United States v. Mark Titus ( 2013 )

Case: 12-31083 Document: 00512440400 Page: 1 Date Filed: 11/13/2013
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
November 13, 2013
No. 12-31083 Lyle W. Cayce
Clerk
UNITED STATES OF AMERICA,
Plaintiff - Appellee
v.
MARK J. TITUS,
Defendant - Appellant
Appeals from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:11-CR-159-1
Before JOLLY, JONES, and BARKSDALE, Circuit Judges.
PER CURIAM:*
The facts underlying the primary issue in this appeal are a bit confusing.
The determining issue is whether the Government unilaterally withdrew from
a plea agreement with Titus. Titus entered a guilty plea under the plea
agreement, and the plea agreement stated that the Government would not bring
further charges. After the Government withdrew from the plea agreement,
charging Titus with having breached it, Titus moved to withdraw his plea of
guilty. The district court denied his motion. Titus appeals the denial of his
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
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motion, the district court’s holding that his plea was voluntary, and his
restitution order. We affirm.
I.
The defendant and appellant, Mark Titus, was the Chief Operating Officer
of construction contractor Garner Services, Ltd. (“Garner Services”), which he
owned with his partners Ed Garner and QCI Marine Offshore LLC. Titus
proved to be an untrustworthy partner. He and his brother-in-law, Dominic
Fazzio, created a series of fictitious invoices from supposed sub-contractors for
work that was never performed, for which Garner Services paid approximately
$925,000. These payments went to companies Fazzio controlled, which then
passed payments to a company that Titus controlled.
The scheme was discovered and a criminal information, plea agreement,
and guilty plea followed. The criminal information charged Titus with one count
of conspiracy to commit mail fraud.1 Titus agreed to plead guilty and waive his
right to indictment in exchange for the Government’s foregoing additional
charges against him relating to the Garner Services scheme. Under the
agreement, Titus committed to: (1) execute a form used to identify assets for
forfeiture purposes; (2) forfeit any proceeds from the Garner Services fraud; (3)
submit to law enforcement interviews “whenever and wherever requested;” and
(4) be “completely truthful.” The agreement contained a “merger clause” stating
that “statements set forth above represent defendant’s entire agreement with
the Government; there are not any other agreements, letters, or notations that
will affect this agreement.”
According to Titus’s version of the events, sometime before Titus’s plea
agreement was signed, Tim Wilson, a private investigator whom Titus had hired,
spoke with two of the Assistant United States Attorneys (“AUSAs”) for the
1
Conspiracy to commit mail fraud violated 18 U.S.C. §§371, 1341.
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Eastern District of Louisiana on Titus’s behalf. Wilson stated that the AUSAs
promised not to execute on the forfeiture provision of the plea agreement. The
story of the secret deal is contested. The two AUSAs deny having made such a
promise.
Titus then pleaded guilty. In a Rule 11 colloquy, District Judge Ivan
Lemelle asked Titus if anyone had promised him anything outside the written
plea agreement. Titus replied no.2 Judge Lemelle then accepted the plea as
knowing and voluntary. Sentencing was postponed pending further
investigation.
Several months later, and after beginning to initiate forfeiture
proceedings, the Government informed Titus through a letter that he was in
serious breach of his plea agreement. Titus was alleged to have engaged in
several transactions to shield assets from forfeiture, including having his wife
sell his mother-in-law real property worth $144,000 for $10. The Government
also alleged that he had continued to engage in the bribery and kickback
scheme.3 Because of this alleged breach, the Government stated itself not bound
by the plea agreement and informed Titus that he would be indicted for
additional charges.
On September 11, 2012, almost a year after pleading guilty, Titus moved
to withdraw his guilty plea, his plea agreement, and his waiver of indictment.
On October 10, the district court denied Titus's motion and sentenced him to 60
months in prison, three years of supervised release, a $100,000 fine, and
$925,320 restitution to Garner Services.
2
Judge Lemelle: “Did anyone promise you anything other than a written plea
agreement with the government to plead guilty?” Titus: “No, sir.”
3
The Government alleged that Titus had also: (1) refused to execute a form used to
identify assets for forfeiture purposes; (2) concealed financial information to block forfeiture
of certain assets; (3) not been fully forthcoming in meetings with the Government; and (4)
refused to submit to additional interviews.
3
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The day after Titus’s sentencing, the Government indicted Titus on
additional charges in United States v. Fazzio, No. 2:11-CR-157-HGB-ALC-2 (E.D.
La. June 24, 2011), a case before District Judge Helen Berrigan. This
indictment also charged Fazzio. Titus filed a motion to dismiss the indictment,
arguing that filing additional charges violated the Government’s plea agreement.
Judge Berrigan denied the motion, stating that Titus “breach[ed] the plea
agreement in multiple ways.” Later, three weeks before trial was set to begin,
the United States withdrew the case before Judge Berrigan. It is our
understanding that no further charges were brought against Titus.
Titus now appeals Judge Lemelle’s denial of his motion to withdraw his
guilty plea, plea agreement, and waiver of indictment. He also appeals the
restitution amount he is charged to repay. If Titus’s guilty plea is upheld, all
other issues, except the amount of restitution, become moot.
II.
This court reviews the denial of a defendant’s motion to withdraw a guilty
plea for abuse of discretion. United States v. London, 568 F.3d 553, 562 (5th Cir.
2009). It reviews the district court’s factual findings for clear error. United
States v. Oliver, 630 F.3d 397, 405 (5th Cir. 2011).
Titus first contends that the secret deal he struck with the AUSAs not to
bring forfeiture proceedings against him induced him to plead guilty. Therefore,
because the Government disavowed that deal, his guilty plea was not voluntary.
It is, of course, basic that a valid plea of guilty must be knowing and voluntary.
Brady v. United States, 397 U.S. 742, 748 (1970). Restated, “[a] plea of guilty
entered by one fully aware of the direct consequences . . . must stand unless
induced by [among other things] misrepresentation (including unfulfilled or
unfulfillable promises) . . . .” Id. at 755 (internal quotation marks and citation
omitted). When a guilty plea is entered because of an agreement with a
4
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prosecutor, breach of that prosecutor's promise “taints the voluntariness of [the]
guilty plea.” Montoya v. Johnson, 226 F.3d 399, 405 (5th Cir. 2000) (internal
quotation marks and citation omitted).
The district court concluded that the plea was “very expressed, very
knowing, [and] very voluntary.” It did not err in so holding. Neither did it err
in determining that Titus’s secret plea deal was likely fictitious. In direct
opposition to this later story of an anti-forfeiture deal, Titus told Judge Lemelle
when pleading guilty that no one had promised him anything outside the written
plea agreement. Cf. United States v. Lampazianie, 251 F.3d 519, 524 (5th Cir.
2001) (“[s]olemn declarations in open court carry a strong presumption of verity”)
(alteration in original).
Titus next charges the Government with anticipatory breach of the plea
agreement by later informing him that it would indict him on additional charges,
contrary to the agreement.4 Because plea agreements are interpreted in
accordance with contract law, Hentz v. Hargett, 71 F.3d 1169, 1173 (5th Cir.
1996), the question here is whether the Government or Titus was the breaching
party. The Government argues Titus breached the agreement by, among other
things, concealing assets in contravention of the plea agreement. Its letter that
it would further indict him was a response to this alleged breach by Titus. The
district court agreed with the Government and upheld the plea agreement.
We review the district court’s holding on breach de novo and review its fact
findings under the clearly erroneous standard. United States v. Davis, 393 F.3d
540, 546 (5th Cir. 2004).
4
Titus also alleges that the Government breached by moving to revoke Titus’s bond.
The Government informed Titus that it planned to revoke his bond in the letter informing
Titus that he would soon be indicted. Titus treats the motion to revoke bond and the notice
of indictment on additional charges as a single issue. We do so as well. We see no reason how
our analysis would differ if we treated the two separately.
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The Government cannot unilaterally declare that a defendant has
breached a plea agreement and thus relieve itself from its obligations under the
bargain. Instead, the Government must: (1) prove to the court by a
preponderance of evidence that the defendant has materially breached the
agreement or (2) “[i]f the pleadings show no factual dispute . . . the court may
determine breach as a matter of law.” United States v. Castaneda, 162 F.3d 832,
836 (5th Cir. 1998). Although we had declined to say “when, during the progress
of a criminal investigation, a judicial determination of breach is required to
comport with due process,” id. at 836 n.25, we later held that the Government
must prove material breach “prior to prosecuting the defendant.” United States
v. Cantu, 185 F.3d 298, 302 (5th Cir. 1999). Rooted in due process concerns, the
rationale for requiring proof of material breach is to provide the defendant with
the opportunity to debate the issue in court. See United States v. Miller, 406
F.3d 323, 334-35 (5th Cir. 2005).
Before Titus’s prosecution began in the case before Judge Berrigan, the
Government twice proved that Titus materially had breached the plea
agreement. The first occasion was before Judge Lemelle in this case now on
appeal. At Titus’s October 10, 2012, hearing on his motion to withdraw his
guilty plea, which was also his sentencing hearing, Judge Lemelle stated:
It’s apparent here that there were from what I gather in this
present record at least, I’ve yet to see any new evidence to the
contrary other than the affidavits from the Defendant and Mr.
Wilson that I didn’t find credible, evidence that the Defendant tried
to conceal his assets. I think that’s obvious from this particular
record . . . .
At the same hearing, Judge Lemelle also fined Titus $100,000, stating “it’s
also a finding of the Court that based upon the asset information that I have
received in connection with these proceedings that [sic] a fine would also be
appropriate.” The asset information Judge Lemelle referenced included an
affidavit from an FBI agent describing sales of two properties by Titus’s wife to
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her mother for nominal sums. Also included were two contracts for the sale of
these properties to Titus’s mother-in-law. As Judge Lemelle later stated in his
final order of forfeiture, both properties were subject to forfeiture.
The second judge to find Titus had breached the plea agreement was
Judge Berrigan. After Titus was indicted on additional charges, he moved to
dismiss the indictment before Judge Berrigan. Judge Berrigan denied the
motion, stating that Titus “breach[ed] the plea agreement in multiple ways.”
The purpose of requiring proof of material breach was also satisfied here.
The Government had sent Titus a letter on April 9, 2012, informing him that he
would be indicted on additional charges, and that it considered him in breach of
the plea agreement because he had shielded assets from forfeiture. Titus had
adequate time to “debate this issue to the court” between his receipt of this
letter, and his October 10, 2012, sentencing hearing or his October 11
indictment. Miller, 406 F.3d at 334-35. Titus’s case is nothing like the
Government’s unilateral determination of breach in Castaneda, where the
Government informed the defendant he was in breach and indicted him the next
day. Id. at 836.
In Castaneda and Cantu, where, in each, there was a possibility that the
defendant was not afforded an appropriate hearing on a breach of the plea
agreement in district court, we, as an appellate court, supplied a hearing and
determined whether a material breach had occurred. See Castaneda, 162 F.3d
at 837-839; Cantu, 185 F.3d at 302-03. Thus, even if we were to assume that
Titus did not receive an adequate hearing in the district court, we may
determine independently that the Government has proved by a preponderance
of evidence that a material breach occurred, given that the defendant has had
ample opportunity to present and argue his case for a government breach in the
briefing and argument before us. As in Davis, the breach was material because
the defendant’s failure to perform was not innocent and because “[t]he
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government did not receive the honest, truthful disclosure of information that
it had bargained for” in the plea agreement. 393 F.3d at 547. Titus contravened
one of the purposes of the plea agreement, asset forfeiture, by concealing assets
from the Government. Cf. id. (defendant materially breached by “contraven[ing]
the purpose of the plea agreement”). Titus thus deprived the Government of the
benefit of the bargain, solid evidence of a material breach. Castaneda, 162 F.3d
at 837.
III.
Finally, Titus challenges Judge Lemelle’s restitution order. “The legality
of a restitution order is reviewed de novo, and if the sentence is permitted by
law, the [amount of the] award is reviewed for abuse of discretion.” United
States v. Ingles, 445 F.3d 830, 838-39 (5th Cir. 2006).
The Mandatory Victim Restitution Act requires that federal courts order
restitution to victims of offenses against property under Title 18, including
fraud. See 18 U.S.C. § 3663A(c)(1)(A)(ii). Restitution is the full amount of loss
that the victim suffers, and no more. United States v. Beydoun, 469 F.3d 102,
107 (5th Cir. 2006). The Government must prove restitution by a preponderance
of evidence. United States v. Reese, 998 F.2d 1275, 1282 (5th Cir. 1993) (citing
18 U.S.C. § 3664(d)).
Titus was ordered to pay Garner Services $925,320, the full amount of
which he had defrauded the company. Titus argues that this amount should be
reduced in proportion to his share of ownership in the company that was
defrauded. This argument, however, ignores that he was ordered to restore
funds to the company itself – not its shareholders. Furthermore, Titus’s
argument asks the court to assume that the money he restores to Garner will
flow proportionally to the company’s owners, when in fact the company may
choose to allocate the restitution amount differently.
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Titus also argues that the restitution amount should be reduced by the
value of the “property” he returned. Under 18 U.S.C. §3663A(b)(1)(B)(ii), the
sum the defendant must pay in restitution is reduced by the value “of any part
of the property that is returned.” We understand Titus to argue that the value
of his labor to Garner Services after his fraud constitutes “property that is
returned.” Ed Garner, Titus’s partner at Garner Services, submitted an affidavit
that the value of Titus’s labor since his fraud exceeded the loss that the fraud
had caused. Titus cites no authority, however, that continuing labor after the
malfeasance constitutes “property that is returned.” And his reading of
“property” as encompassing labor goes against the plain meaning of “property.”
In any event, we reject his contention.
IV.
For the reasons above, the district court’s denial of Titus’s motion to
withdraw his guilty plea, his plea agreement, and his waiver of the indictment,
as well as the denial of modification of the restitution award, and accordingly,
the judgment, are in all respects
AFFIRMED.
9