Monday, May 27, 2019

1st Circuit Affirms Money Laundering and Tax Convictions and Discusses Difference Between SG Loss and Restitution (5/27/19)

In United States v. Flete-Garcia, ___ F.3d ___ (1st Cir. 2019), here, a tax crimes false refund case at heart although money laundering of the proceeds of tax crimes was the more serious charges, the court (Judge Selya) opens with this paragraph (useful at least for encountering some uncommonly used words):
Having identified defendant-appellant Fulvio Flete-Garcia as the architect of a massive swindle, the government charged him with a litany of fraud-based crimes. Following four days of trial, Flete-Garcia threw in the towel and entered a straight guilty plea to all 48 counts of the indictment. Prior to sentencing, though, Flete-Garcia experienced buyer's remorse and attempted to withdraw his guilty plea. The district court denied this motion, as well as sentencing-related motions for discovery and for an evidentiary hearing. It then sentenced Flete-Garcia to 132 months' imprisonment and ordered him to make restitution in the amount of $7,737,486.10. Flete-Garcia appeals, raising a gallimaufry of alleged errors. Finding his asseverational array long on perfervid rhetoric but short on substance, we affirm.
As I said, the opinion was written by Judge Selya.  For more on Judge Selya's and his writing style, see the Wikipedia entry here.

The opinion is 49 pages and has other uses of words not commonly encountered (in my experience).  But that's all beside the point.

Now, what might be useful for readers of this blog?  Let me say that it is all interesting even (in my case beyond the challenge of encountering uncommonly-used words).  But what is really useful for readers of this blog (or at least my target readers of this blog)?

The outline of the opinion with local page cites and links is

I. BACKGROUND (p. 3, here
A. Enhancement for Number of Victims. (p. 13, here.)
B. Enhancement for Amount of Loss. (p. 18, here.)
C. Discovery. (p. 31, here.)
D. Evidentiary Hearing. (p. 35, here)
E. The Due Process Claim. (p. 38, here.)
IV. RESTITUTION (p. 40, here.)
VI. CONCLUSION (p. 49, here.)

I think readers might be interested in the discussion on restitution starting on op. 40, here, where Judge Selya addresses the differences between the loss calculation and restitution.  In brief, the loss calculation determines the Guidelines Sentencing Range ("GSR") calculation which may include intended loss in excess of actual loss; the restitution calculation is to quantify the actual loss so that the victim may be compensated.  In this case, the loss was calculated under the money laundering guideline but basically it appears to be the same quantity as the tax loss since illegal tax refunds were the object of the crimes.  (That is just to say that if the loss had been calculated under the tax guidelines, the loss amount would have been the same.)

Here is Judge Selya's discussion of restitution (or at least the excerpts from that discussion that I think would be helpful for fans of tax crimes).  Note that I used the cleaned up technique:

Flete-Garcia's next plaint builds on one of his earlier plaints. He points to arguments that he marshalled in reproving the sentencing court's findings with respect to amount of loss, see supra Part III(B), and asserts that those arguments "make clear that the . . . restitution order is flawed." This bareboned assertion does not get him very far. 
The district court imposed the restitution order pursuant to the Mandatory Victims Restitution Act (MVRA), 18 U.S.C. § 3663A. The MVRA mandates that a defendant convicted of certain federal crimes, including those committed by fraud or deceit, must make restitution to victims commensurate with actual losses. Although restitution typically bears a relationship to amount of loss, the two are conceptually distinct. In fraud cases, the amount of loss is an integer in the sentencing calculus: it is computed in order to establish the defendant's offense level and, thus, his GSR. Viewed in context, then, amount of loss is the primary metric by which the seriousness of the offense and the defendant's relative culpability are measured.  
Restitution is a horse of a different hue, serving a wholly different purpose. It is designed to compensate the victim, not to punish the offender. Moreover, restitution deals exclusively with losses actually sustained and (unlike amount of loss calculations) makes no provision for intended loss. To that end, the MVRA directs that restitution shall be made to each victim in the full amount of each victim's losses as determined by the court. And whereas loss calculations require only a reasonable estimate of the range of loss, the entire amount of restitution must be supported — albeit only by a modicum of reliable evidence.
Judge Selya then rejects Flete-Garcia's objection to restitution because he did not properly make the argument, arguing only conclusions that did not indicate an awareness of the difference between loss calculations and restitution. Judge Selya then excoriates Flete-Garcia and presumably, by inference, his counsel for leaving to the court work that should have been done by counsel.

JAT Comments:

1.  I have not attempted to sort through this to see whether the restitution will be subject to the summary assessment procedure in § 6201(a)(4)(A).  On its face it would seem to be if under the MVRA.

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