United States v. Gibson, James R. ( 2004 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 02-2051
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
JAMES R. GIBSON,
Defendant-Appellant.
____________
Appeal from the United States District Court
for the Southern District of Illinois.
No. 01 CR 30005 GPM—G. Patrick Murphy, Chief Judge.
____________
ARGUED SEPTEMBER 15, 2003—DECIDED JANUARY 28, 2004
____________
Before POSNER, KANNE, and ROVNER, Circuit Judges.
KANNE, Circuit Judge. After the entry of a guilty plea by
James R. Gibson pursuant to the former Rule 11(e) (1)(C) of
the Federal Rules of Criminal Procedure,1 the district court
accepted the plea agreement and thereby agreed to the
sentence specified in the agreement. Gibson received—and
is currently serving—the precise term of imprisonment he
bargained for, but he now seeks to invalidate the sentence
and plea agreement. Gibson’s indictment included eight
counts, five of which (any of three counts of Mail Fraud or
1
The plea agreement was entered and accepted prior to the ef-
fective date—December 2002—of amended Rule 11.
2 No. 02-2051
two counts of Wire Fraud) would have provided a legal basis
for the 262-month prison sentence agreed to by Gibson.
However, as we discuss below, the single count to which
Gibson pled guilty, Conspiracy under 18 U.S.C. § 371, has
a statutory maximum sentence of five years and therefore
does not allow the 262-month sentence stipulated to in the
plea agreement. Because the sentence exceeds the maxi-
mum term of imprisonment of the statute of conviction, we
must vacate the sentence, conviction, guilty plea, and the
court’s acceptance thereof.
I. History
Gibson’s criminal indictment stemmed from his activities
as owner and president of SBU, Inc. and several affiliated
companies. The companies were operated by Gibson in the
St. Louis, Chicago, and West Palm Beach areas. SBU
offered tax-advantaged structured settlements to personal-
injury plaintiffs. Gibson marketed SBU by representing to
personal-injury victims that he would use their settlement
money to purchase United States Treasury Bonds and hold
these bonds in trust for the victims. Gibson promised to
make periodic payments to the victims from the proceeds of
the investments. Some of the settlement funds were placed
with legitimate trust companies and funded with bonds.
Gibson transferred all of the trust accounts to Flag
Finance Corporation, another corporation wholly owned and
operated by Gibson. Gibson stopped purchasing Treasury
obligations for most of the trusts and instead used new
settlement proceeds and bond proceeds in his own unautho-
rized business transactions, high-risk investments (includ-
ing the operation of a chain of grocery stores that eventu-
ally sought bankruptcy protection), and the purchase of real
estate and personal luxury items. The total loss to the
individual victims in this case was $156,256,316.92.
No. 02-2051 3
In July 1999, Gibson and his wife received a grand jury
subpoena. They attempted to avoid the investigation by
fleeing to Central America, but were eventually arrested
and returned to the United States. On October 18, 2001, a
grand jury returned an eight-count indictment against
Gibson.
Gibson was charged with Conspiracy to Commit Mail and
Wire Fraud in violation of 18 U.S.C. § 371 (Count 1); Mail
Fraud on August 20, 1996, in violation of 18 U.S.C. § 1341
(Count 2); Mail Fraud on September 17, 1996 (Count 3);
Mail Fraud on January 27, 1998 (Count 4); Wire Fraud on
June 6, 1996, in violation of 18 U.S.C. § 1343 (Count 5);
Wire Fraud on January 7, 1998 (Count 6); Conspiracy to
Commit Money Laundering in violation of 18 U.S.C. §
956(h) (Count 7); and a Forfeiture allegation pursuant to
18 U.S.C. § 982 (Count 8).
Gibson’s trial commenced on January 7, 2002. On Janu-
ary 8, before the jury was sworn, Gibson came to an
agreement with the government, quoted below in relevant
part:
1. The Defendant will enter a plea of guilty to count
one of the Superseding Indictment charging a vio-
lation of Title 18, United States Code, Section 371,
Conspiracy to Commit Mail and Wire Fraud which
affects the safety and security of a financial institu-
tion. The maximum penalty that can be imposed for
each violation of § 371 is 30 years’ imprisonment or
a $1,000,000 fine, or both, and at least 5 years
supervised release.
2. The Defendant understands that he is entering a
guilty plea whereby the Government and the
Defendant have agreed, pursuant to 11(e)(1)(C), to
a sentence of 262 months, the maximum fine of
$250,000, and restitution in the amount of
$66,000,000. . . . The court will determine the
appropriate amount of supervised release.
4 No. 02-2051
(Def.’s Plea Agrmt. at 3-4) (emphasis added). The plea
agreement mistakenly states that the maximum statutory
sentence under 18 U.S.C. § 371 is thirty years. As noted
earlier, the actual maximum statutory sentence is five
years. In another part of the agreement, Gibson waived his
right to appeal his sentence and acknowledged his waiver
of the right to trial and his understanding of the charge set
forth in the plea. The government promised not to prosecute
Gibson in the Southern District of Illinois for any other
crimes known at the time of the agreement.
The district judge conducted the requisite colloquy with
Gibson after receiving this agreement. He advised Gibson
as to the relevant provisions of Rule 11. The judge inquired
into Gibson’s age and education and informed him of the
rights he was giving up by pleading guilty. The judge
determined both that Gibson was competent and under-
stood the nature of the charge to which he was pleading
guilty by describing the elements of the crime of Conspiracy
to Commit Mail Fraud and Wire Fraud. Gibson informed
the judge that he was cognizant of all the preceding infor-
mation and affirmed that he willingly relinquished his
rights. The district court accepted Gibson’s guilty plea and
deferred acceptance of the plea agreement until after review
of the presentence report.
In due course, a Presentence Investigation Report (“PSR”)
was prepared by a probation officer. The PSR repeated the
parties’ mistake, first made in the plea agreement, that
Count 1, “Conspiracy to Commit Mail and Wire Fraud 18
U.S.C. §§ 1341, 1343, and 371,” carried a maximum sen-
tence of thirty years.
The PSR calculated Gibson’s sentencing range under the
Federal Sentencing Guidelines based, not on 18 U.S.C.
§ 371 (Conspiracy), but on violation of 18 U.S.C. §§ 1341
(Mail Fraud) and 1343 (Wire Fraud). His offense level to-
taled 41 (a base offense level of 6, with numerous enhance-
No. 02-2051 5
ments), his criminal history category was II, and his guide-
line range was therefore 360 months to life imprisonment.
The PSR concluded that a prison sentence of 360 months
was appropriate.
While accepting the findings of the PSR, the district judge
determined that the Rule 11(e)(1)(C) plea agreement was
acceptable in setting 262 months as the term of imprison-
ment. This departure from the Sentencing Guidelines in
favor of Gibson was justified as appropriate because of
Gibson’s age (57 at the time of sentencing), his cooperation
in recovering some of the converted money after his appre-
hension, and the elimination of a need for a trial by Gib-
son’s acceptance of responsibility.
Gibson, initially proceeding “pro se” on appeal, asserted
legal error in his sentence, although that issue was never
raised below at any point in the process.2 It seems that,
while coming to an agreement on the amount of prison time,
supervised release, fines, and restitution, neither
the government nor Gibson observed that Count One,
Conspiracy to Commit Mail and Wire Fraud, carries a
maximum statutory penalty of only five years. Had the
parties substituted any one of Counts 2 through 6, a maxi-
mum statutory penalty of thirty years would have been
applicable, as the offenses affected a financial institution.
See 18 U.S.C. §§ 1341 and 1343. Unfortunately, the proba-
tion officer did not catch the parties’ mistake and thus did
not alert the district judge to the error.
Both parties now agree, however, that the sentence as it
stands is illegal. Gibson asserts that we must vacate the
sentence because it is illegal or, alternatively, because the
2
Gibson did object to several of the findings in the PSR, but
never took issue with the finding that he was subject to a thirty-
year statutory maximum sentence.
6 No. 02-2051
misstatement of the law during the Rule 11 process led to
an involuntary plea agreement. The government asserts
that we do not have jurisdiction to review the sentence and
that Gibson has waived review of his sentence; alterna-
tively, the government requests that we affirm the sen-
tence, in spite of the error.
II. Analysis
Before moving to an analysis of the merits, we must first
ascertain whether we have the power to provide the relief
requested by Gibson. We do not have the power to preserve
a guilty plea under Fed. R. Crim. P. 11(e)(1)(C), yet “discard
the sentence imposed by the district court.” United States v.
Barnes, 83 F.3d 934, 941 (7th Cir. 1996). In other words,
because the plea agreement entered into by Gibson and the
government contained explicit provisions regarding the
exact term of imprisonment, Gibson can only attack the
validity of the entire plea agreement. He cannot seek to
uphold the plea agreement, yet obtain relief in the form of
a different sentence. See United States v. Peterson, 268 F.3d
533, 534 (7th Cir. 2001). In essence, Gibson cannot hold out
hope that we will order the district court to enforce the plea
agreement and yet reduce his sentence to five years. To the
extent that Gibson does request the relief precluded by
Barnes, we reaffirm the principle cited above and refuse to
consider the request.
Contrary to the assertions of the government, however,
Gibson does request that this court void the entire plea
agreement and remand for further proceedings—either a
new round of negotiations between the government and
Gibson or a trial. (Appellant’s Br. at 14-15, 19.) We have the
power to provide this relief. See, e.g., Barnes, 83 F.3d at
941.
No. 02-2051 7
There is also a question as to whether Gibson has ef-
fectively waived his right to appeal his sentence. Gibson
signed a plea agreement that included the following clause:
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 and voluntarily 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, including any ordered
restitution, in exchange for the concessions made by the
United States in the plea agreement. . . .
(Def.’s Plea Agrmt. at 5) (emphasis added). A voluntary and
knowing waiver of an appeal is valid and enforceable.
United States v. Sines, 303 F.3d 793, 798 (7th Cir. 2002)
(citations omitted). By the terms of the plea agreement,
however, Gibson has not waived an appeal of a sentence
that exceeds the maximum sentence provided for in the
statute of conviction, which is the case here. Furthermore,
the claim that a plea agreement was entered into involun-
tarily cannot be waived in the plea agreement. Id. Thus, we
will consider the appeal on its merits.
Gibson argues that the district court erred in accepting a
plea agreement that included an illegal sentence and that
he did not knowingly and voluntarily enter a guilty plea.
When a defendant fails to object on these grounds while
still before the district court, we apply the “demanding
standard of plain error.” United States v. Gilliam, 255 F.3d
428, 433 (7th Cir. 2001). As Gibson moves to withdraw his
guilty plea for the first time before this court, to provide
such relief we must find under the plain error standard: “(1)
an error has occurred, (2) it was ‘plain,’ (3) it affected a
substantial right of the defendant, and (4) it seriously
8 No. 02-2051
affected the fairness, integrity, or public reputation of the
judicial proceedings.” Id.
As we commented above, Gibson was sentenced on Count
1 to an agreed term of imprisonment of more than twenty-
one years—far beyond the five-year maximum under 18
U.S.C. § 371. However, “[e]ven when a defendant, prosecu-
tor, and court agree on a sentence, the court cannot give the
sentence effect if it is not authorized by law.” United States
v. Greatwalker, 285 F.3d 727, 730 (8th Cir. 2002).
Because Gibson’s sentence exceeds the maximum term of
imprisonment set forth in the statute of conviction, there
was error in accepting this plea agreement. And because
this error is apparent from the language of 18 U.S.C. § 371,
the error was “plain.” Further, the imposition of a sentence
exceeding the statutory maximum affects a defendant’s
substantial rights. Cf. United States v. Robinson, 250 F.3d
527, 529-30 (7th Cir. 2001) (noting that an increased
sentence because of plain error under Apprendi v. New
Jersey, 530 U.S. 466 (2000), affects a defendant’s substan-
tial rights).
But the heart of the inquiry is whether the district court’s
error in accepting the plea agreement seriously affected the
fairness, integrity, or public reputation of the judicial
proceedings. Although we have not found cases applying the
plain error standard to the factual scenario in the instant
case, we have stated that we will overturn a criminal
conviction under this standard only when “necessary to
avoid a miscarriage of justice.” United States v. Raney, 342
F.3d 551, 559 (7th Cir. 2003) (noting that even if evidence
was improperly admitted at a jury trial, there is no miscar-
riage of justice if the defendant’s guilt was so clear that he
would have been convicted anyway). Likewise, technical
misstatements of the law by a trial judge at a sentencing
hearing do not “impugn the integrity of the proceedings”
No. 02-2051 9
when the error does not “alter [the defendant’s] decision-
making calculus.” United States v. Kelly, 337 F.3d 897, 905
(7th Cir. 2003).
Gibson and the government utilized former Rule 11(e)
(1)(C) in structuring the plea agreement. This rule stated in
relevant part:
[The parties] agree that a specific sentence or sentencing
range is the appropriate disposition of the case, or that
a particular provision of the Sentencing Guidelines, or
policy statement or sentencing factor is or is not appli-
cable to the case. Such a plea agreement is binding on
the court once it is accepted by the court.
Fed. R. Crim. P. 11(e)(1)(C) (2002) (emphasis added). The
parties in forming the agreement may have concluded that
the statutory maximum sentence for Mail Fraud or Wire
Fraud (30 years) could be imported into the Conspiracy
count. Although it is unclear how or why this error oc-
curred, it is clearly not, as the government argues, a mere
“scrivener’s error.”3
Gibson does not dispute that he has received the precise
amount of prison time for which he bargained. Nor does he
dispute that, had he been tried under the eight-count in-
3
Black’s Law Dictionary defines “scrivener’s error” as a synonym
for “clerical error.” A “clerical error” is one “resulting from a minor
mistake or inadvertence, esp. in writing or copying something on
the record, and not from judicial reasoning or determination.”
Black’s Law Dictionary 563 (7th ed. 1999). Examples of clerical,
or “scrivener’s,” errors include “omitting an appendix from a
document; typing an incorrect number; mistranscribing a word;
and failing to log a call.” Id. Here, the parties apparently had
Count 1, Conspiracy, in mind before and after the transcription.
The mistake was not one of transcription, but of legal knowledge
or analysis.
10 No. 02-2051
dictment or had the parties used one of the wire or mail
fraud counts in the plea agreement instead of the conspir-
acy count, a 262-month sentence would have been accept-
able upon conviction. Indeed, Gibson makes no argument
that the error at issue affects the fairness, integrity or
public reputation of the judicial proceedings.4
The fact remains, however, that Gibson was sentenced
to a term of imprisonment that exceeds the maximum
provided in the count of conviction. To allow an illegal
sentence to stand would impugn the fairness, integrity, and
public reputation of the judicial proceedings that have
taken place in this case. This error was not harmless.
There is no doubt that the district judge would not have
accepted the plea agreement knowing that the maximum
term of imprisonment was five years, or, if given the op-
portunity, would have reached the same result we do today.
Clearly the integrity of the judicial system would be
offended by ignoring this error even in a case involving facts
as egregious as those asserted against Gibson.
III. Conclusion
As to the statute of conviction, 18 U.S.C. § 371 (Count 1),
we VACATE the sentence, conviction, guilty plea and accep-
tance thereof and REMAND this case to the district court for
further proceedings.
4
There is no claim made, for example, that Gibson did not misuse
his position of trust to bilk millions of dollars from orphans,
widows, and individuals with disabilities relying on the stream of
payments he promised to provide for medical and other family
expenses.
No. 02-2051 11
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—1-28-04