United States v. Cade ( 2002 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
m 01-20435
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
VERSUS
SADAR D. CADE,
Defendant-Appellant.
Appeal from the United States District Court
for the Southern District of Texas
January 9, 2002
Before BALDOCK, * SMITH, and EMILIO M. GARZA, Circuit Judges.
BOBBY R. BALDOCK, Circuit Judge:
Defendant Sadar D. Cade was the ringleader of an extensive fraudulent
check cashing scheme that spanned several years. Cade and his co-conspirators
printed counterfeit checks and recruited people to deposit the checks in bank
accounts or to pass the checks at retail stores. Cade plead guilty to a single-
*
The Honorable Bobby R. Baldock, United States Circuit Judge for the
Tenth Circuit, sitting by designation.
count indictment charging him with possession of a counterfeit security with
intent to deceive in violation of 18 U.S.C. § 513(a). At sentencing, the district
court made a criminal history category departure under U.S.S.G. § 4A1.3 based
on the court’s determination that Cade’s criminal history category
underrepresented his past criminal conduct. The district court departed upward
from a guideline range of twenty-seven to thirty-three months, and sentenced
Cade to forty-one months’ imprisonment. Cade appeals the upward departure,
claiming the district court erred by considering prior sentences used as relevant
conduct in calculating his base offense level, see U.S.S.G. § 1B1.3, to make a
criminal history category departure under § 4A1.3. We have jurisdiction pursuant
to 28 U.S.C. § 1291 and 18 U.S.C. § 3742. We vacate and remand for re-
sentencing.
I.
Cade’s extensive contact with law enforcement began during a traffic stop
in March 1997. Houston police officers arrested Cade after they discovered a
counterfeit driver’s license in his possession. In connection with this arrest,
Cade plead guilty to forgery in Texas state court in July 1997. The court
sentenced Cade to four days in jail.
In December 1997, a Sugarland, Texas police officer observed Cade sitting
in a car parked in the handicapped zone at a mall. The officer approached Cade.
Cade produced a false driver’s license. The officer subsequently discovered Cade
2
was in possession of numerous blank checks, driver’s licenses, and a list of bank
account holders. Cade told the officer he had been paid $50 to take a girl named
“Kelly” to the mall where she would pass counterfeit checks to retail stores.
“Kelly” was then supposed to return the merchandise purchased with the
counterfeit checks to another store for cash. The State of Texas charged Cade
with possession of a counterfeit instrument, and he posted bond. The state court
convicted Cade of this offense in March 1999. The court sentenced Cade to one
year probation.
In June 1999, while Cade was on probation for the March 1999 conviction,
United States Secret Service agents received information from a confidential
informant that Cade was continuing to pass counterfeit checks. The Secret
Service placed Cade under surveillance, and then detained him for questioning.
Cade consented to a search of his person, which yielded four counterfeit Texas
driver’s licenses, all of which bore Cade’s photograph, and numerous counterfeit
checks from various banks. State authorities again arrested Cade, this time
charging him with tampering with a government record and forgery. Cade again
posted bond. In February 2000, the Texas state court convicted Cade of the June
1999 offenses. The court sentenced Cade to four years incarceration for
tampering with a government record, and two years incarceration for forgery, the
sentences to run concurrently.
Prior to that conviction and sentence, a security video tape showed Cade
3
cashing two counterfeit checks at Casino Money Centers in Louisiana in
November 1999. Cade was on bond for the June 1999 charges when he passed
these two counterfeit checks. Authorities arrested Cade yet again in December
1999. Cade had in his possession counterfeit driver’s licenses and six blank
counterfeit checks.
While Cade was serving his state sentence, a federal grand jury charged
Cade with possession of a counterfeit security in violation of 18 U.S.C. § 513(a).
The indictment arose out of a May 1998 incident, in which Cade supplied a
counterfeit check in the amount of $10,000 to his girlfriend, who in turn
deposited the check at a bank, and later withdrew the funds. Cade committed this
offense while on bond and awaiting trial for the December 1997 possession of a
counterfeit instrument charge. As a result of the federal indictment, the State of
Texas dismissed four other state charges arising out of Cade’s December 1999
arrest. 1
1
The following time line summarizes Cade’s activities:
1. March 1997: Houston police arrest Cade for possession of a counterfeit
driver’s license.
2. July 1997: Cade pleads guilty to forgery for #1. Sentenced to four days in
jail.
3. December 1997: Sugarland police officers arrest Cade at a shopping mall for
possession of a counterfeit instrument. Cade posts bond.
4. May 1998: While on bond and awaiting trial for #3, Cade supplies a $10,000
counterfeit check to his girlfriend, who deposited the check and then
withdrew
(continued...)
4
II.
Cade pled guilty to the federal indictment, and the United States Probation
Office prepared a pre-sentence report (PSR) based on the 1998 Sentencing
Guidelines. The PSR set Cade’s base offense level at six pursuant to U.S.S.G.
§ 2F1.1. The PSR considered the March 1999 and February 2000 state sentences
as relevant conduct to the instant federal offense under U.S.S.G. § 1B1.3. The
PSR thus used the state convictions’ underlying facts to adjust the offense level
for Cade’s instant offense. Based on these facts, the PSR increased Cade’s
offense level by the following: (1) nine levels under U.S.S.G. § 2F1.1(b)(1)(J)
because the total loss from Cade’s counterfeit check scheme exceeded $400,000;
(2) two levels under § 2F1.1(b)(2) because the offense involved more than
1
(...continued)
the funds. This is the basis of the federal indictment for the instant offense
(see #10).
4. March 1999: State court convicts Cade of #3, and sentences him to one year
probation.
5. June 1999: While still on probation from #3, state authorities arrest Cade after
secret service agents search Cade and find counterfeit driver’s licenses and
checks. Cade posts bond.
6. November 1999: While still on bond for #5, a security tape at a Louisiana
business shows Cade cashing two counterfeit checks.
7. December 1999: State authorities arrest Cade. Cade has in his possession
numerous counterfeit driver’s licenses and blank counterfeit checks.
8. February 2000: State court convicts Cade of #5. Sentenced to four years
incarceration for tampering with a government record, and two years
incarceration for forgery, to run concurrently.
9. July 2000: While serving his sentence on #8, a federal grand jury charges
Cade with possession of a counterfeit security, the instant offense.
10. September 2000: Cade pleads guilty to #9.
5
minimal planning and more than one victim; and (3) four levels under § 3B1.1(a)
because Cade was an organizer or leader of a criminal activity involving five or
more participants. The PSR reduced the base offense level by two for acceptance
of responsibility under § 3E1.1(a), resulting in a total offense level of nineteen.
The PSR calculated only one criminal history point for Cade’s July 1997
sentence of four days imprisonment for forgery. The PSR did not include in
Cade’s criminal history any of his other state sentences because pursuant to
U.S.S.G. § 4A1.2, sentences used as relevant conduct to adjust the offense level
for the offense of conviction cannot also be used to determine the criminal
history category. Cade’s uncounted sentences included his March 1999 sentence
for possession of a counterfeit instrument, and his February 2000 sentences for
tampering with a government record and forgery. Because the PSR did not
include these sentences in Cade’s criminal history calculation, the PSR placed
Cade in criminal history category I.
An offense level of nineteen and a criminal history category of I
established a sentencing range of thirty to thirty-seven months. The PSR
suggested that an upward departure under U.S.S.G. § 4A1.3 may be warranted
because a criminal history category of I did not adequately reflect the seriousness
of Cade’s past criminal conduct or the likelihood that he would commit future
crimes. Specifically, the PSR noted that Cade had continued to print and pass
counterfeit checks while he was (1) on bond after his arrest in December 1997 for
6
possession of a counterfeit instrument; (2) serving his March 1999 sentence of
probation for possession of a counterfeit instrument; and (3) on bond after his
arrest in June 1999 for tampering with a government record and forgery.
The Government filed a motion for an upward departure under § 4A1.3,
arguing that–
Cade’s prior sentences that are not used in calculating the criminal
history category . . ., his continued criminal activity while on both
pre-trial release and probation, the dismissal of other charges as a
result of his Federal conviction and the commission of the instant
offense while on bond for another offense are all considerations that
warrant an upward departure.
Cade filed objections to the PSR, claiming he deserved a three-level adjustment
for acceptance of responsibility. Cade also argued that his other state sentences
should not be used as the basis of an upward departure because the court
considered them in setting his offense level, and thus the sentencing range as
calculated adequately addressed the seriousness of his offense. An addendum to
the PSR responded that including this conduct in the offense level alone did not
consider the fact that Cade committed several criminal acts while he was on bond
and probation.
At sentencing, the district court granted Cade’s motion for a three-level
adjustment for acceptance of responsibility, resulting in an offense level of
eighteen, a criminal history category of I, and a guideline range of twenty-seven
to thirty-three months. The court then granted the Government’s motion for an
7
upward departure, and departed upward under U.S.S.G. § 4A1.3, finding that “the
defendant’s criminal history category significantly under-represents the
defendant’s criminal history and the likelihood that he will commit future
crimes.” The district court measured the extent of its departure by the criminal
history category that would have applied had Cade’s prior criminal convictions
been counted:
[T]he Court concludes that the defendant’s two prior
criminal convictions, if they had [not] been considered as
relevant conduct, would have resulted in three additional
criminal history points, and that an additional two criminal
history points would have been assessed for being under
supervision while continuing to commit the current
offense. This would give the defendant six total criminal
history points which would put him in criminal history
category three. If he’s in criminal history category three,
his range would be 33 to 41 months in prison. So I’m
going to consider him as if it were a total offense level of
18, a criminal history category of 3, and a range of 33 to
41 months.
The court sentenced Cade at the top of the range to forty-one months’
imprisonment, three years supervised release, and assessed $5,662.06 in
restitution. Cade appeals, arguing that because the district court considered the
state sentences as relevant conduct to adjust his offense level, the court abused its
discretion by also relying on the sentences to make an upward criminal history
category departure.
III.
We will uphold a defendant's sentence under the sentencing guidelines
8
unless he demonstrates the sentencing court imposed the sentence in violation of
the law, as a result of an incorrect application of the guidelines, or if the sentence
is outside the applicable guideline range and is unreasonable. See 18 U.S.C.
§ 3742(f); United States v. Morrow, 177 F.3d 272, 300 (5th Cir. 1999). We
review the district court’s decision to depart from the guideline range for an
abuse of discretion. See Koon v. United States, 518 U.S. 81, 99-100 (1996). A
district court abuses its discretion, and incorrectly applies the guidelines, where it
relies on an invalid departure ground. See id. at 100; Williams v. United States,
503 U.S. 193, 200 (1992). “Whether a factor is a permissible basis for departure
is a question of law we review de novo.” United States v. Reyes, 239 F.3d 722,
744 (5th Cir. 2001), cert. denied sub nom. Maldonado v. United States, 121 S. Ct.
2618 (2001).
The key issue in this case is whether the district court relied upon
permissible factors in departing upward under the sentencing guidelines. See
Threadgill, 172 F.3d 357, 374 (5th Cir. 1999). Sentencing guidelines § 4A1.3,
entitled “Adequacy of Criminal History Category,” permits a district court to
depart from the guidelines 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
9
crimes.” 2 The “reliable information” may include, but is not limited to, “prior
sentence(s) not used in computing the criminal history.” U.S.S.G. § 4A1.3(a).
Section 4A1.2 defines a “prior sentence” as “any sentence previously imposed . .
. for conduct not part of the instant offense.” U.S.S.G. § 4A1.2(a)(1). The
commentary to § 4A1.2 elaborates that conduct is part of the instant offense if it
is “relevant conduct to the instant offense under the provisions of § 1B1.3
(Relevant Conduct).” U.S.S.G. § 4A1.2 cmt. n.1. 3 Pursuant to § 1B1.3, relevant
2
Section 4A1.3 is a policy statement. Policy statements may bind the
federal courts with equal force as the guidelines. See Williams v. United States,
503 U.S. 193, 201 (1992) (“[U]se of a departure ground prohibited by a policy
statement can be an ‘incorrect application’ of the Guidelines under
§ 3742(f)(1) . . . .”). We have held, however, that some policy statements are
advisory only. See United States v. Montez, 952 F.2d 854, 859 (5th Cir. 1992)
(suggesting that Chapter 7 of the sentencing guidelines regarding revocation of
supervised release is advisory only); United States v. Headrick, 963 F.2d 777,
782 (5th Cir. 1992) (holding that a district court must consider the policy
statements of Chapter 7, but these policy statements are advisory only). The
Supreme Court’s treatment of § 4A1.3 in Williams forecloses any suggestion that
§ 4A1.3 is the type of Headrick policy statement which is advisory only. In
Williams, the Supreme Court held that failure to follow § 4A1.3 resulted in a
sentence that was “imposed as a result of an incorrect application of the
sentencing guidelines.” Williams, 503 U.S. at 200-01. Consequently, § 4A1.3 is
the type of policy statement which has the force of a guideline. See Headrick,
963 F.2d at 781 (“Thus, although policy statements generally do not have the
force of guidelines, particular policy statements may carry such force when they
inform the application of a particular guideline or statute.”).
3
“The commentary to the sentencing guidelines ‘must be given controlling
weight unless it is plainly erroneous or inconsistent’ with the guidelines.” United
States v. Smith, 184 F.3d 415, 417-18 (5th Cir. 1999) (quoting Stinson v. United
States, 508 U.S. 36, 42-43 (1993)); but see United States v. Mathena, 23 F.3d 87,
93 (5th Cir. 1994) (concluding that Stinson does not apply to Chapter 7 of the
(continued...)
10
conduct includes all acts and omissions the defendant committed during the
course of committing the offense of conviction.
Pursuant to § 1B1.3, the district court considered Cade’s state sentences as
relevant conduct to the instant offense to calculate Cade’s offense level,
increasing Cade’s offense level to reflect the amount of loss, number of victims,
and Cade’s role as the ringleader of an extensive criminal operation. Pursuant to
§ 4A1.2, the district court could not then also include the state sentences in
Cade’s criminal history score because, as relevant conduct, they were not “prior
sentences” as defined by § 4A1.2. The district court, however, used the relevant
conduct state sentences as the basis for a criminal history category departure
under § 4A1.3. Cade argues the district court erred in departing on this basis.
Cade asserts that because the state convictions are relevant conduct to the instant
offense, they are not “prior sentences” upon which the district court could base a
criminal history category departure.
The Eleventh Circuit recently dealt with this precise issue in United States
v. Hunerlach, 258 F.3d 1282 (11th Cir. 2001). In ruling for the defendant, the
Eleventh Circuit held that the definition of the term “prior sentence” in § 4A1.2
controls the meaning of the term in § 4A1.3: “prior sentence” does not include
3
(...continued)
guidelines because commentary and policy statements in Chapter 7 do not
interpret or explain a guideline).
11
relevant conduct. Thus, when a district court determines that a sentence is
relevant conduct to the instant offense, and considers it as a factor in adjusting
the offense level, such sentence cannot then be considered as a basis for a
criminal history category departure under § 4A1.3(a). See Hunerlach, 258 F.3d
at 1286-87. Other Circuits have suggested in dicta or in unpublished opinions
that they would employ a similar analysis. See United States v. Baird, 109 F.3d
856, 863 n.4 (3d Cir. 1997) (suggesting in dicta that a criminal history departure
under § 4A1.3 would be inappropriate where the dismissed counts were part of
the same criminal activity as the offense conduct); United States v. Washburn, 57
F.3d 1072, 1995 WL 351331, at *2 (6th Cir. 1995) (unpublished) (noting that if a
criminal act was part of the same course of conduct as the offense of conviction,
then, as a matter of law, it is an impermissible ground upon which to base a
criminal history departure under § 4A1.3); United States v. Jones, 948 F.2d 732,
737 n.11 (D.C. Cir. 1991) (stating that if the defendant’s embezzlement was
relevant conduct under § 1B1.3, then, “as a matter of law, it was an
impermissible ground upon which to base a criminal history departure”); United
States v. Kim, 896 F.2d 678, 683 (2d Cir. 1990) (“By focusing on ‘prior’
misconduct, 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.”).
12
We find the Eleventh Circuit’s reasoning persuasive. Simply put, relevant
conduct is part of the instant offense, see U.S.S.G. § 1B1.1, 4 and therefore is not
a “prior sentence” under § 4A1.3(a). In Threadgill, 172 F.3d at 374-75, we
explained that in making the determination of whether a departure factor is
permissible, we must categorize the factor as forbidden, encouraged, discouraged,
or unmentioned by the Sentencing Guidelines. If the factor is expressly
forbidden, the district court is “completely precluded from using it as a basis for
departure.” Id. at 374. Relying on relevant conduct sentences to upwardly depart
under § 4A1.3(a) is a forbidden factor. Although § 4A1.3 states that the district
court is not limited to the listed factors, § 4A1.3(a) would be meaningless if we
did not read the section as forbidding the district court from considering relevant
conduct sentences. Section 4A1.3(a) states that the district court may consider
“prior sentences not used in computing the criminal history.” Prior sentences and
relevant conduct are defined as mutually exclusive under § 4A1.2. If the district
court may consider “prior sentences,” then by negative implication, the district
court may not consider relevant conduct. If the Sentencing Commission intended
to allow the district court to consider both prior sentences and relevant conduct,
§ 4A1.3 would simply state that the district court may consider all of the
4
The commentary to § 1B1.3 defines the term “offense” as “the offense of
conviction and all relevant conduct under § 1B1.3 . . . unless a different meaning
is specified or is otherwise clear from the context.” U.S.S.G. § 1B1.1 cmt. n.1(l).
Thus, the instant “offense” includes all relevant conduct.
13
defendant’s criminal conduct, without reference to “prior sentences,” a term with
a specified meaning in Chapter 4. Thus, we hold that if the district court uses
sentences as relevant conduct, the district court cannot use those same sentences
as the basis of a criminal history category departure under § 4A1.3(a).
Our holding in United States v. Ashburn, 38 F.3d 803 (5th Cir. 1994) (en
banc) is not to the contrary. In Ashburn, we held that a district court may use
“prior similar adult criminal conduct” that is the subject of counts dismissed
pursuant to a plea agreement to justify an upward departure under § 4A1.3(e).
We stated in dicta that “prior” in this context means “prior to sentencing.” See
id. at 807 n.14. In Ashburn, however, the dismissed counts were not considered
as relevant conduct in setting the offense level. See id. at 806 n.4 (noting that as
non-groupable offenses, “the dismissed counts could not be considered in the
offense level calculation under the relevant conduct provision.”); see also Baird,
109 F.3d at 863 n.4 (agreeing with Ashburn that dismissed counts may be
considered for a departure, but suggesting that relevant conduct may not be the
basis of a § 4A1.3 departure). Because the dismissed counts in Ashburn were not
relevant conduct, the district court properly could consider the counts as past
criminal conduct.
Here, the district court considered Cade’s state sentences as relevant
conduct under § 1B1.3. The court then also used these same sentences to depart
upward under § 4A1.3(a) by treating the sentences as part of Cade’s criminal
14
history. 5 By expressly relying on sentences considered as relevant conduct to
support a criminal history category departure, the district court misapplied the
guidelines. See Hunerlach, 258 F.3d at 1287. Once we have determined the
district court misapplied the guidelines, remand is appropriate unless we
conclude, on the record as a whole, that the error was harmless. See Williams v.
United States, 503 U.S. 193, 202-03 (1992); see also Koon, 518 U.S. at 113-114
(noting that the appellate court should remand where it is unable to determine
whether the district court would have imposed the same sentence if the court had
relied on permissible factors alone). The error is harmless only if the party
defending the sentence persuades us that the district court would have imposed
the same sentence absent the erroneous factor. See Williams, 503 U.S. at 202-03.
The Government has not done so. Because the district court explicitly relied
upon Cade’s relevant conduct sentences to measure the extent of its departure, we
are not convinced the district court would depart to the same sentence based on
5
The district court stated that if it had not considered Cade’s prior
criminal convictions as relevant conduct, the sentences would have resulted in
three additional criminal history points, and the court would have assessed an
additional two criminal history points for Cade being under supervision while
committing the current offense. Thus, the district court would have assigned
Cade six total criminal history points, putting him in criminal history category
three, with a guideline range of thirty-three to forty-one months. Based on these
calculations, the district court stated, “So I’m going to consider him as if it were
a total offense level of 18, a criminal history category of 3, and a range of 33 to
41 months.”
15
permissible factors alone. Accordingly, we vacate and remand for re-sentencing. 6
REMANDED.
6
We express no opinion as to whether on remand the district court could
properly depart upward pursuant to other provisions in § 4A1.3 based upon the
facts of this case.
16