United States v. Bruce Brown ( 2015 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 12-3290
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
BRUCE BROWN,
Defendant-Appellant.
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 10 CR 516— Joan Humphrey Lefkow, Judge.
ARGUED DECEMBER 12, 2014 — DECIDED MARCH 3 , 2015
Before ROVNER, WILLIAMS, and TINDER, Circuit Judges.
ROVNER, Circuit Judge. A jury found Bruce Brown guilty of
wire, mail, and bank fraud in connection with a scheme to
defraud mortgage lenders. Brown contends that a prior plea
agreement resolving 2005 money laundering charges against
him barred the government from pursuing charges in the
mortgage fraud scheme, and he contends on that basis the
2 No. 12-3290
district court should have dismissed the indictment in this
case. We affirm.
I.
In 2005, a federal grand jury in Chicago charged Brown
with multiple acts of money laundering. The indictment
alleged that Brown conspired with others to engage in financial
transactions aimed at concealing the proceeds of illegal
narcotics sales, principally through the purchase of luxury cars.
The conspiracy allegedly began in 2002 and ended early in
2005 and involved more than $1.5 million in drug proceeds. In
addition to conspiracy, Brown was charged with seven
substantive acts of money laundering. The case was assigned
to Judge Gottschall.
This was, by the way, Brown’s second indictment in the
Northern District of Illinois. A 2003 indictment had charged
him with multiple acts of income tax evasion. That prosecution
was resolved by way of a written plea agreement pursuant to
which Brown pleaded guilty to one count of filing a false
income tax return. He was sentenced to a five-year term of
probation that included four months of home confinement.
The 2005 money laundering case against Brown largely fell
apart when a key government witness, Kenyatta Coates,
refused to testify against Brown as he had promised the
government he would do. Against the backdrop of a weakened
prosecution case, the parties negotiated a written agreement
pursuant to which Brown committed to plead guilty to one
count of money laundering involving the June 2003 purchase
of a Mercedes Benz automobile by Brown on behalf of Coates.
Brown acknowledged that between $5,000 and $10,000 of the
No. 12-3290 3
$63,000 cash down payment he made on the car constituted the
proceeds of narcotics activity. In exchange for Brown’s agree-
ment to plead guilty to this count and to waive his appellate
rights, the government agreed to dismiss the other charges and
to recommend a sentence of probation and intermittent
confinement within the Sentencing Guidelines advisory range
of four to ten months. The agreement was executed by the
parties on August 21, 2006.
The first page of the plea agreement stated that the agree-
ment “is entirely voluntary and represents the entire agree-
ment between the United States Attorney and defendant
regarding defendant’s criminal liability in case 05 CR 73.”
R. 192 at 2. The charges asserted in that case were set forth on
the next page of the agreement. R. 192 at 3 ¶ 1. Beyond a brief
notation that Brown’s criminal history included his prior
conviction in the 2003 tax case (R. 192 at 5 ¶ 6(e)), there was no
mention in the agreement of any criminal charges other than
those set forth in the 2005 indictment— be they past, present,
anticipated, or under investigation. Elsewhere, the agreement
confirmed that “no threats, promises, or representations have
been made, nor agreements reached, other than those set forth
in this Agreement, to cause defendant to plead guilty.” R. 192
at 11 ¶ 21.
Paragraph 20 of the plea agreement spelled out the
government’s rights in the event that Brown breached the
terms of the agreement. As it is this provision that Brown
believes barred the subsequent mortgage fraud indictment, we
reproduce the paragraph in full here:
4 No. 12-3290
Defendant understands that his compliance with
each part of this Plea Agreement extends through-
out and beyond the period of his sentence, and
failure to abide by any term of the Plea Agreement
is a violation of the Agreement. He further under-
stands that in the event he violates this Agreement,
the government, at its option, may move to vacate
the Plea Agreement, rendering it null and void, and
thereafter prosecute defendant not subject to any of
the limits set forth in this Agreement, or to
resentence defendant. Defendant understands and
agrees that in the event that this Plea Agreement is
breached by defendant, and the Government elects
to void the Plea Agreement and prosecute defen-
dant, any prosecutions that are not time-barred by the
applicable statute of limitations on the date of the signing
of this Agreement may be commenced against defendant
in accordance with this paragraph, notwithstanding the
expiration of the statute of limitations between the
signing of this [A]greement and the commencement
of such prosecutions.
R. 192 at 10-11 ¶ 20 (emphasis ours). As we discuss in greater
detail below, Brown’s argument in this appeal rests on the
italicized language.
When Brown appeared before Judge Gottschall on August
21, 2006 (the same date that he signed the agreement) to
change his plea to guilty, the judge elicited confirmation from
counsel for the government that there were no other agree-
ments other than those set forth in the written plea agreement.
No. 12-3290 5
Rawle 192 at 21.1 The judge then asked the same question of Brown
himself:
THE COURT: Okay. Now, the lawyers, Mr.
Brown, say that there are no other
agreements. Does that go along
with your understanding?
MR. BROWN: Yes, Your Honor.
THE COURT: Okay. Now, what that means as a
practical matter is that you haven’t
been promised anything about the
sentence. …
R. 192 at 21. After asking counsel to state their understanding
of the calculation of the advisory sentencing range under the
Sentencing Guidelines, and confirming that it comported with
Brown’s understanding, the court again asked Brown whether
there was anything apart from the stated terms of the parties’
agreement that had induced him to plead guilty.
THE COURT: Okay. Now has anyone promised
you anything different, Mr. Brown,
to get you to plead guilty?
MR. BROWN: No, Your Honor.
THE COURT: Has anyone threatened you to try
and get you to plead guilty?
1
The judge actually asked counsel for both parties whether there were any
such agreements, but the transcript reflects a response solely from the
government’s counsel.
6 No. 12-3290
MR. BROWN: No, Your Honor.
R. 192 at 25. After the government briefly outlined the evidence
against Brown as to the one charge to which he was pleading
guilty, and Brown acknowledged the accuracy of the proffer,
the court accepted Brown’s change of plea and entered a
finding of guilty.
Following the preparation of a presentence report by the
probation officer, Brown appeared for sentencing on December
6, 2006. As the probation officer’s Guidelines calculations were
consistent with those of the parties, the advisory Guidelines
range was four to ten months in prison. The court imposed a
sentence of three years’ probation, along with four months of
intermittent confinement, with Brown being credited for the
two and one-half months he had already spent in custody
when he was initially detained in the case. Both the probation
officer and the court expressed doubt at the time as to whether
it would be possible for Brown to serve intermittent confine-
ment in the Northern District of Illinois, and their doubts were
later confirmed. For that reason, the court subsequently
modified Brown’s sentence to waive intermittent confinement.
Around the time that the parties agreed to resolve the
money laundering case, the FBI had begun an investigation
that eventually would culminate in the 2010 charges of
mortgage-related fraud. Brown had eventually been released
on bond while the 2005 money laundering charges were
pending, and it turned out that a house that Brown had posted
as security for that bond was one of a number that had been
purchased pursuant to the scheme we shall describe in a
moment. Brigitte Grose was the owner of this particular house,
No. 12-3290 7
and she had been required to file a quitclaim deed in order to
facilitate its use as security for Brown’s bond. When that house
subsequently went into foreclosure, the government started to
make inquiries. An FBI agent had already interviewed Grose
about the questionable circumstances under which she had
purchased that house (and two others) by the time the parties
signed the plea agreement in the money laundering case. And
Mario Moore, who like Grose was the purchaser of several
houses involved in the scheme, was interviewed not long after
the plea agreement was signed. Both individuals had discussed
Brown’s role in the home purchases; and both of them would
later be named as defendants along with Brown in the 2010
mortgage fraud indictment. So it is fair to say that although no
charges had yet been filed in connection with the mortgage
fraud investigation, the government had some inkling by the
time Brown pleaded guilty in the money laundering case—and
certainly by the time he was sentenced—that he was also
implicated in the mortgage fraud scheme that was under
investigation. But, as we have pointed out, the plea agreement
resolving the money laundering case makes no mention of the
mortgage fraud investigation, and Judge Gottschall said
nothing about that investigation (if she was even aware of it)
when she sentenced Brown.2
2
The record does not make clear whether or to what extent Brown’s
involvement in the mortgage fraud scheme was brought to Judge
Gottschall’s attention. Apparently, both the presentence report and the
probation officer’s confidential sentencing recommendation to the judge
indicated that the FBI case agent had supplied the probation officer with
information regarding additional offenses that Brown allegedly had
(continued...)
8 No. 12-3290
2
(...continued)
committed and which might qualify as relevant conduct vis-à-vis the one
money laundering offense to which Brown had pleaded guilty; the
prosecutor, on the other hand, had informed the probation officer that there
was insufficient evidence to establish that Brown had committed these
additional offenses, even under the lesser burden of proof that governs a
showing of relevant conduct at sentencing. Judge Gottschall likewise noted
at sentencing that the probation officer had been supplied with information
concerning “numerous offenses” of which Brown had not been convicted
but which might qualify as relevant conduct. R. 195 at 4, 6-7. But neither the
judge nor the parties commented on the content of that information, and it
is possible, if not likely, that the information had nothing to do with the
mortgage fraud scheme (which was still being investigated, and which was
distinct in time, participants, and subject matter from the money laundering
scheme), but instead concerned the money laundering charges that the
government had agreed to dismiss. Indeed, the government has represented
that the information recounted in the presentence report concerned only
money laundering offenses. See R. 191 at 6; R. 232 at 3. Neither the
presentence report nor the probation officer’s sentencing recommendation
is a part of the record in this case; nor are those documents part of the
electronic record in the money laundering case. Consequently, we can only
speculate on the nature of the other offenses referred to. The sentencing
transcript, however, gives us no reason to believe that the information
influenced Judge Gottschall’s decision as to the sentence. Her remarks at
sentencing suggest that she was disinclined to consider this information, see
R. 195 at 5 (“I’m going to assume that there is no proof that the defendant
did these things … .”); she made no finding that Brown had committed
additional offenses; and she did, after all order Brown to serve a term of
intermittent confinement (four months) at the low end of the advisory
Guidelines range.
We acknowledge that Brown did seek disclosure of the probation officer’s
confidential sentencing recommendation in order to clarify what additional
offenses were alluded to in that recommendation, a request that the district
court denied. However, because, as we conclude below, there is no
(continued...)
No. 12-3290 9
The mortgage fraud scheme had commenced in or about
May 2005 and lasted for just under a year. Brown’s aim was to
extract money from mortgage loans extended to buyers that he
located. Brown recruited a licensed loan officer, Walker Smith,
to find properties for sale that met the criteria that Brown
specified; Brown took care of finding buyers. Once an appro-
priate property and buyer were located, Brown (with Smith’s
help) falsified documents in order to convince a lender to issue
a mortgage to the buyer. For example, Brown would create
documents indicating that the subject property was being
leased to a tenant at a substantial monthly rent—thus generat-
ing income for the buyer—when in fact the property was not
being leased at all. Or the documentation would indicate that
the buyer intended to live at the property when in fact the
buyer had no such plans. In some instances, the buyer’s rental
history and other financial data were falsified. Brown, who
styled himself as a consultant in these transactions, arranged
to have a “decorating allowance” of $5,000 to $10,000 placed in
the purchase agreement. That money would be distributed to
Brown when the purchase closed, and Brown would split the
amount with the buyer. Brown facilitated a total of six mort-
gage transactions in this manner. The record does not disclose
the total amount of money that he extracted for himself from
2
(...continued)
ambiguity in the money laundering plea agreement that warrants an
inquiry beyond the four corners of that agreement into the parties’
expectations regarding the mortgage fraud charges, there is no need to
explore further what information was referred to in the probation officer’s
sentencing recommendation.
10 No. 12-3290
these transactions. But the scheme involved mortgage proceeds
totaling $1.8 million and inflicted a loss of just over $1 million
on the lenders who financed the mortgages.
In June 2010, a grand jury indicted Brown, among others,
on charges arising out of the mortgage fraud scheme. Brown
was charged with six counts of wire fraud, two counts of mail
fraud, and one count of bank fraud. See 18 U.S.C. §§ 1341, 1343,
1344. The case was assigned to Judge Lefkow and tried to a
jury, which convicted Brown on all charges save for one of the
mail fraud counts that the court dismissed during trial at the
government’s request. Judge Lefkow ordered Brown to serve
a below-Guidelines sentence of 60 months in prison and to
make restitution in the amount of $1.067 million.
Approximately five weeks before the trial began, Brown
asked the court to dismiss the indictment and to continue the
trial date while the motion to dismiss was being briefed.3
Brown contended that the plea agreement in the 2005 money
laundering case barred his prosecution in the 2010 mortgage
fraud case absent his breach of the plea agreement, which had
not occurred. After reviewing the motion and the govern-
ment’s response in opposition (which argued that the money
laundering plea agreement posed no bar to the mortgage fraud
charges), the district court denied Brown’s request for a
postponement of the trial, but allowed Brown to file a reply
brief in support of his motion to dismiss once the trial was
3
Brown simultaneously filed a motion with Judge Gottschall to enforce the
plea agreement in the 2005 money laundering case; she denied that motion
without prejudice. See United States v. Brown, 2012 WL 182214, at *3 n.3
(N.D. Ill. Jan. 20, 2012).
No. 12-3290 11
concluded. Brown filed that brief prior to his sentencing. With
his reply brief, Brown submitted an unsigned affidavit in
which he averred that the Assistant United States Attorney
handling the money laundering prosecution on the govern-
ment’s behalf promised him that if he agreed to plead guilty to
one count of money laundering, “the government would
recommend a sentence of probation with intermittent confine-
ment within the applicable Guidelines range and that would be
the end of all my cases and matter[s] for which the US Attor-
ney was investigating me, including the mortgage cases.”
R. 244-1 at 8 ¶ 23.
The district court denied the motion to dismiss in a written
opinion. United States v. Brown, 2012 WL 182214 (N.D. Ill.
Jan. 20, 2012). The court noted that its analysis focused first on
the written terms of the agreement; there being no need to
consider extrinsic evidence unless the plea agreement was
ambiguous on its face. Id., at *3. The court could find no
explicit immunity provision within the four corners of the
agreement. Id., at *4. Although Brown contended Paragraph 20
contained an implicit promise not to prosecute him for
additional crimes of which it was aware at the time of the
money laundering plea, the court was not convinced that
Paragraph 20 plausibly could be construed to contain such a
promise.
On its face, this clause relates only to the possible
penalty for Brown’s failure to abide by the terms of
the plea agreement. It cannot reasonably be read as
a broad grant of immunity. Indeed, the introductory
paragraphs of the plea agreement make clear that
the agreement relates only to Brown’s “criminal
12 No. 12-3290
liability in case 05 CR 73 [the money laundering
prosecution]” and that the agreement “represents
the entire agreement between the United States
Attorney” and Brown. In addition, the plea agree-
ment does not mention any conduct that relates to
the instant mortgage fraud prosecution. In the
absence of any language in the plea agreement
indicating a promise of immunity to Brown, the
court will not consider the extrinsic evidence sub-
mitted in support of Brown’s motion. From an
objective standpoint, the terms of the money laun-
dering plea agreement do not bar the instant prose-
cution for mortgage fraud.
Id. (citations omitted). The court went on to find no evidence
of bad faith or overreaching on the part of the government that
would otherwise support Brown’s request to dismiss the
indictment. Id. If, as Brown averred in his affidavit, the
government was willing to immunize him for offenses beyond
those covered by the 2005 money laundering indictment, he
was free to negotiate the inclusion of such an agreement in the
plea agreement. Id. As it was, both parties had represented to
Judge Gottschall that there were no agreements other than
those set forth in the written plea agreement. Id. And as the
court had already noted, no such immunity provision could be
found in the terms of the agreement as stated. Id.
II.
We must decide whether the plea agreement between
Brown and the government in the money laundering case
precluded the government from pursuing the fraud charges
No. 12-3290 13
against him in this case. A plea agreement is a contract, and we
interpret its terms using ordinary contract principles, while
being mindful of the defendant’s due process right to funda-
mental fairness in the criminal proceeding that produced the
agreement. E.g., United States v. Smith, 759 F.3d 702, 706 (7th
Cir.), cert. denied, 135 S. Ct. 732 (2014). We examine the terms of
the agreement objectively, relying on the plain meaning of its
terms as evidence of the parties’ intent. See United States v.
Adame-Hernandez, 763 F.3d 818, 827 (7th Cir. 2014); United States
v. Hallahan, 756 F.3d 962, 974 (7th Cir.), cert. denied, 135 S. Ct.
498 (2014); United States v. Alcala, 678 F.3d 574, 577 (7th Cir.
2012). Ambiguities in the contract will be construed against the
government. E.g., id. We will hold the government to any
explicit or implicit promises it has made to the defendant in
exchange for his guilty plea, but the government’s obligations,
like the defendant’s, will be limited to matters on which they
have actually agreed. Hallahan, 756 F.3d at 974; United States v.
Williams, 102 F.3d 923, 927 (7th Cir. 1996); United States v.
Jimenez, 992 F.2d 131, 134 (7th Cir. 1993).
Brown contends that the government induced him to plead
guilty to one count of money laundering in the 2005 case with
the promise to abandon not only the other charges in that case,
but any charges related to the mortgage fraud that it had
begun to investigate. The plea agreement contains no explicit
promise with respect to anything but the money laundering
charges (the agreement provided that the government would
ask the court to dismiss the other charges set forth in the 2005
indictment). But Brown reads Paragraph 20—which states that
in the event of Brown’s breach of the agreement, the govern-
ment would have the right to void the agreement and com-
14 No. 12-3290
mence “any prosecutions that are not time-barred by the
applicable statute of limitations on the date of the signing of
this Agreement”—as an implicit promise not to pursue any
charges arising from the mortgage fraud scheme.
Brown’s reading of that language is far too broad. As Judge
Lefkow pointed out, Paragraph 20 is not an immunity provi-
sion, but a recitation of the government’s rights in the event of
Brown’s failure to abide by the obligations that the agreement
imposed on him. If the right to prosecute Brown for mortgage-
related fraud were something that Brown’s breach would
revive, then one would expect to see elsewhere in the agree-
ment a promise to forgo such claims, just as there was a
promise to dismiss the other money laundering charges in
exchange for Brown’s agreement to plead guilty to one such
charge. There was no such promise.4 Indeed, although the
government had begun to actively investigate the mortgage
fraud scheme by the time the parties came to terms on the
resolution of the money laundering case, there was no refer-
ence anywhere in the agreement to the investigation or to any
criminal charges that might result from that investigation.
There was no mention, in fact, of any potential criminal
liability beyond the parameters of the 2005 prosecution. The
absence of such a reference is consistent with the first page of
the agreement, which states that the agreement “represents the
4
By contrast, when Brown pleaded guilty in the 2003 tax prosecution, see
supra at 2, the plea agreement included the government’s express promise
“not to seek additional income tax charges against the defendant [for acts
within a specified time period] which occurred in the Northern District of
Illinois and which constitute[ ] the defendant’s relevant conduct … .” R. 192
at 59.
No. 12-3290 15
entire agreement between the United States Attorney and
defendant regarding defendant’s criminal liability in case 05 CR
73.” R. 192 at 2 (emphasis ours). In short, the plain terms of the
agreement indicate that it was meant to resolve the money
laundering charges, but not charges related to the govern-
ment’s nascent investigation into the mortgage fraud.
We take Brown’s point that the phrase “any prosecutions”
is expansive when read in isolation. But contractual language
is meant to be read in context, not in the abstract. See, e.g.,
United States v. Ataya, 864 F.2d 1324, 1335-36 (7th Cir. 1988);
Asta, L.L.C. v. Telezygology, Inc., 629 F. Supp. 2d 837, 844 (N.D.
Ill. 2009). In the context of a plea agreement which recites as its
purpose the resolution of Brown’s criminal liability in the
money laundering prosecution, which provides that Brown
will agree to plead guilty to one of the money laundering
charges in the 2005 indictment and waive his appellate rights
in exchange for the government’s agreement to seek dismissal
of the other charges in that indictment, and which provides
that in the event of Brown’s breach of the agreement, the
government would have the right to set the agreement aside
and pursue any “prosecutions” not time-barred at the time the
plea agreement was entered into, “prosecutions” is properly
understood to mean only those charges related to the money
laundering scheme. To read that term to include unrelated
charges that the government had only begun to investigate,
when the balance of the agreement offers no suggestion that
the parties intended to resolve anything beyond the money
laundering case itself, amounts to an unreasonable construc-
tion of Paragraph 20. The objective meaning of Paragraph 20
and the balance of the plea agreement is plain, and there was
16 No. 12-3290
no promise to abandon charges related to the mortgage fraud
scheme.
Apart from the terms of the written agreement, Brown’s
affidavit, as we have noted, avers that the prosecutor handling
the money laundering case made an explicit oral promise to
him that the government would drop any mortgage fraud
charges as well as the balance of the money laundering charges
in exchange for his guilty plea to the single money laundering
charge. In Brown’s words, “that would be the end of all my
cases and matter[s] for which the US Attorney was investigat-
ing me, including the mortgage cases.” R. 244-1 at 8 ¶ 23. At
that point, as Brown recalls it, the prosecutor presented him
with the written plea agreement and he signed it. Id. Whether
as extrinsic evidence of what Paragraph 20 of the plea agree-
ment means, or as evidence of bad faith or overreaching by the
government, the affidavit does not support Brown’s contention
that an evidentiary hearing is necessary to establish exactly
what the government promised him in exchange for his plea.
The affidavit is unsigned and thus unsworn, which de-
prives it of value as actual evidence. See Sellers v. Henman,
41 F.3d 1100, 1101, 1102 (7th Cir. 1994); DeBruyne v. Equitable
Life Assur. Soc. of U.S., 920 F.2d 457, 471 (7th Cir. 1990); Pfeil v.
Rogers, 757 F.2d 850, 859 (7th Cir. 1985). We may instead treat
it as a proffer of what Brown would testify if an evidentiary
hearing were convened. But even in that role the affidavit fails
to establish the need for further inquiry.
There is no ambiguity in the plea agreement which war-
rants the presentation of extrinsic evidence. See, e.g., United
States v. Kingcade, 562 F.3d 794, 797 (7th Cir. 2009). Whatever
No. 12-3290 17
question use of the phrase “any prosecutions” in Paragraph 20
might raise is answered, as we have discussed, by the remain-
der of the agreement, which makes no mention of potential
charges related to the mortgage fraud investigation and
affirmatively indicates that the agreement was meant to
resolve the money laundering case alone. In short, nothing in
the agreement reflects a promise by the government not to
pursue the charges later advanced in the 2010 indictment.
Brown’s affidavit thus posits the existence of a contractual
provision beyond those incorporated into the written terms of
the plea agreement. Yet the agreement itself states that it
represents the entirety of the parties’ agreement, and not only
the government, but Brown himself, assured Judge Gottschall
at the change-of-plea hearing that no other promises had been
made to Brown in order to induce him to plead guilty. Brown’s
affidavit is thus in direct contradiction to what he represented
to the court, and what Judge Gottschall relied upon, in evaluat-
ing and accepting his guilty plea. Avoiding after-the-fact
accusations that an undocumented agreement has been
breached is exactly why judges ask the parties to confirm that
there are no agreements beyond those committed to writing or
otherwise recited in open court. Treating Brown’s affidavit as
sufficient to commence an inquiry would undermine the
interests in candor and finality served by the court’s inquiry
into undisclosed promises.
We note, finally, that Brown was represented by counsel
when he signed the plea agreement and pleaded guilty to the
money laundering charge. If, as Brown now represents, the
government indeed had promised not to charge Brown in
connection with the mortgage fraud it was investigating,
18 No. 12-3290
Brown’s counsel no doubt would have made sure that promise
was placed on the record.
III.
For all of the foregoing reasons, the district court correctly
denied Brown’s motion to dismiss the indictment. Brown has
not shown that the charges in this case were barred by his plea
agreement in the 2005 money laundering prosecution.
AFFIRMED