United States v. Behrman, Donald ( 2000 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 00-2563
United States of America,
Plaintiff-Appellee,
v.
Donald Behrman,
Defendant-Appellant.
Appeal from the United States District Court
for the Southern District of Illinois.
No. 3:99CR30042-002--William L. Beatty, Judge.
Argued November 9, 2000--Decided December 22, 2000
Before Fairchild, Easterbrook, and Manion, Circuit
Judges.
Easterbrook, Circuit Judge. After pleading guilty
to four counts of bank fraud, see 18 U.S.C.
sec.1344, Donald Behrman was sentenced to 15
months’ imprisonment plus $611,438.41 in
restitution to the banks he hoodwinked. By
pleading guilty Behrman waived any potential
challenge to all pre-plea events, and the plea
agreement adds a waiver of both appeal and
collateral attack concerning the sentence,
provided that the punishment is within the
statutory maximum. Nonetheless Behrman has
appealed, contending that the restitution is
excessive.
Paragraph 8 of the plea agreement reads:
The Defendant is aware that Title 18, United
States Code, Section 3742 affords a defendant the
right to appeal the sentence imposed.
Acknowledging all this, the Defendant knowingly
waives the right to appeal any sentence within
the maximum provided in the statute(s) of
conviction (or the manner in which that sentence
was determined) on the grounds set forth in Title
18, United States Code, Section 3742 or on any
ground whatever, in exchange for the concessions
made by the United States in this plea agreement.
The Defendant also waives his right to challenge
his sentence or the manner in which it was
determined in any collateral attack, including
but not limited to a motion brought under Title
28, United States Code, Section 2255.
The "concessions made by the United States" in
exchange for Behrman’s plea and waiver were
substantial. A stipulation of facts accompanying
the plea agreement reveals that Behrman and his
father Theodore defrauded five banks, over
extended periods, by selling assets in which the
banks had security agreements. The banks financed
the family’s used-car business, lending against
the security of titles to the cars. Behrman sold
many of the cars without repaying the borrowed
money. Banks were not the only losers. Behrman’s
Garage and Sales, Inc., did not file corporate
tax returns, or pay federal taxes, for the
calendar years 1995, 1996, 1997, and 1998.
Behrman himself did not file tax returns, and
evaded his personal tax obligations, for 1994,
1995, 1996, 1997, and 1998. By pleading guilty
Behrman avoided criminal prosecution for these
tax offenses, which if pursued would have
produced a sentence substantially exceeding the
15-month term he received.
Although the prosecutor has fulfilled the United
States’ part of the bargain, Behrman says that he
need not keep his promise to refrain from
appealing because he seeks to present a
constitutional argument in support of reversal.
The restitution order, Behrman contends, violates
the due process clause of the fifth amendment
because it is inadequately supported by the facts
and because the basis of the restitution order
was not established to a jury’s satisfaction
beyond a reasonable doubt. See Apprendi v. New
Jersey, 120 S. Ct. 2348 (2000). Behrman points to
cases saying that particular plea agreements do
not waive constitutional arguments. E.g., Jones
v. United States, 167 F.3d 1142, 1144 (7th Cir.
1999); United States v. Woolley, 123 F.3d 627,
632 (7th Cir. 1997); United States v. Schmidt, 47
F.3d 188, 190 (7th Cir. 1995). Some
constitutional theories--particularly claims that
the plea agreement was involuntary or the result
of ineffective assistance of counsel--concern the
validity of the plea agreement and thus would
knock out the waiver of appeal along with the
rest of the promises; all terms stand or fall
together. United States v. Wenger, 58 F.3d 280(7th Cir. 1995). But Behrman does not contend
that his plea is invalid and does not want a
trial; he seeks to retain the prosecutor’s
concessions while having an appeal too. Yet each
side’s concessions are linked to the other’s;
while the agreement is in force, a defendant must
keep all of the promises he made. To create a
general "constitutional-argument exception" to
waivers in plea agreements would be to reduce the
concessions defendants could obtain for their
promises, because it would reduce the number of
(enforceable) promises defendants could make.
Because almost every argument in a criminal case
may be restated in generic constitutional form
(as Behrman has done), a "constitutional-argument
exception" would vitiate most waivers of appeal
and all waivers of collateral attack. Yet we held
in Wenger, and have reiterated many times since,
that voluntary waivers of appeal are valid and
enforceable.
Behrman’s contention that all constitutional
arguments always may be presented despite
promises made in plea agreements (and no matter
what the agreement says) is impossible to
reconcile with cases such as Bousley v. United
States, 523 U.S. 614 (1998), United States v.
Broce, 488 U.S. 563 (1989), and Mabry v. Johnson,
467 U.S. 504, 508 (1984), which hold that by
pleading guilty defendants waive all objections--
including constitutional objections-- to their
convictions. Only arguments that would nullify
the plea itself survive. If a voluntary guilty
plea may waive a basket full of potential
constitutional objections to searches and
seizures, confessions, and the validity of the
indictment and prosecution (including claims
under the double jeopardy clause that logically
would preclude any sentence), it is impossible to
see why a voluntary plea agreement may not waive
constitutional objections to the particular
sentence imposed. Plea agreements may preserve
some (or all) constitutional arguments,
concerning the conviction as well as the
sentence, see Fed. R. Crim. P. 11(a)(2), but
Behrman’s does not reserve any identified theory
for appeal. To the contrary, this agreement
surrenders the right to present "any ground
whatever" in support of an appeal challenging
"any sentence within the maximum provided in the
statute(s) of conviction".
Constitutional grounds are included in "any
ground whatever". Still, the agreement waives the
right to appeal only if $611,000 in restitution
is a "sentence within the maximum provided in the
statute(s) of conviction". There is a difference
between the "statute of conviction"--which is to
say 18 U.S.C. sec.1344--and the entire Criminal
Code. Section 1344 provides that a person
convicted of bank fraud "shall be fined not more
than $1,000,000 or imprisoned not more than 30
years, or both." It does not mention restitution.
What does authorize restitution is 18 U.S.C.
sec.3663(a), and because Behrman’s crime entailed
fraudulent deprivation of property the judge was
required by sec.3663A to provide for complete
restitution. See sec.3663A(c)(1)(A)(2). Because
the agreement waives appeal only with respect to
fines and imprisonment, and not with respect to
restitution, Behrman is entitled to present any
kind of argument--procedural, statutory, or
constitutional. An agreement waiving appeal from
"any sentence within the maximum provided in
Title 18" or similar language would foreclose the
arguments Behrman now presents, but, just as we
are willing to enforce waivers of appeal, we
enforce them only to the extent of the agreement.
One final argument based on waiver remains.
Restitution is due to the "victim" of the
offense, defined by sec.3663A(a)(2) as "a person
directly and proximately harmed as a result of
the commission of an offense for which
restitution may be ordered". See also 18 U.S.C.
sec.3664(e). We understand this language to refer
to harm directly caused by the offense of
conviction; more diffuse estimates of loss may be
appropriate for purposes of relevant conduct
under the Sentencing Guidelines, but restitution
tracks "the recovery to which [the victim] would
have been entitled in a civil suit against the
criminal". United States v. Martin, 195 F.3d 961,
968 (7th Cir. 1999). But sec.3663A(a)(3) permits
the defendant to undertake additional restitution
obligations via a plea agreement, and the United
States contends (in effect though not explicitly)
that Behrman did this, waiving the benefits of
sec.3663A(a)(2) and the holding of Martin.
Concurrently with the plea agreement, the
parties entered into a stipulation of facts.
Paragraph 8 of this stipulation, which also
appears as para.3 n.1 of the plea agreement,
contains this language (boldface in original):
The loss to the victim banks was caused by a
number of factors in this case, not all of which
can be proven to be attributable to the
fraudulent conduct of the defendants [Behrman and
his father]. Therefore the actual loss for
restitution purposes is greater than the
guideline "valuation of loss" for sentencing
purposes. The F.B.I. investigation has revealed
to date that $243,894 of the total loss to the
victim banks can be substantiated as attributable
to the fraud or misrepresentations of the
defendants. For restitution purposes the victims
report the following losses [bank-by-bank details
omitted]; which totals to a total loss for
restitution purposes of $602,997.85.
This appears to get things backward, implying
that difficulty of proving loss means that
restitution will exceed "loss" for purposes of
the loss table under the Guidelines. Oddly, the
parties make nothing of this glitch. The
prosecutor reads para.8 as an undertaking to pay
$603,000 in restitution, even though that amount
may exceed the direct and proximate harm from the
offense of conviction. But it would be unsound to
read this stipulation as a promise to pay
$603,000 in restitution. Paragraph 8 does not
consent to the imposition of any particular
penalty. Instead it stipulates that "the victims
report the following losses. . ." (emphasis
added). Whether those losses are amounts that
should be included as restitution under the
sentence is a question reserved (at least, not
resolved) by the stipulation of facts and plea
agreement. Paragraph 7 of the plea agreement
adds, apparently referring to all elements of the
sentence: "Defendant expressly recognizes that
the final calculation will be determined by the
Court after considering the Presentence Report,
the views of the parties and any evidence
submitted prior to sentencing" (underlining in
original). Nothing here or elsewhere in the plea
agreement undertakes to make restitution in
excess of the amount required by sec.3663A.
Misunderstanding the effect of para.8, and
without carrying out the inquiry required by
sec.3663A(a)(2) and Martin, the district judge
directed Behrman to pay as restitution whatever
sums the victim banks claimed as their losses
from all dealings with Behrman’s Garage and
Sales. Something more than $244,000 may be
appropriate as restitution, for the FBI’s
preliminary conclusions do not necessarily
reflect the full consequences of the fraud, but
before directing Behrman to pay more than that
figure the district court must carry out the
inquiry and make the findings required by the
statute and our opinions interpreting sec.3663A.
One important question, so far unaddressed in
this case, is whether the banks’ losses on credit
that they extended to the Behrmans’ customers is
the sort of harm for which restitution is
available under sec.3663A. Compare United States
v. Menza, 137 F.3d 533, 537 (7th Cir. 1998), with
United States v. Hensley, 91 F.3d 274, 277 (1st
Cir. 1996) (broaching the question whether Hughey
v. United States, 495 U.S. 411 (1990), applies to
restitution orders in light of post-Hughey
amendments).
Neither side gave the topic much thought in the
district court, perhaps because no one
anticipates that Behrman will be able to pay even
$244,000. He is represented by a public defender,
and his economic prospects are not bright. But
the difference between $244,000 and $603,000 (or
$611,000) could matter if Behrman acquires
substantial legitimate income. This restitution
obligation, which like a civil fraud judgment
cannot be discharged in bankruptcy, see 11 U.S.C.
sec.523(a)(2)(A), (a)(13), will dog Behrman for
life unless it is paid, so the case is not moot.
According to Behrman, even $243,000 is too high
unless a jury finds the essential facts beyond a
reasonable doubt. But like most recent arguments
invoking Apprendi, this contention depends on a
misunderstanding of that case. Behrman treats it
as fundamentally changing the law of criminal
sentencing, so that every fact affecting
punishment must be treated as an "element of the
offense," with all that implies in criminal law.
Yet that is not how the Supreme Court described
its decision. What Apprendi holds is: "Other than
the fact of a criminal conviction, any fact that
increases the penalty for a crime beyond the
prescribed statutory maximum must be submitted to
a jury, and proved beyond a reasonable doubt."
120 S. Ct. at 2362-63. Thus the first question is
whether restitution is a "penalty for a crime,"
a question that has already been answered "no" in
this circuit because restitution for harm done is
a classic civil remedy. See United States v.
Szarwark, 168 F.3d 993, 998 (7th Cir. 1999).
Congress required judges to include this remedy
in a criminal judgment to avoid the need for the
victims of crime to file separate civil suits--
litigation that, given the preclusive effect of
the criminal judgment, would have an inevitable
outcome. A civil remedy included with a criminal
judgment does not make it a "penalty for a crime"
that must be established beyond a reasonable
doubt; otherwise it would not be possible to
apply the law of preclusion (or grant summary
judgment) in an ordinary civil suit seeking
restitution. It follows that Apprendi does not
affect the calculation of restitution.
What is more, sec.3663A does not include a
"statutory maximum" that could be "increased" by
a given finding. Section 3663A is in this respect
like a statute that permits the judge to impose
any term of years up to life in prison. When
sentencing under such a statute, we held in
United States v. Smith, 223 F.3d 554, 564-66 (7th
Cir. 2000), the judge may make any appropriate
findings by a preponderance of the evidence. Put
otherwise, Apprendi does not affect the operation
of the Sentencing Guidelines; it is limited to
situations in which findings affect statutory
maximum punishment. See Talbott v. Indiana, 226
F.3d 866, 869-70 (7th Cir. 2000). Even if matters
were otherwise, however, Behrman could not
benefit. Section 1344 authorizes a financial
penalty up to $1 million, and Behrman has no
interest in whether this is called a "fine" or
"restitution." (This is not to say that
restitution is capped at $1 million, but only
that, if restitution does not exceed the
authorized fine, then a defendant cannot complain
even if the Supreme Court should eventually
disagree with our understanding of Apprendi and
the holding in Szarwark.) Finally, a defendant
who has pleaded guilty, and thus surrendered his
entitlement to a jury trial, is in no position to
contend that any particular issue should have
been submitted to a jury. Thus all the genuine
issues in this case are statutory, and on remand
the district court may apply sec.3663A without
modification in light of Apprendi.
The portion of the sentence specifying
restitution is vacated, and the case is remanded
for proceedings consistent with this opinion.