United States v. Jeffrey Martinovich , 810 F.3d 232 ( 2016 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 13-4828
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
JEFFREY A. MARTINOVICH,
Defendant - Appellant.
Appeal from the United States District Court for the Eastern
District of Virginia, at Newport News. Robert G. Doumar, Senior
District Judge. (4:12-cr-00101-RGD-TEM-1)
Argued: September 17, 2015 Decided: January 7, 2016
Before WYNN, FLOYD, and THACKER, Circuit Judges.
Affirmed in part, vacated in part, and remanded by published
opinion. Judge Thacker wrote the majority opinion, in which
Judge Floyd joined. Judge Wynn wrote a separate concurring
opinion.
ARGUED: Lawrence Hunter Woodward, Jr., SHUTTLEWORTH, RULOFF,
SWAIN, HADDAD & MORECOCK, PC, Virginia Beach, Virginia, for
Appellant. V. Kathleen Dougherty, OFFICE OF THE UNITED STATES
ATTORNEY, Norfolk, Virginia, for Appellee. ON BRIEF: Dana J.
Boente, United States Attorney, Alexandria, Virginia, Brian J.
Samuels, Assistant United States Attorney, OFFICE OF THE UNITED
STATES ATTORNEY, Newport News, Virginia, for Appellee.
THACKER, Circuit Judge:
During the course of a four-week jury trial, the
Government sought to prove that Jeffrey A. Martinovich
(“Appellant”) engaged in a scheme to defraud his investment
firm’s clients out of millions of dollars. The jury found
Appellant guilty of one count of conspiracy to commit mail and
wire fraud, four counts of wire fraud, five counts of mail
fraud, and seven counts of money-laundering. On September 30,
2013, Appellant was sentenced to 140 months of imprisonment,
three years of supervised release, and monetary penalties.
Appellant appeals his convictions, alleging a litany
of errors. Above all, Appellant contends that the district
court improperly interfered with the trial proceedings and
misstated the law during his sentencing hearing.
We conclude that the jury’s verdict must stand, but
because the district court treated the United States Sentencing
Guidelines (“Guidelines”) as mandatory, we vacate the sentence
and remand with instructions that the matter be assigned to a
different judge.
I.
A.
In or around 2000, Appellant partnered with Witt Mares
& Company, a public accounting firm, to form Martinovich
Investment Consulting Group (“MICG”), a financial services
2
company that provided investment services to its clients. As a
broker-dealer, MICG was licensed by the Securities and Exchange
Commission and regulated by the Financial Industry Regulatory
Authority (“FINRA”).
MICG utilized First Clearing, LLC, a non-bank
affiliate of Wells Fargo, to provide brokerage account services,
such as compiling and issuing investor statements and portfolio
information, to MICG’s clients.
In 2005, Appellant became the sole owner and Chief
Executive Officer of MICG. Thereafter, MICG rapidly expanded,
and as a result, incurred increased expenses for salaries, rent,
marketing, celebratory events, and corporate retreats.
In November 2006, Bruce Glasser began employment with
MICG as managing director of investment banking. Glasser
recommended that Appellant invest in EPV Solar, Inc., a
privately held solar energy company. Appellant and Glasser
expected EPV’s value to increase with EPV’s initial public
offering (“IPO”) in 2008. In order to take advantage of the EPV
investment opportunity, MICG created a hedge fund for MICG’s
clients and launched MICG Venture Strategies, LLC (“Venture
Fund”). The Venture Fund consisted of only non-public assets
that were not otherwise tradeable. The governing document for
the Venture Fund was the Private Placement Memorandum (“PPM”).
The PPM defined the Venture Fund’s investment strategy and
3
objectives, including defining the manager’s role. Pursuant to
the PPM, Appellant had sole authority for investment decisions,
asset valuations, incentive allocation, and management fees for
the Venture Fund. EPV became its first investment with over 1.8
million shares purchased at $1.15 per share in June and
September 2007.
As the Venture Fund manager, Appellant received both a
1% management fee and 20% incentive fee based on the Venture
Fund’s performance. First Clearing managed the brokerage
account services for the Venture Fund, and Appellant maintained
the only check writing privileges for receiving and disbursing
money related to the Venture Fund account.
Pursuant to the PPM, Appellant needed an independent
valuation of EPV in order to calculate his management and
incentive fees and value to the clients. In turn, Appellant,
through First Clearing, would provide statements, which
reflected the Venture Fund’s holdings and performance, to MICG’s
clients. A rise in the value of the holding meant additional
incentive and management fees to Appellant.
Despite the PPM’s requirement for an independent
valuation, Appellant, through Glasser and Steven Gifis (an EPV
shareholder and broker of the MICG/EPV deal), had Peter Lynch
(an EPV shareholder, consultant, and a solar industry expert)
4
conduct the valuation. 1 During the course of the valuation
process, Lynch was unaware of the true intent of the valuation.
Rather, Gifis told Lynch that the valuation was being done so
that EPV’s president could value his personal holdings. Lynch
did not know the valuation was being produced pursuant to
Appellant’s request, was to be used to value assets held in a
hedge fund, or that it would be used outside EPV.
Under these false pretenses, Lynch provided a
valuation share price of $2.13 for end-of-year 2007. Based on
this end-of-year valuation, Appellant took an incentive and/or
management fee of $357,019, withdrawn from First Clearing.
In early 2008, Appellant added an ownership in a
privately held soccer team, the General Sports Derby Partnership
(“Derby Rams”), and an interest in a construction bond to the
Venture Fund. In September 2008, when EPV’s financing
dissolved, its IPO failed to launch, thereby damaging its
forecasted growth potential. As a result, MICG clients sought a
return of their money. In response, Appellant proceeded to
deny, discourage, and delay his clients’ redemptions, yet in
October 2008, he redeemed $100,000 of his own investment.
Moreover, even with EPV’s decline, Appellant continued to
1Appellant did not compensate Gifis, Glasser, or Lynch to
produce these valuations.
5
encourage and recruit individuals to invest capital into the
Venture Fund. In doing so, Appellant (1) sought unsophisticated
investors; (2) failed to disclose EPV’s dire condition;
(3) misinformed investors about their redemption ability; and
(4) used new investment money to pay other investors.
Needing another valuation for end-of-year 2008, in
December 2008, Appellant again orchestrated an EPV share price
valuation. From a share price of $2.13 in December 2007,
Appellant requested that EPV show an increased share value of
$2.16 for end-of-year 2008, and this $2.16 share price
recommendation was submitted to Lynch. In order to support his
predetermined incentive and management fees, along with EPV’s
predetermined valuation, Appellant also represented that the
Derby Rams were valued at $7,595,000. However, the Derby Rams
were actually valued at $6,000,000. On January 2, 2009,
Appellant took three draws totaling $478,363.47 from the Venture
Fund’s First Clearing account to pay Appellant’s management and
incentive fees.
Lynch once again approved Appellant’s predetermined
price of $2.16, thinking it was only being used internally. On
January 4, 2009, Appellant received confirmation that Lynch
approved the $2.16 valuation. However, because of the decreased
value of Derby Rams, Appellant required even more inflation to
EPV’s valuation to justify the incentive and management fees of
6
$478,363.47 that Appellant had already paid himself. Thus, on
January 7, 2009, Appellant authored and transmitted another
increased EPV valuation at $2.42, which was signed by Lynch on
January 15, 2009. But a $2.42 share price was still not high
enough to support Appellant’s incentive and management fees.
So, several hours later, on January 15, 2009, Appellant authored
and transmitted yet another increased valuation at a $2.88 share
price.
Appellant was aware the $2.88 share value was
excessive. Even so, MICG clients received their statements from
First Clearing indicating this $2.88 share value, and Appellant
continued to assure investors of the Venture Fund’s security.
For instance, on January 16, 2009, Gifis sought MICG investors
to purchase EPV shares at $1.00 per share, well below the $2.88
share value. And on January 22, 2009, Appellant himself
identified and arranged for six individuals to purchase EPV
stock at $1.15 per share, at the same time he was promoting the
$2.88 per share value. On or about January 23, 2009, Appellant
received Lynch’s revised EPV valuation of $2.88 per share value.
The deception continued during the month of February
2009. On February 6, 2009, Appellant received an email from
Michael Feldman, MICG’s Chief Financial Officer, in which
Feldman disclosed that an independent auditor was concerned that
Appellant was selling shares for less than the $2.88 valuation.
7
Nonetheless, on February 25, 2009, Appellant brokered the
above-referenced deal to six investors for EPV stock at $1.15
per share.
In 2009, FINRA opened an investigation into MICG,
Appellant, and the valuations within the Venture Fund holdings.
Meanwhile, EPV filed for bankruptcy in February 2010. In May
2010, FINRA forced MICG to close its doors, and Appellant
surrendered his broker’s license.
In February 2011, Appellant filed for bankruptcy under
Chapter 7 of the United States Bankruptcy Code. During his
bankruptcy proceedings, Appellant failed to disclose $5,800 in
income and approximately $21,100 in losses that he had incurred
while gambling.
Ultimately, in October 2012, Appellant was charged
with conspiracy to commit mail and wire fraud, multiple counts
of mail and wire fraud, and lying in a bankruptcy proceeding.
B.
At the jury trial held over four weeks in April and
May 2013, the district court frequently interrupted counsel and
questioned counsel’s tactics. For example, at one point the
district court asked Appellant’s counsel to clarify his line of
questioning. But when Appellant’s counsel attempted to do so,
the district court interrupted, “No, don’t say anything.”
8
J.A. 2639. 2 Appellant’s counsel responded, “You asked me why,”
and the district court responded, “I did, and I made a mistake.”
Id. On another occasion, the district court criticized
Appellant’s counsel for developing a sequential timeline.
Shortly thereafter, however, the district court reproached
Appellant’s counsel for proceeding in a non-sequential manner,
asserting, “Could we start trying to go in order? We’re now
switching back and forth. . . . So, if you can, can you go
forward so that we can follow chronologically?” Id. at 3012.
Although the Government voiced its concerns at one point with
regard to the district court’s conduct, 3 Appellant never timely
objected to any of the district court’s comments, questions, or
disruptions.
After deliberating for over two and a half days, the
jury found Appellant guilty of one count of conspiracy to commit
mail and wire fraud, four counts of wire fraud, five counts of
2Citations to the “J.A.” refer to the Joint Appendix filed
by the parties in this appeal.
3After the district court repeatedly questioned a witness,
the Government, outside the presence of the witness, explained
“given the Court’s comments and concerns about [the witness],”
it “want[ed] to be certain that the record is clear that we will
raise these and object to those concerns when we feel they’re
appropriate and raise it during cross-examination.” J.A. 2705.
The Government explained that it was protecting the record and
that it was “bring[ing] this up now in terms of the Court’s
concerns and the Court’s questions of [the witness].” Id.
9
mail fraud, and seven counts of money-laundering; 4 found
Appellant not guilty of one count of wire fraud and two counts
of money-laundering; and could not reach a verdict on three
counts of wire fraud and two counts of fraudulent oaths in a
bankruptcy proceeding.
C.
At sentencing, the district court -- in staunch
disagreement with both parties -- stated numerous times that it
viewed the Guidelines as mandatory and that its discretion was
restricted to a sentence that fit within the range set forth in
the Guidelines. For example, the district court opined (1) that
the Guidelines were “no longer advisory,” J.A. 3645; (2) “It’s
all where do you fit [in the Guidelines],” id.; and (3) “I will
follow the Guidelines only because I have to. I find that
they’re not discretionary, they’re mandatory,” id. at 3646.
In light of these comments, both parties reminded the
district court that the Guidelines are advisory. Appellant’s
counsel pointed out that the Guidelines were but one factor for
the district court to consider and that the district court had
“significant discretion . . . to depart significantly from the
[G]uidelines.” J.A. 3654. Likewise, the Government noted that
4
On September 11, 2013, the district court granted a motion
for judgment of acquittal on one money-laundering count.
10
the Guidelines were only one factor to consider, see id.
at 3700, and that the “[G]uidelines are absolutely advisory,”
id. at 3729. Ultimately, the district court determined that the
Guidelines range for Appellant was 135-168 months of
imprisonment and sentenced him to 140 months.
Appellant now challenges his convictions and sentence,
asserting a multitude of errors. However, only two issues
warrant extended discussion on appeal. 5 First, Appellant alleges
that the district court’s interruptions and courtroom management
style deprived him of a fair trial. Second, Appellant contends
that the district court erred when it treated the Guidelines as
mandatory. We address each challenge in turn.
II.
A.
Judicial Interference
1.
We review the alleged judicial interference for plain
error because Appellant neglected to raise a timely objection at
trial. See United States v. Smith, 452 F.3d 323, 330-31 (4th
Cir. 2006); United States v. Godwin, 272 F.3d 659, 673 (4th Cir.
5For instance, Appellant argues that the evidence presented
at trial was insufficient to support his convictions for
conspiracy, wire fraud, and mail fraud. We find that the
evidence was clearly sufficient, and thus do not address this
contention at length.
11
2001). Under this standard, we review the record for plain
error that affects substantial rights, such that “the error must
have been prejudicial: It must have affected the outcome of the
district court proceedings.” United States v. Olano, 507 U.S.
725, 734 (1993). And “we may not intervene unless the judge’s
comments were so prejudicial as to deny the defendant[] an
opportunity for a fair and impartial trial.” Smith, 452 F.3d at
331 (internal quotation marks omitted). Furthermore, Appellant
-- not the Government -- must show “that the jury actually
convicted [him] based upon the trial error.” Godwin, 272 F.3d
at 680 (internal quotation marks omitted).
2.
Appellant contends the district court’s improper
interference with his trial deprived him of a fair trial. We
agree that the district court crossed the line and was in error.
We disagree, however, that the conduct of the trial deprived
Appellant of a fair trial.
Under the Federal Rules of Evidence, “[t]he court
should exercise reasonable control over the mode and order of
examining witnesses and presenting evidence so as to: (1) make
those procedures effective for determining the truth; (2) avoid
wasting time; and (3) protect witnesses from harassment or undue
embarrassment.” Fed. R. Evid. 611(a). “The court may examine a
witness regardless of who calls the witness.” Fed. R. Evid.
12
614(b). “A party may object to the court’s calling or examining
a witness either at that time or at the next opportunity when
the jury is not present.” Fed. R. Evid. 614(c).
Appellant argues that the district court’s general
interference in the trial -- which included examining witnesses,
interrupting counsel, and controlling the
presentations -- deprived him of a fair trial, and but for this
interference, he would not have been convicted. However,
Appellant did not object to the district court’s interference.
Although counsel may be reticent to object to such interference
by the court, failing to do so creates a high bar for appellate
review. See Smith, 452 F.3d at 330 (“[F]ail[ing] to bring even
a single alleged error [of judicial interference] to the
district court’s attention during trial . . . [does not]
preserve[] this issue for appeal.”). As such, this error “must
have affected the outcome of the district court proceedings.”
Olano, 507 U.S. at 734.
3.
Here, we are once again 6 confronted with a case replete
with the district court’s ill-advised comments and interference.
6 See, e.g., United States v. Cherry, 720 F.3d 161, 167-69
(4th Cir. 2013); United States v. Ecklin, 528 F. App’x 357, 363
(4th Cir. 2013); United States v. Garries, 452 F. App’x 304,
309-11 (4th Cir. 2011) (per curiam); Murphy v. United States,
383 F. App’x 326, 334 (4th Cir. 2010) (per curiam); United
(Continued)
13
First, the district court unnecessarily interrupted
defense counsel’s presentation of the defense at trial. For
instance, when defense counsel was questioning a witness about
an email, the district court intervened:
District court: Stop. Did he get this
e-mail?
Defense counsel: No, sir.
District court: Then you’re asking him about
an e-mail he did not get, correct?
Defense counsel: Correct.
District court: Why?
Defense counsel: Because it says this should
be totally --
District court: No, don’t say anything.
Defense counsel: You asked me why.
District court: I did, and I made a mistake.
I’m sorry, [defense counsel], but I
appreciate it. This e-mail doesn’t have
anything to do with [the witness].
J.A. 2639. On another occasion, the district court interjected:
Defense counsel [to the witness]: And why is
the date --
District court: Stop. Have we got a date
when this all took place?
Defense counsel: That’s what I’m asking him.
Id. at 2640.
States v. Dabney, 71 F. App’x 207, 210 (4th Cir. 2003) (per
curiam).
14
Considering the numerous witnesses and exhibits
involved in the case, we understand the district court’s desire
to keep the trial focused. At times, however, the district
court became so disruptive that it impermissibly interfered with
the manner in which Appellant sought to present his evidence.
Defense counsel [to Appellant who was
testifying]: All right. Now, at that point
in 2005 what number of offices did you have?
District court: Can we get on to somewhere
near here, get up to 2007.
. . . .
I don’t mind doing history, and it’s very
nice, and I understand that, but I’d like to
get to the case.
Defense counsel: Yes, sir. The expansion
plan is part of the case, Your Honor.
. . . .
Defense counsel [to the defendant]: Could
you tell us about the expansion plan you had
to other offices?
Appellant: Yes. We had expanded --
District court: We’re in 2007 now?
Defense counsel: We’re moving up to that
point.
District court: Well, get there. Excuse me.
I want to get there, okay? We know he had
expansion plans; he’s talked about it.
Let’s get to 2007.
J.A. 2952-53. Shortly thereafter, the district court chastised
defense counsel for not creating a succinct timeline:
15
District court: Could we start trying to go
in order? We’re now switching back and
forth. You’re now in -- the last one was
February, and then there was some talk about
June. So, if you can, can you go forward so
that we can follow chronologically?
Defense counsel: I’m doing my best up here,
Judge. I promise you I’ll try very hard.
District court: I’m not trying to interrupt
you, I’m just trying to have some --
Defense counsel: Continuity. I understand.
District court: -- continuity.
Id. at 3012.
At another point, the district court expressed its
concern over the defense counsel’s litigation tactics, accusing
him of going outside the trial court procedure:
Defense counsel [to the witness]: Sure.
Could you look for that letter for me,
please.
District court: Right now don’t you think a
discovery deposition is not in order?
Defense counsel: I’m not conducting a
deposition, Your Honor.
District court: Yes, you are.
. . . .
District court: You’ve asked him to go look
for something, and that is discovery. Now,
I don’t mind you discovering, but do it in a
deposition before the trial.
. . . .
Okay. That’s the end of that. All right.
If he’s got it I’ll let you refer to it, but
16
we’re not going to have any more discovery
in this case.
J.A. 1946-47.
In sum, the district court’s repeated comments were
imprudent and poorly conveyed. Considering the breadth of the
district court’s actions, from questioning witnesses and counsel
to interrupting unnecessarily, we find that the district court
strayed too far from convention. Ultimately, we find the
district court’s actions were in error.
Appellant must now overcome the second prong of the
plain error standard of review. For us to overturn Appellant’s
convictions, the error must be so prejudicial that it affected
Appellant’s substantial rights, i.e., it had to change the
outcome of the trial. See Olano, 507 U.S. at 734; Smith, 452
F.3d at 331. For several reasons, we cannot conclude the error
has prejudiced Appellant.
4.
First, “[q]uestions of trial management are
quintessentially the province of the district courts.” Smith,
452 F.3d at 332; see also id. at 333 (“[E]ven a stern and
short-tempered judge’s ordinary efforts at courtroom
administration . . . do not establish bias or partiality.”
(internal quotation marks omitted) (alteration in original)).
The district court, pursuant to the Federal Rules of Evidence,
17
has the obligation to control the courtroom to make the case
clear for the jury. See generally Fed. R. Evid. 611(a); Fed. R.
Evid. 614.
Here, the district court was engaged and active in
controlling a multi-week trial that involved highly complex
factual issues, private equity valuations, hedge fund audits,
business management structuring, numerous witnesses, and several
hundred exhibits. Cf. United States v. Parodi, 703 F.2d 768,
776 (4th Cir. 1983) (analyzing the entire record rather than a
few isolated comments). Moreover, the district court
interrupted and interrogated both defense and Government
witnesses.
Additionally, we have held, “[i]t is particularly
vital that the trial judge also instruct the jurors that his
comments are not binding upon them, but are only personal views
expressed for the purpose of assisting them, and that they are
the sole judges of the evidence.” United States v. Tello, 707
F.2d 85, 88 (4th Cir. 1983). Here, the district court gave such
an instruction, reminding the jury at both the beginning and end
of the jury charge that the district court’s opinion or comments
were not important:
Do not assume that I hold any opinion of the
matters to which my questions may have
related. Whatever you may think my opinion
is or may be is not to be considered by you.
What I think is not important. What you
18
think is important. It’s not my
province -- and I emphasize this -- to
judge the guilt or innocence of the
defendant in this case. It’s yours.
Remember at all times you’re at liberty to
disregard any comment I have made during the
trial, any comment on the evidence, but you
can’t disregard the instructions.
. . . .
Lastly, I want to emphasize this: Don’t
interpret anything I have said or done
during the trial as suggesting to you what I
think your verdict should be. That is not
my responsibility. Certainly, I have an
opinion. I heard the same evidence you did.
What my opinion is doesn’t count, should not
be considered under any circumstances. The
verdict in this case is your duty and your
responsibility, not someone else’s. I want
to emphasize that.
Supp. J.A. 7-8, 53. 7
We recognize that one curative instruction at the end
of an extensive trial may not undo the district court’s actions
throughout the entire trial, but we are also cognizant that
Appellant failed to alert the district court of what Appellant
now perceives as improper.
Beyond that, the evidence supporting the convictions
in this case is overwhelming. Testimony from 28 witnesses and
approximately 250 exhibits revealed that Appellant engaged in a
manipulation of EPV’s valuation and deceived investors in
7 Citations to the “Supp. J.A.” refer to the Supplemental
Joint Appendix filed by the parties in this appeal.
19
continuation of his fraudulent scheme. On several occasions
prior to actually receiving a share price valuation from Lynch,
Appellant reported increases of EPV’s valuation to his brokers
and clients. The evidence showed clearly that Appellant knew
the valuations were excessive, and that Appellant was the
driving force behind them. Ultimately, the Government presented
ample testimony and evidence that Appellant engaged in a scheme
to do what was necessary to enrich himself and that he concealed
this fraud from his associates and investors, among others.
In contrast, Appellant has not demonstrated, and we
cannot conclude, that the district court’s comments throughout
several weeks of trial impacted the trial’s outcome. This is
evident, in part, by the jury’s divided verdict. The jury
independently and thoroughly deliberated for nearly three days
and found Appellant guilty on seventeen charges, not guilty on
three charges, and could not reach a verdict on five charges.
Such a split verdict illustrates that the district court’s
comments were not so prejudicial as to warrant overturning
Appellant’s remaining convictions. See United States v.
Cornell, 780 F.3d 616, 627 (4th Cir. 2015) (concluding that a
long deliberation provides “adequate assurance” that the jury
was not coerced, and a split verdict “reflect[s] a thoughtful
and deliberate jury” (citations omitted) (internal quotation
marks omitted)).
20
Therefore, although the district court’s interferences
in this case went beyond the pale, in light of the plain error
standard of review and the overwhelming evidence against
Appellant, the district court’s conduct did not create such an
impartial and unfair environment as to affect Appellant’s
substantial rights and undermine confidence in the convictions.
Accordingly, we must uphold the jury’s verdict.
B.
Sentencing
1.
We review a criminal sentence for an abuse of
discretion. See Gall v. United States, 552 U.S. 38, 41 (2007)
(“[C]ourts of appeals must review all sentences -- whether
inside, just outside, or significantly outside the Guidelines
range -- under a deferential abuse-of-discretion standard.”);
United States v. Dodd, 770 F.3d 306, 309 (4th Cir. 2014); United
States v. McManus, 734 F.3d 315, 317 (4th Cir. 2013).
In reviewing Appellant’s sentence, we must
first ensure that the district court
committed no significant procedural error,
such as . . . treating the Guidelines range
as mandatory . . . . Assuming that the
district court’s sentencing decision is
procedurally sound, the appellate court
should then consider the substantive
reasonableness of the sentence imposed under
an abuse-of-discretion standard.
Gall, 552 U.S. at 51 (emphasis supplied).
21
Upon a finding of a procedural error, the error shall
be subject to harmlessness review. See United States v. Dowell,
771 F.3d 162, 175 (4th Cir. 2014); United States v.
Montes-Flores, 736 F.3d 357, 370 (4th Cir. 2013); United States
v. Hargrove, 701 F.3d 156, 161 (4th Cir. 2012) (explaining
“procedural errors at sentencing . . . are routinely subject to
harmlessness review”) (alteration in original) (quoting Puckett
v. United States, 556 U.S. 129, 141 (2009)). The government has
the burden to show that the error was harmless such that it “did
not affect a defendant’s substantial rights.” Hargrove, 701
F.3d at 161 (internal quotation marks omitted). We have
concluded, “if the resulting sentence [is] not longer than that
to which [the defendant] would otherwise be subject,” then the
error is harmless. Dowell, 771 F.3d at 175 (alterations in
original).
When a district court has treated the Guidelines range
as mandatory, the sentence is procedurally unreasonable and
subject to vacatur. See McManus, 734 F.3d at 318; United States
v. Clay, 627 F.3d 959, 970 (4th Cir. 2010) (pursuant to Gall,
holding that the improper calculation of the advisory guideline
range constitutes significant procedural error); see also United
States v. Mendoza-Mendoza, 597 F.3d 212, 220 (4th Cir. 2010)
(remanding when “left only to speculate as to whether the
22
sentence . . . was imposed as a matter of obligation or as an
exercise of judgment”).
If we determine a procedural error exists, a review
for the second prong -- substantive reasonableness -- is
unnecessary. See United States v. Lewis, 606 F.3d 193, 201 (4th
Cir. 2010) (“[I]f a sentencing court commits a significant
procedural sentencing error[,] . . . our practice is to vacate
and remand for resentencing before reviewing the sentence for
substantive reasonableness.”).
2.
Appellant claims that the district court erred in
treating the Guidelines as mandatory, and that error denied him
a variant sentence below the applicable Guidelines range. We
agree. The district court repeatedly considered the Guidelines
as mandatory.
From the outset of the sentencing hearing, the
district court lectured on its inability to have discretion:
It appears to me that the guidelines have
now become more than guides. You know, the
Supreme Court indicates that they are
advisory; however, I find that they’re more
than advisory. They’re reversible error if
you don’t follow them or give a good reason
why you’re not following them, so they’re no
longer advisory.
J.A. 3645 (emphasis supplied).
23
Thereafter, the district court continued to reference
what it viewed as the mandatory nature of the Guidelines:
• “This hearing here is a great example of
the problems that -- or the difference
between the non-guidelines and the
guidelines. The non-guidelines were
discretionary sentencing depending upon
the person and the commission of the
offense. Now it doesn’t make any
difference who the person is. It
doesn’t make any difference. It’s all
where do you fit.” J.A. 3645 (emphasis
supplied);
• “I will follow the guidelines only
because I have to. I find that they’re
not discretionary, they’re mandatory,
although people think they’re
discretionary and although the courts
have said they’re only advisory. But if
you don’t follow them you have to give
so many reasons why you don’t follow
them. It’s tough. It really is tough.”
J.A. 3646 (emphasis supplied);
• “I’m saying that what [the probation
officer/Government are] putting forth
today is merely an outline of what the
guidelines mandate, if the guidelines
are to be considered. And I’m going to
consider them. I don’t agree with them.
I think they’re absolutely ridiculous,
but I’m going to consider them.”
J.A. 3656 (emphasis supplied); and
• “What I’m alluding back to is what
occurred prior to 1986 when the
guidelines started to work. If this
case had come up then, what would the
sentence have been and why? And what is
happening now? The sentences now are
draconian. What are we accomplishing by
these extremely excessive sentences that
seem to be dictated?” J.A. 3699
(emphasis supplied).
24
Although the district court at times alluded to the
fact that it had discretion, at the same time it bemoaned that
such discretion was highly disfavored. See J.A. 3654 (“I have
some discretion but hardly.”); id. at 3655-56 (“I will try to
use some discretion, apply the factors in Title 18, Section
3553(a), and give some consideration to the
guidelines. . . . I’m going to consider them.”). But see id.
at 3733 (recognizing that the court “has to take into
consideration . . . the nature and circumstances of the . . .
defendant,” but at the same time the court failed to “see any
attributes that are given point-wise in the sentencing
guidelines for doing good”).
In the end, we cannot gloss over the district court’s
repeated misstatements as to how it perceived the Guidelines --
that is, as mandatory. And “treating the Guidelines range as
mandatory” is a “significant procedural error.” Gall, 552 U.S.
at 51. Even though the district court analyzed other factors
during the sentencing hearing, the record indicates that such
analysis did not save the error. Thus, we conclude that the
district court’s treatment of the Guidelines as mandatory is a
“significant procedural error.” Id.25
3.
Having concluded that the district court committed
procedural error in treating the Guidelines as mandatory, we
turn now to considering whether the error was harmless. See,
e.g., Dowell, 771 F.3d at 175.
A review of the record reveals that, had the district
court considered the Guidelines as discretionary, Appellant’s
sentence may have been lower. The district court expressed
concern that the Guidelines did not provide an assignment of
points for Appellant “doing good.” J.A. 3733. Likewise, the
Government recognized that the district court “agreed with
defense counsel that the [G]uidelines had not taken into
consideration [Appellant’s] good character and positive
attributes.” Appellee’s Br. 45. Yet, the district court then
sentenced Appellant to 140 months of imprisonment. This was
near, but not at, the bottom of the Guidelines range of 135-168
months of imprisonment.
Thus, in consideration of the district court’s flawed
understanding of the Guidelines, we cannot say with certainty
that Appellant’s sentence was “not longer than that to which
[Appellant] would otherwise be subject.” Dowell, 771 F.3d at
175 (internal quotation marks omitted). Accordingly, we
conclude that the district court’s treatment of the Guidelines
26
as mandatory affected Appellant’s substantial rights. See
Hargrove, 701 F.3d at 161. The error was not harmless.
Therefore, we are obliged to vacate Appellant’s
sentence and remand for resentencing. See McManus, 734 F.3d at
318; see Mendoza-Mendoza, 597 F.3d at 219 (deciding that when
“there is a serious possibility the district court felt it was
under an obligation to impose a Guidelines sentence, . . . the
prudent course is to remand th[e] case to ensure that [the
defendant’s] sentence, whatever it may ultimately be, is
procedurally sound.”). Finally, in light of finding that the
sentence was procedurally unreasonable, we do not review the
sentence for substantive reasonableness. See Lewis, 606 F.3d at
201; United States v. Abu Ali, 528 F.3d 210, 260-61 (4th Cir.
2008).
C.
Appellant also asserts that the district court erred
in calculating the restitution, forfeiture, and loss amount and
by imposing a two-level enhancement for obstruction of justice
based on Appellant’s perjurious testimony. Because we vacate
Appellant’s sentencing on other grounds, we need not reach these
issues, but leave those for the re-sentencing court to decide in
the first instance. Additionally, we have considered each of
Appellant’s other claims on appeal, and conclude that they lack
merit.
27
D.
Finally, we consider whether, in light of the district
court’s demeanor at trial and its statements during sentencing
regarding the nature of the Guidelines, it is necessary for a
different judge to be assigned to handle this matter upon
resentencing. In doing so, we look to the following three
factors:
(1) [W]hether the original judge would
reasonably be expected upon remand to have
substantial difficulty in putting out of his
or her mind previously expressed views or
findings determined to be erroneous or based
on evidence that must be rejected;
(2) whether reassignment is advisable to
preserve the appearance of justice; and
(3) whether reassignment would entail waste
and duplication out of proportion to any
gain in preserving the appearance of
fairness.
United States v. Nicholson, 611 F.3d 191, 217 (4th Cir. 2010)
(internal quotation marks omitted).
With these considerations in mind, we are compelled to
remand for resentencing by a different judge. See United States
v. Guglielmi, 929 F.2d 1001, 1008 (4th Cir. 1991), abrogated by
United States v. Pridgen, 64 F.3d 147, 150 n.3 (4th Cir. 1995).
In the rare case where a judge has
repeatedly adhered to an erroneous view
after the error is called to his attention,
reassignment to another judge may be
advisable in order to avoid “an exercise in
futility [in which] the Court is merely
marching up the hill only to march right
down again.”
28
Id. at 1007-08 (alteration in original) (quoting United States
v. Robin, 553 F.2d 8, 11 (2d Cir. 1977)). This is that rare
case. The district court was informed by both parties that the
Guidelines are not mandatory, and it claimed to be aware that
the Supreme Court has so held. The Supreme Court’s holdings,
moreover, are not ambiguous: “The Guidelines are not only not
mandatory on sentencing courts; they are also not to be presumed
reasonable.” Nelson v. United States, 555 U.S. 350, 352 (2009)
(per curiam). We have been clear on this matter as well: “[A]
court commits statutory error if it treats the Guidelines as
mandatory, rather than as advisory.” United States v.
Rodriguez, 433 F.3d 411, 414 (4th Cir. 2006). When a district
court can still conclude that the Guidelines are “no longer
advisory,” J.A. 3645, in the face of such straightforward
dictates and the parties’ unanimous objection to its
misstatement of law, remanding the case to that court with our
own reminder of the correct law would most likely be “an
exercise in futility,” Guglielmi, 929 F.2d at 1007.
We recognize that the district court judge is keenly
aware of Appellant’s case, having managed the four-week trial
and subsequent sentencing. Accordingly, assigning a new judge
will “wipe[] the slate clean,” but in light of what transpired
in the original trial, “[w]e do not believe that any waste or
29
duplication would be out of proportion to the appearance of
fairness a reassignment will preserve.” United States v. Lentz,
383 F.3d 191, 222 (4th Cir. 2004); see also Nicholson, 611 F.3d
at 218.
III.
For the foregoing reasons, we affirm the convictions
on all counts, vacate the sentence as procedurally unreasonable,
and remand with instructions for further proceedings consistent
with this opinion.
AFFIRMED IN PART,
VACATED IN PART,
AND REMANDED
30
WYNN, Circuit Judge, concurring:
I concur in the majority opinion, including its holding
that “although the district court’s interferences in this case
went beyond the pale, in light of the plain error standard of
review and the overwhelming evidence against Appellant, the
district court’s conduct did not . . . affect Appellant’s
substantial rights.” Ante at 21. I write separately to make
clear that in our role as judges, we must avoid even the
appearance of improper interference and excessive interruptions
of court proceedings.
Here, there was much more than an appearance of improper
interference. At its core, such conduct tends to undermine the
public’s confidence in the integrity of the judiciary. But more
importantly, such conduct challenges the fairness of the
proceeding.
In United States v. Cherry, for example, we noted that the
judge’s remarks about the defendant’s criminal history prior to
a poll of the jury may have influenced the jurors, and we found
those comments improper and in error. 720 F.3d 161, 167 (4th
Cir. 2013). But in light of the “overwhelming” evidence and the
plain error standard, we concluded that the comments, though
prejudicial, ultimately did not affect the outcome. Id. at 168-
69. Just a day later, in United States v. Ecklin, we again
recognized that the judge had engaged in “problematic
questioning” that “undermine[d] the substance and credibility of
[the defendants’] testimonies.” 528 F. App’x 357, 363-64 (4th
Cir. 2013). We stated that “the court’s skepticism or
disbelief” of the defendants were “sentiments that should not
have been expressed to the jury.” Id. at 364. Again, however,
we were constrained by plain error review. Id. at 365.
It is well accepted that we, as judges, “must maintain such
a demeanor that ‘every one shall recognize that what is said
from the bench is the cool and well-balanced utterance of an
impartial judge, and has in it naught of the heat and
partisanship of the advocate.’” United States v. Godwin, 272
F.3d 659, 677 (4th Cir. 2001) (quoting Wallace v. United States,
281 F.2d 656, 665 (4th Cir. 1960)). In this matter, as in
Ecklin, the judge’s “problematic questioning” and impermissible
interferences constituted “sentiments that should not have been
expressed to the jury.” 528 F. App’x at 364. And while the
judge’s problematic “interference” may not have changed the
outcome here, it was, no doubt, plainly imprudent. At some
point, repeated injudicious conduct must be recognized by this
Court as a compelling basis for finding plain error.
32