United States v. Errol Douglas Cain ( 1998 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 96-4143
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United States of America, *
*
Appellee, *
*
v. * Appeals from the United States
* District Court for the Western
Errol Douglas Cain, * District of Missouri.
*
Appellant. *
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No. 96-4144
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United States of America, *
*
Appellee, *
*
v. *
*
Paul Stephen Cain, *
*
Appellant. *
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Submitted: September 10, 1997
Filed: January 26, 1998
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Before LOKEN, BRIGHT, and MORRIS SHEPPARD ARNOLD, Circuit Judges.
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MORRIS SHEPPARD ARNOLD, Circuit Judge.
Errol Cain and Paul Cain, who are brothers, both pleaded guilty in late 1995 to
one count of conspiracy to commit mail fraud and one count of mail fraud. The
conspiracy charge related to a scheme to induce several people to invest in the
company that employed the defendants by knowingly misrepresenting to those people
the return on the investment and the safety of the investment. The mail fraud count
related to a letter sent to obtain the proceeds of an insurance policy owned by one
investor. Errol Cain and Paul Cain were vice-presidents of the company. James Cain,
a third brother, was the president of the company and was convicted by a jury of seven
counts connected with the same scheme. See United States v. Cain, 128 F.3d 1249
(8th Cir. 1997).
The district court sentenced Errol Cain to 41 months in prison and Paul Cain to
55 months in prison. Both defendants assert that the district court erred when it refused
to adopt certain statements contained in their plea agreements with the government and,
upon doing so, also refused to allow the defendants to withdraw their guilty pleas. In
addition, both defendants challenge the district court's factual findings, for sentencing
purposes, on the amount of loss and on whether one investor was an unusually
vulnerable victim. Individually, each defendant also disputes various other rulings of
the district court. We affirm Errol Cain's conviction (Paul Cain did not
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appeal his conviction), vacate both sentences, and remand the cases for limited further
proceedings consistent with this opinion.
I.
In separate plea agreements, each defendant and the government stated that "the
parties are in agreement" that the "amount of the total loss ... readily provable" was
"approximately $298,851.61." Each defendant and the government further stated that
the relevant defendant "admits ... as the factual basis for the plea" that he entered the
conspiracy in September, 1993.
In determining the sentence for each defendant, the district court disagreed with
the amount of loss specified in the plea agreements and found, instead, that the amount
of loss for sentencing purposes (and hence for restitution as well), see U.S.S.G.
§ 2F1.1(b)(1), was $524,296.61. The effect of that finding was to add ten levels to
each defendant's base offense level, see U.S.S.G. § 2F1.1(b)(1)(K), rather than the
eight levels associated with an amount of loss between $200,000 and $350,000, see
U.S.S.G. § 2F1.1(b)(1)(I).
With respect to Paul Cain, the district court also disagreed with the specified
date of Paul Cain's entry into the conspiracy and found, instead, that he entered the
conspiracy in mid-August, 1993. Because criminal history points are date-sensitive,
see U.S.S.G. § 4A1.2(e)(1), the effect of that finding was to add two more prior
convictions to Paul Cain's relevant criminal history. That addition carried with it a
supplemental four points for Paul Cain's criminal history computation, thus shifting his
criminal history assessment from level III (the level cited in his plea agreement that the
"parties believe[d]" was applicable) to level V. See U.S.S.G. § 5A.
When it became apparent during the sentencing hearings that the district court
disagreed with the statements in the plea agreements on the amount of loss and on Paul
Cain's date of entry into the conspiracy, each defendant moved to withdraw his guilty
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plea. The district court denied those motions. On appeal, both defendants contend,
first, that the district court was obligated to adopt the statements in the plea agreements
with respect to the amount of loss and to Paul Cain's date of entry into the conspiracy
and, second, that the district court should have allowed the defendants to withdraw
their guilty pleas when it did not adopt those statements.
The judge who accepted the defendants' guilty pleas (in a joint hearing) was a
different judge from the one who sentenced the defendants. As the basis for their
contention that the judge who sentenced them was obligated to adopt the statements
described above from the plea agreements, the defendants point to certain remarks by
the judge who accepted their guilty pleas -- specifically, that he "would see that the
entire [plea] agreement is carried out faithfully ... I'll see to it, it's carried out," and that
he would "not only accept the plea agreement, but ... have it enforced." The defendants
argue, essentially, that because of those remarks by the judge who accepted their guilty
pleas, it would be inequitable to uphold the decision, made by the judge who sentenced
them, to disregard the relevant statements in the plea agreements in determining the
appropriate sentences.
The defendants have wisely been careful not to assert that the statements in
question from the plea agreements are binding, as a matter of law, on the district court.
See Fed. R. Crim. P. 11(e)(1), Fed. R. Crim. P. 11(e)(2); see also U.S.S.G. § 6B1.4(d)
(policy statement) (stipulations of fact in plea agreements not binding for purposes of
sentencing). The defendants contend, instead, that after the remarks by the judge who
accepted their guilty pleas, they were "led ... to believe" and "were left with the
unequivoca[l] belief" that the relevant statements in the plea agreements would be
adopted for sentencing purposes; they argue, accordingly, that as a matter of "[p]ublic
policy and the fundamental purposes of plea agreements," it would be unfair to allow
the judge who sentenced them to disregard what they consider to be the promissory
nature of the remarks by the judge who accepted their guilty pleas.
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We have read the transcript of the joint hearing in which the district court
accepted the defendants' guilty pleas. The judge addressed each defendant separately,
but both defendants were present for the entire hearing. Each defendant stated during
the joint hearing that he had read his plea agreement, understood its contents, and had
talked with his lawyer about it.
In addition to the statements in the plea agreements with respect to the amount
of loss and to Paul Cain's date of entry into the conspiracy, those agreements contained
statements that the defendant "understands that the [federal sentencing guidelines] will
apply to the sentence," that the plea agreement "binds only the parties ... [and] not ...
the Court ... with respect to the appropriate Guideline levels," and that the defendant
"understands that if the Court accepts this plea agreement but imposes a sentence which
he does not like or agree with, he shall not be permitted to withdraw his plea." During
the joint hearing, moreover, the government specifically drew attention to the
provisions in the plea agreements that "the final decision about [the] guidelines is the
Judge's, and that ... what we had anticipated may be the case, but is not binding on the
... Court ... he's the one that makes that decision," and that "if the Court accepts this
plea agreement, but imposes a sentence which you don't like, or you don't agree with
... you will not be permitted to withdraw your plea."
In light of each defendant's acknowledgment that he had read and understood his
plea agreement, and in light of the government's specific attention during the joint
hearing to the provisions of the plea agreements relating to the power of the district
court to determine the appropriate sentences regardless of the expectations of the
relevant defendant and the government, we do not believe that any reasonable person
could have construed, or relied on, the remarks of the judge who accepted the
defendants' guilty pleas as a promise that the statements in the plea agreements with
respect to the amount of loss and to Paul Cain's date of entry into the conspiracy would
be adopted for sentencing purposes. We therefore hold that even assuming that such
an estoppel principle is available to the defendants, it is not inequitable, in the
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circumstances of the defendants' cases, to uphold the decision, made by the judge who
sentenced the defendants, to disregard the statements in question from the plea
agreements in determining the appropriate sentences. Cf. United States v. Harris, 70
F.3d 1001, 1004 (8th Cir. 1995) (court may make its own calculations of offense level
and criminal history rather than adopting the calculations in a plea agreement).
At oral argument, the government contended that the judge who accepted the
defendants' guilty pleas might have thought that the defendants had consented to give
assistance to the government. That contention is not made in the government's brief on
appeal. Since we hold that it is not inequitable to uphold, in any event, the district
court's decision to disregard the statements in question from the plea agreements, we
need not consider the government's contention from oral argument.
II.
The defendants further assert, however, that once the district court decided not
to adopt the statements in the plea agreements with respect to the amount of loss and
to Paul Cain's date of entry into the conspiracy, the district court should have allowed
the defendants to withdraw their guilty pleas. The basis for that assertion seems to be
the defendants' contention that the government broke the promises that it made to the
defendants in the plea agreements by "refus[ing] to defend" the statements in question
during the sentencing hearings.
In each plea agreement, the government stated that it was "in agreement" with
the relevant defendant with respect to the amount of loss "readily provable." In Paul
Cain's plea agreement, the government also stated that it was "in agreement" with Paul
Cain with respect to the "belie[f]" of the parties that level III was the appropriate
criminal history assessment for him. Neither of those statements of "agreement," in our
view, amounts to a promise by the government to defend, at the sentencing hearings,
the amount of loss or the criminal history assessment (which is affected by Paul Cain's
date of entry into the conspiracy) in the plea agreements. Indeed,
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construing those statements of "agreement" as promises to defend those statements is
especially unreasonable in light of the additional provision in the plea agreements that
both parties "retain their right to present their respective versions of the offense."
The only promises by the government that we see in the plea agreements are that
the government "will not oppose a request [by the relevant defendant] for designation
to a particular institution" in the event that a prison sentence is imposed and that the
government "agrees not to seek any additional charges in the Western District of
Missouri against [the relevant] defendant arising out of his activities which form the
basis for the instant charge." Neither defendant has alleged that the government
reneged on either of those commitments. Since we see no promises in the plea
agreements that were broken by the government, we hold that the district court had no
grounds to allow the defendants to withdraw their guilty pleas on that basis. See, e.g.,
Santobello v. New York, 404 U.S. 257, 262-63 (1971); see also United States v.
Griggs, 71 F.3d 276, 281 (8th Cir. 1995). We turn, then, to an evaluation of the district
court's factual findings on the amount of loss, for both defendants, and on the date of
Paul Cain's entry into the conspiracy.
III.
The district court found that the amount of loss for sentencing purposes (and
hence the appropriate restitution as well) was $524,296.61. The district court stated
that it based that finding on evidence from the trial of the defendants' brother, see
United States v. Cain, 128 F.3d 1249 (8th Cir. 1997), and also held that each of the
defendants in the cases before us could be held liable for the losses caused by all
conspirators in the scheme (the three brothers plus two other officers of the company
in question, both of whom pleaded guilty to conspiracy to commit mail fraud),
regardless of when each defendant entered the conspiracy.
We remanded the case of the defendants' brother for resentencing because we
held, as a matter of law, that the defendants' brother could not be held liable for the
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losses caused by other conspirators in the scheme prior to the time the defendants'
brother entered the conspiracy, even if the defendants' brother knew of the conduct that
led to those losses. Id. at 1253; see also U.S.S.G. § 1B1.3, application note 2, ¶ 8. In
addition, in the case of the defendants' brother, the district court (the same judge who
sentenced the defendants) found that the amount of loss caused by all conspirators in
the scheme was $508,096.61. United States v. Cain, 128 F.3d at 1252. We are unable
to suggest any explanation for the discrepancy between that amount and the district
court's finding in the defendants' cases on the amount of loss caused by all conspirators
in the scheme ($524,296.61). Finally, we note that the specific losses caused by all
conspirators in the scheme are listed individually in the presentence reports in the
defendants' brother's case and in the defendants' cases and are identical, yet total
$508,379.71 -- an amount different from the district court's finding in any of the three
cases on the losses caused by all conspirators in the scheme.
Because of all of these anomalies, we remand the defendants' cases to the district
court for resentencing. Before doing so, the district court may want to resolve the
conflicts that we have noted on the amount of loss caused by all conspirators in the
scheme. The district court will certainly have to reconsider for which of the individual
losses each defendant may be held liable, since that amount is dependent on each
defendant's date of entry into the conspiracy.
IV.
In his plea agreement, Errol Cain admitted, in describing the factual basis for his
guilty plea, that he entered the conspiracy in September, 1993. He did not dispute that
date in his sentencing hearing (although there is some ambiguous discussion on the
point during a colloquy with the district court on whether Errol Cain could withdraw
his guilty plea), and the district court evidently adopted that date for sentencing
purposes while simultaneously holding that Errol Cain could be held liable for the
amount of loss caused by all conspirators in the scheme, regardless of when he entered
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the conspiracy. That date therefore controls the individual losses for which Errol Cain
may be held liable for sentencing purposes (and hence for restitution as well).
In Paul Cain's plea agreement, he admitted, in describing the factual basis for his
guilty plea, that he entered the conspiracy in September, 1993. The presentence report
for Paul Cain stated, however, that he began working for the company in question in
August, 1993 (and thus implied that he entered the conspiracy in August, 1993, as
well). Paul Cain objected to that statement in the presentence report and disputed the
statement again during his sentencing hearing. The district court found, though, that
Paul Cain entered the conspiracy in mid-August, 1993. One effect of that finding, as
discussed earlier, is to shift Paul Cain's criminal history assessment from level III to
level V because of two prior convictions that become relevant. That finding, however,
has a second effect as well, because it controls the individual losses for which Paul
Cain may be held liable for sentencing purposes (and hence for restitution).
Because the district court held that Paul Cain could be held liable for the amount
of loss caused by all conspirators in the scheme, regardless of when he entered the
conspiracy, the district court did not address the question of which individual losses
occurred before Paul Cain entered the conspiracy. Under the law, though, Paul Cain
may not be held liable for individual losses before that time. See U.S.S.G. § 1B1.3,
application note 2, ¶ 8; see also United States v. Cain, 128 F.3d at 1253. It is therefore
necessary for us to evaluate the district court's factual finding that Paul Cain entered the
conspiracy in mid-August, 1993.
The district court stated that it based that finding on the incorporation date of
BEPB, Inc., an entity that was to provide management services for the separate
company that employed the defendants. Paul Cain was a principal stockholder in
BEPB, Inc. The district court also mentioned that there was evidence that Paul Cain
received a "commission check" from BEPB, Inc., in late August, 1993. The district
court characterized BEPB, Inc., as "a management corporation to make [the
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conspiracy] operational, to further divert money" from the separate company that
employed the defendants; the district court therefore held that Paul Cain "enter[ed] the
conspiracy at that point."
The government offered no evidence in the sentencing hearing, however, that
would support the district court's characterization of BEPB, Inc., and there is nothing
in Paul Cain's plea agreement about BEPB, Inc. Even Paul Cain's presentence report
contains nothing about BEPB, Inc., except an objective description that BEPB, Inc.,
was "a shell management company set up as an extra management layer" for the
company that employed the defendants. In short, we see nothing in the record -- and
the government's brief on appeal directs us to none -- to support the district court's
conclusion with respect to the alleged conspiratorial purpose or role of BEPB, Inc. We
therefore hold that the district court had no basis for characterizing BEPB, Inc., as
conspiratorial in nature, and thus no basis for finding that Paul Cain entered the
conspiracy when BEPB, Inc., was incorporated.
At oral argument, the government contended that Paul Cain was among those
people who prepared certain misleading written materials in August, 1995, that were
given to prospective investors. The government does not make that contention in its
brief on appeal, and the district court did not use that contention as a basis for its
conclusion. We therefore decline to consider that contention.
The only evidence in the record with respect to Paul Cain's date of entry into the
conspiracy, then, is the admission in his plea agreement that he entered the conspiracy
in September, 1993. We therefore hold that in resentencing Paul Cain, the district court
is to use September, 1993, as the date of Paul Cain's entry into the conspiracy. We
note that the use of that date for Paul Cain will affect both his criminal history
assessment and the determination of the individual losses for which he may be held
liable for sentencing purposes (and hence for restitution).
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V.
On its own motion at the sentencing hearings and without prior notice to the
defendants, the district court stated that it was considering increasing each defendant's
offense level by two levels because the defendants exploited one particular victim's
"religious vulnerability ... by using [the] ... ploy of how pious ... they were." The
district court cited as its authority the guideline providing for an offense-level increase
if "the defendant knew or should have known that a victim ... was unusually vulnerable
due to age, physical or mental condition, or that a victim was otherwise particularly
susceptible to the criminal conduct." See U.S.S.G. § 3A1.1(b). The district court then
did impose that two-level increase for each defendant.
The defendants correctly assert that the application notes to that guideline were
amended after September, 1993 (when the relevant victim was defrauded), to remove
the requirement that a victim have been "made a target" because of his or her
vulnerability. Compare U.S.S.G. § 3A1.1, application note 1 (West 1993 edition) (with
"targeting" requirement), and U.S.S.G. § 3A1.1, application note 2, ¶ 2 (West 1998
edition) (no specific reference to a "targeting" requirement). The defendants argue that,
as a consequence, the application of that amendment to their cases would violate the
constitutional guarantee against ex post facto laws, see U.S. Const. art. I, § 9, c1. 3,
and, accordingly, that the pre-amendment version of the guideline and of its application
notes is the appropriate version to be used with respect to determining their sentences.
Under the pre-amendment version requiring "targeting" of a victim, the defendants
contend, the evidence was insufficient to sustain a finding that the victim in question
was "unusually vulnerable."
We agree that the application of the amendment to the defendants' cases would
violate the constitutional guarantee against ex post facto laws. See, e.g., United States
v. Hogan, 121 F.3d 370, 372 (8th Cir. 1997); see also United States v. Stover, 93 F.3d
1379, 1384-86 (8th Cir. 1996). The pre-amendment version is therefore the relevant
one for sentencing purposes in the cases before us. See U.S.S.G. § 1B1.11(b)(1)
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(policy statement); see also United States v. Bell, 991 F.2d 1445, 1452 (8th Cir. 1993).
(None of the parties has asserted that other determinations for sentencing purposes
were based on an inappropriate edition of the guidelines, and thus we need not address
that question.)
We also agree that there is no evidence in the record (or in the transcript of the
trial of the defendants' brother, for that matter) that would sustain a factual finding that
the particular victim at issue was "made a target" because of her vulnerability to a sales
pitch that included the singing of hymns, the reading and the gift of "a religious poem"
to her, and representations that both defendants were ministers and were "so devout
and so religious." See, e.g., United States v. Hogan, 121 F.3d at 372-73. We therefore
reverse the district court's imposition of a two-level increase in offense level under
U.S.S.G. § 3A1.1(b).
VI.
Errol Cain raises several other issues, all of which concern alleged error by the
district court, alleged prosecutorial misconduct, or alleged ineffective assistance from
his first lawyer, who represented him from September, 1995, through March, 1996.
We use the points delineated in the summary of argument in Errol Cain's supplemental
brief on appeal as our guide to the nature of those issues.
With respect to alleged error by the district court, we turn initially to Errol Cain's
assertions that he entered his guilty plea without full knowledge, and therefore
involuntarily under the law, and thus that the district court was wrong in denying his
subsequent motion on that ground to withdraw his guilty plea. (We have considered
and rejected in a previous section of this opinion Errol Cain's contention that he should
have been allowed to withdraw his guilty plea because of the district court's decision
to disregard certain statements in the plea agreement.) The basis for those assertions
is Errol Cain's additional allegation that he was inadequately represented by his first
lawyer in various ways.
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We decline to consider those issues in the cases before us. The questions of
whether Errol Cain's first lawyer provided ineffective assistance, and whether the
district court should therefore have allowed Errol Cain to withdraw his guilty plea on
that ground, are more properly raised in a separate petition under 28 U.S.C. § 2255.
See, e.g., United States v. McNeely, 20 F.3d 886, 889 (8th Cir. 1994) (per curiam),
cert. denied, 513 U.S. 860 (1994).
VII.
Errol Cain also argues that the district court erred in failing to hold that
prosecutorial misconduct, in the form of pre-indictment delay, justified dismissing the
indictment. See, e.g., United States v. Marion, 404 U.S. 307, 324-25 (1971); see also
United States v. Lovasco, 431 U.S. 783, 790, 795, 795 n.17 (1977). The basis for
Errol Cain's argument in that regard is his contention that the government deliberately
delayed bringing his indictment until June, 1995, even though the indictment could have
been brought in January, 1995 (when the government brought Paul Cain from North
Carolina to Missouri, allegedly to testify before the federal grand jury considering the
charges in the cases before us or because the indictment in the cases before us was
allegedly imminent).
That delay, Errol Cain argues, allowed the entry of a felony conviction against
him on state charges connected to an armed robbery and therefore provided the
government with the prospective tactical advantage of being able to impeach any of his
testimony in the cases before us by referring to that prior state conviction for a crime
of violence. The government's prospective opportunity to impeach his testimony, Errol
Cain asserts, acted as a deterrent to his testifying in his own behalf in the cases before
us (and, implicitly, as a disincentive to proceeding to trial rather than pleading guilty,
as he did instead). That deterrent was prejudicial, Errol Cain further asserts, because
his own testimony would be the most effective -- and possibly the only -- means of
rebutting the government's allegations in the cases before us that he had an intent to
defraud.
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To the extent that Errol Cain relies for his prosecutorial misconduct claim (and
his associated claim of district court error in denying his motion to dismiss on that
ground) on an allegation of ineffective assistance from his first lawyer, we decline to
consider those arguments in the cases before us and refer him instead to the prospective
remedy of a separate petition under 28 U.S.C. § 2255. In all other respects, however,
we hold that by pleading guilty, Errol Cain waived arguments of prosecutorial
misconduct and associated district court error in the cases before us. See, e.g., Tollett
v. Henderson, 411 U.S. 258, 267 (1973), and United States v. Vaughan, 13 F.3d 1186,
1187-88 (8th Cir. 1994), cert. denied, 511 U.S. 1094 (1994) (guilty plea waives all
nonjurisdictional claims arising from pre-plea events). We therefore affirm Errol Cain's
conviction.
VIII.
Errol Cain further asserts that the district court had no basis in law for, and
therefore erred in, ordering his return to state custody after he was sentenced on the
federal charges at issue in the defendants' cases. He contends in that respect that no
"writ or detainer" was ever issued to provide the authority for that order. The
government's brief on appeal does not address this assertion.
Prior to his sentencing hearing, Errol Cain moved in the district court for a
restraining order against his return to state custody on the same ground as asserted
here. The government's response in the district court to that motion characterized it as
"presumably" based on the "same premise" "underlying the motion to dismiss" and
offered no substantive argument with respect to the motion for a restraining order. The
district court denied that motion in a short order describing the motion as "concerning
the motion to dismiss."
It appears to us that both the government and the district court misunderstood the
nature of Errol Cain's motion for a restraining order and thus that the issue presented
in that motion was never ruled on, or even considered, by the district court.
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Upon remand for resentencing, therefore, we direct the district court to proceed as it
deems appropriate with respect to Errol Cain's motion for a restraining order.
IX.
Finally, Errol Cain contends that the district court's "approach to this case was
subjective and bias[ed] in manner." We have read carefully all of the transcripts
provided to us (including the transcript of the trial of the defendants' brother) and see
no evidence of such subjectivity or bias. We reject, then, Errol Cain's contention to
that effect.
X.
For the reasons stated, we affirm Errol Cain's conviction, vacate the defendants'
sentences, and remand the cases for limited further proceedings consistent with this
opinion.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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