In The Courts

Convictions Upheld Despite Use of Out-of-Court Statements

In United States v. Stewart, Bacanovic, Nos. 04-3953, 04-4081 (2nd Cir. Jan. 6, 2006), defendants Martha Stewart and Peter Bacanovic appealed their convictions and sentences for conspiracy, making false statements to government officials, and impeding an agency investigation on multiple grounds. Of note, each defendant argued that his and her Confrontation Clause rights were violated when out-of-court statements made by the other were introduced at trial.

Defendants maintained that statements made by them to government officials were testimonial in nature and that, after Crawford v. Washington, 541 U.S. 36 (2004), those statements could not be admitted for the truth of the matters asserted therein because the statements were not subject to contemporaneous cross-examination. Defendants did not argue that their own false statements were precluded by Crawford, but rather that Crawford prevented the government from using each defendant's truthful statements to investigators against the other.

The Second Circuit held that, at least in the context of a case charging conspiracy to obstruct an investigation, statements made by co-conspirators in furtherance of the conspiracy are not excluded by the Confrontation Clause. The court explained that such statements may be admitted to show each conspirator's efforts to increase the believability of the false portions of the conspirators' story and thereby obstruct justice.

The defendants' other challenges to their convictions, including a request for a new trial based on the subsequent indictment of a government witness for allegedly offering false testimony in the case, were also denied. The court did agree to remand Bacanovic's sentence for reconsideration and possible modification in light of Booker. The district court has already declined to modify Stewart's sentence.

Rule 408 Applies to Criminal Cases in the Eleventh Circuit

In United States v. Arias, 2005 WL 3354934, (11th Cir. Dec. 12, 2005), the defendants appealed their convictions for conspiracy and other crimes stemming from a scheme to defraud Medicare. One of the defendants, a licensed pharmacist and part owner of a pharmacy, had previously settled state administrative proceedings against the pharmacy by signing a statement admitting to drug-alteration allegations and agreeing to a fine and other penalties. The pharmacist objected to the admission of this statement at his criminal trial arguing that it was evidence of a compromise and therefore barred by Rule 408 of the Federal Rules of Evidence. In a case of first impression, the Eleventh Circuit agreed that Rule 408 extends to criminal proceedings, explaining that to do otherwise would undermine the public policy purpose of the rule. Nonetheless, the court found that the evidence in question was merely cumulative and refused to overturn the defendant's conviction.

In extending Rule 408 to the criminal setting, the Eleventh Circuit joins the Fifth and Tenth Circuits. The Second, Sixth, and Seventh Circuits limit the rule's application to civil cases.

Ninth Circuit Limits Post-Booker Review of Downward Departures

In United States v. Menyweather, No. 03-50496 (9th Cir. Dec 16, 2005), the Ninth Circuit denied the government's appeal of an eight level downward departure for mental and emotional condition, diminished capacity, and extraordinary circumstances. The court held that although before Booker departures from the guidelines were reviewed de novo, post-Booker departures are subject only to an abuse of discretion standard of review.

The defendant, an administrative employee of the U.S. Attorney's office in Los Angeles, was indicted on ten counts of theft of government funds, mail fraud and wire fraud. She pled guilty to one count of mail fraud and admitted to making personal purchases totaling between $350,000 and $500,000 with government credit cards. Defendant produced a psychological evaluation that indicated she suffered from post-traumatic stress and compulsive coping behaviors because of her difficult childhood and the murder of her fianc'e. In addition, she asked for leniency as the sole parent and only means of support for her 11-year-old daughter.

At the original sentencing hearing, held in 2001, the District Court granted defendant an eight level downward departure, reducing her sentencing range from a possible 21 to 27 months to only 0 to 6 months. That sentence was vacated on appeal for the trial court's failure to sufficiently explain the basis of the downward departure. On remand the trial court built a more extensive record and applied the same sentence. That sentence was vacated for failure to sufficiently explain the extent of the departure. Between the second remand and the third, identical, sentence the Supreme Court handed down Booker.

On the third appeal of defendant's sentence, the Ninth Circuit explained that before Booker, downward departures were reviewed de novo. After Booker, the District Court's interpretation of the Sentencing Guidelines is still reviewed de novo, but its application of the Guidelines to the instant case, and its decision to depart from them, is reviewed for abuse of authority. Under this standard of review, the eight level downward departure was upheld.

Seventh Circuit Allows Review of In-Guideline Sentences

In United States v. Vaughn, 2006 WL 29208 (7th Cir. Jan. 6, 2006), the defendant pled guilty to two counts of conspiracy to steal, transport, and fraudulently endorse U.S. Treasury checks. When his crimes began, the 2000 Sentencing Guidelines were in effect, but the crimes continued until after the more stringent 2001 Guidelines became effective. At sentencing, the defendant argued for a downward departure from the advisory sentencing range, derived from the 2001 Guidelines, based primarily on his contention that 90% of his criminal activity occurred under the more lenient standards. The District Court refused to grant a downward departure and sentenced him to an in-range sentence of 121 months' confinement.

Upon defendant's appeal, the government pointed out that appellate courts have historically lacked jurisdiction to review a trial court's decision not to depart from the guidelines. The Seventh Circuit explained that pre-Booker appeals focused on the correctness of departures, and, therefore, in-guideline sentences were not generally reviewable. After Booker, however, all sentences may be reviewed for reasonableness. The court held that sentencing courts must consider the relevant sentencing factors and apply them in a reasonable manner, but if it does, sentences that fall within the guidelines are entitled to a rebuttable presumption of reasonableness. Applying this standard, the Circuit Court upheld the sentence.

District of Columbia Holds That Booker Does Not Apply Retroactively

In United States v. Zambrano, No. 05-3106 (Jan. 10, 2006), the D.C. Circuit joined all other Circuits to consider the issues and found that Booker does not apply retroactively to collateral attacks on a sentence. The First, Sixth, Eighth, and Ninth Circuits have not yet addressed the issue.

Sixth Circuit Holds Out-of-Court Statements Admissible At Sentencing

In United States v. Stone, 2005 WL 3501590 (6th Cir. Dec. 23, 2005), the Sixth Circuit, in a case of first impression in the Circuit, held that out-of-court testimonial statements are admissible during the sentencing phase of trial, even in the wake of the Supreme Court's decision in Crawford v. Washington , 541 U.S. 36 (2004).

At the sentencing hearing following defendants' conviction on charges of income tax evasion and conspiracy, an IRS agent gave testimony on the amount of loss suffered by the government as a result of the defendants' crimes. Her testimony was based on out-of-court statements made by witnesses not called to testify at trial. In Crawford, the Supreme Court clarified the Confrontation Clause's prohibition of the introduction of testimonial evidence from witnesses not called to testify at trial and severely restricted the previously available exceptions for reliable evidence. Defendants argued that Crawford mandates a change to the long-standing rule that confrontation rights do not apply at sentencing hearings. The Sixth Circuit disagreed and, following the First Circuit, and held that Crawford does not apply to evidence offered at sentencing hearings.

Convictions Upheld Despite Use of Out-of-Court Statements

In United States v. Stewart, Bacanovic, Nos. 04-3953, 04-4081 (2nd Cir. Jan. 6, 2006), defendants Martha Stewart and Peter Bacanovic appealed their convictions and sentences for conspiracy, making false statements to government officials, and impeding an agency investigation on multiple grounds. Of note, each defendant argued that his and her Confrontation Clause rights were violated when out-of-court statements made by the other were introduced at trial.

Defendants maintained that statements made by them to government officials were testimonial in nature and that, after Crawford v. Washington , 541 U.S. 36 (2004), those statements could not be admitted for the truth of the matters asserted therein because the statements were not subject to contemporaneous cross-examination. Defendants did not argue that their own false statements were precluded by Crawford, but rather that Crawford prevented the government from using each defendant's truthful statements to investigators against the other.

The Second Circuit held that, at least in the context of a case charging conspiracy to obstruct an investigation, statements made by co-conspirators in furtherance of the conspiracy are not excluded by the Confrontation Clause. The court explained that such statements may be admitted to show each conspirator's efforts to increase the believability of the false portions of the conspirators' story and thereby obstruct justice.

The defendants' other challenges to their convictions, including a request for a new trial based on the subsequent indictment of a government witness for allegedly offering false testimony in the case, were also denied. The court did agree to remand Bacanovic's sentence for reconsideration and possible modification in light of Booker. The district court has already declined to modify Stewart's sentence.

Rule 408 Applies to Criminal Cases in the Eleventh Circuit

In United States v. Arias, 2005 WL 3354934, (11th Cir. Dec. 12, 2005), the defendants appealed their convictions for conspiracy and other crimes stemming from a scheme to defraud Medicare. One of the defendants, a licensed pharmacist and part owner of a pharmacy, had previously settled state administrative proceedings against the pharmacy by signing a statement admitting to drug-alteration allegations and agreeing to a fine and other penalties. The pharmacist objected to the admission of this statement at his criminal trial arguing that it was evidence of a compromise and therefore barred by Rule 408 of the Federal Rules of Evidence. In a case of first impression, the Eleventh Circuit agreed that Rule 408 extends to criminal proceedings, explaining that to do otherwise would undermine the public policy purpose of the rule. Nonetheless, the court found that the evidence in question was merely cumulative and refused to overturn the defendant's conviction.

In extending Rule 408 to the criminal setting, the Eleventh Circuit joins the Fifth and Tenth Circuits. The Second, Sixth, and Seventh Circuits limit the rule's application to civil cases.

Ninth Circuit Limits Post-Booker Review of Downward Departures

In United States v. Menyweather, No. 03-50496 (9th Cir. Dec 16, 2005), the Ninth Circuit denied the government's appeal of an eight level downward departure for mental and emotional condition, diminished capacity, and extraordinary circumstances. The court held that although before Booker departures from the guidelines were reviewed de novo, post-Booker departures are subject only to an abuse of discretion standard of review.

The defendant, an administrative employee of the U.S. Attorney's office in Los Angeles, was indicted on ten counts of theft of government funds, mail fraud and wire fraud. She pled guilty to one count of mail fraud and admitted to making personal purchases totaling between $350,000 and $500,000 with government credit cards. Defendant produced a psychological evaluation that indicated she suffered from post-traumatic stress and compulsive coping behaviors because of her difficult childhood and the murder of her fianc'e. In addition, she asked for leniency as the sole parent and only means of support for her 11-year-old daughter.

At the original sentencing hearing, held in 2001, the District Court granted defendant an eight level downward departure, reducing her sentencing range from a possible 21 to 27 months to only 0 to 6 months. That sentence was vacated on appeal for the trial court's failure to sufficiently explain the basis of the downward departure. On remand the trial court built a more extensive record and applied the same sentence. That sentence was vacated for failure to sufficiently explain the extent of the departure. Between the second remand and the third, identical, sentence the Supreme Court handed down Booker.

On the third appeal of defendant's sentence, the Ninth Circuit explained that before Booker, downward departures were reviewed de novo. After Booker, the District Court's interpretation of the Sentencing Guidelines is still reviewed de novo, but its application of the Guidelines to the instant case, and its decision to depart from them, is reviewed for abuse of authority. Under this standard of review, the eight level downward departure was upheld.

Seventh Circuit Allows Review of In-Guideline Sentences

In United States v. Vaughn, 2006 WL 29208 (7th Cir. Jan. 6, 2006), the defendant pled guilty to two counts of conspiracy to steal, transport, and fraudulently endorse U.S. Treasury checks. When his crimes began, the 2000 Sentencing Guidelines were in effect, but the crimes continued until after the more stringent 2001 Guidelines became effective. At sentencing, the defendant argued for a downward departure from the advisory sentencing range, derived from the 2001 Guidelines, based primarily on his contention that 90% of his criminal activity occurred under the more lenient standards. The District Court refused to grant a downward departure and sentenced him to an in-range sentence of 121 months' confinement.

Upon defendant's appeal, the government pointed out that appellate courts have historically lacked jurisdiction to review a trial court's decision not to depart from the guidelines. The Seventh Circuit explained that pre-Booker appeals focused on the correctness of departures, and, therefore, in-guideline sentences were not generally reviewable. After Booker, however, all sentences may be reviewed for reasonableness. The court held that sentencing courts must consider the relevant sentencing factors and apply them in a reasonable manner, but if it does, sentences that fall within the guidelines are entitled to a rebuttable presumption of reasonableness. Applying this standard, the Circuit Court upheld the sentence.

District of Columbia Holds That Booker Does Not Apply Retroactively

In United States v. Zambrano, No. 05-3106 (Jan. 10, 2006), the D.C. Circuit joined all other Circuits to consider the issues and found that Booker does not apply retroactively to collateral attacks on a sentence. The First, Sixth, Eighth, and Ninth Circuits have not yet addressed the issue.