United States v. Robert Welti , 446 F. App'x 784 ( 2012 )

NOT RECOMMENDED FOR PUBLICATION
File Name: 12a0009n.06
No. 11-3083
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
FILED
Jan 05, 2012
UNITED STATES OF AMERICA, ) LEONARD GREEN, Clerk
)
Plaintiff-Appellee, )
)
v. ) ON APPEAL FROM THE UNITED
) STATES DISTRICT COURT FOR THE
ROBERT C. WELTI, ) SOUTHERN DISTRICT OF OHIO
)
Defendant-Appellant. )
Before: CLAY, SUTTON, and STRANCH, Circuit Judges.
JANE B. STRANCH, Circuit Judge. Defendant-Appellant Robert C. Welti appeals the
sentence imposed by the district court following his guilty plea for corruptly endeavoring to obstruct
or impede the due administration of the Internal Revenue Code, in violation of 26 U.S.C. § 7212(a).
Welti asserts the district court violated Federal Rule of Criminal Procedure 32(i)(3)(B) by failing to
find by a preponderance of the evidence in the record that Welti committed certain conduct contained
in the Presentence Report. Welti asks this Court to vacate his sentence and remand for resentencing.
Because we find that Welti did not dispute the veracity of the facts contained in the Presentence
Report, we AFFIRM the sentence.
I. BACKGROUND
Prior to 2000, Robert Welti, a Certified Public Accountant, became associated with the Aegis
Company, an Illinois-based organization that marketed fraudulent trust products. Aegis’s scheme
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United States v. Welti
involved the establishment of sham domestic, charitable, and foreign trusts, each with its own bank
account, as well as the establishment of limited liability companies (“LLCs”). Member funds
constituting taxable compensation were transferred through the various trusts, LLCs, and bank
accounts in an attempt to disguise and conceal the income from the Internal Revenue Service
(“IRS”). Taxpayers who used the Aegis system did not properly report or pay their income taxes.
The Aegis system also included a program called the “Audit Arsenal,” which provided
members with obstructionist tactics to be used in the event of an IRS audit. This program included
such tactics as recommending that taxpayers accuse IRS officials of misconduct and was designed
to impede the IRS, thereby delaying audits and investigations. Welti pled guilty to this type of
conduct in relation to Aegis members Donald and Douglas Frichtl.
Welti began representing the Frichtls in or about March 2002 for purposes of an IRS audit.
On April 8, 2002, Welti met with the Frichtls prior to the audit and advised them to answer all
questions by stating that they decline to answer on the grounds it may incriminate them and by
claiming the protection of the Fourth, Fifth, and Sixth Amendments. Although the Frichtls brought
records to the audit in response to IRS administrative summonses, Welti directed them not to provide
the auditor with those documents. Welti told the Frichtls that he planned to stop the audit by
questioning the authority of the IRS. During the audit, Welti proposed meritless and frivolous
arguments to the auditors and accused them of engaging in a criminal racketeering conspiracy.
On November 6, 2008, a federal grand jury returned an indictment charging Welti with one
count of corruptly endeavoring to obstruct or impede the due administration of the Internal Revenue
Code, in violation of 26 U.S.C. § 7212(a), and five counts of aiding and assisting in the filing of false
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federal income tax returns in violation of 26 U.S.C. § 7206(2). On June 28, 2010, pursuant to a plea
agreement, Welti pled guilty to the one-count superseding information based on his conduct
surrounding the IRS audit of the Frichtls. The Government agreed to move for dismissal of the
remaining counts following sentencing on that charge.
The Presentence Report (“PSR”) included the facts relevant to the Frichtls’ IRS audit as well
as similar facts relating to other instances in which Welti engaged in conduct designed to impede the
IRS. At his sentencing hearing, Welti’s counsel indicated that all objections to the PSR were
resolved prior to the hearing except for an objection relating to the information contained in the
Offense Conduct section of the PSR. Welti sought to delete any facts other than those relating
specifically to the offense to which he pled guilty. The district court overruled this objection, finding
it “well settled” that a sentencing court may consider a wide range of conduct, including acquitted
conduct, so long as the resulting sentence is below the maximum statutory penalty.
Welti appeals his sentence, alleging that the district court violated Federal Rule of Criminal
Procedure 32(i)(3)(B) by sentencing him in reliance on conduct that Welti disputed and which the
court failed specifically to find by a preponderance of the evidence.
II. DISCUSSION
“We review the district court’s compliance with Federal Rule of Criminal Procedure 32(i)
de novo.” United States v. White, 492 F.3d 380, 414 (6th Cir. 2007). Rule 32 provides, in relevant
part:
(3) Court Determinations. At sentencing, the court:
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United States v. Welti
(A) may accept any undisputed portion of the presentence report as a finding
of fact;
(B) must—for any disputed portion of the presentence report or other
controverted matter—rule on the dispute or determine that a ruling is
unnecessary either because the matter will not affect sentencing, or because
the court will not consider the matter in sentencing; and
(C) must append a copy of the court’s determinations under this rule to any
copy of the presentence report made available to the Bureau of Prisons.
Fed. R. Crim. P. 32(i)(3). “As a threshold matter, the defendant must actively raise the dispute
during the sentencing hearing before the district court’s duty to find facts arises.” White, 492 F.3d
at 415 (citations omitted). “Once the defendant calls the matter to the court’s attention, ‘the court
may not merely summarily adopt the factual findings in the presentence report or simply declare that
the facts are supported by a preponderance of the evidence.’” Id. (quoting United States v. Solorio,
337 F.3d 580, 598 (6th Cir. 2003)). Rather, the court must “affirmatively rule on a controverted
matter where it could potentially impact the defendant’s sentence.” Id. (citation omitted).
Where certain facts are in dispute, mere reliance on the PSR in insufficient. United States
v. Treadway, 328 F.3d 878, 886 (6th Cir. 2003). “Rather, the district court must actually find facts,
and it must do so by a preponderance of the evidence.” White, 492 F.3d at 416. Welti claims he
disputed the facts contained in the Offense Conduct portion of the PSR that were “unrelated” (that
is, not the basis of the specific obstruction charge to which he pled) and the district court relied on
those disputed facts in violation of Rule 32(i)(3)(B).
The facts in a PSR must be “sufficiently controverted to trigger the sentencing court’s
fact-finding duty” under Rule 32(i)(3). United States v. McGee, 529 F.3d 691, 700 (6th Cir. 2008)
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(quoting United States v. Hurst, 228 F.3d 751, 760 (6th Cir. 2000)) (internal quotation marks
omitted). On facts similar to those here, the McGee Court held that the facts contained in the PSR
were not sufficiently controverted to trigger the district court’s duty under Rule 32(i)(3). Id. The
court found that McGee “very clearly led the court to believe—whether intentionally or not—that
his only objection was to the relevancy, and not the veracity, of the disputed portions of his PSR.”
Id. at 700-01.
Like McGee, Welti only disputed the relevance of the facts in the Offense Conduct section
and not their veracity. At the sentencing hearing, Welti’s council, Mr. Pinales, did not challenge the
accuracy of any facts:
THE COURT: My notes reflect that there is an objection to the presentence report.
Mr. Welti seeks to delete all information in the offensive conduct section other than
the specifics of the offense charged in the superseding Information.
Mr. Pinales, what would you like to say about that.
MR. PINALES: Your Honor, we have been specifically charged with a specific
count. That specific count is an obstruction to a specific couple of folks. There is
no obstruction in the former conduct that was initially charged, in the former
indictments that had occurred, and we submit to the Court that, while it is
background material, it is not offensive conduct.
(Sentencing Hearing Tr. at 3 (emphasis added)). At no time did Welti or his counsel challenge the
accuracy of those facts.
In McGee, this Court held that the district court’s fact-finding duty was not triggered because
the defendant only challenged the relevancy of the facts at the sentencing hearing, even though
McGee had made PSR objections to the accuracy of the facts. 529 F.3d at 700-01. In this case,
Welti did not object to the accuracy of the facts at any point, even in his objections to the PSR. In
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fact, in response to the PSR, Welti is much clearer that he only challenges the relevancy of those
facts: “[A]ll of the conduct described in The Offense Conduct section, with the exception of the
description of Welti’s conduct regarding the April 8, 2002 IRS examination of two Aegis members
in Mt. Vernon, Illinois is not relevant conduct and should be removed from the report.” (PSR at 20
(listing Welti’s unresolved objections to the PSR) (emphasis added)).
Welti asserts reliance on McGee should be rejected because it “is based primarily upon the
holding in Hurst, [228 F.3d 751, 760 (6th Cir. 2000),] which, in turn is based upon the holding in
[United States v. ]Fry, 831 F.2d 664 (6th Cir. 1987).” Because Fry was based on Rule 32(i)(3)(B)’s
predecessor, Rule 32(c)(3)(D), Welti argues subsequent cases that rely on Fry should be rejected
because Rule 32(c)(3)(D) specifically required a defendant to allege a “factual inaccuracy” in a PSR
to trigger a court’s fact-finding duty. Welti’s argument is unpersuasive for several reasons. First,
the purpose of both rules is to “ensure that sentencing is based on reliable facts,” which goes to the
accuracy of the facts. See United States v. Nelson, 356 F.3d 719 (6th Cir. 2004) (Rule 32(i)(3)(B));
United States v. Tarwater, 308 F.3d 494, 518 (6th Cir. 2002) (Rule 32(c)(3)(D)). The 2002
amendments which replaced the fact-finding duty of Rule 32(c)(3)(D) with that in Rule 32(i)(3)(B)
“attempt[ed] to eliminate confusion over whether courts were required to make rulings on every
objection to the PSR or only those that have the potential to affect the sentence.” United States v.
Darwich, 337 F.3d 645, 666 (6th Cir. 2003) (citing Fed R. Crim. P. 32(i)(3) advisory committee’s
note (2002)). As the 2002 advisory committee’s note states, this revision “narrows the requirement
for court findings” from that established in the prior version. It does not, as Welti argues, broaden
the requirement for factual findings based on relevancy challenges. Further, we have previously
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noted that our interpretation of Rule 32(c)(3)(D) was consistent with the revisions made in Rule
32(i)(3)(B). Darwich, 337 F.3d at 666 (“Prior to these revisions, we already had interpreted the rule
in a manner consistent with Rule 32(i)(3)’s recent clarification.”).
More significantly, McGee is directly on point and is binding on this Court. McGee analyzed
the same language of Rule 32(i)(3) that is before this Court and held that McGee’s challenges to the
relevancy of the PSR facts was not sufficient to trigger the court’s fact-finding duty under Rule
32(i)(3). This case is even more clearly outside the requirement of the rule. In McGee, the defendant
raised a challenge to the accuracy of the PSR facts in his PSR objections, but only objected to their
relevancy at his sentencing hearing. McGee, 529 F.3d at 700-01. In this case, Welti did not dispute
the veracity of the PSR facts in either his objections to the PSR or at his sentencing hearing.
As we have previously explained, “[w]e can find no reason to require a district court to make
independent findings outside the PSR when the facts are undisputed.” Treadway, 328 F.3d at 886;
see also United States v. Freeman, 640 F.3d 180, 187-88 (6th Cir. 2011). Because there were no
factual disputes for the district court to resolve, the district court was free to “accept [the] undisputed
portion of the presentence report as a finding of fact.” Fed. R. Crim. P. 32(i)(3)(A).
III. CONCLUSION
For the foregoing reasons, we AFFIRM Welti’s sentence.
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