U.S. v. Gaudet ( 1992 )

UNITED STATES COURT OF APPEALS
for the Fifth Circuit
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No. 91-3647
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UNITED STATES OF AMERICA,
Plaintiff-Appellee,
VERSUS
STANLEY J. GAUDET,
Defendant-Appellant.
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Appeal from the United States District Court
for the Eastern District of Louisiana
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(July 10, 1992)
Before HILL,1 KING and DAVIS, Circuit Judges.
DAVIS, Circuit Judge:
Defendant, Stanley J. Gaudet, challenges in a number of
respects the sentence the district court imposed following his
entry of a guilty plea. Under the standard of review that governs
Gaudet's arguments on appeal, we affirm.
I.
Gaudet pled guilty to twenty-two counts of embezzling from
employee pension plans in violation of 18 U.S.C. § 664 and to a
twenty-third count of embezzling union funds in violation of 29
U.S.C. § 501(c). The district court applied pre-Sentencing
Guidelines law to Counts 1-18 and the Guidelines to Counts 19-23.
1
Senior Circuit Judge of the Eleventh Circuit, sitting by
designation.
The court sentenced Gaudet as follows: 1) five years each on
Counts 1-3; 2) 41 months each on Counts 4-18, to run concurrently
with each other and with Counts 1-3; 3) 41 months each on Counts
19-23, to run concurrently with each other but consecutively to
Counts 1-18. In aggregate, Gaudet was sentenced to a total term of
imprisonment of 221 months.
The district court also ordered Gaudet to make restitution of
the total embezzled amount, $2,750,538.87. To satisfy this amount,
the court ordered Gaudet to relinquish the pension funds to which
he is personally entitled.
At the time these acts occurred, Gaudet was the president and
business agent of Local Union 11 of the Sheet Metal Workers
International Association, AFL-CIO, and served as trustee for
several of its employee benefit funds. These funds were employee
benefit plans under 29 U.S.C. § 1002(3) and subject to the
provisions of Title I of the Employee Retirement and Income
Security Act of 1974 (ERISA). The government established that
Gaudet began converting funds in 1983; that he established bank
accounts into which he deposited these funds; that he engaged in at
least twenty-three separate acts of embezzlement between 1983 and
1989; that he concealed his activities and the existence of the
accounts from all other officers, trustees, employees and members
of the union; and that he gambled away most if not all the
converted funds in frequent trips to Las Vegas. In all, Gaudet
embezzled $2,710,538.87 from Local 11's employee benefit plan
(Counts 1-22) and $40,000 from union funds (Count 23).
2
Gaudet challenges his sentence first by arguing that the
district court erred in applying pre-Guidelines sentencing law to
Counts 1-18. He contends that the Guidelines should have governed
all twenty-three counts. He argues in the alternative that the
district court erred in using the total dollar amount embezzled in
all twenty-three counts to arrive at his offense level for those
convictions to which the Guidelines apply. Finally, he contends
that the district court's order divesting him of his pension plan
to satisfy the restitution award is erroneous. We consider each
argument in turn.
II.
A.
The district court applied pre-Guidelines sentencing law to
the first eighteen counts against Gaudet and the Guidelines to
Counts 19-23. Gaudet argues that the district court should have
applied the Guidelines to all counts.2 The Guidelines apply "only
to offenses committed" after November 1, 1987, the Sentencing
Reform Act's effective date. United States v. White, 869 F.2d 822,
826 (5th Cir.), cert. denied, 490 U.S. 1112 (1989). The actual
acts of embezzlement underlying Counts 1-18 took place between 1983
and 1986; the embezzlements underlying Counts 19-23 occurred in
1988. Gaudet contends that the Guidelines should control his
sentence on all twenty-three counts because his offense conduct
constituted a continuing scheme which did not end until 1988.
2
Application of the Guidelines would have saved Gaudet fifteen
years of sentence and at least five years of actual imprisonment.
3
Courts have recognized that the Guidelines control some
offenses that "straddle" the effective date of the Guidelines.
That is, the Guidelines apply to offenses involving a continuing
course of conduct that begins before November 1, 1987, but
continues thereafter. We have found conspiracy offenses to be
"straddle" crimes for the purposes of applying the Guidelines. See
e.g., White, 869 F.2d at 826; United States v. Devine, 934 F.2d
1325, 1332 (5th Cir. 1991), cert. denied, 112 S.Ct. 954 (1992).
Other courts have held that RICO may be a "straddle" offense. See
e.g., United States v. Moscony, 927 F.2d 742, 754 (3d Cir.) (RICO
is continuing offense analogous to conspiracy), cert. denied, 111
S.Ct. 2812 (1991); United States v. Cusack, 901 F.2d 29, 32 (4th
Cir. 1990) (RICO is "straddle" offense to which Guidelines apply).
The question this case presents is whether embezzlement is a
straddle offense so that Gaudet's sentences for offenses committed
before November 1987 are nevertheless governed by the Guidelines.
This circuit has not addressed this question. The First Circuit,
however, has answered this question affirmatively. United States
v. Young, 955 F.2d 99, 109 (1st Cir. 1992). Gaudet urges us to
adopt the reasoning of Young, which suggests that, for the purposes
of applying the Guidelines, the crime of embezzlement continues as
long as any conduct concealing the embezzlement continues. Id.Gaudet failed to object below to the district court's
application of pre-Guidelines sentencing law to Counts 1-18,
although the Presentence Report (PSR) gave him clear notice that
the court might do just that. The PSR grouped Counts 19-23
4
together for the purpose of computing the offense level and applied
the Guidelines to these counts. Furthermore, in calculating the
applicable fine, the PSR also grouped these five counts together.
A separate section of the PSR discussed the first eighteen counts.
This section, entitled "Sentencing Data for Offenses Occurring
Prior to November 1, 1987--Counts 1 through 18 of the Superseding
Bill of Information," obviously applied pre-Guidelines rules. The
PSR, therefore, plainly gave Gaudet notice that the court would
consider applying pre-Guidelines law to the first eighteen counts.
Because of Gaudet's failure to object to the PSR's proposed
application of pre-Guidelines rules to the first eighteen counts,
we review under a plain error standard.
In United States v. Lopez, 923 F.2d 47, 50 (5th Cir.), cert.
denied, 111 S.Ct. 2032 (1991), we recently repeated our definition
of plain error. It is error that, when "examined in the context of
the entire case, is so obvious and substantial that failure to
notice and correct it would affect the fairness, integrity or
public reputation of judicial proceedings." See also United States
v. Vontsteen, 950 F.2d 1086, 1089-91 (5th Cir. 1992) (en banc).
For a number of reasons, we are not persuaded that Gaudet's
multiple embezzlement offenses are obviously "straddle" crimes.
First, this circuit has never had the occasion to address this
issue. Second, even if the First Circuit's reasoning in Young is
accepted as settled law, the failure to characterize Gaudet's
offenses as straddle offenses is not obvious error. Under Young,
whether a number of embezzlements are continuing offenses depends
5
to some extent on the particular facts of the case. If the court
concludes that later embezzlements covered up earlier ones, it is
entitled to find the offenses continuing in nature. When a legal
conclusion depends in part upon discreet factual findings and the
court is never directed to those facts, its legal conclusion is
almost never obviously wrong. Lopez, 923 F.2d at 50. Thus, even
if we were to hold here that a series of embezzlements may under
appropriate circumstances be a continuing offense and qualify as a
straddle offense when committed both before and after November 1,
1987, we cannot say that the district court's failure to treat
Gaudet's embezzlements as such constitutes plain error.3
B.
Gaudet next complains of the court's use of the total dollar
amount of money he embezzled in all twenty-three counts to arrive
at the base offense level with respect to Counts 19-23. The
government argues that the total dollar amount embezzled in all
counts was properly considered by the court as "relevant conduct"
3
Gaudet points out that the district court's treatment of the
twenty-three acts of embezzlement was inconsistent because it
treated each count as a separate and discreet offense for the
purpose of sentencing, but treated them as a single, continuing
offense for other purposes. Gaudet points out for the first time on
appeal that Counts 1-14 were time-barred by the Statute of
Limitations, 18 U.S.C. § 3282, unless some portion of the conduct
underlying these offenses continued after the actual act of
transferring the money to Gaudet's possession or control occurred.
But Gaudet did not argue to the district court that any of his
offenses were time-barred. Thus, he did not give the district
court a chance to confront this alleged inconsistency. We are
restrained by the plain error standard which compels us to conclude
that Gaudet waived this issue by failing to contemporaneously
object to the district court's alleged inconsistent treatment of
his offenses.
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under §1B1.3(a)(1) of the Sentencing Guidelines. Gaudet, on the
other hand, contends that the court's inclusion of the dollar
amount embezzled in Counts 1-18 to arrive at his sentence for
Counts 19-23, which sentence runs consecutively to the sentence for
the first eighteen counts, is an unconstitutional violation of the
Double Jeopardy Clause.
United States v. Parks, 924 F.2d 68 (5th Cir. 1991), controls
this issue. In that case, the defendant was convicted on twenty-
seven counts of felonious misapplication of funds belonging to a
federally insured bank, in violation of 18 U.S.C. § 656. The
actions underlying the first twenty-four counts occurred before
November 1, 1987, and the conduct for the remaining three occurred
after that date. In calculating Parks' offense level under the
Guidelines for Counts 25 through 27, the court used the total
dollar amount involved in all twenty-seven counts. We held that it
was within the district court's discretion to impose consecutive
sentences for the pre-Guidelines and Guidelines offenses "even if
it uses pre-Guideline conduct in arriving at the Guideline offense
level." Id., at 71. We find no grounds on which to distinguish
today's case from Parks.
III.
Finally, Gaudet asserts that the district court erred in
ordering him to relinquish his personal pension to satisfy the
restitution order.4 Once again, however, Gaudet failed to object
4
The district court, at sentencing, stated: "Two, the return
to the Sheet Metal Worker's International Association of any
monthly pension check to which he becomes eligible. The Court will
7
below and we must determine whether to review this alleged error
only for plain error.
A review of the record indicates that the PSR specifically
mentioned Gaudet's pension. In a section entitled "Fines and
Restitution," the PSR detailed the maximum fines and fees to which
Gaudet could be subject. It stated further that the court could
order restitution for the full amount embezzled by Gaudet. This
same section included a subsection entitled "Defendant's Ability to
Pay" which listed Gaudet's assets and liabilities and calculated
his net worth. This subsection referred to the pension in the
following way:
Gaudet applied for his pension through the
Sheet Metal Worker's International and Local
11 union funds. The local union has denied
this request as of May 20, 1991, and Mrs.
Gaudet, who feels she is entitled to half of
this pension, has contacted the New Orleans
Legal Assistance Bureau for advice. A
decision on the pension through the
International Union is pending.
The Addendum to the PSR stated that Gaudet was entitled to $2,426
per month in pension payments.
We conclude that this information in the PSR put Gaudet on
notice that the court could consider his pension as an available
source of income from which to satisfy the fines or restitution.
Accordingly, we conclude that Gaudet had an opportunity to object
to the court's consideration of his pension to satisfy the
restitution award.
consider as compliance with the procedure the defendant
relinquishing to the Union any pension to which the defendant is
legally entitled."
8
Because Gaudet had an opportunity to object below, his failure
to do so restricts us to reviewing his present argument only for
plain error. Based upon Guidry v. Sheet Metal Worker's National
Pension Fund, 110 S.Ct. 680, 685 (1990), and Herberger v.
Schanbaum, 897 F.2d 801 (5th Cir.), cert. denied, 111 S.Ct. 60(1990), Gaudet argues that the anti-alienation provision of ERISA
precluded the district court from ordering him to relinquish his
pension. Gaudet has a substantial legal argument. In Herberger,
we weighed ERISA's remedial provisions against its anti-alienation
provision. We held that ERISA's anti-alienation provision
precluded the district court from ordering the judgment against a
trustee who had breached his fiduciary duties to a pension fund
against the trustee's pension. Id. at 804.
But we need not decide whether Gaudet would prevail if we were
permitted to consider his argument under a plenary review standard.
Gaudet's failure to object precludes his relief. As we explained
in United States v. Lopez, an appellant is entitled to relief under
the plain error standard only when the error "examined in the
context of the entire case, is so obvious and substantial that
failure to notice and correct it would affect the fairness,
integrity or public reputation of judicial proceedings." 923 F.2d
at 50. As we stated in United States v. Wicker, 933 F.2d 284, 291
(5th Cir.), cert. denied, 112 S.Ct. 419 (1991), "[t]he burden of
showing plain error is a heavy one, and this court will notice
plain error only in exceptional circumstances" (citations omitted).
The judge's order permitting the government to satisfy the
9
restitution order from Gaudet's pension and thereby repay the
pension funds he embezzled is certainly not counter intuitive. No
judge or other legal scholar can be expected to have an intimate
knowledge of every obscure rule of law. Thus, even if Gaudet is
correct that ERISA's anti-alienation provisions preclude the use of
his pension to satisfy his restitution obligation, the district
court's error is not an obvious one. See City of Newport v. Fact
Concerts, Inc., 453 U.S. 247, 256 (1981) ("'Plain error' review .
. . is suited to correcting obvious instances of injustice or
misapplied law. A court's interpretation of the contours of
municipal liability under § 1983 . . . could hardly give rise to
plain judicial error since those contours are currently in a state
of evolving definition and uncertainty.")
Thus, reviewing Gaudet's argument under the weak plain error
lens, the district court did not commit reversible error in
requiring Gaudet to relinquish his pension payments to satisfy his
restitution obligation to the pension plans.
IV.
For the reasons stated above, the sentence of the district
court is affirmed.
AFFIRMED.
10