Third Circuit Affirms Sentence Based on PSR Calculation of Tax Loss In Excess of Stipulated Tax Loss in Plea Agreement (3/27/15)

I recently blogged on the importance for plea agreement purposes to negotiate the tax loss number down to the extent possible.  Relevant Conduct Raised by the Probation Officer and Used by the Sentencing Judge in Calculating the Guidelines (Federal Tax Crimes Blog 3/10/15), here.  However, I noted in the blog that the Probation Office and the Sentencing Judge is not bound by the agreement in the plea agreement as to the tax loss number.  Specifically, in that blog, I discussed the risk of the Probation Officer reporting in the PSR and the Judge agreeing to include relevant conduct not included in the plea agreement.

There is another recent case highlighting this risk.  In United States v. Sepero, 2015 U.S. App. LEXIS 4764 (3d Cir. 2015) (nonprecedential), here, the Third Circuit addressed the defendant's arguments that the Probation Officer improperly deviated from the plea agreement stipulation of tax loss between $1 million and $2.5 million.  The Probation Officer instead determined a tax loss of over $4 million, which increased the tax loss, the resulting tax table determination of the base offense level and thus the resulting Guidelines sentencing calculation.  Since everyone knows that the Probation Office and Sentencing Court is not bound by the plea agreement, this is a risk the defendant takes and can have no legitimate complaint if the Probation Office or sentencing court determine the facts support the higher tax loss.  Recognizing this, the defendant couched his complaint as improper action by the prosecutor inconsistent with the plea agreement in acknowledging that the higher tax loss number was incorrect.  Regarding the requirement that the prosecutor give the defendant the benefit of the bargain, the prosecutor cannot deny facts asserted by the Probation Officer in the PSR or conclusions by the court if they are true.  Thus, if the prosecutor agreed to a $1 million through $2.5 million tax loss and the Probation Officer correctly calculates in the PSR an actual tax loss of over $4 million and that calculation is correct, the prosecutor cannot deny that calculation regardless of what the prosecutor stipulated.  The prosecutor cannot advocate for the higher number, but the prosecutor cannot deny it either.

Here is what the court said in denying relief:

Sepero first argues that his conviction and sentence should be vacated because the government breached the plea agreement. Because he did not raise this issue below, we review for plain error. See Puckett v. United States, 556 U.S. 129, 133-34 (2009) (stating that the plain-error test applies to an unpreserved claim that the government "failed to meet its obligations under a plea agreement"). In the plea agreement, the parties stipulated to a total loss amount between $1 million and $2.5 million. Sepero contends that the government breached the agreement in three ways: by confirming the probation officer's calculated loss amount of over $4 million in the PSR; by confirming the Court's understanding that the facts relating to the calculated loss amount in the PSR were accurate; and by failing to disclose financial records to the probation officer showing that a portion of the supposed loss amounts were actually legitimately invested. 

Those arguments are meritless. The government's statements to the probation officer and the Court relating to the accuracy of the facts contained in the PSR do not amount to a breach of its agreement. In fact, despite the difference in loss amount, in all communications with the probation office, the government expressly stated that it would abide by the stipulations in the plea agreement. Further, in its communications with the Court, the government stressed repeatedly its recommendation that the Court impose a sentence within the stipulated guidelines range, reflecting the lower loss amount, as opposed to the higher range recommended in the PSR. Furthermore, Sepero himself eventually agreed at the sentencing hearing that the facts relating to the loss amount calculations were correct. Thus, the government did not breach the plea agreement by also confirming the Court's understanding of the pertinent facts, nor by failing to provide records that supposedly showed a reduction in the loss amount due to legitimate investments.