United States v. George Robert Hunerlach , 258 F.3d 1282 ( 2001 )

UNITED STATES of America, Plaintiff-Appellee,
v.
George Robert HUNERLACH, Defendant-Appellant.
No. 00-12340.
United States Court of Appeals,
Eleventh Circuit.
July 27, 2001.
Appeal from the United States District Court for the Southern District of Florida.(No. 97-08109-CR-KLR),
Kenneth L. Ryskamp, Judge.
Before BARKETT and HULL, Circuit Judges, and LIMBAUGH*, District Judge.
BARKETT, Circuit Judge:
George Hunerlach appeals the 57-month sentence and $250,000 fine imposed after his convictions
for tax evasion, 26 U.S.C. § 7201, and for making false statements, 26 U.S.C. § 7206(1). He argues that his
57-month sentence should be reversed because the district court abused its discretion at resentencing when
it departed upward from criminal-history category I to criminal-history category III under U.S.S.G. § 4A1.3.
Background
In 1988, Hunerlach pled guilty to filing a false tax return for the 1983 tax year. Pursuant to the plea,
Hunerlach agreed to pay the income tax liabilities for that year within a "reasonable time." Despite this
agreement, from 1988 to 1997, Hunerlach failed to make any payments and instead transferred assets out of
the country to prevent their seizure by the Internal Revenue Service ("IRS"), as well as purchased, sold,
and/or mortgaged property through the use of nominee corporations. In 1994, during a meeting with an IRS
Revenue Officer to discuss Hunerlach's tax liabilities, Hunerlach orally provided false information regarding
his assets to the IRS agent and provided the same false information on a signed IRS Form 433A (Collection
Information Statement for Individuals). As a result, Hunerlach was convicted of one count of willfully
attempting to evade and defeat the payment of income taxes for the years 1981 though 1988, in violation of
26 U.S.C. § 7201, and one count of willfully signing a Form 433A, that he did not believe to be true and
correct as to every material matter, in violation of 26 U.S.C. § 7206(1). Hunerlach appealed his convictions
and sentence and this Court affirmed his conviction but vacated his sentence and remanded for resentencing.
*
Honorable Stephen N. Limbaugh, U.S. District Judge for the Eastern District of Missouri, sitting by
designation.
United States v. Hunerlach, 197 F.3d 1059, 1062 (11th Cir.1999). Hunerlach now appeals the sentence
imposed on remand.
At resentencing, the district court began the sentencing guidelines computation by calculating the tax
loss for purposes of determining Hunerlach's base offense level. In doing so, the district court considered the
entire amount Hunerlach owed, including the payment which he attempted to evade for taxable years 1981
through 1988. This amounted to $544,555.24, which yielded a base offense level of 17. The district court
then referred to Section 4A1.1 of the Guidelines to determine whether he could assign points to Hunerlach
based upon prior criminal history. Section 4A1.1 provides for the addition of a certain number of points for
each prior sentence of imprisonment when determining a defendant's criminal history category ("CHC").
Guidelines Section 4A1.2 defines "prior sentence" as:
[A] sentence imposed prior to sentencing on the instant offense, other than a sentence for conduct
that is part of the instant offense. See § 4A1.2(a). A sentence imposed after the defendant's
commencement of the instant offense, but prior to sentencing on the instant offense, is a prior
sentence if it was for conduct other than conduct that was part of the instant offense. Conduct that
is part of the instant offense means conduct that is relevant conduct to the instant offense under the
provisions of section 1B1.3 (Relevant Conduct).
U.S.S.G. § 4A1.2, cmt. n.2 (emphasis added).1
Ordinarily, the CHC calculated in this manner will sufficiently account for the seriousness of the
defendant's criminal history. However, Section 4A1.3 envisions that there will be "limited circumstances"
in which the CHC will not be adequate and provides that in certain circumstances the district court may
consider an upward departure. U.S.S.G. § 4A1.3.
In this case, the district court, in determining Hunerlach's criminal history category, could not count
Hunerlach's 1988 conviction because that conviction was not a "prior" conviction pursuant to the definition
of that term in Section 4A1.2. That is, the 1988 conviction was for conduct that had been considered "part
of the instant offense" and had been included by the district court as part of the relevant conduct on the
current conviction. See U.S.S.G. § 4A1.2., cmt. n.2. Without being able to count the 1988 sentence,
Hunerlach's criminal history score was zero and his CHC was I. The district court felt that this category
1
Commentary and Application Notes to the Sentencing Guidelines are binding on the courts unless
they contradict the plain meaning of the text of the Guidelines. Stinson v. United States, 508 U.S. 36, 38,
113 S.Ct. 1913, 123 L.Ed.2d 598 (1993).
"understated the seriousness of defendant's criminal history."2 Therefore, the district court found that while
the 1988 conviction must be excluded from determining the CHC, the court could consider the conviction
for purposes of departing from the Guidelines under Section 4A1.3. The district court proceeded to depart
across the Guidelines' Sentencing Table from CHC I, skipping CHC II, and establishing Hunerlach's criminal
history category as CHC III. Accordingly, Hunerlach was sentenced to 57 months' imprisonment on Count
One and 36 months' imprisonment on Count Two, the terms to run concurrently, followed by three years of
supervised release. In addition, the district court also departed upward from the otherwise applicable
guideline fine range, and imposed a fine of $250,000. On appeal Hunerlach challenges both the imprisonment
and fine provisions of his sentence.
As to the sentence of imprisonment, Hunerlach argues that the district court lacked authority to depart
upward from CHC I because the prior conviction that served as a basis for finding his criminal history score
inadequate was part of the "relevant conduct" of the instant offense which the district court had already
included in the computation of the base offense level.
As to the fine imposed, Hunerlach argues that the district court erred when it departed upward from
the sentencing guidelines fine range and imposed the statutory maximum fine of $250,000 because:
(1) the district court did not notify him that it was considering a departure from the Guidelines fine
table as required by Burns v. United States, 501 U.S. 129, 138-39, 111 S.Ct. 2182, 115 L.Ed.2d 123(1991) and Fed.R.Crim.P. 32;
(2) the district court failed to make the requisite findings to support a lawful departure from the
guidelines, U.S.S.G. § 5E1.2(d); and
(3) the district court failed to excuse him from payment of a fine based upon his inability to pay,
U.S.S.G. § 5E1.2(a).
We review the district court's application of the sentencing guidelines de novo. United States v.
Barakat, 130 F.3d 1448, 1452 (11th Cir.1997); United States v. Lewis, 115 F.3d 1531, 1536 (11th Cir.1997).
We accept the district court's findings of fact related to sentencing unless they are clearly erroneous, see
Barakat, 130 F.3d at 1452, and we review departures from the Sentencing Guidelines under the abuse of
discretion standard, see Koon v. United States, 518 U.S. 81, 96-100, 116 S.Ct. 2035, 135 L.Ed.2d 392 (1996).
Discussion
The first question in this case is whether a district court can depart upward from CHC I based on
2
As to Count Two, pursuant to U.S.S.G. §§ 5G1.1(a) and 5G1.2(b), Hunerlach's Guideline sentence is
36 months, the statutory maximum under 26 U.S.C. § 7206(1). Therefore, Hunerlach's challenge to the
upward departure relates only to the sentence imposed on Count One.
criminal conduct which also constitutes relevant conduct that the district court has already considered in
calculating the base level for the offense of conviction.
Application note 1 of Section 4A1.2 defines the conduct underlying a "prior sentence" and "relevant
conduct" as mutually exclusive. The Sentencing Guidelines thus clearly prohibit a sentencing court from
considering relevant conduct in initially determining the applicable CHC. The Government argues, however,
that while Section 4A1.2 prohibits the sentencing court from considering relevant conduct in calculating the
applicable CHC, it does not prohibit the sentencing court from again considering relevant conduct in
determining whether a departure from that category pursuant to Section 4A1.3 is appropriate. Section 4A1.3
provides:
If reliable information indicates that the criminal history category does not adequately reflect the
seriousness of the defendant's past criminal conduct or the likelihood that the defendant will commit
other crimes, the court may consider imposing a sentence departing from the otherwise applicable
guideline range. Such information may include, but is not limited to, information concerning:
(a) prior sentence(s) not used in computing the criminal history category (e.g., sentences for foreign
and tribal offenses);
(b) prior sentence(s) of substantially more than one year imposed as a result of independent crimes
committed on different occasions;
(c) prior similar misconduct established by a civil adjudication or by a failure to comply with an
administrative order;
(d) whether the defendant was pending trial or sentencing on another charge at the time of the instant
offense;
(e) prior similar adult criminal conduct not resulting in a criminal conviction.
U.S.S.G. § 4A1.3.3
We are persuaded that the logical inference from the language of Section 4A1.3 is that the Sentencing
Commission intended that the word "prior" have the same meaning as it has in Section 4A1.1 and as defined
in Section 4A1.2. It would seem illogical to have chosen the same terminology in Section 4A1.3 as in Section
3
The commentary to Section 4A1.3 provides the following example of when a departure under
Section 4A1.3 might be appropriate:
For example, a defendant with an extensive record of serious, assaultive conduct who had
received what might now be considered extremely lenient treatment in the past might
have the same criminal history category as a defendant who had a record of less serious
conduct. Yet, the first defendant's criminal history clearly may be more serious. This
may be particularly true in the case of younger defendants (e.g., defendants in their early
twenties or younger) who are more likely to have received repeated lenient treatment, yet
who may actually pose a greater risk of serious recidivism than older defendants.
U.S.S.G. § 4A1.3, cmt. background.
4A1.1 yet accord a it different meaning. When a district court determines that the conduct underlying a
conviction is relevant conduct to the instant offense, and considers it as a factor in calculating the base offense
level, it cannot then be simultaneously considered as a "prior sentence" under Section 4A1.3.4 See United
States v. Baird, 109 F.3d 856 (3d Cir.1997) (stating in dicta that "prior" means unrelated to the offense of
conviction); United States v. Jones, 948 F.2d 732 (D.C.Cir.1991); United States v. Adudu, 993 F.2d 821,
823 (11th Cir.1993) (reversing where upward departure was based on circumstances of current crime, not past
criminal conduct); United States v. Kim, 896 F.2d 678, 683 (2d Cir.1990) ("[b]y focusing on 'prior'
misconduct [in U.S.S.G. § 4A1.3(e) ], the Commission was obviously contemplating acts not relevant to the
offense of conviction, since those acts would enter into the 'relevant conduct' analysis used to determine the
base offense level and specific offense characteristics"); United States v. Coe, 891 F.2d 405, 409-10 (2d
Cir.1989) ("where a defendant commits a series of similar crimes, it would be elevating form over substance
to regard the early episodes in the series as 'prior criminal history' simply because the defendant pled guilty
to the last in the series, rather than the first."). But see United States v. Ashburn, 38 F.3d 803, 808 n. 14 (5th
Cir.1994) (en banc) (holding that a district court may consider prior similar criminal conduct that is the
subject of dismissed counts of an indictment may justify an upward departure and stating in dicta that "prior"
means prior to sentencing). Accordingly, under the facts of this case, the district court erred in departing
upward to CHC III based on the 1988 conviction.
As to the fine imposed in this case, we find no error. Under the Sentencing Guidelines, the
imposition of a fine is mandatory unless "the defendant establishes that he is unable to pay and is not likely
to become able to pay." U.S.S.G. § 5E1.2(a). Unless the defendant establishes his inability to pay all or part
of a fine, the fine imposed "shall be within the range specified" in the table set forth in subsection (c) of
Section 5E1.2. Once the court determines that a fine is appropriate, the Sentencing Guidelines require the
court to consider eight factors in setting the amount of the fine, including the evidence presented as to the
defendant's ability to pay. U.S.S.G. § 5E1.2(d).
4
Of course, prior convictions not counted toward the criminal history score under Section 4A1.2 may
be considered as a basis for an upward departure under Section 4A1.3. Thus while Section 4A1.2
prohibits the use of convictions which are remote in time from the offense of conviction, Section 4A1.3
specifically permits a departure based on those convictions when they are either similar to the offense of
conviction or otherwise serious. U.S.S.G. § 4A1.2, cmt. n. 8; see also, United States v. Brown, 51 F.3d
233, 234 (11th Cir.1995). It is only because Hunerlach's prior conviction is for conduct that is "relevant"
to the instant offense, and therefore is not "past" criminal conduct, that it cannot be counted under either
Section 4A1.2 or Section 4A1.3.
In this case, the Guideline range for the imposition of a fine was $7,500 to $75,000. U.S.S.G. §
5E1.2(c)(3). The district court found that Hunerlach was able to pay a fine and upwardly departed, imposing
a fine of $250,000, the statutory maximum for his offense. We review this departure for abuse of discretion.
Koon, 518 U.S. at 99, 116 S.Ct. 2035.
As to Hunerlach's argument that the district court failed to provide notice of its intent to depart as
required by Burns v. United States, 501 U.S. at 138-39, 111 S.Ct. 2182, we find that he has failed to meet his
burden. Burns requires the district court to give "reasonable notice" that it is contemplating an upward
departure in the sentencing range established by the Sentencing Guidelines. Id. at 138, 111 S.Ct. 2182. "This
notice must specifically identify the ground on which the district court is contemplating an upward departure."
Id. at 138-39, 111 S.Ct. 2182. This Court has held that Burns requires that the notice "must affirmatively
indicate that an upward departure is appropriate based on a particular ground" and that the defendant must
be provided with notice "setting forth the potential ground (or grounds) for the upward departure within a
'reasonable' amount of time prior to the sentencing hearing." United States v. Paslay, 971 F.2d 667, 673-74
n. 11 (11th Cir.1992). However, because Hunerlach failed to object to the lack of notice under Burns at the
sentencing hearing, our review is limited to plain error. See id. at 674 n. 13 ("Burns notice will be subject
to waiver and limited review under the plain error rule when a defendant fails to make a timely objection
predicated on Burns.").
For this Court "to correct plain error: (1) there must be error; (2) the error must be plain; and (3)
the error must affect substantial rights." United States v. Stevenson, 68 F.3d 1292, 1294 (11th Cir.1995) (per
curiam). We conclude that even if notice was lacking under Burns, this error did not affect Hunerlach's
substantial rights. Paslay, 971 F.2d at 674. On appeal, Hunerlach has offered no arguments, other than those
he raised at sentencing, to challenge the fine. Hunerlach's principal challenge to his fine on appeal is that he
lacks the ability to pay the fine. Hunerlach raised this objection at sentencing and he has not shown that, had
he had notice, he would have been able to present additional evidence or arguments to support his objection.
See United States v. Lopreato, 83 F.3d 571, 577 (2d Cir.1996) (finding that even if notice was lacking under
Burns, the error was harmless as the only argument defendant claimed he would have made had he been
afforded notice had clearly been considered by the district court).
We also find no merit to the claim that the district court failed to impose the fine in accordance with
the requirements of the Sentencing Guidelines or that the district court clearly erred in finding that he had the
ability to pay. The Guidelines require that the factors listed in Section 5E1.2(d) must be considered prior to
the imposition of any fine. We have not, however, required that the district court make express specific
findings concerning each of these factors. We have simply required sufficient record evidence to support the
conclusion that the factors were considered. United States v. Garrison, 133 F.3d 831, 849 (11th Cir.1998)
(citing United States v. Lombardo, 35 F.3d 526, 529-30 (11th Cir.1994)). The PSR in this case delineated
Hunerlach's financial situation based upon interviews with Hunerlach's wife and other witnesses. It also
provided information with respect to the other factors enumerated in Section 5E1.2 and concluded that based
on this information, Hunerlach was able to both pay a fine and satisfy outstanding tax liabilities. In addition,
the Government noted that at the time of trial Hunerlach admitted that he had $400,000 to $450,000 in
Barclays Bank in the Bahamas and that he had spent over a decade moving his assets offshore and into the
names of nominee owners. At sentencing Hunerlach argued that he had sold the assets listed in the PSR.
However, he presented no documentation of these transfers nor testimony as to what had happened to the
proceeds. Moreover, the amount of the departure in this case, far from being prohibited by the Sentencing
Guidelines, is specifically contemplated by the Guidelines:
The Commission envisions that for most defendants, the maximum of the guideline fine range from
subsection (c) will be at least twice the amount of gain or loss resulting from the offense. Where,
however, two times either the amount of gain to the defendant or the amount of loss caused by the
offense exceeds the maximum of the fine guideline, an upward departure from the fine guideline may
be warranted.
Moreover, where a sentence within the applicable fine guideline range would not be sufficient to
ensure both the disgorgement of any gain from the offense that otherwise would not be disgorged
(e.g., by restitution or forfeiture) and an adequate punitive fine, an upward departure from the fine
guideline range may be warranted.
U.S.S.G. § 5E1.2, cmt. (4). According to the PSR, the tax loss in this case was $544,555 and the total actual
loss to the government exceeded $3,000,000, thus twice the amount of the tax loss alone is over $1,000,000
and twice the total is over $6,000,000. Based on this record we are satisfied that the district court did not
abuse its discretion in imposing the fine in this case.
Conclusion
For all of the foregoing reasons we affirm the district court's sentence on Count II, affirm the district
court's imposition of the fine in this case, and vacate the district court's sentence on Count I and remand for
resentencing consistent with this opinion.
AFFIRMED in part,VACATED in part, and REMANDED.