.
2007).
A.
First Motion. The district court did not abuse its discretion in concluding that Giorgio’s
first motion did not present a “fair and just” reason for withdrawal. It carefully considered the
seven relevant guideposts in this context, United States v. Bashara, 27 F.3d 1174, 1181 (6th Cir.
1994), six of which Giorgio barely contests and all of which cut against him.
1. A substantial amount of time—118 days—elapsed between Giorgio’s plea entry and
his plea withdrawal. We have held that far less time, 75 days for example, is “alone” enough to
uphold the district court’s denial of a motion to withdraw a guilty plea. United States v. Valdez,
362 F.3d 903, 913 (6th Cir. 2004); see also, e.g., United States v. Durham, 178 F.3d 796, 798–99
(6th Cir. 1999) (77 days).
2. Giorgio did not suddenly decide to proclaim his innocence. He freely admitted his
guilt throughout—before, during, and after trial. To this day, indeed, he has yet to disclaim his
guilt.
3. The circumstances surrounding Giorgio’s plea suggest that it should not be withdrawn.
Giorgio acknowledged the factual basis of his guilt in the plea agreement and did not challenge
his guilt at the Rule 11 plea hearing. He stood by that view during trial. See Quinlan, 473 F.3d
at 278. And it was only after his co-conspirators were acquitted that he changed his mind—and
even then only changed his mind about the plea agreement, not about his guilt or innocence.
This factor strongly supports the government.
4. Giorgio is a sophisticated and well-educated businessman, not someone apt to
misunderstand what he was signing.
No. 14-4193 United States v. Giorgio Page 5
5. Although Giorgio did not have prior experience with the criminal-justice system, his
background, time spent “soul searching,” No. 14-4192, R. 299 at 193, and comments about the
plea suggest that he understood what he was doing. Quinlan, 473 F.3d at 278.
6. The government would be prejudiced if Giorgio’s plea is withdrawn. It has already
spent considerable time prosecuting the three co-conspirators—and at this point it cannot retry
two of them. The third one (Giorgio) admitted his guilt (based on the existing Rule 11 colloquy
and trial testimony) and in his appellate briefs does not deny the truthfulness of those statements.
All of this would be for naught (at least in the short term) if we permit the plea withdrawal.
7. The remaining factor requires more elaboration, but it still points in the same
direction. At issue is whether the defendant has offered a legitimate ground for the plea
withdrawal. Giorgio contends that Walter Haverfield had a “conflict of interest” because it was
paid by the company and that the conflict led to an involuntary plea. It is true that such fee
arrangements “inherently” raise a potential conflict of interest. Moss v. United States, 323 F.3d
445, 462 (6th Cir. 2003); see Wood v. Georgia, 450 U.S. 261, 268–70 (1981). But a potential
conflict remains just that until it actually impairs the defendant’s interests. Mickens v. Taylor,
535 U.S. 162, 171 (2002). This one did not.
Walter Haverfield represented Giorgio’s interests—not the company’s—as it made clear
it would from the outset. In its retention letter with Giorgio, signed by the company, the firm
said it would “be serving as [Giorgio’s] counsel and not as counsel for [the company].” R. 310-3
at 3. Consistent with this commitment, the firm sought a plea deal early on and remained “fully
prepared to mount a vigorous defense at trial” if Giorgio opted to take that route. R. 310-6 at 7.
It gave Giorgio competent advice, both practically (e.g., for Giorgio to “distance[]” himself from
the company, R. 323-1 at 3) and legally (e.g., the pros and cons of pleading versus trial). And it
followed Giorgio’s instructions to take the plea, even though doing so meant its client would
testify against the party that paid it. Nothing about Walter Haverfield’s representation impaired
Giorgio’s interests.
Giorgio counters by saying that another attorney might have raised the defense that he
was just following the company’s orders and did not know his actions were illegal. But no
conflict prevented Giorgio from pursuing that defense. That is indeed the argument the company
No. 14-4193 United States v. Giorgio Page 6
made at trial, which makes its interests aligned with Giorgio’s, not “antagonistic,” “conflicting,”
or “inconsistent.” See Appellant’s Br. 28. This proposed defense at any rate would not have
changed Giorgio’s fate. Courts do not lightly accept “ignorance of the law” and “just following
orders” defenses—whether courts of yesterday, see Barlow v. United States, 32 U.S. (7 Pet.) 404,
410–12 (1833) (Story, J.), or courts of today, see Kennedy v. City of Cincinnati, 595 F.3d 327,
337 (6th Cir. 2010). And such a defense at any rate does not justify what Giorgio admitted at
trial to doing outside of the context of the plea: “knowingly committing the crime.” R. 324-2 at
1; see No. 14-4192, R. 299 at 193–94.
Giorgio, moreover, cannot “show that there is a reasonable probability that . . . he would
not have pleaded guilty” even if he could show conflicted counsel. Hill v. Lockhart, 474 U.S.
52, 59 (1985). Giorgio insisted on sticking to his plea even after an attorney from Walter
Haverfield asked—after trial—if he wanted to withdraw it. “I do not want to withdraw my
guilty plea,” Giorgio reiterated. “I am guilty as I have indicated in my plea agreement.” R. 324-
2 at 1. Giorgio thus cannot show that any potential conflict affected his decision to take the plea.
See Quinlan, 473 F.3d at 277. The decision was his alone. It had nothing to do with any conflict
of interest and all to do with his admitted guilt.
With the seven factors lining up against him and without anything else that supports him,
the district court did not commit “a clear error of judgment” in denying Giorgio’s first motion to
withdraw. United States v. Frost, 914 F.2d 756, 764 (6th Cir. 1990).
Giorgio insists that no court could come to this conclusion without first holding a formal
“conflict hearing.” Appellant’s Br. 14–23. He asks us to remand the case, contending that
United States v. Krebs, 788 F.2d 1166 (6th Cir. 1986), requires a hearing “for all situations
involving a potential conflict of interest.” Appellant’s Br. 19 n.8. But that is not what Krebs (or
any other case) holds. In dicta, Krebs noted that “when a trial court becomes aware of a potential
conflict of interest,” it must “pursue the matter.” 788 F.2d at 1172. But it did not specify how
courts should pursue the matter, see id., and the Supreme Court has not required a formal hearing
even in the face of a potential conflict like this, see Mickens, 535 U.S. at 173–74. Courts need
not conduct formal conflict hearings so long as they can fairly make their determinations from
the record and briefs. United States v. Martin, 668 F.3d 787, 795–97 (6th Cir. 2012); see Wood,
No. 14-4193 United States v. Giorgio Page 7
450 U.S. at 272. For the reasons just discussed, the district court could—and did—make a fair
determination regarding Giorgio’s first motion.
United States v. Osborne, 402 F.3d 626 (6th Cir. 2005), says nothing to the contrary.
Yes, the decision remanded the conflict issue for a formal hearing. But that’s because the case
involved joint representation, and Criminal Rule 44(c) requires an “inquiry” in that setting. Id.
at 631–33. This case does not involve joint representation, meaning that Rule 44(c) and
Osborne do not apply. United States v. Terry, Nos. 13-2297, 13-2385, 13-2405, 2015 WL
3505480, at *2 (6th Cir. June 4, 2015) (distinguishing Osborne on these grounds); see Mickens,
535 U.S. at 175–76. One other difference between Osborne and this case exists. There, the
record was “simply too sparse” to make a conflict determination without a hearing. 402 F.3d at
633. Here, the record is not. The district court did not abuse its discretion in denying Giorgio’s
first motion without a formal hearing.
B.
Second Motion. Giorgio separately argues that he should be able to withdraw his plea
because the government broke its promise to move for a “substantial assistance” sentence
reduction under Sentencing Guideline § 5K1.1. See Santobello v. New York, 404 U.S. 257, 262–
63 (1971). But the government made no such promise. Just read the plea agreement. “If the
[government] determines that [Giorgio] has fully cooperated and rendered substantial
assistance,” it says, the government “may” move for a substantial-assistance reduction. R. 170 at
8. The word may gave the government discretion. See Jama v. Immigration & Customs
Enforcement, 543 U.S. 335, 346 (2005). Armed with that discretion, the government can choose
not to ask for a reduced sentence so long as it doesn’t have unconstitutional motives. Wade v.
United States, 504 U.S. 181, 185–86 (1992); see United States v. Moore, 225 F.3d 637, 641 (6th
Cir. 2000). It didn’t here.
The government gave two reasons for not moving for a reduction, neither
unconstitutional. The first was that Giorgio “repeatedly made statements that were detrimental
to the government’s case.” R. 369 at 18. That may be a bit overstated, but this much is true.
Giorgio gave equivocal testimony, backpedaling on cross-examination by testifying that what he
(and thus the company) did was “[n]ot a crime but a mistake.” No. 14-4192, R. 307 at 182. The
No. 14-4193 United States v. Giorgio Page 8
defendants’ lawyers pounced on that about-face, using it as a theme in their closing arguments
and likely contributing to their clients’ acquittals. Because this kind of testimony shows a lack of
“substantial assistance,” we have found it sufficient to support the government’s decision not to
move for a reduction. See, e.g., United States v. Head, 927 F.2d 1361, 1375–76 (6th Cir. 1991).
Giorgio takes issue with the government’s second reason: that his motion to withdraw
was “certainly inconsistent with substantially assisting the government.” R. 369 at 18–19. He
contends that this remark shows that the government punished him for exercising his
constitutional right to conflict-free counsel. See Bordenkircher v. Hayes, 434 U.S. 357, 363
(1978). But the government punishes someone in this context only if it acts “solely” because of
“the defendant’s exercise of a protected legal right.” United States v. Goodwin, 457 U.S. 368,
380 n.11 (1982). The record, including Giorgio’s equivocal testimony, shows that the
government acted not to punish Giorgio but instead on its legitimate belief that Giorgio did not
render substantial assistance. The district court did not abuse its discretion in so concluding.
For these reasons, we affirm.