United States v. George, Gary R. ( 2005 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 04-3099
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
GARY R. GEORGE,
Defendant-Appellant.
____________
Appeal from the United States District Court
for the Eastern District of Wisconsin.
No. 03-CR-259—Rudolph T. Randa, Chief Judge.
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ARGUED FEBRUARY 17, 2005—DECIDED APRIL 4, 2005
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Before EASTERBROOK, RIPPLE, and MANION, Circuit
Judges.
EASTERBROOK, Circuit Judge. Gary George served in
Wisconsin’s Senate for 23 years, acquiring considerable
influence over public expenditures. He was indicted in 2003
on charges that he accepted kickbacks in exchange for
exercising that influence, which extended over federal
grants as well as programs financed by state revenues. He
pleaded guilty to violating 18 U.S.C. §371 (conspiracy to
defraud the United States) as part of a bargain in which the
2 No. 04-3099
prosecutor dismissed all other charges, and he was sen-
tenced to 48 months’ imprisonment plus about $614,000 in
restitution.
Four months after pleading guilty, George moved to dis-
miss the single count of conviction under Fed. R. Crim. P.
12(b)(3)(B) for failure to state an offense. Relying on United
States v. Bloom, 149 F.3d 649 (7th Cir. 1998), George
contended that the events narrated in the indictment did
not violate 18 U.S.C. §1346 by depriving Wisconsin of his
honest services. This motion is more than a little odd. By
pleading guilty a defendant normally surrenders an oppor-
tunity to contest the merits, waiving (not just forfeiting) all
arguments that could have been raised earlier. See United
States v. Broce, 488 U.S. 563 (1989). And the plea agree-
ment in this case made that explicit: ¶25 waives all matters
that could have been raised by pretrial motion. Failure of the
indictment to state an offense is such a matter.
Actual innocence might supply a “fair and just reason” to
withdraw a guilty plea, see Fed. R. Crim. P. 11(d)(2)(B), but
George did not move to withdraw his plea in order to set the
stage for a motion to dismiss—for withdrawal would have
allowed the prosecutor to reinstate the remaining charges,
including two counts under 18 U.S.C. §666 and one under 18
U.S.C. §1956(a)(1)(B)(i), none of which entailed hon-
est-services fraud. (And George had pleaded guilty; his
contention that the district judge failed to accept his plea is
incorrect and need not be discussed.)
A district judge has discretion under Fed. R. Crim. P.
12(b)(3)(B) “at any time while the case is pending . . . [to]
hear a claim that the indictment or information fails to in-
voke the court’s jurisdiction or to state an offense”. A judge
might elect to use this discretion to treat a motion such as
the one George made as a request to withdraw the plea and
dismiss the contested charge—though relieving the defen-
dant of the concessions he made would relieve the prosecu-
No. 04-3099 3
tor of the reciprocal concessions and reinstate the other
charges. The district judge did not abuse his discretion in
denying George’s motion, however. It was made late in the
day (only two weeks before sentencing) and rested on a
misunderstanding. The count to which George pleaded
guilty did not depend on §1346. It charged him with
conspiring to defraud the United States, not with depriving
Wisconsin of his honest services. Mail fraud was just one of
the means employed in the scheme. The district judge
sensibly perceived that George was trying to smuggle an
objection to the sufficiency of the evidence (which Rule
12(b)(3)(B) does not cover) into the proceeding under the
guise of a challenge to the charge’s statutory footing.
George submits that his sentence violates the
sixth amendment, as the Supreme Court explained it in
United States v. Booker, 125 S. Ct. 738 (2005). Yet the
district judge understood the sixth amendment problem, for
sentencing occurred after our opinion in United States v.
Booker, 375 F.3d 508 (7th Cir. 2004), which the Supreme
Court affirmed last January. The judge proceeded as if the
Sentencing Guidelines were defunct, so that he had discre-
tion to select any term within the statutory limits of zero to
60 months. Had the court followed the Guidelines, it would
have sentenced George to the statutory maximum— for the
sentencing range was 63 to 78 months, and George does not
contend that there was any basis for a downward departure.
The Supreme Court’s decision in Booker shows that the
Guidelines continue to inform district judges’ decisions.
Judges need not rehearse on the record all of the consider-
ations that 18 U.S.C. §3553(a) lists; it is enough to calculate
the range accurately and explain why (if the sentence lies
outside it) this defendant deserves more or less. That’s the
approach we have taken for decisions to reimprison a per-
son after revoking supervised release, a subject on which
the Guidelines always have been advisory rather than bind-
ing. See United States v. Salinas, 365 F.3d 582, 588-90 (7th
4 No. 04-3099
Cir. 2004); United States v. Hale, 107 F.3d 526, 529-30 (7th
Cir. 1997). It makes sense to follow the same approach for
the Guidelines as a whole in Booker’s wake. Chief Judge
Randa explained his decision. Had he known that the
Guidelines continue to have substantial sway, he might
have imposed a sentence closer to 60 months; it is incon-
ceivable that anticipation of the ongoing need to start from
and respect the Guidelines’ framework would have led to a
lower sentence. Any error therefore was harmless. See Fed.
R. Crim. P. 52(a).
George does not contend that his actual sentence is un-
reasonable, the post-Booker standard of appellate review. It
is hard to conceive of below-range sentences that would be
unreasonably high. George’s is not. The United States
would have better claim to be the party aggrieved by the
district judge’s disposition, and it has not appealed.
Restitution poses a more complex problem. George’s con-
tention that Booker requires juries rather than judges to
assess restitution is misguided. There is no “statutory maxi-
mum” for restitution; indeed, it is not a criminal punishment
but instead is a civil remedy administered for convenience
by courts that have entered criminal convictions, see United
States v. Bach, 172 F.3d 520, 523 (7th Cir. 1999); United
States v. Newman, 141 F.3d 531, 537-42 (7th Cir. 1998), so
the sixth amendment does not apply. We have accordingly
held that Apprendi v. New Jersey, 530 U.S. 466 (2000), does
not affect restitution, see United States v. Behrman, 235
F.3d 1049, 1054 (7th Cir. 2000), and that conclusion is
equally true for Booker.
Still, restitution must be calculated in accord with stat-
utory rules, and we cannot be confident that the district
judge did so. The presentence report and witnesses who
testified at a hearing offered different estimates of appro-
priate restitution, with the low end around $200,000 and
the high end around $900,000. Choice depended on a num-
No. 04-3099 5
ber of variables, such as whether to treat George’s gains as
a proxy for the sums diverted from the public programs and
what value to assign to time that public employees and
private contractors devoted to providing campaign aid,
accounting help, and other services to George personally.
George contended that the answer is zero because employ-
ees put in full days on the job, so that the public lost no-
thing; the prosecutor denied this and added that if workers
were willing to pull overtime they should have done so for
public rather than private benefit.
The district judge chose $613,746.36 as the amount of
restitution but did not make findings of fact or articulate
his reasons. Although Fed. R. Civ. P. 52(a) does not apply
directly to restitution, even though it is fundamentally a
civil remedy awarded after a bench trial, Circuit Rule 50 does
require an explanation for all appealable orders. When the
district judge omits findings about contested amounts of
restitution, it may be impossible to tell whether the legal
rules have been applied correctly. United States v. Menza,
137 F.3d 533, 538 (7th Cir. 1998), holds that a remand for
findings is essential when the reasoning may be important
yet cannot be recovered from the record. See also, e.g.,
United States v. Walton, 217 F.3d 443, 452 (7th Cir. 2000);
United States v. Minneman, 143 F.3d 274, 285-86 (7th Cir.
1998). A remand would be pointless if it were clear what the
award represents, see United States v. Ahmad, 2 F.3d 245,
246-47 (7th Cir. 1993); United States v. Mahoney, 859 F.2d
47, 49-50 (7th Cir. 1988), but this sum does not come from
any combination of items listed in the presentence report.
Both the presentence report and the testimony at the
hearing explore a number of possibilities, some of which
provide good bases of restitution and some of which do not.
We cannot tell which the judge selected and therefore
cannot tell whether all items (whatever they were) that
went into the award are legally appropriate.
6 No. 04-3099
Restitution must be based on the victim’s loss rather than
the offender’s gain. Compare United States v. Shepard, 269
F.3d 884 (7th Cir. 2001) (restitution based on victim’s loss),
with United States v. Genova, 333 F.3d 750 (7th Cir. 2003)
(forfeiture of offender’s gains). “Loss” means direct injury,
not consequential damages. See Shepard, 269 F.3d at 886-
87. Moreover, the only loss that counts is that caused by the
count of conviction, unless the defendant agrees to pay
more, which George did not. See 18 U.S.C. §3663A(a);
Hughey v. United States, 495 U.S. 411 (1990); United States
v. Peterson, 268 F.3d 533 (7th Cir. 2001). One scheme to
defraud may have multiple victims, and the statute allows
an award on account of all victims’ direct injuries, see
§3663A(a)(2); United States v. Mitrione, 357 F.3d 712, 721
(7th Cir. 2004), but Hughey requires the court to exclude
injuries caused by offenses that are not part of the scheme
of which George has been convicted.
The presentence report invited consideration of amounts
that are inappropriate under one or more of these rules. It
covered the events underlying all five counts of the indict-
ment, even though George pleaded guilty to just one. It tried
to tote up George’s gains, though these may differ from the
victim’s losses. It assumed that the State of Wisconsin is
the victim, though the crime of which George has been con-
victed is conspiring to defraud the United States. Witnesses
at the evidentiary hearing likewise made one or more of
these errors. Perhaps Wisconsin should be treated as an
additional victim under §3663A(a)(2) because it lost the
benefit of funds provided by the United States, but this pos-
sibility must be explored with care rather than assumed to
be true.
Restitution of $614,000 may or may not be right; we just
cannot tell. Accordingly we vacate that portion of the
judgment and remand with instructions to receive written
submissions from the parties addressing the considerations
we have mentioned, and then make findings and conclu-
No. 04-3099 7
sions based on the existing record. The conviction and
sentence of imprisonment are affirmed.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—4-4-05